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Ukraine expected to break apple production record in 2018
Andriy Yarmak, an Economist from TCIC, explains why the official figures for apple production can be misleading; "Out of around 1.1mn tonnes of apple production officially reported, only around 450,000 tonnes are of marketable quality, even according to local standards. Of these marketable quality apples, only 200,000 tonnes could potentially be exported, if proper sorting and handling is applied. For the first time, in the history of Ukraine, the production of commercially grown apples is expected to exceed 500,000 tonnes in 2018, with the possibility of reaching as much as 520-530,000 tonnes. The domestic fresh market could absorb no more than 400,000 tonnes, even assuming significant price decline. This would mean that around 100,000 to 130,000 tonnes of fresh apples would need to find buyers in a global market where European producers are all anticipating increased production and low prices."
Loss of the Russian market
Yarmak voiced concern for how Ukrainian producers will be able to meet these challenges, with weaker sorting, packaging and marketing capacities.
"Up until 2015, when there was access to the Russian market, business was booming. There was no import duty and the quality requirements were low, which meant that there was no reason to invest in things such as optical sorting. In addition, growers were spoiled with high prices, around twice as much as Polish growers were getting at the time. This is why no one ever considered entering any markets other than Russia," explains Yarmak.
"After 2015, the market landscape changed dramatically, after Ukraine lost around four million Ukrainian consumers on territories of Ukraine occupied by Russia. Ukrainian products were also banned in Russia as well as transit through Russian territory, an important route to reach markets in Central Asia. In the meanwhile, apple yields in the new orchards continued to grow and domestic consumption was decreasing, as war was taking its toll on the economy and consumers, with local apple prices collapsing as a result. The collapse was eased a bit due to devaluation of the local currency so in the euro, prices became very competitive to those in the EU creating opportunities for exports."
By 2017 Ukraine was already exporting apples to the EU countries, including Germany, the UK and several others. Despite the small volumes, being able to export to the most competitive apple market in the world was worth a lot. In addition to the EU, Ukraine shipped apples to the Asian market, including Singapore, Malaysia, Indonesia and Bangladesh, among others.
Expectations for 2018
"I predict that Ukraine will export between 30,000 to 40,000 tonnes of apples during 2018/19 marketing season, with a majority being exported to the Middle East and South-East Asia. The recently formed Ukrainian Horticultural Association (UHA) is already working hard in South-East Asia, coming back with some very solid offers from local importers and supermarket chains. The Food and Agriculture Organization (FAO) jointly with European Bank for Reconstruction and Development (EBRD) has recently organized a trade mission to this region for horticultural exporters from Ukraine and it was a very big success. Ukrainian apple exporters received the most attention, although vegetable and berry producers were also busy negotiating exporters to Singapore, Malaysia and Indonesia," Yarmak continued.
"It is about time for Ukraine makes the transition from exporting low value commodities to exporting high value products. All of the right conditions are there; excellent growing conditions, qualified and educated workforce, low-cost pickers and access to affordable logistics through Ukrainian sea ports and airport terminals."
For more information:
Andriy Yarmak, Economist TCIC, FAO
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