August 17 2006, 11:53

Apple concentrate producers feel tight on raw material market in Ukraine

Continuous reduction of the acreages of old orchards in Ukraine respectively declines the quantity of apples for processing into apple concentrate and apple puree (price-reasonable apples first of all). Some years ago processors managed to purchase needed apple volumes for relatively low prices (down to $0.02/kg). But, the price has been steadily increasing in recent years. According to information provided to Agricultural Marketing Project by Vladimir Kovtunenko, the Sales Director of YANKE UKRIANE company (on of the national leaders of apple concentrate production), the apples for processing into apple concentrate are expected to cost in average 40% more expensive than a year ago. An average purchase price for apples will be not lower than $0.06/kg - past year the price was around $0.04/kg. The producers of apple puree pay for raw materials more this year, nearly $0.13-0.15/kg, according to the company's forecast. The companies mostly purchase apples for processing directly from the houseplots and rural population.

To the opinion of the specialists of the Agricultural Marketing Project, the problem to purchase raw materials for apple concentrate and puree will escalate in the future. The rates of new apple orchards establishment are quite good; despite of this fact, they are fully oriented to fresh market. Table apples are of comparatively high quality, but they don't fit for processing.

Mr. Kovtunenko thinks the establishment of large apple orchards is the solution. They will work for the maximum reduction of the production cost of apples for processing. However, the resources of old orchards have not been fully exhausted, so there is no great interest to this business observed on market now.

The problems with raw materials result in lower rates of apple concentrate production comparing to many other branches of fruit and vegetable processing industry in Ukraine. In 2005 85,000 tons of apple concentrate were produced in Ukraine - it was even 1% less than in 2000. The leaders of apple concentrate production in Ukraine are YANKE-UKRAINE LLC (14% of national production in 2005), Joint Enterprise PODILLYA-OBST LLC (11%), PFANNER-BAR LLC (9%), ADAMS and VINNIFRUIT companies (8% each). More than 50 companies produce apple concentrate in Ukraine.