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.

The treacherous attack of a huge russian army on Ukraine on February 24, 2022 threatened the food security of Uzbekistan and many other countries globally, impacting the already fragile global balance of food supplies. The government of Uzbekistan manages to cope with emerging threats so far, but the main challenges are yet to come.

In this article, we will outline the situation with food security, macroeconomic and financial stability, as well as consumer sentiment in Uzbekistan and try to assess the prospects and options for future developments.

Uzbekistan is a net importer of food items. The negative trade balance is about $500 million per year.

At the same time, 36% of imports are direct deliveries of food from countries that are directly involved in the war. About 30% of Uzbekistan’s food is imported from the russian federation, 4% from belarus and about 2% from Ukraine. The data on the supply of food from russia to Uzbekistan may even be underestimated, as some of the goods enter the country through intermediaries from Kazakhstan.

In exports, Uzbekistan’s dependence on food supplies to these three countries is even higher – according to our estimates, it is about 42%! About 40% of food products are exported to the russian market, including volumes passing through such intermediaries as Kyrgyzstan and Kazakhstan.

Accordingly, the impact on the food market of Uzbekistan of the war in Ukraine may be huge in the long term.

The most sensitive positions of Uzbekistan’s food trade

More than 60% of all food imports of Uzbekistan are high-calorie basic products, such as grain and grain products, vegetable oil and raw materials for its production, as well as sugar.

Quite sensitive to changes in the conjuncture of imports is the category of feed for livestock and, to a lesser extent, the import of meat itself. Uzbekistan is a net importer of all these goods, meaning that changes in import regimes, availability of imported goods and their prices can have a large impact on the domestic food market and food security.

The situation in Uzbekistan in terms of food security is relatively favorable only in terms of vegetables and fruits, with the possible exception of potatoes. However, there is also an issue of great dependence of the fruit and vegetable business of Uzbekistan on the supply of vegetables and fruits to the markets of russia and other countries that have close trade ties with it. Due to the sharp drop in effective demand in russia, the sharp devaluation of the local currency and the outflow of the population from the country, traders and producers in Uzbekistan urgently need to look for alternative markets. This is not an easy task, because Uzbekistan’s logistics are expensive and complicated. These products are classified as perishable, and their quality leaves much to be desired from the point of view of countries that are more demanding than russia on the quality.

However, let’s get back to the critical import categories.

In terms of grain and grain processing products, Uzbekistan’s dependence on russia is not too high – the bulk of the products are imported from neighboring Kazakhstan. Small volumes are imported from Ukraine.

There are no problems with vegetable oils either – there is no ban on exports from the russian federation, dependence on supplies from Ukraine is also minor – within 1-2%. Of course, oils and grain may rise in price, but this is a global problem.

As for sugar, the problem is quite tangible. Imports from russia accounted for more than 60% of imports of sugar and confectionery, and now there is a direct ban on exports. The share of sugar imports from Ukraine was tangible – about 4%. Accordingly, the solution to the problem could be an increase in domestic processing of raw sugar, which can be imported from Brazil and other major supplying countries, but the main question here is whether the capacities of Uzbek enterprises allow this.

The general situation in terms of imports does not look threatening, although the increase in food prices is undoubtedly causing serious concern among the population. According to analysts, the price increase may be much larger by the end of the year, as the world is still tapping into 2021 harvest stocks.

The exchange rate of the dollar and other currencies in relation to the Uzbek sum

In Uzbekistan, the exchange rate of the US dollar and other major currencies, except for the russian ruble, remained relatively stable until March 9. For example, from February 24 to March 9, the US dollar exchange rate set by the Central Bank of the Republic of Uzbekistan increased from 10 840 to 10 897 UZS per $1, that is, only 0.5%. Since the rate is set by the Central Bank, the regulator has apparently taken a wait-and-see position – the war could be short-term and then everything will return to normal. But the war dragged on, and the Central Bank began to gradually devalue the sum – from 9 to 15 March, the US dollar exchange rate increased from 10 897 to 11 033 UZS per $1, i.e. by 1.2% in a week.

However, this is a meager devaluation of the sum, given that in the second half of March and early April, the season for shipping early vegetables to foreign markets starts. The russian, Kazakh and Kyrgyz markets are the main ones, and their currencies have fallen significantly against the US dollar. In addition, shipments of dried fruits and vegetables, as well as frozen ones, continue and will continue. By that time there was an understanding that the war was entering a protracted phase, and the negotiations had not yet yielded visible results. From 15 to 18 March, the US dollar exchange rate rose sharply – from 11 033 to 11 572 UZS per $1, i.e. by 4.9% in 3 days.

Thus, from February 24 to March 18, 2022, the US dollar exchange rate in Uzbekistan increased from 10 840 to 11 572 UZS per $1, i.e. by 6.8%. But this is not enough to make Uzbek goods competitive in price in the main sales markets, where the devaluation was more significant. On the other hand, effective demand in the key sales markets, especially in russia, also fell sharply, so even with a sharp currency devaluation, it would not be easy to maintain high volumes of product exports. In addition, a sharper devaluation of the national currency of Uzbekistan could have a negative impact on inflation indicators.

Consumer sentiment in Uzbekistan and panic buying

During the audit of the stores of the supermarket chains in the capital of Uzbekistan, as well as in communication with the residents of the country, EastFruit experts did not notice any critical changes in consumer sentiment.

A short-term excitement arose due to a temporary ban on the supply of russian wheat and sugar, but the official authorities reacted almost immediately and reassured the population with statements that there would be no shortage of wheat and sugar in Uzbekistan! For example, wheat will be provided with local production plus imports from alternative suppliers, sugar will be bought from an alternative supplier – Brazil. Here is an example of a statement by the Ministry of Agriculture.

Nevertheless, there was an impact of such a ban on consumer sentiment. Some chains have introduced restrictions on the sale of sugar in one hand: in the “Basket” – 2 kg per person, “Macro” – 4 kg, but “Havas” sells 10 kg. In the Carrefour chain, people also freely buy 10 kg of sugar. The Kazakh chain “Magnum” even touted buyers during the celebration of Navruz by the fact that they had a lot of sugar at a bargain price.

Many older people made a stock of pasta, cereals and other essential products just in case, but this did not have a critical impact on the provision of stores with goods, but rather contributed to a short-term increase in sales.

Otherwise, there are no changes in consumer sentiment in the capital of Uzbekistan, including excitement or panic.

The range of food in supermarkets in Uzbekistan and the structure of crops

Changes in the range of vegetables and fruits, other food products, as well as other categories – including household chemicals, medicines and other essential goods, are currently not observed in Uzbekistan.

Similarly, no intentions to change the structure of sown areas in Uzbekistan have been noted so far. Farmers are more concerned about the impact of weather in March 2022 on their crops than any possible food shortages.

Remittances from migrants  

Money transfers from labor migrants can be problematic. The impact of the war in Ukraine on the volume of cross-border transfers to Uzbekistan from labor migrants can be much more negative now than during the COVID-19 pandemic, when a large part of labor migrants “stayed at home”.

Since about 75-80% of labor migrants’ remittances come from russia (65-70%) and Kazakhstan (7-10%), the impact will have two aspects. First, the depreciation of the russian ruble automatically reduced the income of “russian” labor migrants by 25–30% in US dollars, and that of “Kazakh” migrants by about 15–18% in US dollars. Even without taking into account other factors, the devaluation of the russian ruble and the Kazakh tenge is already leading to a significant decrease in the volume of remittances from these countries.

The second point is a severe deterioration in the economic situation in russia and, as a result, in Kazakhstan, too, since the economy of the latter is closely interconnected with the russian economy. The consequences for Uzbek labor migrants are an increase in unemployment in russia, a sharp reduction in demand for foreign labor, and, most likely, a decrease in wages of migrants. All this leads to a reduction in the number of labor migrants, to a greater extent in russia and probably to a lesser extent in Kazakhstan, as well as a decrease in their income.

In early March, the Agency for External Labor Migration conducted an anonymous survey among labor migrants on its official Telegram channel.

The respondents were asked the question: “Do you plan to return to Uzbekistan from russia in the nearest future?“. Four response options were then offered, and the results are as follows:

As of March 18, 2022, 13 600 respondents participated in the survey.

As can be seen from the table, so far only 35% of respondents are firmly convinced to continue their work; 24% may return if the russian ruble continues to depreciate; and 41% of respondents want to return to Uzbekistan due to a sharp decrease in income due to the devaluation of the ruble or because of the loss of a job. According to various estimates, there are 1.5-2.0 million labor migrants from Uzbekistan in russia.

If we sum up these two aspects (devaluation of the russian ruble and Kazakhstani tenge + deterioration of the economic situation, first of all in the russian and then Kazakhstani economy), we can imagine how the total volume of remittances to Uzbekistan can decrease.

For your information, according to the Central Bank of the Republic of Uzbekistan, the volume of receipts through the international money transfer systems for 12 months of 2021 amounted to $8.1 billion, which is 34% more than in 2020 and 2019. According to rough estimates, 65-70% of this amount comes from russia – about $5.5 billion and 7-10% from Kazakhstan – about $650 million.

This is a serious inflow for the economy of Uzbekistan and how much it will decrease in 2022 is a big question. The first results will be visible in the 1st quarter of 2022, and the fullest effect will be seen in the 2nd quarter of 2022. Even if revenues are reduced by a third at the end of the year, which is quite likely, Uzbekistan will not immediately get $2.7 billion.

This is equivalent to the total absence of exports of fruits and vegetables from Uzbekistan for three years! Accordingly, this will seriously affect all other segments of the country’s economy.

In terms of estimates, the World Bank forecasts a 21% decline in remittances to Uzbekistan, but this forecast was released before a survey of labor migrants on plans to return to Uzbekistan from russia. Therefore, taking into account the results of this survey – that is, the current sentiment of Uzbek labor migrants, this assessment can be adjusted towards a more negative impact.

By the way, for the convenience of migrants and their relatives, all banks in Uzbekistan buy and sell the russian ruble now, since russia itself has an acute shortage of foreign currency in cash. This alleviates some of the problems, but does not solve them.

State regulation

The first measures to regulate prices are taken by the government in relation to sugar. In some regions, its prices even rose to 20 000 UZS/kg. Prices for buckwheat, which was also mainly imported from the russian federation, increased significantly.

Also, the government of Uzbekistan is now trying to intensify trade with Asian countries, in particular with Pakistan, Iran, India and China, in order to reduce trade dependence on supplies from russia. In addition to potatoes, they have already begun to buy meat from Pakistan.

We hope that this will also expand the possibilities for exporting fruits and vegetables from Uzbekistan in 2022.

Conclusions   

The situation in the food market in Uzbekistan remains stable at the moment, but we should expect an increase in inflation in the country and a deterioration in the overall macroeconomic situation due to a decrease in remittances from labor migrants. Also, food prices are likely to keep rising in the coming months affecting the access of the country’s poorest residents to the minimum set of food calories. The situation may worsen if many labor migrants from russia and Kazakhstan return in the event of a job loss, as they will also want to buy a food basket that has risen in price. This will lead to the need to increase imports while reducing incomes.

