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 their own Belgapom quotation starting with the season 2001-2002.
A Commission composed (as from 1/1/2021 onwards) out of 10 persons, of which 5 active in the potato trade and 5 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 frozen fries 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 variety X 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:
The Belgapom price is quoted in Euro - 6 % VAT inclusive and exclusive - and this per unity of 1.000 kg or 1 tonne.
On this moment the quotation of he following varieties is published every week based on this definition in the Belgapom quotation : earlies (when applicable) and Fontane. Concerning the varieties Bintje and Challenger Belgapom communicates a weekly observation of the price and a market mood.
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.
The Belgian potato season for the production of consumer potatoes destined for the chip industry can be divided into two parts:
As far as the available half-early and late fries varieties are concerned, Fontane has become the major variety with a share of 50% in the Belgian acreage.
Other varieties as those for the fresh market, chips (crisps) and snacks and also other frozen products are often only produced and stored on contract.
Growers, dealers and processors can market potatoes both during the early and the storage season by means of :
- volume of culture contracts (whereby a fixed volume of potatoes, with disposals concerning variety, quantity, quality, the moment of delivery and the price are defined in the contracts for volume contracts, and the yield of one or more parcels of potatoes of a certain variety based and crop instructions are sold to the buyer for a certain price at a certain time for culture contracts. In both cases the contracts are signed before the start of the growing season),
- the free market, allowing transactions between farmers, merchants and processors during a season with immediate delivery (within 10 days) or with later delivery (weeks or months later). These transactions are made during a season, when yield and quality is known.
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 traders and processors who buy and sell batches of potatoes every day, quote the most used price on the day before the quotation for the earlies (when applicable) and Fontane. 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.
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 acreage, the weather conditions, that determine not only the production and harvest but also the storage of the potatoes, and of course the market conditions. Offer and demand influence the Belgian and European market.
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.
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 Fontane variety (September to end of June of the following year), but also a graph of the average monthly contract prices for trade and processing (if available).
In this way it possible to gain clearer insight into the factors that affect the price of potatoes for the Belgian frozen fries industry.
