Ukraine. Tree Nuts Annual. Sep 2014 Oct. 1, 2014
Production of walnuts in Ukraine has been relatively steady over the last three to five years and is expected to remain unchanged in the near-term. Commercial development of walnut acreage is ramping up since 2009. Ukraine exports over half of its walnut production to the European Union (EU) and Middle Eastern countries. Also, buyers from the China, Hong Kong, and Vietnam made significant purchases in 2014. Walnuts have traditionally been present in the local diet and primarily consumed in desert dishes or raw. Demand for walnuts is driven by private consumers and food processors- especially by the confectionary sector.
Walnuts, Inshell Basis
Walnut production in Ukraine is spread throughout the country. Various regions have been producing walnuts as well as hazelnuts for many years. Climate conditions and soil in Ukraine are suitable for growing nut trees. At present, about 85 percent of all walnuts harvested in Ukraine are produced by small private family farms. Three decades ago, when there was no private land ownership in Ukraine, walnuts were produced by collective farms in the Soviet planned economy. Some of those orchards still bear walnuts, though at much lower yields.
Starting in 2009, Ukrainian agrarians began developing walnut orchards for commercial purposes. The size of these plantations ranges from half hectare (ha) up to 100 ha. Some regions, especially in central and southern Ukraine require irrigation to ensure expected yields, while orchids in the northern part of the country may not have as high of yields as a result of cooler climates.
Producers prefer Ukrainian origin seedlings, although due to the increase in demand and the inability of local seedling producers to meet demand, some new seed varieties are being imported from neighboring Moldova and Belarus. According to industry prospects, commercial walnut production yield has increased as has the quality of the end product.
In 2014, Ukraine’s producers expect to produce 84,000-86,000 metric tons (MT) of walnuts. Harvest season in Ukraine varies from year to year depending on climate conditions and on proper management technique. Most of Ukraine’s walnut producers do not treat trees for diseases. However, with more commercial walnut production coming online and taking over poorly managed and aging orchards, these newly established producers are said to pay greater attention to production technologies (beyond irrigation) to increase growing efficiencies. For example, these growers are conducting research into ideal growing areas, investing in nurseries to improve genetic stocks, and applying fertilizer and pesticides to their orchards.
However for the most part, walnut production in Ukraine is still a labor intensive business with the majority of walnuts harvested by hand or rudimentary nut picking devices used by the previous generation of growers. Another part of the business that is of interest to commercial growers is walnut wood, which is used for furniture manufacturing locally and with some exports. Other products related to walnut value-added production are treated leaves for medicinal use and walnut (green/young nut) preserves. Also in the recent years, demand for walnut oil has become a novelty niche product in the EU that many of Ukrainian’s growers are now eyeing. The domestic market in Ukraine has also generated some demand for walnut oil as a gourmet food and a key ingredient in the premium segment of natural cosmetic products.
Official data on total walnut planted area in Ukraine is not available at present. However, the trend in walnut production expansion has been going on at the rate of about 1,000 hectares a year during the last three years, reaching over 3,500 ha in 2014. New walnut orchards are expected to start bearing fruit in five to seven years after being planted. At the start of the production age, walnut tree yields are low; they increase gradually and will reach their prime anywhere between fifteen to twenty years. While a new influx of orchards has been planted since 2009, older orchards from the Soviet period are being cut down gradually and offsetting an overall growth in production. Average yields of the newly planted trees (upon maturation) are expected to be higher than that of the older stock.
Domestic walnut consumption is not constant year to year. Depending on the economic situation in the country, local consumers may choose from a variety of tree nuts for their daily needs. Almonds, cashews, pistachios, and Brazilian nuts (in the order of highest to lowest based on consumer popularity) are widely available in local retail outlets and are higher priced than walnuts. Locally produced walnuts and hazelnuts; however, are the most commonly consumed tree nuts in Ukraine.
In addition, domestic chocolate producers and other candy manufactures use walnuts in their recipes. Many of these confectionary products are exported. Generally speaking a greater portion of processed foods and higher priced confectionary products use walnuts in their recipes or to garnish cakes and baked goods for example.
