Representatives of viticultural associations of Moldova, taking into account the new data by the National Agency for Food Safety ANSA, adjust the production balance of the 2021 harvest. In particular, according to the department’s calculations based on the issued phytosanitary certificates, as of the end of last year, almost 65 000 tonnes of table grapes of the 2021 harvest were exported (in 2020 exports of grapes of the 2020 harvest amounted to just over 30 000 tonnes). At least 10 000 more tonnes of table grapes, mostly “Moldova”, were accepted for processing last year. According to fruit market participants, there were about 8 000-9 000 tonnes of table grapes left in the storage facilities of trade and agricultural enterprises at the beginning of January 2022.

Read also: Agrifood forecast for 2022: record price increase, fertilizer shortage, declining yields and labor shortage

In total, according to the Association of Producers and Exporters of Table Grapes, the harvest exceeded 100 000 tonnes last year. This is an optimistic forecast (it will be statistically confirmed after analyzing the reports of agricultural enterprises). Earlier, in October-November last year, some organizations of agricultural producers considered that the 2021 harvest of table grapes would not exceed 83 000-85 000 tonnes. In 2020, about 65 000 tonnes were harvested.

According to traders, table grapes left in the storage facilities vary greatly in quality. A large share of grapes degrades rapidly. However, there is still a lot of high-quality goods (“Moldova” from the vineyards of Pergola). Exporters claim that it is no longer easy to find a buyer for them. The demand for grapes in Russia in the middle of winter traditionally falls. In the European Union, there is interest in black grapes with seeds only in Germany and Poland. Traders hope to find buyers in the Middle East, but they regard the chances as quite low.

Сообщение Table grape harvest in Moldova in 2021 was higher than expected появились сначала на EastFruit.

Global food prices are now at record highs, according to the FAO Food Price Index and consumer perception, especially in the Eastern Europe and Central Asia regions. However, in my opinion, this is far from the limit. Moreover, I believe that there is a high probability that in 2022 food prices, including vegetables and fruits, will rise even sharper, and will set historical records.

Do the representatives of the fruit and vegetable sector in the region rub their hands in anticipation of high profits? No, I don’t think so, and I’ll try to explain why. Although, is possible that for many farmers 2022 may well turn out to be successful.

To begin with, let’s understand why food is so expensive in the world now? 

1.  Macroeconomic
2.  Subsector
3.  Political
4.  Logistics
5.  Energy

I will try to briefly explain them in a random order:

1. 1. Among political reasons, the increasing number of restrictions on the exports or imports of goods, as well as the ongoing trade wars between different countries, have the greatest impact on world prices now. Everything that is expressed in the restriction of the functioning of the free market and the intervention of states in it leads to an increase in the cost of food for the population of these countries. In other words, the process of globalization that we have seen in recent years led to cheaper goods due to lower costs per transaction, but now it has begun to unfold in the opposite direction: states increase duties, introduce various types of government regulation, increase stocks.

    

   2. Macroeconomic reasonsare now having a key impact on the prices of goods in the world. Too much money has been “printed” in the world during the pandemic – this money does not allow demand to decrease, despite rising prices. Inflation in the US at the end of the last year is estimated at 7% – the highest in almost 40 years! Those. if you have savings in dollars, then instead of 100 at the beginning of 2021, now you have only 93 left. Accordingly, inflation leads to higher prices for food too!

    

   3. Logisticsare known to everyone who sells vegetables and fruits. The world is in one of the most brutal logistical crises in history. And so far, it has not been resolved. The cost of delivering food from one country to another is constantly growing, and the possibility of delivery does not always exist even at high prices. The cost of transport has increased by 3-4 times on average, and not only for sea containers, but also for land transportation. In many countries, there is also a huge shortage of truck drivers. Add to that the occasional issue with travel restrictions due to covid-19. And all this, of course, is transferred to the prices of goods for which the consumer pays!

