Russia’s full-scale perfidious invasion of Ukraine in February 2022 had a shocking effect on the market of Moldova, which is a neighbor of Ukraine and has close economic ties both with it and with the aggressor countries: russia and belarus. In addition, Ukraine was actually the only transit country for the export of products from Moldova to the russian and belarusian markets, but transit through Ukraine is now impossible. Therefore, Moldova has to look for other, more expensive and complex logistics solutions, which led to a virtual halt in its exports, EastFruit analysts state.

In addition to the fall in export earnings, Moldova also faced the fact that many goods previously imported from Ukraine, including food, were no longer supplied. This has led to panic among consumers and will be a big test in the long run. About 20-22% of all food imports to Moldova came from Ukraine, which was its main food supplier. By the way, russia was also an important supplier with a share of 9-10%. In other words, almost a third of food imports suddenly became unavailable, which cannot but lead to a severe shock to the market.

The main import commodities that have become drastically unavailable or supplies of which have plummeted are dairy products, several types of vegetables, animal feed, confectionery, milling products, and salt.

In addition to its own population, Moldova now also has to provide for temporary migrants from Ukraine – according to various estimates, the country received from 320 000 to 350 000 people! And this is almost 14% of the population of Moldova itself! Accordingly, with a reduction in the supply of food products in Moldova, the need for them has increased dramatically.

Another important factor that affects the macroeconomic stability in the country is the decrease in remittances from labor migrants.

Not to mention the issue of record high energy prices, which also have a negative impact on agriculture and the food industry in Moldova.

Let’s look at the intermediate consequences of the criminal actions of russia and belarus for the economy and food security of Moldova.

How has the exchange rate of the national currency of Moldova, the leu, against the dollar and the euro changed since the beginning of the war?

Fluctuations were observed in the foreign exchange market of Moldova. According to the data of the NBM (National Bank of Moldova), the US dollar registered a continuous growth trend from 17.95 MDL on 24/02 to 18.44 MDL on 20/03. Thus, the dollar rose by 3% against the leu. Unlike the US dollar, the euro fluctuated more dynamically during this period, but the current exchange rate is almost at the same level compared to the beginning of the war.

How have consumer sentiments changed in Moldova, were there panic buying and how has the assortment changed?

According to official data, inflation in Moldova reached 18.5% in February. Thus, Moldova became the country with the highest inflation rate in Europe. Even in Ukraine, inflation in February amounted to only 10.7%. Purchasing power in this context also declined accordingly.

Given the close trade ties with the countries directly involved in the war, irrational consumer behavior was observed in Moldova – people bought some food products in excessively large quantities.

Currently, there is a shortage of edible salt in Chisinau shops. About 85% of salt is imported from Ukraine, so it is not surprising that demand for salt has grown most significantly since the beginning of the war. Salt is also imported from Bulgaria, Romania, Poland and Italy, but in limited volume. The price has doubled and there is almost no salt in stores.

There is also a real shortage of buckwheat, which is likely to be more problematic in the future. About 85% of buckwheat on the shelves of Moldovan stores was brought from Ukraine and russia. There is practically no buckwheat in stores at the moment, and if it appears, it is quickly sold at a price 80% higher than before the start of the war.

There was also a slight panic in the case of sunflower oil, but the largest producer of sunflower oil in Moldova, TRANS-OIL, said that there is and will be oil on the domestic market and managed to reassure consumers. However, the price of sunflower oil also increased by about 20%.

The prices of many other foodstuffs have also risen notably.

We also note that due to the fact that bananas can no longer be imported through the port of Odesa (Ukraine), there is a shortage of bananas on the market, and they are about 35% more expensive than before the start of russian aggression against Ukraine. And this despite the fact that global market prices for bananas have fallen sharply.

Do farmers plan to change the structure of sown areas and how are things going with the sown area?

At the moment, many farmers in Moldova are concerned about the extremely high prices for fuel, as well as inputs and fertilizers, which are mainly imported from Ukraine. Therefore, in addition to high prices, there is an urgent need to find new suppliers and have time to deliver these goods before the start of a new production cycle. Obviously, these factors can affect the yield and even the area of ​​many agricultural crops.

In the current situation, according to the forecast of representatives of the industry association, the area planted with potatoes in specialized farms is still most likely to decrease. The projected reduction in the area of potato plantations will worsen the country’s food security, since this is one of the key products, which was previously partially imported from Ukraine.

Many farmers are discussing the need to expand sunflower and corn crops this year, provided they can find the necessary resources for this.

