The sale of walnuts is the most common and most criminal business in rural areas of Ukraine. Anyone can make money on nuts. Make it easy. Many walnuts grow on lands without an owner. And dealers buy nuts of any quality in every city market. Not surprisingly, even 15 miles from the site of the fighting with the Russians, the business of selling nuts is booming.
Illegal walnut market
Walnuts grow throughout Ukraine. Although the northern parts of the country are considered risky growing areas for this tree.1 Almost all walnuts grow in the gardens of rural residents. The total area of such gardens is 102,548.73 acres (41,500 hectares). The area of gardens planted by farmers for commercial use is 6,177 acres (2,500 hectares). This is only 6 per cent of the total area of walnut orchards, which are included in the statistics.2
However, there is also a walnut that grows on lands that do not have an owner. It is not known how much of this nut. But it is a fact that this wild nut provides income opportunities for everyone who wants to. In the markets of many Ukrainian cities, speculators buy walnuts from local residents. This business is done on trunks of passenger cars parked near the roadway or in specialised shops.
The quality of a nut is determined by the criteria that set by the speculator. There are no rules. There are no documents. No one asks unnecessary questions about the nut. Cash payment. Speculators buy any nut. Deals with any amount of nut. The seller can sell the nut without the shell and the nut in the shell. The seller can even sell a nut that cannot be eaten by people. The price difference is fantastic.
In Kramatorsk, a speculator who did not want to show her face told me such prices for walnuts. The best nut without shell US$2.7* (UAH 100) for 2.2 lb (1 kg.). The worst nut without a shell US$0.54 (UAH 10) for 2.2 lb (1 kg.). The price of a walnut in the shell is US$0.27 (UAH 10) for 2.2 lb (1 kg.)
Our conversation took place under the roar of artillery cannonade. Russian troops are 20 miles from Kramatorsk. Despite this, the elderly woman continues her business. Residents of the city continue to bring nuts that they have collected in the fall.
“My husband and I sold US$50 worth of shelled nuts. That’s almost half of my monthly pension,” says Yelena Sklyarova, a resident of Kramatorsk. The couple collected nuts from their own garden.
It is not known how much speculators will earn on the nuts that Elena sold. The resale of walnuts collected by the population of Ukraine is a “gray” business. The population collects 88 per cent of all walnuts in Ukraine. Legally working businessmen make only 12 per cent of the total collection of nuts.3 Sixty per cent of walnuts grown in Ukraine are exported. However, three-quarters of this export is done according to “gray” schemes.4 There is a lot of smuggling, crime and corruption in this case.
Bribes of US$10,000-15,000 are publicly announced for 44,092 lb (20 tons) of nuts shipped overseas. Annual bribes can be US$20-40 million.5 Even world-famous politicians such as Mikheil Saakashvili could not fix this.6 Now that there is a war in Ukraine, no one is interested in the illegal sale of nuts. But it’s happening. The markets are filled with speculators who buy nuts. This happens even near the fighting. So illegal income is very large.
The illegal market will continue to exist. The main reason for this is the poor quality of the walnut. Most of the nuts are grown by people in rural areas. Villagers do not meet quality standards. Very often, those varieties of nuts are grown that do not correspond to climatic conditions. Such varieties of nuts give a poor harvest. But even when the harvest is good, nuts are harvested by hand and this is not always done at the right time. Sorting of nuts is also done without standards. As a result, the cost of walnuts grown in Ukraine is almost two times less than the price of walnuts grown in Moldova. A Ukrainian walnut is three times cheaper than a walnut grown in Germany!2 Poor quality nuts can only be sold illegally.
The legal walnut market is just being created
While the population and speculators earn on the illegal market, big business and scientists are trying to create a legal market for walnuts. This market began to be created in Soviet times. The basis of the market is selection work with walnut seedlings. For more than 50 years, Ukrainian scientists-breeders have been selecting the best varieties of walnuts. The researchers have created a gene pool of more than 15 varieties of walnuts. This work was done by scientists Satina L.F., Badalov P.P., Pavlenko F.A., Zatokova F.T., Schepotiev F.L., Strela T.E., Saiko V.I.
