Georgia intends to start negotiations with the United Arab Emirates (UAE) to conclude a free trade agreement. EastFruit analysts figured out how to maximize the benefits of Georgian producers of berries, nuts, fruits and vegetables from the new opportunities that will open up thanks to the cancellation of tariffs.

The UAE is a center of trade in the Middle East and a very attractive market that is growing, striving for diversification and has a very high purchasing power, thanks to a GDP per capita of $43 000 (2019). Imports of fruits, nuts and vegetables  have been growing over the past two decades, and in total reached about $3 billion per year, excluding 2020 with a slight decline due to the pandemic.

In the UAE, imports of agricultural products are taxed on average 6% for WTO members, among which is Georgia. Despite this low tariff and high demand for imported products, Georgia did not export much to the UAE. Georgian exports of fruits, nuts and vegetables to the UAE totaled only $3.2 million over the past 8 years. Annual exports peaked in 2021 at $1.1 million, with 72% coming from the export of hazelnut kernels and fresh blueberries. The two main factors holding back imports are expensive logistics and insufficient product quality for the demanding UAE market.

Read also: Georgia: TOP-10 events of the produce business in 2021

As key Georgian exporters to the Middle East explain, so far the only way to deliver fruits, nuts and vegetables from Georgia to the UAE is by plane. Of course, this is very expensive, but the problem is much more serious: there are no cargo planes. Georgian exporters have to put their goods to the luggage compartment of passenger flights that are not intended for the carriage of perishable goods such as fruits and vegetables and do not have a temperature and humidity control. This limits the volume of exports, and increases the risk of deterioration in product quality during transportation.

However, there were the first attempts to export table grapes by land to Qatar in refrigerated container through Azerbaijan and Iran last year. Also promising is the opening of a new transport corridor to connect the Persian Gulf with the Black Sea.

In addition to logistics problems, it is usually difficult for Georgian exporters to obtain export-quality products in large volumes. They say that there is demand from the Middle East and importers are ready to sign contracts, but local suppliers will not be able to provide them with products of the required volumes and quality.

At the same time, many Georgian products are in demand in the UAE. Moreover, these trade positions have one of the highest growth rates among imports of fruits, nuts and vegetables to the UAE. Georgia could also export these products to the UAE in higher volumes.

Сообщение Will free trade with the UAE help boost Georgian exports? появились сначала на EastFruit.

Ukraine has found an attractive export niche, which has been actively developing for several years – fresh butternut squash exports. Moreover, Ukraine supplies it mainly to the most demanding of the possible sales markets – the UK.

EastFruit analysts note that, despite Brexit, in 2020 Ukraine was able to sharply increase butternut squash exports once again and set a new export record for the year. By the end of 2020, butternut squash exports from Ukraine increased by 76% to almost 2,000 tons. Moreover, compared with the volume of supplies just five years ago, the Ukrainian butternut squash exports has grown more than 12 times. Back in 2016, Ukrainian exporters sold only 164 tons of squash abroad. In monetary terms, butternut squash brought Ukrainian exporters 783,600 US dollars in revenue, of which about half a million is the revenue from supplies to the UK.

Last year, Great Britain imported about half of all Ukrainian butternut squash exported – 972 tons. Exports to this country increased by 20% per year in volume and even more significantly in value terms since average butternut squash prices have increased. Considering that the UK imports more than 70,000 tons of butternut squash per year, Ukraine is far from having exhausted all the possibilities of supplying these vegetables to the United Kingdom because the share of Ukraine in British pumpkin imports barely exceeds 1%.

Interestingly, butternut squash supplies from Ukraine are not limited to the UK. Ukrainian exporters are actively diversifying their sales. In 2020, Ukraine more than quadrupled the exports of fresh squash to Romania. Thus, in 2020 Romania accounted for more than 31% of all Ukrainian butternut squash exports, while a year earlier – only slightly less than 13%.

Another interesting precedent was the supply of Ukrainian butternut squash to the UAE in 2020. It was the first large batch of fresh squash delivered to the Middle East from Ukraine. And this gives hope for the further expansion of sales markets because other fruits and vegetables are increasingly being exported in this direction, mostly thanks to FAO and the EBRD’s successful trade missions.

Similarly, the Ukrainian squash exports to Moldova and Bulgaria increased significantly, reaching 145 tons and 112 tons, respectively. Note that a year earlier, Moldova imported only 15 tons of this product, and Ukraine didn’t supply squash to Bulgaria at all. Among other vital directions of Ukrainian supplies, we note the Netherlands, where Ukraine exported 59 tons of the product.

