The Ukraine holds untapped potential for UK vegetable buyers

by Gill McShane

Once referred to as the ‘breadbasket of Europe’, southern Ukraine offers extremely fertile land that can produce top end crops at low cost, according to Colin Galbraith, sales and marketing director of UK-based importer-exporter Moorhouse and Mohan. Produce Business UK speaks with Galbraith, who recently joined the board of the Ukraine’s biggest horticultural and root production company, Green Team Ukraine, to uncover the potential the eastern European nation has to supply the UK

“There are 33 million hectares of very, very high quality land in the Ukraine, especially in the south,” begins Galbraith. “It’s beautiful soil – some of the most fertile in Europe. In the south around Kherson some 2m ha is irrigable, which is an enormous area. But of that total, only a portion is being used. There’s a lot of land lying fallow – it’s been left for so long it could even be described as virgin land.”

This southern area has apparently been largely ignored since the 1960s when the former USSR built a massive irrigation project with a 400km waterway system around the Dniepar Reservoir on the Dniepar River. That system is available to irrigate all of the surrounding fertile land, which Galbraith describes as “probably the largest single area of continuous irrigable land in Europe”.

Located away from the coast, Kherson lies on same latitude as the south of France and enjoys a stable climate with temperatures that consistently reach 32^oC. Although there is a winter period in December when temperatures drop below 0^oC, Galbraith claims it’s a very short and manageable three-week cold snap.

“It’s not what people think when they imagine the Ukraine,” he points out. “[The southern producing area] is a lot further south – Kiev is around eight hours north by car. It’s warmer than the UK.”

With plenty of available land that’s comparable to Cambridgeshire and Lincolnshire and suitable for bringing back into production, Galbraith believes there is “huge” potential for the area to supply Europe with high quality root vegetables such as onions, cabbage, carrots and potatoes.

“In its present structure, the Ukraine has the capability to produce low cost, high quality crops for the processing market first of all, and retail. The country is not encumbered by very high labour rates. At the moment, wages are about one tenth of the cost of the UK. Infrastructure and diesel costs are very low too,” he says.

“The only downside is because everything is bought in dollars, inputs like pesticides and chemicals are expensive. But since everyone is trying to reduce those types of inputs it’s not such a big factor.”

To encourage trade, the European Union (EU) has already removed tariff barriers on goods entering the region from the Ukraine. In turn, the country has expressed a keenness to spread its exports among several different markets, rather than relying on neighbouring Russia.

For markets like the UK, this could mean a five or six-day overland route by truck (suitable for part-processed products) or a 10-day reefer journey by sea for the fresh market, leaving from the Port of Odessa. “The journey time from Kherson to the UK is probably only one day more than from Cadiz in Spain, and it’s certainly equivalent to getting produce from Morocco,” explains Galbraith.

New source for onions

At a time when Polish produce prices have risen, Galbraith believes the Ukraine could provide Europe with “as much produce as it wants” and help to keep prices down, which could benefit the UK onion market in particular.

“The UK has seen Polish onion prices rise in the last few years along with the rise in the country’s labour costs after joining the EU,” he explains. “The Polish structure for growing onions has never been on the massive scale of the Dutch. It’s a very labour intensive crop, it costs a lot more and the Polish are struggling to justify its production.

“At the same time, we’re seeing more and more other crops come out of Poland, like blueberries, mushrooms, broccoli and cauliflower. There used to be a lot of onions and some high quality offer, but not so much in the last four or five years.”

Added to that, Galbraith says there are also fewer onions being grown in the UK due to high costs and risk. “The amount of onions being produced is falling and the general onion market has a reduced number of players now.”

In the Ukraine, he says onion production around Kherson alone totals approximately 150,000 tonnes and could easily be doubled, while the UK’s national onion output fluctuates between 235,000t and 250,000t a year.

