Tatiana Bordiyan and Natalia Mursa have been in the berry business for a long time, starting their business with a sea buckthorn plantation. Tatiana and Natalia thought about growing blueberries six years ago, when the first plantation of this berry appeared in Moldova. In 2014, Tatiana began to communicate with Yuri Tarai, the founder of Lolly Berry, the first Moldovan blueberry producer on an area of ​​10 hectares. When he moved to America, they bought Lolly Berry. Thanks to them, the “blueberry business” in Moldova got a second chance. An additional irrigation system was installed on the plantation and the plantation was expanded to 13 hectares. The company continues to supply high-quality and tasty berries to the domestic market. The plans for the future are quite ambitious. Tatiana claims that the co-owners of Lolly Berry are now working on a project to establish a new plantation.

– Is it easy to open a blueberry growing business in Moldova? What difficulties did you face?

– It is very difficult because the local land, with rare exceptions, is not suitable for growing blueberries, especially in terms of the pH level. The previous owner found more or less suitable land in the area of ​​Strashen. But he had to import a lot of peat from Ukraine and Belarus. Trenches were dug, filled with a mixture of peat, pine chips and sand. Blueberry seedlings imported from Poland were planted in this soil. These are the most troublesome and capital-intensive operations.

– Do you mainly sell fresh or frozen berries? What’s your pricing policy?

– We try to sell blueberries fresh, because they are tastier and healthier. Although berries do not lose their nutritional value even during freezing, it is better to use them frozen for making smoothies or in cereals. The first time we tried to sell frozen blueberries, the demand was higher than the supply. Then we decided to freeze a part of the blueberry harvest every year. For a consumer, there is almost no difference in price compared to fresh berries. We have changed our pricing policy over the past few years and reduced retail prices from 250 ($14.2/kg) to 150 MDL/kg ($8.5/kg). Moldovan blueberries have become more affordable for buyers, which has increased market demand.

– Many farmers argue that labor is a critical issue. How are things going in your case, is blueberry harvesting also done manually?

– We collect blueberries only by hand, because they ripen gradually. But so far we have not had any problems with the labor, since we have a stable team of workers, we try to provide people with employment throughout the year, not only during the harvest season. We also support them financially in the winter so that people stay in the country and not go abroad. Most of the workers are from neighboring villages.

– What problems do you face now? What are the risks of such a business in our country?

– One of the biggest problems is insufficient production experience. We often have to travel to Poland or Ukraine, to consult with our colleagues, berry growers, who have not only plantations, but also the opportunity to use the services of qualified berry agronomists.

– What kind of support has the EBRD provided?

– We received a grant for consulting services for three years, which helped us a lot last year. We decided to increase the planted surface. There will be more products in the future due to this, and we will be able to compete more effectively with importers of berries.

– What are your plans for the future?

– We will continue to expand the business. The new plantation will be slightly different from the current one – a little more peat for root nutrition. The irrigation system will be integrated with the central computer, the system will analyze and regulate the volume and timing of water supply. We will also use agrofibre or agrotextile, which retains moisture in the soil, not allowing it to evaporate. Hopefully this will save water. We have not thought about processing yet, as we are working for the fresh market and freezing. When processing, you can no longer do without the addition of sugar and some preservatives. For this reason, we avoid processing for now.

– One of your projects is to introduce a new American technology for growing blueberries in tunnels. How and when will this happen?

– In a broad sense, it is the “dream of tomorrow”. New American technology implies growing blueberries in tunnels, much like in greenhouses. It is grown in pots and requires less peat. There is less dependence on weather conditions. It is important that there is sun, so that the berries accumulate sugar content, ripen on time. We plan to invest, gain knowledge abroad. At the same time, we will try to maintain an acceptable price level for consumers.

– Do you plan to enter new markets and exports?

– Our goal is to satisfy the Moldovan market with fresh local berries, and we are working on this. With the growth of production planned for the next few years, we will also expand supplies to the EU and Russian markets. Also, the yield should be about 5-7 tonnes per hectare, and thus, 65-91 tonnes per 13 hectares of the company’s area, but we harvested only 20 tonnes last year.

– There is competition even in the domestic market. What are your competitive advantages?

– The biggest competitors are berry importers from Romania. But our berries are always fresh. For example, they are harvested today, they cool down overnight. The next day they are available in the retail stores and on the consumer’s table. Our blueberries were also cheaper compared to those imported from Romania this year. Blueberries are expensive premium-segment berries not only in Moldova, but also in many European countries. They cannot cost as much as, for instance, raspberries or blackberries here. But we want blueberries to be more affordable to the average Moldovan consumer. We want to make our customers happy.

– In addition to blueberries, you also grow sea buckthorn. How do you sell it and what are your plans for the future?

– We sell sea buckthorn in social networks, chain stores and, of course, some restaurants buy it for seasonal tea. Retailers contacted us to buy our berries. The planting area of ​​sea buckthorn (36 ha) is larger than that of blueberries (13 ha). So far, we also sell it fresh or frozen, without processing. It starts to oxidize within 42 hours if it is not frozen. We cut sea buckthorn with twigs and freeze it within two to three hours after harvest. The harvest is sold until March. We are currently working on the expansion of these plantations (Clara varieties, as well as Mara and Dora).

