Potato prices set to soar by over 100% as Limpopo black frost damage takes its toll

The price of potatoes is slated to soar by more than 100% on the back of damages caused by July’s black frost in Limpopo. 

Limpopo is the largest producer of the staple crop in South Africa.

While Potatoes SA said it is still assessing the extent of the damage to the crops, information and regional manager FP Coetzee said the crops of some farmers had been  decimated.   

“There are farmers that got a total wipe out and some farmers that received a burn. The tricky part is how old the potatoes were when they got frost. Some potatoes were one week from harvest and others were one week old. Some potatoes still have a chance to recover.”

Anjé Venter, a business analyst at Potatoes SA, said that from initial surveys, it appears that about 1 800 hectares of potatoes have been affected by the frost.

Thabile Nkunjane, the National Agricultural Marketing Council’s economist, said that because Limpopo is the largest supplier of potatoes, the effect of the frost on yields, supply and the price of the crop will be felt more significantly. 

“The reality is that the other regions [the Western Free State and Sandveld] may be able to supply a bit, even including Northern Cape, but since the issue was in Limpopo … from now on towards the end of the year we should see the yields being impacted there,” he said.

Nkunjane said the price fluctuations will be felt towards the end of August and into early September, when the potatoes would have gone to the market had they not been damaged. He added that demand could soar towards the end of the year. 

Potatoes are still below the R80 per 10kg mark, which is considered cheap compared with about R120 for 10kg late last year, when load-shedding and input costs pushed prices up. 

Nkunjane added that with the damage yet to be determined, the prices could rise in the short-term.

Less water, higher prices 

Another problem that is set to drive up the cost of the staple is the water and sanitation department’s proposal that farmers in the Western Cape reduce water extraction by 30% to ensure adequate water for the population and the environment. 

Potatoes SA said in a statement that this would significantly affect the production of potatoes in the region. “This would result in 30% of the hectares under potatoes in the Sandveld taken out of production, resulting in the quadrupling of potato prices.” 

It explained that the Sandveld region is one of the few areas producing potatoes year-round, contributing to a stable supply. The Western Cape fresh produce markets would probably feel the effect of reduced production from Sandveld. 

FNB agricultural economist Paul Makube said a reduction of hectares under potatoes will also affect the price. 

“If hectares come down maybe 30%, then you are likely to have over 100% rise in potato prices in the near term, because those supplies will be out of circulation and therefore prices will have to increase. So it is common to have a 100% to 150% price increase due to either adverse weather conditions or supply shortages in the market,” he said. 

But, Venter said, the potential price increases could be offset because “potatoes are grown in 16 different regions across the country [that are less affected by frost], with some of these regions producing throughout the year”, which may ensure a steady supply that could dampen excessive price increases.

Makube said a rebound in production could be expected as early as next year when weather conditions improve. 

“In the long-term, obviously, weather is turning around and if there are good prices on the market, it will stimulate production in other areas, which will almost try to offset any area reduction in one area. But that will be at an elevated price level that consumers will have to bear for quite some time.” 

Nkunjane said better contingency plans are needed to protect farmers and their crops, especially with regard to climate change.  

Venter agreed that government subsidies for farmers could help them recover faster and maintain production levels, while supply chain efficiencies and financial instruments such as insurance for farmers could also protect the industry and its assets.

“Those farmers [who have] crop insurance in place will experience financial relief, which might bring continuity in production, but this can again impact supply and price later during the year or the beginning of next year,” he said.

“Unfortunately, not many of the farmers have crop insurance in place as this is a big expense, which means that this positive market dynamic is not currently a cushion for the potato industry.”