French fries production in Russia will grow by 50% next year, market experts predict. If this expectation comes true, the country will almost certainly have too few ware potatoes to process. There is an opportunity for the Netherlands to fill this gap, provided the Russians suspend the import ban.
Russia has had strong ambitions when it comes to potato processing for several years. The country wants to be self-sufficient and play a more dominant role in global agricultural exports. Fries are no exception. In 2018, the first large-scale chip factory was opened in Lipetsk, about 400 kilometers south of Moscow. This concerns a Lamb Weston/Meijer factory (via a joint venture with Belaya Dacha Group) with a processing capacity of approximately 200.000 tons of potatoes.
Growth of domestic production
In recent years, investments in Russian chip production have continued. Last year, Lamb Weston/Meijer acquired a majority stake in the Lipetsk factory and invested €7,5 million to build the processing speed to screw up. Last June, the company announced it would invest a further €145 million to... more than twice as much can process potatoes. Also McCain and agricultural company ZHAK reported to produce fries on Russian soil in recent years. The latter would open its factory at the end of 2022.
In that light, it is not surprising that the Russians anticipate a 50% increase in French fries production next year. According to the Russian organization Union of potato and vegetables market participants, production this year will amount to 1 million tons of fries. This volume would grow to 2022 million tons in 1,5 and in 2026 even 3 million tons of fries would be produced in Russia. This was reported by the daily newspaper Kommersant.
The potato harvest is disappointing again
The big question is whether Russian potato growers can keep up with the expansion of production. According to the Ministry of Agriculture, there is sufficient anticipation and potato production is growing. She expects 2022 million tons of potatoes in 7,2. That yield was also predicted this year, based on an area of 470.000 hectares. Due to the drought, yield and grading are declining second year in a row. Market experts assume that this year's harvest will remain at 6,7 million tons. That is even slightly less than the 6,8 million tons in 2020.
The question remains whether the French fry factories in Russia will have sufficient raw materials available next year. Any shortages must be supplemented with consumption potatoes from abroad. If the Netherlands and other European countries want to benefit from this, the Russian import ban will first have to be lifted. Since 2014, there has been an import ban on a wide range of food products, including potatoes. The ban applies to all countries that have imposed or support sanctions against Russia. In addition to the European Union, this also includes the United States, Canada, Australia and Ukraine.
French fries supply from Europe is declining
Seed potatoes are exempt from the import ban, just like fries. According to customs data, before the corona crisis, the Russians imported almost 100.000 tons of processed potatoes from abroad, especially from the Netherlands. More than 91.000 tons came from the European Union. In 2020, the European export volume dropped to more than 74.000 tons. This year, exports picked up again. In August (the most recent figures) the volume was slightly below that of 2019.
If the growth of our own chip production continues according to forecasts, chip exports from the European Union may come under further pressure. This is related to consumption growth in Russia. The sale of fries is seen as an important growth market in Russia. Retail sales are said to have grown by 10% last year. Next year - when the impact of the corona crisis diminishes - it will become clear how the cards have been shuffled.