Dutch potato giant Aviko, a subsidiary of Royal Cosun, has signed an agreement with the authorities of Zhangye City and Minle County for the construction of a potato processing factory in the Chinese province of Gansu.

The move reflects the company's aim to increase its manufacturing capabilities in Asia, particularly in China, as it hopes to capitalize on the growing demand for potato products in the region.

The new potato processing factory, which will be built on an industrial estate in the direct vicinity of a major potato growing area, is expected to begin operations in early 2008, and will cost in the region of E15 million.

The plant will initially produce dried potato products such as potato flakes and granules, and, during the first phase, will have a processing capacity of approximately 80,000 tons per annum.

The Zhangye and Minle County authorities are to support the investment by increasing the area under potato cultivation, investing in intensive cultivation assistance and developing specific potato varieties. The Chinese partner will also finance the construction of a 35,000-ton potato store.