    

   4. Subsector reasonsare those that are important only for a particular sector or product category. For example, if there is an overproduction of apples in the world, and an apple is not a trendy (fashionable) product, then its consumption, even though consumers have money, may not grow, which means prices may not rise either. I will not consider these reasons in detail in this part of the blog, because the situation is very different for each type of product. I will only note that for vegetables and fruits, sectoral reasons are more important than in sectors that focus on the production of raw materials, such as grain, sugar, oil and fat, and, to some extent, meat and dairy.

    

   5. Energy component Rising food prices already have a significant impact but will become key in 2022. Therefore, I will write about it in more detail separately. Let me just say that the energy component affects food prices directly and indirectly. An increase in the price of oil and gas leads directly to an increase in the price of sugar, corn and some vegetable oils, and leads to the price of other products in an indirect way. How is oil pouring in the prices of sugar and corn? Very simply – through bioethanol. The more expensive oil is, the more profitable it is to produce bioethanol and the more sugarcane and corn goes into its production, and therefore less of it is offered for the production of sugar and feed, respectively. It is clear that prices then rise. I will explain the indirect effect on the example of an apple – this “exotic” product for many oil exporting countries is imported in large volumes, when a country starts making more money from energy exports.

Now the average cost of mineral fertilizers in the world has already increased by 70-80% compared to last year. But this is an average. The most significant increase was in the prices of nitrogen fertilizers, which are the basis for the growth of all agricultural crops. In the cost of nitrogen fertilizers, up to 80-90% are the costs of natural gas! And he in Europe is now on average 10 times more expensive than a year earlier.

Accordingly, many plants for the production of nitrogen fertilizers simply stopped, because it is necessary to raise prices for nitrogen fertilizers by 5-8 times in order to maintain the economic feasibility of production. However, at this price of fertilizer, of course, no one will buy.

However, fertilizers, despite some recent weakening of gas prices, continue to rise in price. Precisely because the mass production season is approaching, and the supply of fertilizers has dropped sharply. Demand remains high!

In the cost of production of the same corn, the share of costs for fertilizers reaches 30-45%! Corn is the basis for the production of feed, and this, accordingly, affects the prices of meat and dairy products. And yes, even on the prices of fish, because the bulk of the fish in Asia is farmed.

And this is just an example of one culture. The situation is similar for others. And the same applies to fruits and vegetables, where the need for nitrogen fertilizers per hectare is on average higher than when growing field crops!

What does it mean? This means that now that everyone is buying fertilizer to produce crops in 2022, many will reduce their use of fertilizer, especially in developing countries. It is possible that in the same countries there will be many fake sand sub-standard fertilizers with a discrepancy between the content of the active substance and the declared one.

Of course, a miracle will not happen: the less fertilizer, the lower the yield.

Can we increase the area of ​​land for agricultural production? No, moreover, the area is constantly decreasing, but the population of the earth is growing. Accordingly, in order for food not to rise in price, it is necessary to significantly increase the production of agricultural products every year so that the number of products per inhabitant remains unchanged. If we use less fertilizer on a smaller area, then we should perhaps expect even a decrease in production!

Add to this the factor of climate change , which leads to ever-increasing losses in agricultural crops. Here, of course, you can hope for luck in 2022, but you definitely shouldn’t count on it.

What can help avoid a very sharp rise in world food prices, except luck?

There is also the factor of accelerating the development of technology and increasing investment in more sustainable and efficient agricultural production in the world, as well as the factor of improving the access of those inhabitants of the Earth who grow agricultural. products, to know-how  on more efficient growing technologies and product marketing approaches. These are the things we do at FAO and this is exactly what has helped to avoid food price hikes in recent years.

Why should not the representatives of the fruit and vegetable industry rush to rejoice at a possible increase in food prices in 2022?

I would pay attention to three very important factors:

1) The already mentioned intra-sector factir
2) Deterioration of quality
3) Labor shortage
4) Consumption elasticity

Within each of the subsectors and within regions, the situation can differ radically. If we take, for example, blueberries, then the average selling price for this berry in the leading exporting countries continues to steadily decline from year to year, while the costs of its cultivation continue to grow. The situation is similar with an apple and many other products in this market.

Accordingly, you should not rely solely on inflation if you work in a segment where everyone is increasing production. Moreover, in 2022, production costs will rise very sharply.

