Farmers Join Forces to Compete Effectively A Year of Joint Work Yields $145,000 in Sales
Small-scale farms in Zhovkva, Lviv Oblast, faced a new marketing challenge when fruit and vegetable processors and wholesalers began to move away from individual producers to larger legal agricultural entities as a source for raw material. The latter became preferable because of their ability to meet contract terms as well as to perform important marketing functions. In addition, fewer producers simplified buyers’ accounting and payment operations with the processors and wholesalers.
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| Petro Fedyna, the cooperative Director, presents dried fruit samples |
In effort to adjust to a new market trend, six farmers from Zhovkva decided to register an agricultural service cooperative. They had first thought about forming a cooperative six years ago, when they participated in USAID-supported study tours to Poland and Hungary. In 2004, with assistance from Agricultural Marketing Project (AMP), another USAID-supported agricultural program, the farmers prepared all the necessary legal documents. AMP advised them as well on the importance of hiring qualified cooperative employees and assigning clear responsibilities. Furthermore, farmers were assisted in setting up cooperative accounting and tax payment procedures.
The agricultural service cooperative Agrodvir was registered on February 6, 2004. By that time three more farms had joined the original six members. Currently, the Agrodvir members farm a total of 255 hectares of lands including 12 hectares of orchards.
The clear vision and new approaches the cooperative presented for developing their business won them a grant from the AMP Grant Program to purchase fruit and vegetable drying equipment at a cost of $16,000. The new equipment permitted the cooperative to process fruits and vegetables that do not meet the highest standards of the fresh market (size, shape, blemishes, etc.) and might otherwise have gone to waste. By the end of the 2005 marketing season, the cooperative members forecast additional revenues of up to $94,300 from their drying facility.
Working together the members of the Agrodvir cooperative made $145,000 in gross revenue their very first year. Agrodvir managed to develop contract relationships with several processing plants. The cooperative was successful in signing a supply contract with Vattyus, a flash freezing processor, for 100 tons of potato, 100 tons of carrot, 225 tons of bulb onion, 25 tons of white cabbage and 5 tons of Brussels sprouts, and had no problem meeting all contract obligations.
In total in 2004, 79.9 percent of Agrodvir’s products went to state budget-funded institutions (military bases, hospitals and schools), 16.7 percent to processors, 3.2 percent to wholesalers and 0.2 percent was sold in retail fresh markets. This year, the cooperative is fulfilling a major contract with Intermarket Wholesale Company, among others.
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