Furthermore, over the last few years Galbraith claims many have found the quality of Dutch onions does not match the same level as other onions. “I’m not talking about the internal quality,” he points out. “But they tend to be cured at far lower temperatures which produces a very light and sometimes very green looking onion which not everyone wants.

“There is a market for a high quality onion, where the appearance is very important,” he states. “For instance, if the end customer, such as a chef, is making a white sauce or coleslaw, and you start using green onions or an onion with a high level of greening, it doesn’t look attractive and it puts people off.”

As such, Galbraith believes there is a gap opening in the market, particularly at the moment. “I’m not saying there will be a gap this year but there is potential for one as it’s been very dry in Poland, the Netherlands and Germany,” he says. “Some onion crops are already being affected as they can’t get enough irrigation. There will be a lot of smaller bulbs this year.”

Green niche

Green Team Ukraine is looking to supply the top end of the market with a GlobalGAP-certified large onion (70-90mm) that’s of very high quality, chilled, peeled and packed into 10kg or 20kg food-grade bags.

“Initially, we want to get a foothold in the foodservice and wholesale markets, then it’s our aim to look at the retail and the pre-packed market in due course,” explains Galbraith, adding that the UK, Germany and Scandinavia all feature on the target market list.

This initial, niche focus on the peeled onion market is a response to the inconsistency of part-processed products, according to Galbraith. “The pre-cooling down to 1-2^oC has got to be very rapid and you’ve got to get post cooling right too, or you dramatically impact on the shelf life,” he explains. “A lot of people make a lot of mistakes and cut corners on cooling and we’ve seen this in particular on part-processed products coming out of Poland.”

Green Team Ukraine believes it has the right expertise and certainly the equipment in place to supply a higher quality offer that meets standards in markets like the UK. Based in Kakhovka and financed by London-based investors, the firm already boasts a US$50 million (£32m) brand-new, state-of-the-art 60,000-tonne cold storage unit, which can store about 50,000 tonnes of onions in boxes under one roof. “It’s probably one of the biggest onion cold storage facilities in Europe,” claims Galbraith.

At the beginning of August, Green Team Ukraine will also complete a peeled onion plant, which will then seek BRC Gold accreditation, Galbraith says. “It’s not what you might see in other eastern European countries – it’s a very high quality, ventilated, chilling plant with the proper equipment and walling.

“With its ability to pre-cool and fast cool after production we are very confident that product quality will be competitive with many facilities around Europe. It will even match many facilities here in the UK.”

Once up and running, Green Team Ukraine expects to supply 8,000t of semi-prepared (peeled) product in year one. In addition, if there’s a market for it, the firm could also offer another 5,000-7,000t of cured onions.

Indeed, the company leases 1,000ha of land (as per all land in the Ukraine), of which 450ha remains in fallow and can be brought into production very easily. The primary focus is processed vegetables, especially brown onions and some red onions, while other produce lines are being looked at for both the processed and fresh markets, including: carrots, cabbage (white and red, etc), beetroot and some potatoes.

With plenty of land available to develop, sweet potato plants from the US have also been flown over to test their performance on a few acres, and specialised pickling onions are being trialled too.

But first, the team is keen to speak with buyers to find out what they want. “Some of the board members have been over to the UK from the Ukraine to gauge interest,” says Galbraith. “We’ve also sought criticism and asked buyers to point out any weaknesses they see, plus what we should and shouldn’t be doing.”

To market the product in the UK and throughout Europe, Green Team Ukraine and Moorhouse and Mohan are looking at setting up a joint venture under the name of Green Team UK. “It makes sense,” states Galbraith. “Green Team has the product, while M&M has the ability to market and sell it thanks to over 35 years of experience within the UK trade.”

With pro-EU politics dominating the majority of the Ukraine and the southern growing region benefitting from greater stability under the direction of Governor Mikheil Saakashvili (the former president of Georgia), Galbraith says the Ukraine represents a source of supply that UK buyers would do well to consider carefully.

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