Those producers who try to save money by reducing the use of fertilizers or plant protection products will face crop losses and a deterioration in its quality. But it is the quality that determines the price of the goods on the market – a quality apple is sold 10 times more expensive than the one that the consumer does not need. Alas, it is likely that this will happen in the next season quite often.

Well, the labor shortage factor, which has always been very important, will turn out to be key in many countries in 2022. Yes, Uzbekistan and Tajikistan may not suffer so much from it. And in general, for the countries of Central Asia, this is even a certain chance to make themselves known, if, of course, they start thinking not only and not so much about the volume, but about the quality of products.

In Ukraine, Moldova and Georgia, this factor, perhaps for the first time, will lead to crop losses, especially in the berry segment, even without taking into account the almost guaranteed sharp increase in labor costs. I’m not talking about the EU countries and the USA, where already in 2020 it began to have a very serious negative impact on those segments of the fruit and vegetable business that have not yet been fully mechanized.

It should also be noted that transportation market experts do not expect a reduction in logistic costs in 2022. And these costs are shifted not entirely to consumers, but also, in part, to the manufacturer. Accordingly, this factor is also negative for the fruit and vegetable subsector.

Well, one more thing that many people forget. If grain prices rise by 30-40% per year, then this is considered a very serious rise in price. But fruit and vegetable products often become more expensive (and also cheaper) at times. For example, cabbage, carrots, beets, potatoes, onions are now sold in many countries of our region at 3-5 times more expensive than a year earlier. In many countries, fruits were also many times more expensive in season. Raspberries and walnuts have set new price records in 2021.

And here the factor of elasticity of demand is already included – many fruits, berries and nuts are not critical food products, so demand for them may decrease in the event of a sharp rise in prices. And this can already have long-term negative consequences.

In any case, the year 2022 promises to be interesting, but not easy. And we will try to do everything to make this market as transparent as possible. It is not for nothing that the number of unique users of the EastFruit portal in 2021 for the first time exceeded a million people, having almost doubled in a year!

Сообщение Agrifood forecast for 2022: record price increase, fertilizer shortage, declining yields and labor shortage появились сначала на EastFruit.

Representatives of the Speranța Con Association of Canned Fruit and Vegetable Producers, referring to a survey of the orchards of its members and of several fruit-growing enterprises in the southern and central regions of Moldova, concluded that the plum harvest this year may at least be equal to last year (about 65 thousand tons). Given favorable weather and logistics that means no losses during the harvesting, the gross production of plums may exceed 70 thousand tons.

Earlier EastFruit reported that experts of agricultural producers’ associations in July-August forecasted a low harvest of 2021 plums – about 20-30% lower than last year. Meanwhile, the 2020 plum harvest was the lowest in several years. Since the middle of the last decade, the plum harvest in the country has rarely fallen below 100 thousand tons. The pessimistic forecast on the eve of the current season was explained by the effect of biological periodicity – a sharp decline in harvest in the orchards that had a good harvest in the last, extremely dry year.

In addition, when harvesting started, some farmers underestimated the expected yield, given that many fruits cracked from excess moisture. However, the representatives of Speranța Con believe that some farmers exaggerate the influence of the “cracking effect”.

Сообщение The 2021 plums harvest may turn out to be higher than expected in Moldova появились сначала на EastFruit.

Last week, during the annual National Conference of Walnut Growers of the Republic of Moldova, a new forecast for the current year’s walnut harvest was announced. Oleg Tirsina, chairman of the Union of Walnut Crops Associations of Moldova, believes that this year the walnut harvest will be “at least 30% higher than last year.”

In 2020, according to statistics, the gross harvest of walnuts (in-shell) in Moldova amounted to almost 15 thousand tons. This is significantly lower than the average volume- about 25 thousand tons, collected in the country over the past five years. The low production is due to the fact that at least half of all types of nut crops last year were seriously affected by spring frosts and summer droughts. The impact of this damage will be felt to some extent over another one or two seasons.

