Forecast: in 2020 world trade in fruits and vegetables may decrease by more than 30%


Forecast: in 2020 world trade in fruits and vegetables may decrease by more than 30%

04/16/2020

Now all perfectly functioning international trade mechanisms have turned out to be collapsed – many countries have refused to import and export

Today, the whole world has found itself in a completely atypical situation, which neither the present nor the past generation has faced. Despite the fact that many hoped that in May-June the situation with coronavirus would improve, while it was not possible to cope with the pandemic. And the current situation with the spread of the epidemic has significantly influenced the international trade in fruits and vegetables, according to the Ukrainian Fruit and Vegetable Association (UPAA). According to forecasts, the decline in trade in vegetables and fruits in 2020 will exceed 30%. 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 online conference “Berries and covid19: the impact on prices, production and trade.”

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“The spread of coronavirus provoked a significant reduction in energy prices, which in turn significantly affects the fruit and vegetable industry. Why is this factor so important? The fact is that a significant part of the consumption of fruits and vegetables in the expensive segment occurs in those countries that are rich in energy resources. Accordingly, such countries export a lot, earn a lot and, accordingly, import a lot of food products. Therefore, the reduction in energy costs almost always negatively affects the fruit and vegetable segment. Horticulture is a segment of those products that are not essential products and are quite expensive. And if we see a decrease in household incomes in many countries, this means that consumption of non-critical products for people is also declining, ”explains Andrei Yarmak.

Another negative factor, the expert calls the so-called reverse of globalization.

“Now all perfectly functioning international trade mechanisms have turned out to be collapsed, because to a large extent many countries have begun to defend themselves by refusing to import and export. Under such conditions, a situation may arise when prices for certain types of products in one country can increase significantly, and in another country these products are simply disposed of, ”notes Andrei Yarmak.

In addition, the distribution channels of products are changing in Ukraine. Wholesale markets, which sold about 90% of fresh berries, are now closed. On the one hand, consumers cannot buy products, and on the other hand, many farmers are simply not able to sell them. Thus, this season the prices of some products may turn out to be catastrophically high at the consumer level and at the same time, catastrophically low at the producer level.

It is also worth noting that the issue of logistics may become a significant problem for Ukrainian berries exporters. If export is not restored before the start of the season, domestic producers will have problems with the sale of their products. In this case, the frost will receive a huge amount of raw materials, which will be purchased from those who previously focused on the fresh market.

“The World Trade Organization (WTO) estimates the prospects for reducing international trade in 2020 by 30%. And in the berry segment, this indicator may be even greater, since it is the most difficult segment to trade. Therefore, if this fact is transferred to the business of each individual company, then minus 30% this season can be considered a perfectly worked year, from the point of view of business, ”notes Andrei Yarmak.

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