 |
|
|
|
|
|
 |
 |
 |
 |
 | |
 | |||||
 |
 | ||||
 |
|
|
|
|
 |
 |
 | ||
 |
 |
 | ||
|
| |||||||||||||||||||||||||||||||||||
COPAC Open Forum
|
Since independence in 1991, Ukraine has failed to capitalize on its huge agricultural production potential. Production in almost all crops has fallen, reflecting political and economic turmoil as well as disruption of the agricultural infrastructure. Notably, fertilizer use has declined by 50-80% over the past seven years, depending on the data. In addition, Ukraine has made only, limited progress in privatization of farms and agri-business. Privatization efforts have been stymied by a moratorium on the sale of land. However, over 36,000 private Ukraine farmers exist today, farming approximately 2% if the arable land.
While virtually all of the Collective Agricultural Enterprises (KSPs), the former state collective farmers have been privatized on paper, they essentially continue to operate as they did under Communism. Former Soviet managers retain positions of power and exert their continued connections and influence to obtain preferential treatment from government authorities. Large, inefficient and poorly managed it is not surprising that the vast majority of KSPs operated at a loss in 1997 and 1998 and, by all appearances, will face greater losses in 1999. In spite of this, US and multinational agribusiness's have continued to focus resources on business development in Ukraine in the hope that progress in the sector will eventually be made.
It is within this system of state-dominated production and state-controlled distribution that the Ukrainian farmer attempts to operate. The private farmer, regardless of this/her effort, skill and resourcefulness, faces fundamental difficulties in the procurement of supplies and machinery that would likely put many farmers in developed countries out of business. There is virtually no credit available. (Interest rates on loans to farmers are usually 80-100%). Machinery is scarce, and what machines there are (sprayers, combines, seeders, etc) are obsolete and highly inefficient. The supply of fertilzers, seeds, crop protection chemicals and other essentials is sporadic, costly and unreliable. Southern States Cooperative (SSC) and ACDI/VOCA staff visited with scores of private farmers in Western Ukraine, many of whom demonstrated a very high level of commitment and skill. All but perhaps tow or three of the farmers with whom we visited indicated the unavailability of reasonably priced supplied as among the key constraints to profitability of their farms.
On the positive side, Ukrainian farmers are fortunately to have a cooperative law that allows them to establish farmer-owned and controlled cooperatives and benefit from the tax advantages provided to such business structures. Further the fact that they have received so little support from their government and international assistance efforts, has essentially forced them to start cooperatives. The organization and initiative that they have shown thus far is a very positive indicator that these courageous entrepreneurs will have the wherewithal to make their cooperatives and farms successful.
After visiting several private farm cooperatives in four Oblasts, we found on group in Rivne who had 17 members and who paid a membership fee of USD 300 had had hired a manager. After spending tow day with them we determined they were men of integrity and were willing to cooperative with our project. The objective of our project was to find organized private farm cooperatives or groups of private farmers who sincerely wanted to forma a cooperative and then work with them to establish an operation input supply business to provide quality products and services to their members.
Our primary deliverable for this project is to help one cooperative - Western Cooperative in Rivne - become profitable. However, we are attempting to leverage this focused effort in a way that identifies and provides assistance to other cooperatives in Western Ukraine. Ultimately, no single small cooperative with limited membership will achieve the economies of scale required to provide meaningful savings to its members. Therefore, our outreach activities beyond Rivne are essential to longer-term viability of private farmers in the region.
Western Cooperative has been our primary focus for over a year. We have had multiple meeting with cooperative board members over that time and have been able to help them with structural as well as production issues. From the structural perspective, Western heeded our advice that a farmer member should not be the manager. Their original manager has stepped down in order to focus on farming and they have hired a new manager to work full-time for the needs of their members. Also, we are advising them on an on-going basis on such matters as membership development, pricing policies, and other matters.
Regarding production, we are continuing our effort to help current members improve their productivity in order to attract new members. The project has provided mixed feed procured from a US/French joint venture feed mill, to several cooperative members to be used in tightly controlled feed trails for pigs and dairy cattle. Additionally we received a donation of seed corm from Pioneer Hi-Bred which the cooperative members grew this year in our first crop trial.
