Experts of the Expert and Analytical Center for Agribusiness "AB-Center" have prepared another marketing research possiysky potato market... Below are some excerpts from the study.
The Russian potato market in the current and forecast period is characterized by:
— Reduction in the size of potato cultivation areas in 2020 and 2021... In 2019, the area was 305,3 thousand hectares, in 2020 they decreased to 282,7 thousand hectares. In 2021, it was expected that, given the high level of prices for potatoes, the acreage would slightly expand in relation to 2020. In fact, they, largely due to the late onset of spring, decreased and amounted to 274,0 thousand hectares. This is the lowest rate since 2008.
— A decrease in the volume of potato harvests in 2020 and 2021. In 2019, the potato harvest amounted to 7 thousand tons, in 564,9 it decreased to 2020 thousand tons, in 6, according to AB-Center, is at around 811,1 thousand tons. The decrease in harvest volumes in 2021 occurred not only due to a reduction in acreage, but also due to a decrease in yield. According to market participants, the quality of the crop itself has somewhat deteriorated.
— Relatively low level of regional concentration of production... Potatoes are cultivated on an industrial basis in almost all regions of the country. The TOP-5 regions (2020) account for 37,3% of all collections, the TOP-10 regions - 51,9%, and the TOP-20 - 68,7%. Among the key growing regions are the Bryansk, Tula, Nizhny Novgorod, Moscow, Sverdlovsk, Tyumen regions. Astrakhan, Rostov regions, Krasnodar and Stavropol regions, and the Kabardino-Balkarian Republic are leading in the supply of early potatoes on the market.
In 20 regions of the Russian Federation, the volume of industrial potatoes harvested exceeds the mark of 100 thousand tons, in the 21 region the indicators are at marks from 50 to 99 thousand tons, in 22 regions - from 10 to 49 thousand tons. In the rest of the growing regions (17 regions), production is at levels not exceeding 10 thousand tons.
In 30 regions of Russia, the production of industrially grown potatoes exceeds the annual consumption volume, 52 regions produce potatoes in volumes that are lower than their regional consumption level.
— Restoration of import supplies of potatoes to Russia... In 2020, the import of potatoes to the Russian Federation increased in relation to 2019 by 10,4% - up to 392,7 thousand tons. In January-August 2021, compared to the same period in 2020, supplies more than doubled and amounted to 2 thousand tons.
It is expected that by the end of 2021, imports will exceed 600 thousand tons. In 2022, supplies may significantly exceed the volumes that were observed in 2017-2018. (780-845 thousand tons) and approach the values of 1 million tons.
Import deliveries are formed mainly by Egypt, Belarus, Azerbaijan, Pakistan, Iran and China. Also, in relatively large volumes, potatoes are supplied to the Russian Federation from Georgia, Israel, Turkey and Serbia.
— Growth in potato exports from Russia in 2019-2020... In 2019, deliveries, in relation to 2018, increased by 96,2% to 292,6 thousand tons. In 2020, compared to 2019, they increased by another 21,6% and reached 355,9 thousand tons. The increase in potato exports was associated with a relatively low level of prices over the period under review.
Russian potatoes are mainly exported to countries such as Ukraine, Azerbaijan, Uzbekistan, Moldova, and Turkmenistan. Azerbaijan is both a supplier and a buyer of potatoes. From this country, mainly early potatoes are imported to Russia (from April to July), and from Russia to Azerbaijan, potatoes are supplied directly harvested during the main season, that is, in August-October (deliveries are made from August to April).
— A decrease in the volume of potato exports from Russia in 2021... In the context of a decline in production, as well as high prices for Russian potatoes, this season there was a significant reduction in exports. At the end of January-August 2021, export supplies of potatoes from the Russian Federation, in relation to the same period in 2020, decreased by 73,9% to 63,1 thousand tons.
— Pronounced seasonality of imports and exports of potatoes. The main volume of imports of ware potatoes to the Russian Federation in 2018-2019 falls in the period from March to June.
The seasonality of imports is largely due to the increased supply from large supplying countries. Also during this period, the supply of potatoes of own production usually decreases. The volume of export deliveries of potatoes from Russia falls mainly in the period from September to December.
— Unprecedented rise in potato prices... Recall that the strengthening of potato prices was noted in the previous season - 2020/2021 (June 2020 - May 2021). This was due to the reduction in collection volumes in 2020. In the 2021/2022 season, amid a further decline in potato supply, prices continued to rise.
Typically, the sales season starts with the traditionally high prices for early potatoes in June and July. Further, in August and September, their significant weakening is noted. In the current season, on the contrary, prices have significantly strengthened in August-October. For the entire period considered in the study, such a situation was not previously observed for prices in August-October to exceed the price level in July.
At the end of October and November, wholesale prices for potatoes slightly adjusted downward, which is associated with the end of the storage of potatoes. In general, over the season, the vector will move in the direction of their growth. It is highly probable that by the end of March 2022, wholesale prices for potatoes in Russia will exceed RUB 32,0 / kg. However, it is quite possible that the excitement around the fall in collection volumes will pass and prices will remain at the October levels until April. Much will also depend on the activity of import supplies of potatoes - how high will be the possibilities of Egypt, Pakistan, Iran and China to expand imports.
— Expected expansion of floor space and growth in gross receipts in 2022. Given the high level of prices in the current season, there is a likelihood of expanding the area of potato cultivation in 2022 to 310,0 thousand hectares. However, much will depend on natural and climatic factors during the sowing campaign.
In the context of the expected increase in areas, and also taking into account that the potato yield in 2022 will be at the average annual levels over the past 5 years, harvests may amount to 7 thousand tons.
In this case, potato production in Russia in 2022 will slightly exceed market needs, which in turn may lead to a significant weakening of prices in the 2022/2023 season.
The full text of the study can be found at link.