Export Potential of Odessa Region_ENG_final

8/19/2019 Export Potential of Odessa Region_ENG_final

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Table of content

Introduction........................................................................................................................................................ 3

1. Vegetable cultivation ............................................................................................................................... 4

1.1. Production of basic cereal crops ......................................................................................................... 4

1.2. Grain processing ................................................................................................................................. 6

1.3. Production of basic oil crops ............................................................................................................... 8

1.4. Fat-and-oil industry ............................................................................................................................. 9

2. Live-strock&poultry industry and conversion products ......................................................................... 10

3. Fruit and vegetables ............................................................................................................................... 14

3.1. Fruit and vegetables.......................................................................................................................... 14

3.2. Nuts/Peas .......................................................................................................................................... 16

3.3. Tomato paste .................................................................................................................................... 17

4. Fisheries sector....................................................................................................................................... 18

5. Logistical peculiarities of the region. Competitiveness factors ............................................................. 20

5.1. Sea ports characteristics. Current situation and opportunities ........................................................ 20

5.2. Railway transport .............................................................................................................................. 28

5.3. Vehicles ............................................................................................................................................. 32

5.4. Air transport. Reloading potential for parishable products .............................................................. 35

6. Evaluation of export potential in the sectors with consideration of production and logistic potential ...... 36

6.1. Evaluation of resource basis ............................................................................................................. 36

6.2. Evaluation of export potential .......................................................................................................... 36

7. Summaries and recommendations. SWOT-analysis of economic sectors ............................................. 37


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Introduction

Rural economy is one of the most important sectors of Odessa Region economy. In 2014 30,2

thousand people were employed in the arricultural sector.

The area of agricultural dands of the region is 2204,7 thousand hectares including 1959,2thousand hectares of arable land. The structure of cultivated area mosty includes cereal crops and

and grain legumes (64%), industrial crops (27%), potatoes and vegetables (4%) and feed crops

(4%).

In 2015 Odessa Region presented 4,2% of gross product in Ukraine, including 5% of crop

production and 2,7% of livestock farming.

In 2015 specific weight of crop production in total amount of agriculture gross product was 81,1 %,

and livestock farming product — 19,9 %.

The main competitive advantage of Odessa region is well developed infrastructure.

Odessa mainly concentrates major logistic companies with well developed business connections in

various countries of the world, traditionally these connections are maintained throughout many

years.

Depending on climatic and natural conditions of Odessa region and according to its agricultural

specialization there can be enlisted the following zones:

Stock-raising and grain zone (Savranskiy, Anan’evskiy, Baltskiy, Kodymskiy, Kotovskiy,

Krasnooknyanskiy and Lyubashevskiy rayons);

Stock-raising zone with well developed production of sunflower (Velikomykhaylovskiy,Berezovskiy, Ivanovskiy, Nikolayivskiy, Rozdilnyanskiy, Shiryaivskiy and Frunzinskiy rayons);

Milk, vegetable and poultry zone (Bilyaivskiy, Ovidiopolskiy, Kmonternivskiy rayons);

Stock-raising and grain zone with well developed viticulture and pig-breeding (Belgorod-

Dnistrovskiy, Saratskiy, Tarutinskiy, Bolgradskiy, Izmayilskiy, Reniyskiy, Tatarbunarskiy,

Kiliyskiy and Artizskiy rayons).


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1. Vegetable Cultivation

1.1. Production of cereal crops

Climatic and natural conditions allow Odessa retion to cultivate the main cereal crops and to take

the crops much higher than amounts needed for internal consumption.

For the last decade the region has significantly increased the grain production. At the beginning of

2000 the average crop was approximately 2,6 mln. tons and by now the average five year index

has increased for 22 % to 3,18 mln tons.

Within relatively constant cultivated areas the grain production has increased considerably for the

account of the crop yield growth for the last five years. The major agricultural holdings andneighbouring husbandries have continuously increades use of grain production technologies with

high-yield crop cereals of Ukrainian and foreign selection.

According to preliminary data the gross grain harvest in 2015 was 3484,7 thousand tons (in weight

after processing), that is 5,2% less than in 2014.


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Grain, corn and barley are the main cereal crops with a harvest share of 90%. For the last five years

there has been considerable change in cultivated areas structure: the areas with grain and corn have

expanded for the account of the areas under barley, legumes and other.

Structure of Cultivated Areas under Cereal Crops

Grain

For the previous five years the average grain cultivated area in Odessa region has been of 505

thousand hectares. Meanwhile, the harvest varied within 0,9-1,8 mln tons. The grain yield mainly

depends on weather conditions. The minimal harvest was collected in 2012 and the maximum – in

2015.

Cultivated Areas, Crop Yield and Grain Harvest


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Barley

The barley production in Odessa region has been relatively constant for the last five years. The only

exception was a year 2012 when considerable share of sowing was damaged from unvavourable

conditions of overwintering. The production stability is observed against the harvest growth and

downsizing of cultivated areas.

Winter barley serves as basis for production and its share is 75% of the toral barley area in the region.

Corn

Cultivated areas under corn in Odessa region are mainly expanded for the last decade. Though, the

crop yield in Odessa region is significantly lower the index over the country. That is due to moisture

deficit in the South of Ukraine.

1.2. Grain processing

For the last 10 seasons the flour production remained relatively stable in Odessa region and

decreased mainly due to demographic situation and alterations in product preferences of the

population. The maximum flour volume was produced in 2008 in the amount of 137 thousand

tons.

In 2015 market volume decreased for 12% comparatively with the same period in 2014.

The volume of flour consumption is mainly under impact of the following factors:

Volume of internal consumption defined by:- population;

- population purchase power;


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- price dynamics for baked products in relation which the rationalization of bread share occurs in

the average structure of food consumption;

Expenditure increase for the flour production, that in its turn lead to decrease in enterprises’

profitability;

Demand for fluor on the external market.

In 2015 24 companies produced fluor in the volume of 88,2 thousand tons.

ТОР -10 Fluor Producers in 2015

Company Title 2013 2014 2015

Kulindorivskiy Factory of Baked Products, PE 53 476 58 893 47 440

Bilgorod-Dnistrovskiy Factory of Baked Products, PLC 9 265 8 264 10 650Farming Husbandry Kurtsaeva F.S. 2 908 3 978 3 763

Protos – Agricultural Company, Ltd. 2 405 2 687 2 768

Agrofirm – Khlibna Niva, Ltd. 1 887 1 784 1 400

Zernoproduct, Ltd. 3 370 2 581 1 322

Suzir’a - Firm, Ltd. 5 583 3 314 1 167

Lad, Ltd. 2 445 2 570 1 154

Grain Mill, Ltd. 841

ProdService, Ltd. 1 166 1 192 787

Total ТОР-10 82 505 85 263 71 292

The leading producers of flour simultaneously do not act as the leading exporters.

Exporter

Export Volume 2015/16 МГ,

thousand tons

Odesskiy Karavai 3,417

Izmayil Elevator 2,292

Tavria-V 1,518

TH «Bulkin» 1,492

TH «Organic Food» 0,796

Belgorod-Dnestrovskiy KHP 0,689

Total amount 10,204

Therefore, being one of the leading producers of grain in Ukraine Odessa cannot employ its

potential in full amount to process cereal crops.


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1.3. Production of basic oil-bearing crops

The main production of oil-bearing crops in Odessa region is represented by sunflower and coleseed.

For the last years the total cultivated area under oil-bearing crops is constantly expanding mainly for

the account of expanded sunflower areas. In 2014 the total area of oil-bearing crops 510,6 thousand

hectares.

Historically the main oil-bearing crop for Odessa region is sunflower. For many years share of

sunflower in the structure of total cultivated areas under oil-bearing crops was about 90% in theregion. Though, in the season of 2006/07 there was a tendency to expand the coleseed areas. As a

result the sunflower share decreased to 75- 80%.

After the swift growth of coleseed production in the period from 2005 to 2008 there started its

continuous decrease in Ukraine and in Odessa region particularly. This tendency leaded to decrease

of specific weight of coleseed in the structure of sowing. In the season of 2014 coleseed share was

23% against 44% in the seafon of 2008/09.

The opposite situation is observed in the market of soybean, cultivated aread of soybean have a

positive tendency. In the period from 2009 to 2014 the areas of soybeans in Odessa region increased

for 60% from 6,7 to 10,7thousand hectares. According to the estimations the tendency to expandsoybeans areas shall be valid for the next 3-4 years due to its high demand. Though, in Odessa region

considerable expansion of the soybean areas is unlikely due to lack of moisture in the region. Mainly,

soybeans are cultivated on the irrigated areas. Further expansion of soybean areas is possible in

compex with the irrigation system development.

Sunflower

For the period of 2006-2014 sunflower production increased considerably. Cultivated areas under

sunflower expanded from 230 thousand hectares in 2006 to 415 thousand hectares in 2014.

Cultivated areas became the main factor in output expansion.

