Difficult to get a better example of why the current business model for agriculture is not working!
Arthur Marshall, analyst for AHDB Potatoes, comments this week that average British ex-farm prices for potatoes are currently at their second-highest level ever recorded for this time of year, and with planting ongoing it is likely that the recent high price levels will have had an influence on planting decisions.
He says: “This time last year, there was a widespread response to low prices in reduced planted areas. In hindsight, we can see that this has contributed to very high prices despite record yields. Arguably, the high prices provide a genuine market incentive to plant more next season but of course it is impossible to know exactly how much and what will be needed.”
The result – as this graph from AHDB shows so clearly – is that next year the prices will fall in proportion to the amount of extra production, unless of course the Dutch and Poles have a disastrous harvest, in which case we might do okay.
The big question is why is it impossible to know how much is needed?
There must be a maximum amount of chips and crisps that even the British can eat!
Other industries have sophisticated models that are able to predict demand and forecast production – and this technology is getting smarter.
Big data is being utilised by every industry, from transport and logistics to hotels and taxi firms, to create new types of service based on knowledge of customer demand and manage it profitably.
REAP challenging the status quo
At REAP this year we will be looking at how other market sectors are using technology to disrupt the business model and if any are mature enough to apply to the agri-food industry, which would need to include grower confidence and contract arrangements.