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 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.

The state authorities of Belarus continue to disrupt the fruit market causing huge losses for its participants, consumers and the state budget, as EastFruit experts recently showed in their article. The new resolution of the Government of the Republic of Belarus came unexpected to all market participants, since officials kept stating that there were enough fruits and vegetables on the market and there was no cause for concern.

However, on February 5, 2022, EastFruit experts learned that the competent authorities stopped issuing certificates for the export of apples, cabbage and onions from Belarus, even when delivered to Russia. But it is to Russia that almost the entire volume of apples, cabbage and onions from Belarus is exported. Moreover, it is not a secret for traders that not all of these vegetables are grown in Belarus, despite the fact that re-export from Belarus to the Russian Federation has become complicated in recent years.

Alexandra Isayeva, press secretary of the Prime Minister of the Republic of Belarus, posted the following message on her Facebook page.

“As for licensing the export of some goods. The corresponding decision was adopted by the Resolution of the Council of Ministers of the Republic of Belarus dated February 4, 2022 No. 70.

In the above-mentioned decision:

– onions, cabbage and apples, regardless of the country of origin, outside the Republic of Belarus are exported under one-time licenses issued by the Ministry of Antimonopoly Regulation and Trade in agreement with the regional executive committees (Minsk City Executive Committee);

– one-time licenses are issued in the manner similar to that established by the Rules for issuing licenses and permits for the exports and (or) imports of goods, provided for in the annex to the Protocol on non-tariff regulation measures for third countries (Annex No. 7 to the Treaty on the Eurasian Economic Union dated May 29, 2014).

The State Institution “Main State Inspectorate for Seed Production, Quarantine and Plant Protection” and its territorial organizations in the regions issue phytosanitary certificates for onions, cabbage and apples exported outside the Republic of Belarus provided there is a one-time license for their export.

The regulation does not apply to goods:

– exported to the member states of the EAEU, as well as to states not members of the EAEU to provide international humanitarian assistance to foreign states pursuant to decisions of the Government of the Republic of Belarus, as well as supplies;

– transported within the framework of international transit traffic, starting and ending outside the customs territory of the EAEU;

– placed under customs procedures in a member state of the EAEU other than the Republic of Belarus, moved in transit through the territory of the Republic of Belarus;

– transported within the framework of international transit traffic, starting outside the customs territory of the EAEU and ending in a member state of the EAEU.

The Decree comes into force from the date of its publication and is valid for three months.”

It should be noted that the resolution has not yet been published, so it is difficult to say when it comes into force. Nevertheless, traders say that it is impossible to obtain documents for export now. So, the export has already been stopped.

This is very bad news for growers in Ukraine. After all, the unexpected embargo of Belarus on the imports of fruits and vegetables from the EU and a number of other countries, which did not include Ukraine, was the main positive news of the season for Ukrainian growers. This has led to a sharp increase in demand for Ukrainian apples that replaced apples from Poland and other EU countries in the Belarusian market, and probably in the Russian market. After the ban on the supply of apples to Russia from Belarus, the demand for Ukrainian apples may slightly decrease. However, they will remain demanded, since Belarus does not produce enough apples to meet the needs of its domestic market.

Even more unpleasant news for Ukrainian vegetable growers and traders will be a ban on the exports of cabbage from Belarus. Indeed, mainly due to the export of Ukrainian cabbage to Belarus, with its subsequent resale to Russia, prices in the domestic market of Ukraine were so high.

It is not entirely clear why the government of Belarus would ban the exports of onions. The fact is that prices for onions in Belarus are currently 50%  higher than in Russia. Therefore, no one exports them anyway. Moreover, Belarus imports onions from other countries, including Russia. Onion is the only commodity for which prices have not changed over the year in Russia. Their growth in Belarus was not so significant even in Belarusian rubles. However, this part of the resolution will not have any large impact on the market.

Will Belarus change something with this ban? Will the prices for apples, cabbage and onions decrease as a result of these unpopular actions? Experts think they will not. “In most cases, such a brutal intervention in the market as an export ban leads to the opposite result compared to what is desired in the long term,” says Andriy Yarmak, economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO).

“If a country produces more products than is required in the domestic market, then an export ban can indeed lead to a short-term collapse in prices and losses for producers. They will react with a decrease in production in the next cycle, and it is possible that production will become insufficient to cover the deficit in the country’s domestic market and prices will rise even more in the next season. However, Belarus provides even the domestic market with high-quality apples and onions, and their imports annually exceed their exports. Thus, the ban on exports of onions and apples will not change anything in this case, but it will harm trade and reduce state budget revenues. Provided that stocks remain sufficient, cabbage prices may temporarily stabilize, especially since early cabbage of the new harvest from Uzbekistan and Tajikistan may become available on the Belarusian market soon. Therefore, such a decision is also unlikely to significantly reduce prices, but it may cause damage to producers and trade. Nonetheless, in recent years Belarus imported more cabbage than it sold for exports,” the expert notes.