The chief incentive for the expansion of areas under sunflower is its high price/margin. Besides,

sunflower possesses a number of advantages over the other crops. The main one is the

comparative stability of yield in unfavourable weather conditions and tolerange towards drought.

Even in dry agricultural season the sunflower yield can decrease for less that one third, meanwhile

the corn yield can be lost for 60% or even more.

Owing to constant expansion of the cultivated areas the croppage of sunflower raised up to 750

thousand tons in 2015.


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Coleseed

Sown area under coleseed in Odessa region for the recent years mainly reduced. Nevertheless,

gross yield remained high due to the stability or even growth of productivity. Among the main

reasons for the reduction of areas are the following:

- Extremely high risk of production (weather conditions in recent years have been unfavorable for

producers);

- Decrease in profitability of coleseed production, particularly in small farms;

- The need to comply with crop rotation;

- Absolute dependence on the export market. More than 95% of the harvested crop of coleseed in

Ukraine is for export.

1.4. Fat-and-oil Industry

In Odessa region processing of oil material is limited to sunflower as the basic oil crop of the

region. The total capacity of sunflower processing in Odessa region is 2,6 mln tons per year (14,5

mln tont in Ukraine).

The following companies are the leading ones in sunflower processing in Odessa region:

Owner Enterprise

Processing Capabilities,

thousand tons per year

Cernel Ukrainian Black Sea Industry 666

Creativ Odessa Oil Plant 265

Delta Vilmar Deltavilmar CIS 400

"Bessarabia-V" 265

ADM Ilichevsk Oil Plant 230

Risoil S.A. Bio oil Universal Ukraine 85

Allseeds «Allseeds Black Sea» 666

Share of Odessa region in the production of raw sunflower oil in the seasons of 2011/12- 2014/15

was 3%. Almost all the oil produced by these companies is exported to the other countries. This

process in basically supported by the location of these companies: almost all of them are located

in ports.

Production of sunflower oil in Odessa region, thousand tons

Owner Enterprise 2011/2012 2012/2013 2013/2014 2014/2015

Cernel Group Ukrainian Black Sea Industry 197,79 171,03 213,82 211,60

Creativ Group Odessa Oil Plant 83,17 32,26 33,97


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Vilmar Deltavilmar CIS 108,76

"Bessarabia-V" 46,77 63,85

ADM Ilichevsk Oil Plant 90,87 59,72 85,83 94,23

Risoil S.A. Bio oil Universal Ukraine 38,37 32,04 37,38 34,60

Total amount 129,24 91,76 123,21 128,83

2. Live-stock farming, poultry and conversion products

At present the total number of live-stock and poultry belongs to private husbandries Odessa

region. Eventually, in 2015 private husbandries owned 86,1% of total live-stock number (2014 –

86,3%), including cows – 89,2% (89,0%), pigs – 70,2% (71,8%), sheep and goats – 86,7% (85,5%),

poultry – 97,6% (97,0%).

In the rating of cattle numbers in herds Odessa region takes 8th

place, cows – 9th

place, pigs – 7th

place, sheep and goats – 1st

place. In poultry population rating Odessa occupies 15th

place.

Livestock and Poultry Rate in Ukraine and Odessa Region in all the Husbandry Categories,

thousand heads

2011 2012 2013 2014 2015

Total

Odessa

region Total

Odessa

region Total

Odessa

region Total

Odessa

region Total

Odessa

region

Cattle, Total 4425,8 190,2 4645,9 198,9 4534,0 206,6 3884,0 191,7 3776,5 188,6

Cows 2582,2 108,0 2554,3 107,6 2508,8 108,7 2262,7 104,5 2172,3 102,2

Pigs 7373,2 397,4 7576,7 390,1 7922,2 404,1 7350,7 371,6 7093,0 367,0

Sheep and Goats 1739,4 410,1 1738,2 403,0 1735,2 409,3 1371,1 381,3 1327,2 360,0

Poultry, mln heads 200,8 4,8 214,1 5,0 230,3 5,3 213,3 5,1 210,0 4,9

The biggest population of cattle and poultry in agricultural enterprices is located in the followingrayons of Odessa region:

Cattle (more than 2 thousand heads) - Berezovskiy, Saratskiy, Shiryaevskiy, Oviliopolskiy

and Artsizskiy

Pigs (approximately 20 thousand heads) - Bolgradskiy, Artsizskiy, Tarutinskiy

Sheep and goats (more than 9 thousand heads) - Tarutinskiy, Bolgradskiy

Poultry (more than 10 thousand heads) - Belyaevskiy, Belgorod-Dnestrovskiy, Kiliyskiy,

Bolgradskiy, Saratskiy, Shiryaevskiy.


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Odessa Region: Number of Livestock and Poultry in Agricultural Enterprises, heads

Rayon

2012 2013 2014

Cattle Pigs

Sheep

and

Goats

Incl.

CaraculPoultry Cattle Pigs

Sheep

and

Goats

Incl.

CaraculPoultry Cattle Pigs

Sheep

and

Goats

Incl.

CaraculPoultry

Ananievskiy 383 6929 498 0 367 395 7596 679 0 0 446 8122 2455 0 53

Artsizskiy 2311 18395 2754 0 0 2293 18319 2908 0 0 2058 19979 1276 0 0

Baltskiy 244 1645 261 0 0 775 1579 239 0 0 930 1481 52 0 0

Belgorod-Dnestrovskiy 1598 8409 1078 0 65046 1599 6848 750 0 33118 1624 6170 586 0 31773Belyayevskiy 1632 2921 712 0 0 1565 2832 780 0 23240 1590 2678 955 0 33479

Berezovskiy 4123 1751 3924 1126 0 4138 1838 3017 826 0 3624 1130 2639 877 0

Bolgradskiy 1394 19662 8567 0 18641 1437 21366 9411 0 14629 1294 20122 9198 0 16785

Velikomykhailovskiy 1731 3071 817 0 47293 1561 2198 464 0 158 1464 2053 354 0 99

Ivanovskiy 934 4594 1799 0 0 738 5178 1484 0 0 671 5299 1361 0 53

Izmayilskiy 253 4371 980 0 0 260 4331 1038 0 0 180 3946 985 0 0

Kiliyskiy 1041 4972 4299 0 22886 1117 5492 4112 0 19100 1089 5549 4360 0 19905

Kodymskiy 254 1946 69 0 559 270 2000 79 0 368 178 2177 107 0 162

Kominternovskiy 856 1751 2070 0 1780 986 2002 1322 0 68 221 764 1022 0 0

Kotovskiy 1140 1458 757 374 0 1079 1424 788 343 0 665 1558 904 379 0

Krasnooknyanskiy 1870 1236 1328 958 758 1814 909 1511 1028 750 1467 340 1527 941 425

Lyubashevskiy 1064 1270 877 0 2643 965 965 676 0 7881 944 964 748 0 4027

Nikolayevskiy 0 606 1191 0 0 50 598 839 0 200 0 276 874 0 200

Ovidiopolskiy 2300 4163 51 0 294 2457 4239 54 0 180 2239 3285 85 0 10

Rozdilnyanskiy 1029 1507 1110 209 0 1146 1800 1257 199 0 1196 1583 974 119 0

Reniyskiy 152 1734 1871 0 8043 156 1389 1200 0 2945 67 870 619 0 0Savranskiy 317 604 234 0 0 280 237 0 0 0 200 219 0 0 0

Saratskiy 4774 5195 4845 0 0 3943 7558 4929 0 9938 3538 7774 4354 0 16362

Tarutinskiy 808 14597 12931 4824 1595 370 18861 14565 5429 1626 327 19382 12485 5419 1155

Tatarbunarskiy 177 109 1658 0 0 136 43 1153 0 0 56 66 1153 0 0

Frunzevskiy 238 215 1341 0 0 24 417 1355 0 0 26 479 1209 0 0

Shiryaevskiy 3416 5808 3712 0 8535 3061 4916 3024 0 11093 2722 4370 2220 0 10651


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The predominance of livestock production share in private farms leads to the fact that Odessa

region is not fully using its favorable natural and climatic potential for forage production and the

potential for effective development of the livestock industry. In the production of eggs region

occupies only 21 place in Ukraine, meat - 19 place, milk -16 place. Simultaneously Odessa region is

the apparent leader in production of sheep's wool in Ukraine.

In 2015 there was a tendency to decrease production of wool and milk while meat and eggs

production remained on the same level.

Livestock Production in Ukraine and Odessa Region, thousand tons2011 2012 2013 2014 2015

Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region

Meat (carcass

weight) 2143,8 47,2 2209,6 46,4 2389,4 46,5 2359,6 47,1 2265,2 48,6

Milk 11086,0 397,3 11377,6 397,9 11488,2 402,3 11132,8 405,9 10682,4 385,1

Eggs, mln pieces 18689,8 397,1 19110,5 353,7 19614,8 355,1 19587,3 357,7 16780,39 355,1

Wool, tons 3877 1454 3724 1443 3520 1425 2602 1437 2261 1208

Honey 70,3 3,4 70,1 2,6 73,7 2,8 66,5 2,0 70,0 2,2

Production and consumption of basic livestock products per capita in Odessa region is lower than

in a whole across Ukraine. The self-sufficiency level for these products is below 100% in the region,

that reduces the ability to export at the present time.

