Farmers are resuming work in the liberated regions of Ukraine, in particular in the Kyiv, Chernihiv, Sumy regions. Of course, this is not easy to do – some of the fields are mined, some bridges and roads are destroyed. However, Ukrainian growers of potatoes, vegetables and grains do not stop. “Roads are destroyed, logistics are broken, there is a shortage of fuel and fertilizers… but we are Ukrainians, we are stubborn and purposeful,” says Mykola Gordiychuk, director of Agrico Ukraine, which supplies Ukrainian farmers with high-quality seed potatoes.

In a commentary for SEEDS, Mykola Gordiychuk spoke about how Ukrainian suppliers and producers of potatoes work during a war.

– The situation in the entire agricultural sector, which is strategically important for Ukraine, is still quite complicated. What are the most pressing issues for potato growers?

– The first problem is logistics, delivery of fertilizers, fuel. We cannot buy fertilizers and bring them to our farms in the Chernihiv region, because the bridges have been destroyed. There is only one bridge that can be crossed by a small car. The state is trying to help the agricultural sector, but today small farmers are mostly forced to solve problems on their own.

– What is happening to the demand for seed potatoes? Which varieties are in the highest demand?

– There is a demand for seed potatoes now. First of all, buyers are interested in early varieties, as they understand that the situation in the southern regions of Ukraine is difficult and most farms will not plant potatoes there, or they will not be able to sell them to other regions in time. Therefore, early varieties, such as “Riviera”, “Arizona”, are in great demand today.

But, again, there are logistical problems – for example, when it comes to the supply of seeds from the Kyiv region to the western regions of Ukraine. The cost of logistics services has tripled. Before the war we paid 15 000 UAH for a car, but now we pay 40 000-45 000 UAH for transporting the same 20 tonnes from Kyiv to Ternopil region.

– What are the current trends in the potato market?

– There are enough potatoes in Ukraine today. There is no shortage. The average price for potatoes in stores is quite normal – about 10-12 UAH per kilogram.

– Clearly, it is difficult to make any forecasts during the war, but still, what could this season be like for potato producers?

– Today it is difficult to forecast something. We still cannot say how many farmers will start works in the field. In the temporarily occupied or former occupied territories, many will not be able to carry out field work, since the fields are mined. They need to be cleared and farmers may not be able to start work on time. Now it’s hard to say. It will be possible to make forecasts for potatoes in late April – early May, when we know what areas have been planted.

Video: Preparing seed potatoes

– The majority of Ukrainian farmers helps the population and the defenders of Ukraine in this difficult time. Your company also provided aid. Tell about it.

– We helped several organizations that prepared food for the territorial defense of Kyiv and other settlements. This was especially true when the Kyiv and Chernihiv regions were occupied. Volunteers came to our warehouses in small cars, shipped 2 to 3 tonnes of potatoes every day. We also collaborated with retail chains. They took part of the potatoes for sale, and part for the supply of low-income citizens, who found themselves in difficult circumstances.

We tried to help in every way we could. I think that this is the task of every Ukrainian – to do everything possible to help the army and the country.

– What advice would you give to Ukrainian farmers?

– In this difficult time, first of all, you need to take care of people, your employees, because today there is a big problem of finding personnel, both in the occupied and liberated territories, and in the relatively safe western regions.

I also urge you to plant as many as possible – as many potatoes as you can, because after the victory we will need to feed the country.

Our task is to support the economic front and ensure the food security of Ukraine, so that our defenders and all citizens have what to eat after the victory. I believe that every effort should be made not to disrupt the sowing season, but to sow grain, plant potatoes and do other work on time, if possible.

I realize that the situation is really difficult for farmers today. Ports are blocked, many farmers cannot sell the grain they have left for export. Therefore, they do not have working capital and they have to allocate funds for seeds and other resources extremely rationally. But we must make every effort to do the spring field work and provide the country with food.

Сообщение “We are stubborn and purposeful”: potato growers resume work in the liberated regions of Ukraine появились сначала на EastFruit.

