Information for fruit and vegetables business in CIS
Ukraine: apple production expected to reach record high in 2018
Mr. Andriy Yarmak, Economist of the FAO Investment Center, expects apple production in the EU and Ukraine to grow significantly in 2018, which will certainly influence the global apple sector development.
“Ukrainian apple production can reach record high in 2018, assuming that there are no frosts in the beginning of May (registered once per 7-10 years on average). Moreover, record high production is expected in Poland, while total harvested volumes in the EU will most likely recover at least to the results of 2016”, he says.
The expert still sees produce marketing as the main problem of the Ukrainian apple sector. According to his data, current prices of Ukrainian apples are 65-75% higher year-over-year, which negatively impacts export demand.
“Efforts to diversify export are frozen in the current season, and this trend has been only gathering pace in the wake of the price growth”, Mr. Yarmak says. “However, it is worth mentioning that it was this season that provided Ukraine with the greatest opportunities to enter new markets successfully thanks to problems with supply in almost all the countries. Hence, at the end of the season Ukrainian growers will again be forced to search for new customers, but it will be too late,” he adds.
In addition, Mr. Yarmak expects apple prices to continue to grow until the season ends, which will negatively affect domestic consumption as well.
“In May 2018 apple consumption in Ukraine can reach its 5-year low. Moreover, high prices will negatively influence consumption in the following season. At the same time, this is the good news for Ukrainian growers of cherries, strawberries and other early berries, as high apple prices in May-June will additionally boost the demand for these products”, the expert forecasts.
Besides, Mr. Yarmak leaves open the possibility of early apples to be more expensive year-over-year in Ukraine in 2018. According to his preliminary estimates, prices will start decreasing in September, and negative trend will be in effect until the season ends.
“I am almost confident that apple prices in October 2018 will be higher than in April 2019, again if there are no spring frosts registered. As a result, apple prices can eventually drop to such an extent that they will hardly cover their production and storage costs. However, the situation will strongly depend on production efficiency and marketing, in particular”, he emphasizes.
Mr. Yarmak stresses the importance of marketing, which should be the priority of Ukrainian growers.
“Moreover, marketing should be professional, not an amateur one along the lines of “our apples are the world’s tastiest and the most ecologically clean”! Customers would never have a positive respond on that, but on something that can be proved. For instance, Chile sells its image of “the cleanest” producer of horticultural products, as it is a perfectly isolated country (surrounded by the Pacific Ocean, Atacama Desert, the Andes and Antarctica). In addition, Chile has a very strict chemical treatment tracking system and its own ChiliGAP standard, which is more demanding than other analogs. Each country thinks that its apples are “the world’s tastiest”, thus such an approach is completely unproductive,” Mr. Yarmak concludes.