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Potato Price Surge in Russia: Production Surplus Amid Shortage

Potato prices in Russia have risen sharply, reaching 90–200 rubles per kilogram, sparking concern among consumers and even drawing the attention of President Putin. Despite Russia producing approximately 16–17 million tons of potatoes annually, exceeding the consumption of 12.5 million tons, a shortage has emerged, leading to the price increase.

Several factors have contributed to this paradoxical situation. Adverse weather conditions, including a hot and dry summer, resulted in a smaller harvest. Additionally, overproduction in previous years led farmers to reduce acreage, further impacting supply. Problems with imported planting material, exacerbated by sanctions and increased logistics costs, also played a role.

The lack of infrastructure for small and medium-sized farms to access the market is a significant issue. While large agricultural enterprises supply major retailers, smaller farms struggle to sell their produce, leading to waste. Experts estimate that around 4.5 million tons of potatoes are discarded annually due to the absence of a proper sales infrastructure.

To address the issue, experts recommend developing domestic seed potato growing and establishing a robust sales infrastructure for small and medium-sized farms. Rural cooperation and market structures that collect, calibrate, and sort potatoes could facilitate access to larger markets. Opening the market and canceling duties on potato imports can also increase competition and lower prices.

Experts also suggest government recommendations on acreage to avoid overproduction and price drops, combined with a system of subsidies and support for agricultural producers. Purchase interventions, where the state buys agricultural products when prices fall below market prices, could also help regulate prices.

Furthermore, providing subsidies or food stamps to vulnerable populations could mitigate the impact of rising prices. The government has already opened the market and cancelled duties on potato imports. Experts caution against regulating prices, emphasizing the importance of market-driven solutions.