During the crisis, it is important for the manufacturer not only to preserve, but also to improve the quality of fruits and vegetables – Andrey Yarmak


During the crisis, it is important for the manufacturer not only to preserve, but also to improve the quality of fruits and vegetables – Andrey Yarmak

04/08/2020

Investing in quality, safety and product advertising will help players in the produce market survive the current crisis.

The development of the global fruit and vegetable industry in the current season will be very heterogeneous. Moreover, development factors will act differently in different countries. This opinion was expressed by the economist of the investment department of the Food and Agriculture Organization of the United Nations (FAO) Andrei Yarmak during the International Anti-Crisis Fruit and Vegetable Online Conference on the impact of coronavirus and the global economic crisis on the global fruit and vegetable industry, as well as on the markets of vegetables, fruits, nuts and berries of Uzbekistan , Ukraine, Georgia, Moldova, Russia and Tajikistan.

The FAO International Consultant, Director for Development of the Ukrainian Fruit and Vegetable Association (UPOA) Kateryna Zvereva, Head of the Ukrainian Fruit and Vegetable Association (UPAA) Fedor Rybalko, FAO Consultant Bakhtier Abdukhuhidov (Tajikistan), expert of the Federation of Agricultural Producers of Moldova (also participated in the online conference)Farm) Vasile Pozhoga, FAO consultant Daria Ilyina (Uzbekistan), FAO and European Bank for Reconstruction and Development (EBRD) consultant Katerina Poberezhnaya (Georgia).

The manufacturer will be able to make money only if quality products are sold.

As Andrei Yarmak noted during his speech, today the world is devaluing currencies, in particular, in the regions of the EastFruit project – Uzbekistan, Georgia, Moldova, Tajikistan, Ukraine and Russia. According to the FAO economist, this is on the one hand good because imports are getting more expensive and, against this background, local products are becoming more competitive. But on the other hand, there is a flip side to devaluation associated with an increase in the cost of imported material and technical resources, fertilizers, seeds, seedlings, etc.

“In addition, most of the countries in our region have felt the return of seasonal workers from other countries. Thus, on the one hand, the number of labor has increased, but nevertheless, in countries where the quarantine regime has been introduced, labor costs may increase. This is because far from everywhere employees can get to work with their own transport. Accordingly, they need to be transported under conditions of restrictions on the number of people transported by road, compliance with worker safety requirements, which cannot be ignored. On this basis, labor costs, despite an increase in supply, have increased, ”said Andrei Yarmak.

Another important factor that Andrey Yarmak voiced during the conference was access to loans and financing. “In the EU and the USA, the system is filled with money – the state is trying to“ inject ”them as much as possible. The countries of our region cannot afford this because of the risk of hyperinflation. Accordingly, today we are already seeing a decrease in access to finance, the closure of many over-drafts. Thus, financing sowing or planting campaigns may be more difficult this year for many farmers. In addition, delays in the supply of material and technical resources, fertilizers and planting material can lead to problems with the productivity of many farms in the future, ”the speaker of the conference emphasized.

In the course of his speech, Andrei Yarmak dwelt in detail on the issue of the quality of fruits and vegetables in the context of declining consumer incomes. “It is important to understand here that, for example, if a person previously bought high-quality cherries at a price of $ 3-5 / kg, then in the conditions of limited financial means he will buy the same product, only in smaller quantities. At the same time, it is possible that someone will purchase products of lower quality, but still most consumers will prefer to buy less good product. Therefore, I, in the place of manufacturers, would not try to reduce the quality of the products they supply, but would emphasize that the quality must either be maintained or even improved, because in the conditions of an increase in supply, in this case, the manufacturer will always be able to sell his products and get money for it, ”emphasized Andrei Yarmak.

However, at the moment, farmers are already having problems with the ability to ensure a full production cycle and therefore the quality of the products is deteriorating.

He also drew attention to the fact that those companies that want to survive the current crisis and not go bankrupt should fully follow the recommendations of the World Health Organization (WHO) and ensure that employees at their enterprises comply with them.

What will happen to the consumption of fruits and vegetables?

As noted by Andrei Yarmak, today in the world the demand for products with a long shelf life has significantly increased. We are talking primarily about potatoes, citrus fruits, onions and carrots.

“The global trend suggests that the consumption of cheaper products is increasing in the world. For example, if a consumer does not have money for blueberries, then in the current season he will buy more apples. Accordingly, cheap products will have an advantage, ”said Andrei Yarmak.

In addition, he emphasized that in connection with the ongoing global pandemic of coronavirus, the demand for products that strengthen the immune system will increase this season.