Сообщение Lolly Berry from Moldova – an example of efficient cultivation of niche berries появились сначала на EastFruit.

EastFruit analysts have been paying attention to the expansion of Turkey and Iran into the global fresh apple market for many years, and it was one of the key factors in our forecasting the difficult 2021/22 season in the #freshapplecrisis article.

The export volume of Turkish apples increased by 47% in the 2020/21 season (August-July) at once – almost 1.5 times, and reached 298 thousand tonnes. Over the past five years, Turkey has already increased its apple exports by 3.5 times – by 185 thousand tonnes. In other words, the increase in apple exports from Turkey over the past five years corresponds to the average annual volume of apple exports from Moldova!

Apple exports from Turkey continue to grow at the same high rate in the new season of 2021/22! In particular, Turkey has already exported 34.4 thousand tonnes of apples in August-September 2021 – 1.5 times more than during the same period in the last season!

“The global trade in fresh apples has been stagnating for about six to seven years. Trade volumes are declining by almost 1% per year. This means that countries that increase their exports are keeping out other exporters from the market. Of course, this all exerts pressure on apple prices, especially in the segment of average and low quality, and affects the income of growers. However, Turkey does not seem to have much of a problem with this. Moreover, industry representatives report further growth in apple orchard acreage and plans to expand Turkish apple exports to foreign markets.” says Andriy Yarmak, economist at the Investment Centre of the UN Food and Agriculture Organization (FAO).

Turkey and Iran were not previously perceived as serious competitors for apple exporters from the EU, let alone exporters from Moldova and Ukraine. However, they are now real competitors, and their expansion is already affecting the exports of apples from the EU countries and Moldova. In addition, Turkish apples compete even with apples from the US, especially in the Indian market.

India bought a record volume of apples from Turkey in the 2020/21 season – 68 thousand tons. But India has traditionally been one of the key markets for apple sales for the United States. Now it has become the #1 market for Turkish apples.

Another record of apple exports from Turkey was set in the Russian market, which imported almost 60 thousand tonnes of Turkish apples last season! The volume of apple exports from Turkey to the Russian Federation was no more than 3 thousand tonnes five years ago, that is, they have grown 20 times! By the way, when Turkey increased the export of apples to Russia by 51% last season, Moldova failed to sell all the apples from the storage, although the harvest was one of the lowest in recent years. As a result, Turkey sold 20 thousand tonnes more apples to Russia during the season, while Moldova sold 72 thousand tonnes less.

“Despite the logistical advantages that Moldova has when exporting apples to the Russian Federation, it is clearly losing the competition to Turkey in this market in terms of quality management and variety selection. Since the Russian apple market is one of many markets for Turkey, it focuses on high quality requirements and internationally recognized varieties, which also helps in supplying to the Russian market. Turkey is also actively marketing its products. As for Moldova, Russia remains the only sales market, which did not encourage local producers to invest in quality, processing, packaging, promising varieties, etc.,” explains Andriy Yarmak.

Besides India and Russia, the most important markets for Turkish apples are the countries of the Middle East. And here Turkish apples directly collide with apples from the EU countries and Ukraine. There has been a recent trend of growing supplies of Turkish apples to lower-income countries such as Syria, Iraq and Libya, while supplies to wealthier countries such as the UAE, Saudi Arabia and Kuwait decreased in the 2020/21 season.

Malaysia has also become an important sales market for Turkish apples in recent years. Apple exports from Turkey to Malaysia grew by 66% last season. In previous years, deliveries have grown at a similar pace. Let us recall that Malaysia is one of the most important export markets for apples for Ukraine as well.

Сообщение Turkey wins competition on the stagnating apple market as exports of apples surge появились сначала на EastFruit.

The entry of the German retail network Lidl into the Ukrainian market was reported last week in the Ukrainian media, referring to the leak of an internal letter published by Lebensmittel Zeitung. Despite the information not being official yet, EastFruit experts analyzed what this could mean for the Ukrainian retail trade in fruits and vegetables, for Ukrainian farmers and vegetable growers, and for the retail business in general.

If the Lidl chain enters the retail market of Ukraine, it could become the largest event in the history of the country’s retail. Therefore, we advise you to read this material to the end.

Since EastFruit has been conducting retail audits of fruit and vegetable departments of supermarkets around the world for many years proving that the fresh vegetable and fruit department is the key to overall success in the retail business, we have full information on the positioning of Ukrainian supermarket chains and their ratings by assortment, prices, quality of products, department and service. We’ve also learned a lot about the Lidl model, which is unique in many ways.

An even more detailed and unique analysis of fruit and vegetable retail can also be obtained at the “Retail Forum – 2021” by the APK-Inform project: vegetables and fruits in Kyiv on December 2, 2021.

To begin with, what is Lidl and why should other networks fear such a competitor?

