The Ukrainian apple season should be in full swing right now, but demand seems to be at a low point right now. On the growers’ side, some are opting to send all of their harvest towards processing facilities, to minimize both risks and costs as much as possible.
Volodymyr Gurzhiy of Ukrainian apple exporter USPA states that the war in Ukraine is just one factor in the very challenging season they’re currently in: “Every season is different, however the season of 2022-2023 is going to be even more outstanding. The war in Ukraine brought a lot of changes and challenges, which effects all the markets considerably. For Ukrainian exporters, the most painful are the closed Belarusian market, as they had a significant share in our export in the previous seasons, skyrocketed energy costs, huge prices for packaging and double and sometimes triple logistics cost compared to the same week of the previous year. I don't think we are unique in all that circumstance in whole Europe; however, our logistics costs are enormously high. It’s going to be hard to compete until the Ukrainian ports are to be opened.”
As prices have increased in almost every step of the export process, the margin for apple exporters is close to a net zero, says Gurzhiy. “We can meet the market prices. However, all the parties involved in the supply chain from Ukraine will be suffering, even with the low expectations from other European countries suppliers. This situation reflects negatively on our sales. During the same week last year, we were in full swing when it came to sales. Currently, even having extremely low margins, which are near zero, the sales are very slow, and the low prices can’t be compared at all. Also, late harvesting, due to the weather in Ukraine, delayed the export of Ukrainian apples to the markets. Thus, temporarily, to satisfy our customers' needs, we were forced to substitute Ukrainian volumes by importing Serbian, Moldavian, Polish and some others. As soon as we have enough Ukrainian apples harvested, we'll come back to Ukrainian stock.”
Gurzhiy explains that there is less risk for the growers to just send their harvest towards processing facilities: “It’s going to be a good harvest quality and volume wise in Ukraine. It even could be one of the best, however, we see that a lot of farmers prefer to finish the season right here and right now, directing all the apples, even class I, to processing. This is done just to not be involved into increasing risks and costs. Actually, mostly, this situation is related to the varieties which are not suitable for export, however, this will help to reduce the pressure of volume on the domestic market, which is still considered large.”
With the war still going on, it’s difficult for Gurzhiy to look ahead. The company will take it one step at a time, he says: “I can’t really give any forecasts in the situation where we are now. A lot of economic factors need to be analyzed and a lot of hypotheses would need to be examined in the new world. However, if the situation will be the same as it is at the moment, I'd say that there is possibility of increasing of the market prices, in some months, once the European stock is fully supplied. However, I don't think it can cover the increased costs for the same period of time, thus the net price may be the same as if you sold the fruits now, which is impossible to do due to the low demand. Anyway, if I were importer, I’d not expect low prices from Ukraine.”
“Our company, USPA Fruit will not change our quality strategy and will be selecting the best for the export supplies and are going to cover the full season covering 12 months. Moreover, we have not cut our marketing program, which consist of list of exhibitions, such as: Fruit Attraction Madrid, Sial Paris, Asia Fruit Logistica Bangkok, Interpoma Bolzano, where we are exhibitors. Being as co-exponent on the Ukrainian booth during Fruit Attraction exhibition, which just finished last week in Madrid, we had a chance to show to the whole world that Ukrainian business is very much alive, export is returning to normal. Furthermore, we consider current challenges as the way to the new step where we should occupy new, stronger role in international business and society.” Gurzhiy concludes.
