49250 MAY 2009 Leveraging the Supply Chain Development to ABOUT THE AUTHORS Achieve Greater Impact in the Industry TETYANA KORINNA joined IFC in 2005 as a program assistant on public education for the Ukraine The IFC Vinnytsya Fruit Supply-Chain Development Project works to Vinnytsya Fruit Supply-Chain Development Project. Prior to strengthen the farmer supply chain for one of the world's largest fruit joining the IFC team, she processors. This SmartLesson focuses on the project's experience using worked for a Ukrainian media corporation in communica- public education tools--demonstration programs, site tours, publications, tion, promotion, and company development issues. television, and DVDs--for increasing the understanding and knowledge of OKSANA VARODI industry stakeholders about market potential and development, for public operations officer, joined IFC discussion and promotion of needed regulatory improvements, and even in Ukraine in 1998 as an analyst-assistant to the senior for maintaining relations with donors. economist in the Farm Reorga- nization and Land Privatiza- tion Project. Oksana has The Project revolves around Agrana Juice impact on the fruit industry in the region by worked in several agribusi- and Fruit Holding GmbH, a multinational running a strong public education program. ness advisory projects and company with headquarters in Vienna. currently manages the implementation of the Agrana produces mid-product, which is then AlthoughAgranaisnotyetanIFCinvestment Ukraine Vinnytsya Fruit used for production of final products by such client, the discussion is in process, and we Supply-Chain Development clients as, among others, Danon, Pepsi, and believe this is a case where advisory work Project. Coca-Cola. The company has a 14 percent will lead to IFC investment. market share for juice concentrate in Europe APPROVING MANAGER and a 37 percent world market share of fruit Ivan Ivanov, senior operations officer, Agribusiness Linkages, preparations. Agrana Fruit Ukraine LLC, the Central and Eastern Europe company's subsidiary in Ukraine, produces and Southern Europe and apple juice concentrate and fruit Central Asia. preparations. The project provides the following advisory services to Agrana Fruit Ukraine: · Building Agrana's local capacity on supply chain development · Support for registering new juice apple varieties in Ukraine to allow official use IFC's Advisory Services pilot farmer Andriy Slo- of these varieties in the country bodyanuyk greets Lars Thunell in his office in Vin- (completed) nytsya region, Ukraine. · Facilitation of access to finance for local farmers, who are Agrana suppliers; and Lessons Learned · Building local capacity for advisory 1) Do more than just lecture. services to farmers and GAP implementation (addressing food safety One of the project's objectives is to improve and traceability issues) farmers' productivity and competitiveness. Because it is not possible to cover all fruit The project also leverages its supply-chain farmers in the region individually, the project development work with Agrana Fruit designed demonstration-testing ("demo- Ukraine as the anchor company to achieve a testing") programs with selected pilot replication effect and greater development farmers. The aim of these programs is to IFC SMARTLESSONS -- MAY 2009 1 implementnewtechniquesandfarmmanagementpractices To achieve the desired effect of a study tour, it is necessary on average farms, and then have these farmers share their to show the bigger picture to a farmer so that he will be experience and demonstrate to the larger farm audience able to understand the necessity of innovations as they what they can do to enhance productivity and fruit quality relate to global trends and competition. and to market their products effectively. The project identifies the areas with a lot of potential for improvementandthenorganizesthedemo-testingprogram in cooperation with input suppliers: chemical and fertilizer companies, machinery suppliers, and foreign consultants, who bring innovative technologies and professional advice. This approach--on a costs-sharing basis between farmers and input suppliers--proved to be a good public education tool. Furthermore, it is effective in promoting successful replication, since farmers can learn in the field and can consult experienced farmers from the pilot farms. It gives farmers access to practical information through contact with a wide range of input providers. This "learning by doing" system of education not only improves farming methods, it also does more, including: Launch of the Agrana Re-sorts Apple Supply Chain Program. The · Stimulating interest in innovations. For example, on governor plants the first re-sort apple tree. the basis of one demonstration program, a new-to- the-region prospective crop--blueberries, which were demanded by both fresh and processing markets--was The Agrana Re-sorts1 Apple Supply-Chain Program was popularized in the region. That one innovation opened launchedafterastudytourtoEuropeancountries,including a new market niche for local fruit producers, aroused visits to: interest in learning how to implement innovations at other farms, and attracted public attention to the fruit · AgranaheadquartersinVienna,wherefarmerslearned business as a whole. about the global situation in the fruit-processing segment · Providinginformationformakingtherightmanagement decisions. For example, within the apple pest protection · Leading apple scientific-research institutes, where management demo-testing program, several protection farmers learned about the latest news and developments plans were tested with different chemical companies at in apple production pilot farms. Results of the program were demonstrated at the project seminars, where all the participants had · Apple tree producers, where farmers were able to see the opportunity to see first hand what worked best, the required quality of trees and learn about apple what did not work well, and what costs were involved. production Fruit growers could choose the appropriate technology to implement at their own farms, and make better- · Apple producers, where farmers learned about informed decisions about which chemicals to use and technology and found answers to questions about why which input company to select. This approach provides it makes sense to use certain techniques; and an opportunity for the fruit producers to be sure they're making the right choice, instead of just following the · Marketing cooperatives, where farmers learned about ads and making mistakes out of their own pockets. market requirements and trends in Europe. 