A food retail analyst has proposed that the potato sector should seek to agree long-term supply contracts with supermarkets as a way of delivering increased resilience at farm level.
Malachy O’Connor addressed the 2024 National Potato Conference, jointly hosted by the Irish Farmers’ Association (IFA) Teagasc and Bord Bia this week (Thursday, November 21).
He confirmed that supermarkets in the UK had already agreed this approach with elements of the dairy and beef sectors, adding that retailers want long-term stability in the way they deal with suppliers.
Such arrangements would be designed to give comparable stability at primary producer level. Delivering on this objective would allow farmers to invest in the future of their businesses in a sustainable manner.
O’Connor also pointed out that producer prices would be built into these agreements.
Potato sector
The analyst also indicated that the impact of unforeseen sudden input costs shocks, such as those that impacted across all Irish farming businesses, would be on the table as part of an envisaged supply agreement.
The retail analyst inferred that it would be up to the Irish potato sector to work through the logistics of its actual negotiations with retailers.
But he was strongly of the view that the fewer the number of people around the table, the more attractive the option of securing a supply arrangement would become for the food retail sector.
According to O’Connor, the potato, fruit and vegetable sectors are in a very strong bargaining position when it comes to dealing with the Irish supermarkets.
He told the conference that fresh produce accounts for approximately 15% of retailer throughput on a weekly basis. Adding to the significance of these products is the fact that they have a very short shelf life.
Referencing potatoes, specifically, O’Connor pointed out that adding value has got to be a key priority for the future.
His own research has confirmed that value added products are 3.4 times the price of fresh potatoes on shop shelves.
Currently, 35% of the potato products sold in Irish supermarkets fall within the ‘added value’ category.
O’Connor confirmed that consumers are always looking for new taste experiences. Other drivers for consumer choice include the health attributes of the food they eat and the growing attraction of plant-based options. Irish potatoes tick all these boxes.
Current market research confirms that potatoes remain Ireland’s most popular vegetable and carbohydrate source. Currently potatoes account for 51% of all vegetable sales in Ireland.