Wholesale Price Trends of Fruits and Vegetables in Russia and Ukraine

Published Jul 6, 2022
Russia and Ukraine represent important markets for the sale of fresh fruits and vegetables due to their limited production capacity and high demand. Since the beginning of the Russia-Ukraine conflict, supply chain disruptions have shown visible influences global market. Also, the monetary system of these two countries is at risk, with inflation growing MoM. Inflationary pressure and supply problems have led to rising prices for agricultural products. Although the devaluation of national currencies favors exports, Russia and Ukraine do not have significant quantities of fruits and vegetables for export. On the other hand, the conflict in Ukraine has left negative consequences on agricultural production, affecting the growth of prices of domestic farm products.

Russia and Ukraine are significant importers of fresh fruits and vegetables. According to FAO data, Russia imported fruits and vegetables worth almost USD 9B for MY 2021, while Ukraine imported fruits and vegetables worth about USD 1.4B for the same period. Looking at exports, the Russian Federation and Ukraine are among the most important exporters of cereals, vegetable oil, and mineral fertilizers needed for agricultural production.

Source: Tridge

According to Tridge’s Trade Data, the top 5 fruit and vegetables that experienced significant increases in wholesale price YoY in Russia were grapefruit (+100%), avocado (+76.15%), tomato (+72.22%), other sweet peppers (+65.33%), and oranges (+61.02%). The causes of the price increases were mainly inflation and reduced supply. According to Rosstat, inflation increased by 7.61% in March 2022, the highest level since January 1999. The Ministry of Economic Development in Russia stated that in W2 of May-22, a 17.69% annual inflation slightly dropped (from 17.83% at the end of April). Supply is another issue for price rise. Türkiye and South Africa make up almost 70% of the grapefruit market share, with an export value of around USD 54.4M in 2021. Russia relies on Israel and Peru for avocado, with USD 77.11M imported in MY 2021.

Until the outbreak of the Russia-Ukraine conflict in February 2022, Türkiye banned exports of peppers, pomegranates, grapes, oranges, and grapefruits. South Africa, a major citrus supplier to Russia, had problems with container transport, increased transport costs, and payment issues. Peru, like exporters from South Africa, had logistical issues. Once faced with challenges importing fresh fruit and vegetables, Russia swiftly turned to China and Middle Eastern countries and strengthened ties with Türkiye to secure the supply of imported fruits and vegetables.

Source: Tridge

Ukraine relies heavily on Türkiye for fruit and vegetable supply, and other major suppliers include Spain, the Netherlands, Poland, Ecuador, Costa Rica, and Egypt. Citrus and southern fruits (bananas, oranges, tangerines, lemons) dominate fruit imports, peaches, nectarines, and grapes, while tomatoes dominate vegetables. The wholesale price of tomatoes recorded a significant rise in March, reaching a whopping USD 2.8/kg. Almost 86% of tomatoes imported to Ukraine are from Türkiye. A few critical factors contributed to the high price, including logistic issues with difficult inland transport due to damaged infrastructure and seaports, and the Ukrainian Hryvnia's inflation reaching 16.4% in April 2022. Stabilization of tomato prices is expected in the upcoming period, with an increase in the presence of tomatoes from domestic production. The conflict will prevent many farmers from entering the fields and completing the harvest, depending on the region.

Given the inflationary pressures on the monetary system in Ukraine and Russia, a drop in imported fruits and vegetable prices cannot be expected. Due to the conflict, it will be too early to estimate Ukrainian production and exports. Monetary problems in both countries and complicated supply chains will also weaken the population's purchasing power.

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