The Belarusian Market for Sweet Peppers
Target Market Confirmation Study
Conducted by CAMIB for USAID/CNFA’s
Agribusiness Development Project
March 2006
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CONTENTS
Key Observations and Recommendations 3
Background 3
Production trends 3
Import Trends 4
Market Access 6
Information on Companies Interviewed 6
Major Clients and Markets 8
Product Requirements and Preferences 8
Size 8
Packaging 8
Logo/Brand 9
Quality and Certification Requirements 9
Local Production 9
Prices 10
Moldovan Product Prices 10
European Product Prices 11
Major Competitors 11
Moldovan Produce: Buyers’ Perceptions and Recommendations 11
Annexes 14
Greenhouse Sweet Pepper Characteristics 14
Markets in Selected cities in Belarus 16
Belarus Wholesale Outlets 18
TABLES AND FIGURES
Table 1. Belarusian sweet pepper import data in 2004-2005 5
Table 2. Vegetable exports from Moldova to Belarus in 2002- 2005 5
Table 3. Sweet pepper exports from Moldova in 2004 and 2005 6
Table 4. Share of the Belarus Sweet Pepper Market by Supplying Country 7
Table 5. Packaging options for sweet pepper 8
Figure 1. Sweet Pepper Imports by Source (% of total volume imported),Belarus, 2004-2005 4
Figure 2. Sweet pepper imports (% of total volume imported), Belarus, 2004-2005 4
Figure 3. Share of selected vegetables in total vegetable exports from Moldova to Belarus, 2005 6
Figure 4. Import seasonality by the country of supply 7
Figure 5. Sweet pepper retail prices in Minsk (Belarus) in 2003-2004 10
Key Observations and Recommendations
This research outlines the characteristics and trends of the Belarusian market for sweet peppers.
The population of the Republic of Belarus is 10.3 mln and is evenly spread over the territory. The density of the population is relatively high at 50 persons per square kilometer. At present more than 50% of Belarusian’s live in towns where the population exceeds 50 thousand people, 17% live in small towns (up to 50 thousand); there are roughly 24.5 thousand people living in what are considered rural settlements.
The average annual vegetable consumption per capita in Belarus in 2004 was 207 kg, which is double that in the Russian Federation or Tajikistan (101 kg in each country). Armenia is in second place with consumption per capita of about 187 kg. The lowest annual consumption per capita is in Moldova and Georgia – 88 kg in each country.
According to this survey, the consumer trend in Belarus is moving from quantity to quality. It means that consumers in Belarus require and expect better quality products. Achieving the level of quality demanded by consumers is a challenge for Moldovan production, which is becoming more and more non- competitive in current conditions.
An important issue for Moldovan producers is to focus on packaging. The packaging used for Moldovan products creates difficulties for retail traders (especially for supermarkets), because sweet pepper imported from Moldova are packed in 20 kg net sacks and have to be repacked: in addition, sacks do not protect produce in transit, and sweet peppers which are fragile, are frequently and easily damaged when transported in sacks.
Besides quality and packaging, it is very important to pay attention to product presentation, its look, size, variety, standards and regulations. Because of the selling conditions (often Moldovan sweet peppers are sold contaminated/dirty with soil) and the packaging used, Moldovan sweet peppers are often sold in farmer’s markets – the poor quality determines its (low) price segment.
The following are suggested recommendations for local producers and exporters:
· Deliver large quantities of sweet pepper
· Provide constant sweet pepper supply
· The price and quality of the product must be attractive
Generally, Belarus has remained a perspective market for Moldovan products given specific trade regulations between the CIS member states.
Background
Production trends
Sweet peppers have become an important commodity on the shelves of supermarkets all over the world, and are becoming increasingly important. To meet the increased demand, sweet peppers are often cultivated in greenhouses or plastic house facilities, as all-year round or long season hydroponic crops, with the benefit of faster, cleaner production and a premium quality end product.
The world aggregated pepper production (sweet and hot peppers) was 25 million MT in 2005. China was the largest producer of peppers (12.5 million MT, 2005), accounting for 50% of world production. Mexico (1.85 million MT), and Turkey (1.7 million MT) each accounted for another 14.5% of world production, followed by Spain (0.95 million MT, 3,8% of world production) and the United States (0.98 million MT, 3.9% of world production). Other important producing countries included: Italy, France, Greece, Israel, Hungary, Bulgaria, Romania, and the former Yugoslavia, as well as a great many African, Asian, Central and South American countries (Source: FAO website 2005).
