Brazil: PepsiCo’s appetite to have only "made in Brazil" potatoes in Ruffles and Lay’s bags - AgFeed

However, the supposed triviality of the first “crunch” when opening a bag of snacks like Ruffles or Lay’s has behind it a production chain that involves challenges, high technology and a network of agricultural producers that supply PepsiCo.

As explained to AgFeed by the agribusiness manager responsible for the seed chain at PepsiCo Brazil, Natália de Oliveira, each potato that arrives at the chip industry has traveled a three-year journey to the industry, which involves international routes – and a challenge to eliminate them.

Currently, the production process begins with the development of new varieties in PepsiCo’s research areas in Wisconsin, in the United States. The best varieties are sent to Brazil, where they undergo quarantine and are stored in the company’s germplasm bank in Minas Gerais.

The potatoes are then sent to 25 partner producers, who multiply the seed potatoes in their fields. These farmers, who are partners of the company, are responsible for expanding production and cultivating the tubers that will eventually feed the company’s factories. Oliveira estimates that PepsiCo Brazil requires just over 100,000 tons of potatoes per year to supply its domestic chip production.

To ensure this supply, seed potatoes are at the base of the chain. Today, around 70% of these seeds are produced in Brazil, by the company’s partner producers. But the rest still needs to be imported from countries such as Chile and some European nations.

And this stage of the production process has received special attention from Pepsico today. The company’s goal is for 100% of the seed potatoes used in Brazil to be produced locally by 2028.

The company’s objective is to reduce risks in the supply chain and avoid dependence on imports, which have regulatory and logistical barriers.

The company intends to achieve this self-sufficiency by investing with producers so that the multiplication of seed potatoes takes place entirely in Brazil.

The plan is to replace this partial import with in-house production on local farms and seedbeds.

According to ABBA (Brazilian Potato Association), there is a worrying scenario for seed potatoes in Brazil. Although the association does not have the exact number of imports of this product here, it assesses that the country is experiencing a scenario of difficulty in importing these seed potatoes.

Less than two years ago, in 2023, Brazilian producers were surprised by the news that traditional European companies would export only 30% of the usual volume of seed potatoes to Brazil, due to the intense drought in producing regions such as the Netherlands, the main local supplier.

Natália de Oliveira points out that producers have still faced difficulties in importing materials from Chile.

“Many companies have increased their production of potato-based products. We cannot lose control of seed management, because otherwise, in the future, we will not have the product available,” he says.

The PepsiCo executive also adds that most of the seed potatoes used in the national industry are produced here to have “security in supply, both of seeds and in the industrial part”.

ABBA estimates that Brazil’s annual production averages 4 million tons of potatoes. Of this total, around 350,000 tons are used as seeds, around 500,000 tons are used to produce chips and straw, around 900,000 tons are processed to produce frozen pre-fried potatoes and 2 million tons are consumed fresh.

“It is also necessary to consider the imports of more than 300,000 tons of frozen pre-fried potatoes, equivalent to 600,000 tons of fresh potatoes,” adds Natalino Shimoyama, executive director of ABBA, in a recent publication by the association.

Production takes place in seven states in an area of ​​close to 115 thousand hectares, considering all productions.

In the field

Marcelo Cazarotto is one of the company’s 25 partner producers. For 15 years, the potatoes planted on his farm in Casa Branca (SP), a city near São Carlos and Ribeirão Preto, have been supplied to the multinational company.

Marcelo is still one of the producers who make up the less than 30% who import seed potatoes. He told AgFeed that he uses a Chilean variety, approved by PepsiCo, for cultivation. “Today I only work with imported varieties, because I believe they are of better quality. In the future, not too far away, we have a project to produce the tuber on our own farm,” he said.

Cazarotto mentions that, for the past two years, many restrictions have been imposed on producers, making it difficult to release imported seed potatoes. “Barred cargo brings us a heavy cost,” he says.

He explains that he currently imports ready-made seed potatoes from Chile, but that in the future he wants to take control of this stage.

“The project here is to build a greenhouse and laboratory to produce the seeds on the farm itself. In addition to the risk of exporting, we are also at the mercy of currencies such as the dollar and the euro,” he explains.

This project illustrates well what PepsiCo intends to do with producers to ensure that the supply of seed potatoes is 100% national: promote current partners and seek new ones, so as not to depend on bureaucracy when importing.

Of the 3,200 hectares of his property, Cazarotto estimates that 750 hectares are dedicated to potatoes, with planting lasting from April to June, with the harvest spread between July and October, and even November, depending on the harvest. He also grows soybeans, sorghum, corn, wheat and even raises cattle.

Last year, the producer suffered from heat waves on his land, which reduced potato production a little. With the forecast of “cooling off” in the coming months, he expects better potato production, which, according to him, depends a lot on the weather.

Unlike Mato Grosso and the Matopiba regions, the agricultural properties in the interior of São Paulo are medium-sized, just like Marcelo Cazarotto’s. He explains that it makes a lot of sense, because of this, to plant some type of fruit and vegetables, as they bring a higher profitability than grains.

“With soybeans, even though they are stuck at high levels, we depend a lot on the market. Potatoes end up being one of the main crops because they yield more per hectare.” Added to this is a guaranteed buyer, which is PepsiCo, and the crop is a shining light for producers.

He estimates that the cost per hectare of potatoes is close to R$60,000, as unlike soybeans and corn, these are crops that require more employees and more appropriate management.

Today, his potato farm uses only a chemical insecticide. The rest of the products are organic. He believes that the cover crop he plants on his property also helps with the results.