“Exports of squash from Ukraine began to actively develop in the country after the closure of the Russian market in 2015 when Ukrainian vegetable growers were forced to urgently seek both new supply channels and new products for exports. One of these turned out to be squash and in 2016 the first 117 tons of squash were delivered to the United Kingdom. Today, squash exports are one of the fastest-growing segments of Ukrainian export products with high-added value,” comments Yevhen Kuzin, the head of International Projects at Fruit-Inform.com.

“Buyers from the EU are selective about the quality of supplied products. Therefore, although the volumes of pumpkin imports from Ukraine are growing rapidly, they remain relatively low. Butternut squash, according to the requirements of the main European buyers, should be rather small and proportional and the optimal weight should be from 800 g to 1 kg. Squash over 1.5 kg are practically not used for direct sale in supermarkets and are mainly sent for further processing,” adds Mr Kuzin.

The main exports of butternut squash from Ukraine occurs in the autumn-winter period. The peak of export supplies falls in October, November and December, and since January, exports begin to decline.  From January to early March, butternut squash from the Southern Hemisphere countries (Brazil, South Africa, etc.) is already actively entering the EU market. It is then that supplies from Ukraine begin to decline.

“Although Ukrainian exporters will traditionally export the main volume of butternut squash in September-December, they will pay more attention to lengthening the season of their supplies. It will make it possible to stay on the EU market until the end of spring next year when relatively expensive products from the Southern Hemisphere countries occupy the bulk of this market. Also, even in October-December, the growth potential of Ukrainian butternut squash supplies to the UK and EU countries, not to mention the Middle East markets, continues to be quite significant,” says Yevhen Kuzin.

According to EastFruit, the main squash suppliers in January-May 2020 to the EU from non-EU countries and geographically the closest were Morocco and Egypt in Northern Africa. Other suppliers were from the Southern Hemisphere and Central America such as South Africa (the leader in deliveries), Argentina, Panama, Peru, and New Zealand.

Сообщение Butternut squash from Ukraine conquers Europe and the Middle East появились сначала на EastFruit.

Ukrainian company UApple (Сады Днепра or Dnieper Gardens) sent its first apple exports to the United Arab Emirates last week. According to its company’s owner Vadim Ermolaev via his Facebook page, this shipment was preceded by a visit by the Emirati customers to the orchard. They toured the orchard’s refrigerated storage seeing with their own eyes the storage conditions for apples and personally attended the process of automated sorting. The visit allowed foreign customers to fully satisfy their curiosity and became convinced of the reliability of the Ukrainian supplier. Soon thereafter, a large order of Ukrainian apples was made.

Read also: Ukrainian company UApple planting a pear orchard

Mr Ermolaev said the company installed temperature sensors on pallets before shipping the apples for complete transparency and the numbers of the sensors were given to the customers. This allows the customers to monitor the temperature during the transportation of the apples.

“Such openness in communicating with the client is a bonus not only for the reputation of the company but also for our country,” proclaimed Vadim Ermolaev.

Сообщение Ukrainian producer installed temperature monitoring sensors on apple shipment to the UAE появились сначала на EastFruit.

The EastFruit team in Georgia interviewed leading producers, processors, exporters and importers of fruit and vegetable products, as well as solution providers for the industry, officials and experts to identify the most significant events over the past 10 years that have had a decisive impact on its development. Below is a consolidated version of the ranking of the most important events for the Georgian business of vegetables, fruits, berries and nuts in chronological order as these events occur.

The first part of this series on Georgia’s Top 7 events can be read here; and the second part read here. Below is the third and final installment of our series on the main events in the Georgian fruit and vegetable industry over the past 10 years.

5. In 2016, Georgia exported blueberries for the first time to the UAE.

The industrial production of blueberries in Georgia began relatively recently in the 2000s. At the same time, the Plant the Future program gave a more powerful impetus to development.

It should be noted that, thanks to international donor projects, the development of blueberry production in Georgia started on the right foot with the selection of soils and blueberry varieties that grow well in Georgia and are in demand on the world market.

Therefore, already in 2016, the first consignments of Georgian blueberries were exported to the Middle East market in the UAE. “From the very beginning, we focused on Persian Gulf countries since, in the EU market, we are losing to the logistics of Spain whose producers can deliver blueberries in 2-3 days by road,” recalls Giorgi Gviniashvili, head of Agrolane. “In the UAE, Qatar and Kuwait, we are in the same conditions as the EU – all the world’s major producers deliver blueberries by air.”

