Ukraine opens Japanese walnut market
Production of walnuts in Ukraine sharply grew in 2018. By various estimates, the harvest went up by 20-30% and totaled about 120,000 tons. Neighboring Republic of Moldova harvested another 40,000 tons, but domestic consumption of walnuts is much lower there. Thus, Ukraine and Moldova are among global leaders in exports of shelled walnuts.
However, as it was repeatedly reported by EastFruit, walnut growers are unsatisfied with walnut prices in the season 2018/19, and some Moldovan farmers left walnuts on their trees, considering their harvesting cost prohibitive. In addition to growing production in Ukraine, walnut prices were under the pressure of trade wars and changes in trade flows, which switched over from the USA and Asia to the EU.
The EU and Middle East have previously been top export markets for walnuts from Ukraine and Moldova. Today, they are filled with walnuts from the USA, complicating access for exporters from Ukraine and Moldova. The USA can offer more expensive high-quality nuts, while both Ukraine and Moldova offer mainly low-grade nuts, which are less valued. Nevertheless, the segment of expensive high-grade nuts now shows the most rapid growth rates in Ukraine, enabling Ukrainian traders to start paying their attention to markets with strict requirements to quality.
Considering those factors, Japan can become a promising alternative to the markets of the Middle East and EU. Japanese consumers value quality and are ready to pay for it. Moreover, the demand for walnuts is only growing in Japan. EastFruit estimates Japan to have spent about $190 mln for import of walnut kernels in 2018, showing an increase of 33% compared with 2017, the year, when walnut imports also went up.
Of course, it will not be easy for Ukrainian and Moldovan walnut exporters to compete in the Japanese market, as the USA (with its most strict requirements to quality) accounts for about 97% of total deliveries of walnut kernels there. In addition, the USA is very active in marketing its products in Japan. However, Ukraine has already shipped the first trial consignment of walnuts to Japan in 2018. Quality of a trial batch turned out to be satisfactory, and suppliers expect walnut export to Japan to become regular.
More excitingly, the fact of Ukraine entering the group of just six exporters of walnuts to Japan in 2018 was a very important recognition, as the Japanese are very careful in choosing partners, even when it comes to a trial shipment.