March 2021 marks the 10th anniversary of the founding of the Union of Potato and Vegetable Market Participants (better known as the Potato Union). About how the work began, what issues the Union is solving now and what goals it strives for, we talk with Sergey Lupekhin, Chairman of the Potato Union.
The Potato Union was established in March 2011. It was a difficult time for potato growers: the hot and lean 2010 has just ended, the import of potatoes into the country that season reached 1,5 million tons. Why did an industry organization appear at this very moment? A lot of problems accumulated, and they urgently needed to be solved?
- To begin with, at that time in Russia there was already a branch organization of potato growers, even if it did not have an official status - "Potato Club". At the meetings of the club, the heads of the leading potato-growing companies discussed topical issues, but with all the requests and suggestions that needed to be brought to the top, each enterprise was forced to apply to the federal authorities on their own.
At this time, under the Ministry of Agriculture of the Russian Federation, a Public Council was formed from among the branch unions. Potato and vegetable growers did not have such an official association. The leadership of the Ministry of Agriculture suggested starting work on the creation of an industry union. The idea seemed promising to market participants: literally in two or three months, the composition of founders was formed, based on members of the Potato Club, statutory documents were prepared, and on March 29, 2011, a constituent meeting of the Union of Potato and Vegetable Market Participants was held in the meeting room of the board of the Ministry of Agriculture of Russia.
The main task of the Potato Union is lobbying the interests of market participants, assistance in solving current problems at the federal and regional levels, creating conditions for the favorable development of the potato industry as a whole.
What is it expressed in? Our experts, for example, are actively involved in the development of proposals for subsidizing the most significant areas of development of the agro-industrial complex, defend the interests of the industry, promptly responding to current challenges. For example, the beginning of this year was marked by an increase in prices for mineral fertilizers, and the Union was one of the first to draw attention to this problem, became a member of the Working Group under the Ministry of Agriculture of the Russian Federation. We hope that prices will stabilize.
Here is another recent example: in January of this year, a draft decree of the Russian Government on increasing the rates of utilization fee for self-propelled vehicles and foreign-made special equipment was promulgated. According to this document, the amount of the fee should increase, depending on the type of equipment, two to three times. Thus, about 15-20% more can be added to the purchase price of self-propelled vehicles.
We believe that such initiatives should be proclaimed and calculated in advance. For what purpose is this being done right now? It is no secret that at the moment the recycling mechanism has not been worked out, the equipment that has served its time most often rotted near the fence: no one buys it, does not take it or recycle it, and at best it just goes for scrap.
What systemic problems is the Union involved in discussing?
Realizing the importance of the development of domestic breeding, the Potato Union took the most direct part in the formation of the state subprogram for the development of potato breeding and seed production in Russia. During the discussion of the document, it was possible to "shift the focus" of the tasks of the subprogram from the target indicators of scientific organizations, which were supposed to become the center of all their activities, to the interests of business. It is the business that today sets tasks for breeders, seed growers, developers of biological remedies participating in the implementation of the program. This is seen as a guarantee that all products received will be in demand on the market.
Today, in a number of regions of the country, chains have already been formed between scientific breeding organizations and seed companies. And in the near future, potato farms will be able to receive compensation for the purchase of seeds of high reproduction categories produced within the framework of this direction of state support in the amount of at least 70% of the costs incurred.
The Potato Union does a lot to organize the supply of potato seed from Europe and other countries of the world.
Russian companies also need seed potatoes of foreign breeding, foreign breeding and seed-growing companies are interested in the Russian market, but the organization of supplies does not become easier over the years.
The Rosselkhoznadzor, which protects our territory from the possible import of pests and diseases, is ready to accommodate only those producers whose countries were able to provide full information that their potato growing zones are free from harmful quarantine objects. The Potato Union takes part in the discussion of the interaction algorithm of all parties in order to provide agricultural producers with seed material.
An important area of activity of the Potato Union was the establishment of links between potato producers and retail chains. Can we say that you have achieved success in this?
- The Union has been building a dialogue with retail for many years, and we believe that most of the issues can be resolved constructively, for the general benefit.
The Potato Union regularly organizes meetings of representatives of retail chains with producers of potatoes and vegetables within the framework of the Golden Autumn exhibition and at the production sites of allied farms, during which the parties can exchange wishes and proposals, and most importantly - contacts.
These events are one of the most massive and demanded in terms of promoting products to the consumer.
Given the current situation, online meetings have become traditional, at which problematic issues are frankly and constructively discussed, information is exchanged with suppliers from all over the country. Such events allow both retail and producers of fruits and vegetables to react quickly and make decisions.
Will the issue of economy-class potatoes, which all the media literally shout about since the beginning of the year, will it also be possible to resolve?