Consumption of Livestock Products in Ukraine and Odessa Region, kg/individual

2011 2012 2013 2014

Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region

Meat and meat

products51,2 44,4 54,4 46,8 56,1 48,1 54,1 49,0

Milk and dairyproducts 204,9 180,0 214,9 185,4 220,9 192,0 222,8 205,5

Eggs 310 302 307 290 309 292 310 293

Vegetables and

gourds 162,8 174,8 163,4 171,3 163,3 166,5 163,2 173,0

Fruit, berries,

grapes 52,6 66,7 53,3 60,1 56,3 59,9 52,3 58,0

Livestock Production in Ukraine and Odessa Region, kg/individual

2011 2012 2013 2014

TotalOdessaRegion Total

OdessaRegion Total

OdessaRegion Total

OdessaRegion

Meat and meat

products46,9 19,8 48,5 19,4 52,5 19,4 54,9 19,7

Milk and dairy

products242,5 166,3 249,5 166,4 252,5 167,9

258,9 169,4

Eggs 409 166 419 148 431 148 456 149

Vegetables and

gourds 215 221 220 198 217 171 224 183

Fruit, berries,

grapes 41 37 44 34 50 35 46 31

Rate of Livestock Products Self-Sufficiency in Ukraine and Odessa Region, %

2011 2012 2013 2014


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Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region

Meat and meat

products91,6 44,6 89,2 41,5 93,6 40,3 101,5 40,2

Milk and dairy

products118,4 92,4 116,1 89,8 114,3 87,4 116,2 82,4

Eggs 131,9 55,0 136,5 51,0 139,5 50,7 147,1 50,9

Among the existing basic features ot reasins of insufficient development in the sector of livestock

farming in Odessa region we can outline the following:

predominance of production quotas in the private sector of the economy that leads to the

risk of raw material exposure to the market that does not meet the requirements in quality

indicators;

lack of stability and government support of agricultural producers, unpredictable pricing

policy, high level of capital intensity;

need for substantial investments;

most agricultural producers are not familiar with modern trends in the domestic and global

market of agricultural products or with the new intensive technologies;

production retardation generates high cost of goods, that leads to a lack of

competitiveness of Ukrainian agricultural producers in an open market;

trend for the agricultural enterprises to give preference to agricultural crop production

(cereals, oilseeds, etc.), due to its higher profitability and a high export potential. This leads

to a reduction in areas under forage crops, often to the elimination of less profitable or

even unprofitable livestock units, a decrease in the number of employed in agricultural

production, disruption of crop rotation and farmland degradation.

Odessa region has enough potential for areas of hayfields and pastures also for production of the

other baiting that is essential for successful development of livestock sector.

In 2014-2015 a number of agricultural companies invested into development of livestock

complexes. For instance, reconstruction of milk factory “Stud Farm named after Posmitnogo” Ltd

for 500 cows has been competed and reconstruction of milk factory with lactorium construction

for 600 cows in Agrofarm «Petrodolinskoe» of Ovidiopolskiy rayon and hog producing complex for

20 thousand heads in Agrofirm «Vladiscke Podvirya» of Ivanovskiy rayon is now ongoing.

Also reconstruction of another 7 cattle farms and complexes including: 3 hog complexes for 18, 27

and 12 thousand heads, 4 milk farms with tonal quantity of 1696 cows.

Ramping up via quality improvement of raw material and final products will allow livestock

producers of Odessa region to use the export potential of the sector in its full amount.

Meanwhile, it is worth noting that in reality it is necessary to overcome technical obstacles on the

way to export Ukrainian meat products to the EU countries and other international markets. The

essence of the stated limits is in the restriction of EU countries for import of meat products

without prior EU certification of the producing companies. Therefore, the intention of Ukraine to

integrate itself into the European Union requires compliance of national producers and livestock

sector exporters with international legal provisions, in addition, they need to follow all the

international quality standards in the production process. In addition, there should be noted that

export to some countries, i.e. Middle East countries and other, require consideration of additional

provisions like the necessity to obtain specific certificates (i.e. Halal certificate).


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Due to some experience of Ukrainian companies entering the export markets for their effective

operation in importing countries the important role belongs to trade representatives or factoring

companies that deal with dissemination and promotion of Ukrainian products in the local retail

networks, participation in exhibitions and other relevant events.

Priority export directions for Ukrainian livestock products shall the countries of Asia and Africa. On

these markets there is a strong demand of poultry meat, pork and milk powder products.

Middle East countries market demands poultry meat, beef and lamb. Additiolanny, it might be

beneficial to investigate on the possibility to export stock oh the roof (lambs, cattle).Potentially lucrative goods for export might be the ones produced under the Private Lable for

international trade networks of food retail and HoReCa networks.

The first-rate processers of livestock initial product in Odessa region are Titan Ltd. (Kiliyskiy rayon),

PE «Garmash» (Kominternovskiy rayon), PLC «Vekka» (Kominternovskiy rayon), PLC «AMK»

(Artsizskiy rayon), Agricultural Complex «Drujba» (Saratskiy rayon), Eremeevskiy Meat Processing

Plant (Odessa).

Honey is also potentially profitable commodity for the export from Ukraine and Odessa region in

particular. High ratings of honey production and its quality characteristics get our country to the

first place in Europe and the third place in the world among honey producers. As of now Ukraineexports honey to the 22 countries. This fact evidences the acknowledgement of our commodities

as competitive ones in the international markets.

3. Fruit and Vegetable

3.1. Fruit and Vegetable

In Ukraine and in Odessa region in particular the pace of establishing new orchards and vineyards

is distinctly lower coparatively to stump extraction of the existing plants. This leads to decrease of

gross collection of fruit crops. In addition, production of this commodity is under strong impactweather and climatic conditions.

Odessa region possesses favourable weather and climatic conditions for cultivation of fruits and

vegetables. Though, this potential is not employed in its full amount. At present Odessa region

occupies 10-11 place in the rating of vegetable production with its share of 5%, and 13th place in

the rating of fruit and berries production with the share of appr. 4%.

Fruit and Vegetable Production in Ukraine and Odessa Regio, thousand tons

2011 2012 2013 2014

Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region

Vegetables andgourds

10561,9 575,0 10815,4 520 10667,9 455,3 10322,7 500,6

Vegerables 9832,9 526,9 10016,7 472,9 9872,6 408,6 9637,5 437,8

Gourds 729,0 48,1 798,7 47,1 795,3 46,7 685,2 62,8

Fruit and berries 1896,3 88,0 2008,7 81,2 2295,3 82,9 1999,1 74,0

Incl pomaceous

fruits 1118,3 30,6 1297,7 30,5 1391,4 28,8 1251,3 24,9

Stone fruits 545,9 47,2 489,5 41,8 651,5 45,2 512,0 40,7

Berries 119,5 3,2 124,5 3,4 136,4 3,1 132,9 3,0

Grapes 521,9 229,1 456,0 212,3 575,4 256,6 435,6 263,7

Nuts 112,6 10,8 97,0 9,4 116,0 10,7 105,0 9,7

Production and consumption indices of the basic vegetable and fruit products per capita in Odessa

region is considerably lower than the average index of Ukraine. The level of self-sufficiency with


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these products is less than 100%, therefore, this fact decreases export benefits for the region at

present.

Consumption of fruit and vegetables in Ukraine and Odessa Region, kg/individual

2011 2012 2013 2014

Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region Total

Odessa

Region

Vegetables and

gourds 162,8 174,8 163,4 171,3 163,3 166,5 163,2 173,0

Fruit, berries,

grapes 52,6 66,7 53,3 60,1 56,3 59,9 52,3 58,0

Production of fruit and vegetable in Ukraine and Odessa Region, kg/individual

2011 2012 2013 2014


OdessaRegion Total

OdessaRegion Total

OdessaRegion

Vegetables and

gourds 215 221 220 198 217 171 224 183

Fruit, berries,

grapes 41 37 44 34 50 35 46 31

Rate of fruit and vegetable self-sufficiency in Ukraine and Odessa Region, %

2011 2012 2013 2014


OdessaRegion Total

OdessaRegion Total

OdessaRegion

Vegetables and

gourds

132,1 126,4 134,6 115,6 132,9 102,7 137,3 105,8

Fruit, berries,

grapes

77,9 55,5 82,6 56,6 88,8 58,4 88,0 53,4

The largest producers of vegetable products in the Odessa region are LLC "Pivden agro-processing"

(Belyaevsky rayon), Agrofirma “Evrika” Ltd, PE “Sevrig” (Ovidiopolskiy rayon), FH “Victoria”

(Tatarbunarskiy rayon), Agrofirma "Fakel" (Belyaevsky rayon), "Agrosvit" Ltd (Ovidiopol rayon).