There is also concern about the prospect of exporting fruits and vegetables to the markets of russia, Kazakhstan and Kyrgyzstan, where there is a decrease in the level of incomes of the population and the devaluation of local currencies. This may lead to a decrease in the income of the country’s farmers and the curtailment of investment projects in this area.

The crises with high food and energy prices, complex and expensive logistics, and the growing number of trade barriers in the world are likely to persist for several years and will have a global nature.

Сообщение Uzbekistan: food security, exchange rate, macroeconomic stability появились сначала на EastFruit.

In this article, we will outline the situation regarding the food security, macroeconomic and financial stability, as well as consumer sentiment in Tajikistan and try to assess the prospects and options for the developments in the future, given russia’s perfidious invasion of Ukraine, which undermined the foundations of the well-being of the whole world.

Tajikistan is a net importer of food. The negative trade balance is about $800 million per year. In other words, relatively small Tajikistan has a sharper negative food trade balance than neighboring Uzbekistan.

At the same time, 31% of imports are direct deliveries of food from countries that are directly involved in the war. About 30% of Uzbekistan’s food is imported from russia and about 1% from Ukraine. Imports from belarus are relatively small. The data on the supply of food from russia to Tajikistan may be somewhat underestimated, as partially food enters the country through intermediaries from Kazakhstan, and Kazakhstan is the largest supplier of food to Tajikistan with a share of 40%.

Tajikistan’s food exports are relatively small, less than $100 million a year. However, the real numbers could be significantly higher. Nevertheless, the country’s dependence on exports is indeed not too high in most positions. Only in the category of fruits and dried fruits, as well as some early vegetables, the opportunity to export helps maintain prices in the domestic market. Of course, the sharp decline in the purchasing power of russian residents is bad news for Tajik exporters and encourages them to look for alternative markets right now.

The most sensitive positions of food trade in Tajikistan

Tajikistan’s critical import categories are wheat and wheat flour, vegetable oils and fats, and sugar. These three product categories account for more than 55% of all imports. About 10% more are fodder grains and oilseed meals used in animal husbandry, where the country is also dependent on imports.

Although the dependence on russia in wheat imports is low, almost all food wheat in Tajikistan comes from Kazakhstan. At the same time, Kazakhstan recently announced that wheat exports could be banned or severely restricted, which could create serious problems for Tajikistan.

There should be no big problems with vegetable oil, although the increase in its cost will affect its availability for low-income segments of the population.

Slightly worse is the situation with sugar, which Tajikistan partially imported from russia and belarus. However, the main supplier of sugar to the country is India, which means that Tajikistan can try to increase the volume of imports from it. In any case, one should expect price growth here too, which is a significant problem for Tajikistan.

Feed will also become very expensive for the country’s livestock producers. Ukraine, which has been the largest feed exporter in the region, will obviously not enter the market many more months, even if the war ends. Although feed can be bought, its prices could rise the most, hurting Tajikistan’s already not-so-efficient animal husbandry and exacerbating the country’s access to this important source of protein.

The exchange rate of the national currency of Tajikistan somoni

Before the start of russia’s war against Ukraine, the official exchange rate of the Tajik somoni against the dollar was 11.3, and now it is closer to 13.0. Due to the panic that arose, the exchange rate on the black market even rose to 14.8 TJS, but then it was fixed at a level close to 13.0 TJS.

Accordingly, almost all imported goods in the country have risen in price along with the exchange rate by at least 20%. At the same time, according to market participants, many traders are already counting the rate at 15 TJS, as they are not sure that they will not go bankrupt later. Thus, the increase in price is 30%. This applies, of course, only to imported goods.

In relation to the russian ruble, the local currency has risen in price by more than 40%, and the rubles that migrants send have depreciated in relation to the local currency.

Consumer sentiment in Tajikistan and panic buying

In rush days after the start of the russian war against Ukraine, when it became clear that russia’s plan had failed, people massively bought oil, flour and sugar. They, in turn, have risen in price by 30%. All this was aggravated by russia’s bans on the export of these goods.

Traders reacted quickly and immediately increased the supply of sugar from India. Indian sugar is 20% cheaper than russian, but many people prefer products from the russian federation, considering them to be of higher quality.

Also, consumers began to buy pasta. It is produced in Tajikistan from Kazakh flour. Therefore, even local pasta has risen in price by 30% or more. Imported pasta from russia has risen in price by 50%. The price of local oil also went up by 20-30% (sunflower and cottonseed). The import of cottonseed oil from Uzbekistan has increased.

Many people have stopped investing in real estate, and sales in the used car market have risen, which may have implications for the construction business in Tajikistan in the long run.

Meanwhile, the range of food products has not changed. There are still no empty shelves in stores, and all products are constantly present. Only the prices have changed.

Will the crop structure in Tajikistan change this year?

The crop structure is unlikely to change drastically. Only onions in large volumes were exported to the russian federation, but they were sown in the fall. Farmers just keep doing what they always do and grow the crops they are used to.

Nonetheless, farmers complain about very high prices for fertilizers, which have risen sharply in recent years. However, prices had risen even before the start of the russian invasion of Ukraine. The news was that russia stopped exporting fertilizers to Tajikistan.

Therefore, since everything is expensive, Tajik farmers will use fewer fertilizers this year. Leading farmers have already bought fertilizers for the upcoming season in winter or transport them from Uzbekistan, since the roads have opened and COVID-19 restrictions with Uzbekistan have been lifted.

However, there will be a decrease in the volume of fertilizer use for the new crop. And this means that the average crop yield is likely to decrease.

The impact of remittances from labor migrants on the Tajik economy

Tajikistan is one of the leading countries in the world in terms of the share of remittances from migrants in the structure of GDP. For example, at the beginning of the global crisis, in 2008, 49% of Tajikistan’s GDP came from migrant remittances, according to one of the studies. However, we do not have exact official data on the current share of remittances from migrants. Clearly, its impact on the economy and macroeconomic stability of Tajikistan has been and remains huge.

It is obvious that the collapse of the exchange rate of the russian ruble against the US dollar will reduce the volume of cash receipts proportionally. At the same time, Tajik migrants themselves see no reason to return home. They say that prices for the basic products they buy in russia have not risen much, but the cost of renting housing has increased.

There are still many people in Tajikistan willing to go to russia. Trips have become more difficult, as there were no flights to russia for two weeks. However, it seems that the number of flights has been restored now due to the re-registration of aircraft stolen by russia. This means that the flow of migrants will most likely remain large.

Among the measures of state support for business, one can note the introduction of a moratorium on inspections of entrepreneurs until the end of 2022.

Banks realize that the inflow of foreign currency will decrease, so they have already begun to increase the percentage on foreign currency deposits in order to attract foreign currency. By the way, free access to the conversion of the Tajik currency into dollars is available only for the import of vegetable oil, flour and medicines. Banks do not give foreign currency for others aims. There are long queues for currency conversion in banks.

Imports from the russian federation continue to arrive, banks are selling rubles.

What products in Tajikistan have risen in price most sharply?

Sugar and pasta from the russian federation, as well as fertilizers, have risen in price more than others. The increase in prices for other products was within 20% due to changes in the exchange rate.

Prices for imported vegetables and fruits also rose in line with the exchange rate, but prices for local products did not change much, except for normal seasonal changes.

Conclusions

The rest of 2022 will be challenging for Tajik consumers as the war in Ukraine drags on, sanctions against russia continue to escalate, and global food and fossil energy markets become increasingly tense and unpredictable.

Tajikistan will be most affected by trade restrictions imposed on grain and other basic products by major supplier countries. As for the macroeconomics, the impact of a decrease in the country’s income from remittances from migrants will be tangible. This may have a negative impact on the construction and some other related industries.

Producers of vegetables and fruits may also feel the negative consequences of a decrease in effective demand for their products in russia, belarus and Ukraine.

Сообщение Tajikistan: Food security and macroeconomic stability under threat появились сначала на EastFruit.

The nut business in Uzbekistan has been attracting a lot of investment in recent years, as the country has excellent conditions for growing a wide range of nut crops. EastFruit analysts have prepared a review of prices for the main nuts grown in Uzbekistan, and compared them to last year prices.

First of all, we note that pistachios of local production remain the most expensive nut in Uzbekistan. It is a wild plant that belongs to forest products in Uzbekistan. These pistachios are smaller in size than the cultivated ones, but the country has been trying to establish the industrial cultivation of these expensive nuts for several years, and announces very ambitious plans in this area.

Inshell hazelnuts in Uzbekistan are the second most expensive nut. Moreover, they cost much more than in Georgia or even in Russia. Wholesale hazelnuts in Uzbekistan can be 3 times more expensive than in Georgia, and they could also be grown there. However, so far there are no initiatives to grow hazelnuts in Uzbekistan.

Inshell almonds in Uzbekistan are not as expensive as in other countries, but they also differ in quality. There are local almonds, but there are almost no industrial fruit-bearing almond orchards in the country. As for walnuts, it is the most affordable type of nuts. In this segment, Uzbekistan has started laying industrial orchards, mainly of the Chandler variety.

How have prices for nuts changed in Uzbekistan over the year?

As you see in the chart below, prices for nuts have changed significantly over the year. Moreover, two types of nuts fell sharply in price, while the other two, on the contrary, rose sharply.

It should also be noted that wholesale prices for nuts in Uzbekistan change contrary to the global trends. First of all, walnut prices have decreased by one third, while, on the contrary, global walnut prices are at a record high now. Obviously, there is an issue with the quality and consolidation of walnut volumes for export, although Uzbekistan is among the world leaders in the export of walnuts.

The price of pistachios has risen by almost a third, but this is in line with global trends. The pistachio harvest in 2021 should have been low in the US and Turkey, as pistachio is known for its intermittent fruiting. However, a drought in California exacerbated the problem (see how pistachios are grown in the US here).

Iran, where a good harvest was expected, also did not have it due to weather anomalies. But the demand for pistachio in the world continued to grow. By the way, Uzbekistan has also increased its imports of pistachios in recent years, buying up to 1 000 tonnes, mainly from Iran.

The 35% decrease in the price of almonds compared to last year is contrary to global trends. Globally, almond prices have risen substantially from a very low level of last year. The main reason is the sharp decline in the almond harvest in California due to drought and water shortages (see how almonds are grown and processed in the USA here). Uzbekistan does not import almonds and actively sells them abroad.

The decrease in hazelnut price in Uzbekistan by 20% per year corresponds to the trends of the global market. The hazelnut harvest in the region has increased significantly this year having led to lower prices. Uzbekistan usually imports hazelnuts from Georgia and Azerbaijan. And in these countries, hazelnut prices decreased in the 2021/22 season.

We also note that prices for the main nuts in the Uzbek market have remained relatively stable in recent weeks. However, some changes can be expected in the near future, given the trends described in the article.

Сообщение An overview of prices for walnuts, pistachios, almonds and hazelnuts in Uzbekistan появились сначала на EastFruit.

According to EastFruit analysts, the region’s potato market has stabilized after massive imports in the first half of the season. Harvesting of early varieties of potatoes will start in the southern regions of the countries of Central Asia in the coming months. In the meantime, intermediate conclusions can be drawn on the change in potato prices over the year, where they are the lowest now, and where you have to pay more.