Perhaps for this very reason, even if the walnut harvest in Moldova is 30% higher than last year, it will amount to no more than 20 thousand tons, i.e. will be on average 5 thousand tons lower than the long-term average.

Earlier EastFruit reported that there was no consensus among walnut growers-members of the industry union in the first half of August regarding the assessment of the new walnut crop. The optimistic version of the forecast at that time was a 7-10% increase over 2020. The increase in the assessment to the level announced at the conference of walnut growers is motivated by good weather conditions in August and high forecasts of walnut production in large specialized farms.

At the same time, the union’s experts note that due to precipitation in the second half of August, diseases are spreading in the walnuts orchards. This requires increased attention of walnut processors to the tasks of sorting products, preparing them for storage and sale.

Сообщение The forecast of the walnut harvest in Moldova has been increased, but it will still be relatively low появились сначала на EastFruit.

The apple harvest in Poland should be higher than last year. However, this does not mean that apples in the 2020/2021 season will be cheap. This is reported by analysts of the EastFruit project with a link to the fresh-market website.

According to the first forecasts, the apple harvest in Poland this year is expected to be about 300 thousand tons higher than last year. This is quite a lot, but there is a need to remember that last year’s harvest of these fruits in Poland was very low, at about 3 million tons (2.9 million tons according to WAPA and 3.1 million tons according to the Central Statistical Office). The Central Statistical Office of Poland this year estimates the apple harvest at 3 million tons and WAPA – at 3.4 million tons.

However, in addition to the expectation of a higher harvest in Poland, the future market situation will be influenced by the fact that Europe’s total apple harvest is estimated to be lower than a year ago. A drop in this product’s production is noted by important players in this market, particularly France, Italy, and Spain. This should give Poland a certain competitive edge, especially at the end of the season. Besides, there were also spring frosts in Moldova, Russia, and Ukraine, which negatively affected apple yields in these countries.

At the same time, the quality of apples is also an essential element. However, in this case, Poland’s position is not the best. Unfavorable weather conditions have led to a deterioration in the quality of apples in Polish orchards, and a significant part of the harvest may be de facto industrial apples. Most of the market participants agree that some industrial apples will go to this market as fresh in the event of a noticeable shortage of dessert apples on the European market.

In general, the prices for apples in the coming season will not be as high as at the end of the current season, but at the same time, they will not be low enough. Moreover, prerequisites indicate that the high demand for apples will remain until the end of the current season.

Сообщение Apple season in Poland: high harvest, high prices появились сначала на EastFruit.

Will global demand grow as fast as apple production in the 2020/21 season? Prices on the domestic market of Ukraine, Moldova, and Serbia are now at their peak, what will be the situation in the coming months? What’s in store for apple growers in the 2020/21 season? These and other topics were discussed during the International Conference “EastFruit Apple Outlook”, which took place on July 28, 2020, and was organized by FAO, EBRD, and the EastFruit project with the support of industry associations from Ukraine, Moldova, and Serbia. (The full video of the conference in English can be viewed here).

“When investing in apple orchards, you need to clearly understand that this is a “red ocean”

“The global trend of the apple market over the past five years is a decline in world apple trade in physical terms by 3.8% annually. At the same time, apple production in the world is growing by 1% every year, despite the recent increase in the negative impact of weather factors. All over the world, work is underway to grow and adapt varieties to conditions atypical for apple orchards. Today the apple business and apple export are the “red ocean”. Therefore, if you plan to invest in apple orchards, you need to clearly understand why you are doing this and what advantages you have over your competitors,” said Andriy Yarmak, an economist at the Investment Department of the Food and Agriculture Organization of the United Nations (FAO) during the conference.

The economist notes that in developing countries, the advantage is lower labor costs. However, it is necessary to take into account such important parameters for the consumer as quality, safety, appearance, caliber, and taste of the product.

As Andriy Yarmak notes, Serbia, Moldova, and Ukraine show the fastest growth rates in production and exports among all countries in the region. However, apple production in the United States, for example, is growing almost as fast as in these countries. China is the growth leader in terms of increased volumes, and Iran and Turkey are slowly becoming very important and global players. There is not much information about apple production in Iran, and therefore, the participants in the apple market often underestimate the capabilities of this country, having little idea of ​​the real volumes of production and export of Iranian apples.

