The period from autumn 2021 to early summer 2022 went down in the history of the industry as the time of expensive potatoes, it became one of the most successful for table food producers and very difficult for processors. Processing market participants assess the current season as calmer, but by no means problem-free.
The lion's share of the difficulties was provided by a rainy autumn, which greatly extended the harvesting time in most regions. “I have been working in agriculture for a long time, but I don’t remember another such year when potatoes were harvested until the end of November,” says Alexander Shatalov, general director of the Melensky Potato farm in Bryansk, “despite all the efforts made, some of the products remained in the field, this is 181 ha.
Cleaning during the cold period could not but affect the quality of products. “We completed the work at a temperature of +1°C, and not at +10°C, as recommended,” Alexander Shatalov continues, “as a result, some of the products (chips varieties) have an excess of sugar levels. Now the potatoes are in storage, gradually warming up, the sugar content is decreasing, but the process is going very slowly.”
In the Tambov farm "Vesta", the potatoes were completely harvested, but the quality of individual batches suffered. “It so happened that we dug the varieties for processing this year last,” explains Viktor Solenkov, deputy director of the enterprise, “the harvesting was completed right under the snow, and 5-8 percent of the volume was frozen. If we were talking about ware potatoes, we would not touch this site: such a product cannot be stored. But they took it from us for processing, albeit with a slight decrease in the purchase price, and we are very grateful to the customer plant for this.”
Processing enterprises complain about the quality of raw materials, but are forced to adapt to the circumstances.
“In the Ryazan region, where our enterprise is located, a lot of potatoes went under the snow, and what we were able to harvest is really not ideal,” Yury Mironov, director of the Kasimov potato processing plant, shares information, “and we have to reduce the requirements for raw materials. For the production of French fries, we accept potatoes with high sugar values, but do not put them into production, but send them to storage. After a while, the sugars return to normal, and we take the potatoes to work.”
Chips factory "Lorenz Snack-World Production Kirishi" is also maximally loyal to the suppliers of raw materials. “Such a year, we have to take what the market offers,” says Sergey Kokovin, the manager for the purchase and supply of potatoes, “of course, we would like better quality. The main problem of raw materials coming to us is not so much sugar as mechanics. Lots of defective potatoes. The reason is clear - late harvesting: high-starchy chips varieties are not resistant to mechanical damage, especially when work is done at low temperatures.
And yet, despite the circumstances, processors believe that the season is going well. “Now we have enough offers from suppliers,” Sergey Kokovin notes, “raw materials are brought from the Leningrad, Novgorod, Tver, Ivanovo, Vladimir, Bryansk regions (the plant is located in the Leningrad region - from the editor.)».
Another important plus of the season is the absence of contradictions between processors and farmers over raw material prices. This year, against the background of the absence of a shortage of potatoes and the relatively low cost of a food product, they naturally fell. For example, the Kasimov Potato Processing Plant has halved its purchase prices compared to last year. A number of large enterprises have switched to dynamic pricing, tying the cost of raw materials to the market.
“Last season, many farmers refused to work with processors due to tough contract prices,” Viktor Solenkov comments, “as a result, the plant we work with changed the terms of cooperation: the cost of raw materials now directly depends on the level of prices for a table product in the wholesale sector (-20% of the market). This season, all the promises were fulfilled clearly. The price turned out to be very favorable, and the customer provided his own transport, the potatoes were taken without sorting, “with dirt” (the weight of the earth was later subtracted, of course), and dirt this year was up to 20% of the crop.”
“The supply contracts were concluded last spring, they provide for the possibility of adjusting the cost depending on market conditions,” Alexander Shatalov adds, “prices are normal, especially if we take into account the conditions: we ship potatoes in bulk, without packaging, without sorting by caliber and quality. Given this, it is better to work with processors than with retail chains, there are definitely fewer problems.”
It is still difficult to predict how events in the industry will develop before the start of the supply of fresh crops. Experts talk about the possibility of implementing different scenarios.
“The potato harvest in 2022 was not bad,” Yuri Mironov expresses his opinion, “but given that not everything was harvested, the possibility of a shortage of raw materials should not be ruled out. On the other hand, a year ago everyone was afraid that there would not be enough potatoes until the summer, but by the end of the season we were offered so many potatoes that we were able to choose the quality and reduce the purchase prices.”
Potato suppliers are also not yet ready for accurate forecasts.
“We try to adhere to contracts, deviations from the volumes indicated in the contracts, as a rule, do not exceed 10%,” says Alexander Shatalov. “But this year everything will depend on whether the potatoes warm up. If the tubers come to the right stage in terms of sugar content, there should be no problems. Our main customer, a major chip manufacturer, is aware of this situation.”
It is even more difficult to make plans for the longer term. However, the industry continues to evolve. In Russia, new enterprises are being built and production already well known in the market is expanding. In particular, the largest domestic plant for the production of french fries "Vee Fry" (Lipetsk region) does not abandon the previously outlined plans. “Commissioning of the new capacities of the enterprise is expected approximately in a year,” says Sergey Marchenko, Director for Development of the plant. “The second production line will increase the output of finished products to 225 tons per year and the total volume of potato processing to 000 tons per year.”
At the same time, Sergey Marchenko calls the lack of seed potatoes for the production of raw materials and the shortage of irrigated areas in Russian farms the main obstacles to a further increase in the volume of potato processing at the moment.
Are farmers ready to expand the production of varieties for processing? Objectively, this is not an easy task even for professionals.
“Demand for raw materials from processors is still there,” says Alexander Shatalov, “and we cannot satisfy it yet, although our farm has extensive experience in growing the corresponding varieties. We conclude a contract for one volume, but in fact it is rarely possible to fulfill it completely: either a crop failure, or a field remains unharvested, or something else.”
But the attention to this sector on the part of farmers, according to experts, is increasing - primarily due to guaranteed profitability.
“After this year, according to my observations, many farms are again very interested in processing,” Viktor Solenkov believes. – This is a promising direction. There are some technological issues that should be taken into account (for example, the storage temperature of potatoes for processing is higher and it must be treated with growth inhibitors since November), but everything is solvable. The main thing is that by growing potatoes under a contract, the manufacturer receives an almost planned profitability. If our business was just entering the market and we didn’t have a customer base for table potatoes, we would mainly focus on the production of French fries.”
An additional incentive for expanding programs for the production of potatoes for processing, the agricultural producer is convinced, could be the introduction of new highly productive varieties.
“Now, on the same plot of the field, our table variety yields 60 t/ha, and the variety for fries - about 50 t/ha, with the same cultivation technology,” Viktor Solenkov regrets, “it turns out that expanding the area under potatoes for processing is not very profitable for us. We have tried planting new varieties for French fries, and one of them has shown excellent results, but so far the customer does not have a seed program for it.”
Whether the desired varieties will appear on our market and in what time frame this will happen in the current conditions are questions to which we have no answers.