EastFruit experts recently published assessments of the impact of russian aggression in Ukraine on food security and macroeconomic stability in Uzbekistan and Tajikistan. Now we want to give a more accurate estimate of how much citizens of these countries will pay for the decision of russian dictator putin to invade peaceful Ukraine.

We assessed the devaluation of local currencies against world currencies, the decline in income from labor migrants and abnormal inflation, i.e. inflation exceeding pre-war expectations. We also took into account the aggravation of the food security in the second half of the year and the further aggravation of logistical problems.

We want to note right away that according to international experts, the strengthening of the ruble in late March – early April, which led to a sharp strengthening of the Uzbek sum and Tajik somoni, is a short-term phenomenon. It cost russia $40 billion in just one month of direct intervention in the foreign exchange market, and russia does not have large reserves, since they are arrested or under sanctions. In addition, there are now 3 or even 4 exchange rates in russia at once, and the real exchange rate differs from the official one by almost twice.

Since russia received its main income from the export of oil and gas, which supported the ruble exchange rate, then the bad news for russia will also be a sharp refusal of the main buyer – the EU countries, from these and other russian goods. Imports of gas and oil have already fallen significantly, and within 2 years Europe will almost completely abandon them.

Accordingly, the devaluation of the russian ruble against the dollar and the euro is inevitable in the coming months. Moreover, this time the fall may become completely uncontrollable and affect the exchange rates of countries very closely connected economically with Russia. In particular, this applies to Uzbekistan and Tajikistan, but to a much greater extent to Kazakhstan and Kyrgyzstan.

So, how much will each resident of Uzbekistan and Tajikistan pay for the war unleashed by putin and his electorate in Ukraine?

We took the food baskets of Tajikistan and Uzbekistan as the basis for the calculation. Taking into account the forecasts of rising prices for basic goods and services in these countries, it turns out that each resident of Uzbekistan will pay about $1 100 for the war in Ukraine in 2022, and each resident of Tajikistan will pay about $700. This applies to every resident, including children.

In other words, if the average household size in Uzbekistan is 5 people, such a family will pay about $5 500 per year for russia’s war against Ukraine! Similarly, for Tajikistan, where the average family size is 5.8 people, the loss of a household from the war unleashed by russia will be $4 100! This is real money that these families could spend on educating their children, improving their living conditions or medicine. More precisely, this means that, for example, one does not have enough money for an operation that would save the life of a child or an adult.

These estimates do not take into account the loss of income of countries, in particular from the reduction in money transfers from labor migrants, which will also be measured in billions of US dollars. And this means that construction in Uzbekistan and Tajikistan may stop, and construction and development companies that used to sell new housing to families of labor migrants who sent home money earned in russia may go bankrupt. This is a huge loss for the economy, for people and their families.

This, accordingly, will result into a crisis in other areas related to the construction industry and will slow down the development of retail and wholesale trade, which is the engine of the economy of these countries. Returning labor migrants, who were previously sources of income, will become sources of expenses – Uzbekistan and Tajikistan will need to increase food imports, while the global food crisis will only be worsening.

The livestock sector will suffer more than others in the agriculture of Uzbekistan and Tajikistan. Ukraine, the largest feed exporter in the region, will not be able to export almost anything in 2022. Minor volumes that will be exported will go to the EU countries. Thus, protein-deficient Uzbekistan and Tajikistan will experience an acute shortage of livestock feed and a sharp increase in their cost, while the real incomes of their population will decline. This means that it will be impossible to raise prices for milk and meat, since consumers will not afford them.

Accordingly, as early as June-July, a massive reduction in the number of farm animals may begin in Uzbekistan and Tajikistan, primarily in professional enterprises. This will temporarily stabilize meat prices as supply increases, but in the long run, meat prices could soar to alarmingly high levels.

And this is the price that innocent residents of Central Asian countries will pay, and are already starting to pay, for putin’s criminal aggression in Ukraine.

Сообщение How much will residents of Uzbekistan and Tajikistan pay for russian aggression in Ukraine? появились сначала на EastFruit.

