Sweet success: three years after ITC’s intervention, fruit processer’s exports are up fourfold (en)

Kyrgyz dried-fruit entrepreneur Akhtiyam Koshveev hoped that a Moscow trade fair he attended in 2007 would land him a few new clients. It landed much more: business contacts he made at the Prodexpo fair have enabled him to quadruple his production and double his workforce. ‘We are nowhere near the same business anymore,’ Koshveev said of his company, Osko.

ITC paid for the participation of six companies at the expo as part of a 2006-2008 project to increase the export capacities of fruit- and vegetable-processing companies in Kyrgyzstan. The USD 1 million project was financed by Switzerland’s State Secretariat for Economic Affairs (SECO). Three years after Koshveev received the last bit of technical assistance from ITC, Osko employs 80 people directly and has bought up farmland, where it provides stable employment to another 500 farm workers who previously reportedly lived hand to mouth. The company is now completing its first audit in the hope of later raising USD 1 million in foreign investment. The funds are crucial to increase production capacity and meet the demands of the company’s distributors in Russia and Kazakhstan. ‘They are pushing me to produce more and increase the product range,’ Koshveev said. He and his partners have found a literal sweet spot in the market: they have diversified from dried fruits and are now producing fruit juices from various berries. The juices are marketed as “bio.”

Half of the total production of the nascent agriprocessing sector in Kyrgyzstan is now shipped overseas, up from ‘virtually nothing’ seven years ago, said Dilyara Alimjanova, director of the Association of Fruit and Vegetable Processing Enterprises. Combined employment at her 32 member companies at 3,500 is up 20%, despite the uncertain business climate over the last few years. Farm employment has probably also grown as a result of increased exports, she said. ‘ITC’s help was key,’ Alimjanova said, referring to a ITC’s first project in the country in 2004, in which ITC helped the association kick-start its export marketing efforts. ‘At that time nobody offered this kind of assistance.’ The logos and marketing materials designed with ITC’s assistance are still in use, she said.

Besides providing marketing advice and financing trade-fair participation, ITC assisted the companies in putting in place quality-management practices. ITC also trained 25 national consultants, who continue to work on quality-management improvement projects and certification preparation at various companies in the agribusiness industry. Click here to read more about their work and the companies they assist. Two of the fruit- and vegetable-processing companies received ISO quality certification at the end of the ITC project. Aliana, which makes tomato puree and canned vegetables, has hired a quality-assurance director to make sure the improvements can be sustained following the end of the ITC project, said Director Nur Aliev.

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Koshveev has decided not to invest in renewing the certification, because there was no demand from his clients in Russia and Kazakhstan. Initially, on the heels of obtaining the certificate, he found new buyers for his products in Germany in 2009, but exchange-rate fluctuations made the venture too risky. The improvements leading up to the certification have been useful, however, and he estimates that two-thirds of the processes introduced are still in place. As his markets mature and his buyers become more demanding, he will renew the ISO certification, he said.

At the request of the Kyrgyz government, ITC has in the meantime undertaken a similar trade- promotion project in the clothing sector, identified as a key industry for export promotion in the country’s National Export Strategy. The USD 1 million project, also financed by SECO, aims at improving the export capacities of small and medium-sized enterprises. ITC’s intervention contributed to the industry's 17% growth in the first 10 months of 2011 [LINK TO http://www.intracen.org/kyrgyz-clothing-exports-grow-17-percent-jan-oct/], according to Kyrgyz officials.

Funding from donors permitting, ITC plans to move into other sectors or geographic areas of the country, said Project Manager Armen Zargaryan. ‘Our formula has proven to work,’ he said. ‘Sometimes it takes one year after our intervention, sometimes two or three, but sooner or later our approach produces sustainable export growth.’