When the shelves of Scandinavian supermarkets will be Ukrainian onions

The company “green team” was founded in 2010 as a multi-functional vegetable store in Kakhovka, Kherson region. At the time of construction of storage capacity of 50 thousand tons was one of the largest in Eastern Europe. The enterprise equipped with modern lines for sorting, processing and packaging of products. During its existence the company has established itself in the cultivation of vegetables “borsch”, storage vegetables, as well as the export of niche vegetables to the EU market. The owner of the company is a private British investment Fund Delin Capital.

Denis, the history of the company?

It all began in 2010. On the market felt a great shortage of quality vegetable stores, which would be able to store the harvest throughout the year. Therefore, it was decided to build a vegetable store. From the beginning the planned large-scale project — the largest vertical greenhouses in Eastern Europe. All strategic issues — from idea to implementation took over a British private investment Fund Delin Capital UK, which have invested in this project, becoming its owner.

How much cost a project?

Investments in the project amounted to about $40 million that was spent on the construction of a storage facility, the purchase of processing lines and packaging, as well as to other equipment. Also purchased a farm.

How long was construction?

Built in storage for 1 year. Then I really wanted to capture the market quickly on a large scale, which resulted in a series of system errors.

What do you mean?

Initially the company is targeting vegetables “borsch” — beets, carrots, cabbage, onions. In the first couple of years we have chased grow large amounts of vegetables on a huge space with further storage. Thus, neither the production technology nor the technology of storage of vegetables was not particularly developed.

As a result, the “green team” made three basic mistakes. First, we started with a huge scale of growing and storing vegetables without testing technology second, there was no control of the quality of cultivation. In the end, a large number of products had become unusable and had to be removed. Thirdly, there was no cost control.

On top of everything else has played us a cruel joke pricing that season — the company got the lowest prices for fresh vegetables. As a result, the loss of several million dollars.

Wow, probably then decided to change the business model?

Yes, after that experience in 2011-2012, by 2014, the company’s strategy was revised. I joined the company at the end of 2014, and persuaded the founders to return to farming vegetables, but to go the other way — start small. In 2015, we started with 50 ha in 2017 brought the area of 300 hectares. Thus, we were able to work out the technology of cultivation and to minimize the cost of failure.

You mentioned that you started to grow vegetables on 50 hectares Where the land, in what regions?

Originally purchased our farm in the Kherson region. There we all were grown. However, we changed the list of cultivated vegetables and deviated from the “borsch set” to a more strategic cultures. We have expanded acreage, but with one condition — they had to be not more than 50-70 km from the vegetable store. In 2017, the volumes grown vegetables amounted to about 17 thousand tons.

Photo: Green Team

Do you plan to make land?

We are part of this farm started with 50 hectares by the year 2015 and increased the size to 350 hectares in 2017. In 2018 we plan to reach a figure of 400 ha. we grow vegetables on the area of 1200 ha (own land or rented).

Implement where locally grown products?

We work directly with three retail chains — Metro, Billa, ATB. This is something that concerns the internal market. Basically, it’s the vegetables “borsch set”.

We also supply products abroad. This area is strategic for us. Exports are vegetables, which are not much in demand in the country

Plan to export to send about 60% and rest 40% — on domestic market. To date, we significantly reduce the percentage of the volume of vegetables “borsch set” in the General structure of the grown products

Why did you decide to move away from the vegetables “borsch set”?

We are moving away from the crops that we can’t find a use for but to sell the fresh domestic market.

Two years ago we began to study international markets, which took a lot of time and money resources. We wanted to understand which vegetables in the world there is a demand, where the company can successfully compete and to diversify the risks associated with falling prices in the domestic market.

The result is determined by the set of crops that are in demand on foreign markets — onion in all its manifestations, garlic, Butternut squash and sweet potato (sweet potato).

When you decided to export?

He started to break into foreign markets before the revolutionary events. The first export country was Russia. In parallel with this, came knocking on the Polish market.

After the closure of the Russian market in October 2014 we started to think what to do next. As a result came to the conclusion that we are not ready for expansion into the EU, it was necessary to bring the products under the international principles of growing and accounting. Doing this and the next two years.

What and where put?

If we talk about Luke, that we are the first who have learned to work with any types of onions. This vegetable can be of different diameter, shape, could be cleaned, can be cut into rings. It’s all different formats. For example, in a year we export to 3-4 thousand tons of peeled onion in the UK. This country remains our main export market, which we developed, realized and established system of sale.

We export onion and other positions only in the UK. But are actively looking for new markets. We are interested in the Scandinavian countries — Sweden, Denmark, Norway. The plan is to put the onion, sweet potato and the same positions as in the UK. In the 2017/2018 marketing year we plan to add to the onions for another 2 to 3 thousand tons of other exported products.

