Market Assessment

Helvetas Kyrgyzstan 2002

    Helvetas Kyrgyzstan contracted Senty, a local consulting company, to carry out a survey of 28 medium and large fruit and vegetable processing enterprises (FVPEs) in six Kyrgyz oblasts. The study was done to determine the potential for the Kyrgyz fruit and vegetable processing sub-sector to expand both its export and local markets. Products include dried fruits and vegetables, jams, tomato and fruit pastes, marinades, and compotes. The sector's largest export markets are Russia (77%) and Kazakhstan (15%.)

    The total cost of the study was US$12,000.

    Methods for info gathering
    SE survey, Quantitative

    Summary of results
    · Export sales are constrained by insufficient production, distance to potential markets, and unreliable partners.

    · There is a lack of professional managers'most manager/owners have a technical background and Soviet-type, centralized decision-making processes.

    · Exports are focused on Russia, but Russian FVPEs are developing rapidly (up 18% in 5 years) and threaten to take over the Kyrgyz share of that market within 3-5 years.

    · Only 10 % of Kyrgyz enterprises actively promote their products and the low price of imported products limits that of locally produced goods. Traders prefer to sell local products because of quality (no preservatives), reasonable prices, freshness, and relationships with local producers. But, producers need to advertise, update packaging, assess consumer preferences, become certified, and ensure regular supplies.

    · Kyrgyz FVPEs could process five times more fruits and vegetables, but there is no stable, organized raw materials market in Kyrgyzstan. Crop quality is only average; farmers do not have reliable agricultural production information.

    · Production machinery and workshops need repair, but credit for equipment is scarce.

    · There is no Kyrgyz branding; it would make FVPEs more compatible and facilitate quality management, product promotion, and sales. It is difficult to promote consumer goods on the Russian market without a brand name.

    The survey found investors attracted to the sub-sector and good potential to develop the supply of raw materials and increase local and export sales. A Guarantee Fund for collateral and credit to replace/repair machinery would increase production/sales and help export traders develop markets. Discussions with Russian FVPEs could result in sales of Kyrgyz products under their brands.

    Proposals were to organize business trip for Kyrgyz managers to FVPEs in Russia and Ukraine; establish contact with Russian Fruit and Vegetable Processing Industry Research Institute for technology advice; organize conference on modern technology and processed products; analyze possibility of creating a holding company for the industry.

    Associated Activities and Documents
    »Support to Rural Food Processors in Kyrgyzstan, Helvetas 2001-2003
    Final Documentation
    »BDS and value chains in rural areas of Kyrgyzstan, Helvetas 2003-5 (English/French/Russian)