Europe’s share in Ukraine’s walnut exports keep expanding

Raw Walnut

Walnut Kernel

Ukraine

Published Nov 30, 2021

The walnut harvest in Ukraine kicked off in September. The crop is set to bounce back to around 43,000 MT this season after a disappointing crop of 36,000 MT in the 2020/21 season. This means exports will most likely increase from October onward. Ukraine has targeted Europe as their main export destination, with 59% of walnut exports going to EU-27 countries in 2020. The Czech Republic has emerged as a major destination for Ukrainian walnuts, importing more than triple that of last year in the first 9 months of 2021. Turkey’s market share is set to drop sharply after being 17% in 2020.

A respectable crop, exports to increase

The 2021/22 walnut crop is estimated at 43,000 MT on a shelled basis, 20% higher than the previous MY. However, the 2020/21 crop was the lowest in 4 years. The marketing year runs from September to August and export figures for the mediocre 2020/21 crop are still to be finalized. According to UN Comtrade data, for the MY, Ukraine’s exports of shelled walnuts were 19,504 MT and in-shell walnuts were 7,801 MT (converted to shelled basis). This means domestic consumption must have dropped steeply since there was very little inventory when the season started.

Source: INC, ITC Trade Map, UN Comtrade

*Local consumption for 2020/21 calculated as production minus exports and for 2021/22 as the 5-year average

**2021/22 Export estimate based on production minus domestic consumption

Market share of exports to Europe keep increasing

Ten years ago, Russia was by far the largest importer of Ukrainian walnuts. In 2010, Russia had a market share of 45% of Ukrainian walnut exports (shelled-basis). However as tensions between these two countries escalated, Ukraine looked to other markets. In 2016 Russian imposed a ban on food supplies from Ukraine, however, the shift to Europe happened even before that. Europe has become the main export destination, and in 2020, Ukraine’s walnut exports to EU-27 countries made up 59% of their total walnut exports (shelled-basis). Within the EU-27 aggregation, France is the top destination, with Greece, Netherlands, Germany, and Austria completing the list of top 5 European importers. Outside the EU-27, Turkey is the top importer. In 2020 Turkey had a market share of 17%, down from a massive 27% in 2019.

Source: Comtrade, ITC Trade Map

Ukraine also exports in-shell walnuts, but measured by weight, it is only about half of the exports of shelled walnuts. Furthermore, a conversion factor of 1 : 0.4 is used to convert unshelled walnuts to a shelled basis, under the assumption that the shell makes up 60% of the weight. This means that un-shelled exports have a market share of roughly 13% of total walnut exports. Most of these unshelled walnuts go to Turkey.

Source: ITC Trade Map

Exports in 2021 to Europe increasing, Czech Republic emerging as new market

With Ukraine increasing its exports to EU-27 countries almost every year, the 2021/22 season should mark a continuation of this trend. While direct data of monthly exports of walnuts from Ukraine is not readily available, using mirror data of imports of 2020’s top 5 destinations in EU-27 is a good indication. Czech Republic’s imports from Ukraine also boomed in 2021, and their imports are added to the calculation. When comparing the volume of shelled walnut imports by these 6 countries from Ukraine, for the first 8 months of 2021, imports were 7,529 MT, compared to 8,063 MT for the same period last year. But keep in mind that total exports dropped comparatively more, which means the market share of these 6 countries increased.

Source: ITC Trade Map, UN Comtrade

The Czech Republic recently emerged as one of the leading importers of walnuts from Ukraine with 1,113 MT for the first 9 months of 2021, compared to only 359 MT for the same period in 2020. Ukraine’s walnut inventories were virtually depleted in September, that is why Czech Republic’s imports were low in September. When October import figures are issued, it will give a clear indication if the Czech Republic is now a permanent addition to the top importers of Ukrainian walnuts.

Source: ITC Trade Map

Exports to Turkey slowing, in favor of EU-27 countries

Exports for the 2020/21 MY have been much lower than previous MYs, due to the poor crop. Exports to EU-27 countries, on the other hand, have only slightly decreased. This shift to EU-27 countries is only possible at the expense of other destinations. Turkey's imports of walnuts from Ukraine plummeted over the first 9 months of 2021. Turkey imported only 1,370 MT over this period, compared to 4,211 MT for the same period last year.

Source: Turkstat, ITC Trade Map

Future production and export destinations

Walnut trees take 8 to 10 years to mature and yield optimal nuts. Historically walnut production in Ukraine is segmented with many small-scale farms of 10 - 15ha. However, since 2015, the area under walnuts has been expanding by more than 1,000ha annually according to the Ukrainian Walnut Association. This dramatic expansion is mostly in the form of larger commercial and more advanced orchards.

This means there will be a lot more walnuts coming from Ukraine in the near future. There will be a close eye on the destination of these walnuts when they come to the market, and if Europe continues to be the preferred destination.