Round red greenhouse tomatoes in Ukraine have significantly increased in price over the past week, EastFruit project analysts report. At the end of the last week wholesale prices for greenhouse tomatoes were in the range of 50-70 UAH/kg ($1.71-2.39/kg), but the price range increased to 60-80 UAH/kg ($2. 05-2.73/kg) by the end of the current week. Meanwhile, increasingly often sellers in the largest wholesale markets in various regions of Ukraine set selling prices for small wholesale lots of tomatoes no cheaper than 90 UAH/kg ($3.07/kg).

Traditionally, the main supply on the Ukrainian market at this time of the year is tomatoes imported from Turkey, while at least 1 month remains before the start of a new crop rotation in local greenhouse complexes. There are no problems with the current crop of tomatoes in Turkey, but their prices in Ukraine continue to grow.

Despite the partial migration of the Ukrainian population to European countries, the reduction of consumers in the country’s territories occupied by russian troops, and the fact that tomatoes are not a primary necessity, prices in the segment keep rising.

First of all, the increase in prices in the tomato segment was influenced by the many times more expensive internal logistics in Ukraine. Also, it is physically impossible to deliver imported tomatoes, as well as other products, to some of the main consumption centers in the country due to active hostilities and partial temporary occupation of some regions of Ukraine by russian troops. The gradual devaluation of the hryvnia also cannot but affect the final prices of imported products.

According to the project specialists, prices for greenhouse tomatoes in Ukraine may stabilize in the near future, as a further rise in the price of a non-strategically important product will lead to a complete halt in sales. And as mentioned above, a new turnover in Ukrainian greenhouses at the end of April -beginning of May will be able to release the pressure in the greenhouse tomato market, but only if they are not located in the zone of active hostilities or in the territories occupied by russian troops.

Сообщение Prices for imported tomatoes are rapidly increasing in Ukraine появились сначала на EastFruit.

Andriy Yarmak, agricultural market analyst with 30 years of experience, analyzes the information about food surplus in Ukraine.

I do not understand the excessive optimism voiced by some agribusiness experts regarding the large stocks of grain and vegetable oils in Ukraine. They are going as far as to say that stocks are sufficient to feed Ukraine for a few years! Therefore, I want to clarify the real situation with respect to the food security of Ukraine are and what it means for the near future.

1. Stocks of grains and vegetable oils in Ukraine, are now also feeding the russian occupiers, because a lot of these stocks are concentrated in the temporarily occupied territories of the country. The occupiers steal it from farmers to feed their army and to profit.
2. The quality of grains and especially vegetable oils deteriorate during storage. If storage conditions are not optimal, this process would accelerate significantly. As we all know, conditions for storing products are far from optimal in many regions of Ukraine now due to lack of electricity and personnel. Therefore, a large part of this food will be thrown away already in May, when it gets much warmer. What kind of “long-term” stocks are we talking about?!
3. The stocks we have represent a heavy burden for the farmers, instead providing them with the money. After all, farmers must ensure a new production cycle with earned from selling these stocks and the loans obtained from the banks. However, instead of getting the money, farmers are spending the money on trying to store grains, oilseeds and vegoils.
4. Without the sea ports, Ukraine will only be able to export only 10-20% of the grains, oilseeds and vegetable oils at the very optimistic scenario. Even if the war ends now, Ukraine is unlikely to resume exports through ports unto the end of the year. Unfortunately, the infrastructure, including bridges, roads, elevators, railroads, etc. has been destroyed in many regions. Accordingly, farmers who are now heroically preparing for the sowing season with very scares resources also have very grim chances of selling their new crop.
5. I hope that we all understand that it is unreasonable to rejoice in excessive stocks of grains and oils.
6. Let also discuss the diet of Ukrainians. I do not expect anyone to be happy eating only bread and vegetable oil. What about vegetables, fruits, meat, milk, eggs, fish?
7. Livestock business is extremely sensitive to ideal logistics solutions: timely regular supply of veterinarian medicine and services, feed components, maintaining a microclimate in the barns, having access to timely financing, timely sales of finished products for processing, fast logistics of chilled finished products – any failure of the system may result in bankruptcy of the business. In most of the regions of Ukraine livestock business is under a serious threat now, especially in the occupied or surrounded territories with active fighting. Some farmers have already been destroyed.
8. As for the vegetables and fruits, this business is very labor intensive. As of today, more than 3mn people have left Ukraine already. Thus, Ukrainian farmers do not know where to find to work in the fields and orchards already. It is even less clear what will they do when the harvesting time comes. And then the harvest should be quickly exported as fresh produce is a very perishable produce. The risks in this already high risk sector in Ukraine are now much higher than ever.
9. Major share of stocks of onions and other vegetables are in the temporarily occupied areas of the Kherson oblast. They are kept in storages without electricity and, naturally, deteriorate very quickly. Also, the marketing season of early vegetables from plastic greenhouses in the south should begin now. This business “feeds” hundreds of thousands of people in the South, and the products are supplied to all other regions. Needless to say that this business is dead now. The planting of the new crop vegetables in this critically important region may also never happen. The irrigation system is broken by russians, and without it, the south will definitely be left without a crop of vegetables and a large part of the crop of grain and oilseeds!
10. As of the imported fish and fruits, I have nothing good to say. They were mainly supplied through the ports, and it is not clear when imports will be resumed. Therefore, for now, people will have to live without them. And this is a very important element of the country’s food balance.
11. Even in the western regions of Ukraine, there are already some food shortages, because many migrants moved there fleeing from the war and because the supply chain from the Center and South of Ukraine is broken. It is impossible to cover the shortages with imports because the EU did not have major stocks and relies in large on imports. Besides, the EU countries now need to feed additional 3 million Ukrainians, which moved there from the war! Moreover, the entire food system of the EU was set up to accept food imports from Ukraine, and not to export to Ukraine. Therefore, it is impossible to import food from the EU right now! Ukrainian supermarket chains are ready to buy products, but the EU wholesalers simply do not have much availability even at a high price. Thus, Ukraine needs to find a solution and source food somewhere else.
12. Europe does not have the ability to increase food production quickly. This process would take years and would hardly be possible at all because the agricultural area is decreasing,  while environmental standards and limitations are constantly rising.

