In the period between February and June 2020, Ukrainian fruit and vegetable exports contracted by a record 43% compared to the same period last year.
A year ago, export revenues from fruits and vegetables amounted to $101.3 million. Now, revenues have plummeted to just $58.5 million, according to EastFruit, an Eastern European reporting platform for the fruit and vegetable sector.
The collapse is the partly the result of the global COVID-19 pandemic, which has sown instability on international markets.
Ukraine’s exports of fruit and vegetable products is centred heavily around three main crops: walnuts, frozen berries and fresh apples, which account for 64% of all earnings. But fruits and vegetables are only a small component of Ukraine’s agricultural industry, which is dominated by grains and oilseeds. Agricultural goods accounted for around 10% of gross domestic product in 2018.
In 2020, fresh apples saw the most significant decrease in export revenue. Formerly representing 40% of all fruit and vegetable exports from Ukraine, apples slumped dramatically to 16% during the pandemic. The collapse of apple exports most significantly affected revenues, accounting for a loss of around $26.6 million in comparison with 2019.
“The export proceeds from the export of Ukrainian apples decreased by 4.5 times, and this despite the fact that the average export price was significantly higher than last year!” Andriy Yarmak, an economist at the investment department of the UN Food and Agriculture Organization, stated in a comment to EastFruit.
Yarmak noted, however, that the collapse of the apple market, unlike the export of walnuts and berries, was not directly caused by the pandemic.
“On the contrary, (the pandemic) stimulated demand for apples in the EU countries and inflated prices for them,” he said. “Unfortunately, the apple harvest in Ukraine in 2019 was relatively low, and domestic demand only increased against the background of a cold spring and quarantine. Therefore, high prices on the domestic market and a shortage of apples made export unprofitable.”
On the other hand, the collapse in the walnut industry bears all the hallmarks of being the result of external forces.
“The situation with walnuts is fundamentally different from the situation with the export of apples,” Yarmak said. “Here, the decrease in export volumes caused by the global coronavirus pandemic is clearly visible. The season started in October 2019 with a record export rate and the first three months of the season gave walnut farmers good revenue.”
The troubles for Ukrainian walnut exporters began in January, when the COVID-19 outbreak in Wuhan, China forced millions into quarantine.
“In January 2020, when China was quarantined, export demand dropped sharply and export earnings were consistently lower than last year,” Yarmak said. “Demand for Ukrainian walnuts in Turkey dropped sharply. Deliveries to the countries of the Middle East fell several times, which was not fully offset by the growing demand for walnuts in the EU countries. At the same time, the average wholesale prices also decreased, which negatively affected the revenue.”
Compared to the February-June period in 2019, exports of walnuts to the international market decreased by 36%, or $9.4 million.
The decrease in frozen berries and fruits in the first quarter of 2020 was less significant, falling by 10% or $1.5 million. The demand for frozen fruits and berries was reported to have remained consistent, but external pressures and increased competition from North Africa made Ukrainian exports less competitive.
Fedir Rybalko, head of the Ukrianian Horticulture Association, presented the fall in exports in an optimistic light.
“If weather conditions are favourable, we will have a surplus of supply,” he told the Kyiv Post. “There will be a depreciation of the hryvnia and a surplus in supply will create even more opportunities for exports if access to finance improves this year.”
Many indeed believe access to financing from commercial banks will be better than last year, leading exports to grow, he added.
According to Rybalko, China may prove to be the key to the future stability of the Ukrainian export market. He says preliminary information indicates that China will face a crop failure or, at a minimum, a worse harvest this year, leading to a shortage of cheap apples.
“Our apples will be more competitive in processed form and we will restore the lost sales,” he said.
Overall, Rybalko believes that the collapse of fruit and vegetable exports will have a negligible effect on the Ukrainian economy as a whole.
“If our exports of sunflower seeds, sunflower oil or grain decreased by 40%, it would kick up a big fuss,” he said. “But for vegetables and fruits, you need to understand that it is not even 1% of GDP. If exports decreased by 40%, then we have a decrease in gross domestic production of 0.4%.”
The outlook for the fruit and vegetable industry, despite significant losses, is still optimistic.
“The lives of (the exporter) companies and employees have certainly been affected, but not so critically as to close the business,” Rybalko said.