Apple production is also growing rapidly in the countries of the Caucasus and Central Asia. In the 2020/21 season, the countries of Central Asia can, for the first time in many years, almost completely provide themselves with their own apples, and the balance of imports and exports may also turn out to be positive for the first time.

Ukrainian gardeners this year focus mainly on the domestic market

The manager of international projects “APK-Inform: Vegetables and Fruits” (Fruit-Inform) Evgeniy Kuzin during the online conference described the current state of the Ukrainian market and made forecasts regarding its future development.

 “The weather conditions for apple producers in Ukraine this season were more favorable than a year earlier. Problems such as hot summers and spring frosts had a negative impact mainly on less intensive gardens,” notes Evgeniy Kuzin.

He also emphasizes that according to the forecasts of APK-Inform: Vegetables and Fruits, the volume of export-quality apple production in Ukraine in 2020 will be higher than in the previous season, but lower than in 2018, when a record amount of high-quality apples was produced. It is expected that this season in Ukraine will be produced about 1.2 million tons of apples. For comparison: in 2019, production was at the level of 1.15 million tons, and in 2018 – 1.5 million tons.

According to Evgeniy Kuzin, Ukrainian gardeners this year focus mainly on the domestic market due to the high prices for apples in Ukraine. However, according to his forecasts, apple exports this season will be higher than a year earlier, but lower than in the 2018/19 season. And here a lot will depend on the quality of the apple at the harvesting stage in August and September.

Russia remains dependent on apple imports despite increased domestic production

Evgeniy Kuzin also focused on the Russian apple market. According to Fruit-Inform, currently, in Russia, many gardeners expect the decline of apple production due to unfavorable weather conditions. On the other hand, huge areas of new intensive orchards are being laid in this country, many of which are beginning to bear fruit this year or are increasing. And only the intensive new gardens have been minimally affected by weather disasters.

He also emphasizes that apple imports to Russia have been declining for the second season in a row. At the same time, the country is still dependent on imports and imports about 850 thousand tons per year, despite the upward trend in domestic production.

Andriy Yarmak also added that the official statistics of the Russian Federation are very different from the real state of affairs in the production and import of apples to Russia. This is primarily due to the specifics of trade within the EAEU when not all volumes entering the Russian market through partner countries are reflected in official statistics.

Serbian producers should pay attention to finding new markets

During the conference, Yulka Toskic, Manager of the Serbian Does Apple Association, spoke about the situation on the Serbian market.

“In Serbia, the current season was influenced by the situation related to the COVID-19 pandemic. At the same time, export results are strong. Prices on foreign markets for Serbian producers this year are satisfactory, and therefore the bulk of apples were sold, and a small one remained in storage. If we talk about the apple harvest volumes that Serbian gardeners expect to receive in the current season, then, according to preliminary forecasts, they will amount to half a million tons,” the representative of the Serbian profile association notes in her speech.

At the same time, according to Yulka Toskic, as in many other countries, apple producers in Serbia this year faced weather disasters – spring frosts and summer hail, which will have a certain impact on the future harvest. This, in particular, is due to the fact that not every manufacturer has hail protection systems installed.

If we talk about the geography of exports, the Russian market is still the main one for the sale of the Serbian apple. However, several years ago Serbia began the process of export diversification and today the country supplies apples to 40 countries of the world, which have different requirements for varieties and product packaging.

Yulka Toskic also emphasizes that Serbian producers should pay attention to finding new markets where the price of a quality apple will be even more attractive. As an example, she cited the UK market, which in the 2018/19 season turned out to be attractive for Serbian apple exporters for its pricing policy.

In turn, Andriy Yarmak notes that the Serbian apple was also supplied to Southeast Asia, which means that the quality of the Serbian apple allows it to be delivered over long distances.

The manager of the Serbian Does Apple Association, in turn, notes that the countries of Eastern Europe remain interesting for Serbian producers. In addition, producers hope that in the near future the Serbian government will make decisions regarding the trade of Serbian products on the Chinese and Indian markets, which are also attractive for the supply of Serbian apples.

