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CEI Know-How Exchange Programme (KEP) / Support

to Wholesale Market Development in Ukr1aine

International Conference on Wholesale Markets, Lviv, 14-15

September 2006

Marco Sibani

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Outline an ownership, management and financing model that is adapted to Ukraine

One must first of all consider that the WM activity is of general public interest in that the concentration of a large quantity of produce in only one area, at the same time, allows to:

- controls: carry out with simplicity hygienic-sanitary tests and to monitor the quality of the produce arriving from various destinations

- price transparency: to know the price creations on conditions of free competition;

- Incentives: to initiate programs to encourage the process of qualification of the typical produce from the local territory

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Current situation in the Westen European countries

These and other reasons brought the Westen European countries to create WMs with ownership and management under the municipality or in companies in which the municipality has a major share

In these countries, for the large WMs the positioning is towards a mixed company with majority of it being public (State, Region, Municipality, Chamber of Commerce) and with the participation of private institutions (wholesalers, producers, banking institutions etc.).

There exist also WMs of private ownership and management (for example, the big market of Perpignano in France)

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Italy case study

1986 financing law for WM development Developed and initiated 12 markets ( Torino, Verona, Padova, Parma,

Bologna, Rimini, Roma, Fondi, San Benedetto del Tronto, Pescara, Napoli, Catanzaro).

Other 2 currently under development (Cosenza e Catania) Other municipalities followed this exmple(Genova, Firenze etc).

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Characteristics of the new markets

Optimum positioning: outside urban centres and in the proximity of various infrastructures

Variety of commodities: not only F&V but other commodities as well ( fish, flower, meat, cash and carry etc)

More services: not only commerce, but also storage, grading, packaging for hyper and supermarkets etc.

Better logistical function: large areas for the movement of motor vehicles and the palletting of the produce

More dynamic management of the market: mixed public-private company with a majority in the public composition (mainly made up of the municipality, but also the Province, Region, Chamber of Commerce)

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Some reflections

- The public component guarantees mainly the function of general public interest but quite often it is excessively beurocratized and with scarse resources;

- the private component is definitely more dynamic, but resistant in relation to public monitoring which is seen as cumbersome and as an obstacle to the commercial dynamics

- this, brought a tendency towards a mixed joint-stock company with a majority in the public shares created specifically to strike a balance between the public aspect, with the dynamic nature of the private sector

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Market ownership and management models

Public ownership and management through:- State company- Region company- Municipality company or directly owned and managed by the

municipality alone

Private ownership and management through:- Producers cooperatives- Wholesalers company- Wholesaler and producer companies- (often wholesalers are also producers)

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Mixed public-private management

Can be based upon:

One company with the whole ownership and management of the market

Two companies:- One is the owner of the structure;- The other rents out the structure (signed contract and rent fee) and

manages the market

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Shareholders of the company

There could be various compositions between the members of the company:

In the case of one company owing and managing the market, the composition of the company can be:

- Major public share (municipality, province, region, chamber of commerce etc)

- Major private share ( wholesalers, producers, others) In the case of two companies: - the structure can be owned by a company with: a major public or a

major private share - Usually, the company which manages the market is of majority private

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Creation and management of WMs from private bodies

In the case in which one wants to favour the creation of WMs under the support of private bodies, it is necessary to set some rules:

- national norms,

- standard regulations for WMs.

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Contents of the norms

In particular, the norms must foresee the following obligations:- quality and hygiene-sanitary controls,- regular collection, measurement and diffusion of the market prices,

- projects for the development of typical local territorial produce,

- respect of the norms in trems of safety, regulation of labour and environment

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EU Norms

EU norms in relation to agrarian policy aim at adding value to the typical produce of the territory

The underlying rationale is also to protect the economy of our countries, especially in this period of trade globalization

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Supply chains

The supply chain process is a key element in adding value to the typical local produce, and it is based on:

- The identification of the produce which allows for it to be followed and identified from the beginning to the table

- On the possible quality control of the commodity during its various steps throughout the supply chain

Therefore, the supply chain allows for:- Tutelage of the consumer and- Add value to the typical local produce and the quality of the territory

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SO,GE.MIMercati Agroalimentariall’ingrosso

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