These trials have had good results. Increase in weight gain per kilo of feed for the pig trials has been very good Increase in mil yield for the dairy trails has also been very good. As for the corn production, poor growing conditions had a major impact on production, but at least the farmers have proven to themselves that a short season hybrid corn can be grown for grain in Rivne.
Perhaps more important than the immediate benefits to farmers participation in the trials is the fact the Western Coop held an open house to demonstrate their progress to farmers who are not yet members of their cooperative. These "Farmers Day" were well attended and will contribute to a growth in cooperative membership, we believe.
Beyond the feed and crop trials, the project is also donating a small feed mill to Western. During our last visit to Ukraine, we visited the site that the cooperative had chosen for the mill. We had lengthy meetings over its use and the manner in which the coop will charge users in order to build capital. The mill was shipped this past August and we sent a retired SSC employee to supervise the installation and star-up of the mill. The Mill will serve several purposes, the firs being the production of quality feed for cooper members. Second the mill should be a source of income for the cooperative, part of which will be made available for revolving loan fund to be managed either by the cooperative or their own credit union which will be formed in the near future. The third purpose is to attract new members.
While we continued to work with Western cooperative, we are moving closer to the establishment of additional cooperatives. We have followed the same process that took place in Rivne (e.g. meeting with farmers at their farms, information gathering on credit, production and other factors, etc.) and hope during this present trip to make further progress with these potential cooperatives.
A key contact for us had been the President of the Ukraine Union of Cooperatives. He studies for a year in the US to gain an understanding on how farmer owned cooperatives are organized and operate. He has built a strong reputation as the leader of the Ukrainian cooperative movement.
Thus far in the project we have used three US volunteers who have been invaluable in providing expertise in animal health, nutrition and management plus feed mill operation. The ACDI/VOCA offices in Kiev and Lviv, Ukraine, have provided great support in assisting with shipments and administrative support.
In January and February of this coming year, the manager of Western Cooperative and tow of the board members will visit a local cooperative in Virginia for three weeks to be immersed into the day-to-day operations of an input supply cooperative. Although accounting procedures in the US are different form those used in Ukraine, the key factors of operating a successful farm cooperative are basic anywhere in the world. The Ukrainian board members will visit with and get to know board members of a local US cooperative. The board members will learn what their responsibilities are the process for establishing policies governing the cooperative. The manager will earn how t control the business and learn the decision making process that is critical for successful management of a cooperative. The manager and board members will gain a clear understanding about the division of responsibilities between the members of the board and the manager. The Ukrainian board members will observe an actual coop board meeting where an established agenda is followed. The manager will spend many days at the side of the US manager learning how he makes decisions involving personnel assignments, personnel supervision, factors to use in establishing prices of products and services, document and records used to monitor the flow of inventory, evaluating profit and loss statement and learning key business indicators.
In July or August, it is planned for the manager and two board members of the US cooperative to visit Rivne Cooperative and learn firsthand about the unique challenges and conditions the Ukrainian private farmers faces. Farmer to farmer meetings are good because farmers have kindred spirit that transcends language, culture and methods of production. This allows a trusted exchange of information based on ac common denominator of farmers helping each other and yields immediate improvement in management practices.
Some of the greatest challenges we have encountered in Cooperative Development in Ukraine are: farmers do not trust Government to act in their interest, there is void of leadership at the farmer level, farmers do not trust each other, the unfair tax burden forces farmers to not keep accurate records, bartering is done to avoid "a paper trail" which open the door to government to seize farm assets. the past Soviet system has "trained" the fam3r to expect outside dependency, telephone and e-mail communication is not reliable, and there is essentially no system for farm credit.
In spite of the existing condition, there are sparks of hope in the hearts of the Ukraine private farmer. If our project can start one small fire of cooperative success, we believe that fire will spread quickly and form a new foundation of private farmers cooperative in Ukraine.
COPAC Members| COPAC Meetings | Publications and Information | International Day of Cooperatives | Cooperative Policy and Legislation | Cooperative Development Projects | Site Map
Comments or questions? Contact the COPAC Coordinator.
Updated: 1 November 1999
