1. EU-funded Project “Implementation of Ukraine’s Commitments under WTO and ENP Frameworks in the Rural Sector (Sector-Wide Approach)” Effective Post Harvest Technologies in Ukraine John Millns Lviv, Friday 8 th October 2010 Slides Courtesy of the International Finance Corporation (IFC), Part of the World Bank Group

2. EU-funded Project “Implementation of Ukraine’s Commitments under WTO and ENP Frameworks in the Rural Sector (Sector-Wide Approach)”  Large market for fresh fruit and vegetables > 5,5 million tons (2-2,5 billion USD)  Strong retail growth during the last 5 years and retailers unable to keep up with growing demand  30% of vegetables and 70% of fruit sold by retailers are currently imported  Opportunities to increase local production are significant, yet unrealized  Post harvest barriers to increase local production include: Ineffective supply chains Investment needed in storage and infrastructure Huge losses ( 5 million tons per year) as result of poor quality storage and transport Ukraine Fresh Fruit and Vegetable Market

3. EU-funded Project “Implementation of Ukraine’s Commitments under WTO and ENP Frameworks in the Rural Sector (Sector-Wide Approach)” Key Market Channels for Fresh Produce IFC estimates for2010 - Share of key channels for sale of fresh produce, % (*markets include summer street stands).

4. EU-funded Project “Implementation of Ukraine’s Commitments under WTO and ENP Frameworks in the Rural Sector (Sector-Wide Approach)” Losses in the Supply Chain UkraineHolland Farm level30 - 35 %15 – 20 % Sales point10 %5 % Consumer25 – 30 %10 – 15 % Total losses~ 65 %~ 35 %

5. EU-funded Project “Implementation of Ukraine’s Commitments under WTO and ENP Frameworks in the Rural Sector (Sector-Wide Approach)” Ukraine FFV Cool Chain Review (December 2009) Main findings:  Large losses  Only 10% of storage facilities meet with modern requirements  Projected investment needed to replace outdated storages $2 billion

6. EU-funded Project “Implementation of Ukraine’s Commitments under WTO and ENP Frameworks in the Rural Sector (Sector-Wide Approach)” Ukraine FFV Cool Chain Large losses; Ukraine is losing around 5mn tons of harvested potatoes, vegetables and fruits, costing Ukrainian growers and traders over a billion US Dollars Poor storage quality: Only 4% of cold storage for potatoes, 10% for vegetables, and 19% for fruits meets with modern requirements Production is growing faster than storage capacity, placing pressure on markets after harvest

7. EU-funded Project “Implementation of Ukraine’s Commitments under WTO and ENP Frameworks in the Rural Sector (Sector-Wide Approach)” Ukraine FFV Cool Chain Ukrainian firms currently spend about US$50mn on new storage facilities for fruits, vegetables and potatoes every year A further US$2bn needs to be spent in FFV cool storage. Most of the new facilities are distribution centres for trade rather than storage.

8. 8 of 25 Transport of Fresh Produce In Ukraine, losses during transportation are much greater than in the EU for the following reasons: 1. High temperatures prior/during loading onto trucks 2. Poor packaging 3. Transportation without refrigeration 4. Transportation without isolation during cold season 5. Drivers often try save diesel turning off refrigeration 6. Poor quality roads 7. Multiple re-loading due to an unstructured market

9. 9 of 25 Ukraine FFV Cool Chain Existing cold storage for fruit and vegetables. Capacity (brown) vs. demand (red), thousand tons.

10. 10 of 25 Estimated Need for Cool Storage Capacity RegionStorage capacity required, thousand tons PotatoesVegetablesFruitVeg+Fruit West1,761486135621 Centre1,65840378481 East54726553318 South13327932311 Ukraine4,0991,4332981,731

11. 11 of 25 Viability of cold storage investment (USD/ha) IndicatorPotatoesApplesOnionsCarrots Project size, ha250604025 Production investment 8,00018,8505,0005,200 Storage investment9,80026,77525,00022,000 Prod operation cost2,6674,8006,4002,167 Storage operation Cost 3731,4701,4931,517 Storage premium by May 15 3659,5009,88014,592 Quality premium7472,1001,4932,357 Payback time, years 24442

12. 12 of 25 Investment Directions in the Cool Chain Over the next few years, demand for the following types of facilities are expected to grow:  Modern cold storage facilities at farm level for vegetables (as well as pre-cooling)  Controlled Atmosphere facilities at large fruit farms  Modern facilities near large cities, used as distribution centres for wholesalers, importers and retailers