The leadion producers of fruit and berries in Odessa region are «Dunaisky Argo» Ltd (Kiliyskiy

rayon), PE “Vinogradar” (Belgorod-Dnestrovskiy rayon), PE «Comsomolets» (Artsizskiy rayon), PE

«Comuna» (Lyubashevskiy rayon), “Magic” Ltd (Ovidiololskiy rayon), “Liman” Ltd (Ovidiololskiy

rayon), «Pindenagropererabotka» Ltd (Belyaevskiy rayon).

At present, the main problems of the fruit and vegetable industry in Odessa region are reduction

of production of these crops, absence of the required number of canneries and plants for their

processing, the lack of an established system of vegetables storage, which leads to a rise in the

cost of production, a large crop losses and as a consequence the region does not use its export

potential.

To overcome the problem it is necessary to create conditions for private investment in the

reconstruction of existing and construction of new processing plants, to create conditions for theformation of industrial zones of cultivation of these crops, to explain to the locals the need to

establish production and marketing cooperatives, to create a regional association of producers

and processors of vegetable crops, to develop measures to create new and reconstruction of

existing vegetable stores, create regional utilities on the harvesting and collection of vegetable and

melon production.

As for the EU countries, the export to these countries is limited. Though, theoretically Ukrainian

producers are able to compete with Italians and Spanish in the markets of Central and Northers

Europe.

But in reality this target is not so easy to achieve. It is not exceptionally about preferences of localconsumers that are allegedly not ready to purchase Ukrainian products or protective measures

taken against these products. While shipping to Western Europe the cost of logistic services voids

price advantage of Ukrainian companies. Under these circumstances Odessa region would choose


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Balkan region for export considerations. In these regions we can observe lucrative pricing for

logistics; therefore, there is a possibility to retain pricing advantage of the products. Besides, this is

a good starting point for further market expansion towards Central Europe.

One of the possible solutions in this situation can be a creation of separate logistic network,

possiply in partnership with European companies. It would be rather difficult for small and midsize

companies to do so without cooperation consideration.

With the unavailability of sustainable financial support for promotion of production (i.e. for the

advertising campaigns in the countries of retail) one needs to pay special attention towards searchof new potential customers and partners in the market of outlet.

The experience of Ukrainian fruit and vegetable exporters shows that the competitivemess is

much weaker in the sector of premium class products in Eastern Europe. The competitiveness

actually occurs rather between exporters than with local companies. Under this segment we can

also detect some “usual” competitive advantages of Ukrainian products: after the Ghryvna

devalvation they turned to be cheaper than European analogues, that means, these products

became more affordable for local consumers. One more important thing here shall have effect:

the expansion towards the neighbouring market is not supported with big advertising campaigns;

therefore, still there is no need for additional expenditures under this line. Traditionally, it is much

easier to achieve agreements with small networks comparativery with national ones with thesupermarkets all over the country. But due to the volume of sales and high logistic expenditures

the profit margin is much lower here. Successful sales in local supermarkets allow to strenghthen

the company position in the negotiation with the leading retailors. If a company enters the

market with more expensive products most probably it would need to take considerable

expenditures, though it will obtain more income under this condition.

Good demand for your products will always be the most important argument in negotiations.

Although sales in local networks are important for you as a separate provision. They would allow

understanding what products are in high demand and eventually making sufficient changes in the

action plan for the future.

Experience of Ukrainian exporters shows: food manufacturersneed to spend six months to a year

to enter the Eastern European market. As a rule, the national networks prefer to make contracts

at the beginning of a year. That is why companies have a next year to get all the permits and start

working with local networks and in 2017 to begin mass export already working with major retail

chains.

When entering foreign markets the company requires active use of local experts. If working

independently without support of major retail chains Ukrainian producers have to follow all

international rules, for example - in the field of product labeling where standards differ

significantly from the usual Ukrainian. However, it is equally important that it is often tnecessary

to hire local professionals for better understanding of the local market.In order to successfully enter the international market it is necessary to deeply explore it by

examining the local customer preferences and take into account that even if this customer is

looking for a cheaper product he is not ready to tolerate the decrease in quality.

At present fruit and vegetables produced in Odessa region are in active demand. First of all this

statement is valid for nuts and tomato paste.

3.2. Nuts

Deliberate formation of walnut forests in Ukraine started in 2009. Odessa region possesses a very

small number of husbandries with big nut gardens. Basically, they are walnut ones. The major are

enlisted below:


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Husbandry Rayon Variety of nuts Area, hectares

Ltd. «Nika Invest Agro» Bolgradskiy Walnut Appr. 90

FH «Agro-Marin» Reniyskiy Walnut Appr. 30

PE «Marlen» Rozdelnyanskiy Walnut 25

FH «Orekh Plus» Kotovskiy Walnut Appr. 20

PE «Max Agro» Izmayilskiy Almond Appr. 26

The areas under hazelnut do tot exceed 1-3 hectares.

Walnut is one of the most profitable and lucrative crops of modern horticultura in Ukraine. Highconsuming value of the nut secures high demand and comparatively easy marketing. Ukraine

harvests up to 22,5% of the total ingathering in Europe, meanwhile, the export share increased up

to 30%.

As of now Ukraine has the following nuts export directions:

Export of high quality nut for consumption in fresh to the EU countries and Northern-

Western Asia,

Export of moderate quality nut for internal use in the CSI markets and partially in Asia;

Export of peeled nut;

Export of byproducts (oil, oil meal, BAAs)

One of the major Ukrainian nut exporters in "UkrNut Company" PLC(Odessa).

3.3. Tomato Paste

Ukraine is considered to be a major producer of tomatoes. Through the south of the country,

including Odessa region, there passes so-called global "tomato belt" - climatic zone with plenty of

sunny days that are favorable for cultivation of industrial tomatoes. This area allows to cultivate

tomatoes with high solids content especially important for producers.

Ukraine has substantial potential for tomatoes cultivation ant their further processing. At present

annual level of tomatoes production in Ukraine is approximately 1,6-2,0 mln tons with the share of

21% in total amount of production in the country. Quality of tomatoes and processing procedures

are under strong impact of weather conditions in the areas of tomato cultivation.

Specific feature of Ukrainian material raw material market is the fact that the majority of

husbandries cultivate small amounts (not more than 10 tons) of tomatoes. In addition, many

Ukrainian farmers are trying not to concentrate their production on one vegetary crop. Therefore,

they aim to decrease production process risks; meanwhile, they are incapable to form big

consignments because they “spread themselves” to a variety of vegetables.

The leading tomato processors choose either to develop a network of farmers-suppliers or set out

vertical integration to solve raw material problems.

The first-rate producer of tomato paste in Odessa region is Odessa preserving plant, PLC

“Pivdenagropererobka” and Agrofirm “Evrika”.

Creation of competitive production allows Ukraine to compete with the major tomato producers

in the international market. For the last decades the tomato paste export dynamics has a positive

tendency.


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4. Fisheries Sector

Odessa region is one of the leading fishery regions of Ukraine. Considerable amount of internal

water reservoirs and sea accessibility allow to obtain bioresources without any obstacles. At the

same time specific weight of Odessa region in the Ukrainian accessibility towards bioresources is

relatively low: 13% of catch in internal waters and 6,5% of catch in the sea.

Extraction of bioresources in Odessa Region and Ukraine, 2013-2014, thousand tons

Catch in internal waters 2013 2014

Ukraine 45,695 39,092Odessa region 5,462 5,123

Catch in sea 2013 2014

Ukraine 78,848 51,640

Odessa region 4,238 3,342

Source: State Committee of Statistics of Ukraine

Fishery complex of Odessa region is represented with 38 water reservoirs including 31 pond and 7

water storages with total area of more than 4 thousand hectares of water surface.

Aquaculture in Odessa Region, 2014Name of water body Quantity Area, thousand hectares

Pond 31 3,305

Water storage reservoir 7 0,685

TOTAL 38 4,021

Source: data provided by State Fishery Agency of Ukraine

Production potential of these water resources in the region is 3 thousand tons per year.

Fishery complex of Odessa region is represented with commercial fishing out and specialized

commercial fish-farm.

Fisheries Industry in Odessa Region, 2014

Commercial fishing-out Specialized commercial fisheries

Number of companies (SP, Ltd) - 90 Number of water reservoirs – 11

Fishermen – 1720 Area of water reservoirs – 74,803 thousand hectares

Vessels – 838,

Boats – 830 items.

Fishermen – 484 individuals

Vessels – 178 items.