The main conclusion is that Ukraine does have stocks of the very basic products, but I am far from certain that it is good news, and it certainly does not guarantee Ukraine’s complete food security. Farmers and processors, especially these involved in the production of high value products, are on the verge of bankruptcy, and the threat is growing daily.

If you are a citizen of Ukraine and if you can plant a small garden for yourself this spring, it is worth considering. I am sure that the world will help Ukraine survive this year, but as I have mentioned many times, only the Armed Forces of Ukraine can save the planting campaign this year and the whole agribusiness of Ukraine!

Сообщение Food security and agricultural sector of Ukraine during the war появились сначала на EastFruit.

The war between russia and Ukraine continues to destroy the established global order and economic ties almost everywhere. Just recently, we reported on the difficult situation in the global banana market and the expected shortage of pallets in Europe. At the end of this week, citrus suppliers from South Africa announced a possible crisis, EastFruit reports citing local media Foodformzansi.co.za.

The loss of the russian market after the imposition of international sanctions will force South African citrus exporters to look for alternative markets for at least 10% of their supplies, according to the South African Citrus Growers Association (CGA). In addition to direct logistical, transport and financial issues, the situation is aggravated by the growth of production costs in the country.

Exporters from South Africa are already reporting the negative impact of russian aggression on the supply of early varieties of lemons, and the export season for grapefruits and mandarins in the country starts in April.

The loss of the export market in Ukraine for South Africa will be a minor event, as exporters have only recently started using direct supply opportunities in Ukraine. Meanwhile, russia annually consumed 7-10% of the total volume of citrus fruits exported from South Africa. For example, russian market operators imported about 168 000 tonnes of citrus fruits from South Africa in 2021.

In addition, suppliers from Morocco, Turkey and Egypt were also aimed at the russian market, and now they will be partially forced to look for alternative markets. “This could lead to an oversupply of citrus in these markets and affect the supply season for early varieties from South Africa,” said Justin Chadwick, Chairman of the CGA. “In addition, the devaluation of the ruble will make imported products in russia more expensive, and the payment system will be complicated due to financial constraints.”