For three years we intend to take first place for the supply of Butternut squash to the European market.

How much time passed from the moment targeting the UK market and came to him?

A year or so. So much time needed to pass all certification, start a new plant for the production, work process and train people.

We started with Luka, and now promote Butternut pumpkin. The British, it is in great demand. They can be baked, added in various mixes. This year started to put the pumpkin in branded packaging. It says that it’s a Ukrainian product that is our production. We, therefore, inform the British people of Ukrainian products.

Take bow for example. How much it costs in Ukraine and how much in the UK? How to earn on it?

Take peeled onions. If you compare the margin in the UK and in Ukraine, in the first case it is 2 times higher than today. The main difference is that in the UK the contract price is fixed for 12 months, whereas in Ukraine are directly tied to the cost of raw materials, and also may change significantly.

Tell us more about the permits, obtained by the company for entering international markets? There is a misconception in the head of the Ukrainian manufacturers. It is that kind of country requires some certificates.

In fact, the country requires nothing. The certification demanded by the customers. There are some clients who don’t need no certificates. Then the cost of production for them will be minimal. But there are others who care about the food safety of their customers and strive for quality. Second willing to pay more. These customers want us to control how we grow, how we store and how we process.

Our strategy was aimed at the second group of clients. Therefore, the “green team” decided to get certified to HACCP and many others.

Tell us more about the vegetable store, because it stores not only your own vegetables?

We came to this when he abandoned his own cultivation. Total storage capacity — 50 thousand tons. Their products fill 30-35%, the rest of the space is not occupied. It figures for 2017.

Accordingly, came in to being to provide a service for storage products from other manufacturers.

Who are your customers?

A variety of categories — farmers, vegetable processors, food network.

Do vegetables “face control” before you can get in vegetable store?

Of course, in the beginning, we analyze incoming raw materials, check it in our lab. It is important to understand how it fits for storage. If everything is in order, then give the nod to storage. Vegetables can be stored with us until June.

What can you say no storage?

When we understand that the product cannot be stored due to diseases or pests. The company gives the farmer test Protocol and tries to convince that the product will lie long.

How do you manage to make it so that the vegetables do not mix?

Each product has its own optimal storage conditions. Take, for example, a bow that cannot be stored in the same cell with potatoes or carrots. Therefore, the products are divided into the chambers, and each particular cell can store one or more products that are similar in humid climate and storage conditions. The vault is divided into 16 cells, where the smallest camera of 1,500 tons, the largest camera 4000 tons. Vegetables are placed in special containers with a capacity of 1 ton and stand up to 7 levels or floors.

Is there a minimum required amount of vegetables, which might be stored?

Previously, we provided services for container storage and the minimum amount that a farmer could make in storage, 100 containers, that is 100 tons. Now moved to the storage chamber, that is, the farmer takes us to rent the camera. The minimum quantity is 1,500 tons.

We not only provide services for the storage of vegetables in the region. There are other providers. Prices vary plus or minus 15-25 cents per kilogram of stored products per month.

How keenly felt at the moment, the lack of facilities for the storage of vegetables in Ukraine?

We recently tried to perform, how many providers are on the market. You could count them on the fingers of one hand. In Ukraine storage is an incremental thing for growing. That is, there is own business for growing agricultural products, plus storage. But companies that provide services only for storage, very little.

Do companies that do only storage, problems with customers?

I know a few examples of companies that are unable to fill their store. Infrastructure entails large fixed costs and some of these projects are unprofitable.

What about public procurement, do you participate in tenders?

We try to distance themselves from all government programs and public procurement. When we have some regular “functionaries” at the regional or Central level and ask the question: “how can I help”?, the answer usually sounds memorized phrase: “Thank you, we are nothing more than to not need help. The main thing — do not disturb”. Now, that’s all”.

Let’s talk about plans for the future. What areas do you want to develop?

We see great prospects in cooperation with the HoReCa (hotels, restaurants, cafes). This is a niche that is underdeveloped. They have the overriding challenge is the presence of people on these types of ancillary works such as cleaning potatoes or carrots, for example. The business wants to obtain a prepared to use product. And we are ready to give it.

What kind of products?

It depends on a very large number of variables. We are now working on a list of products that we want to do, look after equipment in the UK. It can be two different types of cleaned and cut into products with a longer shelf life. For example, in a vacuum pack. We recently spoke with representatives of retail. They said that they are interested in packing a mass of 3-5 kg. In this form, which we could distribute in the network of restaurants. The process is moving. When will the first delivery will be to tell more details. But the prospects of this direction are good.