Marshall Plan Type Study Tours

Meat & Dairy Processing Marshall Plan Study Tours to the USA Organized by the Center for Economic Initiatives

Background Where will the group travel? The meat and dairy industries are fundamental to The program will be centered on the Cincinnati all countries and the cost and quality of food prod- Ohio area with trips to at least 5 other states in the ucts are reflected directly in the standard of living. Midwest. At least two weeks will be spent outside It is therefore important to improve the productivity the Cincinnati area. and reduce the costs in these industries so that both the product costs and prices to the consumer Expected Benefits can be lowered. Increased profitability likewise can  Reduced product costs lead to increased wages for the workers.  Improved product quality  Improved labor management CEI has organized study tours for both meat & dairy and fruit & vegetable. Example benefits from Ukraine CEI has conducted a Meat & Dairy program and a How can the CEI program help? program for Fruit, Vegetable, and Sugar. The follow- CEI programs to the U.S. can expose dairy and ing examples come from that experience. meat processor management to modern management techniques, products, organization, and Cooling Systems methods. Product costs can be lowered, infra- When the first fruit & vegetable and dairy tours in structure strengthened, and more efficient use is 1998 visited Kroger and other U.S. plants, Kharkiv made of existing facilities and manpower. Only by engineers noticed that that the cooling systems in visiting working plants in the U.S. and talking to ex- the U.S. were located in the ceiling. In Ukraine perienced industry managers and seeing for them- they are located on the floor. It is well known that selves what works, can the managers fully appreci- hot air rises – or actually cold air sinks. Therefore, ate the benefits of streamlined and updated proce- the American system is much more efficient in dures and practices. cooling the entire storage area.

What will they see? Due to the high cost of energy in Ukraine, when the The CEI programs are designed to acquaint the engineers returned to Kharkiv they immediately re- participants with the detailed operation of plants, located their cooling systems to the ceilings. After procedures, forms, and practices used in the U.S. making the change, one dairy forgot to readjust They will visit dairies, meat processors, industry their cooling controls. Their milk froze. As a result suppliers, government agencies, trade associa- of the improved efficiency, the dairies now reduce tions, and others. They will see the equipment their cooling costs by 30%. used, marketing practices, product packaging, quality control practices, and new products. Increasing the Milk Supply – Soy In 1998, the Kupiansk Milk Plant was short of Topics covered whole milk for making condensed milk, its primary  Organization structures product line. The reasons were many and Alexan-  Marketing practices and advertising programs der Radchenko, Executive Director was looking for  Use and application of new technologies a solution. His CEI program paid a visit to Archer  Sanitation requirements and standards Daniels Midland (ADM) the large U.S. soy processor. The tour group was fascinated at the uses of Companies studied on earlier study tours this very flexible food, one of which was as a whole  Archer Daniels Midland (AMD) milk substitute.  Portion Pac, Inc.  R.A. Jones & Company At that time there was little or no soy grown in  Kroger Co. Kharkiv, Ukraine. There had been some experi- ments with it earlier, but the Ukrainians had little in- terest in using it as a substitute for sunflower seed oil. ADM showed the tour group how soy could be In many countries, a truck, in addition to carrying used as a milk substitute. goods, is viewed as a moving billboard. Although large and attractive billboards are located on the Upon his return to Ukraine, Radchenko put togeth- side of most Ukrainian main roads, vehicles are al- er a plan to start using soy. He encouraged every most never used to promote products and services. farm in the area to start growing soy. This included This applies to all companies from the very largest Olga Zhygaylo of Verbovskoe who participated on to the single owner entrepreneur. In Kharkiv, inter- the 2000 Meat & Dairy tour. In the meantime, Rad- national companies advertise on street cars and chenko obtained a soy processing machine from a busses where large signs promote McDonalds, Ukrainian equipment manufacturer. Despite Panasonic, Konica, Marlborough, Lucky Strike, and Kharkiv’s northern location, seeds suitable for that others. Ukrainian firms seldom advertise here. latitude were found. Other farmers were encouraged to grow soy. Most started with experimental Milk and bread trucks are seen frequently seen on plots. These have increased each year since there the streets. However, they are painted olive green was a steady market for soy. By 2002, Kupiansk and brown. They appear to be army surplus with Milk was using a 50% soy and 50% whole milk the word “Bread” or “Milk” crudely painted on the combination in their white condensed milk opera- side. None promote their products with benefits tion. Chocolate condensed milk was 100% soy. such as for stronger and healthier babies and chil- dren. CEI was told that some companies wanted Saving Whole Milk from the Calves to remain anonymous in order to avoid detection by When an American calf is born, it nurses from its the tax man. Others explained that a change in mother for just a few days. After a Ukrainian calf is color would require a re-registration and they did born it nurses for 6 to 12 weeks. The result is that not want to incur that expense. After the program, almost 6 weeks of whole milk production is con- companies such Kupiansk Milk and Roma Bakery sumed by the calf. After seeing that the Americans use their trucks effectively to promote their prod- were feeding their calves on a soy milk formula, the ucts. Ukrainians were able to save this whole milk for the market and improve their finances.

Expanding the Milk Export Market through the Inter- net Like any progressive firm, Kupiansk Milk wanted to expand into new markets. When CEI first met this dairy there was little hope of expansion – least of all outside Ukraine. The supply was just not large enough. As this gradually became resolved, exporting became a possibility.

One of CEI’s other activities in addition to running programs, is the operation of the www.ukrainebiz .com website. Due to the excellent site name, many visit it daily. CEI has set up individual pages for most of the firms who have participated on its programs. By early 2003 over 23 sales inquiries were being received each week.

As one result of the sales leads received through the CEI web site, Kupiansk Milk is now exporting condensed milk to India and the United States.

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