The renewal of the Association Agreement between the European Union and Ukraine next year can give a new impetus to the development of the Ukrainian honey industry, strengthen the country’s position in the EU market and reduce its dependence on the supply of Chinese honey, which now forms about 40% of the total supplies in this direction, national consultant to the Food and Agriculture Organization of the United Nations (FAO) Hanna Burka has said.
Now the Ukrainian honey market depends on supplies to the European Union, whose share in the total volume of Ukrainian honey exports exceeds 80% (in 2019 – 86%, in 2018 – 80%, in 2017 – 74% ). The EU countries are considered the largest honey importers in the world and about 40% of honey needs are met by imports, she said on her Facebook page.
“The signing of the Association Agreement between Ukraine and the European Union, within the framework of which a deep and comprehensive free trade zone began to function, contributed to an increase in purchasing countries and an increase in the export of Ukrainian honey, and, accordingly, the flow of foreign exchange earnings into the country,” Burka wrote.
So, in 2017, Ukraine exported 47,100 tonnes of honey to the EU, in 2018 – 41,000 tonnes, and in 2019 – 45,000 tonnes.
“A year after the signing of the Agreement, the number of enterprises that had the right to supply honey to the markets of the European Union increased to 52, and by the end of 2019 it was 72,” the FAO consultant said.
In addition, the share of Ukraine in the import of honey to the EU countries also increased, if in 2013 it was 10%, then in 2019 it reached 22% (in 2018 – 20%, in 2017 – 23%). Accordingly, Ukraine became No. 2 supplier of honey to Europe, with China ahead.
“During the FTA, Ukrainian honey exporting companies are actively using the possibilities of duty-free tariff quotas. Both the main and additional preferential quotas for honey were used in the first days of the month. Despite the fact that the extra-quota volume is subject to an import duty of 17.3%, the export volumes of Ukrainian honey continue to increase. The current export volume is seven-eight times higher than the annual volume of the total quota, which confirms the interest of European partners in Ukrainian honey,” Burka said.
According to her, it is obvious that the current volume of the quota (in 2017, the main quota was 5,200 tonnes, in 2018 – 5,400 tonnes, in 2019 – 5,600 tonnes, in 2020 – 5,800 tonnes; additional 2,500 tonnes was not revised) does not suit both the demand of Europe and the possibilities of the Ukrainian honey industry.
“The next Ukraine-EU negotiations should be aimed at both increasing the duty-free quota and reducing customs tariffs. As an example, the EU-Mexico cooperation model can be used, for which the preferential quota is 30,000 tonnes at a rate of 8.6%,” said the expert.
Ascania-Pack, part of the Ascania muti-profile Ukrainian holding, has started exporting honey to Saudi Arabia.
According to a company press release on Monday, the first batch of 12.2 tonnes was shipped in December.
“Saudi Arabia has become the eighteenth country in the world where the company exports cream honey for the retail market, including the United States, Canada, Singapore, Iraq, Qatar, as well as European countries,” the company said.
Ascania-Pack is a large Ukrainian exporter of honey, has its own production, which allows processing more than 20,000 tonnes of honey per year.
Ascania-Pack, part of the multi-profile Ukrainian holding Ascania, in January-November 2019 reduced production and export of honey by 20% compared to the same period last year, to 5,200 tonnes due to export of packaged honey and the uncertainty of prices, development director of Ascania-Pack Viktor Ivanchenko has said.
“For 11 months of 2018, the company exported and actually produced 6,500 tonnes of honey, for the same period in 2019 some 5,200 tonnes. The reduction in volumes was due to uncertain prices and export prospects in the second half of the year. We did not know whether the price will grow or fall, but we didn’t want to play roulette. In addition, we focused on export of packaged honey. From the point of view of added value, this is much more interesting,” he said.
Ivanchenko noted that over the 11 months of this year, Ascania-Pack exported three times more packaged honey compared to the entire last year and plans to increase these volumes both in the domestic and foreign markets.
“We have determined for ourselves the volume of bulk exports, which is sufficient for us. Now we focus on the sale of packaged honey in the domestic market and on export. Today we export more packaged honey than we sell in the domestic market. This year we we’ll export about 130 tonnes of packaged honey. But we would like the share of packaged honey to be at least 25%, and then 50% of the total production,” he said.
Ascania-Pack supplies packaged honey to 14 countries in Europe, Asia, the United States, and Canada and is constantly working on expanding its export geography. In addition, the company received Halal certificate in 2018 and plans to receive Kosher next year.
The Ministry of Agrarian Policy and Food of Ukraine has approved mandatory requirements for honey, which will come in force in six months, on February 6, 2020.
According to a report on the ministry’s website, its order No. 330 dated June 19, 2019 and officially published on August 6 harmonizes Ukrainian legislation with European legislation regarding honey requirements. The document will improve the regulatory framework for the labeling, production and sale of honey.
The ministry said that voluntary application of the approved requirements is envisaged until January 1, 2023, which will allow market operators to prepare for new requirements.
The document divides honey by origin into nectar (flower) and honeydew, by the method of production into honeycomb, honeycombs in honey, honey, centrifugalized and pressed honey.
The labeling requirements indicate that the package of honey should contain information about the country of origin, the label of honey for confectionery products along with its name it should be indicated that it is intended only for products to be processed.
Ukraine as of July 22 had fully used quotas for duty-free exports of agricultural products to the EU on nine groups of goods, including honey, sugar, cereals and flour, processed starch, processed tomatoes, grape and apple juice, wheat, corn, and butter. According to a press release from the Ukrainian Agribusiness Club (UAC), the pace of quota use and revival of trade with the EU is noticeably accelerating, as on the same date last year seven quotas for duty-free exports from Ukraine to the EU were used.
“Potentially, quotas for barley (79% are now used), poultry (75%), malt and wheat gluten (58%), and starch (53%) will be used by the end of the year,” the association noted.
The UAC said additional quotas for eight groups of goods come in force from October 2017 for a period of three years: for honey, flour and cereals, processed tomatoes, grape and apple juice, oats, corn, wheat, and barley. As of July 22, five of the additional quotas were used: for honey, cereals, juice, wheat, and corn.
Ukraine last year cut honey export by 27%, to 49,500 tonnes and lost positions in the global rating list of honey exporters, national consultant to the Food and Agriculture Organization of the United Nations (FAO) Ann Burka has said.
“The last 2018 year can be called a watershed year for the Ukrainian honey market. In fact, until last year, the industry, which showed annual growth in honey exports, faced a series of challenges in 2018. The search for solutions to some of them continues to this day. On one side, vast amounts of killed bees, affecting all regions, and on the other side, price battles that unfolded in the second half of the year, which “contributed” to a 27% reduction in honey exports from Ukraine and led to a loss of market share in several European countries and the United States,” she wrote on her page in the Facebook social network.
According to the FAO consultant, as a result, Ukraine dropped in the world ranking of exporters of these products from third place in 2017 (share 10%) to fifth place with a share of 7% in 2018.
“And while Ukraine was losing its position in the foreign market, competitors were actively increasing their export volumes, occupying a vacant niche. Export volumes from India in 2018 increased 10% compared with 2017, Mexico doubled, Argentina also saw growth,” Burka said.
She added that in general, the volume of globla trade in honey in 2018 decreased 3% in kind and 7% in value, reaching 689,000 tonnes, or $2.23 billion.
“Icing on the cake: according to ITC estimates, the unrealized export potential of honey on a global scale is estimated at $1.6 billion, so, Ukraine has room to grow,” the FAO consultant said.