As we see from the table below, Poland became the leader in terms of the relative increase in the price of potatoes. However, the situation with potatoes in Poland was very difficult last year – lockdowns and the closure of restaurants and hotels led to the shutdown of factories for processing potatoes into French fries. This led to a drop in prices to a critically low level. Therefore, the base for comparison was too low and such a figure should not surprise anyone. Even with such a seemingly sharp increase in the potato price in Poland over the year, it is now lower than in the “pre-Covid” years in the same period.

But for other countries the price dynamics is indicative. In Ukraine, where the quality of potatoes is low and temporarily they cannot be exported even to Belarus, prices are now 36% lower than last year. This is despite the fact that prices have increased quite significantly over the year in all neighboring countries. Belarus is the leader in terms of price growth in the region – potatoes are now on average 60% more expensive there than last year.

Russia managed to stabilize the market with large imports, including imports from Iran. Therefore, potatoes in Russia are on average 50%  more expensive than at the same time in 2021. In Uzbekistan, the price of potatoes has risen by 43% over the year, and the record of potato imports was updated again. Given the situation in Uzbekistan, the market in Tajikistan looks surprisingly stable, where potato prices have not changed at all over the year and are at a quite affordable level. Local experts explain this by the fact that local potatoes are not originally intended for exports, so it is rather difficult to collect a commercial batch of potatoes of uniform quality in Tajikistan. This protects the market from rising prices. Otherwise, local potatoes would have long ago been exported in larger volumes to the Russian Federation, Kazakhstan and Uzbekistan.

Noteworthy is the moderate increase in potato prices in Georgia and Moldova. Both countries quite unexpectedly became exporters of potatoes in the 2021/22 season, which allowed prices to rise slightly.

However, if we look at the absolute price level, it turns out that potatoes in Moldova are still relatively cheap. Obviously, market participants are dissatisfied with this. Moldova can import from Ukraine, where prices are the lowest in the region, or in Poland, where they are only $0.02 higher than in Ukraine.

On the other side of the table is Uzbekistan with the most expensive potatoes in the region, as it was last year. Nonetheless, the gap between Uzbekistan and Russia in terms of potato prices is very large. Russia and Georgia also have a high level of prices for potatoes, as it was last year. Belarus joined them this year, where prices are usually much lower than now.

Сообщение How have potato prices changed over the year in Eastern Europe and Central Asia? появились сначала на EastFruit.

The EastFruit team recognized weather disasters as the main event in the fruit and vegetable business of Uzbekistan in 2021. A comprehensive description of the TOP-10 events is available here: part 1, part 2.

In this material, we will provide you with a detailed analysis of how frosts affected the prices for fruits, nuts and vegetables in Uzbekistan in 2021, as well as their exports. The following fruits and nuts are reviewed here: apricot, apple, pear, cherry, peach, nectarine, plum, persimmon, almond, walnut, pistachio and table grapes.

The production volumes of many key fruits for Uzbekistan, especially of early varieties, have sharply decreased due to frost. Their prices in 2021 were also high, which affected the volume of both exports and domestic consumption.

As EastFruit analysts forecasted, the apricot crop suffered the most from frosts. During the mass harvest season in 2021, the average wholesale prices for apricots increased 6-7 times and ranged from 13 000 to 40 000 UZS/kg (from $1.2 to $3.8/kg), while in the same period in 2019-2020 average wholesale prices ranged from 2 000 to 6 000 UZS/kg (from $0.2 to $0.6).

With such prices and volumes available for exports, the exports volume of apricots has sharply decreased. Exports in physical terms amounted to only 9.5 thousand tonnes in 2021, having decreased by almost 6 times compared to 2020, and turned out to be the lowest exports volume in 5 years. Prior to that, Uzbekistan was actively increasing the exports of apricot, and became the second largest apricot exporter in the world in 2020, second only to Spain.

Further, the list of “victims” was continued by apple, pear, peach/nectarine, plum, persimmon, cherry, walnuts, pistachios and almonds.

Apple: in the third decade of June 2021 – in the midst of the harvest season for early apple varieties, their average wholesale prices were at least 2.5 times higher than in the 2020 and 2019 seasons. In the past few years, Uzbekistan has been searching for an export niche for early apples in more northern countries, primarily in Russia. However, there was no question of exporting at such high prices. Another factor was the unexpected drop in apple prices in Russia in the summer, as stocks in most countries of the region turned out to be record high, and even Turkey and Iran have increased apple supplies dramatically. At the same time, many seem to have forgotten that the demand for apples in summer in Russia always sharply decreases, because of seasonal berries, fruits and vegetables available on the market.

Fortunately, the early apple harvest was unusually low in Uzbekistan. At the end of June 2021, EastFruit experts forecasted a sharp decline in the exports of “summer” apples in 2021 compared to previous years. Later, the statistics on foreign trade confirmed this: the volume of apple exports from Uzbekistan from May to July 2021 amounted to 6 thousand tonnes, having decreased 2.8 times compared to 2020 and being the lowest in the last 5 years.

As for mid and late-ripening apple varieties, EastFruit published an article at the end of their mass harvest season – at the end of September 2021, covering the effect of frost on the apple harvest in different regions of the country. Weather anomalies had a severe negative impact on the apple harvest in Uzbekistan. Average wholesale apple prices in 2021 were at least a third higher than in the 2020 and 2019 seasons.

Pear: The pear harvest was more affected by early frosts than the apple harvest. The average wholesale price for pears was 22 000 UZS/kg ($2.1) even at the end of the harvest season for late-ripening varieties at the end of October 2021, which is 38% higher than on the same date in 2020 and 3 times higher than in 2019. From the beginning of November to December 25, 2021, wholesale prices for pears increased by another 14%, updating all records.

Although Uzbekistan is a net importer of pears, it exported 1 thousand tonnes of pears worth $1.1 million from June to September of last 2020. Due to the low harvest and high prices for pears, the volume of exports fell almost 3 times in physical terms, and exports earnings – 4.5 times in the same period in 2021.

Peach/Nectarine: In the 2021 season, their average wholesale prices were 2.5-3 times higher than in 2020 and 2019. Exports of peaches and nectarines amounted to 55.2 thousand tonnes in 2021, having decreased by 36% compared to 2020. Notably, Uzbekistan exported 82.2 thousand tonnes of peaches and nectarines in 2020, ranking 5th among their largest exporters in the world.

Plum: Average wholesale prices for plums in Uzbekistan during most of the 2021 season were about 3 times higher compared to the 2020 and 2019 seasons. In addition, the season was abnormally short in 2021 – there were no longer any plums offered on the wholesale markets in the second decade of September, whereas in 2020 plums were available on the market until mid-November.

Despite high prices and a short season, exports of fresh plums fell by only 14% in physical terms compared to 2020. At the same time, the exports have been declining for the second year in a row, indicating that the relatively low harvest in the 2021 season is not the only reason for the decline in exports in the final year. Moreover, the volume of exports of plums in physical terms in 2020 and 2021 was even lower than in 2017 and 2018. With the exception of 2019, there has been a steady downward trend in the dynamics of plum exports from Uzbekistan over the past 5 years.

Persimmon: After declining persimmon exports for two years in a row in 2018 and 2019, Uzbekistan exported a record volume of persimmon in 2020 and even entered the Top-4 largest exporters of persimmons in the world. However, the peak harvest of persimmons in 2021 started 10 days later than usual and the 2021 harvest was lower than in 2020 due to weather anomalies. In addition, the purchase prices of exporters from farmers in 2021 were higher than last year: they were about 30% higher at the beginning of October 2021, and by mid-October, they were already 70% higher than in 2020.

The season for exporting persimmons from Uzbekistan starts in the third decade of August and ends in the second half of January next year, but the peak accounting for about 98% of the total exports volume lasts from September to December inclusive. According to the Customs Committee of Uzbekistan, the export of Uzbek persimmon in physical terms reached 74 thousand tonnes from the beginning of August to December 25, 2021, which is 23% less than in the same period in 2020.

Obviously, the decline in the harvest of persimmons in Spain allowed Uzbekistan to get a higher price for its fruits when exported, but the harvest in Uzbekistan turned out to be lower than expected. Thus, local consumers also had to pay more for this traditional fruit, and its consumption in Uzbekistan has apparently decreased.

The cherry harvest was less affected by weather anomalies compared to other stone fruits. More precisely, it was the early varieties of cherries that were affected, as well as the harvest in those regions that supply cherries earlier than others.

Therefore, cherries became available in large volumes on the market and their mass harvesting in the 2021 season started 7-10 days later than last year, with rather high prices. At the beginning of the harvest season, average wholesale prices for cherries were 1.5-2 times higher than last year, depending on the caliber. Prices began to decline sharply as the harvest season entered a peak phase, and by its end, average wholesale prices were already 10-25% lower than last year, depending on the caliber. Moreover, the rate of decline in prices for large-caliber cherries was higher than for small ones.

In the article “Uzbekistan: the best cherries are exported cheap, and small cherries are expensive for the domestic market,” EastFruit analysts explained why prices for more valuable cherries that are suitable for exports declined much faster than those for smaller cherries.

Nevertheless, cherry became the only product among stone fruits, the export volume of which Uzbekistan sharply increased in 2021, and exports doubled to 60.1 thousand tonnes in physical terms (worth $83.1 million) against 29.3 thousand tonnes (worth $56.4 million) in 2020. This was a record volume of cherries exported from Uzbekistan ever. However, the price was close to the anti-record.

Walnut: the harvesting of walnuts in Uzbekistan starts in early September, and EastFruit analysts made preliminary estimates of damage from weather anomalies to the walnut harvest based on interviews with farmers in mid-September 2021. According to producers, frost damage to the walnut harvest ranged from 5% to 50%, depending on the region. On average, Uzbek farmers received less than 20-30% of the walnut harvest.

At the end of the season of mass harvesting of walnuts, the average wholesale prices for inshell walnuts were 30-40% higher than last year.

Despite relatively high prices, exports of walnuts of the 2021 harvest increased. According to preliminary data, Uzbekistan exported 2.2 thousand tonnes of walnuts of the 2021 harvest worth $8.5 million from September to December 2021, which is almost 63% more in physical terms and 25% more in terms of export earnings compared to the same period in 2020.

Surprisingly, the physical volume of walnut exports from Uzbekistan increased more than the proceeds from them, while the global prices for walnuts were growing at record rates. Nevertheless, the exports price of Uzbek walnuts turned out to be lower than last year.

Pistachio: The frost damage to the pistachio harvest was much bigger than the damage to walnuts, which was reflected in its high prices. It should be reminded that pistachio mainly grows wild in the mountainous regions of Uzbekistan. However, interest in the industrial cultivation of pistachios in Uzbekistan has been steadily growing in recent years, and some very ambitious plans have been announced. Moreover, the conditions for growing pistachios in Uzbekistan are almost ideal.

Harvesting of Uzbek pistachio starts in the first decade of August and ends in the third decade of September. The average wholesale prices for pistachios were 160 000 UZS/kg at the end of the harvest season, i.e. at the end of September and the beginning of October 2021, which is 60% higher than in the same period in 2020 and 2019. Wholesale prices for pistachios remained at this level until the end of December 2021.

You can watch how pistachio is grown in California, USA in this video.

