Food and Agriculture
Investment opportunities in agriculture processing
04 Jun 2025
Investment thesis
India’s growing potato market
- Potato market in India is ~US$ 9B, whose growth is driven by large-scale consumption and production capacity
- Potato processing sector is set to grow at a 6% CAGR in volume from 2020 to 2030, driven by rising global demand for processed potato products
- Philippines has emerged as a key export destination for India's processed potato products, accounting for 39% of total exports in 2023, underscoring the region's rising consumption and its strategic importance for India's potato processing industry
Target’s competitive differentiation- Leading players in the potato processing industry are increasingly adopting backward integration, investing in contract farming, cold storage, and supply chain infrastructure to ensure consistent raw material quality, reduce costs, and enhance production efficiency
- Processed potato industry includes a wide range of B2B and B2C players, each focusing on different end products designed to meet diverse market needs and consumer preferences
Value proposition
- Retailers, HoReCa and institutional, large and small, are
the primary buyers of processed foods, contributing to the majority of total
sales with growth expected from large retailers and national food chains
- Strong R&D, farmer networks, and breeder support makes
Target an attractive partner fostering innovation and improving potatoes for
processing
- Farmers receive support from Target through agronomist
guidance, agricultural inputs, credit, and more, increasing their revenues by
40% and ensuring guaranteed procurement of ~70% of yield
Potato varieties and superior unit economics for farmers
partnered with Target
Kufri Chipsona-1, Kufri Chipsona-2, and Kufri Chipsona-3 are
the preferred potato varieties for processing, selected for their high yield,
optimal sugar content, and tuber dry matter. Among them, Kufri Chipsona-3
offers the highest yield (48.1%) on fresh tuber for French fries
Potato farmers earn US$ 5,400 per hectare with an EBITDA of
34%, provided there is no crop failure
Key risks we have analyzed:
- Input cost volatility due to seasonal price fluctuations and
procurement competition
- Increasing competitive intensity with increasing regional
players
- Export market uncertainty due to international trade
restrictions or tariffs