NEWS AND VIEWS: Farmers' aid program must also consider the national economy (07/14/02)

NEWS AND VIEWS

Farmers' aid program must also consider the national economy

by Ihor Dlaboha

The United Ukrainian American Relief Committee's "Farmer's Project" (The Weekly, May 19) is a well-intentioned grassroots initiative to help small farmers in Ukraine. But for the effort to have a more decisive and lasting impact, it needs to be significantly expanded. Any discussion of revitalizing the agricultural industry in Ukraine must take into account the national economy.

It is not enough to initiate projects that would provide technological and planting assistance to the small farmer in Ukraine when he is incapable of contributing to the gross domestic product with his crops because he uses them almost exclusively for his family or his livestock. That kind of assistance by any other name is welfare, and it will not help Ukraine in the long run. Ukraine's celebrated agricultural prowess is a historical fact, but in its current shape it neither attracts attention nor makes an impact.

Ukraine's agricultural industry should only be discussed in the context of the entire national food chain, which must be rebuilt and developed anew beginning with the producer, and then the food processor, distributor, retailer, food service operator and, ultimately, the consumer. To be sure, there are many small farmers in Ukraine who grow what regionally amounts to tens and hundreds of tons of potatoes in one year and then store the crops in their cellars. What is not consumed by the family or bartered away is fed to the pigs.

One small farmer in the western Ternopil region - an oblast, like others, with an expanding restaurant business - grows 2.2 tons of potatoes in one season on nearly a half an acre of land. Small farmers in his town cumulatively produce a crop of 1,584 tons (U.S) of potatoes, none of which is used in the local economy. Using the U.S. benchmark farm price for potatoes of $4.50 per hundredweight, the potato crop from this town could be used to stoke the local economy and put money in the farmers' pocket.

It would be more beneficial to the Ukrainian national economy to help these local farmers create produce co-ops or marketing groups, such as the American body called Pro*Act, located in Monterey, Calif., which would supply regional food processors and distribution companies, who would then supply regional retail stores and restaurants. This would mean that an agricultural rescue plan for Ukraine would have to take into account the development of the attendant infrastructure of national highways, trucking companies, food processors and distributors, along with trade organizations and media, as well as retail stores, and commercial and non-commercial restaurants.

The foodservice industry should not be overlooked in its prospective contributions to the GDP. If developed properly, it could also help Ukraine's economic growth. In the United States the foodservice distribution industry had a collective sales volume of $170 billion in 2001. American restaurants of all sizes and categories are expected to ring up $407.8 billion in sales this year, and they are the largest single employers outside the federal government.

The Ukrainian agricultural industry is in dire straits, but it is improving and does offer the potential of productivity and profitability for all participants.

John R. Block, president of Food Distributors International located in Falls Church, Va., and former secretary of agriculture in the Reagan administration, attended a Citizens Network for Foreign Affairs conference in Kyiv this spring. He offered the following positive comments about farming in Ukraine:

"After some tough times this country's agriculture is starting to turn the corner. This is a very important turn of events, because this is a rural state. We've been driving south from Kyiv and we're headed to the port city of Odesa on the Black Sea. And all we've been able to see in a whole day of driving has been miles and miles, and acres and acres of rich black land. Farmers raising wheat and corn and soybeans and barley. They are trying to put their act together.

"They've had some real problems because communism messed up this agriculture something terrible. We have abandoned farms where the pig barns are empty, the poultry barns empty. The grain elevators were owned by the government and they mismanaged those. But now this is being turned over to private hands. They are starting to see some real improvement."

Food Distributors International and the International Foodservice Distributors Association, two related trade organizations located in Falls Church, as well as the International Foodservice Manufacturers Association of Chicago, the American Bakers Association of Washington, the American Frozen Food Institute of McLean, Va., National Food Processors Association of Washington, and the Grocery Manufacturers Association of Washington, are among the American trade associations that could help put together a farm-to-table program that would improve not only the livelihood of Ukrainian farmers, but also the national economy.

Long-term development of the Ukrainian agricultural industry, or specifically the food chain, will undoubtedly contribute to the gross domestic product, boost Ukraine's economic image and invigorate the national spirit. But the formula must be based on the entire chain.

Ihor Dlaboha is executive editor of ID (Institutional Distribution), New York, a monthly business-to-business magazine in the foodservice distribution industry.

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