Almonds: according to the survey of farmers in Uzbekistan by EastFruit experts after the second wave of frosts in the second half of March 2021, the possible loss of almond harvest was estimated from 30% to 90% depending on the region. As low harvest was expected, prices for almonds in Uzbekistan literally skyrocketed. From late March to mid-June 2021, the average wholesale price for inshell almonds doubled – from 50 000 UZS/kg to 100 000 UZS/kg (from $4.8 to $9.4), which is about 80% higher than on the same date in 2020. Prices remained at this level until the 20th of August when the new harvest of mid-season almond varieties started.

However, wholesale prices for almonds began to fall then, and a steady downward trend formed in the market. From the end of August to the end of November 2021, the average wholesale prices for inshell almonds decreased 2.5 times and reached 40 000 UZS/kg ($3.7). As a result, the average wholesale prices for almonds from the end of November to the end of December 2021 were 35% lower than in the same period in 2020.

What explains such a sharp drop in prices for almonds after serious crop losses expected and no imports of almonds to Uzbekistan?

According to the Uzbek EastFruit team, there are two reasons for this. First, the worst loss expectations were met only on early almond varieties, the harvest of which starts at the end of July. The yield of mid-season and late varieties, the harvest of which starts in the second half of August and September, respectively, was better than expected. The second reason is the expansion of almond plantations in Uzbekistan. The market began to receive almonds from new orchards this year, which have begun to bear fruit, affecting prices.

Grapes: 

Weather anomalies in winter and the first two weeks of spring in Uzbekistan did not have a large impact on the grape harvest. However, the relatively low level of precipitation in spring, problems with irrigation in some areas of the central and southern regions of the country, as well as hot and dry summer, led to a decrease in grape yields in Uzbekistan in 2021.

Despite this, the volume of table grape production in 2021 was still higher than in 2020 due to the expansion of vineyard areas. Over the past four years, 52 000 hectares of new vineyards have been planted. As of early July 2021, grapes are grown in Uzbekistan on an area of ​​90 000 hectares. As a result, average wholesale prices for grapes in the 2021 season in Uzbekistan were about a quarter cheaper than in 2020.

No wonder that Uzbek producers and exporters faced an oversupply of table grapes on the Russian market in the midst of the export season. Moscow’s largest fruit and vegetable wholesale market, Food City, was oversaturated with grapes from Uzbekistan in late August and early September, and their prices were extremely low. This is quite natural, as the supply of grapes from competing countries such as Turkey, India, Moldova, Armenia, Iran and Azerbaijan keeps growing. Many of these countries offer more modern varieties in more modern and retail-friendly packaging.

As for the competitiveness of table grape varieties grown in Uzbekistan in foreign markets, including the possibility of opening new sales markets, the prospects for Uzbekistan are far from being promising, EastFruit analysts say. The article with a rating of the most popular varieties of table grapes in Uzbekistan published in May 2021 caused a heated discussion among winegrowers and showed that the industry needs to take urgent measures if it wants to maintain its position in this competitive market.

Uzbekistan is the largest exporter of table grapes in Central Asia and one of the Top-15 world’s largest exporters. Moreover, grapes are the main export position of Uzbekistan in the fruit and vegetable sector, especially if we take into account the exports of raisins. Unfortunately, the exports of Uzbek grapes is limited to post-Soviet countries – almost the entire export volume of Uzbek table grapes is bought by three countries: Russia, Kazakhstan and Kyrgyzstan.

At a meeting on the development of viticulture and industrial processing of grapes in July 2021, the head of state set the task to create new export-oriented plantations in 44 regions of Uzbekistan based on the experience of past years. To this end, it is envisaged to allocate additional subsidies and compensations from the budget, incentives for the import of equipment and technology used in viticulture, tax incentives, resources to banks to finance the planting of vineyards in the amount of $100 million, and to create new high-yielding, seedless, cold-resistant and disease-resistant grape varieties based on foreign experience.

Unfortunately, these measures can only lead to an aggravation of the surplus of grapes on the market and a further drop in prices. Uzbekistan does not need to increase the volume of grape production, but to renew plantations, laying down varieties that are more promising and demanded on the global market.

Table grapes became second after cherries in the fresh fruit segment in terms of the growth rate of export volume in physical terms in 2021. Uzbekistan exported 212.1 thousand tonnes worth $144.8 million from June to December 2021 (the season for the export of table grapes from Uzbekistan starts in the second half of June). Compared to the same period in 2020, the exports of grapes increased by 62% in physical terms and by 16% in exports earnings.

Unfortunately, such a large difference in the growth of physical volume and revenue is explained by the prices for exporting Uzbek table grapes being about 30% lower in 2021 than in 2020. If we take into account the sharp rise in the cost of logistics this year, it can be assumed that the income of winegrowers from such exports decreased even more significantly. And this is another proof that Uzbekistan should not increase the volume of grape production, but work on modernizing the entire industry: from replacing varieties to improving processing, cooling, packaging and logistics.

Сообщение Uzbekistan 2021: fruits, nuts, grapes – the analysis of prices, production and exports появились сначала на EastFruit.

This is the second part of the analytical material by the EastFruit team on the most important events in the produce market in 2021 that will influence further developments in the sector. You can read the first part of the material here.

6. Very expensive Ukrainian borsch – table beets, onions, carrots and cabbage

Never before have vegetables of a “borsch set” in been as expensive as in 2021. However, there were various reasons. It is better to break the analysis into seasons, as each was very different.

To detail all the events in the market for vegetables of the “borsch set” in 2021, we would have to write several huge analytical articles. So, we will summarize them and list the key factors that led to such high prices in the market.

The situation on the Russian market has become one of the key factors influencing the Ukrainian market. Ukraine cannot directly export food products to the Russian market, but it still affects the situation in Ukraine. The forecasts we made when discussing the crisis in Russian vegetable growing 2 years ago in the article “Crisis of vegetable farming in Russia” came true in 2021. Supply and demand in the Russian market led to such a sharp increase in table beet and carrot prices that they became the cause of memes on social networks.

Naturally, Russian importers and supermarkets tried to eliminate the shortage of products by all possible means, which led to price increases in all countries supplying vegetables to Russia. One of them was Belarus, that filled its own shortage of vegetables by imports from both the EU and Ukraine. This resulted into prices for these goods in Ukraine reaching very high levels.

This allowed both growers and resellers, who bought beets during the autumn harvest, to make very good money on their resale in spring. However, Ukrainian vegetable growers did not increase the area of beet plantations, but kept reducing it. Therefore, many market participants had an idea to hit the beet jackpot in the 2021/22 season. There is still a chance they can do it.

The developments on the cabbage market were similar. In the new season, Russia faced an acute shortage of cabbage, provoking its price increase in all countries of the region, including Ukraine. As a result, wholesale prices for cabbage in Ukraine in mid-December 2021 exceeded last year’s levels by 5-6 times and were a record for this month. Thus, the imports of cabbage from Poland started, but the exports to Belarus (and to Russia) did not stop either.

The only question is, what will be cabbage prices in Ukraine in spring, and where will Ukrainian importers buy cabbage? It is not excluded that cabbage will have to be imported from Uzbekistan in March, where its prices are also record high, but a new harvest is to start in March.

Speaking about Uzbekistan, we can move on to the most sold position of the “borsch set” – onions. Ukraine faced severe price swings here, too.

The year started with record low prices for onions in Ukraine. The export of onions was record-breaking, but it did not please vegetable growers, as it did not help to raise the price level. We advise you to study this analytical article, where the reasons for such price swings were explained in great detail.

One of the most resonant EastFruit news about the onion market in 2021 was the message that the first wholesale lots of Uzbek onions arrived at the wholesale markets of Ukraine, when the last onions were still being harvested in Ukraine. Onion prices are usually very low during this time, but this year the imports started early.

Moreover, Russia had nothing to do with the import of onions to Ukraine after the record exports. Fruit-Inform analysts explain this with several reasons. The first is the extremely low onion prices in recent seasons, which forced the least efficient vegetable growers to stop growing onions. Secondly, the weather was unfavorable during the harvesting of onions in 2021. Therefore, a lot of onions with high humidity were laid in storages, and there are very few modern onion drying and processing technologies in Ukraine. Consumers needed high-quality onions, the deficit of which was discovered in autumn.

Therefore, wholesale prices for onions in Ukraine were almost 3 times higher by the end of 2021 than in 2020 and almost 1.5 times higher than in 2019.

Among the reasons for the record high prices for vegetables of borsch set in Ukraine, experts noted a sharp rise in prices for grains in the past two seasons, which made their production almost as profitable for small farmers as growing vegetables. Nevertheless, the level of market and loss risks in the grain sector was much lower than in the vegetable sector. This has led to a reduction in vegetable acreage in favor of grain acreage in 2021.

7.  Upcoming changes in produce retail business

There were unusually many events in Ukrainian fruit and vegetable retail in 2021. Perhaps the main one was the rumor about the entry of the German retail chain Lidl into the Ukrainian market.

Despite the information not being official yet, EastFruit experts analyzed how this will affect the trade in fruits and vegetables in Ukraine, if the discounter opens its stores in Ukraine. We consider this quite likely to happen. Our analytics on the issue was widely discussed among owners and top managers of supermarket chains in Ukraine.

A great event of the year was another confirmation of the high objectivity of the audits of the produce departments by EastFruit – our audits again managed to foresee the fate of the whole retail business. As in the case of the purchase of the Ukrainian Billa chain by Novus, we expected the exit from the retail business of the Furshet chain through the purchase by Silpo. The possible purchase of the Ekomarket supermarket chain, constantly occupying very low positions in our audits, by the owners of the Silpo chain was reported at the end of the year.

Silpo firing the management team of the chain’s fruit and vegetable departments became top news in 2021. Obviously, the chain is striving to improve its position in the segment, especially if it is going to expand further by purchasing weaker competitors.

An extraordinary event was the first international fruit and vegetable retail forum by the EastFruit team, APK-Inform: vegetables and fruits and UHA. The results of a unique study of the retail trade in fruits and vegetables by FAO and EBRD experts was presented there. In addition, the best supermarket chains in the produce trade in 2021 were identified and awarded in various nominations.

The winner in the main nomination “Leader of fruit and vegetable retail in Ukraine” (in terms of assortment, product quality, convenience and quality of departments and price level) was the supermarket chain “Auchan”. It also became the leader in the “Assortment of Vegetables and Fruits” nomination. The winner of the “Freshness and quality of vegetables and fruits” category was Metro, and of the “Prices for vegetables and fruits” category – ATB. The ATB chain also became the absolute favorite among the suppliers of vegetables and fruits according to the results of their survey. According to consumers, LeSilpo was recognized as the best chain.

8. Land market opening in Ukraine

Although the limited opportunity to buy and sell land plots which opened up in the midyear is still one of the most discussed topics in the fruit and vegetable community, it had minor impact on the market.

But the long-term impact of this event on the market will be huge. First of all, many investors will focus on buying out land in the next few years, which will somewhat reduce the investments in growing vegetables and fruits.

On the other hand, most farmers will now be more confident in investing money in land and infrastructure, knowing that this land belongs to them.

However, investments in the purchase of agricultural land for growing vegetables and fruits in Ukraine will be relatively low in relation to those made for plantation and providing infrastructure.

