The Belarusian Market for Fresh Eggplants
Target Market Confirmation Study
Conducted by The Republican Union “UniAgroProtect” for USAID/CNFA’s Agribusiness Development Project
March –April 2006
The Belarusian Market for Fresh Eggplants, TMCS
Content
Key observations and recommendations
Background
Information on companies interviewed
Sources of supply and import seasonality
Major clients and markets
Product requirements, grades and standards, packaging
Varieties and varietal market trends
Price data and analysis
Competitors
Buyers’ Perception of Moldovan produce and suppliers
Recommendations to Moldovan exporters of eggplants wishing to enter the target market
Annex: List of companies interviewed, interviewees’ names and contact details
Key observations and recommendations
The key observation resulting from this study is that the Belarusian market for imported eggplants is quite unstable and small (the highest level of imports, 245MT, was registered in 2004).
Currently, the only option Moldovan exporters can pursue on the Belarusian market is to export eggplants during on-season (summer-fall). At this time, Belarusian companies deal mostly with local producers or those from neighbouring countries, including Ukraine and Russia.However, according to companies surveyed for this report, the local and regional offer is not sufficient or does not satisfy high-end market requirement during on-season period, and additional imports are made mainly from Spain and Netherlands.
Moldova has a low transportation cost and labour advantage, compared to countries such as Spain and Netherlands. By supplying good quality products at competitive prices, Moldovan exporters could substitute imports from Spain and The Netherlands. In addition, there appears to be a growth trend in the market, and it may be that good quality products at competitive prices could substantially expand the market.
Off-season supply to the Belarusian market is dominated exclusively by Dutch and Spanish exporters, who operate highly-intensive production of eggplant in greenhouses and are difficult for Moldova to compete with, at the current time. By using greenhouses to extend the growing/harvesting period, Moldovan producers could compete during the off-season.[1]However, this would require attracting significant investments for the introduction of modern all-season, or extended season production practices.
Interviewed companies indicated that in order to improve access to the Belarusian market, Moldovan exporters of fresh eggplants have to increase their product’s competitive advantage, i.e. improve product quality, packaging and transportation conditions considerably, to meet Belarusian importers’ requirements.
It is important to note that Moldovan exporters of eggplants have lost market share on the Belarusian market within the last few years: in 2002 the share of Moldovan eggplants was about 60% in terms of volume, in 2004 it decreased to 7%. The explanation provided by some interviewed respondents, especially the larger ones, was the poor quality of Moldovan products, packaging and transport conditions. As a result, a lot of eggplants (and other vegetables) arrive in Belarus damaged; (one large importer had experienced receiving 50% badly damaged, unmarketable products Moldovan products, due to poor packaging and transport.).
Research for this study suggests that Moldovan exporters could re-enter the Belarusian fresh eggplants market and position themselves during the on-season period. To accomplish this, firstly Belarusian importers’ requirements need to be satisfied (produce appearance, size, packaging, and standards and regulations). Secondly, as suggested by the importers surveyed, the focus should be put on setting a competitive price over exporters from other countries.
Background
Production trends. Eggplants are the sixth most widely grown vegetables produced in the world after tomatoes, watermelons, cabbages, onions and cucumbers. In the last 15 years, world production of eggplants rose approximately three fold, with a steady annual growth of 1.36 million metric tons, reaching a global total of 30.5 million metric tones (MT) in 2005 (source: FAOSTAT Agriculture Database). The top four leading producers of eggplants are China, India, Egypt and Turkey. They hold about 89% of world production; China alone takes as much as 55% of the total.
Import trends. Only 1% of world eggplant production enters the international fresh eggplant trade. The leading producers of eggplants consume internally almost all their own local production. In 2004, 313,723MT of fresh eggplants were exported worldwide, a growth of 43% compared to 2000 (source: FAOSTAT Agriculture Database). During 2000-2004, the average annual growth by volume was almost 13%, the highest annual increase of 23% being registered in 2004.
On the whole, over the last ten years the price of fresh eggplants registered a general decline from 1996 to 2002, followed by a slight upward tendency from 2002 – 2004, to prices closer to those of the mid 1990’s. See Figure 1 below.
