The main mistakes when creating wholesale markets for fruits and vegetables: explains Andriy Yarmak


The main mistakes when creating wholesale markets for fruits and vegetables: explains Andriy Yarmak

08/04/2020

The main rule when creating objects of logistics infrastructure is that they should follow the consumer and be as close as possible to the consumer

Today there are a lot of mistakes when creating wholesale markets for fruit and vegetable products. The reason for this is the rapidly changing modern world. But the main thing that an investor needs to understand when creating such an object of logistics infrastructure is that there are no dogmas and rules here, except for the need to be careful when analyzing the flow of goods and the structure of consumption of fresh group products. This was stated by Andrei Yarmak, Economist, Investment Department, Food and Agriculture Organization of the United Nations (FAO) during the International Online Business Forum “Infrastructure of Agrology”, which was held today, August 4.

The information partner of the forum is the EastFruit project. The organizer of the event is the Agrologistics company.

As Andrey Yarmak notes, when creating a wholesale market, you need to clearly understand how this will help radically change people’s business. “By the definition of“ cardinally ”I mean an increase in profit not by 5-15%, but at least twice. Only in this case such objects will be able to have the right to life, ”says the economist of the investment department of the Food and Agriculture Organization of the United Nations (FAO).

In his speech during the online business forum, Andrey Yarmak dwelt in detail on the most common mistakes when creating wholesale distribution centers (wholesale markets).

In matters of agricultural logistics, the “bicycle” must always be invented

“The most common mistake is copying the wholesale markets of other countries. At the same time, everyone thinks that it is enough to build a market in Kazakhstan following the example of a successful one in France and there is no need to reinvent the wheel. But in matters of agrology, such a “bicycle” must always be invented. The same applies to the construction of two wholesale markets in two cities of the same country – in this case, these markets will also work differently, ”the specialist says.

The best place to market is where the trade is already taking place

The second, most common mistake, according to Andrey Yarmak, is the construction of the market in a more favorable place (in the opinion of the owner) than where it is already located. This is very often a big disappointment for market owners, as the best place is, in fact, where the trade is already taking place. “In order to move the wholesale market to a new location, in most cases it is necessary to close the old place of trade,” notes Andriy Yarmak.

Besides, creating a wholesale market where it does not significantly improve anything is another mistake. “For the wholesale market to work, it is necessary that many buyers and many sellers arrive on the first day. – this is the most difficult task. Otherwise, no one will return there, ”explains the economist of the investment department of the Food and Agriculture Organization of the United Nations (FAO).

“Another mistake that I see all the time is the creation of export-oriented markets. In most cases, such projects are doomed to fail. Especially if such a market is not located on the territory of any single economic space, for example, the European Union. Indeed, as a rule, export-oriented markets have a certain seasonality, where trade is carried out for 2-3 months a year. The rest of the time they simply stand idle. In addition, there is a very limited range of products in such markets, ”says Andrey Yarmak.

All these errors are not always errors – there are exceptions in some cases.

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The economist also focused the attention of the Forum participants on the fact that the main rule when creating logistic infrastructure facilities is that they should follow the consumer and be as close as possible to the consumer, and not to production. This mistake is made by many and quite often.

Andriy Yarmak also emphasized that one of the main mistakes is the owners’ inattention to the main wealth of the market – information. “Many do not monitor prices, assortment, volumes of trade in products, or they do not do it very well and do not know how to use this information. In fact, if you know how to use it, then you can improve the business of people at times and create a very interesting object that is interesting for both product manufacturers and buyers, ”the specialist is sure.

According to Andrey Yarmak, creation of trade infrastructure in the wholesale market is also a common mistake. If such an infrastructure is not needed, then it does not need to be created. For example, if an uncooled apricot from Armenia reaches Moscow well, then you should not assume that having created capacities for cooling fruit and vegetable products in the wholesale market, they will be lucky enough to cool this apricot because its price will not change. Thus, we can conclude that such an infrastructure should be as close to production as possible. If you want to refrigerate products on the wholesale market, then nothing good will come of it, since you need to cool them as soon as possible after harvesting. Otherwise, it can only worsen the quality of the product. Accordingly, it is a mistake to create a product development infrastructure on the market, ”explains Andriy Yarmak.

Also, among the mistakes in creating wholesale markets, Andriy Yarmak counts the creation of such objects in small cities with an undeveloped HoReCa segment. “You shouldn’t think that every city needs its own wholesale market. Wholesale markets are regional structures, ”says an economist at the investment department of the UN Food and Agriculture Organization (FAO).

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