1. The largest food retailer in Europe and the fifth largest in the world, after four US chains. The Schwarz Group, which owns the Lidl supermarket chain and Kaufland hypermarkets with an annual turnover of 125 billion EUR ($145 billion) and almost 12.9 thousand stores in 33 countries, is the most important player in the market. The turnover of the Schwarz Group supermarket chains almost corresponds to the GDP of Ukraine ($156 billion in 2020)!
2. In terms of turnover, Schwarz Group is several times superior to international supermarket chains operating in Ukraine. For example, Metro AG, which owns the Metro Cash & Carry supermarket chain in Ukraine, has approximately 3 times less turnover than Schwarz Group, and Auchan almost 4 times less.
3. The fastest growing supermarket chain in Europe – Lidl was not the leader in food retail in Europe 8 years ago, giving place to Carrefour, Tesco and Aldi. Considering the current huge gap with competitors – 50% larger turnover than Aldi, the second in the ranking, one can understand how impressive growth rates Lidl has had in recent years!
4. Ukraine is the first former CIS country where Lidl enters, but not the first where Schwarz Group operates. The Kaufland supermarket chain shortly after entering the Moldovan retail market took the lead in the comprehensive assessment of fruit and vegetable departments and greatly raised the bar for the quality and range of fruit and vegetables.
5. The business model is a tough discounter. Kaufland is usually a premium supermarket, but Lidl is the opposite. We can say that Lidl is a trendsetter in this segment. It is distinguished by extremely low, sometimes incredibly low prices, a minimum of staff, placement of goods on shelves in original packaging from the supplier in order to save the consumer’s money, a limited assortment, an emphasis on its own network brands (Private Label), but the presence of leading independent brands, unlike other discounters.
6. Private Label – Lidl has an extensive system of partners-producers of goods for the chain under its own (chain) trademarks in different countries. In addition, the company has its own powerful production facility, Schwarz Produktion. These products are the most affordable in each category, as a rule.
7. In Poland, Lidl operates a chain of more than 700 stores with a turnover of over $6 billion, being the leader in food retail in Poland. For comparison, the turnover of ATB, the leader of the Ukrainian retail, is approximately the same in 2020 as the turnover of Lidl in Poland. At the same time, ATB has much more stores – about 1200. However, the average size of a Lidl store in Poland, according to our estimates, is 35-50% larger than that of ATB in Ukraine.
8. Lidl officially announced its entry into the markets of Bosnia and Herzegovina and Estonia in 2022. Let us remind you that entering the Ukrainian market has not yet been officially announced.
9. Lidl Plus is an interesting and effective loyalty system that goes far beyond traditional discounts and cashbacks. Consumers can use the smartphone app around the world.
10. The scandals and litigation involving Lidl mainly concerned complaints about working conditions and low wages at Lidl’s suppliers and in the stores of the chain.

How does Lidl sell fresh vegetables and fruits?

As in any other segment, Lidl focuses on ultra-low prices for vegetables and fruits. The challenge for a retailer is always to be the first in fruit and vegetable prices.

Nonetheless, the requirements for the quality and safety of fruits and vegetables in Lidl are very high. The chain may not offer premium-quality products, but it inspects the suppliers of fruits and vegetables very rigidly in terms of complying with the safety and quality requirements. The supplier, on the other hand, knows that if Lidl’s requirements are met, the chain will be able to offer huge development prospects and large volumes of product sales.

Lidl’s range of vegetables and fruits is limited, but the chain has recently regularly prioritized this segment of goods, given the global trend towards healthy food choice. For example, in the UK, the chain plans to increase the share of healthy foods to 85% of total sales and increase sales of fruits and vegetables by 35% by 2026, Fruitnet reported.

The focus on local vegetables and fruits is also an important element of the fruit and vegetable trading strategy for Lidl. Trade in local products, as we regularly emphasize in the fruit and vegetable audits of EastFruit retail chains, is beneficial for any chain. This allows to offer fresher, and therefore tastier fruit and vegetables, reduce transport costs, emphasizing the concern for the environment, and, at the same time, get a higher price, since consumers in most countries prefer local products to imports.

However, the availability of high-quality and safe products in the country at a competitive price should be taken into account. Otherwise, Lidl’s global direct procurement and direct import system will find alternatives.

The quality of the produce department and the quality of services in Lidl supermarket chains usually correspond to the discounter format. The chain is trying to minimize staff costs, so you shouldn’t expect a lot of workers in the store. Lidl supermarkets are also unlikely to amaze by merchandising and beautiful display, as products are usually sold in the same packaging they were supplied by producers or wholesalers of fruits and vegetables. Nevertheless, Lidl’s information content, as a rule, is at a fairly high level, as well as the convenience of shopping.

Lidl stores normally have an area of ​​about 1 thousand square meters, but there are also stores of ​​about 2 thousand square meters.

Lidl, taking into account the general trend towards a healthy diet, also pays great attention to the sale of organic vegetables and fruits and has its own line of organic products. This, undoubtedly, can attract not only economy-oriented shoppers to the store, but also the premium segment.

Since Lidl was a large wholesale company for a long time before entering the retail segment of the business, it knows well how to minimize the logistics costs for the purchase of fruits and vegetables. Accordingly, the supermarket chain is likely to launch a distribution center (DC) at the earliest stage of market entry. Without this, it will not be possible to implement the strategy of ultra-low prices. Naturally, the chain will strive to work directly with producers who have the necessary capabilities to ensure year-round supplies of fruits and vegetables.

As Lidl is trying not to hire many employees in sales areas, the chain will most likely require suppliers of fruits and vegetables to supply products with the maximum level of “packaging”. In other words, you probably won’t find bulk potatoes, carrots or other root vegetables in Lidl.