Source: data provided by State Fishery Agency of Ukraine

Chief Market Players

Leading producers of fish and sea food in Odessa region, 2014

Company Catch, tonsTotal 8893,3

COMPANY "LIMAN" 2355,5

"REPIDA" 869,5

"VMS-10" 836,5

"FIF-2012" 527,6

"BORA" 470,4

"HOLOD-SERVICE" 356,8

SP"TILIGUL PLUS" 337,4

"KRASNIY RYBAK" 260,8

"OZERNE 2012" 241,5

"VIDRODZHENNYA" 198,6

Source: State Committee of Statistics in Ukraine, calculations provided by Ukrainian Agricultural Consulting


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Drivers and Tendencies

A modern fish market in Ukraine is represented mainly by commodity average price category -

both marine and freshwater. Marine fish are sold mostly frozen, freshwater fish - fresh.

Fish production in different forms of property holdings is widespread throughout Ukraine and has

a tendency to expand, despite the considerable risks. Trends cultivation of freshwater fish in

Ukraine is quite large.

Fish and seafood market is characterized by a high degree of "shadowing", large amounts of fish

are produced and sold illegally. A significant part of the market is not structured, the

implementation is seasonal, often spontaneous.

In view of the environmental problems associated with a significant discharge of wastewater into

water bodies, as well as pollution of groundwater with herbicides and pesticides, in some places

there are significant problems with the quality of water for fish farming. This greatly increases the

incidence of fish and reduces its quality.

Unmet demand for fish in Ukraine is one of the main growth factors for this type of business.

However, the opacity of the market, a high level of shadow economy makes its investment

attractiveness limited.

Economic activity on the cultivation of freshwater fish in Ukraine is quite promising in terms of

several factors, namely:

- The availability of a significant production capacity and the potential to increase their

productivity;

- Pent-up demand for fish, including fish inexpensive varieties;

- Healthy eating demand (low-calorie and easily assimilated protein in the diet of people).

From water bodies suitable for the development of aquaculture in Ukraine is currently involved

only half, with about 60% of them used with low efficiency. One way to increase the production of

freshwater fish is to increase the productivity of water used.

According to market participants, Odessa is one of the most attractive for fish farming regions of

Ukraine. Odessa region has considerable production capacity, including both freshwater and

marine waters of the Black Sea. The prevalence of moderate-continental climate (mild winters and

warm summers) allows the fish to grow and gain weight faster than in regions further north.

A promising, according to the obtained results is an increase in the production of freshwater fish in

the Odessa area by a decline in production volumes and catch saltwater fish. This factor is not only

a local or regional, and global trend due to the reduction of fish stocks in the oceans and the

impossibility of its reproduction by artificial means. FAO (Food and Agriculture Organization of the

UN) predicts that by 2020 only 35% of the global food basket will be fish caught in the wild, and

65% - grown in aquaculture (fish farming in a controlled fresh water) or Mariculture (growing in

seawater).

In the matter of identifying the most promising type of fish to the production will be in the firstplace, the level of purchasing power of the population and bring the level of fish consumption in

Ukraine is physiologically necessary.


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Important tasks of the sector in the near future are the development of infrastructure and the

logistics of the delivery system of fish products to the consumer, the introduction of advanced

production technology and its fish processing enterprises with modern equipment with new

equipment.

The development of the fishing industry will largely depend on the level of investment required for

the introduction of new technologies of production and processing. In addition, the strong

influence of the state will remain on the functioning of the sector as a whole. In this connection, it

should be noted that the deregulation of the market processes can contribute to the overall"detenenizatsii" market, which will improve its performance indicators and investment

attractiveness.

Increasing the investment attractiveness of the industry can promote and industrial fish farming in

the sea. Previously, this type of business activity was not possible, since it was impossible to assign

to a particular user of land for rent, but now it's real. According Gosrybagentstva specialists in the

Odessa region has good prospects for breeding, not only traditional types of fish, but also those

that are now imported: dorado, sea bass.

Ukraine. Estimation of and fishery products fish market, 2013-2015гг.

2013 2014 2015Consumption fund, thousand tons 623,7 479,4 452,1

Total catch of fich, thousand tons 225,0 91,2 94,6

Wholesale price of catch, thousand UAH 730,4 526,8 556,2

Retail turnover of fish, sea products, including fish in

tins (presenved fish), bln UAH*

7,0 7,1 3,3

*without consideration of market sales

Source: estimations provided bt State Fishery Agency of Ukraine

5. Logistical Features of the Region. Competitiveness Factors

5.1. Characteristics of sea ports. Current situation and their potential

There are 8 sea port and 1 fishery port on the territory of Odessa region:

Belgorod-Dnestrovskiy Sea Commercial Port

Izmail Sea Commercial Port

Ilichevsk Sea Commercial Port

Kiliyskiy Port

Sea Commercial Port «Yuzhniy»

Odessa Sea Commercial Port

Reni Sea Commercial Port Ust’-Dunaysk Sea Commercial Port

Ilichevsk Fishery Port


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Sea Ports of Ukraine

Source: SIF Service

The unique position of the Ukrainian ports (in the way of international transit corridors) and theirproximity to a number of key markets (Middle East, North Africa, Europe) significantly increases

the competitiveness of these ports.

Ports in the region occupy leading places in the export shipments of agricultural products,

including cereals and vegetable oil. For example, in 2014-2015 major ports of Odessa region

processed more than 60% of grain exports in total, and about 60% of oil exports.

The main sea ports of Odessa region for transshipment of grain and oil are the Yuzhniy, Odessa

and Ilyichevsk.

Ukraine. Structure of transshipment in sea ports, 2014-2015, %

Ukraine. Structure of vegetable oil transshipment in sea ports, 2014-2015, %

Source: data provided by SE « Administration of Sea Ports of Ukraine»


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In general, the major sea ports of Odessa region (Odessa, Ilyichevsk, Yuzhny) have a number of

advantages that give them a competitive edge when compared with ports in other regions,

namely:

- Good geographical position and the proximity of key markets for agricultural marketing

- Developed port infrastructure, including the availability of modern specialized and universal

cargo complex

- Developed access infrastructure, including roads and railways

At the same time, the small ports of Odessa region located at the mouth of the Danube river has

recently lost some of its cargo flow.

Capacities of Cereal Crops Transshipment

According to the research, capacities of sea ports of Odessa region for grain transshipment are of

29,3 mln tons , that is 63% of the national volumes.

Assessment of theoretical capacity for the export transshipment of cereal crops via ports of

Odessa region, 2015, mln tonsPort Terminal Transshipment capacity

Ilichevsk Sea Commercial

Port

Transbalkterminal (Cernell) 6,5

Ilichevsk grain terminal

Glencore

2,0

Ilichevsk Fishery Port 0,8

Yusniy TIS 7,0

Borivage, Privat 2,0

Odessa Loading complex «Brooklyn

Kiev»

CJSC «Ukrelevatorprom», ADM 3,5

PLC «Inzernoexport» 0,3SE «Odessa Port Elevator», 2,0

PLC «Transterminal Company» 0,5

Grain Complex «Olympex-

Coupe»/CHS

2,0

Reni Grain Complex Reni Line 0,7

Belgorod-Dnestrovskiy 0,5

Ust’-Dunaysk, Port Sector

Kiliya

Grain Complex 1,0

Izmayil 0,5

Total 29,3

Ukraine. Comparative characteristics of the major ports of the Black Sea for the grain

transshipment

Port Advantages Disadvantages

Ilichevsk Sea

Commercial

Port

- availability of three railway lines to the port

- deep-water quays and ability to load two vessels of

Panamax type simultaneously

- located in the sea harbor (no need to enter payable

channels, pay ice fees or clean channel bottoms)

- high level of terminal management

- insufficient capacities for grain reception from the

vehicles, this disadvantage automatically leads to

deprivation of cargo handling especially in comparison with

cargo receprion from railway carriages

- insufficient port area (with no possibility for further

expand)

- port additionally charges for vehicle admission to the

premises – 0,35 USD

- geographical location will not allow the grain delivery

from Luganskaya, Donetskaya, Zaporozhskaya andKharkovskaya oblasts due to high expenditures for

transportation especially in comparison with Yuzhniy and

Sevastopolskiy ports


23/39

Yuzhniy Sea

Commercial

Port

- Deepest berths (possibility of loading Cape-size type

vessels)

- Presence of significant capacities for simultaneous

storage of grain (380 thousand tons.) And high

intensity loading (25 thousand tons per day.)

- High capacity to unload the grain delivered by road

- Technologically literate line unloading of railcars,

which provides fast unloading and has the ability of

(the possibility of building additional equipment to

unload more cars at the same time)

- Own railway branch and high bandwidth of railway

haul routes "Black Sea-Chemical" that allows toincrease the total freight traffic by 1 million tons

without the need for significant investment in track

facilities.