For example, you need to invest about $100 000 in one hectare of an intensive apple orchard, including seedlings, irrigation, apple storage, protection from hail, sorting, etc. One hectare of land is now being sold at $1 000-2 000. This means that this is only 1-2% of investments in production.

9. Record prices for greenhouse cucumbers in Ukraine and imports from Russia

It seemed at the beginning of 2021 that the greenhouse industry of Ukraine was starting to recover and the export of greenhouse vegetables began to grow. However, the incredibly high level of gas prices in the second half of 2021 canceled all these achievements and put the Ukrainian greenhouse industry on the brink of survival. Similar was observed in many European countries.

The worst fears about the prices of greenhouse vegetables have not yet been fully justified. It is partly due to Turkey experiencing a collapse in the lira exchange rate, which spurred exports at highly competitive prices. Nevertheless, the prices did renew the records, and primarily, this concerned cucumber prices.

The last crop cycle of greenhouse cucumbers in Ukrainian farms was distinguished by record high prices, at least over the past 4 years. Many greenhouse plants have relied on growing tomatoes in the second half of 2021. As a result, the area planted with cucumbers in greenhouses was reduced. In addition, the weather was unfavorable during the growing season. The combination of the above factors led to an insufficient supply of cucumber on the Ukrainian market, and sellers often increased prices for the available volumes.

Thus, the news that Ukraine imported greenhouse cucumbers from Russia for the first time became a sensation. According to trade sources, Russian cucumbers proved to be competitive in price with the Ukrainian ones, despite the 10% import duty due to Ukraine’s withdrawal from the free trade agreement with Russia. By the way, Russia exported its greenhouse cucumbers even to Poland!

However, this did not last long, and soon problems with the supply of cucumbers occurred on the Russian market itself. Therefore, cucumber prices set new records in the second half of December in Russia and exceeded those in other countries of the region.

Russian cucumbers contributed to the stabilization of prices on the Ukrainian market, and they fell back to $1.30/kg. But when the supplies stopped, greenhouse cucumbers began to rise in price again and they were sold at no less than $1.70/kg in the second decade of December 2021 in Ukraine.

10. Failures in the cherry and watermelon markets

Watermelon was one of the main export positions of the Ukrainian produce sector in 2020, when the exports record was set. Ukraine set two new exports record in 2021: the export of watermelons was record low, as were their prices. We analyzed this in more detail in the article “Watermelon Collapse in Ukraine”. As a result, many producers failed to sell watermelon even at the lowest price, and had to leave the watermelon on fields, although the season began with early watermelon being sold at record high prices!

Will this lead to a decrease in the area of watermelon plantations for 2022 harvest? The question is rhetorical.

The situation on the Ukrainian cherry market was just the same. There were record low prices and an anti-record of exports in recent years, despite an unusually high harvest.

The domestic market in Ukraine was oversaturated with cheap cherries from the very beginning of the cherry sales season, but the purchasing activity remained rather low. And it reflected the consumer perception of the quality of Ukrainian cherries, because Ukraine updated the record for cherry imports in 2021, almost doubling it compared to 2020!

Ukrainian cherry growers blamed everyone for their problems: the lack of exports opportunities to Russia, the country’s population decline, and even the COVID-19 pandemic. However, all these arguments break down on the fact that the Ukrainians preferred imported cherries because, like consumers in other countries of the world, they want high-quality cherries. And if consumers’ requirements for the quality of cherries are constantly growing, Ukrainian growers also need to grow.

In this article, we explained why cherries in Ukraine are not that cheap and why access to the Russian market would not have saved Ukrainian farmers from low prices for cherries. Here we showed that the global market for cherries is growing faster than their production, and prices are constantly increasing, as well. In other words, there is a shortage of cherries in the world! To be more precise, there is a shortage of high-quality cherries in the world, and this is the problem in Ukraine!

Cherries in Ukraine are mainly grown without irrigation, not to mention protection from rain, hail and frost. By the way, here is an example of how some leading producers are already growing cherries in Uzbekistan. And here you can read about the most effective frost protection systems for cherries and other fruits. Besides, more and more cherry growers in different countries start growing in greenhouses.

Therefore, if the approaches to the production, cooling and processing of cherries are not radically changed, Ukraine will not only reduce exports, but will continue to increase imports of cherries.

If we missed some of the important trends, please let us know in the comments section.

Сообщение Ukraine: TOP-10 events in the Ukrainian produce business in 2021 (part II) появились сначала на EastFruit.

There were many successes for the fruit and vegetable business of Ukraine in 2021, even though it was difficult. According to EastFruit estimates, Ukraine’s  revenues from exports of fruit and vegetables will be record high by the end of 2021, as will the income of farmers.

However, not all segments of the fruit and vegetable market were doing so well – for example, potato and apple growers may not be quite happy with this year. There was a complete failure in the segment of walnuts in the first half of the year, which also unexpectedly turned into a seller’s market. There were many complaints from strawberry and blueberry growers in 2021, but those who had productive raspberry plantations, as well as sellers of raspberry seedlings, were on a roll.

There were significant changes both in fruit and vegetable retail and in Ukrainian vegetable growing.

We present our version of the TOP-10 events in the Ukrainian produce business in 2021, among which there are many price and exports records or anti-records.

The hyperlinks in the text will allow you to catch up on our publications on this specific issue in more detail.

1. Record high global prices for raspberries provoke a raspberry boom in Ukraine

The global frozen raspberry market unexpectedly started warming up in the second half of 2021. The main reason was a reported sharp decline in the harvest of raspberries in Serbia – the main raspberry exporter in the world. At the same time, the rise in prices exceeded expectations. They reached records in July and kept growing, as low raspberry prices have been convincing processors from the dairy, confectionery, bakery and other sectors of the food industry for several years to diversify their production. Therefore, fears of a shortage of raspberries forced importers to sharply increase their purchases.

The rise in prices coincided with the start of the harvesting season of summer raspberry varieties in Ukraine, so prices began to grow rapidly. In some regions, prices for frozen raspberries exceeded $4/kg in 2021 – 10 times higher than 2-3 years ago! In other words, raspberries took away the title of the most expensive berries on the market from blueberries in 2021, because they were more expensive than blueberries in some regions in summer!

Thus, Ukraine exported raspberries to the USA and Canada for the first time, which was a meaningful event for the industry. According to our estimates, the exports of frozen berries will bring Ukraine about $200 million in s earnings in 2021, becoming the main source of income for the fruit and vegetable sector. Of course, it is the merit of expensive raspberries.

The EastFruit analyst team prepared two notable materials on the state of affairs on the global raspberry market, showing that Ukraine is the current leader in the growth rate of global frozen raspberry exports, while Poland, the main importer of raspberries from Ukraine, is the fastest to increase the imports. You can also find a detailed analysis of the markets in the main exporting and importing countries of frozen raspberries there. They are full of surprises.

Naturally, interest in the establishment of raspberry plantations has sharply increased in Ukraine, both on the part of large investors and private households. Even they made good money on raspberries in 2021! Those who had only 0.1 hectare of raspberries could earn up to 100 000 UAH (about $4 000) per season selling raspberries.

Taking into account the rush, we have prepared the material “Raspberry Boom 2”, which became one of the most discussed and cited materials on berries in 2021 not only in Ukraine, but in Poland, too. In this article, we recalled raspberries dropping to 8 UAH/kg after a period of high prices, mass planting and explained the consequences of what is happening now. Of course, we took into account the availability of capacities for deep freezing of berries in Ukraine and the impact of high prices for raspberries on their global consumption. We also considered the fact that raspberries are planted not only in Ukraine – in 2021, a huge demand for seedlings was observed in Serbia, Croatia, Poland, Moldova and even in the countries of Central Asia, where raspberries were not previously grown in large volumes.

We have also prepared a handy checklist before investing in the raspberry business – “Should I plant raspberries? Checklist to define all the pros and cons” which was much cited by the berry industry.

2. Ukraine’s potato disappointments: imports and low prices

Potato markets in literally every country of the region was turned upside down in 2021. There were many records everywhere, but, perhaps, there were the most of them in Ukraine.

After the 2019/20 season, when Ukraine became one of the largest potato importers in the world, importing almost half a million tonnes in one season, mainly from Russia and Belarus, Ukraine continued to massively import in the 2020/21 season. However, everything changed dramatically at the beginning of the 2021/22 season – potato imports dropped sharply, and exports began to grow for the first time in three years.

Much has changed in neighboring countries: Belarus and Russia faced drought in production regions. The area planted with potatoes in Russia has significantly decreased, as prices have remained low for too long. Therefore, Belarus began to import potatoes during its own harvest, and there was a rush on the Russian market – potato prices were increasing every day. The threat of a shortage became real, given that Russia had banned many countries from supplying potatoes to its market.

Therefore, it was the turn of Ukraine to supply potatoes to Belarus and Russia, since Belarus has long been known as the largest re-exporter of “sanctioned” fruits and vegetables to Russia. At the same time, Ukraine exported potatoes even to Serbia, while importing from Moldova. But Moldova has been the main sales market for potatoes from Ukraine for many years! This is an extremely unusual season.

However, these were not all of the surprises of the potato market in 2021. Despite high exports, potato prices in Ukraine remained the lowest in the region! The situation was aggravated by the fact that the exports of Ukrainian potatoes to Belarus stopped due to changes in safety requirements for imported potatoes. The supply of potatoes from Ukraine to the EU was also impossible, and there was only the domestic market left.

 The average wholesale price for potatoes in Ukraine in the first 6 months of the 2021/22 season was 15% lower than in the previous season and 37% lower than in the first 6 months of the 2019/20 season. But the cost of potato production has increased significantly!

Thus, the issue of the quality of potatoes grown in Ukraine became relevant again, after it was raised at the beginning of the year by Andriy Yarmak, economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO). In his opinion, the low quality of Ukrainian potatoes is the main reason for price collapses and the unprofitability of growing, alternating with periods of large imports. EastFruit asked a foreigner’s opinion of Ukrainian potatoes in supermarkets, and Andriy Yarmak gave detailed calculations of how many billions potato growers, supermarkets and consumers annually lose on low-quality and dirty potatoes on the shelves.

During the largest annual conference “Fruits and Vegetables of Ukraine 2021”, Thomas Carpenter, a potato grower from Ireland, confirmed that it is the low potato quality that is holding back the development of the potato industry in Ukraine. His experience in growing potatoes in Ukraine and the defect rates he got on Ukrainian fields compared to what his Ukrainian colleagues get were eye-opening. However, it is gratifying that many Ukrainian potato growers began to turn to Thomas for advice after his presentation at the conference. Let’s hope for at least some progress in this area and for the potato growing of Ukraine entering the phase of sustainable development.

3. Walnut – price records and anti-records

The beginning of 2021 was really bad for Ukrainian walnut growers. Global prices were at record lows, and premium-quality American walnuts, mainly of the Chandler variety, were shipped to Europe cheaper than the cost of growing them in Italy and France. Walnut seedlings were not sold in Ukraine at all, and our analytical material “Walnut prices in Ukraine keep going down – temporary blip or end of an era?” published in January attracted great interest.

