According to EastFruit analysts, the rate of growth in potato prices is accelerating in Ukraine, which has attracted first import shipments to the local market. Since January 4, 2024, large volumes of ware potatoes from Poland, as well as from Lithuania and Latvia, measuring hundreds of tons, began to arrive in Ukraine.
“Currently, wholesale prices for potatoes in Ukraine are the highest in history, both in hryvnia and in terms of dollars or euros. In fact, over the year, prices for this product have increased by 3.5-4.0-fold. Moreover, in last recent 3 weeks, the wholesale price for high-quality fresh potatoes in Ukraine has soared by 40% and exceeded the price level in neighboring EU countries, which made importing potatoes economically feasible,” says Andriy Yarmak, economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO).
What is the reason for such a sharp rise in potato prices in Ukraine?
Producers mainly refer to the traditional factors of unfavorable weather conditions, which had a negative impact on the quality and yield of potatoes in Ukraine, but Andriy Yarmak draws attention to more fundamental reasons.
“For several seasons in a row, wholesale prices for potatoes in Ukraine mostly did not cover the costs of growing them on professional farms, forcing many professional potato growers to save on literally everything, including high-quality seeds. This, in turn, led to a decrease in produce quality, which limited export opportunities even to those countries where Ukraine had the opportunity to supply products” notes the FAO expert.
“As a result, this has led to a decline in potato production as many small potato producers have switched to other crops, such as onions, carrots, cabbage, or red beets. In addition, the population, after increasing the area in 2022 and the subsequent fall in market prices, also reduced production. This, combined with suboptimal weather conditions, has created a shortage of high-quality ware potatoes on the Ukrainian market,” explains Andriy Yarmak.
Impact of the EU market
It is also impossible not to note the tense situation on the EU potato market, which cannot but affect the Ukrainian market. True, the EU potato market has huge differences from the potato market in Ukraine or other Eastern European countries. In the EU, the bulk of potatoes are consumed in the form of French fries, and there are two parallel segments – potatoes for processing and potatoes for the fresh market. In Ukraine, on the other hand, potatoes are mostly bought fresh by households and HoReCa.
Currently, potato processing plants in the EU are experiencing an acute shortage of raw material. The situation is similar in the fresh potato market. The main reason is prolonged rains in the main potato-producing countries in Northern Europe, which led to the impossibility of harvesting products in the optimal time frame. As a result, both processors and supermarkets are forced to continue purchasing products from southern EU countries, which drives up prices in these regions.
There is another problem – a ban imposed in the EU on the use of any chemicals that prevent potato sprouting during storage. This requires storing potatoes at a lower temperature, but this type of storage is not as effective. Therefore, in addition to the increase in storage costs by 2-4 times, EU potato growers also talk about a sharp increase in potato losses during storage, because the buyers have not lowered potato quality requirements.
Read also: Poland’s blockage of Ukraine’s boarder raised prices of ware potatoes in Moldova
Accordingly, if Ukraine has now begun importing potatoes from Poland and other EU countries because prices there are now lower there, then it is likely that in the near future prices for potatoes in Poland will also go up. This will lead to the need to increase wholesale prices for products in Ukraine so that imports continue to make sense.
In any case, at the moment, the prospects for updating potato price records in the spring of 2024 in Ukraine seem very realistic. Moreover, farmers who grow early potatoes can make good money. However, we must not forget that potatoes in Ukraine are mainly a side dish for the main meal. Therefore, it can be replaced by cereals, pasta, rice, and vegetables. Therefore, you probably shouldn’t expect such a steep price run as for onions in the past season.
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