Potato harvesting problems, especially large potatoes, could disrupt the supply of chips this year. This has already been put in writing by PepsiCo, which owns Lay’s. So far, potato producers have fulfilled their commitments to processors despite a 15%–20% decline in yields. The Ministry of Agriculture generally expects an increase in tuber harvest by the end of the year.
A shortage of potatoes on the market led PepsiCo’s Frito Lay Manufacturing LLC to inform its counterparties of scheduled supply interruptions in September and October for the entire Lay’s line of chips.
The largest manufacturer of potato chips in Russia is PepsiCo. Currently, the company operates factories in the Moscow and Rostov regions, and is building one in Novosibirsk. As per Euromonitor International, the company held 65.3% of the Russian potato chip market in 2020 with a total turnover of 93.81 billion rubbles. In contrast to last year 470 thousand tons, PepsiCo anticipated processing over 500 thousand tons of potatoes this year.
Due to a very hot summer and prolonged rains since the beginning of autumn, PepsiCo expects to face interruptions in the supply of Lay’s to its customers.
As stated by the company’s spokesperson:“The situation will return to normal when we start using the raw materials stored in our warehouses,” . Since the outbreak of the pandemic, snack consumption has increased significantly and this trend continues. NielsenIQ reported that chip sales increased by 13% in value and 9.5% in volume in the 12 months to July 2021.
Both Lenta and X5 (Pyaterochka, Perekrestok, Karusel) indicated that they had been notified of potential Lay interruptions. Lenta expects that 5-10% of supplies will be affected. A spokesperson for the chain says that its partners are taking steps to mitigate risks.
The company said they do not face a shortage of chips and have the necessary stocks for the products to be on the shelves.
According to a retailer source, Lay’s deliveries have been arriving late and not in full for some time, which might be due to logistics problems.
Agricultural producers have already reported a shortage of large caliber potatoes in this season, according to Varvara Serdyukova, senior expert at the Institute for Agrarian Market Studies. Due to rains and droughts in the producing regions, the proportion of large potatoes of 55 mm in size this season has fallen to 50%, while traditionally the harvest occupied 80 percent of that size.
In the European part of the Russian Federation, Ms. Serdyukova states that the average price for large potatoes of 50 mm or more reached 25 rubles last week for 1 kilo, a price that has doubled since last year.
It is a struggling situation with the availability of potatoes for processing and for tables, says Aleksey Krasilnikov, executive director of the Potato Union. In his view, rains in a number of regions have impacted harvesting, and large producers have given up on selling, sending their harvests to storage. According to Gennady Uvarkin, director of Trio Group of Companies, the potato yield this season may decrease by 15-20% due to weather conditions. Tubers are only released for processing and are being shipped on schedule, he added. Vegetables are reaching their planned yields this season, and there is enough product in both storage and for sale, according to AFG National.
Unfavorable weather conditions affected the size and volume of the supply of large potatoes, according to the Ministry of Agriculture. According to the ministry, the harvest of potatoes from agricultural producers is expected to increase at the end of this year, which, along with potato imports, will meet the needs.
Source : Kommersant
