Eastern Europe and Central Asia New sourcing opportunities of excellent fruits Andriy Yarmak Investment Centre FAO

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1 Eastern Europe and Central Asia New sourcing opportunities of excellent fruits Andriy Yarmak Investment Centre FAO Hong Kong 05 September 2018

2 Why Eastern Europe and Central Asia? Serbia and Moldova could lose access to the Russian market anytime Russia is increasing its fruit production while demand remains low 2

3 Ukraine, Uzbekistan, Moldova, Serbia These countries are rapidly becoming significant exporters of fruits, berries, nuts and vegetables. Some key figures: Combined population of 85mn people, Combined agricultural land area of 50mn ha (42mn in Ukraine but Uzbekistan could expend a lot of proper irrigation is in place) Combined apple production 2.5mn tonnes Combined apple exports 480 thousand tonnes 3

4 Similarities All of them are relatively warm and could grow wide range of fruits and vegetables All of them but Ukraine export nearly 100% of all fresh produce to Russia. (Ukraine used to export 100% to Russia until 2015 but now does not export anything to Russia). All but Uzbekistan are large apple exporters (Uzbekistan is rapidly becoming a large apple producer) Limited experience in exporting fresh produce beyond Russia 4

5 Sourcing opportunities Ukraine apples, sweet cherries, frozen wild berries, frozen raspberries, fresh blueberries and other berries, plums, walnuts. Uzbekistan sweet cherries, fresh apricots, raisings and a wide range of dried fruits, table grapes, persimmons, pomegranates, plums, unique lemons. Serbia apples, plums, frozen and fresh raspberries and blackberries Moldova apples, table grapes, plums, walnuts 5

6 Uzbekistan - upside 2nd largest global exporter of persimmons after Spain 2nd largest global exporter of fresh apricots 7 th largest global exporter of sweet cherries 10 th of plums, 12 th of peaches and 13 th of table grapes already a large fresh market player! Sharp increase in exports of sweet cherries to Russia from Uzbekistan this year dropped prices in Turkey and whole Europe. Annual investments into intensive new orchards, storage infrastructure are estimated at US $ mn Unique taste of fruits produced due to unique climate and very inexpensive abundant labour force! 6

7 Uzbekistan - downside Post harvest handling and packaging is underdeveloped and perception of quality and safety is outdated; Located in Asia, closer to your markets than other two; Market economy is not there yet and high degree of government interference in the market cases many limitations in transactions with Uzbekistan and increases risks of business; One of only two double land locked countries in the world logistics are not easy! Experience in exports of fresh produce beyond Russia is very limited; Varieties of produce are not always internationally known; Trade is not consolidated with a government as a major player 7

8 Ukraine - upside Perfect land, climate, access to water and land resources combined with inexpensive educated labour; Knowledge of modern production technologies is widespread; Excellent possibilities for growing premium quality fruits (BRIX, colour, taste, size, etc.); Best logistics of the four countries thanks to Sea Ports and rapidly growing air traffic, many farms GlobalGAP certified; Best experience in exporting beyond Russia of the four countries and the best post harvest handling of the four although far from perfect; Large size of farms allows to buy directly from them, making it very price competitive and assuring 100% traceability 8

9 Ukraine - downside PHH and packaging is far from best international standards; Experience in logistics to Asia is limited; Exporters are not consolidated yet although a process of creative cooperative export platforms is under way; 9

10 Moldova - upside Inexpensive educated labour with excellent knowledge of modern production technologies thanks to tight links with the EU; Relatively good logistics through Sea Ports of Ukraine; Relatively good experience in PHH and packaging, GlobalGAP certification is under way; Farms are small but export trade is relatively consolidated. 10

11 Moldova - downside Only 10% of fruits are irrigated and water access is limited; Relatively small size of farms could make it more difficult to sustain uniformity of produce; Experience in logistics to Asia and exports beyond Russia is very limited; Dependence on the Russian market, affecting quality improvement and motivation to diversify exports. 11

12 Key annual export volumes now and in 5 years (forecast by Ukrainin Horticultural Association), tonnes Country/product Exports now Exports in 2022 (F) Ukraine/apple 42, ,000 Moldova/apple 220, ,000 Serbia/apple 210, ,000 Uzbekistan/apple 7,000 50,000 Uzbekistan/sweet cherries 67, ,000 Moldova/sweet cherries 10,000 35,000 Ukraine/sweet cherries 3,000 20,000 Serbia/sweet cherries 15,000 25,000 Uzbekistan/table grapes 135, ,000 Moldova/table grapes 80, ,000 12

13 Key annual export volumes now and in 5 years (forecast by Ukrainin Horticultural Association), tonnes Country/product Exports now Exports in 2022 (F) Ukraine/plums 8,000 20,000 Moldova/plums 30,000 50,000 Serbia/plums 20,000 35,000 Uzbekistan/plums 49,000 80,000 Uzbekistan/peaches 42,000 65,000 Serbia/peaches 43,000 60,000 Moldova/peaches 7,000 10,000 Serbia/berries fresh & frozen 225, ,000 Ukraine/berries fresh & frozen 47,000 85,000 Moldova/berries fresh & frozen 4,000 15,000 13

14 Key takeaways: Every year Uzbekistan, Moldova, Ukraine and Serbia will be offering thousand tonnes of additional fruits to the world market; If Serbia and Moldova lose access to the Russian market, additional 500 thousand tonnes of fruits will immediately become available on the global market; Uzbekistan could offer some unique high value products very inexpensively but risks of doing business with this country is the highest; Start exploring Eastern Europe and Central Asia today to be ahead of competition (and we could help)! 14

15 Thank you! 15