In addition to problems with the export, citrus producers in South Africa also faced the negative impact of the situation in the domestic market. The cost of fertilizers in the South African market has doubled over the past year, and the prices of plant protection products have increased by 1.5 times. Also, the cost of fuel and freight increased by 30-40% in the country in 2021, and after the aggression of russia, the cost of the services of shipping companies will keep increasing due to rising oil prices.

“Major European ports, where citrus fruits are shipped from South Africa, are now overloaded, as all containers are undergoing various checks. Because of this, the transit of goods from South Africa, which previously took about 24 days, now takes up to 90 days in some cases,” adds J. Chadwick.

Сообщение Echoes of russian aggression – citrus fruits in South Africa появились сначала на EastFruit.

The European Federation of Wooden Pallet and Packaging Manufacturers (FEFPEB) in a recent address expressed its support to the people of Ukraine and stated that there could well be a shortage of wooden pallets and packaging on the European market in the coming weeks, EastFruit reports citing EuroFruit.

Ukraine exported over 2.7 million m³ of lumber last year, a significant part of which was used for the production of wooden pallets and packaging in France, Germany, Italy, the Netherlands and Poland. Ukraine also independently produced and exported to European states about 15 million of its own pallets.

The war in Ukraine and the shutdown of sawnwood production will soon have the most serious consequences for pallet manufacturers in Hungary, Italy and Germany (the Top-3 countries importing sawnwood from Ukraine), FEFPEB notes. Moreover, there will be an indirect negative effect on the whole Europe, as the market will unbalance and packaging prices will go up.

In addition to stopping deliveries from Ukraine, the EU wooden pallet and packaging market will also face difficulties with imports from the Russian Federation and Belarus, which annually supplied about 7.6 million m³ of lumber to the EU (mainly to Estonia, Germany and Finland).

However, FEFPEB said it supported the imposition of trade sanctions on Russia and Belarus, although some EU countries are almost a quarter dependent on the supply of materials for the production of pallets from Russian, Belarusian and Ukrainian suppliers. Alternative suppliers from Scandinavia, Germany and the Baltic countries are currently not yet able to fully cover the possible shortage.

The energy crisis also stirs the pot. It has already caused the price of fuel in Europe to rise by almost a third, and the cost of a barrel of oil has reached $110. This is all added to long-standing problems in the industry and the economy, such as the global transport crisis, shortages of labor and commodities, and the destruction of established logistics routes.

Сообщение The war between Russia and Ukraine will cause a shortage of pallets in Europe появились сначала на EastFruit.

In 2021, Georgia exported $5 081 000 worth of blueberries to Russia. The 2022 season will start in June, but growers are in a limbo today. The consequences of the war with Ukraine are likely to affect the Russian economy in the coming months. The only way to save this season is to export to the EU and other developed markets, but is it realistic? Georgia became a producer of blueberries quite recently, but 90% of all export earnings from the sale of blueberries come from the Russian Federation.

Watch: video about the blueberry sector in Georgia

The EastFruit team contacted several blueberry growers in Georgia to find out what their plans are for the season.

Although growers cannot make an accurate forecast, today’s view of the future looks hopeless. Growers are worried that Russian consumers will become poorer due to sanctions, and demand for blueberries will fall, since they are not an essential product.

An alternative to the Russian market is the EU and Gulf countries, but it seems that the industry, with the exception of a few large growers, is not ready to export to these markets without previous experience. Only a few growers are ready to export to the EU this season.

Why haven’t Georgian blueberry producers diversified their export markets so far?

Growers cited several reasons: logistics difficulties, unfavorable payment terms, uncertified production, as well as the ability of local laboratories to check the safety of products.

Logistics

Georgia does not have cargo planes for export to the Gulf countries, although a small volume of blueberries has been exported to Qatar only by passenger airlines in recent seasons. Another hurdle is that since it is not a cargo plane, it does not have the proper facilities, such as temperature control, to carry perishable goods.

Export to the EU countries is carried out by land transport, which is not difficult to organize. The issue is time. If a perishable cargo from Georgia reaches Russia in 3-4 days, then, for example, it needs 9-10 days to reach Germany. Transport time is critical for perishable goods, as more time spent on the road means lower quality and loss for the seller.