The main features of Ukrainian varieties of nuts:
- the yield of the walnut kernel is up to 54.6 per cent of the total weight of the fruit (there are varieties with an indicator of about 60 per cent)
- light walnut kernel, fully removable
- walnut shell is thin, easily crushed
- walnut varieties have a predominantly lateral type of fruiting (suitable for intensive gardens)
- varieties have excellent taste and are appreciated by buyers around the world.7
Walnut varieties created by Ukrainian scientists are grown in special nursery gardens throughout the country. In Ukraine, there are at least three special gardens for growing walnut seedlings.8 About 200,000 walnut seedlings are grown in these orchards every year. So far this is not enough. Therefore, some seedlings are imported from other countries. Among these countries are Moldova, Turkey, Italy, Belarus, Canada and France.9
Thanks to the use of modern varieties of nuts, the average yield reached 16534 lb (7500 kg.) from 2.4 acres (1 hectare). This is 65 per cent more than 30 years ago! The great efficiency of new varieties interested businessmen and rural residents.
Orchard owners began to abandon the old walnut varieties and began to grow new varieties. Also, people began to increase the area of gardens. Since 2015, the area of walnut orchards has been increasing every year. In 2015, the area growth was 2 per cent. In 2016 it was the same value. In 2017, the area of walnut orchards increased by 18 per cent.10 In 2018, the increase was 3 per cent.11 In 2019, this indicator increased by almost 11 per cent.12 In 2020, the area of walnut orchards increased by 4 per cent.13 There was no area increase in 2021. And in 2022, the war prevented the growth of the garden area.
The cost of planting a 2.4 acre (1 hectare) walnut orchard is about US$3,000. Of this amount, the cost of seedlings is US$1000. About US$800 is needed to bring seedlings and plant young trees. Protecting the land from pests is estimated at US$200. Preparation of sites for planting trees costs another US$100.14
During the period of maximum efficiency, the income of the walnut orchard can reach 180 per cent of the invested funds.15 For agriculture, this is a very good indicator. Therefore, many businessmen invest in planting walnut orchards. This is done even by those businessmen who have not been engaged in agriculture before. According to statistics, about 800 businessmen legally create large walnut gardens. Of these, almost 60 per cent have no experience in agriculture.16 Some entrepreneurs do very large projects. For example, in Ukraine there is a US$15 million investment project.17 Some walnut orchards sell for US$800,000. For example, a garden in Mykolaiv Oblast sells for that price.18
Whether these businessmen will be successful will not be known soon. After all, a walnut tree begins to bear fruit only for 4-6 years. And the maximum yield can be obtained 20-30 years after planting the nut.19
It is clear that it is not possible to sell a walnut profitably in Ukraine. There is no processing industry in the country. There are no large enterprises that would use walnuts for the production of anything. Only confectionery factories use a small amount of walnuts.20 The population Ukraine does not like to eat walnuts. In Ukraine, the consumption of walnuts is approximately 1.1-1.7 lb (0.5-0.8 kg) per person per year. It is not enough, since the consumption rate of walnuts for good health is 3.3-7.7 lb (1.5-3.5 kg.) per person per year.21
In the current situation, Ukrainian businessmen are forced to focus on the export of walnuts. However, this is not the best solution to the problem, since international demand is influenced by many factors that Ukrainians cannot control.
From 2015 to 2020, Ukraine was among the five largest exporters of walnuts in the world. According to the latest data for 2020, the country ranked 4th. Only the United States, Chile and China exported more nuts.22 In 2018, Ukraine exported 90389527 lb (41 000 tons) of this product, in 2019 -(68 000 tons), then in 2020, foreign deliveries of these products amounted to only 85,980,282 lb (39 000 tons). In January-November 2021, Ukraine exported 63,934,056 lb (29 000 tons) of walnuts. The main buyer of walnuts from Ukraine is Turkey. However, in the last couple of years, France, Greece and other EU countries have become leaders.