Figure 1. Evolution of fresh eggplants prices on the World and EU markets (1993-2004)
Source: FAOSTAT Agriculture Database
The major import markets for fresh eggplants spread worldwide are: SyrianArabRepublic (17%), United States of America (15,9%), France (12%), Germany (8,8%), Canada (4,7%), Russian Federation (4,5%) and United Kingdom (3,9%). Together, these seven countries absorb 67% of the total volume of worldwide imports of eggplants. In the world rating byvolume of eggplant imports, Belorussia comes 44th in the list (with a share of 0,08%).
The Belarusian import market for eggplants is a very small market, as clearly illustrated in the Figure 2.
Figure 2. Evolution of Belarusian imports of fresh eggplants (1998-2004)
Source: FAOSTAT Agriculture Database
Figure 2 emphasizes the fact that within the period of 1998-2002 Belarusian eggplants imports grew continuously, and in 2004 the upward trend continued in terms of both volumes and value. However import volumes are very small, from 28MT in 1998, to 245MT in 2004.
The decrease in imported volumes in 2003, to 41MT, is considered to be the result of lower volumes of eggplant being grown and exported from Eastern Europe[2] in that year. During this year the major source of supply for Belarus was Netherlands (reaching 67% market share – around 30MT), at much higher average prices of $857 per MT.
In 2004, the import of eggplants returned to the growth levels shown in 2000, 2001 and 2002, indicating a potential growth trend in the market, and it may be that good quality products at competitive prices could substantially expand the market.
Although total values for imports were increasing, the average value per MT decreased during 2001 and 2002 (Figure 3).
Figure 3. Evolution of Belarusian import average prices per MT for fresh eggplants (1998-2004)
Source: FAOSTAT Agriculture Database
The decrease in average values per ton 2001/2002 coincides with an increase in imports of low value Moldovan eggplants, with an average price of $254 per MT, which formed 60% of all Belarusian imports in 2002 (see Figure 4).
Figure 4. Belarusian imports of fresh eggplants by country of supply (in terms of volume)
Source: FAOSTAT Agriculture Database
By offering prices of around £552/MT - higher than Moldovan prices, but lower than Dutch prices ($1177+), Ukraine gained a total share of 39% of the Belarusian eggplant import market in 2004.
Table 1: Average monthly(US$) Belarus import prices of Eggplant from Netherlands (2004)
Jan / Feb / Mar / Apl / May / Jun / Jul / Aug / Sep / Oct / Nov / Dec / Avge 20041440 / 1295 / 1469 / 1408 / 1464 / 1177 / 1209 / 1614 / 2209 / 1484 / 1305 / 2345 / 1557
Source: EUROSTAT External Trade Database
According to Moldovan customs statistics, in 2004 Moldovaexported 18.2MT for an average value of 301 US$/MT, exports by months were as follows:
- August - 17,746MT total value US$5012, average value – US$297/MT
- September - 0.95MT total value US$352, average value – US$371MT
In 2003 Moldova exported to Belarus 7,8MT of eggplants in total value of US$2070, average value was: US$263/MT.
Market access. The economic relationship between the Republic of Moldova and Belorussia, for the period of 2000-2009, is regulated mainly by the Programme for Economic Partnership between the two countries, with certain activities envisioned for each year.
For example, according to this agreement, the following relevant activities were planned for 2005:
- Belorussia will provide Moldova with information about its markets, fairs, expositions and other similar manifestation in order to assure market resources for 2005;
- Moldova will organize activity to promote export of 60,000MT of fresh fruits and vegetables to Belorussia in accordance with regulations of the two parties;
In June 2006, agreements on supply of 27,000MT of fresh fruits and vegetables were signed in Minsk. According to a representative of the General Department for Agriindustrial Technologies under the Ministry of Agriculture and Food Industry, twenty-seven economic agents from Moldova will provide fruits and vegetables in 10 regions of Belorussia. Source: Newspaper Flux, Nr. 1577, June 13, 2006
However, one Belarusian trader mentioned that Belarusian state policy regulates procurement of vegetables, including eggplants, in such a way that local importers are allowed to import vegetables only when local production cannot cover the demand of consumers.
Information on companies interviewed[3]
Telephone interviews were carried out with two types of respondents, i) large importers / wholesalers, and ii) super / hypermarkets, and were aimed at revealing essential primary information on the Belarusian market for fresh eggplants, including specific produce requirements and buyer preferences, eggplant varieties currently demanded by the market, the sources of produce supply and sales statistics.