Terms of payment

As the growers explained, there are different payment terms in the Russian and European markets. Payment in Russia was made on the spot, while European traders only pay after the sale of goods, which delays payment by weeks, reducing cash flow and increasing risks for sellers. When exporting to EU markets, grower also take on the risks of transportation and defective products, since they will be paid only for commodity volumes.

Certification and laboratory research

Growers without certificates such as GlobalG.A.P. will not be able to export to the EU as this is the first requirement from European customers. Unfortunately, only a few large growers are certified by GlobalG.A.P. in Georgia, while most of the small producers initially set up their business to export to the Russian market, where certification is not required.

In addition to certification, blueberries must be tested for product safety in order to enter developed markets. According to producers, laboratories in Georgia cannot do all the necessary tests.

FCO is one of the few producers that received GlobalG.A.P. certification in 2020. According to FCO spokesman Rati Morchiladze, although it seems that this season will be difficult for most growers, their company plans to sell in Western Europe, as they have already done this last season.

“Last season we exported a small volume of blueberries to Germany. We only managed to export once at the end of the season due to the difficulties we faced. One of the factors that delayed the process was that we had to send samples to Turkey in order to pass all the requested tests. But now we know what needs to be done and how to do it in a short time. This season it should be easier for us to export to Germany. We even found a way to shorten the transportation time. With two drivers driving a truck in turn, it is possible to get to Germany in 5-6 days,” said Morchiladze.

Those who are not yet ready to export to the EU are still hoping that the Russian market will not be completely closed, but they are also considering the worst-case scenario, realizing the need to diversify markets in the future.

Сообщение Is Georgia ready to export blueberries to the EU? появились сначала на EastFruit.

A group of representatives of Bulgarian trading companies supplying fruits and vegetables to LIDL, Auchan, Carrefour, REWE supermarket chains in Bulgaria visited the post-harvest infrastructure facilities of seven large horticultural enterprises in Moldova at the end of January.

As the heads of agricultural enterprises that received the guests noted, the visit was not informational, but had a practical nature. Bulgarian sales representatives tried to solve a temporary problem: to compensate for the lack of supply of high-quality apples to Bulgarian supermarkets with urgent imports from Moldova. The quality, packaging and even the price of Moldovan apples suited them. However, apparently, it will not come to the signing of contracts.

The host party concluded that the main obstacle to the supply of Moldovan apples to Bulgaria was too expensive transport logistics. Potential buyers would have to rent trucks both ways, and there would be no return loading. Potential sellers were also focused only on the sale of apples and did not consider options for the reverse import to Moldova of some Bulgarian products, for example, vegetables or seed potatoes.

According to Moldovan traders, after visiting Moldova their Bulgarian counterparts went to Poland, where, most likely, they purchased apples of similar quality on more attractive logistics terms or at a lower price.

Сообщение What prevents the exports of Moldovan apples to Bulgaria? 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 associations of agricultural producers of the Republic of Moldova say “the exports of apples are in full swing” in the first half of January 2022. According to optimistic forecasts, it will exceed the volume of exports (slightly more than 14 thousand tonnes) of the “failed January of last year”. However, the country’s fruit market participants believe that it is still early to talk about a return to the level of high January exports in the period 2017-2020, when apple exports in the first month of the year amounted to about 25-35 thousand tonnes.

Read also: Moldovan growers expect worsening labor shortage in 2022

Some large traders attribute good exports in the first two work weeks of 2022 to “the inertia of high demand and supply volumes in December last year.” Moreover, export demand at the end of 2021 even exceeded logistical possibilities (permits for cargo transportation by road in Russia have ended, gasoline and diesel fuel have risen in price). According to exporters, the cost of transporting apples by a heavy-duty refrigerated truck increased on average from $3 000 to almost $4 000. In the hope that the transport problem will mitigate at the beginning of the year, some buyers of Moldovan apples in Russia, apparently, postponed a part of deliveries from December to January.

In addition, there will probably be an adjustment in prices for apples supplied to the Russian market in the second half of this month. If the price level declines a lot in comparison with the December level, it is quite possible that exports will slow down as well.

Сообщение Apples exports from Moldova remain high in January появились сначала на EastFruit.