A Farmer Gains Profit by Signing Contracts with Supermarket Chains
Mykola Chumak, a Crimean farmer for 14 years, views the year 2004 as his most successful year for crops, profits and business contracts. In October alone he made an additional profit of 20,000 UAH ($3,775) from cucumber sales. With assistance from the USAID-funded Agricultural Marketing Project, he signed contracts with two major supermarket chains. The Agricultural Marketing Project (AMP) increases profits and stabilizes supply systems by creating direct linkages through contracts between farmers and retailers. To date, he has sold 17,600 kilograms of produce worth 272,300 UAH ($51,510).
He fell in love with the fertile land of Crimea in his childhood, first by watching and then helping his parents work their small parcel of land. Chumak, who was a chief engineer of a state farm in Crimea, decided to change tack after Ukraine gained independence. He educated himself in the latest technologies before taking up private vegetable farming on his own.
Initially, he mastered his vegetable growing techniques on a household parcel in the village of Gvardeisk, one of the vegetable growing centers of Crimea. With the advent of land privatization and changes in ownership laws, he decided to lease additional land and utilize a more advanced growing method that included drip irrigation, fertilizers and crop protection. Small-plot vegetable growers sold their produce mostly in open-air markets at that time, since few stores sold vegetables and supermarkets were not yet known here. For the most part, Mykola grew grains as his main staple and tomatoes and cucumbers only as a side business.
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| A very happy Mykola Chumak pays a visit to AMP’s Crimea office after concluding several contracts with area supermarkets |
His interest in these vegetables proved not in vain when market demand increased for both the fresh and processed varieties. It provided the opportunity to switch mainly to fruit and vegetable production and further increase the success of his enterprise.
By June 2004, Mykola had expanded his vegetable plot to 0.8 hectares of greenhouse, but now faced the challenge of finding a market for his additional produce. The solution came from the USAID-funded AMP, with which he partnered the same year.
Implemented by Land O’Lakes, AMP works to create strong market linkages between farmers, markets and consumers. The project assists producers in establishing contractual relationships between wholesalers and retailers. To ensure that farmers can meet their contractual obligations, they receive AMP assistance in the use of new growing technologies, product diversification and specialization, storage, packaging and marketing. To date AMP has assisted 385 farmers in signing contracts with 112 retailers, including processors, worth 4,300,000 UAH ($811,000).
Emphasizing his vast greenhouse growing experience, AMP assisted Mykola in arranging contracts with Furchet and Silpo, two of Ukraine’s most predominant supermarkets chains.
The collaboration allowed Mykola to sell more vegetables at a higher price, and most importantly, to secure a direct outlet for his produce throughout the year.
Mykola decided to expand his production and constructed an additional 0.9 hectares of greenhouses, where he planted more tomatoes and cucumbers, and also peppers and other greens exclusively for sale to exclusively to supermarkets. He also hired four workers to help him with his expanding business. Ever forward-looking, Mykola re-invested additional profits into the construction of a refrigeration unit to preserve his produce in the off-season. According to the farmer, he has already recouped his expenses. He recently sold his refrigerated cucumbers and tomatoes at a nice profit in a demand-driven market driven by last season’s poor yields.
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