In addition to low global prices and low demand for Ukrainian walnuts in foreign markets, there were changes in the regime of exports of Ukrainian walnuts to Turkey. In contrast to duty-free imports from other countries, the duty on the import of walnuts from Ukraine led to an almost complete halt in supplies to Turkey. But Turkey is the world’s largest importer of inshell walnuts, and Ukraine used to exports more than half of its walnuts to Turkey.

Of course, this could not go unnoticed. There were first reports of uprooting fruit-bearing walnut orchards in Ukraine in spring. Naturally, the results of the 2020/21 season turned out to be disappointing for Ukrainian walnut exporters – a collapse in exports and revenue volumes.

However, everything changed dramatically even before the start of the new season. Severe drought in California and water shortages have led to a sharp decline in walnut yields in the United States. The USA is the global leader in the exports of walnuts, exporting mainly premium-quality walnuts. That’s why, market changes in the United States always directly affect global prices. Thus, global prices for walnuts began to rise sharply in June 2021.

Therefore, the 2021 walnut harvest in Ukraine started with quite high prices. Moreover, even walnuts of the 2020 harvest, which were previously not demanded, were sold at good prices.

As a result, the exports revenue of Ukrainian walnut exporters in October 2021 increased by 43% compared to October 2020, but was still 50% lower than in 2019. Despite the growing exports of walnuts from Ukraine to the EU countries, there is still no alternative for the Turkish market.

Also, market participants pay attention to the growing competition in the region. Georgia, which used to be one of the main markets for Ukrainian walnuts, is starting to export. In contrast to Ukraine, modern walnut processing is developing well there. You can see the full cycle of growing Chandler walnuts in Georgia, including mechanized harvesting using walnut harvesters from the United States at Agrovia, here. The whole process of drying, sorting, processing, splitting and packing walnuts at the modern plant of the Georgian company Anigozi can be seen in this video. We are confident that Ukrainian companies will have a lot to learn from their colleagues in Georgia.

4. Is there a crisis of apple business in Ukraine?

The first half of 2021 greatly surprised Ukrainian apple producers. Most of them expected a sharp price rise in spring, but apple prices remained more or less stable. Moreover, apples began to fall in price in June after growing imports – the EU, Moldova, Iran and Turkey entered the spring-summer period with record high apple stocks. As a result, apple processing plants started operating in Moldova again, and it was very difficult to sell apples in Ukraine.

This set a negative tone for the new season. After all, the demand for early summer apple was low, and the forecasts for the 2021 harvest were unpromising. A good harvest was expected, but the price forecasts were disappointing.

Our forecasts of a difficult apple season in 2021/22 described in the article #freshapplecrisis have so far been confirmed. As a result, prices for high-quality apples in Ukraine dropped to their lowest level over the past three years in early October this year. Nonetheless, there was still no demand in this segment even after selling prices dropped to 5 UAH/kg ($0.19/kg).

However, later there was a series of unexpected positive news that could smooth over the damage. For example, wholesale apple prices in Ukraine have not dropped to the level of the 2018/19 season. Many believe that apple stocks this year are not lower than then, and higher prices are due to increased storage capacity in new modern fruit storage facilities.

The main positive news for Ukrainian farmers was the decision of Belarus to ban the import of apples and other vegetables and fruits from the EU and a number of other countries from 1 January 2022, and not to include Ukraine in this list. Of course, Ukraine can still be added to it, but this has completely changed the market situation so far – Belarus has sharply increased the import of Ukrainian apples. This means that many Ukrainian farmers will not uproot apple orchards with old apple varieties, and investments in apple processing and the motivation to find new markets will slow down again.

Let us recall that despite the fears, the loss of access to the Russian market became a very positive event for the produce industry and helped Ukraine to sharply increase the exports of fruits, berries and nuts, increasing the proceeds from their sale. This became possible because investments in improving the quality of fruit and vegetable pay off well. Access to the Russian market does not encourage growers to make changes for the better, and, as the example of Moldova shows, the country is losing its position even in the Russian market. Moreover, while Moldova was experiencing difficulties exporting apples to Russia, Ukraine and Poland were actively supplying to Russian supermarket chains in spring 2021, as they offered apples of appropriate quality.

Nevertheless, one cannot but rejoice at the attempts of the industry to strengthen its positions. In particular, due to the apple price crisis, the Ukrainian Horticultural Association launched the first fruit trading platform operating on the basis of cooperation.

5. The collapse of prices for strawberries

In 2021, prices for the most popular berry in Ukraine brought a lot of surprises. The season for peak harvesting of strawberries in Ukraine began later than usual, so prices in mid-May were record high.

However, prices began to decline sharply at the very beginning of the season, promising a real collapse. Independent analysts also pointed to this possibility, believing that the strawberry harvest in the country will be possibly one of the highest in recent years. This is what happened – prices for Ukrainian strawberries remained extremely low from May 21 to July 8 inclusively. Freezing enterprises that have dramatically increased their capacities in Ukraine were in no hurry to buy them for processing, as there were lots of very cheap frozen strawberries from Egypt left on the global market. This led to prices remaining at record lows throughout the season.

This had a direct impact on the apple market – the abundance of cheap strawberries (and cherries) partly affected the prices of Ukrainian apples, the demand for which fell sharply at the end of May.

Сообщение Ukraine: TOP-10 events of the Ukrainian produce business in 2021 (part I) появились сначала на EastFruit.

This is a continuation of the first part of the article on the main fruit and vegetables events in Uzbekistan.

6. Expensive berries and missed opportunities in the berry business

2021 was remembered for the high prices for strawberries and raspberries. Strawberries became available on wholesale markets in the 20th of April at an average price of 60,000 UZS/kg ($5.7), which is 3 times higher than last year. Wholesale prices dropped to 25,000 UZS/kg ($2.4) in two weeks, which was twice higher than on the same date in 2020. The strawberry season ended in the beginning of June, and wholesale prices had dropped only to 20,000 UZS/kg ($ 1.9) by that time, which is 30% higher than last year.

The first large batches of raspberries became available on the wholesale markets of Uzbekistan in early June, and the season ended in mid-November. Average wholesale prices fluctuated in the range of 21,000 – 55,000 UZS/kg ($2.0-5.2). Throughout the 2021 season, the gap in average wholesale prices from last year’s levels was quite large: they were 20-65% higher compared to 2020, and 2-3 times higher compared to 2019. However, the rise in prices was quite modest compared to the rise in prices for raspberries on the global market, where they are sold mainly frozen.

Due to such high prices, Uzbekistan began importing raspberries from Tajikistan in 2021 for the first time, raising raspberry prices there.

Despite high prices, in 2021, frozen raspberries were exported from Uzbekistan to the Russian market for the first time. In total, Uzbekistan exported 83 tonnes of frozen raspberries to Russia in August-September 2021.

EastFruit analysts have repeatedly noted Uzbekistan ignoring opportunities in the berry business, despite the excellent climate and available labor, the lack of which hinders the expansion of raspberry production in other countries. The situation in the country seems to be changing: the establishment of new raspberry plantations started in autumn 2021 in the Fergana region of Uzbekistan, the total area of ​​which will be 300 hectares. Thus, Uzbekistan joins the raspberry boom in many other countries.

Let’s hope that high prices for strawberries and raspberries will be a signal for Uzbek investors who ignore the most profitable and fastest growing segment of the global fruit and vegetable market.

7. New trends in the export of fruits and vegetables

EastFruit analysts note a very important and long-awaited trend in the international trade in fruit and vegetables in Uzbekistan – the volume of exports of frozen vegetables and fruits more than doubled in 2021 compared to 2020. Moreover, there was a shift towards a higher price product category in the structure of frozen fruit export.

According to preliminary data, Uzbekistan exported 12.1 thousand tonnes of frozen vegetables worth $9.3 million in 2021, which is 2 times more in volume and 2.3 times more in terms of exports earnings compared to 2020. As for frozen fruits, the export volume of this category amounted to 5.8 thousand tonnes worth $7.6 million, which is 2.1 times more in physical terms and 2.5 times more in terms of export earnings compared to 2020. EastFruit wrote about the structure of exports of frozen vegetables and fruits from Uzbekistan at the end of October 2021.

Uzbekistan also significantly increased its peanut exports in 2021. In volume, the exports exceeded the level of 2020 by 67% and was twice higher than in 2019. According to preliminary data, Uzbekistan exported 21.7 thousand tonnes of peanuts worth $23 million in 2021. Peanut exports from Uzbekistan to China increased the most. There were no peanut supplies to the Chinese market until 2020. However, 400 tonnes were delivered in 2020, and in 2021 Uzbekistan increased its peanut exports to China 5.5 times compared to 2020! The growth potential of supply of peanuts to China is indeed high. For more information on the structure of peanut exports by major importing countries, read the EastFruit material dated December 17, 2021.

Uzbek farmers have been actively expanding the area of pomegranate plantations in recent years. Based on plans to establish new plantations and taking into account existing ones EastFruit experts expect the annual production of pomegranate in the republic to reach at least 600 thousand tonnes in the next 5-10 years. It is obvious that the domestic market will not be able to consume such a large volume of pomegranate, and the stake is made on increasing the exports.

As statistics show, there have already been noticeable successes in increasing the exports of Uzbek pomegranate – for the second year in a row, the export volume of new harvest pomegranates has been growing. The exports season for pomegranates from Uzbekistan starts in August (the harvest of early varieties starts at the end of July) and ends in February-March next year. Thus, Uzbekistan has made it through the most of the 2021/2022 season. According to preliminary data, it exported 14.7 thousand tonnes of pomegranate worth $10.9 million from August to December 2021, which is 32% more in kind compared to the same period in 2020 and 50% more than in August-December 2019.

At the end of March 2021, EastFruit analysts presented a detailed analysis of a new strategic priority in the country’s fruit sector – increasing pomegranate production. The article was much cited by the media in China, as it is the largest importer of pomegranate in the world. Together with Hong Kong, China imports more than $1 billion of pomegranates a year.

8. Growth in banana consumption in Uzbekistan

In 11 months of 2021, Uzbekistan imported 2.2 times more bananas compared to the same period in 2020. Moreover, the import volume during the reviewed period was almost twice higher than the total import volume in 2020 and 64% higher than that in 2019.

EastFruit analysts identify three reasons for the continuation of the growing trend and such a solid increase in banana consumption in Uzbekistan in 2021:

First, the influence of rumors that discredited bananas during the onset of the COVID-19 pandemic, probably faded away in 2021. The second reason is the relatively high prices for fruits and vegetables in Uzbekistan, particularly for stone fruits, due to weather anomalies in 2021. Bananas were relatively cheap in 2021 compared to apricots, cherries in the first half of the season, apples of early and mid-season varieties, and pears. Third reason is the expansion of supermarket chains that have a crucial impact on the banana trade in the country. Banana is a very convenient product for supermarkets, as they can import it directly all year round and sell it cheaper than in the markets due to the large volume and VAT refunds. Therefore, banana is the best-selling fruit in supermarkets of Uzbekistan. And as the number of supermarket chain stores in the country grows, the consumption of bananas will grow.

Let’s remind that Uzbekistan was earlier included in the list of countries with ultra-low consumption of bananas. By the end of 2019, residents of Uzbekistan consumed only 700 grams, or about five bananas per year per person. The analysis of banana consumption by countries of the world and our region in particular is available here. It seems that despite a sharp increase in the consumption of bananas in Uzbekistan, its position in this global ranking will not change much by the end of 2021.