“In many countries today, for example, demand for onions and garlic has grown. I think that this trend will continue and many vegetable producers will make an emphasis on the usefulness of their product in this regard.

On the whole, not only those manufacturers who can invest well in advertising, quality, and ensuring the safety of products and their employees will be able to make good money and save money. The rest will be hard, ”said the FAO economist.

Regarding the prospects for the freezing segment this season, Andrei Yarmak expressed the opinion that the reorientation of production to retail is the most effective scenario for manufacturers today. After all, earlier most of the products of this fruit and vegetable segment were supplied to the HoReCa segment, which today has almost ceased to exist.

Producers of fruit and vegetable products go online sales

The coronavirus pandemic, of course, had a negative impact on the business of many fruit and vegetable companies. He touched on both exporters who violated supply chains and contract execution conditions, and the domestic market, where consumer preferences of people seeking to purchase products with a long shelf life changed, noted during the conference Katerina Zvereva.

According to the Director for Development of the Ukrainian Fruit and Vegetable Association (UPOA), such changes in consumer preferences could not play into the hands of players in the fruit and vegetable market.

In addition, speaking about the situation on the Ukrainian market, Kateryna Zvereva noted that for many farmers in the country who grow early fruit and vegetable products – radishes, parsley, tomatoes, herbs and cucumbers – it became a real crisis to close food markets due to quarantine restrictions.

“On March 30, under pressure, including by farmers, the Ukrainian government decided to resume the work of food markets. However, several weeks of downtime in their work in all regions of Ukraine led to significant losses for agricultural producers. A large number of buyers, in the conditions of market closure, chose the only alternative – the implementation of the necessary purchases in supermarkets. Supermarket chains during this time significantly increased prices not only for fruits and vegetables, but also for long-term storage products. The favorite for price increases in the fruit and vegetable sector was positions such as lemon, ginger and garlic – products that the Ukrainian consumer traditionally relies on to strengthen the immune system, ”said the director of development of the UPOA.

According to her, the price, for example, of lemon today is from 70 to 90 UAH / kg, while the price in the same period in 2019 is 40-50 UAH / kg. The price of ginger root increased by 4-5 times – if in the same period last year it cost 100 UAH / kg, today in some retail chains the price is about 500 UAH / kg. The growth dynamics is also shown by the cost of garlic, which is sold in retail in the range of 140-170 UAH / kg, which is 2.5 times higher than in the same period last year.

Katerina Zvereva called the search by fruit and vegetable companies for new channels for selling products as a characteristic trend provoked by the coronavirus pandemic. For example, many exporters today began to evaluate the attractiveness of the domestic market, actively seeking new trade relations.

This is facilitated, in particular, by online platforms and trading platforms. For example, Ukrainian farmers are actively using the EastFruit Trade Platform international trading platform, as well as the UkrOpt trading platform, created in March this year by the EastFruit project in conjunction with the UPOA.

“In general, agricultural producers today focus on online sales. In this regard, even small farmers are actively using the capabilities of social networks, Instagram-based platforms and the trading platforms I have mentioned to sell their products.

At the same time, the delivery process plays a significant role in this, and therefore those farmers who can implement it have good prospects for development and growth even in the current crisis period, ”Katerina Zvereva emphasized.

What will happen to the export?

The increased cost of logistics makes exporting products unprofitable this season, says Andrei Yarmak.

“If an agrarian previously produced onions, for example, in Uzbekistan and exported it to Poland, can this be done today? Can. But, most likely, it will be unprofitable due to the increased cost of logistics. Transport companies take into account the risks of delays at the border, the impossibility of crossing them – all this is reflected in the cost of logistics. Accordingly, exports will become more complicated, especially for inexpensive products.

Exports of expensive products may decline due to falling demand for them. At the same time, nuts, fresh berries (blueberries, honeysuckle, raspberries, blackberries) belong to expensive products in the fruit and vegetable sector, ”said Andrei Yarmak.

Agribusiness will be the niche in which they will seek to invest money from falling industries

Investments in agribusiness will grow despite the crisis, Andrei Yarmak expressed confidence. After all, agribusiness will become that niche in which you can invest money from falling industries.

“In other words, the investor will try to pull funds from industries where he does not see prospects in the near future, and invest them in a promising agricultural sector. At the same time, vegetables and fruits, in this situation, will not necessarily become the segment of agribusiness where investors’ money rushes. It is likely that investments will be made in such areas as the production of cereals, oilseeds, vegetable oils and other essential products, ”said Andrei Yarmak.

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