In the EU, the Netherlands and Spain play a leading role both in the production and sale of sweet peppers. More than 85% of peppers produced in the Netherlands are intended for export. The area devoted to the crop has grown enormously in the past ten years and pepper has overtaken tomato as the most important vegetable crop (Source: Glasshouse vegetable growing in the Netherlands).
The Belarusian production of sweet pepper mainly relies on greenhouses. During the on-season it covers just about 5% of the current market demand for sweet peppers. The varieties that are grown in green houses are presented in Annex 2 (varieties, average productivity, and period of ripening).
The majority of respondents have indicated that sweet pepper suppliers represent mainly two groups: the EU (the Netherlands and Spain) and the CIS countries (the Republic of Moldova, Ukraine and Russian Federation).
Import Trends
Belarusian Sweet Pepper Imports
According to official data from the Ministry of Agriculture in Belarus, in 2004 the total volume of sweet pepper imported was 1585.4 tons, with a total value of USD1 million, (average price USD 631.3/t). In 2005, sweet pepper imports decreased by 9.5% to 1435.6 tons, with a total value of USD1.7 million (average price USD 1215.3/t).
According to the official import data, the three leading sweet pepper exporters to Belarus are Spain, Netherlands and Ukraine.
Figure 1. Sweet Pepper Imports by Source (% of total volume imported),Belarus, 2004-2005Source: Ministry of Agriculture, Belarus
Figure 2. Sweet pepper imports (% of total volume imported), Belarus, 2004-2005
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Source: Ministry of Agriculture, Belarus
Generally, the sweet pepper average import price from the CIS during the summer season is lower than that of imports from other countries. The value of peppers imported from the CIS countries was about USD 387/t in 2004 and USD 338/t in 2005. The import price from non-CIS countries was USD 832/t in 2004 and USD 1495/t in 2005, almost twice as high as that from CIS.
Table 1. Belarusian sweet pepper import data in 2004-20052004 / 2005
Quantity, MT / Value, USD ‘000 / Average Import Price, USD/kg / Quantity, MT / Value, USD ‘000 / Average Import Price, USD/kg
Total / 1585.4 / 1000.8 / 0.6 / 1435.6 / 1744.7 / 1.2
CIS / 713.8 / 276.1 / 0.4 / 346.8 / 117.1 / 0.3
Ukraine / 633.9 / 251.4 / 0.4 / 231.7 / 83.1 / 0.4
Russia / 60.3 / 19.0 / 0.3 / 101.8 / 28.6 / 0.3
Moldova / 19.6 / 5.7 / 0.3 / 13.2 / 5.4 / 0.4
Non CIS countries / 871.6 / 724.7 / 0.8 / 1088.8 / 1627.6 / 1.5
Spain / 447.5 / 416.1 / 0.9 / 449.8 / 623.6 / 1.4
Netherlands / 285.2 / 221.3 / 0.8 / 318.8 / 518.7 / 1.6
Israel / 59.7 / 47.3 / 0.8 / 199.4 / 325.1 / 1.6
Poland / 68.4 / 29.0 / 0.4 / 73.9 / 89.6 / 1.2
Morocco / 5.1 / 3.7 / 0.7 / 41.0 / 60.6 / 1.5
Ecuador / - / - / - / 1.7 / 2.7 / 1.6
Italy / 0.2 / 0.4 / 1.8 / 1.4 / 2.6 / 1.9
Turkey / - / - / - / 0.7 / 1.1 / 1.7
Source: Ministry of Agriculture, Belarus
Moldovan Sweet Pepper Exports
Moldovan statistics shows that sweet pepper exports to Belarus dramatically dropped over the last five years: from 400 tons in 2002 to 13 tons in 2005. In the period 2002 – 2005 levels of all Moldovan vegetable exports to Belarus fluctuated, but were generally low, as shown in Table 2 and Figure 3 below.
According to Byelorussian import statistics for vegetables, in 2005 Sweet Peppers represented 1% of Moldovan vegetable exports to Belarus (compared with 5% in 2002). The average export price increased to USD0.38/kg in 2005, compared to USD0.27/kg in 2004.
