Information for fruit and vegetables business in CIS
Polish Wholesalers Try to Increase Apple Prices in Ahead of the Possibility of Price Reduction
According to the information provided by "Agrooglyad: Vegetables and Fruits" weekly journal of the Ukrainian produce business, some wholesale companies in Poland are relaying information about a possible deficit on cheap variety apples supposedly caused by an increased demand from Ukrainian consumers. At the same time Polish wholesalers speak about high demand on expensive top quality Polish apples in EU countries; so there is no sense in selling them at lower prices on the Ukrainian market.
However, the specialists of "Agrooglyad: Vegetables and Fruits" journal regularly monitor the condition of the Polish produce market. Based on their observations, they say the situation in the Polish market does not fully correspond to the above-mentioned remarks. This week Polish mass media are writing about the anticipated collapse of the apple market because of banned apple imports to Russia. Orchardists and cooperative apple and pear producers raise alarm when indicating prices on these products could go even lower in the near future; undoubtedly, its producers who will bear losses.
In the experts' opinion, the problem of Polish orchardists is that they are accustom to gearing their produce only towards Russian consumers, in which taste and quality preferences differ when compared to EU countries. The majority of Polish farmers have tiny orchards (even by EU standards), producing only a few varieties at a time. It's difficult to sell such varieties as "Aidared" in EU countries; but the majority of Polish orchardists specialize in it. Plus, it is a long and expensive process to develop a large assortment of equal quality, size and color apples. Small farmers are dispersed around the country, so their abilities to meet the mentioned requirements and sell apples to EU countries are limited.
It appears about 300,000 tons of apples are "stuck" in storage as producers had planned on selling them to Russia. Consequently, an apple deficit seems almost impossible in Poland now. Even large apple sets are exported by the wholesalers at $0.25-0.27/kg. Market players admit that Ukrainian wholesalers prefer to purchase apples directly from producers in relatively small sets as compared to wholesalers. Polish producers are easily agreeing to decrease prices in the wake of a nearly absent demand and the threatening price decrease. Hence, why Ukrainian companies are purchasing apples at even lower prices in Poland.
Its important to remember that import tax on apples is reduced from EUR0.5/kg to 5% of custom cost for the winter period according to the recently adopted "Changes to Custom Tariff of Ukraine". This action actually opened a legal way for a medium priced apple segment to appear in Ukraine.
Ukrainian apple producers have to contend with 15-20% lower prices compared to the previous year, as it is impossible to raise prices with the competition of imported produce. However, the producers are not disappointed, as even the reduced price seems quite acceptable to them with production having a significant profit margin. Plus, the Ukrainian consumer is traditional enough that other conditions being equal, s/he would rather choose a Ukrainian apple. There are rumors that some vendors even sell imported apples marked as being "Ukrainian".