At the same time, according to Andriy Yarmak, despite the fact that India is an attractive destination for export, it is not easy to work with this country today. As an example, he cited the uncertain situation with the supply of Ukrainian apples to India. Thus, trial deliveries of apples were carried out without any significant remarks more than a year ago, however, the Indian side did not give a final answer regarding the opening of the market for Ukrainian products.

As EastFruit notes, the Ukrainian Horticultural Association (UHA) has been dealing with this issue for the second year in the hope of clarifying the situation, since the number of requests for the supply of Ukrainian apples from importers from India is constantly growing.

Moldova is increasing its storage and processing capacities and is also working to improve the quality of the apple produced

Igor Gorashov, the owner of the Moldovan company Gigacom LLC, engaged in the production and supply of fruits, during the conference shared his opinion on the development of the Moldovan apple market this year.

“Today, 50 thousand hectares are occupied by apple orchards in Moldova. And the trend of the new time is the replacement of ineffective old gardens with new intensive gardens using modern technologies. Farmers have finally realized the benefits of super-intensive production technologies. And it’s not only about the economic effect but also about the technical possibilities of obtaining the best varietal apple of a certain caliber and quality with less manual labor, as well as the use of weather protection, which is available in intensive orchards,” says the owner of the Moldovan fruit company.

According to Igor Gorashov’s forecasts, in 2020, Moldovan gardeners will produce about 700 thousand tons of apples. At the same time, he notes that the apple of green varieties is losing its position in the market, while apples of such varieties as early “Gala” and red apple varieties remain popular.

He also emphasizes that in recent years Moldova has not only been actively growing apples but also has been increasing its storage and processing capacities. “In addition, local producers are working to improve the quality of their products, giving priority to quality over quantity,” says Igor Gorashov.

Andriy Yarmak, making forecasts regarding the development of the apple market in Serbia, Moldova, and Ukraine in 2020, notes that the production of these fruits in these countries will increase by 3.6% or 80 thousand tons compared to 2019.

He also drew attention to the fact that, despite the likely decline in apple exports from Moldova (although experts from Moldova believe that apple exports will not decrease despite the decline in harvest), the three countries will jointly export a record volume of apples, if not take into account deliveries to the Russian Federation. The increase in the export volume of apples outside Russia from these three countries will reach 90 thousand tons in comparison with the last season, and this apple will directly compete with apples from the EU countries and in the markets of the EU countries as well.

He also drew attention to the fact that an unrepresentative survey conducted by the EastFruit project among apple producers and exporters in Eastern Europe showed that gardeners expect prices to rise by an average of 6.5% compared to last season. At the same time, more than half (56%) of respondents are sure that apple prices this season will be higher than in the past, and only 32% believe that prices will decrease.

However, according to Andriy Yarmak, although the demand for apples increased sharply during the COVID-19 pandemic in a number of countries, in others it, on the contrary, decreased. He also draws attention to the fact that for two years in a row in Ukraine and the EU countries, the spring was quite cold, which led to a delay at the beginning of the ripening season of berries and even the loss of a significant harvest of berries and stone fruits, in particular cherries. This also contributed to an increase in the apple consumption season and stimulated prices in May-June, when usually apples are no longer in high demand.

 “Therefore, it is not yet clear whether the higher demand for apples will be sustained or whether the trend towards increased consumption of alternative products such as berries and exotic fruits will return,” says the FAO economist.

In addition, Andriy Yarmak notes that many countries where apples are exotic fruits may reduce imports due to lower consumer incomes. After all, in Europe, the apple is the cheapest fruit, but in the countries of Southeast Asia and Sub-Saharan Africa, where consumption has grown rapidly in recent years, the apple belongs to the category of expensive products.

In addition, global apple production could be even higher than the record level in 2018. Therefore, if production does not turn out to be much lower than currently expected, prices may well disappoint growers in Eastern Europe, the EU, and Central Asia.

Сообщение High apple price expectations may not come true: summary from EastFruit apple outlook появились сначала на EastFruit.