9. Large-scale concessional financing, subsidies and a new system for the development of the produce sector

EastFruit regularly covered new initiatives of the government of Uzbekistan to stimulate fruit and vegetable producers, support the industry with subsidies, concessional financing and the introduction of new mechanisms in 2021. Below we list the main initiatives of 2021 that are important in the development of the produce sector of the economy.

In early June 2021, EastFruit wrote about the creation of modern greenhouses based on public-private partnerships. Housing and greenhouse complexes will be built in Uzbekistan on low-yielding lands so that people willing to engage in greenhouse farming, could live and work close. Each housing and greenhouse complex will be of ​​at least 20 acres. Within the framework of the partnership, the state will allocate land for the complexes, install utility systems (gas, water, electricity, internal roads) to housing and greenhouse complexes and provide benefits.

It was announced at the end of August that the state would allocate a total of $100 million for targeted financing of projects to create modern greenhouses. However, as there are still issues with country’s greenhouse industry access to gas, it is forced to pollute the environment, damaging the health of people. Therefore, solutions to these very pressing problems for the industry are needed.

At the end of October 2021, EastFruit wrote about specific measures of state support and incentives for fruit and vegetable producers, the implementation of which is envisaged at the beginning of 2022. They include concessional financing, insurance of vegetable and fruit harvest against weather risks, subsidies for the modernization of agricultural machinery, incentives for the imports of equipment, their components, as well as benefits for the planting of new disease-resistant crop varieties and the introduction of water-saving technologies. In mid-November 2021, it was reported that Uzbekistan would allocate almost $400 million to support the fruit and vegetable industry in 2022.

On November 24, 2021, the introduction of a new development system for the produce industry in Uzbekistan was announced. It will be based on strengthening the role of clusters, introducing new cooperation mechanisms, financing fruit and vegetable producers and expanding the provision of agricultural services. In particular, 200 thousand hectares of low-profitable sown areas freed from cotton and grain will be returned to the reserve in 2022–2025. Of these, it is planned to allocate 80 thousand hectares for the production of fruits and vegetables in 2022. Read more about this in the materials of EastFruit dated November 30 and December 18, 2021.

We note that most of these decisions are aimed at increasing production volumes. And this is a direct way to reduce the income of producers, if you do not take care of sales. Therefore, solutions are required to such problems as modernizing and improving the varietal composition of fruits grown in the country, improving the storage infrastructure, processing and packaging, and increasing the efficiency of its marketing. We have repeatedly drawn attention to the alarming trend of a decreasing export of vegetables and fruits from Uzbekistan for two years in a row despite the continuing growth in acreage.

10. New players in the retail market

2021 will be remembered for the active expansion of foreign supermarket chains into the Uzbek market. Two foreign retailers came to Uzbekistan – the largest retail chain in Kazakhstan Magnum Cash&Carry and the Russian discounter chain Dobrozen. The first stores of both retailers in Uzbekistan were opened in the last month of 2021.

Magnum in Uzbekistan

The Kazakh chain Magnum Cash&Carry has been getting ready to enter the Uzbek market for about two years, studying its similarity with the Kazakh market and local peculiarities. Finally, the first Magnum hypermarket in Uzbekistan was opened in the renovated Integro shopping center in Tashkent on December 11, 2021. 20 thousand products, from food, household chemicals to non-food products, of leading producers from Uzbekistan, Kazakhstan and other countries were presented on an area of ​​5000 sq. m. Magnum pays special attention to fresh vegetables and fruits. They include vegetables and fruits even from Brazil, Italy, China, Colombia, USA, Turkey, and, of course, local ones.

The second Magnum store was opened in Uzbekistan in a different district of the same city just a week later, on December 18, 2021. The Kazakh retailer plans to invest about $20 million in the first year of development in Uzbekistan and open two more hypermarkets and several supermarkets in 2022.

Magnum Cash&Carry is the largest retail chain in Kazakhstan. The first store was opened in 2007 in Almaty. The company planned to increase the number of stores to 197 in 11 cities of Kazakhstan by the end of 2021. The total retail area of ​​the chain is 220 thousand sq. m. This indicator is growing by 30% average every year. The chain operates in four formats – express, daily, supermarket and hypermarket, with an assortment of 35-40 thousand SKU, depending on the seasonality.

“Dobrocen” – 4 stores in one month

The first store of the Russian retail chain “Dobrocen” in Uzbekistan opened in Bukhara on December 18, 2021, where more than 1,500 positions of food products, household chemicals and non-food products were presented. The Dobrocen chain opened three more stores in Uzbekistan – in Tashkent, Karshi and Margilan on December 25, 2021. Thus, there are 4 Dobrocen stores in Uzbekistan now.

As of August 2021, the Russian retail chain Dobrocen had 400 stores. It is present only in two countries abroad, except for Uzbekistan: it opened its first store in Belarus in 2019, and in Kazakhstan at the end of April 2021.

The peculiarity of the Dobrocen retail chain is its format of a store-warehouse without division into a sales area and storage, with goods being displayed not on shelves, but on pallets. The assortment includes about 1200 items of the most popular high-quality food products and everyday household goods at the lowest prices.

Bonus – free profitable investment niches of the fruit and vegetable business in Uzbekistan

Uzbekistan stays away from the global trends in the fruit and vegetable business, focusing on traditional cultures and varieties. It is convenient, but while other countries earn good money and reinvest it in the development of the produce sector in their countries, Uzbekistan loses these opportunities. By the way, it is crucial for Uzbekistan to rely on trendy and expensive goods, because the country is located far from the main sales markets and has no access to the sea. Therefore, transportation of goods is more expensive for Uzbekistan than for its competitors.

We will provide you with our rating of profitable niches that Uzbekistan missed, despite the possibility to take advantage of them.

Blueberries are the most expensive and trendy berry imported by Uzbekistan in large volumes, that could bring hundreds of millions of dollars in export earnings to the country. For example, Peru earns $1 billion a year from blueberry exports. Read more about this here.

Nuts: pistachio, almonds, hazelnuts, walnuts – Uzbekistan has favorable conditions for the cultivation of most nuts, but does not use them. For example, the USA, where nut production is concentrated in a similar climate region of California, exports nuts worth approximately $9 billion annually! Considering that the domestic walnut market in the United States is also huge, one can imagine how much Uzbekistan could potentially earn on nuts. By the way, Uzbekistan has no problems with finding workers, unlike the United States! There is a playlist “Nuts” on our YouTube channel with many videos on how different nuts are grown, harvested and processed in the USA and Georgia, as well as presentations by the world’s leading experts in nut production.

Berries: Uzbekistan can export traditional berries such as strawberries, raspberries, blackberries and others almost all year round, thanks to the efficient use of climatic zones and greenhouse technologies. Berries are at the peak of healthy eating trends, and there are more and more of them. The berry freezing segment is also growing at a tremendous rate. Spain earns $1.5 billion a year on the exports of berries and Poland – about $700 million (about the same as Uzbekistan on the exports of all vegetables and fruits combined). Uzbekistan with a wonderful climate and cheap labor earns almost nothing. Even in Tajikistan, the segment is developing faster and more successfully. Therefore, there are many possibilities here too.

Kiwi is one of the most profitable crops for farmers in the countries growing it. For example, many farmers remove and replace them with kiwi plantations in Italy. Global trade in kiwi is growing at a high rate. Of the countries in the region, Georgia is the most successful in developing this sector, even exporting its kiwi to Japan – the most expensive and demanding market in the world! Kiwi production in Uzbekistan is also growing, but there are almost no industrial plantations. We wrote about the peculiarities of growing kiwi in Uzbekistan from the experience of an amateur farmer in this article.

Avocados are the fastest growing segment of the horticultural trade in the world. According to preliminary estimates, avocados can be grown quite successfully in Uzbekistan. Mexico receives about $3 billion dollars a year in revenue from avocado exports. The first commercial avocado plantation has already been established in Georgia. The analysis of the regional avocado market is available here.

Asparagus is also trendy in terms of healthy eating. The demand for it is growing rapidly all over the world, including Russia. Uzbekistan could take advantage of this given its climate. We wrote more about the possibilities of Uzbekistan in growing asparagus in this article.

In fact, there are many niches even in the sectors of the fruit and vegetable business traditional for Uzbekistan. For example, high-quality large-fruited cherries, properly cooled, packaged and delivered to China, can provide 10 times higher revenue than cherries grown in the traditional way and exported to the Russian market. By the way, you can compare these approaches in our two videos: “Traditional cherries of Uzbekistan” and “Ultra-modern technologies of cherries in Uzbekistan“.

Similar analogies can be drawn in other segments as well. However, we hope that Uzbekistan will start focusing on trendy and expensive products, as well as their high quality, in order to ensure the growth of exports earnings and welfare for everyone involved in this industry.

If we missed some of the important trends, please let us know in the comments section.

Сообщение Uzbekistan: TOP-10 Main Fruit and Vegetable Events of 2021 (Part II) появились сначала на EastFruit.

What was 2021 for the participants of the produce business of Uzbekistan and what significant events can be noted?

Like 2020, this year turned out to be difficult for the fruit and vegetable sector of the country, especially for the fruit business. Weather anomalies in winter and frosts in early spring severely damaged the harvest of many stone fruits. As a result, their prices were high, leading to a decrease in export volumes and domestic consumption.

But vegetable growers are unlikely to complain: pricey carrots, record-high cabbage, beet and onion prices helped them earn good money with the growth of export volumes. Also, Uzbekistan attracted great attention to the record volume of its potato imports, becoming one of the global leaders in it.

We also noted new interesting trends in the exports of fruit and vegetables, the adoption of a large-scale program to support the country’s fruit and vegetable industry, the continuing problems of the greenhouse business and the active expansion of foreign retailers into the vacant market of Uzbekistan. Do not forget about niche crops and new opportunities, especially in the context of record high berry prices!

Since the material is large, the EastFruit experts divided it into two parts. The first part includes the TOP-5 events and the second part will include another 5 important events.

1. Weather anomalies in winter and early spring

Undoubtedly, the weather anomalies became the greatest event that influenced all the aspects of vegetable, fruit and nut production in Uzbekistan, trade and processing, and, of course, consumers.

Starting from the first month of 2021, the weather presented unpleasant surprises for growers in Uzbekistan. The unusually warm weather at the end of January caused a too early awakening of nature – almonds, apricots and cherries blossomed in the southern and central part of Uzbekistan in the 2-4 weeks of February. This was the first weather surprise that did not bode well, since the average temperature throughout the year is relatively constant. In other words, such anomalous warming increased the likelihood of a sharp cold snap or frost at the beginning of spring.

The next surprise was not long in coming – a cold anticyclone from the Volga region at the end of February. It was +26 in the afternoon and +18 at night in the capital of Uzbekistan at the peak of blooming of stone fruits (February 15-20), but in just a week the air temperatures dropped to -5 in the afternoon and -9 at night. This weather lasted 2-3 days, and it was enough to ruin the flowers on the trees. EastFruit surveyed experienced farmers from different regions of the country and published preliminary estimates of the damage from these frosts.

