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September 28 2006, 00:00 Agrarian Marketing Project

Storages which yield money

Ukrainians are use to an excessive quantity of vegetables in season and a lack of produce in the off season.  As a result, vegetables that are sold during the harvest season for a penny (a very low price) are often very expensive in the winter, and of relatively lower quality.  The price fluctuations are especially striking during the winter-spring period when imported produce: cucumbers, tomatoes, pepper, apples, and potatoes are supplied to markets.  During the mentioned time period prices for fruits and vegetables are quite high: For example, tomatoes that are less than $0.2/kg during harvest can be more than $ 3/kg in the winter.  Starting from May, the period of intensive trade begins.  Sales volumes increase during the summer and reach a seasonal peak during the period August-October.  Sales volumes start declining in November/December.  In this situation, the utilization of modern specially equipped storage with cooling equipment can be one solution for trying to extend the season and gain higher prices and revenues for farmers of Ukraine.  

In order to extend the produce sales season, and following suggestions of the specialists of the Agricultural Marketing Project (AMP) the founders of the service cooperative "Fruits of Crimea" decided to purchase premises and to construct a cold storage facility able to handle 150 tons of produce.   

The cooperative was formed in March 2005 using the MRIYA private enterprise as its base.  The objective of the cooperative is to provide cooperative members with a place to store harvested produce so that they can sell it later when prices rise.  Mr. Mikhail Dzhorkashvili manages both the private enterprise and the cooperative.

Given the opportunity to obtain a grant from the AMP, the cooperative submitted needed documents and was selected to be a recipient of a Grant.  The total grant sum of the Grant is UAH 127,000 (approximately $ 25,000).  The match of the cooperative members was to be at least equal to the Grant from AMP, and the members did provide UAH 126,300.  The cold storage Grant, consisting of two chambers, was launched October 4th 2005.  According to plans, 50 tons of table beets were put in one chamber and 100 tons of cabbage in the other chamber.  

The produce was mainly sold to resorts and through PRIVOZ wholesale market in Simferopol. By using the produce storage facility additional profits amounted to nearly 100,000 UAH (around $20,000).  This was compared against the possible profit that would have been realized if the produce had been kept in ordinary storage non-refrigerated storage.  Usually 35-40% of the harvested commodities are lost under ordinary storage conditions.  Respectively, each cooperative member got his share of profit (around 33,000 UAH).  Four full-time jobs were created to maintain the storage facility in proper condition; thus, providing additional indirect evidence that the storage idea was successful because long term jobs were created in addition to the profits generated for members.

The cooperative planned to start selling stored produce in March 2006; but, severe winter frosts shifted the terms of storage opening. Shipping of table beet and cabbage started mid April. Practically all stored produce was sold out by the end of April. 

After experiencing actual profitability from using the vegetable storage facility, the manager Mr. Mikhail Dzhorkashvili planned to build additional chambers in 2006.  In fact, as of today the cooperative is finishing the construction of two more chambers 100 tons each.  The chambers will be of the same type as the chambers assembled last year using AMP grant support.

Steel construction and sandwich-panels have been used to construct the storage.  And, AMP assistance has not been limited to grant support only.  AMP invited Mr. Yuri Calin, a Cold Storage Specialist from Moldova, to consult with and assist Project clients in Ukraine.  The specialist advised the cooperative management on many technical aspects; his advice helped save materials and ensure assemble of high-quality chambers at the earliest possible date for least cost.  The cooperative established a partnership with SVP firm (Lviv) which sprays polyurethane on cold chamber walls in order to significantly reduce the construction cost.  Finally, with assistance from AMP specialists produce supplies to several firms were also set up.

Each of three founders of the cooperative has experienced positive results of their joint work.  AMP specialists assisted with project implementation, and they continue cooperating with the farmers.  They wish the cooperative to succeed in their future activities.  The AMP specialists are sure that the members of "Fruits of Crimea" cooperative are likely to see more opportunities and perspectives provided by long-period storage of quality produce.  They see the opportunity for more members to join or associate with the cooperative.  As the cooperative meets the challenges it faces it will help Crimean producers work more effectively on the produce markets of Crimea and throughout Ukraine.  This project has been a true success.

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