An important objective of the phone survey was to learn about the Belarusian importers’ experience of doing business with Moldovan exporters, as well as to collect recommendations from large Belarusian importers addressed to Moldovan exporters of fresh eggplant wishing to enter the Belarusian market.
The targeted companies were identified through various sources, the main being KOMPASS Database ( ITC Product Map ( Chamber of Commerce web page, search servers (Google), respondents’ referrals etc.
The largest players on the Belarusian market for fresh vegetables, with large operations and coverage were selected as target interviewees for the phone survey. A total number of nine companies were interviewed, four large importers, four supermarkets and one local wholesaler.
The focus on large market players of fresh eggplants was determined by the necessity to identify the produce requirements and buyer preferences of the high-end Belarusian market for fresh eggplants. The analysis and conclusions below are based on the information collected as a result of interviews with these organisations. Although the survey sample is relatively small, the information collected is considered as representative and relevant.
The respondents’ product ranges mainly include “all fresh fruits and vegetables”, but some companies deal only with vegetables. The largest of the interviewed importers indicated an average turnover for fresh eggplants of around 40MT per year, valued at approximately US$75,000. One larger wholesaler with an average turnover of 80MT is known to exist, but currently this wholesaler does not import and only buys eggplants from local producers.
One midsize importer indicated an average annual turnover of fresh eggplants or around 24MT, though they were not willing to provide any information on the annual value of sales. The importer indicated that the average share of fresh eggplants in total company turnover was estimated at 0.05%.
The last group of respondents can be classified as small importers of fresh eggplants. This group is represented mainly by supermarkets and small retailers with an average annual turnover from 0.1 to 2MT[4]. In general, respondents reported that fresh eggplants represent from 0.05% to 5% in their total sales.
Sources of supply and import seasonality
Main suppliers
According to information provided by respondents, the main supply countries for fresh eggplants are Netherlands and Republic of Moldova (see the table below). The secondary supply countries are Spain and Russia.
Table 2. Share of fresh eggplants volume by country of supply
SM / SM / SM / SM / IMP / IMP / IMP / IMP / WHLocal producers/importers / 1.5MT / 0.8MT / 0.1MT / 0.3MT / 1MT / 80MT
Netherlands / 32MT
Spain / 8MT
Moldova / 2MT / 18MT
Russia / 6MT
SM – supermarket; IMP – importer; WH – wholesaler;
FAO statistics revealed that leading suppliers of eggplants to Belorussia in 2004 were Ukraine, Spain and Netherlands. The discrepancy in source information may be explained by the fact that some of the interviewees (especially supermarkets) do not import fresh eggplants directly from exporter countries, but buy from importers of fresh eggplants, and do not know the source of the products they buy (i.e. product is not labelled with country of origin).
Import seasonality
The analysis of information provided by interviewed importers emphasizes that during the summer and autumn period the market for fresh eggplants in Belorussia is mainly saturated by local producers and, to a certain extent, by imports from Republic of Moldova and Russia.
One importer provided some detailed information with respect to local producers. It was mentioned that there is a producer, called Dorors, who produces eggplants in greenhouses almost 12 months of the year, except mid-winter when the company replenishes planting stock.
It was also mentioned that state policy regulates procurement of vegetables, including eggplants, in such a way that local importers are allowed to import vegetables only when local production cannot cover the demand of consumers. (Note: the trader prefers to trade in higher value imports because they can obtain higher prices and, consequently have higher profit, than for local products.)
Respondents’ sources of eggplants by season and country of supply are shown in Table 3 below.
Table 3. Respondents sources of supply*
J / F / M / A / M / J / J / A / S / O / N / DLocal producers
Local importers
Netherlands
Spain
Moldova
Russia
Great supply / Average supply / Small supply / No supply
* The information is based on the information provided by interviewed companies
According to EU export statistics, during the off-season (winter and spring), the Belarusian market is supplied with fresh eggplants exclusively from Netherlands and some limited supplies from Spain. The Netherlands tends to be also whole-year supplier, as illustrated in the Table 4.