Recall that the harvest of vegetables and potatoes in Belarus in 2021 was much lower than expected, which led to a sharp increase in prices for most vegetables of borsch set. Cabbage and potatoes rose in price most of all. Moreover, the country began to import potatoes even during harvesting. Since then, the government has unsuccessfully tried to contain the rise in prices for borsch vegetables, using the methods of manual market control.

Сообщение Bad news for Ukraine – Belarus bans exports of apples, cabbage, and onions появились сначала на EastFruit.

According to EastFruit analysts, Belarus has decided to expand the list of countries covered by the food embargo, i.e. a ban on the import of food products, including fruits and vegetables. Recall that from January 1, 2022, Belarus banned its importers from buying vegetables and fruits and some other products in the EU countries, as well as in a number of other countries in Europe and the world. The expansion of the list of countries from which the import is banned for Belarusian companies was quite unexpected – Serbia and Liechtenstein were added to it.

The surprise is that Serbia is not yet a member of the European Union, it is considered a friendly country in Russia, and even Russia has not banned Serbia from supplying vegetables and fruits to its market. By the way, Serbia remains one of the largest fruit exporters to the Russian market. Liechtenstein, although not a member of the EU, is not a producer of fruits and vegetables, so its inclusion in the list is obviously symbolic. Perhaps they simply forgot to add it to the original list of countries subject to the Belarusian food embargo.

Read also: Serbia and Croatia overtook Ukraine in terms of apple exports to Singapore in 2021

Notably, Russia is the No. 1 fruit and vegetable market for Serbia. However, Belarus is not an important sales market for Serbia, not even being among the Top-30 countries where Serbian vegetables and fruits are supplied. Similarly, for Belarus, Serbia is a minor supplier.

According to preliminary estimates, the loss of Serbian fruit and vegetable growers from the ban on supplies to the Belarusian market will amount to about $2.2 million. This is a relatively small amount, given the volume of fruit and vegetable exports of Serbia. However, due to the ban on the supply of products from the EU to Belarus, Serbia could count on a large increase in exports in 2022.

Which fruits and vegetables Serbia supplied to Belarus?

The main volume of fruit and vegetable exports from Serbia to Belarus were peaches, fresh strawberries, cherries, apricots and frozen berries. The export of fresh fruits and vegetables from Serbia to Belarus increased by 33% in 2021. The main increase in exports in 2021 was noted in the segment of frozen berries and fruits – their supplies from Serbia to Belarus increased by 3.3 times. Deliveries of Serbian peaches to Belarus increased by 44%, strawberries increased by a third, fresh cherries increased by 1.5 times, apricots almost doubled, apples more than doubled, and fresh plums more than 6 times. However, Belarusian purchases of apples and plums from Serbia were relatively small.

Thus, Belarus once again worsened access to fresh fruits and vegetables for its own consumers. Consumers in Belarus are now forced to overpay a lot of money for vegetables and fruits of average quality, so they are actually deprived of a choice. And prices for fruits and vegetables in Belarus are already record high.

Сообщение Belarus bans the imports of fruits and vegetables from Serbia появились сначала на EastFruit.

EastFruit experts note the growing interest of Ukrainian consumers in understanding why borsch vegetables are so expensive.

Indeed, it is difficult for many to understand why the retail price for cabbage now ranges from 21 to 25 UAH/kg, while last year at the same time, it was sold at an average of 4-5 UAH/kg. And how can cabbage cost more than apples?

By the way, cabbage, carrots, onions and table beets were sold at approximately the same retail price a year ago – within 4-5 UAH/kg. However, all four of these important vegetables are now many times more expensive. Table beets are now sold in supermarkets in Kyiv at 16-18 UAH/kg, onions – at 13-16 UAH/kg, and carrots – at 15-20 UAH/kg.

By the way, the only product from this category that has not risen in price over the year is potatoes. Moreover, it even fell a little in price over the year. And if in January 2022 potatoes were the most expensive vegetable of the borsch set, now they are the cheapest.

However, how can one explain such high prices for beets, carrots, onions and especially cabbage, and why prices for borsch vegetables have risen so sharply over the year? We will also try to figure out whether there are prospects for lowering the prices.

Probably, this will come as a surprise to many in Ukraine, but despite the ban on the export of vegetables from Ukraine to Russia, it is Russia that is mainly “to blame” for the high prices for vegetables in Ukraine. Moreover, there are two important factors that led to an increase in vegetable prices in Ukraine, and which are directly related to Russia.

