USAID Helps Smallholder Farmers Rebuild Their Lives and Businesses in Conflict Torn Eastern Ukraine

Speeches Shim

As USAID continues to partner with Ukraine and its people and support them on their journey to self-reliance, we come upon stories that profoundly show the relentlessness and heroic determination that companies and individuals alike have undertaken to keep Ukraine on its European path.

I am continuously moved and motivated by the resilience and determination shown by so many Ukrainians to overcome the challenges before them. This is most evident in eastern Ukraine, where the ongoing conflict has displaced so many lives and uprooted so many small and medium businesses. I’d like to share with you two stories that demonstrate the resolve of two agricultural firms to overcome setbacks caused by the conflict in eastern Ukraine and how they did so. They are among the dozens of similar USAID successes across Ukraine in providing sustainable support to small and medium-sized agricultural businesses.

These two stories are vivid examples of how USAID plays a critical role in helping Ukraine on its journey to self-reliance, most often one small step at a time. It also shows the effectiveness of using private sector engagement to energize and enhance that journey.

Serhii Ostapets, 46, started Sady Donbasu, an apple producing company, in 2000, and by 2014 had nurtured it into the largest such firm in Donetsk Oblast. 

That year, a Kremlin-supported rebellion and armed conflict exploded in Donetsk Oblast. Soon after, armed fighters entered the village of Spartak, where all of Sady Donbasu’s post harvest processing and storage facilities were located, and occupied the facility. Before long, the place was in ruins. The company lost about $2.5 million in equipment and storage containers.

Mr. Ostapets and his business partners fled their homes for the village of Dachne, which is located within the government-controlled area of Ukraine, taking with them what little they could. 

“It makes me sad to remember how we watched our former facility turn to garbage,” explained Mr. Ostapets. “After moving beyond the line of contact, we set a goal for ourselves to again become the leading apple producer in the region.”

The Sady Donbasu management team was determined to get back to business, but lacked financial resources. 

They still had their apple orchard in Poltavka, near the line of contact on the government-controlled side, but the essence of their business was processing, packaging, and sales, and they had abandoned their equipment as they fled Spartak.

It took some time, but in 2017 Sady Donbasu connected with USAID’s Agriculture and Rural Development Support (ARDS) activity, which helped them develop a co-investment plan that led to the purchase of new processing and storage equipment and the relaunch of their business. USAID provided $123,000 and Sady Donbasu invested  $235,000 to implement the project. 

USAID’s ARDS activity also provided training to the Sady Donbasu leadership on implementation of international quality and safety standards and the latest technology for fruit cultivation and pre-sale preparation, opening the door to international market sales. USAID ARDS showed the company how to maintain quality, comply with international packing standards, and increase sales.

By 2018, Sady Donbasu had broadened its domestic sales base and entered the international market, signing supply contracts with a Belarus company and developing a specific brand for the Asian market, called FruitBall. Today, Sady Donbasu boasts an 87 percent increase in sales from its 2014 figures.

The co-investment provided by USAID extended beyond propping up a single business entity. It made Sady Donbasu a processing hub, which allowed smaller fruit producers in the area to learn and adopt the same international quality and safety standards that had helped Sady Donbasu to expand its market. It also provided the smaller producers access to the company’s fruit sorting and storage facilities. With improved product quality, prices increased and markets expanded for these farmers too, leading to a 20 percent higher batch price and 15 percent increase in retail sales networks.

Ever mindful of the workers they had left behind, Sady Donbasu management also began hiring internally displaced persons (IDPs) like themselves, who had fled the conflict zone and were now trying to re-establish their lives in a new location. Today 90 percent of Sady Donbasu’s workers are internally displaced from the non-government controlled conflict area.

The meat processing plant, Miasne Remeslo, is another example of how USAID efforts in the east are helping reinvigorate businesses and jump start the economy using private sector engagement. Miasne Remeslo, located near the line of contact in Donetsk Oblast, found itself unable to do business after its pig breeding facility ended up in the non-government controlled area of Ukraine after the military conflict began. Before the conflict, its business of producing quality sausages using German technology had thrived. As the company searched for new sources of meat, USAID’s ARDS activity co-invested with Miasne Remeslo to upgrade its processing plant and implement international safety standards. The new equipment helped it to increase production, and the implementation of international safety and production standards allowed it to enter international markets. With higher demand came a need for even more raw product. In response, Miasne Remeslo also became a processing hub. It worked with USAID to show small, local pig farmers -- many of them IDPs, too -- how to meet international standards, and then developed contracts with them, guaranteeing the displaced farmers steady sales and helping them to rebuild their lives.

In addition to training farmers throughout Ukraine in internationally-recognized growing and processing requirements and standards, USAID helped develop a network of labs that allow farmers to test everything from the quality of their soil to the purity of the milk their cows produce. The labs further enable Ukrainian farmers’ abilities to offer their products to larger and more distant markets.

The work of USAID ARDS is unique in that it not only helps strengthen value chains in Ukraine but also connects small farmers to international markets through established local processing companies. With USAID support, these processing hubs, many with international contracts, show smallholder farmers how to grow and prepare their products to meet international standards. The food processors obtain the additional higher quality product or input they need, and the farmers receive a guaranteed higher price and a steady source of sales. With each such success, Ukraine’s journey to self-reliance moves forward, one successful group of farmers at a time.

Tuesday, November 19, 2019 - 1:15am

Last updated: November 19, 2019