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  • A Black Swan Moment…

A Black Swan Moment…

Posted on 27/09/2013

The Black Swan theory is a term coined by Nassim Nicholas Taleb, a finance professor and former Wall Street trader, used to describe an unforeseen turn of events that would otherwise be extremely difficult to predict.

Is this what is about to take place in the European potato market?
With the 2012-13 harvest being one of the most challenging for all of us in the supply chain, most of us are expecting a more normal 2013-14 with prices relaxing from the heights of 330 Euros/tn. However, as October looms large, we find ourselves in a 'black swan' moment as the market continues to climb.

Hope is a wonderful word but a recent article by Rabobank, the respected Dutch multinational, predicts five years of elevated price volatility in the northwest European potato market as input costs increase.

In fact since 2005, input farming costs have increased 5.8% year-on-year which is being passed down the supply chain. No doubt that black swans will challenge the fundamental assumptions of the total supply chain and adaptation will be formidable. That said we are beginning to see green shoots in Europe as certain economies are finally heading towards growth. In fact this year, the UK, Germany and France are expecting to grow their GDP and lower unemployment rates. Consumers should see discretionary incomes rise in the years to come as long as governments continue to support their respective economies and keep interest rates low. This should reflect into growth for the food industry, however whether this is growth in value and/or volume is yet to be seen.

The good news is that black swans, if you can grasp them, could be turned into opportunities for growth and product innovation. And innovation is exactly what our industry requires.

I trust you will find the Q3 newsletter informative and I am always happy to receive any feedback/suggestions/ideas you may have, so please feel free to get in touch with me directly at m.essa@aviko.com or through our customer service centre at ukhelpdesk@aviko.com
Mohammed Essa,
General Manager
Aviko UK