“In 2016, our company took part in the Gulf Food Exhibition where we managed to get to know our first customers, to whom, a few months later, we sent the first consignments of our fresh blueberries from Georgia. We are successfully working with this company today. This year, deliveries to Dubai, of course, were complicated due to the interrupted air traffic due to the pandemic and quarantine measures, but we still ship blueberries through Baku,” says Giorgi.

Also, according to Giorgi Gviniashvili, only a high-quality product can be exported to markets such as the UAE. For this reason, in addition to production technologies, blueberries must be able to be properly processed and packaged. Without sorting, packing and cooling, you shouldn’t think about exporting.

Nevertheless, the very fact of blueberry supply to such a distant sales market attracted the attention of investors. He also showed farmers that there are many interesting sales markets and niches attractive for business in the produce business.

6. In 2017, Georgia banned the sale of agricultural land to foreigners.

The new Constitution of Georgia, adopted in 2018, states that, with a few exceptions, agricultural land can only belong to the state, a citizen of Georgia, or a legal entity owned by citizens of Georgia. But, de facto, the ban on the purchase of agricultural land by foreigners was already adopted in 2017 and was in effect until the adoption of the new Constitution.

Agriculture Minister Levan Davitashvili said the move followed widespread public concern that outsiders were acquiring too much of the country’s best fertile land, especially in strategically important areas.

According to the 2017 report of the State Commission on Migration Issues, “Among foreign citizens investing in real estate in Georgia, there are citizens from Georgia’s neighboring countries – Russia, Ukraine, Armenia and Azerbaijan. Presumably, some of these individuals are former Georgian citizens who emigrated to these countries and wished to maintain stronger ties with Georgia through real estate investments. The same may be partly true for the citizens of the United States and Israel.”

The share of foreign direct investment in agriculture in Georgia over the past 10 years did not exceed 4%, but in 2018, it dropped to the minimum (negative) value -0.14% (-$1.8 million) (i.e., the ban on the purchase of land by foreigners immediately led to an outflow of foreign investment in the country’s agriculture).

7. In 2018, Georgia became a net exporter of apples for the 2018/19 season.

Georgia has been a net importer of apples for many years. However, in the 2018/19 season (July-June), the export of Georgian apples, unexpectedly for many market participants, increased 10 times compared to the average value over the past five years and reached 12,500 tons. Naturally, 89% of the exported apples were supplied to the Russian market.

In addition, Georgia’s trade balance for apples turned positive for the first time, and Georgia became a net exporter of apples. Apple imports to Georgia in the same season also became the lowest over the past five years and amounted to only 3400 tons. This was facilitated by the decline in prices in the domestic market due to the high harvest.

At the same time, the shortage of capacities for storing apples still has a negative impact on this business. An apple falls in price during harvesting and in the second half of the season it is usually not enough to meet domestic demand, prices for it rise, and import.

Georgian growers expect that the apple harvest in 2020 will also be 50-60% higher than in the previous season. “In 2019, the apple harvest in Georgia was at the level of 44,000 tons, which is 47% less than in the previous year. The factor of the frequency of fruiting played a role. In addition, several strong hailstorms occurred in the Gori region (the country’s largest apple producing region), which destroyed up to 80% of the crop. This year the weather is more favorable, and if everything continues, I think the harvest will reach 65,000-70,000 tons, which is 50-60% more than last year. The average prices for an apple in the coming season, in comparison with the one that already ended and taking into account all factors, in my opinion, will be 10-20% lower,” said Ilya Mishchenko, director and co-founder of GUFruit, a major Georgian apple producer.

The importance of Georgia’s transition to the category of a net exporter of apple, the most affordable fruit, cannot be underestimated. First of all, the drop in apple prices in the 2018/19 season came as a shock to many producers, and the least efficient of them realized that they needed to either develop this business or give way to more successful ones. It also clearly demonstrated the need for investment in apple storage infrastructure, which can become a starting point for the development of infrastructure for the storage and processing of fruits and vegetables in the country as a whole. Most importantly, many manufacturers realized for the first time the importance of investing in product quality, because high-quality products could be exported and get a good profit even in this season. Accordingly, the Georgian consumer was also able to gain access to a better and less expensive product, and the fruit and vegetable business received new incentives and opened up new horizons.

Watch the video below for industry-specific coverage of these events.

Read also: Top 7 events that influenced Georgia’s produce business over the past 10 years: Part 1 | Part 2

Сообщение Top 7 events that influenced Georgia’s produce business over the past 10 years (Part 3) появились сначала на EastFruit.

