After the Belgian commission price was no longer fixed by the Belgian federal ministry in February 2001, as a result of the regionalisation of the department of agriculture, Belgapom has taken the initiative to publish the Belgapom quotation starting with the season 2001-2002.
A Commission, composed out of 8 persons, of which 4 active in the potato trade and 4 in the potato processing industry, quotes on a weekly basis on Friday morning the Belgapom quotation. This is the most frequent price on the physical market for potatoes from the field with destination processing industry.
This Belgapom quotation makes part of the basket of European quotations, which are used to define the 'cash settlement price' of the potato futures market in Frankfurt (Eurex).
As from 2011 each Friday morning the Belgapom quotation is determined based upon the following definition:
"The Belgapom quotation is the most frequently used price observed on the previous working day for Bintje intended for processing into frozen potato products, from the field 35 mm+, suitable for chips (french fries), departure producer, loose on truck for immediate delivery/picking up. "
The commission also adds a market tone, chosen from the following definitions:
- Flat: offer is larger than demand
- Quiet: offer is larger than or equal to demand
- Stable: offer is equal to demand, balanced
- Firm: offer is smaller or equal to demand
- Fixed: offer is smaller than demand
The Belgapom price is quoted in Euro - 6 % VAT inclusive and exclusive - and this per unity of 1.000 kg or 1 tonne.
As from the season 2011 - 2012 an observation of the most frequently noticed price for other varieties on the free market will be added to the weekly Belgapom quotation. This observation concerns the varieties Fontane / Challenger, and follows the same definition as the Belgapom quotation.
The Commission reserves the right not to define a Belgapom quotation due to exceptional circumstances. The motivation of this decision will be expressed by the Commission.
The past years the Belgapom quotation has set itself on national and international level as a reliable source of market information, which allows the sector to dispose of a database which illustrates the Belgian physical potato market and which can be consulted at all times.
Belgian potato production and its seasons:
The Belgian potato season for the production of consumer potatoes destined for the chip industry can be divided into two parts:
* The early season (from the end of June to the end of August): the production of early potatoes occurs in sandy soils, primarily in Flanders, and offers a choice between a number of early varieties suitable for chips with a shorter growing season. These varieties are usually lifted before their skin becomes hard so the idea is not to keep them for a long time.
* The storage season (from September to June of the following year): as the name says, it concerns potatoes that can be kept an entire season as long as they are stored professionally.
As far as the available half-early and late chip varieties are concerned, Bintje remains the most important variety. And thus characteristic of the typical Belgian chip with its own flavour, texture, colour and length.
In addition there are numerous other varieties, the most important of which are Fontane and Challenger that are available both on the free and on the contract market. Other varieties are often only produced and stored on contract.
Contracts and free market:
Growers, dealers and processors can market potatoes both during the early and the storage season by means of production contracts (whereby one or more parcels of potatoes are sold to the buyer before the start of the growing season), or on the free market. On the free market, transactions can be concluded with immediate delivery (within 10 days) or with later delivery (months later).
A well functioning market requires the necessary transparency; that is why there are various quotations in Europe that show the latest developments on the free market with immediate delivery.
The weekly Belgapom quotation is one of them. Every Friday morning, a committee of dealers and processors who buy and sell batches of potatoes every day, quote the price most used on the day before the quotation for the Bintje variety, which is by far the most important variety on the free market in Belgium. This quotation also includes an additional market mood and in this way offers both buyer and seller an instrument to better interpret the free potato market for Bintje.
For a number of years now, an observation is also shown for the price most used for other important, freely traded fries varieties: Fontane and Challenger.
In fact virtually all the growers, dealers and processors are active on the market both using contracts and on the free market.
In the past few years, the share of contract production has increased sharply. After all, operators throughout the entire potato chain wish to increase certainty. The prices on the free market - in contrast to those for the contracts– are extremely volatile as a result of the weather conditions that determine not only the production and harvest but also the storage of the potatoes. As a result of this, demand on the European potato market can vary greatly, with all that this entails for the price.
The smaller the free market becomes, the more volatile it will evolve, which is also illustrated by the multi-year graphs of the various quotations.
Conclusion: to get a correct picture of the evolution of the price of raw materials for the Belgian potato processing industry it is important to take into account both components of the potato market: contracts and free prices.
The ratio between the two factors may vary from one company to the next.
That is why, starting from 2014, the weekly Belgapom quotation will show not only the evolution of the weekly quotation for free early potatoes (July and August) and potatoes of the Bintje variety (September to end of June of the following year) but also a graph of the average monthly contract prices for trade and processing.
In this way it possible to gain clearer insight into the factors that affect the price of potatoes for the Belgian frozen fries industry.