Strategic Plan for Developing the Agriculture Produce Market Infrastructure

The Ministry of Agrarian Policy and Food of Ukraine estimates that commissioning a network of wholesale markets of agriculture produce will help Ukraine mobilize over UAH 10 million investments in the agrarian market infrastructure, and export of Ukrainian agriculture produce will generate extra revenues of over UAH 200 million every year. The current market infrastructure in Ukraine is characterized by a lack of modern storage facilities, with only 4%, 10%, and 19% of storage facilities for potato, other vegetables, and fruit, respectively, complying with modern requirements. The provision of modern cold storages located within logistics centers and at strategic producer and physical market sites is identified as a key constraint to transforming Ukraine into a net fresh produce exporter. Currently, Ukraine is a net fresh produce importer for many products for which it has a comparative advantage based on climate and soil conditions. The lack of modern storage infrastructure is not the only challenge facing the agricultural produce market in Ukraine. Formal retail market outlets distribute from less than 10 percent to no more than 25 percent of basic agriculture produce, with most of these vegetables still sold at traditional urban and rural retail markets lacking in modern storage and distributional facilities. Market managers and other specialists indicate that total sales volume through these markets has been increasing since the economic downturn resulting from the 2008 global recession. The new wholesale markets of agriculture produce are expected to increase sales of fresh fruit and vegetables that are produced domestically, and comply with international quality and safety standards. Achieving this goal will help Ukraine solve the current problem of low quality domestically produced fresh fruit and vegetables in supermarkets and other retail outlets. The AgroInvest Market Infrastructure sub-component is designed to support this MAPF policy goal. The Strategic Plan for Developing the Agriculture Produce Market Infrastructure has been developed based on the following considerations: the lack of a clearly stated concept or comprehensive national approach to developing an integrated agricultural market infrastructure, the lack of transparency and competitiveness in the process for selecting private sector partners, and the lack of a national integrated agricultural market infrastructure strategy. The plan aims to address these challenges by integrating the current system of local, sub-regional, and regional market infrastructure with the emerging regional WMAPs, implementing market procurement strategies, and promoting private sector selection transparency. The Component 3.2 market infrastructure strategy goal is to increase the number of local sub-regional and regional agricultural fresh produce markets and market infrastructure, including vegetable storage and packing facilities. The strategy will be implemented through a series of actions, including integrating the current system of local, sub-regional, and regional market infrastructure with the emerging regional WMAPs, implementing market procurement strategies, and promoting private sector selection transparency. The plan does not envisage any direct AgroInvest Project financial support of WMAP development that is already under construction in Donetsk, Kyiv, and Lviv.