For years, the steel industry was the driver of Ukraine’s economy. But with the conflict in Eastern Ukraine, the economic realities have changed: The agricultural sector of Ukraine, known as Europe’s bread basket, has become the key factor in the country’s economy. Over the past five years, the volume of agricultural production has increased by more than 15 per cent. Today, 18 per cent of Ukraine’s GDP come from this sector. The importance of the agri-business has increased along with opportunities for export – among them the Deep and Comprehensive Free Trade Agreement with the European Union, which opens the doors to a huge market of 550 million consumers. Already today, 44 per cent of Ukraine’s exports are agricultural products being transported to the EU, China and the Arab world. It is no wonder that Ukraine’s agricultural sector has attracted international investors – and keeps Ukrainian policy makers busy developing attractive investment conditions.
But the importance of Ukrainian agriculture has also increased for Ukrainians themselves. The demand for products “Made in Ukraine” across all categories has spiked after EuroMaidan 2013/2014. This development goes along with a growing dynamic towards sustainability, health and transparency. Thus, for example, 80 per cent of Ukrainians today prefer to see completely natural products on the shelves.
In 2016, METRO Ukraine decided to bring those two developments – the need to support Ukrainian agriculture and the demand for sustainable, local and healthy products – together and initiated the project “FERMOVE”.
FERMOVE links three actors: farmers in Ukraine, seed and fertilizer producers – and finally METRO Ukraine as the trade company, offering sales channels, namely in the 26 METRO stores across the country.
The project was launched with 30 farmers. They received high-quality seeds and fertilizers as well as consultancy for every step of their farming process from METRO’s partners. The objective: increasing productivity, food quality and food safety in a sustainable way. The first partner was Syngenta. Today, four other seed and fertilizer suppliers – RIJK ZWAAN, Sakata, Enza Zaden and Bejo – have joined the programme, which also enjoys strong support of the Ministry of Economic Development and Agriculture of Ukraine.
After harvest, METRO Ukraine takes over all logistics, ensures packaging and transport in accordance with international standards and Ukrainian regulation in the field of food safety. Therefore, quality control is guaranteed until the product is being put on the shelf and sold under the own-brand name “FERMOVE” at reasonable prices to METRO customers. By cooperating with farmers directly and eliminating the “middlemen”, participating farmers increase their income.
These factors have proven to be an ingredient for success: The number of participating farmers has increased dynamically. Today, METRO Ukraine works with 70 farming enterprises, from Kherson to Odesa and Kharkiv. The challenge today is not to increase the number of farmers – but to promote farmers’ business development in a meaningful way.
The produce of FERMOVE farmers has increased in volume but also in categories. Today, the assortment includes 229 commodity items like onions, pepper and pumpkin in 24 categories. In 2019, the season share of “FERMOVE” products in the fruits and vegetable assortment in METRO Ukraine stores was 69 per cent. For 2020, METRO Ukraine seeks to reach a 75 per cent share.
FERMOVE has become a strategic initiative that allows METRO Ukraine to differentiate itself from local competitors, to become an authentic actor in supporting local farming – and in promoting a healthy food culture in Ukraine. And it has become an example of a long-term and mutually beneficial partnership between large international businesses and local farmers. Finally, it has created new communities, linking farmers to consumers.