The agribusiness group, known for its grain, seeds and fertilizer trade mainly, signed 12 agreements with potato farmers in Harghita, Covasna and Suceava Counties to buy and distribute 10,000 tons of potatoes in the stores of international retailers in Romania by yearend. The 10,000 tons are enough to fill 500 trucks.
Agricover should get about EUR1 million from the distribution of the 10,000 tons of potatoes, according to ZF calculations.
“Our plan for this market was devised with long-term business in mind,” says Robert Arsene, chief executive officer of Agricover.
The interest of the group in potatoes comes six months after entering the market of fruit and vegetable distribution, operating as link between farmers and major retail chains.
The reason for this step is that the growth potential of grain trade is limited since multinationals are fiercely protecting their market share and Agricover’s other business, distribution of seeds, fertilizers and pesticides, is a highly competitive segment.
“Sales volumes of fruit and vegetables may double and even triple in the coming years. What we’ve built won’t start showing until next year, when a crop schedule will be implemented and we will have predictability,” Arsene says.
Potato market is the fourth largest in the vegetal agriculture sector after corn, fruit and vegetables and wheat.
Potato farmers, however are lagging far behind the grain farming businesses in terms of sophistication. Few of them have storage spaces, primary processing systems or enough potatoes to ensure a steady supply to major retailers throughout the year.
The largest potato producers in Romania farm up to 200 hectares and their revenue barely reaches EUR1.5 million a year.
The amount of land allocated to potato growing has gone down 23% in the last eight years, while the yield is up only 8.3%. However, potato farming is an about EUR1.1 billion business a year.
This fall’s harvest stands at 3 million tons, down 10% on 2013 but the yield, 15 tons per hectare, is among the lowest in the European Union. Romania is EU’s fourth largest potato producer, far behind Germany, The Netherlands and Poland.
(English version by Loredana Fratila-Cristescu)