HZPC is active in more than eighty countries. Over the past fifteen years our company has transformed from a Dutch exporter of seed potatoes into a European player, and subsequently into a global market leader. We must however point out that we have a market share of only a few percent globally. Nevertheless, it is our ambition to become, and remain, a global player. We want to be active in every corner of the globe, in a sustainable way, with the best products.
Northwest Europe had a moderate yield in seed potato crops last year. We nonetheless managed to market almost the same volume. Growers of consumer potatoes also accepted aboveaverage seedlings, mainly due to the strong demand of the French fries industry. Our sales continue to grow, even close to home, such as in Germany and Great Britain. In Germany, we realise this by being more active with our offer of yellow-fleshed varieties. The market in France is stable. In southern Europe we have an excellent market share. Here we are focused on maintaining our position, with sound marketing and good varieties.
Western economies have been relatively stable over recent decades. Recently, however, there has been increasing political and administrative turmoil. Both in the United States and in Western Europe. Political-administrative systems are changing rapidly. For example, Brexit is a negative development for internationally operating companies. Our company attaches great importance to the open market of the European Union and its currency.
Despite frosty relations between the European Union and Russia and mutual trade embargoes, our company is gaining a stronger position on the Russian market. It is a marketing area with great potential. In its trade boycott against Russia, the EU makes an exception for seed potatoes and seed, while to date, the Russian government has, in its boycott of EU products, also made a conditional exception for seed potatoes.
In Russia, HZPC has now transformed its participation in the HZPC Sadokas joint venture into a 100% shareholding. In this way, we have been able to get to know the Russian market well and get our foot in the door with the introduction of our varieties. By acquiring the seed potato activities of KWS Potato, Stet has also acquired a trading house in Russia. HZPC Sadokas and Stet Russia are facing the challenge of further expanding local seed potato cultivation in the country.
HZPC maintains food supply in Syria
In the Middle East and North Africa, HZPC is used to unstable conditions. As a result, prices are often under pressure and it is difficult to sell products and reach growers. However, we have decades of experience in this region and still manage to maintain good market shares here too.
Things were even more turbulent over the past year in a number of Arab countries. The fact that we are currently selling more seed potatoes in war-torn Syria than in recent years is quite an achievement. It would be easier to pull out of these types of areas and operate only in balanced and calm markets. Even simply because of the troublesome logistics and payment issues with which one is faced there. On the other hand, HZPC has decided to do everything it can in this kind of country to keep the food supply for the population intact as long as possible. We feel a responsibility for this as a food producer. Because even in war zones we want to realise our company’s mission: feeding the world.
In North and South America we see opportunities for growth and in providing added value through the introduction of new varieties. As a company that has grown up with yellowfleshed varieties, HZPC has also grown and developed its own white-fleshed varieties over the past fifteen years. These are promising varieties that provide us with good opportunities for growth, especially in the United States, where market demand is strongly dominated by white-fleshed potatoes.
Although the market is fairly saturated in volume, our share is seeing cautious growth and we are rolling out further plans for the US market. In South America, we have strengthened our position by expanding our shareholding from 80% to 100%.
So far, in Asia, costs exceed benefits. The enormous population and the still relatively limited consumption of potatoes per capita, however, offer great opportunities. In India we are quickly building a market share. Our company entered into a joint venture with the Mahindra group three years ago. This cooperation with a strong partner offers us access to local markets.
A number of our varieties have now been admitted and in Mohali, the new production facility for minitubers was put into operation in the past year. At present, our activities in India are not yet profitable. But we expect to be able to sell 100,000 tonnes of high quality seed potatoes within 10 years at good prices.
India will undoubtedly contribute significantly to the company’s revenue and profitability. Nevertheless, in November 2016 there was a temporary hiccup. The national government in India suddenly decided to withdraw old banknotes. Through demonetisation, the potato trade, which is entirely based on cash, was crippled. As a result, we failed to achieve our budgeted sales. However, we regarded this as an incident and have since then enthusiastically continued our path to success in India.
The establishment of our own seed potato company will also be our goal in China in the near future, a country where the potato market continues to grow. We are currently conquering market share by licensing, especially to supply the French fries industry. We are also striving for a position in the much larger fresh market. Yield in China is taking a little longer, but here too we are confident and our expectations are high.
HZPC also sees a challenge in Central Africa. There are large potato growing areas waiting for us in countries such as Tanzania, Nigeria, Uganda and Rwanda. These are interesting markets, but with considerable logistical challenges. Patience is very much required here.