This is a continuation of the first part of the article on the main fruit and vegetables events in Uzbekistan.
- Expensive berries and missed opportunities in the berry business
2021 was remembered for the high prices for strawberries and raspberries. Strawberries became available on wholesale markets in the 20th of April at an average price of 60,000 UZS/kg ($5.7), which is 3 times higher than last year. Wholesale prices dropped to 25,000 UZS/kg ($2.4) in two weeks, which was twice higher than on the same date in 2020. The strawberry season ended in the beginning of June, and wholesale prices had dropped only to 20,000 UZS/kg ($ 1.9) by that time, which is 30% higher than last year.
The first large batches of raspberries became available on the wholesale markets of Uzbekistan in early June, and the season ended in mid-November. Average wholesale prices fluctuated in the range of 21,000 – 55,000 UZS/kg ($2.0-5.2). Throughout the 2021 season, the gap in average wholesale prices from last year’s levels was quite large: they were 20-65% higher compared to 2020, and 2-3 times higher compared to 2019. However, the rise in prices was quite modest compared to the rise in prices for raspberries on the global market, where they are sold mainly frozen.
Due to such high prices, Uzbekistan began importing raspberries from Tajikistan in 2021 for the first time, raising raspberry prices there.
Despite high prices, in 2021, frozen raspberries were exported from Uzbekistan to the Russian market for the first time. In total, Uzbekistan exported 83 tonnes of frozen raspberries to Russia in August-September 2021.
EastFruit analysts have repeatedly noted Uzbekistan ignoring opportunities in the berry business, despite the excellent climate and available labor, the lack of which hinders the expansion of raspberry production in other countries. The situation in the country seems to be changing: the establishment of new raspberry plantations started in autumn 2021 in the Fergana region of Uzbekistan, the total area of which will be 300 hectares. Thus, Uzbekistan joins the raspberry boom in many other countries.
Let’s hope that high prices for strawberries and raspberries will be a signal for Uzbek investors who ignore the most profitable and fastest growing segment of the global fruit and vegetable market.
- New trends in the export of fruits and vegetables
EastFruit analysts note a very important and long-awaited trend in the international trade in fruit and vegetables in Uzbekistan – the volume of exports of frozen vegetables and fruits more than doubled in 2021 compared to 2020. Moreover, there was a shift towards a higher price product category in the structure of frozen fruit export.
According to preliminary data, Uzbekistan exported 12.1 thousand tonnes of frozen vegetables worth $9.3 million in 2021, which is 2 times more in volume and 2.3 times more in terms of exports earnings compared to 2020. As for frozen fruits, the export volume of this category amounted to 5.8 thousand tonnes worth $7.6 million, which is 2.1 times more in physical terms and 2.5 times more in terms of export earnings compared to 2020. EastFruit wrote about the structure of exports of frozen vegetables and fruits from Uzbekistan at the end of October 2021.
Uzbekistan also significantly increased its peanut exports in 2021. In volume, the exports exceeded the level of 2020 by 67% and was twice higher than in 2019. According to preliminary data, Uzbekistan exported 21.7 thousand tonnes of peanuts worth $23 million in 2021. Peanut exports from Uzbekistan to China increased the most. There were no peanut supplies to the Chinese market until 2020. However, 400 tonnes were delivered in 2020, and in 2021 Uzbekistan increased its peanut exports to China 5.5 times compared to 2020! The growth potential of supply of peanuts to China is indeed high. For more information on the structure of peanut exports by major importing countries, read the EastFruit material dated December 17, 2021.
Uzbek farmers have been actively expanding the area of pomegranate plantations in recent years. Based on plans to establish new plantations and taking into account existing ones EastFruit experts expect the annual production of pomegranate in the republic to reach at least 600 thousand tonnes in the next 5-10 years. It is obvious that the domestic market will not be able to consume such a large volume of pomegranate, and the stake is made on increasing the exports.
As statistics show, there have already been noticeable successes in increasing the exports of Uzbek pomegranate – for the second year in a row, the export volume of new harvest pomegranates has been growing. The exports season for pomegranates from Uzbekistan starts in August (the harvest of early varieties starts at the end of July) and ends in February-March next year. Thus, Uzbekistan has made it through the most of the 2021/2022 season. According to preliminary data, it exported 14.7 thousand tonnes of pomegranate worth $10.9 million from August to December 2021, which is 32% more in kind compared to the same period in 2020 and 50% more than in August-December 2019.
At the end of March 2021, EastFruit analysts presented a detailed analysis of a new strategic priority in the country’s fruit sector – increasing pomegranate production. The article was much cited by the media in China, as it is the largest importer of pomegranate in the world. Together with Hong Kong, China imports more than $1 billion of pomegranates a year.
- Growth in banana consumption in Uzbekistan
In 11 months of 2021, Uzbekistan imported 2.2 times more bananas compared to the same period in 2020. Moreover, the import volume during the reviewed period was almost twice higher than the total import volume in 2020 and 64% higher than that in 2019.