The first factor is the unprecedented shortage of vegetables in the Russian market. Since Russia has isolated itself from the markets of Ukraine and the EU, it is not easy to fill this deficit, and as a result, local consumers are forced to pay incredibly high prices for vegetables and potatoes, losing billions of dollars on this. This problem was previously partially solved by Belarus, which re-exported vegetables banned in Russia from the EU countries, but it has banned the import of vegetables and fruits from the EU and a number of other countries since January 1, 2022.

However, if Ukraine cannot export vegetables to Russia, how do the developments in the Russian market affect the Ukrainian market? It’s simple – Russia buys cabbage, carrots, beets and other vegetables wherever it can. Belarus has traditionally been a major supplier, but it also faced a crop failure in 2022, so it began to purchase vegetables in Ukraine. Today, the export of vegetables to Belarus is more profitable than their sale on the domestic market of Ukraine, and it is easy to guess that these Ukrainian vegetables are likely to end up on the Russian market.

The second factor that leads to an increase in prices for vegetables in Ukraine is also directly related to Russia. Due to the concentration of Russian troops on the borders with Ukraine and the threat of their invasion into the country, the national currency of Ukraine has been actively devaluing in recent weeks. This makes exports even more profitable, which means that the supply of vegetables for the domestic market is reduced. Thus, retailers have to raise prices in order to purchase vegetables from growers.

In the case of cabbage, another factor is added – the increase in the cost of imports. After all, Ukraine is now importing cabbage from Poland. If the UAH devalues, even with the price for cabbage in Poland remaining the same, its price in Ukraine grows in proportion to the devaluation of the UAH.

Of course, one cannot but take into account the reducing production of traditional borsch vegetables in Ukraine. “In recent years, grain prices have risen to record levels, while prices for borsch vegetables in Ukraine have remained stable. This almost equalized income per hectare of grains with income per hectare of vegetables. The risks in growing vegetables are much higher, it is more difficult to grow them, they are far from being stored as well as grains. Losses during storage of vegetables are much higher and even market risks are ten times higher than in the case of grain, which can always be easily sold. This has led many vegetable and potato growers in Ukraine to abandon the production of table beets, onions, carrots, cabbages and potatoes in favor of grains,” explains Andriy Yarmak, economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO).

Will vegetable prices go down in the near future and in the new season? Unfortunately, there is no definite answer to this. However, the EastFruit team in Central Asia confirms a sharp increase in the area planted with early cabbage, the harvest of which is beginning in the southern regions of Uzbekistan and Tajikistan. It is possible that it will become available on the Ukrainian market in February, leading to a reduction in wholesale and retail prices for cabbage.

As for other vegetables, one should not expect a significant decrease in their price in Ukraine in the coming months, given the situation with production and logistics in other countries of the region.

Opinions about the prospects for a new harvest are divided. Many market participants believe that high prices will lead to a sharp increase in acreage in Ukraine. Others point to the fact of a sharp increase in the cost of inputs, especially fertilizers, which may act as a deterrent to increasing areas, and may also affect vegetable yields.

Сообщение Why are traditional vegetables so expensive in Ukraine? появились сначала на EastFruit.

According to EastFruit analysts, Iran reduced its exports of fruits and vegetables by 6% in 2021 due to a sharp decline in sales to countries such as Iraq, Russia, China and Afghanistan. Meanwhile, a number of countries have sharply increased imports of Iranian fruits and vegetables.

Among the sales markets that increased fruit and vegetable imports from Iran faster than others, Uzbekistan stands apart. In 2021, it spent 5 times more money on importing vegetables and fruits from Iran than in 2020. Iran’s revenue from the supply of fruits and vegetables to Uzbekistan in 2021 reached $46.2 million, making Uzbekistan the 15th largest market for Iran.

Read also: Watermelon imports to Russia in 2021 were record-breaking due to supplies from Iran

Obviously, the main product of the fruit and vegetable category, which was exported from Iran to Uzbekistan, was marketable potatoes. The volume of exports of Iranian potatoes to Uzbekistan in 2021 reached 146 thousand tonnes, having increased 36 times. Iranian dates were the second, of which Uzbekistan imported 7.4 thousand tonnes – 3 times more than in 2020.

Fresh apples were the third in terms of exports. Uzbekistan increased the import of Iranian apples by 9 times to 6.4 thousand tonnes in 2021! The next most imported Iranian fruit in terms of volume was kiwi. Uzbekistan bought 3.9 thousand tonnes of kiwis from Iran in 2021, doubling imports in a year! However, kiwi can be successfully grown for domestic consumption in Uzbekistan and exported to other countries!

We also note the sharp many-fold increase of imports of Iranian mandarins and oranges to Uzbekistan. Imports of Iranian pistachios to Uzbekistan also increased by 2.5 times in 2021, and Iranian garlic – by almost 5 times.

Сообщение Uzbekistan became the fastest growing market for fruits and vegetables from Iran in 2021 появились сначала на EastFruit.

