The Russian chip factory of Belaya Dacha Group and joint venture Lamb Weston Meijer was officially opened at the end of April. When the company is running at full speed, 200.000 tons of potatoes can be processed per year. The largest customer is McDonalds.
The chip factory in Lipetsk has been active since the start of this year. It can currently process 90.000 tons of potatoes, and full capacity should be reached by the end of 2019. This concerns 200.000 tons of potatoes that are cut into chips. The largest customer of this is fast food chain McDonalds (650 restaurants). They only want to serve Russian fries in the country.
The Belaya Dacha factory has a long history. It would start in 2014 with the partners Farm Frites and the European Bank for Reconstruction and Development (EBRD). However, the sanctions against Russia threw a spanner in the works, after which both partners retreated withdrew.
State aid
LWM saw potential in the factory and joined the negotiating table. The Russian state agricultural program also made a contribution. The first potatoes could be processed at the beginning of 2018, according to schedule. The construction costs amount to 8,7 billion rubles (€115 million). According to the company, it is the first large-scale chip factory in Russia. Ivan Lebedev, Deputy Minister of Agriculture, officially opened the factory on April 25.
During the opening, Lebedev emphasized how important it is for Russia to be self-sufficient. With significant subsidies, it is possible to produce locally at a fair price. For the Lipetsk region, the number of jobs also plays a role; more than 200 Russians can work in the factory.
Growing in the Russian market
Bas Alblas, CEO of LWM, sees it as a unique opportunity for the company to grow in the Russian market. Belaya Dacha also mentions the knowledge and experience that LWM has in the production of fries.
The company's first and largest customer is McDonalds, but the partners hope that more fast food and retail chains will follow. The American fast food giant has been active in Russia for 30 years and has the ambition to switch completely to Russian fries this year. This factory helps with that. The main reason for this is the volatile ruble, with which imported Dutch and Polish fries must be paid.
Own cultivation
Belaya Dacha has a lot of agricultural land, with which it can meet 30% of its raw material needs. The potatoes come from the Tambov region, where it has built a new warehouse to store the necessary 60.000 tons. The remaining 140.000 tons are grown by arable farms in the region. Belaya Dacha and LWM work closely with the contract growers to increase quality and yield. In favorable cases it is now 50 tons per hectare.
The bottleneck for the Russian (chips) potato sector is seed potatoes. For this it still has to come to the Netherlands. McDonalds keeps the seed potato supply in its own hands, which allows it to manage quality. "In the past, there was no potato variety available that met our requirements," says Khamzat Khasbulatov, CEO of McDonald's Russia, told Reuters.