The future of the UK Potato Industry: exploring the supply chain challenges

Globally potato consumption is rising, driven primarily by the increasing demand for French fries in the developing world. Global production has now surpassed 385 million tonnes; an increase of 18% since 2005. In the UK, potatoes are still seen as a healthy and nutritious staple of the shopping basket, but also a value product positioned to entice consumers in the intense retail battle. Competition from imported processed products and falling fresh consumption have contributed towards increased pressure on margins throughout the domestic supply chain. In addition, exchange rate uncertainty, market volatility, short term commitments and a widening disparity in cost assumptions have made for a very turbulent operating environment.

The objective of my report was to identify the factors that contribute to achieving a thriving potato supply chain in a competitive market. To do this I visited Central and Northern Europe, Kenya, South Africa, Canada and the United States. I wanted to examine production under differing climates, relationships between participants, how supply chain sustainability was approached at both a micro and macro-economic level, and the local environmental, political and social factors that influence it.

Meeting potato growers, packers and processors, government bodies, NGOs, levy boards, and research organisations, I found that successful supply models display some of the following characteristics:

• Strong investment in relationships and partnerships that build trust and deliver mutual benefits - an ethos of collaboration over confrontation.
• Unilateral recognition of other stakeholder challenges and objectives that, once recognised, allowed the creation of robust and stable supply platforms.
• Recognition of an ongoing need to increase returns by raising productivity levels through simplified processes, adoption of precision technology and differentiated product offerings.

Looking ahead, domestic supply chain relationships and interdependency will become ever more important. Our highly productive neighbours in Northern Europe have the potential to become an even greater threat. Their ongoing pursuit of creating efficiencies in their own supply chain will continue to put pressure on our domestic marketplace if there is no impetus on our industry’s part to change.

Consumption trends are changing at a pace; consumers are turning their attention to prepared products that satisfy convenience, health and quality criteria. While they respect provenance and quality, the current retail dynamic clearly indicates that value is just as critical. A ‘GB only’ initiative from some of the major buyers should not be relied upon to support our industry.

Supply chain customers are looking for price and quality consistency. This can only be achieved by an increased adoption of contracts and tools that bring about stability. For some growers this will necessitate a recalibration on their expectations of returns. To bring about the confidence required to invest in the future of the UK potato industry, requires commitment and support from the processors and retailers higher up the supply chain.