Market research results 2017–2018
“Last year, Agroport focused on niche areas, including organics. And after the company became the operator in profile international exhibitions, it became necessary to study the situation with the export of such products. The result of the research is striking: the total volume of organic products export in 2018 amounted to over 273 thousand tons, which is 60% more than in 2017. This made us thoroughly research why exactly the export of organic products is increasing, and most importantly, which products, regions, and countries make our external market”, Dmytro Tytarenko, Organic Export Promoter, noted.
TOP EXPORT PRODUCTS
Thus, during 2018, almost 6 thousand export transactions amounting to UAH 3.160 million were made (+ 64% compared to 2017). What exactly is exported? There are ten products, almost every one of which showed continuous growth last season. The top three are corn (A), wheat (B) and soybean (C). Sunflower oil (D), sunflower seeds (E), blueberries (F), millet (G), apples (H), peas (I) and barley (J) also made the top ten.
TOP-10 products in terms of export volume and export earnings, 2017–2018
As we see, crop products compose a significant part of the export, and its share continues to grow. It suggests that, unfortunately, Ukraine is still a raw-material appendage, and three leaders are unchangeable from year to year: in 2017 their share in export was 67%, and in 2018 it is already 77%. Moreover, their share increases both in relative terms and in absolute terms, simultaneously with the growth of the entire export.
It is worth mentioning that almost 2/3 of the corn and soybean volume was the crop of 2017, while the dynamics of wheat is opposite —by 70% it was composed of the new crop of 2018.
TOP-3 cereal and legume crops and their yield in the export structure, 2017–2018
WHERE UKRAINIAN ORGANICS COMES FROM
In Ukraine, 89 operators are currently engaged in the export of organic products. This is a very dynamic market. Somebody leaves it, but all the time someone new joins the external trade. However, it does not have any negative impact on the overall dynamics of the market. Thus, in 2017, 18 operators representing 7% disappeared from the export map, and in 2018, 31 new operators joined representing nearly 30%. So, we can see positive dynamics in a very lively market.
However, it is worth mentioning that experienced operators engaged in this activity from year to year still make the biggest share of export. In 2017, their share in total export amounted to nearly 90%, in 2018 — nearly 70%. Also, the volume of exported products of such producers remaining on the market increased by 15%.
Even though operators from all over Ukraine are engaged in the export of organic products, there are also TOP-10 leaders in terms of regions. That is Kherson (46.2%), Zhytomyr (7.9%), Poltava (7.6%), Rivne (6.8%), Odesa (5.7%), Vinnytsia (5.5%), Lviv (4.5%), Chernihiv (3.5%), Mykolaiv (2.6%) and Kyiv (2.3%) region. Thereby, in 2018, it was Kherson region that became the absolute leader both in terms of volume of export products and in money terms. That is 25% of the total export turnover and more than 46% of the volume of exported products. Comparing to 2017, Kherson region demonstrated almost 100% of export growth. Also, the big growth was demonstrated by Poltava region, where export rose more than 5-fold and the volume of exported products increased by 4.5 times. This can be explained by the fact that in this region most of the players of the crop farming market, such as Agroecology, Arnika Organik, Ukrolia Organik, etc., are operating.
ТОП-10 exporting regions of Ukraine, 2017–2018
Thus, we see that due to the increase in the number of market players having experience in export, their production volumes are increasing as well and hence the export as a whole, which positively influences the overall dynamics.
HOW TO ORGANICALLY ELIMINATE MIDDLEMEN
In total, Ukraine has commercial relations with 30 countries, due to which Ukrainian organic products enter the markets of 37 countries. The analysis shows that 94% of Ukrainian organic products are exported to European countries. And here we also have ten leaders. They are the Netherlands, Germany, Switzerland, Lithuania, Austria, Italy, France, Great Britain, Denmark and Poland.
ТОП-10 importing countries in terms of volume of the exported products and volume of the export earnings, 2018
Export to these countries gives Ukraine 90% of all export profit, thereby export to the Netherlands and Germany in 2018 produced almost 40% of all profit. In addition, in 2018, export to Lithuania and Switzerland soared.
As for trading partners of Ukraine in these countries, today it is about 250 operators. Thereby, 62 operators who exported Ukrainian products in 2017 and whose export amounted to 80% ceased their cooperation. Instead, in 2018, 171 new operators entered the market. New operators provided 86% of export in 2018.
The main reason for this is not the instability of the market, but the elimination of traders in favor of direct customers, creation of own companies abroad and becoming one’s own trader. Simply put, the number of middlemen is reduced in trading transactions. This once again shows the relevance of profile international exhibitions (such as Biofach in Germany, Izmir Fair in Turkey, Food Matters Live in the UK, etc.), which is the main source of a maximum number of potential buyers and the ability to establish direct contact with them. Thanks to them, the volume of export of each individual operator also increases, and as a result, the total Ukrainian export is growing.
On this basis, it may be concluded that today it is better for Ukrainian producers to focus on strengthening their positions on existing markets other than messing around searching for new ones.
WHO IS CASHING IN ON UKRAINE
It should also be noted that not only Ukraine makes money by selling Ukrainian organic products. It is logical, as some of the countries that buy Ukrainian organic products resell them to the third countries. Thus, the main countries trading Ukrainian products include Germany, the Netherlands, Austria, Switzerland, Poland and the leader among them —Lithuania.
Geography of export and trade of TOP-10 organic products, 2018
Top items in the general export structure are maize and wheat. But it is worth mentioning that Ukraine is increasingly starting to trade directly. The share of trading through other countries has decreased by almost 15% (from 54.2% in 2017 to 39% in 2018). At the same time, the absolute volume has not increased notably against the general growth, which again shows a reduction in the share of traders in total.
Thus, the share of direct supplies has increased almost twice from 29% to 58%. This also indicates a reduction in the influence of traders on the export of Ukrainian organic products, but still, it means that our external market for producers is still made by raw materials.
HOW MUCH WE ARE TALKING ABOUT
What Ukrainian organics producers are interested in? This is: how to enter the export market, how to increase export volumes and currency earnings, what is the demand for products, who should they cooperate with, and most importantly, how to make it all as expensive as possible. The issue of price is a concern for “ordinary” producers as well and may become an incentive for a transition to socially responsible farming with a premium price.
A new product that will be presented at the southern Agroport will help producers to answer these questions. The first run is confined to the expert discussion “Organic: 15 days before the Law comes into force”, where the fate of market after coming into force of the Law “On Basic Principles and Requirements for Organic Production, Circulation and Labeling of Organic Products” will be discussed.
@BuyBioBot is an assistant of the organic exporter that will help anybody to be well versed on the main issues and to know the price of any product that has already been exported in previous seasons, depending on the month of the export transaction, the country of export, as well as to find out at what price on average a region sells products within Ukraine depending on delivery terms.
The telegram bot will demonstrate a comparative analysis of prices. It means that everyone can see the dynamics of prices, which will help in shaping the market prices for the current season. One part of statistical information in this product will be available for free, and another part of the functionality envisages payment for requests.
As the developers note, the system already contains the maximum information for 2017-2018 and immediately after the launch it will be updated with data for the first half of 2019.