Present and future perspectives of niche crops export on the world markets

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National University of Life and Environmental Sciences of Ukraine

PRESENT AND FUTURE PERSPECTIVES OF NICHE CROPS EXPORT ON THE WORLD MARKETS

O.F. KYRYLIUK, PhD, Associate Professor,

D.O. KYRYLIUK, PhD, Senior Lecturer,

M.A. DUBOVYK, bachelor in management

Abstract

There is conducted research on development of niche crops in Ukraine, identified tendencies of its production and export increase. Niche crops such as chickpeas, lentils, sorghum, berries and nuts are rare nontraditional crops, which production efficiency in recent years has increased.

It is analyzed main niche criteria on niche market: low development of this market, excess demand over supply, low competitiveness, high purchase prices and high level of production profitability.

It is concluded that main volumes of these products are exporting, that's why domestic producers have to constantly monitor situation on the world market and try to make a projections on concrete crop, to diversificate niche crops production with taking into account its efficiency level and constantly develop of supply value chains. market niche crop export

It is substantiated ways of development of export-oriented production of niche crops: stimulation of development of production and selling infrastructure, giving to an exporters access to infrastructure objects on international level, improvement of legislative base with harmonization to international standards, which will support export of domestic products on international agricultural market. Key mechanisms of entering on new markets should be cooperation with big companies in the field of production and selling of niche crops.

Keywords: foodmarkets, nichecrops, sorghumexport, lentilproduction, berrycropsexport.

Аннотация

СОВРЕМЕННОЕ СОСТОЯНИЕ И ПЕРСПЕКТИВЫ ЭКСПОРТА НИШЕВЫХ КУЛЬТУР НА МИРОВЫЕ РЫНКИ

О.Ф. Кирилюк, Д. А. Кирилюк, М. А. Дубовик

Проведено исследование развития производства нишевых культур в Украине, определены тенденции увеличения их производства и экспорта. Нишевые культуры такие как нут, чечевица, сорго, ягодные культуры, орехи-малораспространенные нетрадиционные культуры, эффективность производства которых впоследние годы значительно повышается.

Рассмотрены основные нишевые критерии: недостаточное развитие конкретного рынка, превышение спроса над предложением, низкую конкуренцию, высокие закупочные цены и высокий уровень доходности производства культур.

Определено, что основной объем продукции экспортируется, поэтому отечественным товаропроизводителям следует постоянно мониторить ситуацию на мировом агропродовольственном рынке с целью предусмотреть спрос на определенный вид продукции, диверсифицировать выращивания нишевых культур с учетом уровня их эффективности, а также налаживать постоянные каналы сбыта продукции. Обоснованы направления развития экспортноориентированного производства нишевых культур: стимулирование развития производственной и сбытовой инфраструктуры, обеспечения экспортерам доступа к рыночным инфраструктурным объектам на международном уровне, совершенствование нормативно-правового законодательства и гармонизации с мировыми стандартами, что будет способствовать наращиванию темпов экспорта отечественной продукции на мировые агропродовольственные рынки. Ключевым механизмом выхода на внешние рынки должна стать кооперация и товарное сотрудничество с крупными компаниями в сфер епроизводства и реализации нишевых культур.

Ключевые слова: продовольственные рынки, нишевые культуры, экспорт сорго, производство чечевицы, экспорт ягодных культур.

Анотація

СУЧАСНИЙ СТАН ТА ПЕРСПЕКТИВИ ЕКСПОРТУ НІШЕВИХ КУЛЬТУР НА СВІТОВІ РИНКИ

О.Ф. Кирилюк, Д. О. Кирилюк, М. А. Дубовик

Проведено дослідження розвитку виробництва нішевих культур в Україні, визначено тенденції збільшення їх виробництва та експорту. Нішеві культури такі як нут, сочевиця, сорго, ягіднікультури, горіхи - малопоширені нетрадиційні культури, ефективність виробництва яких в останні роки значно підвищується.

Розглянуто основні нішеві критерії: малорозвиненість конкретного ринку, перевищення попиту над пропозицією, низьку конкуренцію, високі закупівельні ціни та високий рівень доходності виробництва культур.

Визначено, що основний обсяг продукції експортується, тому вітчизняним товаровиробникам слід постійно моніторити ситуацію на світовому агропродовольчому ринку з метою передбачити попит на певний вид продукції, диверсифікувати вирощування нішевих культур з врахуванням рівня їх ефективності, а також налагоджувати постійні канали збуту продукції. Обгрунтовано напрями розвитку експортно- орієнтованого виробництва нішевих культур: стимулювання розвитку виробничої й збутовоїі нфраструктури, забезпечення експортерам доступу до ринкових інфраструктурних обєктів на міжнародному рівні, удосконалення нормативно-правового законодавства й гармонізації зі світовими стандартами, що сприятиме нарощуванню темпів експорту вітчизняної продукції на світові агропродовольчі ринки. Ключовим механізмом виходу на зовнішні ринки має стати кооперація та товарне співробітництво з крупними компаніями у сфері виробництва й реалізації нішевих культур.

