The volume of frozen vegetables export in 2019 is a new maximum

Exports of frozen vegetables reached 1.5 thousand tonnes in November 2019, an increase of 31% compared to the November 2018 and 52% compared to previous month. During the first four months of the 2019/20 season (August – November 2019), Ukraine has exported 4,0 thousand tonnes of frozen vegetables, which is 14% more than the previous season. Export earnings were also at a highest levels in history – $ 4.9 million.

Export growth was on the backdrop of a generally unfavorable global environment – a sharp strengthening of the national currency and, as a consequence, pressure from Poland, which offered cheaper vegetables. During the conference “Vegetables and Fruits of Ukraine 2019. Export Breakthrough”, Ukrainian producers of frozen vegetables repeatedly complained about the shortage of raw materials for processing this season. According to them, it was difficult to close all contracts, as the vegetable growers preferred to sell produce in the fresh market, where prices were higher.

The main raw materials for the freezing of vegetables are: broccoli cabbage, cauliflower, sweet peppers, green peas and sugar corn, although, of course, you can freeze almost anything. In particular, in recent years, the production of frozen onions for export to the EU countries has been very active in Ukraine. Last season, some freezers even imported onions from Kazakhstan, Uzbekistan and Tajikistan to clean, freeze and reexport it. At the same time almost all enterprises clean onions manually.

The main difference between the sale of vegetables for the needs of freezing and the sale on the fresh market is the ability to sell much larger volumes. Especially when it comes to products such as broccoli, cauliflower, sugar corn and green peas. That is, when focusing production on freezing, the vegetable grower has the opportunity to grow vegetables on an industrial scale. However, the selling price for vegetables will be lower than in the fresh market. Moreover, it is better for the freezer to fix the price of raw materials before they are grown, taking into account the fixed margin of the producer, since prices for frozen vegetables are not subject to such significant fluctuations as prices for fresh produce. This, by the way, can also be an advantage, because the farmer, starting the season, can already roughly calculate the amount of expected profit and can plan your growth.

At the same time, the disadvantages of such a business are the weather risks, which, with large scale production, can result in significant losses. Another risk factor is the possible waiver of a freeze from contractual obligations, which sometimes also occurs. Mostly, such a default may be due to a low market price for a product purchased on the spot market or a deterioration of the customer’s financial health.

Despite this, the business of freezing vegetables certainly has good prospects. For example, Poland’s neighboring country exports frozen vegetables worth over $350 million annually, or about 500,000 tonnes. However, French fries are included in this volume. The world’s leader in this category is Belgium, which sells more than 1.3 million tonnes of frozen vegetables and potatoes. Among the leaders are China, Spain and Poland.

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