The third surprise and the second frost occurred after two weeks of warming since the first frost in late February. On March 13, a new cold cyclone came from the north. On March 14, the air temperature dropped sharply throughout the country, with the exception of the Fergana Valley. In Karakalpakstan, Khorezm, some areas of Navoi and Samarkand regions, snowfall and strong wind even caused damage to power lines. As a result, the stone fruit harvest in the central and middle zone of the country was again hit by the second frost. Uzbek EastFruit team re-conducted the survey to assess the damage to future harvests of stone fruit and almonds. This time, all regions were covered and more than 30 farmers from different regions of Uzbekistan were interviewed, which together form 95% of the total production of fruits and berries in the republic. Estimates of losses of apricots, cherries, peaches, plums and almonds by regions of the country were published at the end of March 2021.

After the frost, growers often began to contact us with a request to share the global experience in frost protection. Therefore, we have prepared a substantial material “How to protect your orchards and vineyards from frosts? Protection methods, effectiveness, cost and availability” and even found suppliers of these solutions.

2. Imports of potatoes to Uzbekistan exceeded half a million tonnes for the first time

 From early January to December 20, 2021, Uzbekistan imported 516.2 thousand tonnes of potatoes, which is 23% more than total imports in 2020. The previous record was set last year: according to EastFruit analysts, the imports of potatoes to Uzbekistan in 2020 amounted to 421 thousand tonnes.

Potatoes have become the main import commodity in Uzbekistan’s fruit and vegetable sector over the past few years. Until 2016, the annual import volume of potatoes did not exceed 50 thousand tonnes per year, and in 2017 it amounted to 194 thousand tonnes. Accordingly, from 2017 to 2021, the volume of imports increased 2.7 times.

By the way, such  high imports in 2021 can be considered an achievement, because Uzbekistan was threatened by an acute shortage of potatoes because of a sharp decline in production in Russia and a number of other reasons. The situation can be considered controllable now, and prices have been stabilized. However, they are 56% higher than at the same time in 2021.

To reduce the volume of potato imports, the country plans to dramatically increase the area of ​​potato plantations next year. According to the National News Agency of Uzbekistan, the projected potato planting area in 2022 will amount to 122 thousand hectares, which is 40% more than in 2021. In accordance with the government decision on planting various crops on agricultural land, 86.5 thousand hectares were allocated for planting potatoes in 2021.

However, these plans are most likely not to come true. There is a shortage of planting material, since Uzbekistan cannot yet grow high-quality seed potatoes due to climatic features, and is forced to import them. Imported seed potatoes are too expensive, which makes commercial potatoes grown in Uzbekistan expensive, as well. At the same time, prices for seed potatoes in most countries of the world, from where Uzbekistan buys them (Russia, Kazakhstan, the Netherlands, Germany and Pakistan), rose sharply in 2021. The cost of transporting has also increased. Thus, the big question is whether it will be possible to increase the area under potatoes by at least 1%.

In addition, in July 2021, the Ministry of Agriculture of Uzbekistan and the International Potato Center (CIP) launched a five-year program “Improving food security and climate resilience in Uzbekistan through breeding and seed production of potatoes and sweet potatoes”. The expected result of the program is an increase in the yield of potatoes produced in the republic by at least 30%.

Back in early 2021, EastFruit analysts studied the import of potatoes to Uzbekistan and explained why it will be extremely difficult for Uzbekistan to avoid the growth of potato imports in the coming years in an extensive article “Potatoes of Uzbekistan – what caused the high prices and can they be reduced in the future? ”. As you can see, analysts’ forecasts are coming true so far.

3. Removing the import duties on apples, pears, citrus fruits and other fruits

In October 2021, the government of Uzbekistan decided to stimulate the imports of a number of fruits, exempting their import from import duties. The list of such fruits included both widely consumed, such as fresh apples, pears and quinces, and exotic ones: bananas, plantains (fresh or dried), kiwi, fresh or dried citrus fruits, dates, figs, pineapples, avocados, guava, mango and mangosteen and fresh papaya. Prior to this decision, the imports of these fruits was subject to a customs duty rate of 10 to 20%, but not less than $0.2/kg.

The next day after the relevant decree of the government of Uzbekistan was issued, EastFruit published a material where experts analysed what it means for the country’s fruit business, whether it would harm local producers and how it would affect fruit prices and the volume of their trade.

A little more than two months have passed since the decision was announced by the government. From the list of fruits exempted from duty, EastFruit monitors wholesale prices for bananas, oranges, mandarins, apples and pears weekly. Therefore, we can partially assess the effectiveness of such a government decision.

Wholesale prices for orange in Uzbekistan are currently 16,000 UZS/kg ($1.5). This means that oranges in Uzbekistan are now 33% cheaper than on the same date in 2020. Considering the sharp increase in logistics costs over the past year, one might say the result exceeds all expectations and is very positive for the consumers of the country that cannot grow orange in large volumes due to climatic features.

Wholesale prices for mandarin as of December 24, 2021 are 11,000 UZS/kg ($1.0) and they are almost 2 times lower than on the same date in 2020! Wholesale prices for banana dropped to 16,000 UZS/kg ($1.5) and as of the end of December 2021 they were 11% lower than on the same date in 2020. In other words, the reduction in import duties has allowed Uzbek consumers to have better access to  fruits not grown in Uzbekistan at a much lower price.

As for apples and pears, the situation is completely opposite so far. From October 22 to December 24, 2021, average wholesale prices for apples increased by 40-64%. In terms of sorts, Renet Simerenko went up in price by 64%, Golden Delicious – by 60%, and Granny Smith – by 40%. As of the end of December 2021, apples were sold in Uzbekistan on average 2.3 times more expensive than at the end of December last year.

During the same period, average wholesale prices for pears increased by 25%. As of December 24, the average wholesale price for pears is 25,000 UZS/kg ($2.3), which is 25% higher than in 2020.

However, this does not mean that the zeroing of duties on the imports of these fruits in Uzbekistan did not work. If the duty had not been canceled, the prices for apples and pears would have been even higher. The main reason for the rise in prices was the weather anomalies described in the first paragraph of our review, that led to a decrease in domestic production. Imported apples are relatively expensive due to the increase in the cost of transportation by 2-3 times this year and the remoteness of Uzbekistan from the main centers of global apple production.

4. Expensive carrots in 2021

In Uzbekistan, the per capita consumption of carrots is higher than in the countries of Eastern Europe. The main reason is that carrots are an essential component of the most famous traditional Uzbek dish – plov. Although the cost of pilaf was determined by the prices of meat, rice and vegetable oil until 2021, with record-breaking high prices for carrots in 2021, their share in the cost of cooking pilaf has become much larger.

It all started with the boom in demand for carrots and beets in the Russian market, where they were jokingly called new symbols of wealth. Naturally, Russian importers started buying them in all neighboring countries, including Uzbekistan, causing the rapid rise in carrot prices in the domestic market. In a material published in June 2021 “Even the Uzbek pilaf is becoming more expensive due to high prices for carrots and beets in Russia”, we showed how the dynamics of carrot prices in Uzbekistan repeats the respective dynamics in Russia and in neighboring Tajikistan. The conclusion was obvious – since Russia is the largest and main export market for fruit and vegetables from Uzbekistan, the rise in prices for products in Russia is reflected in the growth in prices for the same goods in Uzbekistan.

However, the influence of foreign markets on the pricing of carrots in Uzbekistan was reduced to naught in the second half of July 2021, since the excitement had subsided by that time. On 16 July 2021, EastFruit analysts noted that the further dynamics of carrot prices in Uzbekistan would depend on the ratio of supply and demand in the domestic market, but wholesale prices continued to remain high and several times exceeded those in previous years.

Due to climatic peculiarities, carrots are sown and harvested in Uzbekistan 4 times a year: in March-April, May-June, July and in September-October. However, in 2021, even after the end of the third harvest (in July), carrot prices remained unprecedentedly high. They began to decline only in the third decade of August 2021, but the decline rate was slow and prices were still several times higher than last year’s.

In mid-October 2021, EastFruit wrote that carrot production in Uzbekistan could decrease in 2021, since frosts in early spring could affect the harvest of early carrots, and dry and hot summers could not but reduce the yield of mid-ripening and late-ripening carrots. According to analysts, such a sharp rise in carrot prices in Uzbekistan is most likely a combination of two factors: an increase in exports in the first half of the year and a decrease in carrot yields.

Prices decreased and the gap with last year’s levels narrowed only in the beginning of November 2021 when the harvest of late-ripening carrots ended. From 5 to 12 November 2021, the average wholesale prices for carrots decreased from 4,500 to 3,000 UZS/kg (from $0.42 to $0.28) and remain at this level until the end of December 2021. Nevertheless, wholesale carrots are still twice more expensive than in December 2020 and 3 times more expensive than in the same period in 2019. An increase in areas and production volumes in the carrot segment are expected next year. However, vegetable growers of Uzbekistan will add this season to their successes, as they made good money, and not only on carrots.

5. Successful year for onion and cabbage growers

The first lots of early winter onions became available on wholesale markets in the beginning of April, and in the same month, Russia experienced a shortage of high-quality onions from last year’s harvest. Russian supermarket chains have significantly reduced purchases of local onions due to their poor quality and were expecting the supply of high-quality newly harvested onions from Central Asian countries. Thus, the season of exports to the Russian market has started quite successfully for the onion producers of this region.

The season for selling winter onions in Russia began almost 2 weeks later than in 2020, which extended the period for shipping onions from Central Asia to the Russian market by another 2 weeks.

As statistics show, the season for exporting onions from Uzbekistan ends in July, but favorable conditions for Uzbek exporters in foreign markets allowed to extend the season until October in 2021. In particular, Uzbekistan exported 11.3 thousand tonnes of onions from August to October 2021. In total, onion exports from Uzbekistan reached 184.3 thousand tonnes from April to December 2021, which is almost 20% more than in the same period in 2020.

The developments on cabbage market were similar. In 2021, early cabbage appeared on markets and supermarkets in Uzbekistan in the second half of March. It is one of the most important products in the country’s exports, and the exports often start even before cabbage appears on the domestic market. The main importers are Russia, Ukraine and Belarus, where local cabbages ripen later.

Due to the cold spring of 2021 in Ukraine, Russia and Belarus, the start of early cabbage harvesting shifted by an average of two weeks there. Therefore, Uzbekistan had two additional weeks for export. Back in April 2021, EastFruit analysts suggested that the exports volumes of early Uzbek cabbage may increase in 2021 and the decline in export volumes in May 2021 will be less dramatic compared to May 2020.

As a result, the exports of cabbage from Uzbekistan amounted to 67.5 thousand tonnes worth $10.2 million in March-May 2021, which is 30% more in volume than in the same period in 2020. According to preliminary data, Uzbekistan exported 81.3 thousand tonnes of white cabbage worth $12.4 million from March to December 2021, which is 35% more in kind than in March-December 2020.

Note that the forecast for cabbage prices and the possibilities of its export remains very favorable for vegetable growers and traders in Uzbekistan, because of an acute shortage of cabbage in Russia.

Сообщение Uzbekistan: TOP-10 Fruit and Vegetable Events of 2021 (Part I) появились сначала на EastFruit.