Although it was my first visit to Chile, I already knew that this was by far the most advanced fresh produce country of South America. Still, the reality turned out to be much better than the expectations, especially in light of what is happening in Ukraine’s fresh produce business.
More money is generated in this sector than in the grain sector, for which Ukraine is famous. Moreover, one can get 20-30 times as much money from a hectare of fruits or vegetables than from a hectare of grains. Still, the fresh produce business helps feed way more people in rural Ukraine than grains and oilseeds combined.
It just so happened that I came from the record high temperatures in Ukraine right into the record low temperatures in South America. The contrast in temperature was almost as shocking as the contrast in the level of development of fresh produce businesses in both countries and government policies with respect to agribusiness.
I don’t think many people really know much about the fresh produce business and why it is even important. Let me explain – the fresh produce business is everything related to fruits and vegetables. The fact is that more money is generated in this sector than in the grain sector, for which Ukraine is famous. Moreover, one can get 20-30 times as much money from a hectare of fruits or vegetables than from a hectare of grains, although the risks are also higher. Still, the fresh produce business helps feed way more people in rural Ukraine than grains and oilseeds combined.
Chileans were smart enough to discover then and now they are nearly the largest global player in the fresh produce business, although most of their clients are very far away. They are blessed with the fact that their season mirrors the northern hemisphere where most consumers are. Still, mind the 10,000 miles distance to the market!
Have you ever seen a point-of-sale promotion in the fresh produce department at a Ukrainian supermarket? I haven’t, except for some we helped organize a while ago. Chileans are doing it all the time in key chains of Russia. It costs money, and producers as well as traders pay for it, but the government provides co-financing, as it understands the importance of exports for its economy. The government helps pay the bills to employ professionals from the EU to help promote their products there.
Americans and other nationals buy land in Chile and grow fruits and vegetables as well as local investors. They really wondered why Ukraine is buying apples from Chile.
I loved the fact that Chileans grow Fuji variety of apples, which get all exported to Taiwan. China, which only grows this variety of apples, can’t supply them to Taiwan and Chile is right there filling the gap! They search for market niches all the time and at the conference where I spoke they had people from all the key markets in the world sharing information about new possibilities.
Americans and other nationals buy land in Chile and grow fruits and vegetables as well as local investors. They really wondered why Ukraine is buying apples from Chile.
I have always jokingly said “less oil, more brain.” I think that’s exactly the case with Chile. They do not have much oil or gas. Unfortunately, the way the Ukrainian government acts means Ukraine still has too much oil. Argentina is another good example – they have too much oil, it seems. They banned meat exports to help consumers get meat for a lower price basically, ruining this powerful industry. Chileans were shocked by the stupidity of this decision. It’s a little like the grain export bans Ukraine had in place just a couple of years ago. I was wondering if it is because Argentina has too many Ukrainians!
I have been trying to promote the development of the fresh produce business in Ukraine for the past seven years now. We have made a lot of progress. But it is nothing compared to what we could really do. Thus far we have not even been able to create an association to represent the business, although our organization basically does most of the things an association would have to do. There are great opportunities here in Ukraine, but we are moving way to slow. We need to fire 80 percent of government bureaucrats and let business work. We need to improve the investment climate and we need to help by granting businessmen access to information and new technologies and not by trying to impact prices.
Andriy Yarmak is an independent agribusiness expert. He has worked on agriculture development issues in 10 world countries, serving as an adviser and independent board members for agribusinesses in Ukraine and has developed market information systems for APK-Inform, a Ukrainian agriculture consultancy. He can be reached at [email protected].