What does the possible entry of Lidl into the market mean for Ukrainian farmers, vegetable and potato growers?

First of all, these are new opportunities. Competition is always good, and Lidl will become a new powerful distribution channel. The partnership with Lidl will help producers create long-term business development strategies, taking into account the best international practices. After all, if you can meet the requirements of Lidl in Ukraine, you will most likely be able to supply products to any supermarket in the world.

Here is the second advantage – the opportunity to enter the international market, as well as through Lidl. Lidl’s global procurement strategy provides this opportunity for the most efficient and competitive suppliers. Therefore, the network can become a gateway to the markets of the EU and other countries in the world.

The third advantage is the general increase in the quality and safety of fruits and vegetables, which usually takes place after such a powerful international player enters the market. For instance, Lidl in Poland requires mandatory GlobalGAP certification from all vegetable and fruit suppliers, and the requirements for pesticide residues in the chain are much stricter than the EU standards.

While producers dislike and actively oppose increased requirements to their products, improved quality always leads to higher sales and revenue. Of course, this will require investment in the infrastructure for refinement, and many will even have to change approaches to production and crop protection, if they want to take advantage of the opportunities provided by Lidl.

The fourth advantage is the reduction of the risk of non-payment by the chain. Unfortunately, many suppliers of vegetables and fruits in Ukraine have not been able to receive payments for the supplied products due to bankruptcies of chains, or they often received payments delayed up to six months or more. In the case of the leader of European retail, such risk will be minor.

In general, any opportunity will require improvements from producers. Without a doubt, these are changes for the better and producers need to start preparing for them now.

What does Lidl’s possible entry into the market mean for fruit and vegetable consumers?

It is quite clear – competition means lower prices. An average Ukrainian consumer is not among the richest in the world, so he will only be glad to save money.

The second important advantage for the Ukrainian consumer is Lidl’s increased requirements for residues of plant protection products in vegetables and fruits, which we mentioned above. This will provide additional safety guarantees to Ukrainian consumers, and the chain will benefit from a high level of loyalty.

The third advantage is higher requirements for the quality of fruit and vegetable products. This can be very important for those who are tired of dirty potatoes, onions, carrots, beets in supermarket stores.

The fourth is the availability of organic products in the chain’s stores. However, it is not yet entirely clear how widely the organic segment will be represented in the fruit and vegetable department of Lidl in Ukraine.

The fifth is the promotion of local products that are tastier and fresher. Lidl will create opportunities to develop fruit and vegetable production in Ukraine and promote local products as they do in other countries.

Perhaps, a reduced assortment can be a potential drawback of the chain. However, the “reduced assortment” in the EU market may be quite sufficient for the Ukrainian market, as the average supermarket chain in Kyiv has about 100-120 positions of vegetables and fruits, the leaders – 200-260 positions, and ATB – about 50 positions.

What does Lidl’s entry into the market mean for the retail business, and how will it take place?

Since the former manager of the chain in Poland has been appointed as the head of the Lidl chain in Ukraine, it is obvious that Ukrainian chains should study the experience of the neighboring country.

Will Lidl buy any of the Ukrainian supermarket chains or will it create its own supermarket chain in Ukraine from scratch? It would be logical to assume that the ATB supermarket chain is the most suitable for the Lidl chain in terms of its format, and its purchase can provide the rapid gaining of leadership.

However, the experience of other countries shows that Lidl prefers to create its own chain, rather than enter the market through the purchase of competitors. Perhaps this is due to the format of the chain and high requirements for efficiency created by standardizing stores. Nevertheless, it is this option of entering the Ukrainian market that seems very likely. This will become a significant impetus to the development of the commercial real estate market in Ukraine, as experience has proven that the chain will strive to take the leading positions in the country within 3-5 years.

Where will Lidl find its Ukrainian competitors, where will it be inferior to them, and what position would the chain take in our audit today if it had already operated on the market?

As a rule, Lidl is a leader in terms of prices, but it will not be easy to do this in Ukraine. Particularly, it will be more difficult than in Poland. This is due to the fact that, according to EastFruit estimates, only 26% of all vegetables and fruits are sold through supermarket chains, and 74% of trade turnover is sales in markets, stands and street trading. If we take into account the consumption of self-grown vegetables and fruits in value terms, the chains control only 16.5% of the consumption of vegetables and fruits in value terms.

Obviously, the Lidl chain will be able to count on leadership in prices in the segment of imported vegetables and fruits at the first stage. It may take some time to become the leader in local products.

In terms of assortment, the chain is most likely to be somewhere in the middle, but it is likely to take leading positions in terms of quality. As for the quality of the department, we expect the chain to have the same positions as in the assortment – in the upper middle of the rating of the country’s supermarkets.

Thus, we assume that Lidl, according to a comprehensive assessment of the fruit and vegetable departments, will enter the top 3 of Ukraine. The chain will most likely offer the greatest competition to such supermarket chains in Ukraine as ATB, Novus, Silpo and Auchan.

Of course, only the ATB chain can be considered a direct competitor of Lidl, however, the German retailer will put pressure on Auchan and all other chains in terms of prices. In terms of product quality, Lidl will compete directly with Novus, especially Novus Express, offering significantly lower prices. Silpo, on the other hand, has multi-format stores, and their large part are very similar in format to discounters. It is this segment of the chain that will suffer the most from the potential expansion of Lidl in the Ukrainian market.