Table 2. Vegetable exports from Moldova to Belarus in 2002- 2005 t2002 / 2003 / 2004 / 2005
Q, t / Q, t / Q, t / Q, t
Total / 8037 / 2291 / 3474 / 2663
including
Potatoes / 20 / 1961 / 39
Tomatoes / 1278 / 2107
Onions / 5952 / 24 / 40 / 85
Cabbage / 124 / 5 / 18 / 471
Carrots / 76 / 22 / 130 / 40
Cucumbers / 47 / 19
Sweet pepper / 400 / 78 / 20 / 13
Aubergine / 110 / 18 / 1
Other / 188 / 8 / 1306 / 1996
Source: Customs Department, Republic of Moldova
Figure 3: Share of selected vegetables in total vegetable exports from Moldova to Belarus, 2005
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The data for imports of Moldovan Sweet Peppers obtained from respondents does not correspond to the official data, both in Belarus and Moldova (see the table below). According to the respondents’ data, on average about 5-10% of sweet peppers imported to Belarus are of the Moldovan origin. During the on-season (July-October) this share increases to 20-30%. CAMIB’s estimates (according to the questionnaires) for export of sweet pepper to Belarus are 100-150 tons (8-10 times more than official statistics). This inconsistency indicates that either a great part of Moldovan sweet peppers are exported informally, or the use of the Moldovan name for peppers of other origin, e.g. Ukrainian.
Table 3. Sweet pepper exports from Moldova in 2004 and 2005, ‘000 tons
January-December 2004 / January-December 2005Quantity, t / Value, ‘000 USD / Average Export price, USD/kg / Quantity, t / Value, ‘000 USD / Export price, USD/kg
All destinations / 72 / 18.6 / 0.26 / 94 / 23.3 / 0.25
Belarus / 20 / 5.3 / 0.27 / 13 / 5 / 0.38
Source: State Customs Department. Moldova
Market Access
According to official data from the Ministry of Agriculture in Moldova, Marketing and External Relations Dept., there are no restrictions for the import of sweet pepper from Moldova to Belarus. The imported production should correspond to GOST 13908 quality requirements.
Information on Companies Interviewed[1]
The purpose of the telephone survey was to get primary information on the Belarusian sweet pepper market, specific requirements for import buyers’ preferences, market structure, main sweet pepper varieties demanded, supply sources and supply mechanism, and major domestic competitors. One of the objectives of the survey was to collect recommendations from Belarusian importers for Moldovan companies exporting sweet pepper.
More than 20 companies were interviewed. The list of companies was compiled on the basis of the information provided by the Belarusian Embassy to the Ministry of Agriculture in Moldova (the companies list is attached in annexes 3 and 4), business-catalog “Kompass” and other web sources. Some companies refused to be interviewed, others responded without providing figures on their financial turnover and acquisition prices (especially importing companies and wholesale entities).
Out of 20 companies that were interviewed only 5 supermarkets, 5 importers and wholesale entities answered the questions. Most of them have a large product range. Their assortment includes sweet pepper, onions, potatoes, carrots, cabbage etc. Some vegetables are produced domestically. Other vegetables, the domestic supply of which is not sufficient to cover the Belarusian market demand, are imported (especially in the off-season period).
A large assortment of fruits is commercialized along with vegetables during the period.
Most of the respondents said that average share of sweet pepper in total sales varies between 3% and 5%.
Sources of Supply and Import Seasonality
The production of sweet pepper in Belarus mainly relies on greenhouses. In the summer season they cover just about 5% of the market demand for sweet peppers. The varieties grown in Belarusian green houses are presented in Annex 2.
The majority of respondents indicated that sweet pepper suppliers represent mainly two groups: the EU (the Netherlands and Spain) and the CIS countries (the Republic of Moldova, Ukraine and Russian Federation).
Sweet peppers imported from the Netherlands and Spain are available all year round, but in the local production season their sales share drops significantly as a result of price competition from local and regional production.
According to table 4 (based on the interviews) Ukraine has the biggest share of sweet pepper imports into Belarus. In spite of the short sales period of sweet pepper produced in Ukraine, this country is the leader in sales volumes, with relatively low prices and high production capacity.
Ukraine is followed by Spain and the Netherlands in terms of the import volumes, however, the majority of respondents would not provide information on imports from each of these countries.
Table 4 % Share of the Belarus Sweet Pepper Market by Supplying CountryCountry / % Share
Ukraine / 30-35
Spain / 25-30
The Netherlands / 20-25
Moldova / 5-10
Russian Federation / 5-10
Source: Respondents data
In some cases the respondents were not sure about the origin of the product. They assume that the Ukrainian sweet pepper imports could be of the Moldovan origin.
Figure 4. Import seasonality by the country of supplyJan / Feb / Mar / Apr / May / Jun / Jul / Aug / Sep / Oct / Nov / Dec
Ukraine
Spain
The Netherlands
Moldova
Russian Federation
Source: Respondents’ data
Major Clients and Markets
According to the survey, almost all respondents noted that they sell their production on the domestic market. None of the respondents confirmed the fact that a part of imported production is re-exported.