Despite a shortage of potatoes, causing prices to rise and the volume of imports increasing, Russia is sticking to the 'own potatoes and chips' first strategy. This offers opportunities for the professionalization of the sector, but there are still major steps to be taken.
The provisional yield figures from the Russian statistical agency Rosstat show that the potato harvest in Russia is lower than in previous years. The total consumption potato harvest is estimated at 29,6 million tons, a decrease of 4,9% compared to 2016. The 5-year average is 31 million tons.
Imports doubled
Lower availability means that the import engine is currently running at full speed. In the first 10 months of 2017, 96% more potatoes were imported, Rosstat calculates. This is partly because very little was imported in 2016. In tonnes, the volume is estimated at 800.000 tonnes, of which approximately half comes from Egypt and China. The former has now started delivering the new harvest to Russia.
The Russian government agency Rosstandart has tightened import requirements from this year, which may affect imports. One of the new rules is that green tubers are no longer allowed on table potatoes. However, damage from wireworms and harvesting damage are still permitted (to a certain extent). New requirements also apply for size sorting. By improving product quality, the Russian government hopes to increase potato consumption. However, it is expected that the imported volume will continue in the first half of 2018.
Less own cultivation
It is a long-standing trend that Russians grow fewer potatoes on their dachas and do their shopping in the supermarket. In large cities the potato quality is relatively good. In small towns this is not always the case. Moreover, Russia has had bad economic times, which means that spending patterns are low. In 2017, the economy grew again by 1% to 1,5%.
French fries production
The fast food segment is also growing. The chip factory by Lamb Weston/Meijer and their Russian partner Belaya Dacha in Lipetsk (South Russia) has been running for about 2 months now. 90.000 tons of potatoes can be processed there annually. The Dutchman Christian de Vries, from mechanization company Agri 2.0, has 3 branches in Russia and 2 in Ukraine. He also farms on 1.500 hectares.
De Vries specializes in precision agriculture, where potato growers are important customers. In expensive years they invest, among other things, in RTK GPS systems. "You see growers becoming more professional. We are talking about companies that grow up to 3.000 hectares of potatoes. They grow more chip potatoes on contract, but chip potatoes are also popular. PepsiCo has 2 factories, but large growers sometimes also have their own factories. A few years ago a hectare yield of 30 tons is common. Now that is 40, 50 or even 60 tons for the top growers."
De Vries hears prices between 12 and 14 rubles per kilo (for the farmer), equivalent to about €0,17 to €0,20 cents. "They can grow potatoes here very well for that. The cost price is around 5 to 6 rubles (€0,07 to €0,09)." The average supermarket price is currently €0,37 per kilo. In Moscow this is slightly less at €0,34 per kilo. Grower and supermarket both make a good living from the potatoes.
Local product
In the long term, European chip producers have to fear Russia's ambition to be self-sufficient in frozen potato products. For example, McDonalds wants to serve only Russian fries to customers by the end of 2018. Currently, 85% of their products are Russian. The chain has more than 650 restaurants in the country, partly as franchises. About 50 are added every year.
According to the most recent figures from the Global Trade Atlas, Russia imported 12 tonnes of chips from the EU-1 in the 2017 months to November 110.000, 5. It is a plus of 17% compared to the year before. This puts it in the third largest customer position, after heavyweights Brazil and Saudi Arabia. The Netherlands accounts for a large part of the Russian volume. In addition, Polish chip factories are also active in this market. Neighboring country Ukraine mainly supplies table potatoes and still has plenty of stock after a good harvest.
Seed potatoes
McDonalds is an exception in the Russian market. The seed potato supply and cultivation is managed by the growers themselves. The availability of high-quality seed potatoes is particularly an issue. Only in this way can yield and quality be structurally increased. Until then, the Russian consumer cannot avoid Dutch fries when he goes for a meal.
Despite a shortage and favorable prices, the Central Bank of Russia expects potato volumes to decline further in 2018. It calculates a total volume of 26,6 million tons, 10% less than 2017. This is due to the sharp decline in 'backyard cultivation', just as we have seen in Poland. According to the Ministry of Agriculture, Russia was 90% self-sufficient in potatoes, while the ambition is 95% or more. New reductions do little to improve this.