- Located on the shores of harbour (no need to pay the

passage channels, fee collecting ice, there is no need

for periodic dredging of channels)

- impossibility to load simultaneously several capsize

vessels by contrast with Ilichevsk port

Odessa Sea

Commercial

Port

- Deep-water port (13.8)

- Ability to combine a variety of loading options, the

high technical and technological possibilities

- High quality of services due to the high competition

among freight forwarders (15 Forwarders)

- Located on the shores of a tharbour (no need to pay

the passage channels, fee collecting ice, there is no

need for periodic dredging of channels)

- Limited reception of railcars due to insufficient capacity of

the railway capacity (1 rail track). Despite the fact that the

tensity of the port and the station was somewhat

eliminated by the construction of the railway to Grain

harbor entrance from the station park "Odessa Port" in

summer of 2003 , the construction of the 2nd entrance to

the port is an important issue

- Inability to port infrastructure development due to its

location in the city center

- Insufficient length of berths for loading large vessels (the

depth of the quay walls is sufficient, but the vessels often

have to occupy next berth space and thereby deprive it of

the proper operation)

Ports capacities for vegetable oil handling

According to assessment the capacity of vegetable oil handling in sea ports of Odessa region in 3,6

mln tons.

Assessment of potential capacity to handle vegetable oil in the ports of Odessa region, 2015,

mln tons

Port Terminal Handling capacity

Ilichevsk Ilichevsk Oil Refinery 0,5

Oil extraction plant 0,8

Odessa JSC "Odessa Port Load

Complex"

0,3

Yuzhniy Terminal «Delta Vilmar» 0,5

JSC "AE Risoil Terminal" 1,5

TOTAL 3,6

Port reloading capacities for regrigerated and utilized cargoes

In Ukraine handling of container cargo is carried out in four sea ports (Odessa, Ilichevsk, Yuzhniy

and Mariupol) and one river port (Dnepropetrovsk).

On the whole the capacity of Ukrainian ports for handling containers in 4,6 mln TEU per year,

meanwhile half of it is distributed by pthe ports of Odessa region.

Ukraine. Assessment of Container Terminal in the Ports, thousand TEU

Port Terminal/Operator

Thousand

TEUOdessa SE Ukraine 2100

MetalUkraine 1000

Olympex Coupe 1500


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Novolog 50

Brooklyn-Kiev-Port 24

Novotex-Terminal 2100

Ilichevsk Ukrtranscontainer 1000

Ilichevsk Fichery Privat 1500

Yuzhniy TIS 50

Mariupol 24

Dnepropetrovsk 2100

Odessa transport junction is one of the most powerful in the sphere of container handling in

Ukraine and is of 2,1 mln TEU approximately. Odessa port concentrates about 50% of container

capacity of the country.

Odessa port is a leader in handling containers, continuously it takes more than a half of the whole

container turnover including export.

Ukraine already possesses functioning terminals and areas for loading of cereals in terminals with

the employment of container port equipment.

In Odessa region as in the biggest transport junction for container operation in Ukraine there is a

possibility to handle cereals in container terminals or load containers with cereals – in Odessa and

Yuzhniy.

Odessa region ports possess opportunities to handle refrigerated cargoes, fresh vegetables and

fruit.

Assessment of potential capacities of Odessa region terminals, 2015, thousand tons/yearPort Terminal Transshipment Capacity

Odessa PLC «Odessa Port

Refrigerator»

200

Ilichevsk Sea Fishery Port 100

TOTAL 300

Assessment of potential capacities of vegetable and oil terminals in Odessa region, 2015,

thousand tons/yearPort Terminal Transshipment

Capacity

Odessa Ltd. «Novoteh-Terminal» 300

PLC «Odessa Port Regrigerator»

Ltd. «Ukrainian National

Stevedoring Company»

Ilichevsk Sea CommercialPort

50

Reni 200

TOTAL 550


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Current Situation

Odessa region ports always have been in high demand due to their competitive advantages.

Therefore, in 2015 two ports of Ukraine took the leading places in volumes of cargo turnover:

Odessa port and Yuzhniy port.

Source: SE « Administration of Sea Ports of Ukraine»

Despite considerable growth of food cargo handling volumes ports of Odessa region still have a

wide leeway for further increase of cargo turnover.

Comparative table of actual volumes of food cargo handling in Odessa region ports

Cargo Maximum volume of

handling, mln tons

Available capacities for

handling, mln tonsGrain 23,9 29,3

Vegetable Oil 2,6 3,6

Food Commodities in

Containers

0,3 4,6

Handling of grain in the ports of Odessa region, 2013-2015, thousand tonsPort 2012 2013 2014 2015

Belgorod-Dnestrovskiy

Izmail 11,46 65,69 138,40

KiliaYuzhniy 5 776,47 6 165,26 9 139,79 9 763,30

Odessa 5 805,87 5 481,74 6 661,67 8 615,44

Reni 154,50 454,28 624,76 245,98

Ust-Dunaysk 11,00 18,20 39,80 15,40

Ilichevsk 4 486,40 3 835,51 4 593,04 5 088,49

TOTAL 16234,24 15966,45 21124,75 23867,01


Handling of vegetable oil in the ports of Odessa region, 2013-2015, thousand tonsPort 2012 2013 2014 2015

Belgorod-Dnestrovskiy

Izmail 12,92 40,45 53,49Kilia

Yuzhniy 421,58 599,72 1 005,62 954,41

Odessa 185,85 152,05 70,32 115,56


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Reni 2,9

Ust-Dunaysk 12,92

Ilichevsk 1 575,02 1 366,42 1 498,22 1 529,11

TOTAL 2182,45 2146,93 2614,61 2652,57


Перевалка продовольственных товаров в контейнерах, включая скоропортящиеся, через

порты Одесской области, 2013-2015гг., тыс.т Port 2012 2013 2014 2015

Belgorod-DnestrovskyIzmail 6,40 5,73 15,32 29,48

Kylya

Yuzhniy

Odessa 243,39 218,64 67,56 25,91

Reni

Ust-Dunaysk

Ilichevsk 5,70 8,00 29,10 25,20

TOTAL 255,49 232,37 111,98 80,59


Potential for development of port capacities in Odessa region

Sea ports of Odessa region due to their beneficial location and lucrativeness both for shippers and

exporters see further perspectives of development together with plans on further development of

capacities for handling of grain and oil crops or vegetable oil. There is a number of projects

declared in the ports of the region evidencing the above stated fact.

The biggest potential of development belongs to capacities for handling vegetable oil. Therefore,

according to announced plans Odessa region ports can increase theis capacities for vegetable oil

handling 77% to 6,4 mln ton in the nearest future, and in long-term perspective – for another

7,8% - to 6,9 mln tons.

Significant point is also the potential for the development of transhipment facilities for cereals.

Thus, according to current plans, in the medium term up to 2020 capacity of ports of Odessa

region could increase by 33% to 39,1mln.t, and in the long term to 2030 - by almost 22% to

47,6mln.t.

When deciding on the development of grain and oil handling capacity at seaports companies,

potential investors and seaports shall be guided by the following factors:

- Steady growth of the world's population

- High production and export potential of Ukraine on grain and vegetable oil

- Good geographical position of the region's ports.

In addition, the major ports of Odessa region are demonstrating steady growth in the processing

of cereals and vegetable oil, as well as there is a strong demand for services for handling these

types of goods for export.

Potential development of container handling capacity is small, because currently due to lower

purchasing power of the population against a background of devaluation of the Ghryvna is

reduced imports of various goods, including imported products (vegetables, fruits, etc.). In

addition, the current situation in Ukraine as a result of the ongoing military operations in the Eastof the country has also led to the fact that a large part of transit cargo in containers left for the


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Russian Black Sea ports. As a result, in the ports of Odessa region container terminal in

constructed at Quarantine Mole with design capacity of 0,7mln.t TEU.

Even before the financial crisis of 2008 some experts pointed out that Ukraine and the Black Sea

region as a whole already have a permanent excess capacity for the processing of container

cargoes. Offer of ontainer terminal capacities in Ukrainian ports has reached a level of demand

already in 2005.