2) It is better to see once than to hear 100 times. When the Agrana Re-sorts apple program was launched in the region, five pilot farms planted 157 hectares altogether Sometimes the project cannot find a farmer willing to take of apple orchards with innovative Re-sorts cultivars. the risk of implementing a new technique or practice, but we know that a vehicle already exists in other countries and A note on pricing: it works. Or, sometimes we know it could take too long for a new technique to be ready to demonstrate results. In such The project itself learned a lesson from the first study tours. cases, we organize study tours. We learned that charging a fee for the tour ensures commitment and helps attract the right participants. After For some study tours that cover a broader range of topics, the first study tour, which was free for the clients, the the project invites various sector stakeholders (fruit project implemented a participation fee. We discovered producers, representatives of local authorities, financial that clients who paid were more responsible for getting as institutions, professional nongovernmental organizations, much benefit as possible during the tour, took knowledge and input suppliers) to promote better understanding, 1 Re-sorts are varieties of apple cultivars resistant to main apple diseases. They en- trust, and improved partnership among them. able farmers to mitigate risks, reduce costs of production, and improve quality and productivity 2 IFC SMARTLESSONS -- MAY 2009 very seriously, and implemented changes faster upon allow us to spread information about best experiences, return. market possibilities, and results of the demo-testing programs and to keep fruit producers informed about 3) Educational materials need to be presented, not just market trends and developments distributed. · Educational programs are used as a practical guide. For Since the beginning of the project's work, we've created example, a fruit-orchard pruning program provided four manuals covering technical and economical aspects of professional detailed step-by-step information that any fruit production and advice for farmers regarding the most fruit farmer could follow to perform pruning in the common legal issues. Such manuals are a unique source of proper way and increase the productivity of the trees. information in the local language and are adapted to the local condition. To have a broader impact, we present newly To extend the life of the TV materials and reach a variety of published manuals at our seminars, training sessions, and audiences, we record all our TV programs on CDs or DVDs. workshops, and via educational TV programs. This allows us These videos can be effective training aids, support the to achieve an impact across the entire fruit sector, well project's events, and illustrate ideas and help put them into beyond the farmer group directly covered by the project. action. Never lose an opportunity to leave good tracks. For example, after the first presentation of the manual, "Growing Strawberries," one of the leading Ukrainian Conclusion strawberry plant materials producers paid for additional 300 copies for further dissemination among his clients. Due to an intensive public education program, the project achieved significant sector impact beyond the Agrana supply chain. To date, almost 100 training events have been conducted, 125 educational materials produced, and more than 1,600 individuals trained by the project. The strong demonstration effect has already led to a more than twofold increase in new fruit plantations set up in the region (from 370 hectares to almost 900 hectares per annum). With project support, farmers invested more than $5 million in new techniques and plantations. During recent years, the Vinnytsya region became a leader in fruit production in Ukraine and in implementing the newest technologies. In 2008, Vinnytsya farmers produced 40 percent of apple output from farms in Ukraine (see Diagram 1), and apple productivity in Vinnytsya is 57 An IFC project consultant presents a newly published manual, percenthigherthanthenationalaverage.In2008,Vinnytsya "Growing Strawberries." was the only region in Ukraine showing a positive trend in establishment of apple plantations and the first increase in plantation area since the Soviet era (see Diagram 2 on the Greater outreach through TV programs and DVDs: next page). Since its launch, the project has partnered with the local TV station on creating interesting and relevant educational programs directed toward promoting development of thefruitbusinessintheregion, Diagram 1.Apple Production by Farms in Ukraine in 2008 including: · Interviews and advice-- IFC specialists (lawyer, agronomist, business developer) cover the most burning topics that we think need to be addressed, or that have been raised by the clients · Coverage of IFC events (seminars, workshops, and training sessions organized by the project in cooperation with other fruit sector stakeholders) IFC SMARTLESSONS -- MAY 2009 3 Diagram 2. Dynamic of Apple Plantations in Ukraine DISCLAIMER IFC SmartLessons is an awards program to share lessons learned in development-oriented advisory services and investment operations. The findings, interpretations, and conclusions expressed in this paper are those of the author(s) and do not necessarily reflect the views of IFC or its partner organizations, the Executive Directors of The World Bank or the governments they represent. IFC does not assume any responsibility for the completeness or accuracy of the information contained in this document. Please see the terms and conditions at www.ifc.org/ smartlessons or contact the program at smartlessons@ifc.org. 4 IFC SMARTLESSONS -- MAY 2009