EastFruit continues to analyze the results for 2021. In this article, we present our version of the TOP-10 events of 2021 in the fruit and vegetable sector of Moldova.

1. Weather anomalies affecting the quality of fruit and vegetables and their marketing

Moldova is experiencing abnormal weather for the second year in a row. If in 2020 farmers of the country, where the area under irrigation is one of the lowest in Europe, suffered from the worst drought in recent decades, then 2021 was marked by heavy rains.

Spring 2021 was unusually cold, prolonged and rainy, which affected the start of the growing season of all crops. Hot summer allowed to minimize the lag in the ripening of fruits and vegetables as much as possible, but rainy and cool weather in autumn again prevented the timely harvesting and caused a delay in the ripening of vegetables, fruits and grapes. What is most unpleasant, it affected their quality.

In the fruit sector, the lag of peak harvesting and the entry of the new harvest on the market averaged two weeks (for table grapes of late varieties it was up to three weeks). Growers were often unsure of the high quality of grapes, apples and other fruits and vegetables, and unlike previous seasons, they tried to sell them as soon as possible. There were also other reasons, but we will talk about them later.

Thus, the main share of export-grade plums of the 2021 harvest was sold by mid-November, i.e. about two weeks earlier than usual. In Moldova, this is the second case in the last 7 years when there were almost no plums left in the refrigerators of agricultural producers and traders at the end of December.

A similar situation for table grapes is noted: the export volume in autumn 2021 significantly exceeded the normal one in recent years. According to experts, the country’s winegrowers exported at least 70-80% of all table grapes by the end of autumn, which is for the better.

Finally, the most striking example of a change in the marketing strategy in the fruit business of Moldova is the fresh apple market. In autumn 2021, Moldova exported much more apples than in the same periods of the previous two years.

This is an important fact considering that the bulk of apples of the 2020 harvest from cold storage facilities were sold in January-June 2021. This strategy used to work and allowed to get a higher price than in September-December, but the situation has changed dramatically last season. Production volumes and apple storage capacities in Russia have grown, and competition in the regional and global markets has reached an unprecedented level described in the article “#freshsapplecrisis”.

Therefore, it was a huge surprise for the players on the Moldovan fruit market that apple prices fell in the second half of the 2020/21 season and there was almost no demand in Russia. As a result, according to expert estimates, at least 40 thousand tonnes of high-quality apples of the 2020 harvest from fruit storage facilities were processed into concentrate.

It seems that Moldovan growers drew conclusions and began to actively export apples of autumn varieties in September 2021, shortly after they were harvested. Only time will tell how correct these conclusions are. It is definitely not worth rushing to extremes.

But what Moldovan farmers should pay attention to is improving the quality of apples in order to bring it up to international standards. To do this, it is worth taking advantage of the experience of neighboring Ukraine, which has successfully diversified apple exports after the ban on their export to Russia.

2. Record volumes of apple and plum processing

According to the estimates of organizations of growers and processors of fruit and vegetables, at least 320-330 thousand tonnes of apples have been processed in Moldova in 2021. About tens of thousands of tonnes will be sent from cold storage facilities to apple juice concentrate factories next spring. In total, the country will process about 350 thousand tonnes of apples from the 2021 harvest, which is very close to a new record.

On average, nearly 300-340 thousand tonnes of industrial apples were sent for processing over the past five years. However, this isn’t the reason to be proud, because the more apples are sold for processing, the less growers earn. Grovers receive on average 5-10 times less for industrial apples than for those sold on the fresh market. To learn why growing industrial apples is a futile business area, read this blog. This once again confirms our theses that ended the first point – Moldovan farmers urgently need to improve the quality of apples.

Plum processing volumes were also very high this year. However, the main reason was bad weather, namely the excessive rains in May, in the first half of summer, and during harvesting in autumn. This affected the possibilities of long-term storage of plums, so the farmers decided not to risk it.

According to expert estimates, at least 30-40 thousand tonnes of plums were processed in the country. At the same time, thousands of tonnes were sent for processing (into distillates and spirits) and to neighboring Romania. At a certain point, it was these supplies that relieved stress from the domestic market and allowed farmers to keep wholesale prices for plums at an acceptable level.

3. New attempts to diversify apple exports

At each point we return to the largest problem – the quality of apples grown in Moldova. Quality will again be a key stumbling block for new attempts to diversify Moldovan apple exports.

As Ukraine’s experience in diversifying fruit exports shows, high-quality apples can be sold in the countries of the Middle East, North Africa and Southeast Asia more expensive than in Russia. To this end, apples need to be grown, stored using high-quality and proven ethylene inhibitors, properly handled, sorted on an optical sorting line, packed in high-quality cardboard boxes, which are different from those used for deliveries to Russia and even to the EU. Also, it should be learned how to pack them for a 30-40, and sometimes even 55-day trip in a sea refrigerated container.