EastFruit analysts identify three reasons for the continuation of the growing trend and such a solid increase in banana consumption in Uzbekistan in 2021:
First, the influence of rumors that discredited bananas during the onset of the COVID-19 pandemic, probably faded away in 2021. The second reason is the relatively high prices for fruits and vegetables in Uzbekistan, particularly for stone fruits, due to weather anomalies in 2021. Bananas were relatively cheap in 2021 compared to apricots, cherries in the first half of the season, apples of early and mid-season varieties, and pears. Third reason is the expansion of supermarket chains that have a crucial impact on the banana trade in the country. Banana is a very convenient product for supermarkets, as they can import it directly all year round and sell it cheaper than in the markets due to the large volume and VAT refunds. Therefore, banana is the best-selling fruit in supermarkets of Uzbekistan. And as the number of supermarket chain stores in the country grows, the consumption of bananas will grow.
Let’s remind that Uzbekistan was earlier included in the list of countries with ultra-low consumption of bananas. By the end of 2019, residents of Uzbekistan consumed only 700 grams, or about five bananas per year per person. The analysis of banana consumption by countries of the world and our region in particular is available here. It seems that despite a sharp increase in the consumption of bananas in Uzbekistan, its position in this global ranking will not change much by the end of 2021.
- Large-scale concessional financing, subsidies and a new system for the development of the produce sector
EastFruit regularly covered new initiatives of the government of Uzbekistan to stimulate fruit and vegetable producers, support the industry with subsidies, concessional financing and the introduction of new mechanisms in 2021. Below we list the main initiatives of 2021 that are important in the development of the produce sector of the economy.
In early June 2021, EastFruit wrote about the creation of modern greenhouses based on public-private partnerships. Housing and greenhouse complexes will be built in Uzbekistan on low-yielding lands so that people willing to engage in greenhouse farming, could live and work close. Each housing and greenhouse complex will be of at least 20 acres. Within the framework of the partnership, the state will allocate land for the complexes, install utility systems (gas, water, electricity, internal roads) to housing and greenhouse complexes and provide benefits.
It was announced at the end of August that the state would allocate a total of $100 million for targeted financing of projects to create modern greenhouses. However, as there are still issues with country’s greenhouse industry access to gas, it is forced to pollute the environment, damaging the health of people. Therefore, solutions to these very pressing problems for the industry are needed.
At the end of October 2021, EastFruit wrote about specific measures of state support and incentives for fruit and vegetable producers, the implementation of which is envisaged at the beginning of 2022. They include concessional financing, insurance of vegetable and fruit harvest against weather risks, subsidies for the modernization of agricultural machinery, incentives for the imports of equipment, their components, as well as benefits for the planting of new disease-resistant crop varieties and the introduction of water-saving technologies. In mid-November 2021, it was reported that Uzbekistan would allocate almost $400 million to support the fruit and vegetable industry in 2022.
On November 24, 2021, the introduction of a new development system for the produce industry in Uzbekistan was announced. It will be based on strengthening the role of clusters, introducing new cooperation mechanisms, financing fruit and vegetable producers and expanding the provision of agricultural services. In particular, 200 thousand hectares of low-profitable sown areas freed from cotton and grain will be returned to the reserve in 2022–2025. Of these, it is planned to allocate 80 thousand hectares for the production of fruits and vegetables in 2022. Read more about this in the materials of EastFruit dated November 30 and December 18, 2021.
We note that most of these decisions are aimed at increasing production volumes. And this is a direct way to reduce the income of producers, if you do not take care of sales. Therefore, solutions are required to such problems as modernizing and improving the varietal composition of fruits grown in the country, improving the storage infrastructure, processing and packaging, and increasing the efficiency of its marketing. We have repeatedly drawn attention to the alarming trend of a decreasing export of vegetables and fruits from Uzbekistan for two years in a row despite the continuing growth in acreage.
- New players in the retail market
2021 will be remembered for the active expansion of foreign supermarket chains into the Uzbek market. Two foreign retailers came to Uzbekistan – the largest retail chain in Kazakhstan Magnum Cash&Carry and the Russian discounter chain Dobrozen. The first stores of both retailers in Uzbekistan were opened in the last month of 2021.
Magnum in Uzbekistan
The Kazakh chain Magnum Cash&Carry has been getting ready to enter the Uzbek market for about two years, studying its similarity with the Kazakh market and local peculiarities. Finally, the first Magnum hypermarket in Uzbekistan was opened in the renovated Integro shopping center in Tashkent on December 11, 2021. 20 thousand products, from food, household chemicals to non-food products, of leading producers from Uzbekistan, Kazakhstan and other countries were presented on an area of 5000 sq. m. Magnum pays special attention to fresh vegetables and fruits. They include vegetables and fruits even from Brazil, Italy, China, Colombia, USA, Turkey, and, of course, local ones.
The second Magnum store was opened in Uzbekistan in a different district of the same city just a week later, on December 18, 2021. The Kazakh retailer plans to invest about $20 million in the first year of development in Uzbekistan and open two more hypermarkets and several supermarkets in 2022.
