On 13^th October 2004, the LUKO Potato Company Inc. in Istog Municipality has been given license to start production and sales of potato chips made in Kosova. This project started in January 2003. It is financed by the Govt of Luxembourg, and is implemented by the Swiss based NGO IDEAS. Producing farmers and farmer's associations are partners. The project name comes from "Luxembourg-Kosovo". Technical support comes from the Swiss Institute for Agriculture at Reckenholz, Zurich, the College for Food Technology in Wädenswil, and from several Swiss chips producers.

This is the only project of its kind, and the first processing plant specially made for chips production in Kosovo. We obtained a building in April 2003. First, we repaired and adapted this site in Gurrakoc. Farmers were contacted and field production started 2003, when 100 tons of potatoes were produced for the project. At the same time, we purchased all machinery needed for processing. The complete line was bought in Brasil. It is semi-automatic, which means that some items where needed are electronically controlled, like temperature, frying time, packing sizes, machine speed etc. But some items are simple, so that they can easily be maintained and repaired on site. Also, this means that more staff can be employed to run the line, which creates jobs.

The project is designed to demonstrate that competitive production is possible in Kosovo. We aim at the most promising sector here, agriculture and food processing. And along with agriculture, we focus on potatoes because they have much unused potential in Kosovo. Climate and soils are suitable, but new varieties must be introduced. Maintenance and irrigation need to be much improved.

Kosovo consumers are demanding in terms of quality and prestige. But Kosovo production is by far not sufficient in quality and quantity. We from the LUKO project must respond to consumer demands, and our farmers must learn that, too. To become suitable for the factory, farmers must improve their techniques and make more effort in maintaining their crops. If such innovations are not accepted and introduced soon, Kosovo agriculture will not become competitive.

Present situation:

• LUKO produces 6 varieties of chips at a rate of 400 to 500 kg per day, coming from 1800 to 2500 kg of raw potatoes.
• In 2005 a harvest of over 260 tons of potatoes. Lady Claire and Lady Rosetta are very suitable and especially used for the production of salted chips because of their good and fair looking appearance. We are producing 32g and 160g chips bags, all salted and paprika spiced. The range is now widened with 32g wave chips. LUKO focuses on purely natural chips without additives.
• 2005 we started a creative and offensive marketing and advertising campaign, introducing billboards all over Kosovo. As well we had several video clips in the TV, one accompanying a highly frequented football league. The new campaign 2006 has started in April. It had setbacks as the person in charge of marketing dropped out unexpectedly in July 2006.
• LUKO sales are developing with a sales system run by two sales men, two Ford vans, and a truck. Sales do not yet cover the costs and must grow further.
• A highlight in 2005 was the implementation of a quality management system according to Codex alimentarius. Several staff trainings took place in 2005 on this. Production complies now with international standards for hygiene and food technology. A graduate student from the Technical university of Wädenswil, Switzerland, developed the system. The actual environment of our project does not allow to reach HACCP standard, but we aim to achieve this in the future.
• In 2005, several improvements of laboratory and especially the production area were made. A segregated clean area for production has now been established, thus fulfilling the criteria for a safe and hygienic food production.
• In 2006, a washable floor was installed in the wardrobes in order to allow better cleaning.
• At present, LUKO employs 26 workers. This includes a quality manager, 9 women and 5 minority members.
• In 2005, another focus was to involve more farmer associations as future co-owners in the project. Now, 6 associations participate. About a hundred farmers are planting potatoes for LUKO. The associations have been provided with fertilizer and seed and also with technical know how on better planting methods and irrigation.
• Since early 2005, LUKO recycles used frying oil to make it available for use in diesel engines. With this, generator costs due to unreliable electricity supply and for diesel in vehicles can be reduced. Savings are between € 1500.- to 2000.-/month.

Main opportunities

• Chips are popular in Kosovo. This means that there is a market for chips. However, they are almost all imported, like most other items in Kosovo.
• Climate and soils are suitable for increased potato production.
• Jobs and know-how are generated for about 20 technical staff per shift and about 10 administrative/marketing and extension staff.
• New market opportunities become available for hundreds of producing farmers, along with better production techniques.
• The shareholder company concept has been strengthened.
• A LUKO board, including a municipality delegate, is meeting regularly to discuss and decide about the fate of the company.
• Sales have reached a level which is almost at the break-even point.

 

Main challenges (in order of seriousness)

• There is a very serious lack of qualified technical and managerial staff in Kosovo. This problem is considered the most serious, and it also is noted everywhere else. Lack of qualified technical and managerial staff will in future be among the most important obstacles to economic development in Kosovo.
• Rule of law is shaky, to say the least. Fraud and contract evasion by employees and business partners are frequent, but enforcement of remedy or compensation is virtually impossible. From authorities, business is confronted with demands with dubious reasoning, and/or with arbitrary sanctions on grounds for which the legal basis is often unknown.
• The supplier situation is volatile. We are often confronted with unannounced supply stoppages and/or low quality or adulterated raw materials (oil, spices).
• Basic infrastructure, namely water, telecommunication, and electricity, is unreliable. This causes additional risks and costs due to ad hoc production breakdowns.
• Sales are near break-even, but are not yet satisfactory. Consumers should be made aware of products produced in Kosovo, and not only imported products or products that are merely packed here.
• Farmers must learn to produce marketable quality. Farmer’s cultivation techniques are backward: poor planning and soil preparation, poor quality seed, unsuitable fertilizer, insufficient irrigation, poor maintenance, poor handling techniques.