Do not forget that having high-quality apples, you also need to learn how to find buyers for them, as well as sell profitably. That is, you have to invest both time and money in marketing. In 2019, the FAO-EBRD project held the largest B2B forum in Moldova with apple buyers from around the world. Moldovan suppliers could not meet the basic requirements of apple importers then, although there were attempts to make trial deliveries, and the importers’ interest in purchasing fruits in the country. We launched virtual trade missions during the pandemic, and our video about apple suppliers from Moldova was watched by many potential importers worldwide.

The exports of apples from Moldova outside the post-Soviet countries totaled less than 1,000 tonnes since then. Apple exports are unlikely to be much higher this season. However, new attempts to diversify them are better than none. In particular, we wrote about the negotiations of the FreshTime cooperative on the export to the UAE. The attempts of this and other large horticultural/commercial enterprises to enter apple markets in Egypt, India and other countries are also noteworthy.

4. Record high prices for walnuts

 Global walnut prices plummeted to record lows in the 2020/21 season. Rapidly growing areas and production volumes, especially in the global market leader USA, put pressure on nut prices in the world. It was also aggravated by trade wars between the United States and some Asian countries, which led to a reorientation of American walnut supplies to the European market. Therefore, walnut prices in Moldova, despite a relatively low harvest, were shockingly low last season. In particular, the demand remained low even in the second half of the season, and buyers were constantly reducing the price level.

Thus, there was almost no demand for walnut seedlings in Moldova, and the establishment of new orchards was suspended. For nursery growers this was aggravated by the complication of export of seedlings from Moldova to the EU. Similar was observed in neighboring states – there was no interest in laying new walnut plantations due to record low prices. Moreover, the first cases of uprooting orchards that have reached fruiting were reported.

The situation changed dramatically in the middle of 2021. A drought in the state of California, USA, where the bulk of the world’s premium quality walnut is grown, has led to a downward revision of production forecasts. Despite record acreage, US walnut production fell sharply in 2021, leading to a series of unprecedented price increases starting in June 2021.

Accordingly, wholesale prices for walnut kernels of the new harvest in Moldova reached a five-year maximum by the beginning of December, having increased to 140 MDL/kg ($8/kg). At some point, their prices in Moldovan retail approached a historical record – about 250 MDL/kg ($14/kg). Moreover, this was the price in bazaars, and not in store retail, where kernels in consumer packaging have always been expensive in Europe.

Taking into account the growing global prices, the Moldovan EastFruit team does not exclude that the volume of proceeds from the export of Moldovan walnuts will set new records and reach $100-120 million this marketing season.

The prerequisites for the price records are obvious: the demand from exporters remains very high now, and the walnut harvest in Moldova turned out to be relatively low in 2021 – approximately 25-30 thousand tonnes in hard shells.

Another problem of the industry was exposed this year – an acute shortage of workers. According to the representatives of the Union of Associations of Producers of Nut Crops of Moldova (UAPCN), the volume of walnuts harvested in forests and along the roads has sharply decreased this year.

Considering the record high prices this season, it cannot be ruled out that investors in Moldova will again pay attention to investments in walnuts. After all, walnut production keeps developing in the country. While walnuts went out of fashion, Moldovan farmers were establishing hazelnut and almond plantations. Therefore, according to expert estimates, the total area of ​​nut orchards in Moldova reached 17-20 thousand hectares in 2021. Perhaps this sector of Moldovan fruit growing is ready for investment in processing infrastructure in the near future.

It should be reminded that cultivation and processing of walnuts are developing fast in Georgia that used to import them from Moldova. You can see how a modern walnut processing plant works there at this link, and read about it here.

5. Fresh apricot exports record

Apricots have unexpectedly become one of the most demanded segments of the stone fruit market in Moldova. The country exported about 5.5 thousand tonnes of apricots to 16 European countries in 2021.

There were objective reasons for this – problems with frost in the EU countries that led to great losses in the apricot harvest. Similar problems have arisen in Central Asia, in particular in Tajikistan and Uzbekistan. The latter is one of the five largest exporters of apricot globally. Therefore, it is not surprising that apricot prices were high and the demand for apricots from Moldova rose sharply.

Accordingly, the exports of fresh apricots from Moldova in 2021 was a record and several times exceeded the corresponding figures for the last 3-4 years. This is all the more pleasant because many horticultural enterprises that grow stone fruits considered apricots a “by-product” of the production of cherries and sour cherries. In other words, apricot orchards were previously planted to employ full-time and seasonal workers, usually enrolled for caring for and harvesting other stone fruits.

