“Logistics of fruit and vegetable market of Ukraine: development problems and

perspectives”

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International Finance Corporation (IFC)

IFC is the private arm of the World Bank Group making investments and gives support to the development of the private sector in developing economies. Ukraine is a member of IFC since 1992. Since then IFC invested 1,2 billion USD in different projects.

Improvements in infrastructure, a more streamlined legislative framework, and greater access to finance are needed to enable Ukraine to reach its full potential in real sectors such as manufacturing and agribusiness.

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IFC Ukraine Fresh Fruit and Vegetable Project

• A two year project with a possible one year prolongation

• Two main objectives: To increase market access for Ukrainian fruit and vegetable farmers and to support investment in the supply chain (storage etc)

• Project main clients are supermarkets and traders

• Activities: Market research and information, training for FFV staff, linking farmers/traders with retail, highlighting investment opportunities in the supply chain, introduction of common quality standards/definitions, logistic analysis and recommendations

3

Ukrainian Fresh Fruit and Vegetable Sector

• Strong retail development during last five years (until crisis)

• Local fruit production 1.5M tons

• Local vegetable production (including potato) 26 M tons

• Approximately 15-20% of all FFV sales through formal retail

• Part of locally sourced fruit sold by supermarkets: 50%

• Part of locally sourced vegetables sold by supermarkets: 70%

• Small FFV export, approximately 0.2 million tons

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FFV Consumption and Sales (million tons)

2008 2012 (est.)

Fruit 1.5 1.9

Vegetables 4.4 4.6

Supermarkets FFV sale 0.5 1.5

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The Ukrainian FFV Supply Chain

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ACTUAL FUTURE

1 Farmers' supplier 1 Farmers' supplier↓ ↓

2 Farmer 2 Farmer ↓ storing/cooling

3 Storing/cooling packing↓ grading

4 Packing sorting↓ trading

5 Sorting ↓↓ 3 Distribution center

6a Trading supermarket↓ ↓

6b Trading 4 Supermarket↓ ↓

6c Trading 5 Consumer↓

7 distribution centersupermarket

↓8 Supermarket

↓9 Consumer

Ukrainian Fresh Fruit and Vegetable Sector

Bottlenecks for development

• Poor quality (and no common quality understanding)

• Lack of post-harvest facilities (large losses in the supply chain)

• No standard packaging (banana box is “standard”)

• No cool-chain

• Fragmentized supply chain, many small traders/middlemen and no cooperation within the sector

• Access to long term credit

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FFV Cool Chain Study

• Unmet demand for cool storage. Today 10% of demand met for vegetables and 20% for fruit. Production in Ukraine is growing faster than storage capacity.

• Presently Ukrainian farms spend about 50mn US dollars on new storage facilities for fruits, vegetables and potatoes every year. Estimated demand total around 2 billion US dollars.

 

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FFV Cool Chain

Two key fundamental problems for further development of cold storage facilities in Ukraine:

1. Poor quality of the products grown due to poor production technologies used;

2. Shortage of financing and problems in obtaining a credit for storage facility;

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