Average export price in January-September 2021 for 2204.62 lb (1 ton) Ukrainian walnuts inshell nuts was $1 350 and shelled nuts $3 412.23
The decline in exports is due to unfavourable market conditions. Turkey, which was the main importer of walnuts from Ukraine, began to buy more goods in China. Chinese farmers offered the best nut. The cost of the Chinese walnut was less than the cost of the Ukrainian walnut.
Dependence on foreign trade conjecture makes Ukrainian farmers vulnerable. To eliminate this threat, it is necessary to create production facilities in Ukraine for the processing and use of walnuts. In addition, it is necessary to certify gardens, improve the quality control of walnuts by increasing the share of sales of shelled nuts and create uniform batches of quality walnuts from industrial orchards.24
However, this cannot be done without the political support of the authorities. Ukrainian officials now cannot support the development of such industries. All forces are thrown into the defense of the country. However, after the end of the war, the situation may change. Then the authorities will be able to support the development of the walnut growing industry.
*At the official rate of 36.75 UAH. for US$1
References
1 https://propozitsiya.com/ru/kak-ne-poluchit-na-vyrashchivanii-greckogo-oreha-keys-ot-fh-kovcheg
2 https://landlord.ua/news/ukraina-vhodit-v-top-5-proizvoditeley-gretskih-irehov/
3 https://aggeek.net/ru-blog/v-ukraine-blagopriyatnye-usloviya-dlya-vyraschivaniya-gretskogo-oreha
4 https://delo.ua/business/kuda-ukraina-prodaet-orehi-323002/ 5 https://biz.censor.net/resonance/3008784/kak_rabotaet_orehovyyi_biznes_v_ukraine_nevypolnennoe_obeschanie_groyismana
6 https://nv.ua/ukraine/events/saakashvili-vzlomal-v-odesse-sklad-orehovoj-mafii-91497.html
7 https://nutscentre.com.ua/ru/osnovnye-oshibki-pri-vyrashhivanie-grec/
8 https://orehovod.com.ua/orehovodstvo/perspektivy-razvitiia-orehovogo-biznesa-i-pererabotki-go-pochemu-vygodno-zanimatsia-orehom
9 https://sadco.com.ua/ru/survey/stati_gorix_grusha/
10 https://pro-consulting.ua/pressroom/a-oreshki-ne-prostye-gotov-biznes-plan-kompleksa-po-proizvodstvu-greckih-orehov
11 https://zn.ua/ECONOMICS/ukraina-voshla-v-troyku-mirovyh-liderov-po-urozhayu-orehov-304740_.html
12 https://agroportal.ua/ru/publishing/idei-dlya-biznesa/orekhovyi-sad-prinosit-s-gektara-v-desyat-raz-bolshe-chem-podsolnechnik
13 https://agroportal.ua/ru/news/rastenievodstvo/urozhai-gretskikh-orekhov-vyrastet-na-17-nazvany-prichiny
14 https://orehovod.com.ua/orehovodstvo/perspektivy-razvitiia-orehovogo-biznesa-i-pererabotki-go-pochemu-vygodno-zanimatsia-orehom
15 https://latifundist.com/novosti/43021-ukraina-poluchila-rekordnyj-urozhaj-orehov
16 https://klaptik.com.ua/novosti/orexovyj-biznes-perspektivy-razvitiya-v-ukraine/
17 https://biz.nv.ua/markets/krupnyy-proizvoditel-orehov-privlek-15-mln-dollarov-ot-ukreksimbanka-novosti-ukrainy-50142261.html
18 https://agro-ukraine.com/ru/trade/m-945940/prodam-orekhovyj-sad-kharkov/
19 https://motokosmos.ua/ua/news/gretskiy_oreh_kak_sest_na_mel_s_pribilnoy_ideey
20 https://pro-consulting.ua/issledovanie-rynka/analiz-rynka-orehov-ukrainy-2017-9-mes-2019
21 https://sadco.com.ua/ru/survey/stati_gorix_grusha/
22 https://www.epravda.com.ua/rus/news/2020/11/3/666863/
23 https://propozitsiya.com/ru/pochemu-eksport-greckogo-oreha-upal-na-20
24 https://ukragroconsult.com/ru/news/k-2030-godu-ukraina-uvelichit-ploshhadi-pod-orehami-v-23-raza/