Ключові слова: продовольчі ринки, нішеві культури, експорт сорго, виробництво чечевиць, експорт ягідних культур.

Introduction

Development of Ukrainian agriculture demonstrates growing trends in main crops: wheat, corn, barley, sunflower. Practice shows that in recent years local producers is paying more and more attention on so called niche crops. These crops are not traditional ones, but they are characterized by higher economics efficiency due to possibility to export such crops on domestic and international markets with less competitiveness. These crops are chickpeas, peas, mustard, lentils, mash, sugar corn, sorghum, nuts, berry cultures, liqueur and energy plantsetc. Some of them (like soghum) has a high level of drought toleranceand may be produced on land with lack of water. Others (like peas and sugar corns) has a higher productivity especially on watered lands. Expansion of farmer's activitiesof growing individual niche crops will allow to create additional jobs in the countryside and to expand the directions of product's sales both on the domestic and international markets.

Analysis of recent researches and publications

Ukrainian scientists researches were devoted among others to analysis of tendencies on food markets and niche crops market. Among researches were O. Berezina, O. Borodina, M. Ilchuk, S. Kvasha, O. Kozlov, B. Supikhanov and others. Mean while today niche crops market is developing very fastin context of European integration.

The purpose of research is to define main tendencies on domestic nichecrops markets and to explain increase in export operations with taking into account changes in international economics.

Material and methods of research

Theoretical and methodological base for research were papers of Ukrainian scientists on development and functioning of domextic food market. To solve research problem we've used modern methods of general and economic research such as: dialectic, logic, analysis, synthesis, statistical analysis.

Research results

Development of market relations in rural areas proves the need to involve the population of rural areas in the production of products, to provide them a place on the market of food products, to determine the possibility of establishing organizational and legal formations in order to increase the efficiency of agricultural crops production[1,2,3].Particular attention should be paid to production of nuts, blueberries, other berries and greens, which are niche crops. Niche crops market is characterized by excess demand over supply, low competitiveness, high purchase prices and high level of profitability. This criteria's may be applied to almost all beans: lentil, nut, mash and peas. In addition among others to niche products belongs most of all berries, in particular blueberries, cranberries, raspberries, blackberries, apricots, strawberries. In a separate group gardeners defines niche crops, which today are produced in extremely limited volumes: gooseberry, sea buckthorn, honeysuckle, hipster. Also we may called niche products flax, hemp, mustard, poppy, garlic, spelled and other exotic crops.

By the excess demand on supply criteria, as one of the most significant criteria of niche crops, we may such much increase in volumes of production. Especially these crops allows farmers to increase their investment efficiency in production development. Specific attention shoul be paid to lentil (its production increased in 3 times is 2016 compare to previous year), peas and poppy (its production volumes doubled). Sorghum also increased its harvest - on 45%, linen - on 24%, apricot - on 25%. Grows in production was checked at least in 10 niche crops. Tendency to growth kept in 2017 - grains harvest increased on 42% compared to previous year, lentil production increased on 79%, peas - on 46%, whips - on 43%. Such positive dynamics is observed 3 years in a row. This results became possible mostly due to increase in harvest area under the niche crops[5].

Production increase has positive effect on sales direction - both on domestic and international markets [4]. It was founded that in recent years farmers continue to increase export of frozen berries. Despite that farmers get used to sell through agents, it's more popular now to sell directly by themselves. More and more new farmers started to open international markets. Niche crops markets is becoming more profitable and it stimulates farmers to increase production.

A special place among niche crops belongs to sorghum. Changes in climate allows to grow non-typical crops for our country, including sorghum. Its attractiveness is caused, mainly, by drought tolerance. The ability to carry the hot summer months and the need for a small amount of precipitation makes this crop effective for cultivation in the southern regions of Ukraine. In especially dry periods this crops is used as insurance for corn which needs more water. Sorghum is used in animal husbandry, industry and food sector, but main share - around 60-65% - is used for export. In recent years harvest area is shortened under this crop. Thus, in 2016 Ukrainian producers panted 75 ths hectares out of 85 ths hectares, which were planned. At the same time, this index is higher in 41% from 2015. Research demonstrated tendency to shortage planted areas under sorghum during last 5 years. In 2012 areas were 171.8 ths hectares and in 2016 - only 74.1 (less on 97.7 ths hectares). In addition, due to increase in average yield from 1.52 t/ha to 3.9 t/ha in 2016, its gross production increased in 1.3 times to 273.5 ths tones.

Factors analysis demonstrates increase in gross sorghum production due to increase in average harvest yields even with simultaneous shortage in harvest area. That allows Ukrainian producers kept their export positions on this market (Pic. 1).

Pic. 1 Indexesofsorghumproduction in Ukraine in 2012-2017 [7]

It was defined that during analyzed period sorghum yields has a tendency to increase. Thus, in 2000 average yield of sorghum was 1.15 t/ha, in 2015 - 2.68 t/ha, in 2010 - 2.14 t/ha. At the same time during last 15 years, started from 2000, harvesting area under increased on 55.6 ths ha, despite that in last 5 years it's observes shortage in it. Increase of gross harvest and high demand on the world market caused the increase of export potential of domestic producers. During 2012-2017 there was a tendency to export diversification. During 2012-2014 sorghum export increased on 22%, in 2015 it was shorten rapidly on 57% due to shortage in gross harvest of crop. In next years because of increase of harvest area, gross harvest has an increasing tendency which led to increase in export of sorghum (Pic. 2).

