A new large potato processing enterprise will soon appear in Russia: in May 2021, McCain Foods Rus, the world's largest producer of French fries, began construction of a plant in the Tula Region. The launch of the lines is scheduled for late 2022 - early 2023. The planned processing capacity is 200-220 thousand tons of raw materials per year, the output of finished products is more than 100 thousand tons per year.
The implementation of such a large-scale project is undoubtedly an important event for the entire industry.
We talk with the General Director of McCain Foods Rus LLC Alexander Petrov and the agro director of the enterprise Georgy Sitnik about the tasks the Canadian company sets for its Russian plant, where it plans to buy raw materials and where to supply finished products.
“McCain has been choosing a site for the future plant for many years. Why did you end up in the Tula region?
Alexander Petrov: There were several selection criteria. First of all, we were worried about the issue of raw materials: it was important that within a radius of 500 km from the potential location of the plant there were many agricultural enterprises specializing in growing potatoes. And the Tula region, as you know, ranks second in Russia in terms of the gross harvest of potatoes.
Georgy Sitnik: I would add that in this region, potato production is constantly growing, the number of specialized plant growing enterprises is increasing, and this positive dynamics is achieved not only due to favorable climatic conditions for culture, but also thanks to the support from local authorities. This is also very valuable for us.
Alexander Petrov: When choosing a region, the availability of infrastructure (electricity, gas, water) available for new industries and the prospects for obtaining tax incentives were also of great importance. Since 2016, the Special Economic Zone "Uzlovaya" has been operating in the Tula Region, where we were offered all the necessary conditions. A huge advantage of this section is the convenient transport interchange (the intersection of the federal highway M-4 "Don" and the highway R-140).
Well, let's not forget that the Tula region is located in the center of Russia, not far from the capital - the main market for frozen French fries in the country at the moment.
- 2020 was a difficult year for French fries producers, many enterprises in the world reduced production volumes and even stopped conveyors for some time. How do you assess the situation now? How favorable is it for the launch of a new plant?
Alexander Petrov: According to our estimates, the market has already recovered to “dock-like” indicators and continues to grow. Nowadays fast food restaurants are developing very well - both in Russia and in the CIS countries, where we also plan to supply the plant's products.
- But in Russia there are already enterprises producing French fries. How ready is the market for additional volumes?
Alexander Petrov: Our enterprise is intended to replace the European product supplied by McCain to Russia with a domestic one, in full compliance with global quality standards. We are confident that the French fries that McCain will produce in the Tula Region will be in demand. The largest fast food chains operating in the country are our constant partners and welcome the opening of the Russian factory. We see potential for growth and are convinced that we will be able to quickly restore McCain's leading position in the Russian and CIS markets.
But if other players decide to increase production capacity, these will be their risks.
- For processing enterprises, the issues of raw materials (its quality, required volumes, regularity of supplies) are very important. McCain has a wealth of experience in this regard. How will the production of raw materials be organized in Russia? Which agricultural enterprises can become your suppliers?
Georgy Sitnik: While we are taking the first steps on this path, there is a lot of work ahead, which we conditionally divide into two areas: the production of raw materials directly and the production of seed.
I can say that the future plant has a formed pool of suppliers who will supply us with their potatoes this year. The circle of agricultural enterprises - our partners will expand.
Alexander Petrov: An important clarification: we plan to process the potatoes that we receive next year at the new plant, and starting from 2023 we will reach full production volumes.
Georgy Sitnik: I will indicate the parameters that are priority for us. We would like to work with companies with experience in the production of potatoes for processing and long-term storage facilities. Preference will be given to agricultural enterprises with irrigation capabilities. But most importantly, our future partners (for a company this is a very important word, we treat raw material suppliers exactly as partners with whom we will work together for a common result) should be open to gaining knowledge, interested in development and ready for long-term relationships.
- Do the area of the farm and its location matter?
Georgy Sitnik: Among our future suppliers there are both small farms (from 200 hectares) and rather large ones (about 2000 hectares). We place our demands not on the area, but on the quality of the products. As for geography, we are waiting for proposals from enterprises from the European part of Russia, where the main potato producers are concentrated.
- You mentioned the readiness to acquire knowledge and development. Will the raw material suppliers receive special training?
Georgy Sitnik: We are really going to pay great attention to training, agricultural support, assistance; our interaction with farmers will not be limited to the introduction of technological maps and control. The company's specialists are well aware of the importance of an integrated approach, taking into account agro-climatic conditions. We will share our knowledge and experience so that farmers can be proud of their harvest, and the plant, subsequently, of its products.
- Tell us about the seed production line of work. What varieties are you planning to grow? Where to buy seed material?
Alexander Petrov: We believe that the localization of all stages of seed production in Russia is the most correct approach, and we will consistently move in this direction.
Georgy Sitnik: The production of high-quality seed material is one of the key stages in organizing a sustainable raw material base for a plant under construction. As the saying goes: "Do not expect a good tribe from a bad seed."
We have established cooperation with a number of enterprises that are growing seeds for the company for the seasons of 2022-23.
McCain is working with a large package of varieties of European selection, some of them have already been registered in Russia, some are in the process of registration.
We also actively interact with domestic breeders, and we hope that in the future Russian breeding achievements will be presented on the fields of our partners and on the production line of our enterprise.
- Where do you plan to supply the finished products of the plant besides fast food restaurants?
Alexander Petrov: First of all, these are ordinary restaurants, hotels, HoReCa - the so-called Food Service segment. In addition, as now, our potatoes will be sold through retail chains. There is potential for the development of this area, but there are also certain constraining factors: French fries are still quite an expensive product, and it is difficult to expect an increase in demand in the context of a decrease in household income.
We consider the development of the export direction to be no less promising. At the same time, we consider not only the CIS countries, but also the states of the Middle East, for example, as potential buyers. While there are certainly many challenges to entering this market, it requires careful preparation and is likely to be smooth.
- Share information about the planned technical equipment of the plant. Is this standard equipment at the McCain plant? Or will there be some peculiarities?
Alexander Petrov: The plant will be equipped with the latest technology. This is the state-of-the-art equipment used in new / revamped McCain plants. And if we are talking about features: the emphasis will be on environmental friendliness. For example, the enterprise will install treatment facilities that will bring the water used in production to drinking quality.
The Russian plant will be included in the top five of the company's enterprises in terms of energy efficiency and minimization of negative impact on the environment.
- Does the company consider in the future the possibility of expanding this production, building other enterprises on the territory of Russia?
Alexander Petrov: The possibility of increasing the capacity is provided by the project. We also do not exclude the construction of other enterprises in Russia, but these are questions of the future, to which it will be possible to move on after the implementation of the tasks already set. Let's return to their discussion in three years.
The editorial staff of the Potato System magazine would like to thank the managers of McCain Foods Rus LLC for the interview and wish success to the new project!