Given the long stagnation at the very end of the EastFruit rating of the Ecomarket and Velyka Kishenya chains, Lidl’s entry into the Ukrainian market may accelerate their exit from the retail business, because their formats will directly intersect with a more powerful international competitor.

Conclusions

Lidl’s entry into the Ukrainian market may not take place, since the chain has long had offices in some countries with no Lidl stores. However, these are usually countries with large orders for the production of goods for sale in this supermarket chain, and Ukraine hardly fits this criterion.

Most likely, Lidl’s entry into the Ukrainian market will take a lot of time. Therefore, we cannot say for sure that there will be at least one store of the chain in the country by the end of 2022.

Lidl’s entry into the Ukrainian market will have a powerful impact on both the retail market and the fruit and vegetable market. The impact will be predominantly positive, as it will open up new opportunities for business development and even export expansion for the most progressive producers and provide access to better and safer products at a fair competitive price for consumers.

The entry of such a powerful player into the country’s market is also positive for the image and investment attractiveness of Ukraine, as Lidl will create new investment opportunities in other sectors of the country’s food and non-food businesses.

“The EastFruit team is looking forward to including Lidl in our periodic retail audits of supermarket horticultural departments, which we have been doing for nearly 15 years. We see how the development of modern fruit and vegetable retail is changing the fruit and vegetable business of the countries of our region, creating new opportunities for all market participants ready to face the challenges of modern times and develop,” says Andriy Yarmak, Economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO), managing a joint FAO/EBRD project to develop the fruit and vegetable trade in Ukraine, Moldova, Georgia, Uzbekistan and Tajikistan.

We invite everyone to the first international conference “Retail Forum – 2021” on December 2, 2021 in Kyiv. As part of the event, EastFruit experts and representatives of the Ukrainian Horticultural Association will present a unique study of the country’s fruit and vegetable retail. The study includes the top 20 best-selling vegetables and fruits, seasonality of sales, specific weight of vegetables and fruits in the turnover of chains, current turnovers of fruits and vegetables in Ukrainian retail, and, of course, opportunities for the development of this segment.

Registration of participants will soon be available on the FruitInform website. For participation you can contact the project staff:
+380 96 5836323 – Yevhen Kuzin, eugenekuzin@gmail.com

+380 96 4337857 – Olexandr Khorev, halex.khorev@gmail.com

+380 96 1319287 – Olexandra Manko, sashchaa@gmail.com

Сообщение Lidl to make a revolution in Ukraine’s retail and produce sectors: detailed analysis by EastFruit появились сначала на EastFruit.

According to EastFruit analysts, in 2021 Uzbekistan once again reduced fruit exports to China – one of the most attractive fruit markets in the world. In the first eight months of 2021, fruit exports in volume fell by 16% compared to the same period in 2020 and three times compared to 2019. Thus, the negative trend in the supply of fruit to the Chinese market continues.

The decline in exports of Uzbek cherries was especially noticeable, despite the very low price level. In 2021, Uzbekistan managed to find and deliver to China only 14 tons of cherries that met the requirements of demanding Chinese importers. Uzbekistan exported 105 tons of cherries in 2020, in 2019 – just over 600 tons, and in 2018 – 148 tons, that is, since gaining access to the Chinese cherry market, Uzbekistan has never exported so little cherries to China.

It is China that is the fastest growing market for cherries in the world. The exports of cherries is growing fast, and their prices remain very high. Moreover, it is China that pays one of the highest prices for cherries. However, Uzbekistan was forced to supply cherries in 2021 mainly to Russia and much cheaper than in 2020, since their quality did not meet the requirements of buyers from other countries. Uzbekistan had more and more competitors in the Russian market who offered a better product. We gave a detailed analysis of the reasons for low prices for cherries in Uzbekistan in this article.

You can see and read how cherries of export grade quality are grown, refined and packaged in Uzbekistan here. You can read and listen in detail how much it will cost to set up such a farm and how to do it right.

Let’s get back to the fruit trade between Uzbekistan and China. An anti-record has also been set over the past seven years even for the most popular position, namely the exports of Uzbek raisins (dried grapes) to China! It fell by 17% compared to 2020 and three times compared to 2019, when the export volume was at its maximum. The only export position where Uzbek exports to China increased was dried apricot. The export of dried apricot grew by 37% compared to 2020, but its share in export was small – only about 5%, so it did not impact the overall negative dynamics largely.

“The global markets for both fresh and dried fruit are becoming more competitive as production in developing countries grows. This is facilitated by a freer access to information about cultivation and processing technologies, which allows faster implementation of these methods in production. The FAO and EBRD also strive to foster the transfer of technology and market knowledge, in particular through the EastFruit platform. However, since there is no shortage of fruit in the world, for success in the market it is essential to ensure high quality and safety of the grown fruits in the sense buyers, and not producers themselves, perceives it. Too little attention is paid to fruit quality, refinement and marketing in the post-Soviet countries, which leads to the need to sell or send products for processing at the lowest prices,” explains Andriy Yarmak, economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO).

By the way, while Uzbekistan was reducing the export of fruits to China, Iran was actively increasing it. In the first 8 months of 2021, the export of Iranian fruits and nuts to China increased by 75%!

