Potato Crisis in Russia

Potato Crisis in Russia

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Potatoes might become a scarce product in Russia in 2022. Without production subsidies, shortages can only be compensated with imports. Drought, shrinking production at private subsidiary farms and a 50% increase in processing capacity are the main reasons for the possible shortage.

About 1 million tonnes of potatoes were processed in Russia this year. Next year it is expected to process about 1.5 million tonnes.

Not only are the production costs of this vegetable rising but also the demand on the part of processors. So, all this can lead to a shortage of potatoes in retail trade and, as a consequence, to further increase in the prices for this product.

Prices for potato flakes, chips and other potato products are also likely to go up in the coming year. According to the Federal State Statistics Service (Rosstat,) prices for vegetables are growing faster than prices for other product groups, and potatoes are one of the most expensive products. This year alone, its cost has risen by 79%, and the average price of potatoes has risen by 44.5 rubles ($0.06) per 1 kg.

“The Russian consumers have a particularly high demand for potatoes this year. As a consequence, there is an increase in the volume of its processing,” Tatiana Gubina, the head of the Union of Potato and Vegetable Market Participants, told wek.ru. “As a matter of fact, it is much more profitable for the farmers to plant potatoes for processing than to work with the retail chains that literally drive high-quality products from the market, though of a smaller size. Well, these are the requirements of trade networks today.”

Gubina reminded that trading networks announced bidding contests for the purchase of large-size potatoes that meet their standards. This year Russia will bring in a smaller harvest due to weather conditions, said Gubina.

Nevertheless, it is difficult to make predictions about the next year's harvest because of too many unknown factors including seed prices, weather conditions, fuel and lubricants price hikes and labor costs at the end of the season. Against the background of inflation this year, the retailers do not sign annual contracts because of volatile prices.

The motivation to plant potatoes on personal garden plots is one of the effective ways that can help cope with the rise in prices for the product today. In 2022, the state will provide support for citizens who agree to grow potatoes on their own garden plots. In addition to these measures, Russia is planning to buy potatoes from CIS countries instead of expensive imports from Egypt and India.

“As for dacha plots,” said Gubina, “the Russians have started growing fewer potatoes in their private household plots. However, no one has limited themselves in the consumption of potatoes, so everyone has just started buying them in chain stores.”

The Agriculture Ministry is planning to increase potato production by enlarging the planted area up to 20,000 ha. In another project, 5 billion rubles ($67.2 mln) will be allocated in 2022 to promote the development of the vegetable industry. According to market players, only subsidizing the production of vegetables, particularly, potatoes, might replace their import.

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