From year to year, the market of organic products continues developing rapidly, herewith, Ukraine and the CIS countries have already occupied their places in the segment. But despite the stable market development, there are still some problems. APK-Inform Agency asked Dmitriy Sidenko, the Director of Procurement in East Europe and CIS at GRANOSA AG (Switzerland) — importer of the organic agriproducts from the CIS, to report about the features and prospects of the organic market.
The company GRANOSA AG was founded in 1930. It delivers agriproducts from all over the world for the Swiss food industry and the national producers of animal feed. Due to the careful choice of the suppliers, constant control of the quality of the products, and the focus on customers, the company gained the lead on the market of Switzerland as a supplier of the common and organic products.
— Dmitriy, what organic agricultural products does GRANOSA AG purchase from the CIS countries?
Generally, these are alternate crops, such as mustard seed, coriander, caraway seed and fennel. Earlier we had actively worked with the grain and pulses, and now the volumes of purchases of these crops significantly decreased, because of the changes in the company’s development strategy.
— How would You estimate the development of the organic market segment in the CIS countries and in general?
In general, three countries which are the main agriproducers of grains and oilseeds in the CIS — Ukraine, Russia and Kazakhstan — have already successfully accustomed the organic sector. Ukraine, having broken the ground of the organic movement, has developed understanding of the genuine organic principles of the production and processing of the agriproducts, organic elevators and terminals. The distinctive positive marker is the stable presence of the organic products in the supermarkets, in other words, the domestic market demonstrates the demand on such products. And of course, the main advantage of Ukraine is a team of professionals who actively promote the idea of “organic” and Ukrainian agricultural export.
Russia and Kazakhstan do not have the required domestic market. To date, they are on their way to create the organic standards, when the processors widely use the pseudo-organic brands such as “eco”, “natural”, etc. But in terms of the exports, the both countries are catching up with Ukraine in terms of volumes and procedures.
— Considering the recent activity of Kazakhstan in terms of organic production, how has the position of the country changed on the organic market of the EU, and how much does Kazakhstan compete with Ukraine?
Kazakhstan, as expected several years ago, has significantly influenced the market of the organic flaxseed. Kazakhstan in fact nearly settles the price for organic flaxseed as well as it does on the market of conventional flaxseed. It is difficult to call it a competition, because flaxseed has never been considered the major GDP generating position in the export of organic products from Ukraine. In reality, Kazakhstan is not a competitor of Ukraine in terms of the most important items of the organic export for Ukraine. But this situation can change rather fast in the future with regards to the oilseeds and pulses first of all.
— What ways of the organic farming development in the CIS countries do You expect in the near-term?
For Ukraine, it is definitely the development of the domestic market and the processing infrastructure. I believe that the domestic market can give the domestic producers of the organic products rather large and more stable increase of the turnover than the export. If we speak about the fast increase of the export volumes — than there should be the Export-Credit Agency launched. The large exporters and processors strategies must contain the widening of the activities outside the saturated and spoiled market of the EU. The markets of Asia, the US and China despite being more complex in terms of the logistics, are more perspective in a long-term perspective.
For Russia and Kazakhstan, the export infrastructure should develop first of all.
— In general, how have the European consumers change the attitude towards organic products for 5 recent years?
Now, it is obvious that the organic products are no longer classifies as “premium” products. In general, the developed countries have these products in any supermarket. The share of the organic products in the consumer’s budget increases steadily. Nevertheless, it is too early to call it the massive popularity. For now, we are at the last stage of the acknowledgment of the philosophy of organic products, but the popularity will come when the consumers’ collective consciousness change. This process is already underway and it is greatly integrated into the growing “climate” movement.
— What main problems did Your company face during purchases of the organic products? What main features of work with the Ukrainian, Kazakh and Russian suppliers of these products could You highlight?
I would not talk about the problems, but rather about the difficulties, connected with the import to the EU from third countries:
— in order to import organic products from third countries, and Ukraine, Russia and Kazakhstan are one of them, it is necessary to receive the additional conclusions of the certified or/and state bodies in the EU. Sometimes, we receive this conclusion in a week after sending the documents, sometimes in a month;
— given the above, there is a necessity to make confirmation tasting of each consignment which is delivered by us as importer to the EU. Consequently, there is always a risk that the analysis will show the results different from those made by the supplier. It is nearly impossible to return the products but we cannot confirm the organic status of the products as it is beyond our competence. This risk makes the import from the third countries less attractive than for example from Bulgaria or Poland given the equal prices;
— and of cource, the issue of the payment to the suppliers from the EU and from the third countries. All the suppliers of organic products from Ukraine, Russia and Kazakhstan require from 50% to 100% payment before sending the product off the warehouse. In other words, in fact they require the prepayment for the product which has not been received the status of being organic on the market of the buyer. If we buy the organic products from the EU countries (Poland, Latvia, Bulgaria, etc.) the payment after the analysis received following the delivery is taken by the supplier for granted, moreover, the product is approved to be organic and we can freely dispose it as soon as it is delivered to our warehouse.
— What are Your expectations of the organic industry in the future?
The consumer market of organic products will definitely be growing all over the world. This is a clear tendency. The arable areas under the organic farming are constantly widening around the world, the demand is increasing and the philosophy of the mankind is changing. It is clear that the organic products for the next decades will not be able to become the main standard of the food products and to surpass the convention, but this market segment will be obviously increasing actively.
Interviewed by Polina Kalayda, APK-Inform Agency