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"We’re wondering how we can compete in the coming months, with such high bills”

Potentially increasing gas and electricity prices cause uncertainty for Polish apple exporters

The final stretch of the Polish apple season is upon us, says Jakub Krawczyk, export manager for Polish apple exporter Appolonia: "Right now the season is coming to an end, mostly we are left with Idared, Red Jonaprince and Golden Delicious and we predict that in two-to-three weeks' time, we will have depleted most of our stocks, leaving some apples for supermarkets, to keep fulfilling their orders up until the new season. There is a stronger demand right now, from countries like Kazakhstan or Belarus. The western European countries don't buy as much at the moment. Supplies are getting lower and lower, so soon all of our ULO chambers will be empty."

As supply is getting lower, the prices for certain apples have increased to their peak. However, for some varieties the price has lacked behind, Krawczyk explains. "Prices for red apples have increased, right now they're on the highest level of the season. But, the price for Golden apples did not increase as much. We think it's because the availability of Golden apples is still quite big in other European countries. This is why it's not so easy to sell these apples to the Western European territories. Normally, by the end of the season, Golden was the variety you could sell easily, but this season the situation is different."

Meanwhile, the energy costs for both gas and electricity are going through the roof in Poland right now. Krawczyk feels this will heavily impact the Polish apple industry going forward: "The price is not only increasing because it's harder to obtain apples, but also because right now in Poland we have the highest energy cost of the entirety of Europe, and there will be still some more increases not only in prices for energy, but we also hear about price increases for gas. For many sectors of production, increasing both of these prices will be simply dramatic. We're also wondering how we can compete in the coming months, with such high bills."

Looking back at the season now, Krawczyk feels it's clear what event had the largest impact on the fresh produce industry as a whole. "I think the most important thing this season, which will also have significant impact in the next season, was the conflict in Red Sea. This caused longer shipping routes to Asia and Middle East from Europe. Many of the exporters and importers suffered from the three-to-four weeks delay this caused in the transportation, which in the fresh fruit sector is a massive problem. The quality can suffer a lot if the transit time is between 60 and 70 days total. These delays didn't just cause quality issues, but also made a lot of mess on the market. For example, our last containers arrived when the first apples from New Zealand and South Africa had already arrived at the Indian market. It's never good when our oldest apples need to compete with the Southern Hemisphere fresh crop apples. Luckily, we sorted out all the issues, but still the conflict in Red Sea hasn't ended, and we don't see that it can change in coming months."

Krawczyk feels the situation has resulted in exporters being forced to take all the risks, rather than getting any compensation from other parts of the supply chain. This potentially has huge ramifications if exporters choose not to pick up this risk in the next season: "It's also very hard to get any guarantee from shipping lines about the maximum transit time, because as we all know, they are not taking any responsibility if a ship is delayed. We're also not able to receive any compensation from insurance companies, so we're basically left alone holding the bag. To understand this issue on a larger scale, we need to see that if many exporters decide not to send products to the destinations where the transit time will be longer than usual, they will need to export their product to other places in general. This will cause too many products on the market in certain regions, which in turn will lead to dumping prices, just to get rid of the apples. Of course, this is the one worst-case scenario, but I think it's very likely it will happen. There are still a lot of people that do not realize how bad this conflict is for the Polish economy."

Looking at the new season, Krawczyk can already see a few things coming up. "There will be slightly lower volumes of some varieties, mostly Jonagold. Also, we mostly expect apples with larger sizes in the next season, while the harvest will start a bit earlier. From what we heard, the southern part of Poland has suffered the most from frost and hail, and as such this region will have the biggest losses in terms of volumes. There is still an entire summer ahead of us, so everything can still happen. These weeks, there are like big storms in some regions of Poland, so we will see whether it will have a negative effect on the crops."

"Right now, we are slowly servicing our machinery and preparing for the new season. Many customers have declared they would like to receive more of our apples, with a smaller size, in the new season. Apples of 60/70 mm are safer for the longer transport. So, we predict there will be no problem to sell small sizes next season, but the availability of these apples could be an issue if the apples grow too big," Krawczyk concludes.

For more information:
Jakub Krawczyk
Tel: +48 785 342 930
Email: [email protected]