Assessment of food supply processing in sea ports of Odessa region, mln tonsCargo Available handling

capacities

Capacity potential up

to 2020

Capacity potential up

to 2030

Grain 29,3 39,1 47,6

Vegerable oil 3,6 6,4 6,9

Food commodities in

containers, mln TEU

4,6 5,3 5,8

Source: assessment by AkrAgroConsult

Projects of grain trans-shipping complexes in sea ports of Odessa region, 2015Port Project/Terminal Potential capacity of

transshipment

Implementation period

Odessa Olympex-Coupe

Increased loading capacityby installing additional

shiploader, construction of

a new station

avtorazgruzki, increased

storage capacity

500 thousand tons 2016-2018

MetalUkraine/Olympex-

Coupe

Creation of grain complex

at the berth № 7, dredging

operations


Novotech-Terminal

Construction of elevatorsfor 110 thousand tons


Izmail Development of port for

transshipment of grain

through renewal of the

fleet of specialized

equipment (mobile and

vacuum loader),

development of port

infrastructure

500-700 thousand tons 2016-2018

Ilichevsk AE RisOil

Grain terminal construction

4,5 mln tons 2016-2018

Yuzhniy PLC «Trading House «GrainHarbour»

Construction of births №33

and 33а

PlC «М.В.Карго»

Construction of birth № 25

and reloading grain

complex

PLC «Transoil»

Construction of births №

27and 27б and reloading

complex of cereal crops

3,3 mln tons

4 mln tons

2,5 mln tons

2018

2023

2023

Reni Construction of reloading

complex for grain on the

premises of warehouse №6


Ust-Dunaysk PLC «Davos» 500 thousand tons 2023-2025


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Construction of terminal

for reloading of grain in

Kilia Port

Source: data provided by companies and ports

Plans for development of port infrastructure for sea ports of Ukraine in the sector related to

transshipment of vegetable oils for the period to 2038

Port Scheduled updates Expected results Investor

Ilichevsk Development of bulk platformfor vegetable oil

Increase of volumes forhandling of 0,3 mln tons per

year

Investor

Yuzhniy Construction of birth № 34а

and complex for handling of

vegetable oils

Increase of volumes for

handling 2,8 mln tons per year

PLC

«Borivage»

Source: SE « Administration of Sea Ports of Ukraine»

In recent years, Ukraine increases export shipments of grain, and it is not just about increasing the

volume of supplies, as well as to expand their geography. It is noted that Ukrainian grain is also

delivered to the countries of Southeast Asia. Researcher notes that the development of the grain

market of Ukraine in ongoing and its task is to meet the trend of the commodity market.Development of grain transshipment port infrastructure for the export creates conditions for

further development prospects of agricultural production.

5.2. Railway means of transport

Railroads of the region belong to the State administration "UkrZaliznytsia" and are related to the

Odessa railway nerwork. The length of the Odessa railway is 18% of the length of railways in

Ukraine. About 43% of the operational length of the highway Odessa is electrified lines, 73% of the

operational length of railways equipped with automatic block system, about 73% of the stations

equipped with electric centralization, the entire range of the railway operates train radio.


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Railways of Ukraine

Source: official web-site of Railway Department of Ukraine

Operating length of the main railway line in the boundaries of Odessa region is 4013.6 km, the

following 1725 km of them are electrified. Railway 1038 is adjacent to industrial outs with the

length of 2131.9 km. There are 17 separate technological processes of the railway and access

roads.The main feature of the Odessa railway is its seaside and frontier position: shipment

through major maritime ports provide external economic relations with more than 70 countries

around the world.


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Scheme of Odessa railways

Source: web-site of Odessa railway department http://odz.gov.ua/

Ukrainian railways service 18 seaports of the Black Sea and Azov basin. A number of port railway

stations do not longer cope with the volume of incoming shipments.

Port stations were built and equipped primarily for the processing of imports, which prevailed over

exports during the second half of the last century. But in future direction of the port operation has

changed radically with the processing of import to export.

Especially distinct changes are observed in the nature of work in the region's main ports - Illichivsk,

Odessa, Yuzhniy. The range of goods unloaded in seaports is significantly expanded. As a result,

the railway met dramatically increased volume of marshalling and shunting work on selection and

placement of wagons on multiple fronts and areas of ports.

Today we have a situation in which the processing capacity of port stations and bandwidth sites on

the approaches to ports are significantly below port processing capacity.

In addition, on the approaches to the sea harbours not all the zones are electrified, that is why the

cargo trains have to switch from electric haulage to the hot-wire. Besides, some directions require

construction of the second roure, because this traffic bed does not allow to transfer necessary

amount of cargo carriages.

Therefore, Odessa railway (OR) outlines that the complications with carriages unloading appear at

PLC "TransInvestService" (Chernomorskaya station), "Terminal-UkrKharchButSyrovyna» Ltd

(Octyabrskaya station), PLC "Ukrelevatorprom" (Odessa-Port station).

http://odz.gov.ua/http://odz.gov.ua/http://odz.gov.ua/


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In 2010 Odessa railway together with investors carried out construction of the second route and

electrified the passage Chernomorskaya-Beregovaya, this cecame the first stage to expand

throughput of this part of the route.

In addition, geopolitical transformations that are taking place in the Black Sea region for the last 2

years, have led to a change in the existing logistic routes of delivery of goods in Ukraine because of

the annexation of the Crimea and loss of the export port capacity, the export grain delivery system

has been reoriented towards the ports Large Odessa.

In 2015 PLC "Transinvestservice" (TIS), Ltd. "Borivage" and Odessa Railway (DWS) commissioned a

second mainline railway track 5 km long, as well as two receiving and departure tracks near

railway station Beregovaya next to the port of Yuzhny. According to railway service

representatives new infrastructure will increase the capacity of Chernomorskaya-Beregovaya line,

52 pairs of trains per day, which, in turn, will increase the volume of traffic for10 million tons of

cargo per year, and will solve the problem of bandwidth shortage in this area within the next 2-3

years.

The construction of new infrastructure was performed in terms of public-private cooperation: TIS

and "Borivage" financed the whole scope of works and provided all the necessary materials.

Construction operations were performed my meand of Odessa Railway Service and the

"Ukrzalyznustya". The total sum of investments was 11 mln dollars, that in opinion of the Minister

of Infrastructure of Ukraine Mr. Pivovarskiy was the maximum amount of private funding spent for

the development of railway structure.

Researcher outlines that this considerable amount of investment into railway infrastructure has

been performed by the companies of of grain loading sector and demonstrates its swift

improvement together with necessity of further continuous development.

According to the information provided by the Director of Odessa Railway Service in 20016 the

development of railway infrastructure in the route to Yuzhniy port shall be continued. In

particular, he was commenting on Chernomorskaya station part that shall be refusbished viainvestment made by “Greenterminal”. New Reception Park and route shall be construted. The

next year construction of new vehicle park and four routes adjacent to Beregovaya station is

scheduled with investments made by PLC “Berths of Komintern”. PLC “Allseeds Black Sea” is

planning a construction of entry points of 30 km to Beregovaya station. TIS is also planning to

conslruct the second track from the check point to Khimicheskaya station in total with 30 km

length.

Continuous trade confrontation with Russia and various trade or transport restrictions for cargo

delivery have already had their impact upon many countries – not onle of the Black Sea Region but

CIS countries too. The consideration of new routes for Ukrainian commodities leads to revival of

the project of the New Silk Road Ukraine – China.

On the 15th of January 2016 the first demo voyage of container train started on the route Ukraine-

Georgia-Azerbaijan-Kazakhstan-China from Ilichevsk port. The first demo train in composed of 10

carriages. The expected time of transportation to the station Dostik on the border of Kazakhstan-

China will be 10-11 days. The estimated sea transportation would take 30-35 days on the route

China-Black Sea.


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Source: Ministry of Infrastructure of Ukraine

New Silk Road route has been elaborated for several years and the project was initiated byKazakhstan, China and Azerbaijan. Ukraine is one of the options of the corridor, as goods from

China after they get to the Black Sea coast can continue their adherence to the EU either through

the territory of Ukraine or through the territory of EU member states - Romania and Bulgaria.

Thus, the ports of Odessa region may become a major focal point for handling large goods traffic.

The volume of traffic between Ukraine and Kitem in 2015 amounted to 25,480,000. Tons, which is

2.25 million tons or 11% more than in 2014, for the first time it was a record figure for the last 10

years. At present, China ranks first in export shipments from Ukraine, relegating Russia to the

second position (from the first position for the last five years.) - 15.9 million tons. According to

Ukrzaliznytsia, the Chinese route currently leads with a share about 90% in the structure of theexport turnover, mainly due to shipments of agricultural products.

5.3. Automobile traffic

Odessa region incurs three European highway routes [9]:

highway E 58; Vienna - Bratislava - Zvolen - Košice - Uzhhorod - Mukachevo - Halmeu -

Sushchev - Iasi - Leuseni - Chisinau - Odessa - Mykolaiv - Kherson - Melitopol - Taganrog -

Rostov-on-Don

highway E 87; Odessa - Izmail - Reni - Galati - Tulcea - Constanta - Varna - Burgas - Tsarevo

- Malko Tarnovo - Derek - Kirklareli - Babaeski - Havsa - Keşan - Gallipoli ... Edzheabad -Canakkale - Ayvalık - Izmir - Selçuk - Aydın - Denizli - Acıpayam - Korkuteli - Antalya.

highway E 95. St. Petersburg - Pskov - Gomel - Kiev – Bila Tserkva - Uman - Odessa ...

Samsun - Merzifon

Scheme of European highways of Ukraine

https://ru.wikipedia.org/wiki/%D0%9E%D0%B4%D0%B5%D1%81%D1%81%D0%BA%D0%B0%D1%8F_%D0%BE%D0%B1%D0%BB%D0%B0%D1%81%D1%82%D1%8C#cite_note-9https://ru.wikipedia.org/wiki/%D0%9E%D0%B4%D0%B5%D1%81%D1%81%D0%BA%D0%B0%D1%8F_%D0%BE%D0%B1%D0%BB%D0%B0%D1%81%D1%82%D1%8C#cite_note-9


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Source: Raster Maps

Transportation of passengers and goods by road in the Odessa region is carried out by 202

business entity with different forms of ownership, including 34 motor enterprises, 96 private

enterprises, 70 sole proprietors.