Meanwhile, many producers have abandoned growing vegetables in greenhouses, because heating greenhouses is too expensive due to a sharp rise in energy prices. Therefore, vegetable prices can be relatively high out of season. On the other hand, the supply of Turkish vegetables may increase, as it is obvious that deliveries to Ukraine have practically ceased, and deliveries to russia are significantly reduced.

Apple producers found themselves in a particularly difficult situation, having suddenly lost almost all traditional and any large sales markets. Few of them have yet voiced plans to uproot apple orchards, but this process is almost certain to accelerate (the total area of ​​apple plantations in the country has decreased by about 3 000 hectares to 49 000 hectares in 5 years).

On the other hand, the heads of large nursery farms claim that by mid-March there was not a single case of termination of contracts concluded earlier for the purchase of planting material for perennial fruit crops on the initiative of agricultural producers. Some nurseries even increased the shipment of seedlings in March, because due to the dry autumn in 2021, some of their customers postponed the delivery date to spring 2022. Nevertheless, the prospects for investments in the fruit growing sector of Moldova this year are poor, since Moldova has failed to find an alternative to the russian market for apples.

How much has the volume of remittances from labor migrants decreased and how will this affect the economy?

It is estimated that about 250 000 Moldovan citizens work in russia. However, half of them is expected to return home as they claim their dollar-denominated salaries have fallen and some have even lost their jobs. Now they have to save money or think about returning home or moving to another country.

It has also become difficult to send money to relatives in Moldova. The volume of remittances from the russian federation decreased by about 15% to 30%. At the same time, it was russia that was the leader in money transfers to Moldova.

After Western Union announced the suspension of operations in russia and belarus, transfers through the Zolotaya Korona and Unistream money transfer systems to citizens of Moldova became possible. However, money transfers in foreign currency (USD and EUR) from russia to Moldova cannot be made through russian money transfer systems such as Contact, Unistream, Zolotaya Korona, money can only be transferred in rubles.

Сообщение Moldova: impact of the war on food security, macroeconomic stability and agribusiness появились сначала на EastFruit.

In 2019, the Moldovan cooperative CI Nucces (Cupercheni village, Orhei district) established an organic Chandler walnut orchard on about 100 hectares and It will give its first harvest this year.

The project is noteworthy from many points of view. First, it is being implemented by a classic cooperative created by six co-founders who entered agribusiness with approximately equal land shares. Within the framework of the cooperative, the same agricultural technologies are used at all agricultural plots – for growing products of the same variety and uniform quality, a common investment is made in the development of production infrastructure. In the future, marketing will be common, as well. Earlier in the nut industry of Moldova, production and marketing cooperation was used in almond and hazelnut growing. In the walnut sector, individualism prevailed: there were either large enterprises of a closed production and commercial cycle, or small farms largely dependent on processors and traders.

Read also: The forecast of the walnut harvest in Moldova has been increased, but it will still be relatively low

Secondly, from the very beginning of its work, the cooperative CI Nucces used the consulting support of a professional organization – the Federation of Agricultural Producers of Moldova FARM. Its experts assisted the co-founders of the cooperative in finding land plots suitable for organic agricultural production, choosing agricultural technologies, drafting business plans and searching for preferential financing.

Thirdly, the choice of walnut variety plays a special role in the concept of the project. On the one hand, “Chandler” is the standard of quality and the most preferred variety in the global walnut market. On the other hand, it is demanding in terms of agricultural technologies. In particular, its productivity depends on fertilization and irrigation regime. With the assistance of FARM, the CI Nucces cooperative received grant support from the IFAD program for the construction of a main pipeline (from the Dniester River) and a storage reservoir. In the near future, the cooperative will receive financing through the “Livada Moldovei” project in order to equip the orchard with a drip irrigation system.

Сообщение A Moldovan cooperative has created one of the largest organic walnut orchards in Europe появились сначала на EastFruit.

EastFruit analysts draw attention to an interesting trend in Poland. Despite Poland being one of the world leaders in the exports of fresh apples, at times displacing China from the first place in terms of exports, it has ever more clearly shifted its focus from the exports of apples to the exports of fresh pears in recent years.

“Over the past five years, Poland has been increasing its exports of pears at an average rate of 23% per year, or almost 13 thousand tons, and reduced the exports of apples by 4% or 34 thousand tons per year. At the same time, Poland increased its pear exports faster than any other country from the world’s top ten exporters of pears. Since bad weather had an equally negative effect on both apples and pears, this factor can be ignored. Thus, the shift in trends in favor of pears looks quite obvious.” explains Andriy Yarmak, economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO).

