FAO promotes sustainable value chains in Russian regions

The dynamics of real incomes and earnings of the population in Russia offers a weak incentive for the increase in retail trade turnover. Even the official statistics records retail market “growth” within margin of error (1-2% per year). Buyers are tightening their belts, while demanding from retailers an ever-increasing variety of products, quality service and lower prices.

How will the retail trade develop in the regions of Siberia, the Urals and the Far East, Tatarstan and Bashkortostan? What points of growth and opportunities are available on regional markets? These issues were discussed on 20 September at the “Retail in Russia. Focus on the regions” Forum in Krasnoyarsk, organized by the “Vedomosti” daily newspaper.

FAO has a wealth of experience in promoting one of the promising areas of agrifood development – the creation of sustainable value chains. A presentation by Katerina Antonevich, an expert at the FAO Liaison Office with the Russian Federation in Moscow, was devoted to this issue at the forum in the Siberian city.

“The food chain brings together all participants in a coordinated process of production and value addition necessary to obtain food,” Antonevich pointed out. The food chain is “cost-effective throughout the whole chain (economically sustainable), based on the social benefit for the society (socially sustainable) and has no negative impact on natural resources (environmentally sustainable).”

There are several tested and proven territorial tools for agro-industry development, the FAO expert noted. These are:

Agro-based clusters. An agro-based cluster is a geographic concentration of interconnected producers, agribusinesses and institutions that are engaged in the same or related agricultural or agro-industrial subsectors. It interconnects and builds value networks by addressing common challenges and pursuing common opportunities.

Agro-industrial parks. An agro-industrial park is a centrally managed, physical platform that offers high quality infrastructure, logistics and specialized facilities and services to a community of tenants, formed by agro-industries, related agribusiness firms, service providers and research and knowledge institutions.

Agribusiness incubators. An agribusiness incubator is an enterprise development hub that provides a common environment − often physical, but in some cases virtual − to nascent agro-based companies, where they have access to shared infrastructure, and networking, mentoring and coaching, business and financial services. The objective of agribusiness incubators and accelerators is to help entrepreneurs create and expand their businesses by enabling the successful startup and growth of agribusiness companies, i.e. to increase the chances of success.

Regional centers – Food hubs. Business, commercial or non-profit organizations that actively manage the collection, storage, packaging, distribution, marketing of agricultural products from a clearly understood territory, only from direct local or regional producers, to stimulate their ability to meet demand from retailers, wholesale market and non-governmental institutions (the so-called institutional demand).

The FAO expert presented the main characteristics of such regional centers. They:

* Organize themselves or coordinate the collection and distribution of products, marketing products of local and regional producers in different markets;

* Consider producers as valuable business partners (priority interaction with medium and small enterprises);

* Conduct intensive work with small producers, clarify the requirements of the buyer (technical assistance or search for a partner to provide technical assistance);

* Use strategies of product differentiation based on promotion of “individuality” of products (by whom and where they have been grown), group branding, special individual product qualities, use of sustainable production practices – organic production, elimination of pesticides, etc.

The strategic goal is to become economically sustainable and have a favorable socio–economic impact on the environment in the region,” Katerina Antonevich concluded.