- The story with the supply of potatoes to retail chains this year really turned out to be loud. Unexpectedly for us, because there was nothing revolutionary in the initiative of the Potato Union: we offered retail chains a conditionally new commodity item - uncalibrated potatoes in nets from 2,5 to 5 kg.
High-quality (not rotten, not damaged, without signs of greening) potatoes were to be packed into the nets, slightly smaller than usual (35 mm caliber, not 55 mm). As a result, everyone would get what they want: chains - a cheaper product in assortment, buyers - freedom of choice, and manufacturers - the opportunity to sell products that previously could not get into stores, since they did not meet retail acceptance standards.
The initiative was supported by the Ministry of Agriculture of Russia, but some media received ambiguous views, we had to give a lot of comments, explain that the terminology of the product "economy class" has nothing to do with substandard. It is surprising that this concept has received such a negative connotation, because flying in an airplane in "economy class" does not bother anyone.
On the other hand, it should be noted that the number of mentions of the Potato Soyuz brand and the number of citations of statements by our experts on the Internet have grown tenfold since the end of January, which attracted great attention to the industry problem of the current season.
Over the past 10 years, there have been more serious events that have left their mark on the history of the industry. Which of them would you name the most important?
- 10 years is not such a long historical period to mark significant milestones. The biggest change for us is the growth in industry profitability. The financial position of professional enterprises is strengthening, farmers have a desire to expand their activities, increase exports, invest in the development of breeding and seed production, in the construction of facilities for processing potatoes and vegetables. Vivid examples of this are the Agrofirm KRiMM, the agricultural holding "Dmitrovskie vegetables", the farms of Avetisyan and Putsko.
And the ending season, according to the Potato Union, can be considered profitable in the industry as a whole?
- While a significant part of the harvest is still in the warehouses of producers. If the price action continues through the end of the season, the industry will make good profits. But at the moment, this is just speculation. I think many remember the 2017/18 season well, when retail chains contracted a large volume of Egyptian potatoes since December, and access to the shelf was artificially closed for Russian products, despite the fact that prices for them were significantly lower than for imported ones. Many domestic farmers then suffered huge losses. Now Egyptian potatoes are also slowly starting to appear in the assortment of stores, and we are monitoring the development of the situation, because the likelihood of a repetition of the scenario, albeit on the wrong scale, exists.
Recently, the Potato Union has become a regular participant in gastro festivals, culinary shows, etc. In Russia, has the time already come when it is necessary to popularize a product that is called "second bread"?
- It’s a pity that journalists don’t do this at all. Potatoes are a unique, interesting product, you can talk about it endlessly, and this information is useful for the health of readers. For example, do you know that young potatoes must be cooked (best boiled or baked) and eaten with the peel, because it contains dietary fiber, which has a positive effect on digestion, and a large amount of vitamin C, which reduces cravings for sweets?
Potatoes do not lose popularity in Russia, but the shows help to look at it from a new perspective, to understand that it is not only a traditional ingredient of the usual national dishes (although we are not tired of them at all, the Herring under a Fur Coat Festival is a confirmation of this), not an element historical heritage, and a modern product that ideally fits into the concept of healthy eating, and at the same time is quite capable of decorating both a festive table (and even amaze with exoticism: remember that varieties with colored peel and pulp are quite available on the market), and a daily menu.
Let's imagine that another 10 years have passed. What results should the industry achieve by this point?
- The first item on the list of achievements should be: Russia is fully self-sufficient in potato seed; the whole cycle of its production, including popular varieties of foreign selection, is completely localized at the highest professional level.
On the market, there is free competition for varieties of both Russian and foreign selection, farmers should freely choose what is more interesting to them, focusing on the commercial qualities of the product, disease resistance, yield, etc.
In addition, I think that in 10 years, new enterprises for the production of potato starch, which are in demand in a wide range of domestic industries, will be launched in the country.
Most likely, the export volumes of seed and table potatoes will be significantly increased. There are niches for this. The key markets for us are the countries of Central Asia and the Caucasus, where domestic production will never cover the needs due to climatic conditions.
We also expect that the incomes of farms from growing potatoes will significantly translate into the development of rural infrastructure, and farmers will breathe new life into rural areas.
Well, the consumption of potatoes and their by-products per capita, we hope, will grow one and a half times. Once I came across a wonderful poster of the Soviet era with the slogan: "You need more vegetables for cabbage soup and borscht!", I think it is quite relevant today, and will also be in 10 and 50 years.
And I would like to emphasize that the Potato Union is, first of all, allies, its participants. Thanks to our joint work, the industry is becoming more consolidated, the authority of the Union and its members is growing. Every year the voice of the industry sounds more and more confident. I thank everyone who trusts Potato Union.