Сообщение Uzbekistan sharply reduced fruit exports to China again появились сначала на EastFruit.

According to the monitoring of wholesale prices for vegetables and fruits by EastFruit, one of the most popular grape varieties in Uzbekistan, black Kishmish (seedless) “Kora”, has risen in price by 29% over the past two weeks. However, despite such rapid growth, it is sold 25% cheaper than at the same time in 2020. EastFruit analysts investigated the reasons for it.

Kora table grape variety is a seedless and is in the greatest demand both in the Uzbek domestic market and on the part of exporters to Russia, Kazakhstan and other post-Soviet countries. Fresh grapes are also exported in small volumes to ethnic shops for Russian-speaking residents of the European Union. In addition, this grape variety is used for the production of raisins – dried grapes.

Wholesale black Kishmish can now be sold at 9000 UZS/kg ($0.84). According to Uzbek winegrowers, the rise in its prices is due to a seasonal factor. Winegrowers from different regions of the country interviewed by EastFruit experts confirmed the end of the peak harvest season for this variety. Prices for Kora grapes also began to grow rapidly at about the same time in 2020, but in 2019, they began to rise only in mid-October.

The last batches harvested from vineyards are now available on the market and the supply is decreasing, as grapes in refrigerators are normally stored by traders and producers until a significant increase in prices for the New Year holidays.

However, as wholesalers and exporters say, large volumes of grapes were not stored in refrigerators this year, which gives reasons to expect further growth in prices for black table grapes. At the same time, it is likely that more grapes were laid for storage than in 2020, but less than usual.

Market participants explain this by a decrease in the average yield of grapes in 2021 due to unfavorable weather. On the other hand, the vineyards in the country continue to expand. Moreover, Kishmish grape varieties are among the leaders in terms of the rate of area expansion. Therefore, it is possible that the production of grapes in Uzbekistan in 2021 was still higher than in 2020.

Then why is Uzbek black Kora significantly cheaper than in 2020, but much more expensive than in 2019? It turns out that the grape yield in the country is lower than usual for the second year in a row, but in 2019 the harvest was good, since there were no significant weather anomalies.

Accordingly, the supply of Kora table grapes to the market was significantly higher in 2019. More grapes were stored, and naturally, the prices were much lower than now, as we see in the graph above.

Prices for black Kora grapes could well have been higher this year, but Uzbek producers and exporters faced an increasing competition in the Russian table grape market. As a result, even though the harvest was moderate, Food City, the largest fruit and vegetable wholesale market in Moscow, was literally oversaturated with grapes from Uzbekistan in early September, with prices being extremely low.

One can only guess what happens to the prices of Kora and other less popular grape varieties in Uzbekistan, if in 2022 there are no severe weather conditions and the country has a normal harvest for the first time in three years. Since 2019, the areas of vineyards that have begun to bear fruit in Uzbekistan have grown significantly. Accordingly, the volume of the crop and its supply will increase.

Meanwhile, in Russia, the main market for Uzbek grapes, the real income of the population continues to decline, and the supply of grapes from competing countries such as Turkey, India, Moldova, Egypt, Chile, Peru, South Africa, Armenia and Azerbaijan continues to grow. Many of them offer more modern varieties in more modern and retail-friendly packaging.

Сообщение Kishmish seedless grapes have sharply increased in price in Uzbekistan. Will the trend continue? появились сначала на EastFruit.

The supply of Uzbek table grapes on the Russian market is beginning to significantly exceed demand, and this ratio has formed a downward trend in prices, EastFruit analysts report. Russian purchasing retail chains have reduced purchasing prices for Uzbek table grapes by 25-30% over the past month.

At the same time, market participants foresee a further decline in prices for Uzbek table grapes in the near future, despite the current prices being already 20-30% lower compared to the same period last year.

Since the export season of Uzbek table grapes starts in July and its most active phase, which accounts for most of the annual export volumes, lasts from August to November, now is the peak season. Therefore, we can already draw conclusions that the prices for Uzbek table grapes in Russia are not favorable for their growers and exporters.

In an interview with EastFruit, Nodirbek Musayev, the head of one of the largest export companies in Uzbekistan, Musaevs Exim LLC, commented on the current developments: “I estimate the total volume of grape production in Uzbekistan to be higher this year than last year. Accordingly, the supply in the domestic market is higher and the prices are lower than in 2020. For example, in 2021, the prices that Uzbek exporters pay to producers and wholesalers are on average 30% lower compared to 2020”.

“In August, the supply volume of table grapes from Uzbekistan to the Russian market grew so rapidly that the largest wholesale market in Moscow, Food City, is now overloaded with Uzbek table grapes.” Mr. Musaev says.

Read also:  Afghanistan resumes imports of table grapes from Tajikistan

He also mentioned some of the varietal features of the table grape trade between Uzbekistan and Russia. “The delivery of the most popular Uzbek grape variety Toifi on the Russian market will start soon. However, Russian retailers are announcing a rather low price for it. At the same time, Uzbek farmers, taking into account the high prices last year, continue to adhere to high price targets (about $ 0.5 per kg), which makes the exports of Toifi table grapes not attractive  for exporters at this stage,” the expert notes.

