Selling a crop at a good price is no less difficult than growing it. Perhaps even more, because there are no universal ready-made schemes in this matter. Confirmation of this is the end of the 2017/18 season, the last months of which were not at all as expected.
FROM THE HISTORY OF EVENTS
Autumn 2017 brought great hopes to potato growers. The season was challenging and the harvest was less than in previous record years. The situation was conducive to a long-awaited rise in product prices. In addition, analysts, journalists and officials “warmed up” the situation (recall the report of the Accounts Chamber, according to which the self-sufficiency of the Russian Federation in potatoes in 2017 was 90,7%, with the threshold value established by the Doctrine of Food Security of the Russian Federation at least 95%). From all the stands sounded: "Quality potatoes are in short supply, until the end of the season it will not be enough, prices will grow strongly ...". Prices really grew, at the start of spring there was even a period when it was almost impossible to agree on the supply of a large batch, manufacturers were waiting for more and more advantageous offers.
And then a new crop of potatoes from Egypt poured into Russia. It poured in: in February, 30 tons of products were purchased (in 545, at the same time - 2017 tons, 765 times less!), In March the volume of purchases exceeded 40 thousand tons, in April
another 117 tons were set foot. This amount of imported product in the spring - in fact, at the height of domestic potato sales - was not yet available in Russia.
Egyptian potatoes occupied all the shelves in stores, and large retail chains seriously limited (in fact, canceled) purchases of domestic potatoes of the "economy" (unwashed) class, arguing their decision with the desire to provide customers with better (read: imported) goods.
At the same time, as noted by the Executive Director of the Potato Union of the Russian Federation Alexei Krasilnikov, the networks could not cope with the volumes of supplies and, fulfilling their contractual obligations to Egyptian suppliers, were forced to offer part of the potatoes for sale to Russian potato growers. Farms packed the product on their equipment and sent for processing and sale through their own channels.
The situation was not even mitigated by the intervention of the Rosselkhoznadzor, which suspended potatoes from eight regions of Egypt since mid-March in connection with the identification of the bacterium Pseudomonas (Ralstonia) solanacearum (Smith) Yabuuchi et al. The ban was lifted only in early June.
By April, the market was collapsed, wholesale prices fell by 4050%, sales terms extended by one and a half to two months. Dozens of Russian households could not realize a significant part of their harvest. If you study the data on the potato residues in the regions at the end of May and June, the numbers are amazing. About 130,5 thousand tons of potatoes turned out to be unclaimed by June.
The areas of “developed potato growing” suffered more than others: those who grew a better product were provided with modern vegetable stores to a greater extent. Farms were in the red, many did not have enough funds to purchase the necessary new season, part of the unsold potato was used as seed.
Trading networks also did not get the desired profit. Due to the fact that large volumes of Russian potatoes were present on the market, import prices had already been reduced in February from the initial 60 cents / kg to 33-36 cents. At this level, prices remained until the end of the supply.
Only the final buyer partially won, although in fact people lost the right to choose the goods: it was impossible to buy cheap Russian-made potatoes in stores.
The situation was loudly publicized in the media.
Unfortunately, the editors were not able to get comments on this topic from the representatives of the retail chains, so we can only guess how and why the decision was made on the bulk purchase of imported potatoes.
It is only obvious that the supply agreements were concluded no later than December 2017: the first consignments of Egyptian potatoes arrived on the shelves as early as January (and usually early potatoes were imported from mid-February).
Consequently, an appeal to foreign suppliers was not made because of really identified problems with the quality of the domestic product.
It is likely that an unusually low price for Egyptian potatoes acted as a catalyst for the process (there were rumors in the market that initially large quantities were supposed to be sent to Germany, but the purchase did not take place, and the goods were offered to Russian buyers at a significant discount).
All this could be attributed to a coincidence. But the crisis in which farmers fell at the end of last season has deeper reasons.
To begin with, the logical chain “Russian potatoes in the spring = low quality product” has become irrelevant today. Of course, there have been, are, and probably will always be examples of attempts to sell rotten goods on the market. But in general, Russian farms (most of those who work with networks) are able to store potatoes.
