Кошельник А.В.

Донецкий национальный университет экономики и торговли

имени Михаила Туган-Барановского

DEVELOPMENT OF FOOD INDUSTRY IN UKRAINE

Ukraine is a country with a high level of economic development and a good scientific and production basis. Such industries as chemical, mechanical, metallurgical and others are developed in Ukraine. Much attention in our country is given to the food industry.

The food industry employs 12.8% of working population (as of 2003). Range of manufactured products includes more than 3000 titles. Enterprises of food industry are located near sources of raw materials, collective and private farms.

Structure, technical-economic indicators and infrastructure development of food industry in Ukraine significantly lags behind the developed countries, particularly with respect to the complex processing of raw materials, mechanization and automation of manufacturing processes, as well as packing and packaging of products. In recent years Ukraine loses foreign markets of food products distribution, while an internal market is filled with foreign products (often of poor quality), meanwhile there are all necessary raw materials and production capacity for own production. Production of meat and dairy products is decreased. During the last year production of milk compared with the year 2000 is decreased by 31.8%, butter - by 29.8, meat - by 29.5.This is due to decrease in livestock and poultry not only in public but in private sector (except livestock of cows).

Over the last five years the situation on Ukrainian food market has changed completely - supply and demand has dropped. In this case the rate of decrease in demand exceeded supply reduction. For many products the market has become oversaturated with the deficit.

The main reason for reduction of production volumes is increase of resource costs and lending rates, taxes as well as sudden opening of the domestic market for competition with foreign producers.

In spite of difficult financial situation, many companies carry out reconstruction and technical re-equipment of production introducing new types of high-quality products in modern packaging. In the food industry the process of ownership reformation is completed. As of January 1, 1998 system of Mіnagroprom has fully privatized oil and fat, soap, tobacco, confectionery, soft drinks, milk, macaroni industry.

Food industry relates to the social complex of consumer goods production. Food industry is traditionally the major supplier of basic foods, such as sugar, salt, oil, alcohol, confectionery, etc. Food industry is the leader of the agro-industrial complex. It will remain strategically important in future, determining the well-being of the people. The sector has considerable production, research and labor potential. At present, its production capacities are not fully utilized. They operate at 42% of capacity in confectionary, 30% in dairy canning and 19% in soft drink production. Thus, reserves of the sector are vast.

Among the major sub-sectors of the food industry are meat and dairy processing, sugar refining, flour milling and cereals production, oil extraction and starch and molasses production.

Food industry economic potential largely depends on the development of agriculture, which is the main element of the agro-industrial sector and the supplier of raw materials to all the sub-sectors of the food industry. Meat processing facilities are concentrated in Kharkiv, Poltava, Odesa, Kyiv, Vinnytsia, and Dnipropetrovsk. The largest dairy processors are based in Kyiv, Dnipropetrovsk, Kharkiv, Odesa, and Lviv. The sugar industry, which is another key element of the food industry, comprises more than 190 sugar refineries located in sugar beet growing areas (Vinnytsia, Cherkasy, Khmelnytsky, Kyiv and Termopil Oblasts). Flour and cereals industry offers its products to the market.

The most significant centers of the food processing sector are Kyiv, Kharkiv, Odesa, Mykolaiv, Zaporizhzhya, and Lviv. Canning industry based on fruit and vegetable supplies is strong in Odesa, Simferopol, Kherson, Izmail, Cherkasy, Nizhyn, etc. Vegetable oil extraction facilities primarily process sunflowers. The largest centers are Dnipropetrovsk, Mariupol, Zaporizhzhya, Poltava, Kirovohrad and Vinnytsia. Prospects for the food industry development include extention of domestic raw material supplies, introduciton of state-of-the-art technologies, and advanced marketing and management methods.

Numerous exhibitions are organized to represent the food industry on domestic and foreign markets. Ukraine also participates in international exhibitions. Ukrainian producers share was about 50% of the exhibitors: Ridna Marka, Intermarket Ltd, Maslyanka Ltd, International Seafood Group Ltd, Oliyar PE, TM Foodville, PE SVKA Market, TM Dobra Vecherya, Bogdan Corporation and others.

Food Expo Ukraine, World Food Ukraine Exhibition are the main exhibitions, in which Ukraine takes part in almost every year. Such events provides business communication opportunities for the representatives of food,  food processing and packaging industries. Such combination of the exhibitions will considerably widen the opportunities of new cooperation variants for national and international manufacturers. The exhibitions will feature demonstrations of progressive developments, which were presented at the leading exhibitions worldwide and were successfully implemented in production of processing and packaging companies in many countries of the world. Ukrainian and foreign food companies year after year include the World Food Ukraine exhibition to their marketing plans.

Thus, the food industry of Ukraine is developed quite well but at the same time it has a lot of problems whose solution can significantly improve the industry's development.

So to stabilize the situation in many sectors of food industry, several steps should be made. This implies renewal of material and technical basis, modernization of production cycles by means of innovative technologies implementation, increase of competitive products volume, competent widening of products range, active work on attracting international investors, entering new international markets for national products sales together with utilization of local marketing opportunities, and creation of representation offices of national companies abroad, which would be constantly active in international markets.