At the same time, as over the entire territory of Ukraine, the state of roads in the Odessa region is

insufficient. The length of highways of Odessa region is 8.3 thousand kilometers, meanwhile the

total coverage area with potholes, as of March 1, 2015 exceeded 1.2 million square meters. In

addition, almost 30% of the total length of highways in Odessa region is so damaged that needs to

be repaired not only on the road surface, but to its foundations. In general, according to thenavigation service Navizor.com, in the Odessa region the 47.03% of the roads are in critical

condition.

Chart of highway conditions in Odessa region

Green colour depicts highways in appropriate condition with even surface and more than two traffic

pathways


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—————— absence of holes, the average speed is not less than 100 km/h

Yellow colour depicts highways with even surface and relatively comfortable transportation.

—————— holes are not numerous and average speed is less than 100 km/h

Red colour depicts roads with damaged surface and dense traffic.

——————

holes are numerous and the average speed is less than 60 km/h

Источник: http://routes.in.ua/maps-ukraine/karta-sostoyaniya-dorog/

The critical state of roads generally leads to a decrease in the speed of delivery of goods, reduction

of road safety and environmental pollution. Consequently, the transport capacity of the region

and its attractiveness for market operators is reduced.

As the Ministry of Infrastructure outlines, the experience of previous years shows that with the

beginning of the harvesting campaign along the international motorways M-14 Odessa-Melitopol-

Novoazovsk and M-28 Odessa-South, on which the delivery of grain to the port, there are

kilometer queue trucks, complicating movement of vehicles and dramatically reduce the level ofsafety on the roads.

The infrastructure of grain market of Ukraine launched with the active development of port

facilities for shipping grain to export. Further development of the infrastructure of the internal

market is initiated by ports and port terminals interested in a regular and uninterrupted receipt of

grain for export shipment. After all, the main factor limiting the possibilities of Ukrainian sea ports

for transshipment of grain for export, is imbalance between the capacity of the port and approach

areas for them.

In the major ports of Odessa region there is an active development of the access road ways, whichis carried out mainly by operators of grain and oilseed markets.

As many as three operators of the grain market - TIS-Grain, LLC "Borivage" and LLC "Delta Wilmar

CIS" reported on the measures taken to reduce the stress on the road at the entrance to the port.

OOO "TIS-Grain" and LLC "Delta Wilmar CIS" will lead to the construction of parking lots 1,5

thousand and 200 parking spaces, respectively. In addition, the port operator LLC "Borivage"

completed the construction of funded and parking for trucks with 300 parking spaces. In addition,

a group of companies owned by TIS on her territory completes the construction of a bypass

tarmac road connecting the highway M-14 and M-28, this would reduce the queue of cars waiting

at the port of unloading.

With the active development of port facilities in Ukraine there remains a problem of lack of access

infrastructure. Projects for the construction and upgrading of access roads are maintained by the

owners of port terminals to a limited extent, because these activities require substantial financial

costs and long negotiation period.

According to the results obtained, investment in the development of the domestic market

infrastructure can significantly increase the country's capacity to export grain. Finally, from a

technical point of view Ukraine is currently the largest in the Black Sea region in availability of

grain transfer facilities that is about 42mln.tonn. Development of the internal logistics system and

building of a stable delivery chain will load existing facilities.


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5.4. Air traffic. Discharging potential for parishable commodities

Today, the fastest means of delivery of goods is air. This type of transport is one of the most

profitable and essential means of delivery for transportation of perishable and high-value goods.

Fruit, early vegetables, berries, fresh fish, fresh flowers, biological, medical and other products

requiring temperature control are shipped by air.

Air transport in comparison with other modes of transport has several advantages in the

transportation of perishable goods. By air transportation is carried over long distances in a short

time, and as a result, the transportation of perishable products requires no special cooling. The

low temperature in the cargo space is required for compliance with the conditions of carriage and

is achieved by the circulation of cold outside air.

Odessa International Airport is located in the southwestern part of the city of Odessa. The distance

from the city center to the airport is 7.5 km. The airport covers an area of 570.3 hectares.

LLC "Odessa International Airport" is a joint venture established in November 2011, the Odessa

City Council and private investors "Odessa Airport Development", which finances the construction

of a new US airport terminal and infrastructure valued at $ 45 million...

Odessa International Airport belongs to the largest airports in Ukraine and is associated by air lines

with many cities of Ukraine, CIS and Western Europe, Asia and Africa.

Airport in Odessa offers cargo terminal, including the handling of perishable goods. The airport has

the necessary production resources for this:

• Customs temporary storage warehouses (3 warehouses with a total area of 1500 m2, including

warehouse for the storage of hazardous and valuable cargo, low-temperature chamber with

temperature control from 0 to + 5 ° C);

• special equipment for mechanical handling of cargo (container loaders, fork-lift trucks with load

capacity from 1.5 to 3 tons, container trucks, trucks with lifting basket, conveyor belts, rokly,

tractors);

• highly qualified, trained and certified staff to work with dangerous goods

The development plans in the airport via installation of two deep-freeze chambers with

temperature control between 0 - 20 ° C, as well as a certificate for maintenance of dangerous

goods in categories 3 - 9.

According to the research, in 2015 cargo Odessa airport amounted to about 500 tons. Taking into

account the trend of recent years of declining traffic, researcher evaluates potential cargo

handling Odessa airport in 1 thousand tons and transshipment of perishable goods in not less than

500 tons.


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6. Evaluation of export potential in sectors with account of industrial and

logistic potential

6.1. Assessment of resource potential

Climatic and soil resources of the Odessa region allow to cultivate a wide range of crop and

livestock production. However, at present this potential is not used in full. The raw material

structure there is a steady trend of growth in the share of crop production. The main crops

cultivated in the region are wheat, barley, corn, sunflower and rapeseed. Wheat production can

fully meet the needs of mills in the area. Consumption of forage crops is relatively small due to

weak development of animal husbandry. This makes it possible to generate sufficient export

potential of grain crops.

High level of concentration of oil and fat enterprises enhances the export potential of the region

for the products of processing of oilseeds.

In animal husbandry, the main production is concentrated in the private sector, this reduces the

capacity of the region to export due to poor quality and quantity of output. In addition, due to theshortage of raw meat and milk processing industry went into decline in the region. It should be

noted that the region is a leader in the sheep breeding and has all the resources for further

development, particularly given the significant demand from the global market, i.e. in the Arab

world for the products of sheep, both in vivo as well as as processed products.

A similar situation is observed in the fruit and vegetable sector. With sufficient soil and climatic

conditions, the sector is still largely developing in private households. In addition, the lack of

modern vegetable storage and processing enterprises does not allow the sector to develop fully

and to apply for the European and global export market. In these markets, the high level of

competition, fresh produce, besides its production should be controlled / certified accordingly,that in the conditions of small-scale production is almost impossible. At the same time production

of fruit and vegetable by processing enterprises (concentrated juices, tomato paste, fruit puree,

canned food, etc.) is much more competitive. In this sector, the region has great potential, but it is

necessary to take into account the features and taste preferences to the prospective markets.

Available water resources suitable for the production of fish currently in use are not enough. With

sufficient investment the region has all the prerequisites to become a leader in the production of

valuable species of fish and their sprawn, which has a deficit in the global market.

6.2. Assesment of export potential

Odessa region has unique for Ukraine export opportunities from the point of view of logistics, with

the most developed sea port infrastructure. The internal logistic component is in need of

modernization and development.

Export potential for grain is 2-3mln.tonn depending on the crop, for sunflower oil - about 250

thousand tons. In addition, there is a potential for export of fresh fruit (apples, pears, cherries,

peaches, strawberries, nuts) in case of improving the storage and transport system. At the same

time, the development of export capacity for meat and dairy products is possible in the conditions

of large-scale and cooperative production of raw materials, as well as the implementation of

quality standards of international level. A promising product for exports from Ukraine and theOdessa region in particular is honey.


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The fishing industry Odessa region also has a very high export potential for the valuable fish

species (particularly sturgeon) in case of the corresponding investment in the development of this

area.

7. Summary and recommendations. SWOT-analysis of industries

Livestock Farming

Strong points Weak points

- Constant demand for products

- Favourable location- The use of surplus grain and by-products of

agriculture

- More efficient use of existing resources

- Availability of raw materials for the production of

animal feed

- Availability of significant production capacity and the

potential to increase the productivity

- Backlog demand for meat and meat products

- Low self-sufficiency in the field of livestock

production

- High rate profitability of poultry and pork

- Short payback period of investments in the poultryand pork

- Imperfection of large-scale agricultural production.

Predominance of the private sector in production- Lack of quality control in the private sector

- The personnel problem in the industry: a lack of

highly qualified professionals with specific education

- Low rate of cattle profitability

- Lack of investment in the development of the sector

- Branding of products to be expor

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