Let us give a vivid example: on August 16, at the Agroforum "Potatoes and Vegetables", organized by the agricultural holding "Dmitrovskie Vegetables" with the support of the Potato Union of the Russian Federation, a Contact Exchange was held, which was attended by representatives of many large retail chains. During this event, the meeting participants were asked to determine "at a glance" in which of the three containers there are imported potatoes of the 2018 harvest, and in which - domestic, grown in 2017 and 2018, respectively. Experts identified the imported product by the specific shape of the tubers. But about the domestic one, a discussion arose: the presentation of the potatoes in both containers was impeccable, the "old" was not inferior in quality to the young, and this was in mid-August!
Let us also recall that the provision of storage facilities in the country as early as 2016 reached 74%. By the way, according to experts, the situation on the potato market by the spring of 2018 is in many ways a direct consequence of the successful implementation of the state program to support the construction and reconstruction of vegetable and potato storage facilities. Russian companies took an active part in it, wishing to be able to sell potatoes in the most marginal period.
Today in the country a sufficient number of enterprises can supply potatoes of excellent quality until the end of the summer, but it turned out that no one needs it. There is no need to talk about the quick payback of very expensive storage projects, the prompt return of credit funds taking into account the results of the season.
As the president of the Dmitrovsky Ovoshchi agroholding, Sergey Filippov, notes, Russian potato producers (with state support) are ready in the coming years to reach the level at which the country could do without purchasing early potatoes.
On the other hand, in agriculture the influence of weather factors cannot be completely ruled out. According to Filippov, agricultural enterprises until the completion of harvesting do not have information about how much they will receive the products and what quality. With this in mind, it is difficult to guarantee something to retail chains.
and what to do?
From the point of view of experts, the parties need to learn to negotiate. According to Svetlana Belova, deputy director of the National Fruit and Vegetable Union, it is precisely the misunderstanding that has developed between agricultural producers and retail chains, as well as the lack of reliable information on the market that led to such dire consequences.
Agricultural enterprises should become more open, and certain steps have already been taken in this direction. At the moment, the Ministry of Agriculture of the Russian Federation, together with industry unions, is developing an open platform format on which all information on the quantity and quality of available agricultural products in specific farms, the desired selling price, and the possible frequency of shipments will be consolidated. This data will be designed to help networks build procurement policies that take into account the interests of all parties. It is hard to say what will come of this in practice. The mechanism has not yet been thoroughly thought out and raises many questions.
Aleksey Krasilnikov emphasizes that the information that is proposed to be published is a trade secret, and not every farm is ready for such publicity. But the Ministry of Agriculture of the Russian Federation is developing options for algorithms of interest of agricultural producers in the issuance of this information.
However, agricultural producers themselves express doubts that retail chains at this stage are really ready to see them as equal partners, listen to their opinion and make any concessions. Indirectly, their doubts are confirmed by the chains themselves: for example, at the end of August, the Russian multi-format grocery company X5 Retail Group, which includes such chains as Pyaterochka, Perekrestok and Karusel, informed the media about its plans to increase the volume of imports from 3% to 10%. According to Igor Shekhterman, CEO of X5, "direct imports will improve purchasing conditions, improve the quality of goods and reduce the risk of supply disruptions."
A search is underway for other ways of establishing cooperation; in September, several working meetings of representatives of the Ministry of Agriculture, the Federal Antimonopoly Service, industrial Unions and trade networks on which this topic will be raised should be held.
At the moment, it can be noted that a discussion of the situation and its consequences is unlikely to lead to severe restrictions on imports. Farmers themselves are not interested in this either. As Sergey Filippov explains, "any ban is no longer a market."
But at the same time, industry representatives hope that retail chains will not repeat the experience of last season, and rely on the state to constantly monitor the situation. According to Aleksey Krasilnikov, the practice when a distribution network acts as an importer of products leads to a narrowing of market relations and should be controlled by the antimonopoly service.
As for recommendations to specific manufacturers, it is difficult to call them unexpected. The position of the Potato Union on this issue has remained unchanged for many years: agricultural enterprises should pay maximum attention to the quality of the grown product and consider the possibility of equipping farms with lines for pre-sale preparation and processing of potatoes, since the future of the industry undoubtedly belongs to these areas.
Moreover, the choice of a business strategy for each specific year, as before, remains with the enterprise itself.