Obviously, exports records in 2021 became possible not because of Moldova’s success in the segment, but because of frost issues in other countries. By the way, European farmers are now trying to solve the frost problem by purchasing wind machines and investing in the cultivation of premium-quality stone fruits in greenhouses.

6. Cherry quality issues

The main problem for cherry growers for the second year in a row is maintaining cherry quality. It has been significantly affected by precipitation on the eve of and during harvesting in the past few years. Moreover, this happens both in rainy and dry seasons.

On the other hand, the segment of cherry and sour cherry production is one of the few in the stone fruit sector that has showed a stable growth in acreage over the past five years: from 3.5 thousand tonnes and 3.2 thousand hectares in 2017 to 4.5 thousand tonnes and 4.2 thousand hectares in 2021.

For the further development of the segment, especially in terms of export potential, it is crucial for growers to invest in anti-rain protection or in the cultivation of premium cherries for exports in greenhouses (here you can read and see how to grow large-fruited cherries in greenhouses). However, growing cherries is half the battle. You also need to learn how to cool them (preferably with hydrocooling), sort and properly pack for transportation. You can see how this is done in one of the most modern enterprises in Uzbekistan in this video.

7. Reducing subsidies for fruit growing in Moldova

The subsidies for orchards and vineyards were sharply reduced in Moldova in 2021. According to preliminary data by the Agency for Investments and Payments in Agriculture (AIPA), the department received 468 applications from agricultural producers for post-investment subsidies in connection with the establishment of new, modernization or removing of old plantations of perennial crops for a total of 70.5 million MDL (about $4 million) in 2021. This is 14% of the total amount of subsidies for the development of agriculture and rural areas requested by private economic entities this year – 507 million MDL (about $29 million).

Last year, AIPA received 1,119 applications for subsidizing investments in perennial plantations in the amount of 212.5 million MDL (about $12.8 million), of which the department authorized slightly more than 1,000 applications of about 181 million MDL (about $11 million). This is approximately 15% of the state fund for agricultural subsidies last year.

Farmers were not happy with the reduction in subsidies. However, this is positive for creating a more sustainable horticultural business model in the country in the long term.

8. Protectionism in domestic trade

Amendments to the law on internal trade were adopted in Moldova, obliging grocery stores to allocate at least 50% of shelves for products produced in Moldova. Some additional regulations were adopted to introduce the measure at the government level, but they were not enough. As a result, this provision of the law never started to work in practice.

Some high-ranking government officials declared that this idea was “anachronistic”. Opposition politicians and many organizations of agricultural producers consider this provision of the law not perfect, but strongly oppose its repeal. Nevertheless, producers of fruit and vegetables in Moldova are already concerned about the authorities’ plans to deprive them of preferences in local retail, which they actually do not have.

However, as international experience shows, such decisions only exacerbate the problems of farmers, trade, the state, and end consumers. After all, if they are applied in Moldova, consumers will be limited in the choice of quality products, and will have to overpay for locally produced ones. Accordingly, consumer spending will rise, and access to quality fruits and vegetables will be limited. Likewise, the quality of products in stores will deteriorate, leading to an outflow of consumers into unorganized trade. It means both the volume of revenue of the chains and the amount of taxes paid by them to the state budget will decrease. Most importantly, as we have already mentioned many times, the motivation of Moldovan farmers to dramatically improve the quality of fruit and vegetables, which is the main obstacle on the country’s path to export diversification, will decrease.

9. Low prices for potatoes

Low potato prices in Moldova in the 2020/21 season did not lead to a decrease in the area planted with potatoes, as many might expect. By the way, the prices were low due to the lockdowns in the EU and the lack of potato processing for the needs of the HoReCa segment then. Therefore, imported potatoes pushed prices in the country down as well.

Why didn’t the area planted with potatoes in Moldova decrease in 2021? Instead of selling marketable potatoes cheaply, potato growers decided to turn them into seed potatoes, and put back in the ground hoping for a higher price in the 2021/22 season.

As we understand it, the result is the opposite of what was expected. From the very beginning of the 2021/22 season, the lowest prices for potatoes were established in Moldova in comparison with other countries of the EastFruit price monitoring, and even for exported potatoes from Moldova to Russia, Belarus, Ukraine and the Balkans!

For a number of reasons, including the savings on pesticides and the declining level of agricultural technologies, the quality of the potato harvest in Moldova was rather low, limiting export opportunities and continuing to put pressure on prices.

Claims of seed potato suppliers in Moldova that some of their clients intend to reduce or even give up potato production in favor of grains next year are not surprising.

10. Increase in subsidies for agricultural insurance

An amendment was made to the Moldovan Law on Subsidized Insurance of Agricultural Risks, increasing the share of subvention in the insurance premium from 50% to 70%. Thanks to this, the total amount of insurance premiums collected by the insurance companies of Moldova in 2021 has increased considerably. Damage payments for insured events have also sharply increased.