Magnum Cash&Carry is the largest retail chain in Kazakhstan. The first store was opened in 2007 in Almaty. The company planned to increase the number of stores to 197 in 11 cities of Kazakhstan by the end of 2021. The total retail area of the chain is 220 thousand sq. m. This indicator is growing by 30% average every year. The chain operates in four formats – express, daily, supermarket and hypermarket, with an assortment of 35-40 thousand SKU, depending on the seasonality.
“Dobrocen” – 4 stores in one month
The first store of the Russian retail chain “Dobrocen” in Uzbekistan opened in Bukhara on December 18, 2021, where more than 1,500 positions of food products, household chemicals and non-food products were presented. The Dobrocen chain opened three more stores in Uzbekistan – in Tashkent, Karshi and Margilan on December 25, 2021. Thus, there are 4 Dobrocen stores in Uzbekistan now.
As of August 2021, the Russian retail chain Dobrocen had 400 stores. It is present only in two countries abroad, except for Uzbekistan: it opened its first store in Belarus in 2019, and in Kazakhstan at the end of April 2021.
The peculiarity of the Dobrocen retail chain is its format of a store-warehouse without division into a sales area and storage, with goods being displayed not on shelves, but on pallets. The assortment includes about 1200 items of the most popular high-quality food products and everyday household goods at the lowest prices.
Bonus – free profitable investment niches of the fruit and vegetable business in Uzbekistan
Uzbekistan stays away from the global trends in the fruit and vegetable business, focusing on traditional cultures and varieties. It is convenient, but while other countries earn good money and reinvest it in the development of the produce sector in their countries, Uzbekistan loses these opportunities. By the way, it is crucial for Uzbekistan to rely on trendy and expensive goods, because the country is located far from the main sales markets and has no access to the sea. Therefore, transportation of goods is more expensive for Uzbekistan than for its competitors.
We will provide you with our rating of profitable niches that Uzbekistan missed, despite the possibility to take advantage of them.
Blueberries are the most expensive and trendy berry imported by Uzbekistan in large volumes, that could bring hundreds of millions of dollars in export earnings to the country. For example, Peru earns $1 billion a year from blueberry exports. Read more about this here.
Nuts: pistachio, almonds, hazelnuts, walnuts – Uzbekistan has favorable conditions for the cultivation of most nuts, but does not use them. For example, the USA, where nut production is concentrated in a similar climate region of California, exports nuts worth approximately $9 billion annually! Considering that the domestic walnut market in the United States is also huge, one can imagine how much Uzbekistan could potentially earn on nuts. By the way, Uzbekistan has no problems with finding workers, unlike the United States! There is a playlist “Nuts” on our YouTube channel with many videos on how different nuts are grown, harvested and processed in the USA and Georgia, as well as presentations by the world’s leading experts in nut production.
Berries: Uzbekistan can export traditional berries such as strawberries, raspberries, blackberries and others almost all year round, thanks to the efficient use of climatic zones and greenhouse technologies. Berries are at the peak of healthy eating trends, and there are more and more of them. The berry freezing segment is also growing at a tremendous rate. Spain earns $1.5 billion a year on the exports of berries and Poland – about $700 million (about the same as Uzbekistan on the exports of all vegetables and fruits combined). Uzbekistan with a wonderful climate and cheap labor earns almost nothing. Even in Tajikistan, the segment is developing faster and more successfully. Therefore, there are many possibilities here too.
Kiwi is one of the most profitable crops for farmers in the countries growing it. For example, many farmers remove and replace them with kiwi plantations in Italy. Global trade in kiwi is growing at a high rate. Of the countries in the region, Georgia is the most successful in developing this sector, even exporting its kiwi to Japan – the most expensive and demanding market in the world! Kiwi production in Uzbekistan is also growing, but there are almost no industrial plantations. We wrote about the peculiarities of growing kiwi in Uzbekistan from the experience of an amateur farmer in this article.
Avocados are the fastest growing segment of the horticultural trade in the world. According to preliminary estimates, avocados can be grown quite successfully in Uzbekistan. Mexico receives about $3 billion dollars a year in revenue from avocado exports. The first commercial avocado plantation has already been established in Georgia. The analysis of the regional avocado market is available here.
Asparagus is also trendy in terms of healthy eating. The demand for it is growing rapidly all over the world, including Russia. Uzbekistan could take advantage of this given its climate. We wrote more about the possibilities of Uzbekistan in growing asparagus in this article.
In fact, there are many niches even in the sectors of the fruit and vegetable business traditional for Uzbekistan. For example, high-quality large-fruited cherries, properly cooled, packaged and delivered to China, can provide 10 times higher revenue than cherries grown in the traditional way and exported to the Russian market. By the way, you can compare these approaches in our two videos: “Traditional cherries of Uzbekistan” and “Ultra-modern technologies of cherries in Uzbekistan“.
Similar analogies can be drawn in other segments as well. However, we hope that Uzbekistan will start focusing on trendy and expensive products, as well as their high quality, in order to ensure the growth of exports earnings and welfare for everyone involved in this industry.
If we missed some of the important trends, please let us know in the comments section.
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