The global apple market in 2020 will suffer record losses in history – Andrey Yarmak


The global apple market in 2020 will suffer record losses in history – Andrey Yarmak

04/13/2020

According to forecasts, in 2020 world trade in apples may fall by $ 1.0-1.2 billion.

According to estimates by Andrei Yarmak, an economist at the investment department of the Food and Agriculture Organization of the United Nations (FAO), the global market for fresh apple and apple concentrate can suffer huge losses due to coronavirus and low oil prices. This means that gardeners will have a very difficult season. And despite the fact that the market has been stagnating for many years, as EastFruit has repeatedly reported.

“The volume of world apple trade has been fluctuating at a level close to $ 8 billion for many years, and in real terms it has a downward trend. And this is against the backdrop of growing apple production in almost all major producing countries and many developing countries and growing competition from other fruits and berries in the consumer market, ”says Andrei Yarmak, economist at the Investment Department of the Food and Agriculture Organization of the United Nations (FAO).

“According to our estimates, in 2020 the global apple trade may fall by $ 1.0-1.2 billion. These are direct losses for gardeners who were focused on the export of their fruits, and they are caused by lower incomes of consumers around the world (especially in countries dependent on tourism and energy exports), the devaluation of national currencies, as well as the complexity of logistics. And this will be an absolute record of the fall in apple trade in history, ”predicts Andrei Yarmak.

According to the forecasts of the FAO expert, a decrease in global demand for apples can lead to a real collapse in world prices for this product, because it will be impossible to quickly reduce production. Moreover, according to EastFruit estimates, after declining production in Europe last year, gardeners expect a high yield of apples this season. The combination of a factor in reducing demand and a factor in production growth is highly undesirable in any business.

“If there are no problems with the volume of apple harvest in the main producing countries, we can see a historically record low price level for fresh apples. At the same time, it will be practically impossible to sell an apple of not the highest quality categories, because the cost of logistics has also grown, which will make deliveries of low quality apples economically unprofitable, ”notes Andrei Yarmak.

See also: The most popular apple varieties in the region are Idared and Renet Simirenko. Apple market review for the 15th week of 2020.

He also believes that such countries as Poland, Moldova, Serbia, China, Turkey, Iran and Ukraine will suffer most from the possible fall in world apple trade.

“Poland continues to earn money by supplying apples to Russia through the mediation of Belarus and Kazakhstan. However, Russia will sharply reduce fresh apple imports in 2020, as oil and gas revenues plummet, and local apple production continues to grow. The second largest apple market for Poland is Egypt, where the welfare of the population directly depends on tourism (the consumption of apples depends to a large extent on it) and oil exports. Both of these sources will run out sharply in 2020. The third largest market for Polish apples is Romania. And it is this country that can suffer economically more than most other EU countries from the coronavirus pandemic. Sharply reduced apple imports and India, which is another major apple market for Poland. Therefore, more than half of Poland’s apple importers will have serious problems with apple imports and there’s practically no alternative to them, because in Poland very few premium-quality apples are produced and sold in a high price category, ”the economist said.

He says that the situation is even worse for Moldova and Serbia, which are almost entirely dependent on apple exports to Russia. Turkey and Iran also depend on exports to oil and gas and tourist countries, as well as to Russia, and this will also hit their apple producers hard.

As for Ukraine, its export is more diversified, but half of the deliveries are still carried to Russia through Moldova and Belarus. Therefore, serious problems are possible here. The EU’s second largest market is Ukraine, and here Ukraine can still be a competitive supplier, but prices are likely to be shockingly low. But supplies to the UAE can significantly decrease, since this country lost almost the entire tourist flow, on which apple sales, as well as oil export revenues depended. Similar problems are possible with deliveries to other countries in the Middle East.

“The countries of Southeast Asia will remain the most attractive destination for deliveries in terms of price, but there will be fierce competition between China in the low price segment, as well as the USA, New Zealand, South Africa, Italy and France in the premium. And it’s better to prepare for this in advance, ”says Andrei Yarmak.

Accordingly, countries growing an apple of medium and low quality may face a situation where the supply of apples for processing increases sharply. But will global demand for fruit juices, in particular apple juice, increase? Andrei Yarmak believes not. Moreover, it may even decline.

“Recovered juices, in which apple concentrate is widely used, are not critical products for consumers. In addition, they have not been considered healthy foods for quite some time now due to the fact that sugar is usually added to them. Therefore, a decline in consumer incomes around the world will also affect the consumption of juices, and hence the demand for apple concentrate, whose prices have been at a very low level for many years. Therefore, selling the apple for processing to gardeners in the new season may be so unprofitable that their collection will not be worth the price, ”the FAO expert explains.

By the way, you can read more about the problems of demand and prices for apple concentrate and industrial apple in his blog.

Andrei Yarmak also says that the probable loss of the apple business will not be as significant as the loss of exporters of fresh berries, where a decrease in tourist flow will negatively affect not only consumption, but also transportation of berries. However, we will talk about this in a separate article.

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