The specialist also draws the attention of Uzbek growers to the high level of competition in the segment of white grape varieties on the Russian market.

“I would like to note that there are many offers of white varieties of Uzbek table grapes on the Russian market, for example, Khusaini and its subvarieties, such as Lady Fingers. In addition, there are also many offers for white table grape varieties in Russia from other countries, and the competition in this segment is quite high. But the Russian market has a higher level of demand for colored varieties, for which Uzbek exporters have few offers. As far as I know, it is white grape varieties that are planted on a considerable part of the new vineyards of Uzbekistan. This means that the supply in this segment in Uzbekistan will continue to grow. Today we already see difficulties with selling white table grape varieties. In other words, production is growing, but sales markets are not expanding. Nowadays producing any product is still half the battle. Finding to whom, where and how to sell it – requires as much effort given growing competition in the global markets” Nodirbek Musayev said.

According to the exporter, the downward trend in prices for Uzbek grapes on the Russian market is most likely to continue in the near future. As to new sales markets, according to EastFruit analysts, the prospects for Uzbekistan are far from promising. In particular, our recent material with a rating of the most popular varieties of table grapes in Uzbekistan clearly showed that the industry needs to take urgent measures. The current decline in prices for Uzbek tables grapes on the Russian market is confirming this.

Uzbekistan is the largest exporter of table grapes in Central Asia and is in the Top 15 of the world’s largest exporters. Moreover, table grapes are the main export position of Uzbekistan in the fruit and vegetable sector. From 2017 to 2019, the country exported from 117 thousand to 138 thousand tons of fresh table grapes, and export earnings ranged from $ 98 million to $ 121 million US dollars per year. In 2020, the volume of table grapes exports from Uzbekistan reached 141 thousand tons worth $ 133 million.

The main external markets for Uzbek table grapes are Russia, Kazakhstan and Kyrgyzstan, which together account for about 98-99% of the total export of fresh table grapes from Uzbekistan. Accordingly, Uzbek table grapes are almost unknown outside the post-Soviet space. Small-volume export deliveries of table grapes to Germany are also aimed at immigrants from post-Soviet countries living in this country.

Сообщение Food City wholesale market in Moscow is oversaturated with Uzbek table grapes – prices are very low and will keep falling появились сначала на EastFruit.

EastFruit often reports on Uzbekistan’s tremendous successes and significant potential in the development of new markets for fruits and vegetables and the greenhouse sector of the country is the most technologically advanced segment of horticulture, exporting tomatoes, cucumbers, peppers, eggplants, and other greenhouse produce. Greenhouse industry participants invest the most money per hectare of cultivation, but they also ensure highest revenues from each hectare, and provide jobs to a the largest number of people per hectare.

That is why it is difficult to understand the logic of the country’s officials currently putting enormous stress on the greenhouse industry of Uzbekistan. In this article, we will try to understand what is happening to their greenhouse industry, why the did the government create such unfavorable conditions for the industry, and how much Uzbekistan stands to lose if the situation does not improve. After all, competitors are alert and they will not miss any chance of winning more of their piece of the pie.

Greenhouse producers in Uzbekistan have repeatedly complained to EastFruit about the complicated bureaucratic and non-transparent procedure to connect (and re-connect annually) the gas supply necessary for heating their greenhouses. Even the lucky ones who manage to accomplish a gas connection are faced with an unstable supply of natural gas, which leads to disruptions in production processes. Therefore, greenhouse growers are then forced to spend huge sums to create additional infrastructure for the use of alternative sources of heat if their gas supply fails. To make matters worse, not everyone can afford to prepare for gas shortages. For example, East Fruit recently received information about another complete loss of harvest in greenhouses due to the gas supply being shutoff.

After forwarding these concerns to the appropriate authorities, the response from the Ministry of Energy of Uzbekistan is perplexing. It stated: “Greenhouses are seasonal consumers of natural gas, which is declared in their contracts with gas supply organisations. According to the documents, in the autumn-winter period, seasonal consumers must have a supply of an alternative type of fuel, in this case, it is a coal, to use for at least three months.”

The logic is confounding since greenhouses in Uzbekistan require gas in autumn and winter, not in summer. Therefore, it begs the question: what purpose does a gas supply contract serve if gas cannot be guaranteed when greenhouse producers need it most?

Why can’t Uzbekistan guarantee gas supplies to their consumers? Exports of natural gas are the most important source of budget revenues for Uzbekistan and the key sector for improving the country’s trade balance. In 2019, according to TradeMap data, Uzbekistan supplied 13.5 billion cubic meters of natural gas to foreign markets earning $2.6 billion.

Gas is a raw material and the government of Uzbekistan regularly declares the need to increase value to their exported products. Furthermore, fruit and vegetable production is officially considered one of the country’s priority sectors. Entire regions of Uzbekistan have shifted from growing cotton and grain up to 2013, to growing fruits, berries, grapes, nuts, and vegetables today.

When we look at the dynamics of Uzbekistan’s exports, gas exports tend to decrease while fruits and vegetables exports have nearly doubled over the past three years. Why, then, does the state fail to support the sector providing more jobs and better revenues while the demand for natural gas globally is falling?

Let’s calculate which is more profitable for Uzbekistan: exporting natural gas or exporting tomatoes and peppers grown in a greenhouse using natural gas?