In addition, the Moldovan government adopted a new (expanded) list of risks and crops at the end of 2021, the insurance of which can be subsidized from the state fund for supporting agricultural producers and rural areas. One of the paramount innovations in the list are clearly formulated risks associated with a decrease in the quality (and price) of fruit crops. For example, growers have the right to insure against the loss of the quality of apples damaged by hail and for this reason sold not on the “fresh market”, but for processing. Probably next year there will be corresponding insurance products and demand for them.

If you think that we have missed some important events for the produce business in Moldova, please write in the comments section.

Сообщение TOP-10 events of the produce business in Moldova in 2021 появились сначала на EastFruit.

At a meeting of the Cabinet of Ministers of Turkmenistan on December 17, 2021, Deputy Prime Minister Esenmyrat Orazgeldiev, who is in charge of the agro-industrial complex, reported on the work on reducing the area planted with cotton by increasing its yield. The vacant land will be used for cultivating potatoes, vegetables, and melons, as well as for the production of silkworm cocoons.

According to the website “Chronicles of Turkmenistan”, the area for growing cotton will be reduced by 40 thousand hectares, from the current 620 thousand to 580 thousand hectares. To date, 55,550 hectares of land have been allocated for potatoes, vegetables, melons and other food crops. Thus, this area will increase to 95,550 hectares.

Read also: Tajikistan and Turkmenistan are increasing early apple exports to Russia, while Uzbekistan reduces them

In 2020, Turkmenistan increased its purchases of potatoes in the EAEU countries eightfold. After the closure of the Turkmen-Iranian border due to the coronavirus pandemic in 2020, there was an acute shortage of potatoes and a sharp increase in their cost in the country. In February, the state media reported that this year Turkmenistan plans to significantly increase the volume of its own potato harvest.

It was decided to increase the annual plan for the production of silkworm cocoons by 200 tonnes, from the current 2100 to 2300 tonnes. Additional volumes of cocoons will be grown in Akhal (+145 tonnes), Balkan (+25 tonnes) and Mary (+30 tonnes) regions.

Growing cocoons has been unprofitable for many years. Many state employees in the villages are forced to do this. People spend time and money on it. Mulberry trees, the leaves of which are the only food for worms, have been cut down almost everywhere. The vacant areas were used for the cultivation of cotton and wheat. To feed the worms, people travel around nearby villages and buy branches of mulberry trees from people growing them in their yards.

Сообщение Turkmenistan is replacing cotton with potatoes, vegetables and melons появились сначала на EastFruit.

Unfortunately, the concerns expressed by EastFruit in the article dated 6 December about a possible ban on the imports of fruits and vegetables to Belarus are confirmed. The leadership of the republic decided to impose an additional tax on its own citizens and restrict their access to high quality fruit vegetables, berries, and nuts from January 1, 2022. The decree was published on December 7, 2021 on the National Legal internet-portal of the Republic of Belarus.

We note that Ukraine is not included in the list of countries from which the imports of fruit and vegetables is prohibited. Unexpected was the inclusion of non-EU countries in this list – not only the United States, Great Britain, Norway, Switzerland, Iceland and Northern Ireland, but also countries such as Albania, North Macedonia and Montenegro, which are not sanctioned by Russian. At the same time, Serbia, traditionally friendly to Russia, is not included in the list.

EastFruit experts analyzed who will benefit from the embargo and how it will affect the produce business of Belarus and Russia. After all, it has long been no secret that Belarus was a major transit point on the way of food banned in Russia to its stores. Thus, by prohibiting the import of fruits and vegetables from these countries, Belarus raises prices and limits the choice for its consumers, and deprives entrepreneurs in the fruit and vegetable trade of large additional income. By the way, in addition to vegetables, fruits, berries and nuts, Belarus also bans the import of meat and poultry, dairy products, meat products, confectionery and some other categories of goods.

The ban on the supply of fruits and vegetables from the EU to Belarus is beneficial to countries that did not fall under the embargo by providing better access to the Belarusian market and de facto banning their re-exports from the EU to Russia. This will pull up the prices for fruits and vegetables in Russia, although they are already close to record highs.

Who will lose on the Belarusian embargo?
The most affected will be the consumers of vegetables and fruits from Belarus and Russia. They will have to pay more for lower quality products.

Poland, Spain, the Netherlands, Belgium and Greece will suffer the biggest losses. The total losses of exporters of fruits and vegetables from the EU may amount to about $300 million per year. Finding alternative markets will not be too difficult for the countries except for Poland. However, it will be a sensitive loss for EU farmers.

The rest of the countries that have come under the ban will most likely not even notice the impact of the embargo on the fruit and vegetable business. Although the loss of $10 million in exports may be sensitive for small North Macedonia.

Who benefits from the embargo?