Table 4: Belarusian imports of fresh eggplants from Spain and The Netherlands (Holland)
by month, 2004 and 2005 MT and €/MT
Jan / Feb / Mar / Apr / May / Jun / July / Aug / Sept / Oct / Nov / DecSpain 2004 / MT / 1.1 / 1.3 / 1.1 / 5.5
Spain 2004 / €/MT / 545 / 512 / 490 / 890
Holland 2004 / MT / 5.9 / 6.5 / 7.9 / 12.4 / 4.7 / 9.2 / 9.1 / 1.5 / 1.9 / 6 / 13.2 / 18.3
Holland 2004 / €M/T / 1152 / 1036 / 1175 / 1127 / 1171 / 942 / 967 / 1291 / 1767 / 1187 / 1044 / 1876
Spain 2005 / MT / 1.7 / 6.7
Spain 2005 / €M/T / 588 / 771
Holland 2005 / MT / 4.7 / 7.6 / 9.3 / 5.7 / 7.2 / 11.3 / 6.2 / 3.6 / 3.1 / 5 / 24.5 / 13
Holland 2005 / €M/T / 2296 / 2294 / 1306 / 1244 / 971 / 1040 / 825 / 1509 / 1363 / 973 / 874 / 1924
Source: EUROSTAT External Trade Database
The information obtained from respondents does not conform with EU customs statistics, suggesting that in Belarus origins of products are largely unknown or ignored, or that exports to Belarus from the EU are sometimes carried out through intermediary countries, and in some instances Spanish eggplants may re-exported from The Netherlands.
Major clients and markets
Imported fresh eggplants are sold exclusively in the local market. The main clients by sales volume are retailers. They take 84% of fresh eggplants, the rest being split between distributors – 10.6% and consumers – 5.4%. The interviewed supermarkets sell imported eggplants through their own retail network.
Detailed information of client share is provided in the table below:
Figure 5: Respondents Clients (by type of business)
Type of respondentRespondents’ clients / SM / SM / SM / SM / IMP / IMP / IMP / IMP
Distributor / 70% / 30%
Retailer / 30% / 70% / 100%
Consumer / 100% / 100% / 100% / 100% / 100%
* SM – supermarket IMP - importer
Product requirements, grades and standards, packaging
Product requirements studied for this research refer to size of eggplants, packaging, logo or brand and quality of products, each of these aspects being analyzed in detail below.
Size. The majority of interviewed respondents reported preference for middle-size eggplants in the range 200 – 300g each, however a significant number of the respondents reported no preference for eggplants’ size.
Packaging.Almost each importer had individual requirements for packaging.However, the largest interviewed importers require eggplants supplied in carton boxes with a maximum weight of 10 kg. Some interviewed supermarkets require polyethylene bags, especially permeable or perforated bags. A supermarket representative expressed interest in plastic boxes also, while an importer required cotton bags.
Logo or brand. All interviewed companies expressed no preference for brand-name eggplants. Just some of them indicated the necessity for country logo, in order to be aware of the products’ country of origin.
Quality/certification requirements. When interviewed businesses have been asked about the quality requirements, most of them referred to the State Standards of Belorussia. Some respondents mentioned also that exporters of eggplants must have a quality certificate and, according to an interviewee, a Phytosanitary certificate.
In general, by good quality of produce the interviewees understand clean, attractive looking eggplants with no spots or marks.
Varieties and varietal market trends
Based on the answers provided by respondents with respect to the eggplants’ size, we can conclude that the most required varieties of eggplants are those producing uniformly middle-size eggplants or around 200-300 gr. in terms of weight.
As for specific market trends, some respondents observed that consumption of eggplants is higher in the summer and autumn period, when lower priced locally produced eggplants are available. A specific characteristic for on-season eggplants consumption in Belorussia is that ordinary people prefer to buy less expensive eggplants from the open market, even if these are of lower quality compared to those from supermarkets. There does however, appear to be an opportunity for exporters to provide supermarkets with international quality products, at competitive prices, lower than those for imports from Netherlands or Spain.
Price data and analysis
Seasonality was defined by respondents as:
- On-season – summer-fall
- Off-season – winter-spring
During the on-season, the lowest prices registered for eggplant were $0.38 per kg, while the maximum price was $1.8.
During the Off-season lowest prices range between $2.2 and $3.73, while the maximum prices are around $4.
In general, according to FAOSTAT statistics for 2004, the lowest import price registered for eggplants was from Russia (the average value per MT was $250) and from the Republic of Moldova ($333/MT), both are which insignificant suppliers.
The highest prices have been registered for eggplants imported from The Netherlands, Spain, Italy and Belgium at $1000+ per MT.