January 12 2007, 10:40

The Ministry of Agriculture of Ukraine thinks the produce branch of the country to have low perspective of the competitiveness

A very interesting document named "The project of the national social-economic development of Ukrainian village up to 2015" is published on the official site of the Ministry of Agriculture of Ukraine. The specialists of the produce business were surprised first of all because potato, berries and fruits are referred to as having "low perspective of the competitiveness" products in this document.

In particular, the authors of the document think that the production of beef, sugar, flax, berries and fruits needs to be governmentally supported "in the most favorable climatic zones". Nevertheless, despite of such pessimistic assessment of the competitiveness of these goods, the Ministry of Agriculture plans to increase vegetable production 11% up to 8.4 mln. tons, to increase threefold berry and fruit production up to 4 mln. tons, and grape production - up to 1.2 mln. tons by 2015 comparing to the results of 2005. At the same time, the Ministry plans to build up potato production up to 19.1 mln. tons that is 2% less than in 2005 and approximately 8% less than in 2006 (according to evaluations of the Agricultural Marketing Project). In fact, it is planned to decline potato production.

To the opinion of Andriy Yarmak, the Deputy Director of the Agricultural Marketing Project, the conclusion about low perspective of Ukrainian produce and potato competitiveness seems to be quite doubtful. At the present moment the produce business is developing faster than other segments of the agro-industrial complex. A large quantity of serious investors comes to this sector. The analysis of the competitiveness shows that Ukraine has rather good perspectives to build up potato, vegetable, fruit and berry production and export due to many factors. The only restraining factor is a poor development of the produce infrastructure. However, A. Yarmak says that serious investments have come to this area recently as well.

11.01.2007 15:10 Агроогляд: овочі та фрукти

Sixteen regional wholesale markets for agricultural products will be created in Ukraine

There is an intention to create 16 regional wholesale markets for agricultural products, 25 markets for poultry and livestock and 15 trade centers of the cooperative agro-trade houses by 2015 in Ukraine. This information is included to "The project of the national social-economic development of Ukrainian village up to 2015", which is published on the official site of the Ministry of Agriculture of Ukraine. Also, the legal regulation of the mentioned activities is supposed to be put in place.

The document also says that the Ministry will define the location of such markets; it will be partially involved in their financing. Experienced in this area, the specialists consider such intentions as positive but unreal with a great share with probability. First of all, the creation of 16 full-featured wholesale markets for fresh produce, and also meat, fish and flowers can cost around 2.5 bln UAH ($0.5 bln) excluding the land cost even based on the present-day calculations. However, it does not mean that the markets will function effectively. To get them working, it is necessary to ban wholesale and night trade in retail markets, to adopt a number of regulative documents and to provide these markets with the efficient managers. The experience of the EU countries proves that state property in the wholesale markets is often a factor which hampers the development and reduces the efficiency of such markets. At the same time, the private investors do not hurry to put up the capital to the construction of wholesale agricultural markets as the payback period for such projects is 6 to 10 years.

Also, it is not clear why Ukraine needs 25 markets for poultry and livestock and 15 trade centers of the cooperative agro-trade houses. Such form of wholesale trade as agro-trade house seems to have no analogues in the world. It is also worth mentioning the EU experts' opinion: if no chain of the wholesale agricultural markets is created in Ukraine in the coming 5 years, there will be no necessity to create such chain as large wholesale companies will be created and developed. It means that such chain should be created not later than 2010-2012.

For example, there are no wholesale markets in the USA at all - their functions are performed by large wholesale companies which control the contracting production at farm level, transportation, storage, calibration and other handling processes, packing and delivery to supermarkets and public catering enterprises. In their turn, large producers and their cooperatives control the whole chain by themselves.

It is worth mentioning that according to evaluations of the experts of the Agricultural Marketing Project the producers bear 100 times and more expenses to sell produce on the wholesale market than to sell this produce according to the production contract (to supply the needs of the wholesale company, retail chain or processing enterprise). According to information provided by AMP specialists, there is only one market meeting the criterion "the wholesale agricultural market" at the present moment in Ukraine - it is SHUVAR market in Lviv.

11.01.2007 15:15 Агроогляд: овочі та фрукти

Organic farming gained governmental support

The Ministry of Agriculture of Ukraine suggests adopting the Law of Ukraine "About organic agriculture". This suggestion is mentioned in "The project of the national social-economic development of Ukrainian village up to 2015", which is published on the official site of the Ministry of Agriculture of Ukraine.

Though, it is not clear from the text if it goes about the growth of the organic produce or "ecologically pure produce" which is mentioned in the other parts of the document. To the opinion of the analysts of the Agricultural Marketing Project, the development of organic farming in Ukraine can be another perspective working direction which is able to let Ukrainian producers increase the profitability of their business. Ukraine is already one of the world largest suppliers of organic grain. At the same time, the growth of other organic produce, in particular organic vegetables and fruits, is not practically developed in Ukraine.

To the opinion of Andriy Yarmak, the Deputy Director of Agricultural Marketing Project, the main reason for a slow development of the organic fruit and vegetable production is lack of the necessary knowledge about the specifics of such production and insufficient information about the technology of organic produce growing. Also, high expenses to certify the produce and a long procedure of registration are the significant obstacles. In addition, there are no market for organic fruits and vegetables in Ukraine now, so the main sales markets are located in other countries. This factor threats most of farmers who often sell the major part of their products for cash.