To sell or not to sell: the apple dilemma

In this season, many apple producers and traders in the Eastern Europe and Central Asia region tend to keep apples in stock amid reports of declining production in many countries. It looks like they hope to hit the jackpot by selling apples at a higher price in winter and spring.

So, is it worth keeping apples in warehouses and wait till the prices go up, or is it better to sell them now? First, let’s take a look at the apple prices in different countries of the region to see if they increased compared to the last year.

The most significant decline in average apple prices occurred in Tajikistan: by 44% in the US dollars. The situation is very similar in Georgia, where prices also dropped by 28% in national currency and 39% in US dollars. Prices also significantly went down in Uzbekistan. That is, the Asian part of the region, as well as the Caucasus, are better supplied with apples than last year, at least at the moment.

As for the European part, the trends differ. The situation in the Ukrainian apple market is very interesting. Prices in hryvnia practically did not change over the year, and the prices for the non-exporting apple varieties even increased. The average price in national currency for all apple varieties is 1% lower than last year. But if we take into account the devaluation of the national currency, the decrease of the real average wholesale price is already quite significant – by 13%. The decline in euros was even sharper.

Why is it important to consider prices in dollars and euros when apple producers pay their bills and receive their profits mostly in national currencies?

Because most of the expenses, like equipment or plant protection products, except for labour, are directly tied to the exchange rate. As a rule, they are imported from the eurozone countries. Revenue of the countries, exporting or importing a significant amount of apples, also directly depends on the dollar and euro currency rates. Accordingly, for most countries in the region, if the devaluation of the local currency occurs, costs will increase, while revenues, on the contrary, will fall.

In this context, Moldova, who benefits most from this year’s situation, is the glowing example of this dependence. Apple prices in Moldova are now 30% higher than a year earlier when they were already relatively high. The local currency even strengthened against the US dollar, which is positive in terms of costs and revenues. However, the apple yield in Moldova has also dropped sharply; therefore, at the moment, the income of apple growers is approximately the same as last year, taking into account the decline in production.

For the full article EastFruit, including information about Poland and Russia, click here.

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