Due to its favorable geographic location, as well as favorable conditions for farming, over the past few years, Ukraine has become one of the leading suppliers of organic fruits and vegetables to the markets of Western Europe, occupying, as of the beginning of last year, the 4th place among the supplying countries in EU.

This is stated in the “Research of the Ukrainian Market for Organic Fruit and Vegetable Products-2019“, which was carried out at the initiative of the Ukrainian Fruit and Vegetable Business Development Project (UHBDP) with the participation of specialists from the certification body “Organic Standard,” as well as the educational and consulting project Organic Business School.

As the authors of the study note, currently, Ukrainian exporters of organic fruits and vegetables are actively using the advantages of the Association Agreement between the EU and Ukraine and the Deep and Comprehensive Free Trade Area, which is part of the Agreement.

The research emphasizes that additional control measures over Ukrainian products introduced in the EU in January 2016 do not apply to fruit and berry and vegetable crops, simplifying the EU’s export of fruit and vegetable products. At the same time, the study notes that competition, especially in the developed EU market, is relatively high. “Therefore, Ukrainian exporters need to prepare very carefully for the supply and promotion of their products to this market,” researchers report.

The largest organic markets in the world are concentrated in the USA, Germany, and France. Thus, in percentage terms, the US organic market has a 47% share of the world market, and the EU organic market – 37%.

“These are the areas of export of organic products from Ukraine that can be a priority. Although Ukrainian exporters should also pay attention to countries such as Switzerland, Canada, and Asian countries, particularly the United Arab Emirates, Japan, and China,” authors of the study noted.

The UHBDP also notes that organic vegetables have the largest market share among all categories of organic produce.

In countries such as Switzerland, Austria, Denmark, and Sweden, organic vegetables account for 10% or more total vegetable assortment sales. In comparison, organic fresh carrots and pumpkins account for almost 30% of Germany’s corresponding product segment.

Analyzing the Ukrainian organic fruit and vegetable market, the authors of the study draw attention to the fact that some product categories have an advantage in terms of sales on the external market, and some on the domestic market.

“In particular, Ukrainian producers of organic vegetables sell their products mainly on the domestic market through supermarket chains (Silpo, Auchan, Good Wine, WineTime), small specialized stores (Natur Boutique, Eco Lavka), Internet, direct delivery to end consumers through the organic basket concept, or through a store near the farm. The products are sold fresh. The assortment of fresh organic vegetables on the Ukrainian market includes potatoes, beets, carrots, tomatoes, cherry tomatoes, cucumbers, peppers, onions, garlic, radishes, beans, lettuce, arugula, spinach, Swiss chard, cilantro, dill, basil, eggplant, zucchini, sweet corn, white cabbage, broccoli, kale, Brussels sprouts, cauliflower, Peking cabbage, and Kale cabbage.

Organic fruits, including berries, are sold mainly for export to the EU and Switzerland. Partially, these products can also be found in the domestic market. For example, such products are watermelon, melon, pumpkin, grapes, blueberries, lingonberries, blackberries, raspberries, garden strawberries. These products are sold mainly fresh, although the berries are also sold frozen,” researchers reported.

It is noted that fresh organic apples supplied from Ukraine to foreign markets are intended only for further processing in the country of export. “The decision on whether to export fresh apple or apple concentrate from Ukraine is made depending on the market situation and the cost of logistics,” the authors of the study explained.

It should be noted that, in addition to cultivated organic fruit and berry products (raspberries, garden strawberries, chokeberries, apples), Ukrainian operators also sell wild plants: blueberries, blackberries, lingonberries, cranberries, elderberries, chokeberries, blackthorns, rose hips, sea buckthorn, mountain ash, wild strawberry, apple, and nuts.

“In total, about 20 Ukrainian operators export only wild berries. At the same time, 3 Ukrainian operators export walnut kernels, but only obtained as products of wild plants. The export of nuts grown in the fields of farms is not yet conducted. The main reason for the absence of such shipments is the young age of the walnut plantations and insufficient volumes for export,” the study explains.

The study also states that in 2018, 8 exporters supplied organic raspberries to EU markets, grown by 28 Ukrainian producers.

“An analysis of the importing countries of this berry shows that Ukrainian producers export their products to countries such as Poland, Czech Republic, France, Germany, Switzerland, Italy, Serbia, and the United Kingdom. What is more, every year, the geography of Ukrainian organic exports raspberry increases,” authors of the research noted.

Сообщение Research: Ukraine becomes one of the leading exporters of organic fruits and vegetables to EU markets появились сначала на EastFruit.