Peru does not have a potato processing plant, despite increasing demand

Last Tuesday, farmers and producers of white potatoes raised their voices and went on strike because of the fall in tuber prices.

They argued that the import of pre-fried and precooked potatoes from the Netherlands, and other countries, was unfair competition to the local product because the imported product had very low prices, and their profit margin was low.

The Ministry of Agriculture and Irrigation (Minagri) reached an agreement with producers and the regional governments to purchase the surplus of potatoes for 1.5 million Soles in each region. The strike ended, but what about the sector's problems?

Factors 
In the last few years, notwithstanding this crisis, the sector has behaved in a positive way. "The potato's performance in Peru has been one of the most striking worldwide in terms of its per capita consumption and production growth," said Gregory Scott, a researcher at Centrum Catolica and a specialist in the sector.

So why have prices fallen? 
According to farmers, prices started to fall because of the import of pre-fried potatoes. The pre-fried potatoes are white potatoes that are ready to be fried and be used in meals. This potato is much cheaper than the national product, and therefore producers can't compete with it, they said. 

According to Scott, the price is not the only determining factor. "Some buyers haven't had a great experience with their suppliers of peeled potatoes (from local producers) in terms of quality, so they have opted for the imported pre-fried alternative," he said.

Some people have even decided to buy the imported potato because they find it to be more crispy than the national potato.

Supply and Demand
The number of chicken restaurants in the country has grown notably, as well as their preference for pre-fried potatoes.

This has two possible consequences for the sector: (1) There may be an oversupply of potatoes, as customers would be migrating to other alternatives; and (2) there will be a greater demand for pre-fried potatoes.

It is still difficult to know for sure if there is an overproduction but, according to Scott, the demand for the product is real. 

"The concentration of demand in terms of its daily use to supply restaurants has already been established, and this demand could support the creation of a precooked potato processing plant in Peru," said the expert.

What better way to compete with the foreign product than by playing the same game? 

Alternatives
Potato production has migrated in the country. According to Scott, in the last ten years there's been an increase in the sowing of different native varieties, not of the traditional white potato, in the southern region of the country.

The expert said that the increase in demand for this type of potato has been much higher than the evolution of white potatoes. This can be an alternative for producers who decide to stop growing this type of potato.

"These varieties do not compete with the imported pre-fried potatoes because the Netherlands and the United States do not produce this potato," he said.

Farmers could also choose to plant other products. 


Source: gestion.pe


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