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Berry business at risk due to COVID-19

EastFruit analysts are warning about possible complications with the sale of berries if quarantine is not canceled.

“The experience of Italy shows that in times of strict quarantine, sales of perishable products are reduced. Since people try to leave their homes less often and visit retail outlets, sales of such perishable goods as garden strawberries are already sharply declining. Instead of wild strawberries, consumers in Italy prefer to buy more citrus fruits, apples, and other products that can be stored for a week or more at home. At the same time, a decrease in prices does not have a significant effect on sales promotion, since, in this case, the key reason for the decline in demand is a completely different factor. Nevertheless, Italian farmers still lower prices, because export shipments are also difficult, given the serious problems with logistics,” said Andriy Yarmak, an economist at the investment department of the Food and Agriculture Organization of the United Nations (FAO).

The expert also notes that the situation in Ukraine and other Eastern European countries with berries sales may be even worse than in Italy due to the nature of retail trade.

“According to various estimates, strawberry sales in Ukraine and Moldova through supermarket chains and retail stores barely exceed 4-5% of sales, and in Georgia – even less. In Italy, more than 60-70% of all berries are sold through supermarkets and other forms of organized retail. The prohibition of the retail markets in some regions of Ukraine can be a real disaster for the sale of fresh berries. This can affect, first of all, strawberries, if the quarantine lasts until the start of the season,” said Andriy Yarmak.

As for the berries for freezing, there also can be certain problems. The fact is that in the past season, many berry freezing companies in Ukraine overestimated the market size and the pricing prospects for the frozen strawberry. The increase in shipments of the frozen strawberry to the EU from North Africa led to lower prices and market stagnation. Therefore, even now, some of the companies have unsold berry leftovers from 2019. Therefore, it is possible that the price of berries for freezing will not be very high. Also, if the supply in the fresh market also decreases, and the supply of berries for processing increases, the prices may decrease even more significantly.

“Let’s not forget about the decline in incomes that have already occurred due to a sharp decline in business activity. Berries are not a key and indispensable product for a poor consumer, which means that their consumption will almost certainly decrease. Even when the quarantine is canceled, the purchasing power of the population in 2020 will be significantly lower than in 2019. This factor will also put notable pressure on prices.”


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