Due to the rapid growth in pear exports, Poland became 9th in the world among the leading exporters of pears, surpassing Italy and Portugal, by the end of 2020. According to EastFruit forecasts, based on information from Polish sources, Poland could export more than 100 thousand tons of pears in the 2020/21 season for the first time. The export of pears from Poland was only 25 thousand tons five years ago!

In the structure of Poland’s fruit exports, pears are currently ranked fourth in terms of revenue, after apples, frozen berries and fresh blueberries. Experts foresee that the revenues from the export of Polish pears will only grow.

It is notable that out of the ten largest world exporters of pears, only three countries are reducing their export volumes, while all the rest are increasing them. Poland is increasing exports the fastest in relative terms, as Andriy Yarmak already noted. However, Turkey is also showing similar growth rates. It is still 12th in the world, but given its success in the apple market, there is no doubt that Turkey will actively increase export volumes of pears, as well. Now the export of Turkish fresh pears is growing by 9 thousand tons annually.

Read also: The Ukrainian fruit producer “Sady Dnipra” will establish 30 hectares of pear orchard in 2021

The USA (by 8 thousand tons per year), Italy (by 11 thousand tons per year) and Chile (by 5 thousand tons per year) are reducing the exports of fresh pears. China, the Netherlands, Argentina and Belgium remain the leaders in the global ranking, exporting about 1.5-1.6 million tons of fresh pears annually. These four countries account for about 58% of world exports.

Among the countries of our region, the growth of pear exports by Central Asian countries should be noted. However, it is assumed that mainly Chinese pears are exported to Russia from there, as China cannot supply its pears directly to the Russian market now. Azerbaijan also has large export volumes, but most likely these are re-exported pears from Iran.

Moldova and Ukraine, despite good conditions for growing and exporting pears, so far do not pay much attention to them. However, it is worth noting the emerging trend of establishing modern pear orchards by the famous Ukrainian company “Sady Dnipra”, known primarily for its premium apples under the UApple brand. Primarily, the company plans to sell pears on the domestic market, since Ukraine is a net importer of pears.

Сообщение Polish growers are switching from apples to pears появились сначала на EastFruit.

Representatives of Moldovan agricultural producers’ organizations highlight several factors that can significantly affect the prices of cherries on the domestic market in early summer 2021. However, not all of them share the opinion that prices for local cherries at the beginning of the marketing season will be significantly lower than last year that was noted for a low production.

According to the EastFruit wholesale price monitoring, at the end of May/begging of June 2020, the level of average wholesale prices for cherries, depending on their size, fluctuated within 30-40 MDL/kg ($ 1.70-2.27/kg), and a year earlier – 14-30 MDL/kg ($ 0.77-1.66/kg). Experts of fruit producers’ associations explain the difference in price levels by a significant exchange rate difference, and lower production in 2020. Last year, due to spring frosts, it was already clear at the beginning of the season that there would be big losses, and this was confirmed later. According to estimates, the harvest of cherries in Moldova reached 11 thousand tons in 2020, almost half of about 20 thousand tons in 2019.

This year, the weather conditions are still favorable for cherry producers and cherries have so far suffered from frost and hail less than in 2020. Nevertheless, fruit growers associations note that in Moldova, only a few agricultural enterprises have cherry orchards equipped with anti-hail nets and anti-rain films. Meanwhile, in the last decade of May 2021, precipitation is regular almost everywhere in the country. There are already cases of the spread of diseases in stone fruit orchards. In this regard, the quality of the cherry harvest and its prices are an open question.

It is also worth considering that the sector of early stone fruit production in Moldova is much more export-oriented than the sector of early berries (strawberry). Horticultural farms, even if there are only a few hectares of intensive or semi-intensive cherry orchards, according to the heads of fruit growers’ associations, “will obviously prefer to sell their products to exporters than to search options within the country.” From this point of view, the export of early cherries will be intensive, even if exporters will pay in bulk no more than 30-35 MDL/kg, while wholesale prices for the domestic market will not be less than 40 MD/kg.

Since prices for sweet cherries in the EU remain high this year due to huge crop losses caused by weather, export opportunities for Moldova are going to be better than usual. EastFruit analysts earlier pointed out the opportunities for Moldova and Ukraine to export cherries to Italy but other EU countries will have good demand for this fruit during the season as well.

