Borders and Costs: Trends in Niche Cultures

Niche crops are a great alternative to low-margin traditional plants. But how to understand which of them will be in demand in the market, and which will not bring the business into a plus?

In recent years, agricultural enterprises are increasingly sowing fields with non-traditional crops, such as chickpeas, peas, amaranth, lentils and many others. These plants have a good effect on soil composition and support crop rotation. However, can they be not only seasonal earnings, but also low-competitive and profitable production?

Profitability depends on communication

Great interest in niche crops is directly related to their high profitability: if per hectare from corn you can get 10 thousand UAH, from sugar beets - 50 thousand UAH, then from asparagus, for example, 400 thousand UAH and 100 thousand UAH for sweet corn. But making money even with a good harvest is not so simple. It is necessary to have experience and skills in growing new plant species, to learn how to cultivate and store them correctly. On the other hand, the culture of consumption of atypical products in Ukraine is just beginning to develop, so you should be prepared for additional investments in marketing campaigns. It also provides a good export opportunity.

Another point - the price range is above average. “For most agricultural enterprises, niche crops are a business that brings a lot of money. But manufacturers must understand their buyer who is willing to pay a high price for such food products, ”said Sergey Potapov, specialist in the value chain of the fruit and vegetable business of the International Finance Corporation (IFC). In his opinion, farmers need to follow the trends in the types of products that will be in demand in big cities. And if good communication is enough to sell to the domestic market, then additional investments will be required for export - in storage, packaging and marketing.

Risk Factor - Weather

Future risks, including weather, must be incorporated into niche production. For example, two years ago, agricultural enterprises saw a prospect in the cultivation of malting barley, which was in demand among manufacturers of craft beer types that are gaining popularity. According to analysts of APK-Inform, the sowing of this crop in 2018 amounted to 340 thousand ha, the average yield reached 50 kg / ha, and the profitability was higher than that of feed grain. Throughout Ukraine, only a few farms are engaged in the production of malting barley.

However, the farm "InterAgroBaza" in the Chernihiv region noted that product prices were lower than expected. “In general, the crop grew good, the state of crops and the nutritional balance are normal,” says Alexander Velenty, an agronomist of the enterprise. On the farm this year, 250 hectares were sown under malting barley, and the yield was 50 centner / ha. At the same time, the specialist added that it is difficult to say whether there will be a large demand for barley in the future. In the Khmelnitsky region in the agricultural enterprise "Ridny Krai" the brewing of barley is not particularly happy. Here they took 1.5 thousand hectares for crops with a yield of 4.2 t / ha. “We were let down by weather conditions. In May, there was heavy rainfall and then arid weather. The plants went up and remained weak, ”Peter Mariychuk, agronomist, explains the situation.

Farmers note that import barley can really be expected on the malting barley market, because the crops grown in the western regions do not “pull out” in quality. The company says that next year they will not sow brewing barley - it is simply unprofitable. The need for it will be covered by the producers of the finished product themselves - beer. The company Umanpivo, for example, said that they have no need to buy raw materials, since their own crops ensure uninterrupted production.

From niche to mass production

It should be noted that not all niche cultures do not live up to expectations, among them there are more resistant to weather conditions. For example, sorghum. Over the past seasons, the domestic consumption of this product is estimated at 22%, the rest is exported, mainly to Spain and Israel.

The area under sorghum in 2018 amounted to only 40 thousand ha, but, according to market forecasts, in a few years this figure will increase to 1 million ha. The yield of starch from grain sorghum is much greater (70-74%) than from corn (67-72%), and sugar sorghum surpasses sugar beets in terms of growing technology, product quality and benefits. Many producers began to cultivate this crop precisely as a safety net in case of crop failures of other crops.

“Today in Ukraine there are 59 varieties and hybrids of sorghum registered, but the culture is not too common. By energy value, grain and green mass of sorghum are not inferior to corn, and even surpass it in the amount of protein. This crop is also more drought-resistant and requires half as much water as corn, so it can grow in the steppe and forest-steppe zones, giving high yields, ”says Yaroslav Bardin, director of the Ukrsorgo NGO. According to him, in five years, niche sorghum could well replace corn or sugar beets.

Displacing commodity sales

Niche crops will be grown more and more for the production of finished products, and not just for raw materials marketing. For example, today the global market for amaranth oil is $ 500 million, and every year it increases by 12%. Suitable climatic conditions in Ukraine allow the cultivation of marketable seeds of this crop, which are higher than Indian and Pakistani in terms of fat and macronutrient content. The Association of Manufacturers of Amaranth and Amaranth Products says that with a ton of seeds you can get 40 liters of oil, 350 kg of ground cereals, 400 kg of native flour. The rest is oilcake. In addition, in Europe there is a demand for finished products.

“In Ukraine, 15 enterprises are engaged in the production of amaranth oil and flour, and two more farms make amaranth tea. In the Dnieper there is a Center for cleaning seeds of this crop. Recently, a product such as amaranth groats has appeared on the Ukrainian market, and in Nikolaev they also produce amaranth flakes, ”says Alexander Duda, chairman of the Association of Amaranth and Amaranth Products. In 2017, 250 ha were sown with this crop in Ukraine, and in 2018, the cultivated area under it occupied 800 ha, which is 3.2 times higher than the previous year. The area under organic amaranth has grown more than six times.

Empty niches

For several years in a row, the trend in niche agricultural production was asparagus, which was sold at fairly expensive prices. This culture was replaced by fresh asparagus (chilli) beans, which is gaining popularity among consumers. The start of a small business is estimated at $ 5 thousand, for a full payback, the price should be about 120 UAH / kg.

At present, in Ukraine, the niche for the production of sweet potato - sweet potato remains almost empty. With us, it is still rather a rare product, while in Europe it has long been considered a daily component of the diet. Producers in the southern regions are only just beginning to master the cultivation of sweet potato.

The root crop is not picky about weather conditions and grows quietly even without special chemical treatment. At the same time, water scarcity significantly reduces plant productivity. The key costs of growing sweet potatoes are significantly lower than the potential profit. Such production is mainly suitable for small farms, since the culture requires more manual labor in the care. In local markets, this product is sold at 35-40 UAH / kg.

Almost the most unrecognized and one of the most useful products that has just begun to appear in small batches in Ukrainian retail is honeysuckle berries. Honeysuckle survives at temperatures up to minus 40 ° C, is not susceptible to serious diseases and is environmentally friendly to grow, requires a minimum amount of pesticides.

So far, the production of these products in Ukraine is at the level of 20-25 tons, while its market value is 5.6-7.6 dollars / kg. Due to the very soft structure of the berry, such a product is difficult to store intact for a long time, therefore it is more suitable for local sales and production for small businesses. Optimal processing of honeysuckle - production of ice cream, yoghurts, jams, as well as tinctures and wines.