The world is rapidly changing and significant factors are impacting the sourcing and supply of products, particularly from Europe.
The backdrop entering into the next Eastern European red fruit crop in July/August is very high market prices.
The high prices are due to a combination of factors, including;
- Increased demand due to strong retail markets for IQF retail-packed frozen fruits as well as food products using industrial fruit (e.g. yogurt, smoothies, jam etc.).
- Reduced staffing due to COVID, has led to reduced processing and production. In locations such as Chile, the governments have been supporting workers to stay home to lower the risk of spreading the disease.
- Very high and increasing logistic costs.
- Sharp rises in input costs (fuel and energy) affecting freezing, packaging material and fertiliser costs.
- The war in Ukraine is impacting export and availability of essential products for crop production, including fertilisers.
More specifically, individual crops have their own challenges;
- Raspberries; Due to lower prices in previous 2018-2020 crop seasons, growers stopped planting and cultivating these crops. North-America had a poor crop due to unprecedented heatwaves.
- Blackberries wild; Chilean supply disappeared since pickers and factory workers stayed at home throughout the COVID pandemic. On top, factories were significantly impacted by government taxes which led to less processing facilities. We have seen a similar impact on picking and processing of raspberries in 2021-2022 Chilean season.
- Blackberries cultivated; Very low pricing in earlier years resulted in growers exit crops. E.g. in Serbia, until 2019 Serbia had 6,500 hectares of blackberry fields. In 2021 this had decreased to approx. 1,360 hectares.
- Blueberries wild; A poor crop in Canada has resulted in high prices in Europe.
- Blackcurrants; Typical 6 years “up-and-down” cycle; last 2 years prices have increased and we are not expecting any price decrease for the upcoming season.
How the situation in Ukraine will unfold is unclear for now. There is a possibility that sanctions will dictate that the export of Ukrainian blackberries, blueberries, and raspberries will be abandoned. In such a scenario, as we have seen in the past (in the ’90s during the Balkan war), obscure situations evolve where the fruit is channeled through another country as a major exporter. If this occurs, more parties are involved in the supply chain and prices will increase.
Our market information from our European partners, ranks Ukraine as the third frozen raspberry exporter globally, just after Poland and Serbia. As you can see from the report in 2021, there were very positive expectations for Ukraine that raspberry export volume could double in 2022. https://east-fruit.com/en/news/a-second-raspberry-boom-in-ukraine/
At the same time there were already growing concerns with regards to the behaviour of Russia which has evolved to today’s tragic situation.
Another unfolding issue because of the war in Ukraine, which might have a significant impact on Eastern European agriculture and Polish agriculture in particular, is the availability of Ukrainian labor.
- In recent years, Poland was given EU permission for Ukrainian workers to work in the fields harvesting fruit during summer. This was licensed for 1–1.2 million workers, for a period of 3–4 months. Under current circumstances, it is uncertain if this can continue for the upcoming crops and this then will have an impact on the collection of fruits like strawberries, raspberries and sour cherries.
- Factories in eastern Poland are taking fresh fruit raw material (e.g. raspberries) from across the border in Ukraine for processing in Poland. Question will be if these companies continue to have access to these raw materials in 4 months from now. If not, it will give extra pressure on Polish origin demand and supply.
We all are witnessing the tragic stream of refugees from eastern Ukraine moving to the west of Ukraine, to Poland, and to other European countries. At the same time Polish factories confirm that their Ukraine workers are going back to Ukraine, to stay with their families and/or to fight in the war. In some of the factories, mainly located in eastern Poland, ⅓ of the total workforce is returning home.
Also, some large multinationals in Europe developed a significant reliance on Ukraine for wild blueberries, wild blackberries, and to a lesser extent raspberries. If supply issues evolve from sourcing origin Ukraine, these multinationals will be sourcing their products where businesses like ourselves are active today (Serbia, Bosnia, Poland), increasing demand.
Regarding the subject of fertilisers, it is already noticeable in European red fruit growing regions (Bosnia, Serbia, Bulgaria, Poland, Hungary, Kosovo etc.) that farmers are questioning whether to buy these expensive “inputs” for their upcoming season. They face the need to feed the soil versus not knowing what their crops will sell for. They need to weight up the risk of damage to crops versus the large spend that they may not be able to recoup. If over 30% of these growers decide not to use fertilisers, it will cause a reduced yield/tonnage for export, resulting in more pressure on supply and price.
The 2022 crop will start empty on Blackberry, Raspberry and Blueberry. Globally, cold stores for these fruits are empty; only a little unsold fruit volume is still available. We will see the European crops open with high and firm prices based on low/no remaining stock combined with where Chile finished their crop (exports of Raspberry from Chile this 2021-2022 season is expected to be down to just 10k mt).
The European and North American harvests are still months away and the market needs a very large and healthy Northern-hemisphere crop to restore balance and release some price pressure of these fruits. But we brace for another difficult season as the “release valve” for the price pressure is not yet in sight and the developments in Ukraine seem to be creating more pressure on some fruits along with fertiliser costs increase, supply issues and logistic costs increase.
We are hoping the above information will assist you to prepare for what appears to be another challenging period ahead for this fruit category. Our team is happy to answer your questions, provide more detail or clarify any of the information. Contact us on 02 4573 2555 or by email at [email protected].