Сообщение Exports to the EU will keep prices for cherries in Moldova high despite higher production появились сначала на EastFruit.

According to the Customs Services of Republic of Moldova, in April 2021 about 20 thousand tons of fresh apples were exported from the country. According to EastFruit analysts, it represents a slight increase compared to March 2021 when a bit more than 17 thousand tons of apples got shipped abroad. In January-February 2021 combined only around 28 thousand tons of Moldovan apples were exported.

While seasonal export pattern is preserved, volumes of apple exports have dropped sharply compared to 2020. In March 2020 Moldova exported 30 thousand tons and in March and 2019 – around 41 thousand tons of apples. In April 2020 and 2019 apple exports reached 39 and 35 thousand tons, respectively. In means that in the spring of 2021 exports were around half of these in the same period of the the previous years.

As EastFruit analysts mentioned earlier, many of the problems Moldova is facing in Russia are caused by the expansion of Iran, which might become a leading global supplier of fresh apples in 2020/21.

Exporters and growers were happy to see even a slight increase in exports in April 2021. Although volumes of sales this spring were disappointingly low, market players were not sure there would be any demand at all, and they fully depend on one market only – the Russian Federation. Traders think that the April exports could have been higher if they had significantly reduced prices. However, in April 2021 the average prices for Moldovan apples offered to exporters remained unchanged at $0.50-0.67 USD per kg.

In May 2021, some traders noted a slight recovery in demand for red coloured apple varieties in Russia. As a result, the domestic market of Moldova reacted with a small – up to 1 MDL/kg (around 5-6 US cets) – increase in prices for relatively high-quality apples of the cheap Idared variety.

Сообщение Moldova’s apple exports in the spring of 2021 decreased two fold to previous years появились сначала на EastFruit.

The Ministry of Agriculture, Regional Development and Environment of Moldova (MADRM) recorded over 14,000 tons of apples exported from Moldova this January. The volume of apple exports was almost twice as high at about 27,000 tons in January 2019. In February 2021, experts from producer and trader associations claim exports of apples increased, yet official data on this matter is due to appear in the coming days. However, it is already clear that the physical volume of exports in February 2021 will also be lower than the average for the same month in the previous two or three years (about 30,000-35,000 tons).

Nearly all exports of Moldovan apples this winter were shipped to the Russian market as was the case last year. It is worth noting that from 2017-2018, apple exports from Moldova to countries outside the CIS and the European Union decreased significantly from several thousand tons to a maximum of 1,000-1,200 tons.

Representatives of agrarian organizations state that by the beginning of spring 2021 at least 120,000-130,000 tons of apples remain in traders’ refrigerators. This is almost two times less than a year earlier, which is due to a significant reduction in the harvest (610,000 tons in 2019 down to 430,000 tons in 2020) and exports last autumn, which were only about 23,000 tons whereas a year earlier it was more than 40,000 tons.

Read also: Moldovan farmers urged to switch to organic products to protect orchards

Managers from large farms, which also have large stocks of relatively high-quality products and high-tech infrastructure for processing/storing them, do not plan to sharply increase shipments of apples in March. Some are considering postponing active exports until April-May as a preferred strategy given the current stagnation of prices for Moldovan apples in Russia.

In fact, throughout February in Moldova, the average wholesale prices for apples did not change. Prices ranged from 9-10 lei/kg ($0.57/kg) for Renet Simirenko and Idared varieties to 13 lei/kg ($0.74/kg) for Fuji. Only at the end of the month, the minimum prices for Idared and the maximum prices for Jonagold increased by about $0.03/kg, which had practically no effect on the average price level for the fruits of these varieties. A similar picture regarding the relative stability of average wholesale prices for apples is observed in all European countries of the EastFruit price monitoring region. Apparently, this indicates a balance between supply and effective demand primarily in countries with a large domestic market and importing countries.

Bear in mind that the majority of the apple stocks in Moldovan refrigerators belong to exporting intermediaries. In the fall of last year, these traders bought even low-quality (small, deformed, not optimal ripeness) apples at the local market from farmers for a high price. As a result, it is not profitable for them to actively sell this expensive product at the relatively low prices prevailing in the Russian market in winter.

However, keeping products of poor quality until mid-spring is also a big risk. Taking this factor into account, market operators do not exclude that supplies of unsold apples of low-quality for industrial processing will increase in the spring.

Сообщение In 2021, winter exports for Moldovan apples to Russia lags behind last year появились сначала на EastFruit.