High Apple Price Expectations May Not Come True: Summary from EastFruit Apple Outlook - Fruit Ukraine

High Apple Price Expectations May Not Come True: Summary from EastFruit Apple Outlook

Will global demand grow as fast as apple production in the 2020/21 season? Prices on the domestic market of Ukraine, Moldova, and Serbia are now at their peak, what will be the situation in the coming months? What’s in store for apple growers in the 2020/21 season? These and other topics were discussed during the International Conference “EastFruit Apple Outlook”, which took place on July 28, 2020, and was organized by FAO, EBRD, and the EastFruit project with the support of industry associations from Ukraine, Moldova, and Serbia. (The full video of the conference in English can be viewed here).


“When investing in apple orchards, you need to clearly understand that this is a “red ocean”


 “The global trend of the apple market over the past five years is a decline in world apple trade in physical terms by 3.8% annually. At the same time, apple production in the world is growing by 1% every year, despite the recent increase in the negative impact of weather factors. All over the world, work is underway to grow and adapt varieties to conditions atypical for apple orchards. Today the apple business and apple export are the “red ocean”. Therefore, if you plan to invest in apple orchards, you need to clearly understand why you are doing this and what advantages you have over your competitors,” said Andriy Yarmak, an economist at the Investment Department of the Food and Agriculture Organization of the United Nations (FAO) during the conference.


The economist notes that in developing countries, the advantage is lower labor costs. However, it is necessary to take into account such important parameters for the consumer as quality, safety, appearance, caliber, and taste of the product.

As Andriy Yarmak notes, Serbia, Moldova, and Ukraine show the fastest growth rates in production and exports among all countries in the region. However, apple production in the United States, for example, is growing almost as fast as in these countries. China is the growth leader in terms of increased volumes, and Iran and Turkey are slowly becoming very important and global players. There is not much information about apple production in Iran, and therefore, the participants in the apple market often underestimate the capabilities of this country, having little idea of ​​the real volumes of production and export of Iranian apples.


Apple production is also growing rapidly in the countries of the Caucasus and Central Asia. In the 2020/21 season, the countries of Central Asia can, for the first time in many years, almost completely provide themselves with their own apples, and the balance of imports and exports may also turn out to be positive for the first time.


Ukrainian gardeners this year focus mainly on the domestic market


The manager of international projects “APK-Inform: Vegetables and Fruits” (Fruit-Inform) Evgeniy Kuzin during the online conference described the current state of the Ukrainian market and made forecasts regarding its future development.


 “The weather conditions for apple producers in Ukraine this season were more favorable than a year earlier. Problems such as hot summers and spring frosts had a negative impact mainly on less intensive gardens,” notes Evgeniy Kuzin.


He also emphasizes that according to the forecasts of APK-Inform: Vegetables and Fruits, the volume of export-quality apple production in Ukraine in 2020 will be higher than in the previous season, but lower than in 2018, when a record amount of high-quality apples was produced. It is expected that this season in Ukraine will be produced about 1.2 million tons of apples. For comparison: in 2019, production was at the level of 1.15 million tons, and in 2018 – 1.5 million tons.


According to Evgeniy Kuzin, Ukrainian gardeners this year focus mainly on the domestic market due to the high prices for apples in Ukraine. However, according to his forecasts, apple exports this season will be higher than a year earlier, but lower than in the 2018/19 season. And here a lot will depend on the quality of the apple at the harvesting stage in August and September.


Russia remains dependent on apple imports despite increased domestic production


Evgeniy Kuzin also focused on the Russian apple market. According to Fruit-Inform, currently, in Russia, many gardeners expect the decline of apple production due to unfavorable weather conditions. On the other hand, huge areas of new intensive orchards are being laid in this country, many of which are beginning to bear fruit this year or are increasing. And only the intensive new gardens have been minimally affected by weather disasters.


He also emphasizes that apple imports to Russia have been declining for the second season in a row. At the same time, the country is still dependent on imports and imports about 850 thousand tons per year, despite the upward trend in domestic production.


Andriy Yarmak also added that the official statistics of the Russian Federation are very different from the real state of affairs in the production and import of apples to Russia. This is primarily due to the specifics of trade within the EAEU when not all volumes entering the Russian market through partner countries are reflected in official statistics.