March 31 2006, 00:00 Agrarian Marketing Project

Improved Vision & Expansion for Omelyanenko Family Wholesale Business

Mr. Yuriy Omelyanenko and wife Svetlana managed 3 mobile fruit and vegetable sales outlets at a city market in a large residential area of Poltava. They employed three sales people at their outlets, and he drove his minibus to various farming areas of Southern Ukraine where he obtained an assortment of fruits and vegetables demanded in Poltava. He acted as a middleman between the farmers of Southern Ukraine and consumers on the Poltava markets. Svetlana controlled all accounting documentation of the business; and, she developed new trading ideas for their emerging business. Svetlana has had substantial experience in fruit and vegetable marketing due to her several years of experience as produce manager of the retail chain owned by Polagroservice Company; and her practical experience since she and Yuriy established their small business. The couple considered their business stable and was not planning changes. One sales outlet used to realize gross profits of 600-700 UAH ($US 120-140)/day in peak season. And, this was a reasonable living for the couple.

In addition to the trade at the city market, Yuriy tried to sell small quantities of produce through other sales channels in Poltava, in particular through the Polagroservice Company. Polagroservice is a prominent partner of the Agricultural Marketing Project (AMP) in Poltava. Through this connection AMP specialists learned of the Omelyanenko’s and since the summer of 2004 they have become an AMP client. Since becoming a client Yuriy has actively participated in AMP seminars and round tables dedicated to fresh produce market development; and, he has taken advantage of consultations provided by AMP specialists. During AMP seminars and workshops Yuriy often spoke, as a small wholesaler, to local producers informing them about the assortment, volumes and quality of produce he was ready to purchase. Soon he was able to increase significantly purchase volumes of locally produced fruits and vegetables from AMP farmer clients. Also, because AMP has offices in Odesa and Crimea the Omelyanenko’s have been able to develop more rational buying practices and arrangements with AMP farmers for produce they continue to obtain from farmers in Southern Ukraine. Finally, the market information published in AMP’s Agro-review journal has been successfully utilized by the Omelyanenko’s because it has helped them identify good farmer suppliers and know what prices to offer.

Seeing the positive potential of Omelyanenko’s’ family wholesale business, AMP took interest in helping to develop this budding wholesale firm. AMP specialists worked to support negotiations of the Omelyanenko’s with two other retail outlets – Serviceproduct grocery chain; and, the Furshet chain of supermarkets Poltava store (opened their first store in Poltava last fall). After first opening Furshet Poltava received all its produce from Kyiv, and consequently the quality was only satisfactory, not good. At the recommendation of AMP specialists Furshet Poltava signed an agreement with Mr. Omelyanenko for a supply of locally grown fruits and vegetables. In fact, Yuriy is very likely the only supplier who "risked" signing a contract with Furshet Poltava for payment on a deferred basis – because most agricultural producers in Poltava oblast are not willing to work using bank transfers.

Through their working relationship with AMP Yuriy and Svetlana Omelyanenko have increased the number of sales outlets to six (6) at the city market where they started; and, are constructing a small 30m² storage facility to preserve and extend the shelf life of their produce. In addition, the Omelyanenko’s opened two (2) more sales outlets at another residential city market, one of which is a regular shop of 30m² and able to offer produce sales year-round. In total, employment has gone from 3 to 10 persons, not including the Omelyanenko’s, and includes two (2) drivers who help Yuriy collect produce from AMP farmers in the Southern regions of Ukraine. To help insure effective growth of his business he has taken advice and purchased a refrigerated mini-bus which will help reduce losses of highly perishable product during transportation and extend the shelf life of the product once placed on his or his customers display counters. Taking into account the product supplied to the chains - Furshet, Polagraservice, Service product- and, his own outlets the Omelyanenko’s gross profit from the business has grown 400%/week at peak season (conservatively estimated) in one and a half years time. This has been accomplished together with help from AMP.

When talking about business ideas and plans for the future, the Omelyanenko’s are determined to continue to expand and optimize their wholesale business, and based on what they have learned from AMP seminars and workshops dedicated to modern marketing practices, as well as the one-on-one advice received from AMP specialists Svetlana is contemplating the idea of creating a distribution center with cold storage in a city suburb, so that they can evolve to a professional wholesaler able to provide full services to retailers in Poltava.

It has been a great pleasure for AMP specialists to work with this family business and to see it grow from a typical farmer to customer middleman business to a true wholesaler trader providing services to the customer. It is this kind of small business that AMP is anxious to assist because they represent the future of the Ukrainian wholesale trade.