In 2014, Ukraine suffered significant currency devaluations. The national currency Hryvnia (UAH) has lost over 64 percent of its value compared to U.S. dollar during the first few months of the year. The economic struggle continues as this report was drafted and it is not expected to stabilize in the near future.
No official statistics exist on either walnut production or consumption. Estimates adopted by FAS-Kyiv for the purposes of this report were derived mainly from industry expert opinions.
Walnuts are widely available in the market place as well as exported in large quantities. One can purchase walnuts easily in food stores around the country or in farmers’ markets. Walnuts are sold in-shell as well as shelled. Large industrial size sales also are common especially by the food processing industry and by exporting enterprises.
The price of walnuts in Ukraine fluctuates over the growing season, dropping to the lowest point shortly after the harvest and gaining back ground during winter and spring holidays and at the time when stocks are dwindling (usually in the late spring). No official data is collected on walnut prices at the national level in Ukraine. No known private sources provide market aggregated price data or analysis presently.
Exports of walnuts are in most cases managed by private enterprises. An industry group, the Tree Nut Association, was established several years ago to assist walnut market entrants. The Association serves as a consultant to growers in various stages of the business cycle and has had some success in raising production standards in orchards as well as targeting export markets around the world.
Ukraine has been exporting over half of their annual walnut crop in the last five years. Large quantities of walnuts from Ukraine have been sold to the EU and Middle East destinations. Also, this year, buyers from China, Hong Kong, and Vietnam made significant purchases. Walnut exports are usually up October through May and by the time May arrives, walnuts from the southern hemisphere become available on the world market thus curbing demand and sales of Ukrainian product- this is especially true in Europe.
The vast majority of Ukrainian walnuts are sold shelled. According to industry experts, the average conversion rate between shelled to in-shell walnuts is at about 33-38 percent. It is expected that this ratio will change in the future with greater commercial production development. Conversion rates for the recently established walnut orchards average at about 55 percent, though the share of these plantations is still relatively small, so it does not have much impact on the national average.
Exports of walnuts from Ukraine in marketing year (MY) 2013/14 are expected to be about five percent higher than last year due to an increase in the planted area and in production. A successful foreign market development initiative in 2014 also contributed to this growth. In the coming season, MY 2014/15, Ukraine is expected to export a slightly lower quantity of walnuts, down by about seven percent year-on- year, mainly due to lower expected production and lower yields due to the impact of natural factors like climate and nut tree conditions.
Walnut stocks are difficult to calculate because large quantities are still produced by private family farms that do not report their production figures and the majority of these tree nuts are stored by private producers. Unless these products are exported, there is no trace of stock or production for that matter. As commercial walnut production develops in Ukraine, growers understand that official national data must become available in the marketplace.
Walnut production is not expected to receive support from the national government. With regards to subsidies from the State Budget, crops with higher priority in the agricultural sector are traditionally designated for grain, sugar, and livestock production.
Locals consume walnuts in their everyday diets. It is a common ingredient in desert-type dishes and in local cuisine. Walnuts are often consumed raw as well as slightly roasted. Walnut oil is becoming a niche product. Cold pressed oil is high valued mainly for its nutritional purposes. Industrial walnut oil production has been on the rise in Ukraine in recent years.
Walnuts are often sold in bulk in farmers’ markets in Ukraine both shelled and in-shell. Local food stores prefer to carry pre-packaged walnuts. However, in this case, the price of walnuts is only slightly lower than that of almonds or cashews that are often thought of by Ukrainian consumers as premium type nuts. This is mainly because many Ukrainians have walnut trees in their back yards or summer homes which are grown by relatives or friends and can provide them with sufficient supplies for their family’s annual uses. Thus, local consumers are not keen on purchasing packaged walnuts (specifically amongst all tree nuts) in retail outlets at prices comparative of imported tree nuts. Ukrainian consumers do purchase almonds and other imported tree nuts on occasion, but the locally grown walnuts and hazelnuts are the ‘go to’ nuts they prefer when it comes to day-to-day food choices.
Another market segment of walnut buyers in Ukraine is the confectionary industry. Producers of chocolates, sweets, deserts, bakery products and snacks are the most reliable users of walnuts in the local market. More research needs to be conducted to determine the specifics and trends of this market segment