There have not been such prices for potatoes in Russia for a long time. So long ago that the topic of the rise in price of the product has remained hot for many media since autumn. Although, judging objectively, the increase in cost did not make potatoes inaccessible and even just an expensive product. But many manufacturers for the first time, at least in five years, managed to breathe a little more freely. Unfortunately, not everyone.
Plus due to the minus
As noted by Sergei Filippov, president of the Moscow agricultural holding Dmitrovskiye Ogoshchi, directly for his enterprise 2020 was not a potato year: “There were regions in the country that were severely affected by the drought, but we were flooded. The potato yield shortfall in our company was from 40 to 50% of the planned one ”.
In general, in the Russian Federation (in the industrial sector), according to official data, 6,6 million tons of potatoes were harvested, which is almost a million tons less than a year earlier.
Weather disasters had a great impact not only on the quantity, but also on the size of the product: in many farms, a significant part of the harvest was potatoes of fraction 35+ (too small to be sold through trade networks).
Economy class potatoes
The problem became apparent back in September. Large agricultural enterprises (and for some of them the volume of small potatoes was up to 50% of the harvest) faced the threat of non-fulfillment of contracts and tried to find a solution: they offered retailers - in order to avoid a shortage of potatoes on the shelves - to reduce the requirements for this parameter, referring to the current GOST for food potatoes, which indicates that the minimum size of tubers suitable for sale for round varieties is 35 mm, for oval varieties - 30 mm. Agricultural producers wanted to supply uncalibrated potatoes (including small ones) to stores in 2,5 kg nets and were ready to make concessions in the price of these products.
By December, when the issue of prices for significant products was already announced at the government level, the Potato Union submitted this proposal for discussion to the Ministry of Agriculture, and the department supported the initiative. True, a general decision was never made.
“Our company managed to agree on the supply of 45+ caliber potatoes with some chains, and 50+ with others,” explains Sergey Filippov, “but these are private, point-to-point agreements that do not apply to the industry.”
“On the other hand,” adds the President of the Dmitrovskie Ogoshchi Group of Companies, “now it is not so relevant, we do not see large volumes of 35 ... 45 + products on the market”.
As a result, small potatoes were partially sold through other channels, bypassing retail chains, partially utilized, and the amount of the loss to producers had to add to the total production costs. Although without them, the cost of potatoes was rather big.
fair price
In mid-February, when this material was being prepared, the wholesale price of potatoes (depending on the region and the quality of the product) averaged 15 to 22 rubles / kg. This is a high level, if we remember that in the last two years the bulk of consignments went at 6-8 rubles / kg. “A random person may get the feeling that agricultural producers are raking money with a shovel this year,” comments Vladimir Denisov, general director of the Samara company “Scorpio”, “in fact, until this year, we suffered big losses for several years in a row. I do not even exclude that the rise in prices for potatoes this year is the result of the potato growers overflowing with patience: at some point, people decided that they needed to make a profit or completely abandon the production of this crop. "
“A fair wholesale price for potatoes starts from 12 rubles / kg,” continues Vladimir Denisov, “and if we are talking about a product that meets the network requirements (caliber 55+), then 15 rubles / kg is not enough, the farm has , as a rule, no more than 40%, the rest has to be sent to waste. Here is 20 rubles / kg - this is the price at which it is worth dealing with potatoes. "
A similar opinion is shared by the head of the Bryansk potato-growing enterprise (KFH Dovgalev M.M.) Mikhail Dovgalev. He notes that the cost of potatoes on his farm by the end of winter is 15-16 rubles / kg (taking into account the monthly increasing storage costs), so the average selling price (22 rubles / kg) cannot be attributed to unjustifiably high.
Will there be a profit?
It is too early to summarize the season, and yet, assuming that prices continue to rise throughout the spring, many potato growers will benefit from good income. Or just an opportunity to "patch holes in the budget"?
Vladimir Denisov believes that it is clearly premature to talk about the high marginality of the industry: “If we are discussing the financial results in the field of potato growing in recent years, then four out of five years for many were a failure. Potato prices were low, and farms had to keep working, they had to invest in seeds, plant protection products, spare parts. Moreover, the volume of these expenses increased every year, because the cost of "consumables" directly depends on the exchange rate. We survived through loans, and today the level of debt burden on agricultural enterprises is very high. "
The success of this year, according to Denisov, will allow the agrarians only to soften the situation a little, "to get off the knife a little bit."
Viktor Solenkov, deputy general director of the Tambov farm Vesta, looks at the situation a little more optimistically: “Of course, the profitability of vegetable growing in recent years has not been very high. For a long time, we could only afford to maintain the operation of the farm, but in years like this, we can start renewing the fleet of equipment, building storage facilities. "
However, much can still change. “We are within the framework of the capitalist system,” sums up Viktor Solenkov, “And retail chains have the greatest influence on the market. If they buy a large volume of imported potatoes, the price will collapse and no one will be able to help us. "
And reflections on the future immediately turn into a discussion of the prospects for the new season, which causes great concern for everyone.
On the eve of the new season
“The sentiments of this year are alarming,” says Viktor Solenkov, “we note the growing demand for seeds on the market, and it seems that the number of potato producers will increase dramatically in the near future. There are many people who, focusing on the current prices, will say: "Oh, why don't I know how to grow potatoes?"
“Last year,” he continues, “in our region, the area under potatoes decreased by 34%, the weather was far from ideal, plus“ dry ”harvesting. As a result, there is an obvious shortage of potatoes in the region and purchase prices - 15-20 rubles / kg. On the one hand, they make us very happy, on the other hand, they attract new players to the market. If in the coming season the weather conditions turn out to be a little more favorable, we will again face the problem of overproduction. "
Sergei Filippov also believes that the area for potatoes in the new season, at least, will not decrease: “Some producers and regions have made good money this year and will not reduce plantings. Those who have not earned, also do not plan to reduce production volumes. "
“It has long been known that if potatoes are in price this year, you shouldn't rely on them next year,” concludes Vladimir Denisov. - We have already passed this several times. People rush in one direction in the hope of a quick profit, and then cool off and leave the market. It is necessary to work systematically, to grow six-seven-eight types of products, of which half will always be a good price, and the second will be low. In this way, the agricultural enterprise will be able to maintain a balance ”.
But other ways are possible to strengthen the stability of the economy: for example, the production of raw materials for processing. Viktor Solenkov considers this direction to be very promising: “We have been growing onions for Belaya Dacha Trading for five years now, the prices have been the same all this time, and this suits us. Of course, over time, profitability drops a little, but we clearly understand what we will get in the end. If grown according to modern technology, on irrigation, the costs do not vary much, and we are insured against collapses in the market. Not so long ago, they began to experiment with growing potatoes for processing on fries, and also quite successfully. Yes, this season we supplied the processor with a product at a lower price than it was on the market. But in 2019, potatoes were sold “from the field” at 9-10 rubles / kg (taking into account the premium for quality). It is profitable for us to carry out such work, but also because our farm is located close to the customer's enterprise, and we have irrigation ”.
Let's not forget about the need to work to improve the quality of the products grown. Although in this matter, not everything depends on the manufacturer. As Sergei Filippov notes, potato growers face two problems today. First, there is a shortage of good quality seeds. Second: the continuing rise in prices for fertilizers, plant protection products, equipment and everything that is necessary for the production of products - no one is trying to regulate this process, which cannot be said about the prices of potatoes.
Whether the producers have enough resources and opportunities to grow the product in full accordance with the production technology, the result of the new season will show.