Russia wants to be self-sufficient and play a more dominant role in global agricultural exports. The country does not hide that ambition. The processing of potatoes is also part of the growth plans.
The Russian government has invested heavily in agricultural growth in recent years. The result is that the country is now virtually self-sufficient. "Now the most important task is to further increase the export potential of agricultural products," newly appointed Prime Minister Mikhail Mishustin recently emphasized. According to the head of the Russian government, this applies not only to grain, but also to other crops and meat products.
Potato processing substandard
In that light, market analysts' prediction that potato processing in Russia will grow rapidly does not come as a surprise. The Russians regularly complain that the processing of potatoes in their own country is far below standard. That could change quickly in the coming years. Just if you look at the developments at the largest potato processor in the country Frito Lay, part of the American PepsiCo.
Frito Lay processes 360.000 tons of potatoes in Russia every year, mainly into chips. This started almost 20 years ago with a production of 4.000 tons in the Moscow region. This has now been scaled up to 210.000 tons of potatoes per year. In addition, Pepsico has had a factory in southern Russia (Azov) since 2017 and there are construction plans for a third factory in Nowsibirsk. Including to supply Siberia and Kazakhstan.
French fries production is growing
French fries production in Russia only took off in 2018. The joint venture Belaya Dacha Group and Lamb Weston/Meijer then opened the first large-scale factory in Lipetsk, about 400 kilometers south of Moscow. Last year, 200.000 tons of potatoes should have been processed here and there are already plans to expand the factory. The company has the ambition to make Russia independent of French fries imports.
There is also an export target. McDonalds is one of the chains supplied by Belaya Dacha Group and Lamb Weston/Meijer. The production of potato flakes and peeled potato products in Russia is also growing. Maxim Gorky and CRIMM are the main players here.
Less export from EU
For the EU-5 countries, Russia is mainly important for the export of seed potatoes and chips. The Netherlands is the main supplier of fries in Russia. In 2018-2019, Russia imported a total of 100.500 tons of fries. That was already one Daling of 20% and given the ambitions with our own potato softening, chip exports to Russia will come under further pressure.