It may sound strange, but the decision is most beneficial for Ukraine, which will now be able to supply higher volumes of fruits, vegetables and potatoes to Belarus. Ukraine is neighboring Belarus and annually supplies it with fresh fruits and vegetables worth $20-30 million.

In the context of the crisis in the fresh apple market #freshapplecrisis, the embargo will be a real gift for Ukraine, because apple prices remain extremely low there, especially for outdated varieties that are in demand only in Russia and Belarus. Given the lack of competition from Poland, apple sales may grow from January 1. However, importers will try to import as many products from the EU as possible by the end of the year. Belarus is also actively importing carrots, potatoes, frozen vegetables and greenhouse tomatoes from Ukraine this year.

It must be taken into account that Ukraine can also be included in the decree at any time.

The embargo is no less beneficial for Moldova. As in the case of Ukrainian apples, there are many outdated varieties that will be easier to sell to Belarus now. Moldova will also be able to improve the sales of table grapes, although their stocks are quite low this year. In the summer season, many fruits and berries from Moldova will find their way to the markets of Russia and Belarus easier. An additional potential benefit is an increase in re-exports from the EU to Russia through Moldova.

The embargo will be beneficial for Serbia, as well. After all, Serbia is not on the list, which means that the apples imports to Belarus will slightly increase. However, the priority of this destination for Serbia is decreasing now. Serbia also supplies high volume of stone fruit and blueberries to the Russian market and, partially, to the Belarusian market. By the way, Serbia can become a re-export hub for Russia instead of Belarus, although there was a scandal on this matter a couple of years ago and the volume of re-exports has dropped sharply then.

The ban will also benefit the countries of Central Asia: Kazakhstan, Uzbekistan, Tajikistan, Turkmenistan and Kyrgyzstan. However, the profitability will not be so obvious, since Belarus does not import much from them and logistics remains complicated and expensive. Given the lack of alternatives, Belarus may still increase purchases of stone fruits and early vegetables from Central Asian countries. To a much lesser extent, Georgia will receive its share of the benefits.

Turkey will receive multiple benefits from the embargo as it is the only country that can replace almost all the goods that Belarus will not be able to import from the EU. The situation on the Russian market may also become more favorable for Turkish suppliers. The situation is beneficial for Iran, too.

Citrus exporters from Morocco and Egypt will also be able to increase sales in the Belarusian market in the absence of competition from Spain, Greece and Italy.

Сообщение Belarus bans the imports of fruits, vegetables, and nuts from the EU, the United States and other European countries появились сначала на EastFruit.

On December 6 the Ministry of Foreign Affairs of the Republic of Belarus made a statement on “the introduction of a ban on the imports into the territory of the country of a number of goods originating from states applying illegal anti-Belarusian sanctions.” Although the list of goods has not been announced, market participants fear that Belarus will try de-facto to duplicate the so-called “counter-sanctions of Russia”. They were a response to economic sanctions against Russia by a number of influential countries after the annexation of the Ukrainian Autonomous Republic of Crimea by Russia.

If this is the case, the sale of fruit and vegetables may also fall under the ban. This means that one of the most reliable channels for the supply of fruits and vegetables from Ukraine and the EU countries to the Russian market may be blocked.

Who will suffer from such a ban if it is introduced?

First of all, these are consumers in Belarus itself and in Russia. Prices for a number of basic products, such as “borsch set” vegetables and potatoes, are already breaking records in 2021 in these countries. And it is the EU countries and Ukraine that are now making up for the deficit of these products on the Belarusian market.

If we talk about the suppliers that will lose more than others on a hypothetical ban, then this is primarily Poland. During the period of the Russian sanctions, Poland supplied to Belarus fruits and vegetables worth up to $400 million. Although the volume of imports of fruits and vegetables from Poland to Belarus fell sharply in 2020, and re-exports became more complicated, it still remains quite sensitive.

Spanish suppliers of fruits and vegetables will lose much less – up to $70 million. Also, the volumes of supplies of fruits and vegetables to Belarus from the Netherlands, Belgium, Greece and Italy remain quite large. It is not clear whether the sanctions will be extended to Ukraine, but if so, it will be a significant blow to Ukrainian growers of fruit and vegetables of low or average quality, that are currently sold mainly to Belarus.

Commodity items imported from the EU to Belarus in the largest volumes are apples, citrus fruits, berries, grapes, apricots and cherries. At the same time, it is obvious that Belarus will find an alternative to them by purchasing from Turkey, Morocco, Egypt and Central Asian countries. However, consumers will have to pay a higher price for this.

Therefore, it is not obvious yet that the ban will affect food products. After all, high prices for them are still a rather sensitive topic in Belarus.

Сообщение Will Belarus ban the imports of fruits and vegetables from the EU and Ukraine? появились сначала на EastFruit.