Pic. 2 Export of sorghum in Ukraine in 2017-2017, ths tones [7]

In money equivalent export of sorghum increased in 2017 to $21.6 mil, meanwhile in 2016 thisindexwasonly $13.4 mil.

Analysis of production dynamics of niche crops shows the importance of beans in its structure. According to preliminary calculations, harvest area under beans will increase in 2-3 times till 2020. Beans are famous by high protein and its ability to substitute animal protein. That's why crops such as peas, chickpeas, soybeans, beans, lentils takes important place in food in developing countries. Increase in population in this countries comes with demand increase for beans. Thus, soybeans, which was niche crop in Ukraine in recent years, now takes second place among oil crops by volumes of production and export [6].

Chickpeas and lentils are still exotic cultures for most farmers. Main reason - lack of knowledge and experience of growing technology and in difference in quality of final product. Research shows that Asian and South Africa countries are keeping buying Ukrainian chickpeas, but in small volumes. It expects that harvest areas under chickpeas will increase in 2-3 times till 2020 from present 40-45 ths ha. Taking into account that in recent years there is a tendency to increase harvest areas. In 2016 chickpeas was grew on 7.3 ths ha, in 2017 its harvest area was more than 8 ths ha. Small demand on this beans crops on domestic market and low yield comparing to other crops explained why even agroholdings give a small land for this crops. Research shows that in 2017 chickpeas was produced by 91 farms, where harvest area was 100-500 ha. It's defined that chickpeas yield in Ukraine with taking into account climate changes may be higher that average in the world. At the same time there is a big difference in yield on farms. Thus, in Zaporizhzhiaaverage yield of this crop is 1.28 t/ha, Vinnucia - 2.25 t/ha, meanwhile in south regions it may be up to 3 t/ha [8].

Important niche crop is lentil. Harvest area in Ukraine is increasing constantly - from 8 ths ha in 2016 to 20 ths ha in 2017. There is also increase in yield of this crop - from 1.2 t/ha in 2016 till 2.2 t/ha in 2017. This crop is preferably growing in Poltava, Kharkiv, Sumy, Vinnucia and Ternopil regions. It should be taken into account that Ukraine are still small player on the world market of this crop. In 2016 it was sold only 1 ths tones of lentil. In 2017 this index was 1.5 ths tones. It's defined that increase in production volumes was caused by increase in exportand increase in money income to the country (Pic. 3).

Pic. 3 Export dynamic of lentil and money income to country 2012-2017 [7]

It should be mentioned that popularity is limited by lack of tecknologies of production. Absense of quality seeds, its required volumes, lack of production technologies and low level of processing technologies is constraining increase of lentil production in Ukraine. Domestic selection of lentil seeds is on low level, so producers has to do by themselves [6].

An important source of money income in Ukraine is berry export. In 2016 domestic farmers produced 190 ths tones of berries. Its demand in increasing on 4% per year. Main part of harvest is exported: market value is over $250 mil in 2016. Leader on the market is strawberry: Ukraine takes 7^th place in Europe. Second place is taken by raspberry: in 2016 harvested area was 69 ths ha and gross harvest 69 ths tones. In 2017 Ukraine exported 34.5 ths fresh and frozen berries with forecast up to 40 ths tones. General value of export is around $66 mil. Research defined that increase in export is explained by gross harvest. Berry production in Ukraine in 2017 was up to 120 ths tones. The biggest volumes was produced of strawberry (55 ths tones), raspberry(34 ths tones), black currant (27 ths tones), blueberry (5 ths tones). The most rapidly increase of share in export is in raspberry - from 7% in 2014 to 29% in 2017.Production of bleuberry is increasding very fast: despite the price for seeding material and long time till first harvest (in some cases up to 5 years), this berry has a high profitability.

Conclusions and perspectives

Research of current production and export of niche crops in Ukraine allows to come to the conclusion that growing of this crops is mainly made by small and medium farmers. Absence of large areas is compensated by production of more profitable crops. It's defined that main share of final product is exported. That's why domestic producers has to pay attention on the world market. Taking into account increase of competition on the world market in recent years, it's complicated to project demand and supply, so farmers have to diversify production of niche crops with taking into account its efficiency level and also they should work on supply channels.

The overcoming of the raw material export is possible by providing the transition to an inclusive strategy of export potential development, in which export-oriented activities will involve not only large agricultural holdings, but also small and medium-sized farms.

The key mechanism of entering a new markets in this situation may be cooperation between small farmers and big companies in production and selling niche crops. Main directions which will support export oriented production should become: providing access of farmers to financial resources, development of information field for all market players, stimulation of production and selling infrastructure, giving to an exporters access to facilities, support of farmers mobility and their improvement in education, improvement of national legislation harmonized with international standards.

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