To heat a hectare of greenhouses in Uzbekistan during the winter growing cycle, one needs an average of 220,000 cubic meters of natural gas. Domestic industrial consumers pay about $96 per 1,000 cubic meters of gas. Based on the TradeMap data, the average export price of gas last year was $193 per 1,000 cubic meters. We know that in 2020, global gas prices have dropped dramatically.

Thus, to heat 1 hectare of greenhouses, a grower needs to spend about $21,500 per season. With Uzbekistan’s growing technologies, it will be possible to harvest about 350 tons of tomatoes per hectare of such greenhouses. When exporting these products to Russia, a grower can receive on average at least $1,500 per ton of tomatoes or more than $500,000 per hectare.

Therefore, exporting gas required for heating 1 hectare of greenhouses, the country earns only slightly more than $42,000. If the same amount of gas were used to heat greenhouses instead, Uzbekistan’s earnings would exceed $500,000. Simply put, exports of greenhouse tomatoes for Uzbekistan are 10 times more profitable than the exports of natural gas! Supplying gas to the greenhouses means adding value to the exports of raw materials and increasing the country’s export earnings, which is what the country’s leaders are already striving for.

Additionally, the greenhouse industry is very knowledge intensive. It’s continually evolving and requires constant improvement, which means development of greenhouse technologies leads to an overall increase in the technological level of the country’s agricultural business. The benefits of this progress would be enormous, despite the difficulties to accurately assess it.

Why don’t greenhouses in Uzbekistan just switch to coal instead of gas when growing greenhouse vegetables? Why not just give up using gas altogether?

Complete transition to coal in greenhouses is possible. However, heating with coal will have the following negative consequences for Uzbek greenhouses:

1. Increase in heating costs by 12-17% resulting in lower producer’s income and products competitiveness;
2. Increase in the volume of capital investments per hectare since it would require purchases of more land, large warehouses for coal storage, equipment for coal logistics, and expensive filters to reduce emissions from coal combustion;
3. Higher costs for working capital since coal needs to be purchased for future use upfront – and this means frozen money and additional costs for servicing the loans;
4. Higher labour cost since coal usage requires hiring additional workforce;
5. More money spent on replacing the filters;
6. Decrease in productivity and product quality loss due to reduced transparency of glass or film on greenhouse surfaces caused by ash and soot buildup from burning coal. Using expensive filter systems (and their regular replacement) reduce this issue, but it can decrease selling prices and increase production costs affecting the competitiveness of greenhouse products from Uzbekistan.

“Both the regional and the global markets for greenhouse vegetables are very competitive. No one is guaranteed a share of this market. Moreover, the world trade in greenhouse vegetables has been stagnating for several years in a row. Thus, with the increasing production, international trade is not growing or is even declining,” says Andriy Yarmak, an economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO).

“Uzbekistan’s main target market for exporting greenhouse vegetables is Russia, even if produce gets there via neighbouring countries. In Russia, production of greenhouse vegetables is growing at a very high pace, so the demand for imported products, including those from Uzbekistan, is constantly decreasing. Besides, the neighbouring countries also stay alert. In Kazakhstan, the greenhouse business is actively developing and their producers have no problems with gas access, and the gas is 30-40% cheaper than gas in Uzbekistan. Even Russian greenhouses spend much less on gas than Uzbek ones. Turkmenistan provides gas to local greenhouses about 100 times cheaper than Uzbekistan and they also need less gas for heating! It is not surprising that Turkmenistan is increasing the export of greenhouse vegetables much faster than Uzbekistan does,” explains Andriy Yarmak.

Uzbekistan has the highest price of gas for greenhouses in the region. Even at this high price, it is still not easy to buy it and supplies are not guaranteed. If Uzbek producers switch to heating greenhouses with coal, then competitors will get even more advantages over Uzbekistan. This means that they will be able to offer better prices, pushing Uzbekistan out of the markets. Also, competitors will use the additional margin to accelerate the development of their technological level and will strengthen their positions in the market very quickly.

The Russian market is attracting a lot of competitiors in greenhouse vegetable supplies. After the ban on supplies in 2016, Turkey is starting to recover its leading position in Russia by rapidly increasing export volumes. Exports of greenhouse tomatoes and other greenhouse vegetables from Iran is growing very rapidly even if supplied via Azerbaijan. Turkmenistan is very rapidly increasing the volume of greenhouse vegetable exports to the Russian Federation. Thus, it is getting crowded there.

We are not experts in the oil and gas market, and we admit that other internal reasons may not allow Uzbekistan to allocate more gas for the local greenhouse business. Such reasons may include long-term export contracts with guaranteed volumes, depletion of gas deposits, or agreements with private companies that own gas wells.

However, from the point of view of the fruit and vegetable business and a common sense, Uzbekistan’s government should pay attention to this promising industry and try to lend it a hand. After all, market experts believe that more and more agricultural crops will gradually move into greenhouses. Today, many world countries started growing most of the berries and even cherries for the fresh market in greenhouses. Greenhouse production allows for extending the season, but also significantly improves quality, reduces losses, increases yields, and improves the purity and environmental friendliness of products thereby minimising the use of chemical plant protection.

Сообщение Why is Uzbekistan killing their successful greenhouse industry? появились сначала на EastFruit.