Required Report - Public distribution

**Date:** 10/01/2008

**GAIN Report Number:** UP8025

UP8024

**Ukraine**

**Exporter Guide**

**Ukraine's Food Market in Transition**

**2008**

**Approved by:**

![](media/image1.wmf)Ann Murphy, Agricultural Attaché

Office of Agricultural Affairs

**Prepared by:**

FAS/Kyiv Staff

**Report Highlights:**

The Ukrainian retail and food processing sectors are developing rapidly
and have the potential to become significant regional suppliers,
especially for former Soviet Union countries. The trading environment in
Ukraine is complicated and non-transparent. Potential exporters are
advised to secure an experienced Ukrainian partner with established
contacts and who is capable of navigating the myriad of obstacles facing
imported agricultural products.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Kiev \[UP1\]

\[UP\]

Table of Contents

[**SECTION I. MARKET OVERVIEW 3**](#section-i.-market-overview)

[Macroeconomic performance and other indicators
3](#macroeconomic-performance-and-other-indicators)

[Investments 4](#investments)

[Retail trade 4](#retail-trade)

[Foreign trade 4](#foreign-trade)

[SECTION II. EXPORTER BUSINESS TIPS
5](#section-ii.-exporter-business-tips)

[Local Business Practices and Customs
6](#local-business-practices-and-customs)

[General Consumer Tastes and Preferences
7](#general-consumer-tastes-and-preferences)

[Food Standards and Regulations 8](#food-standards-and-regulations)

[General Import and Inspection Procedures
10](#general-import-and-inspection-procedures)

[Competition 11](#competition)

[SECTION III. MARKET SECTOR STRUCTURE AND TRENDS
13](#section-iii.-market-sector-structure-and-trends)

[Retail Food Sector 13](#retail-food-sector)

[HRI Food Service 15](#hri-food-service)

[Food Processing Sector 15](#food-processing-sector)

[SECTION IV. BEST HIGH VALUE PRODUCT PROSPECTS
16](#section-iv.-best-high-value-product-prospects)

[Products with Best Sales Prospects in Ukraine
17](#products-with-best-sales-prospects-in-ukraine)

[Product Category 17](#product-category)

[SECTION V. KEY CONTACTS AND FURTHER INFORMATION
20](#section-v.-key-contacts-and-further-information)

[ATTACHMENTS 21](#attachments)

# SECTION I. MARKET OVERVIEW

## Macroeconomic performance and other indicators

Over the past seven years, Ukraine's macroeconomic indicators have been
quite stable, creating a good environment for further economic
expansion. Ukraine has achieved high rates of economic growth,
stabilized the national currency (unofficially pegged to the U.S. dollar
at the rate of 4.85 UAH per \$1 dollar in 2008), and sustained a gradual
increase in per capita income.

In 2007, Ukraine's economy rebounded and achieved a GDP growth rate of
7.6% or a total output of \$141.2 billion. This performance was
significantly better then in 2006 when the economic output increased by
7.1% (total output of \$106.5 billion). Per capita income also jumped in
2007 to \$1,966 compared to \$1,538 in 2006. Between 2001 and 2007, the
Ukrainian economy grew at a strong rate of 7.4%. These high growth rate
is a result of significant reforms that were implemented during the mid
1990's. For 2008, the GDP growth rate is also expected to exceed 7%
despite the worldwide economic slowdown. The growth in the economy is
being driven by strong domestic demand and growing world prices for key
Ukrainian exports (metals, chemical products, heavy machinery, grains
and oil crops). Per capita income and consumption are on the rise, but
still lower than the average in most developing countries. Ukraine
posses a sizable shadow economy that developed due to excessive tax
pressures, nontransparent and frequently changing legislation and
standards, and the lack of law and contract enforcement. Experts
estimate the size of the parallel shadow economy to be between 50 and 60
percent of the official economy. Widespread corruption became a serious
problem in the late 1990's. The country is ranked 134 out of 180 on the
2008 Transparency International Corruption Perception Index scoring 2.5,
which is 0.3 bellow the previous year (10 = zero corruption level).

As of September of 2008, the population of Ukraine was estimated to be
46.2 million, making it the second largest consumer market in Central
and Eastern Europe after Russia. Ukraine's population is characterized
by the increasing number of elderly and slowly decreasing population.
The size of the official labor force is stable at 20.4 million. In 2008,
the official unemployment rate reached 6.4%, but experts point out that
the actual number is higher due to unrecorded unemployment, especially
in rural areas. Growing real incomes and strong demand drove the
recovery in the domestic consumer market. Household spending in 2007
grew by 19% to 4,091 a year.

Ukraine joined the World Trade Organization (WTO) on May 16^th^ of 2008,
decreasing most of agricultural import duties to previously negotiated
levels. The country is also bound by international agreements on
Technical Barriers to Trade and Sanitary and Phytosanitary measures.

Agriculture, accounts for a considerable share of Ukraine's gross
domestic product. In 2007, agriculture accounted for 17% of GDP. The
food processing industry employs only 2.1% of the population, although
agriculture employs an additional 32.5%. The food industry's growth rate
exceeded GDP growth rate.

Because of relatively low incomes, the sale of the vast majority of U.S.
food products available on the Ukrainian market is limited. Most U.S.
products are of premium quality and value added and found in some niche
markets frequented by wealthy consumers (1.5-1.8% of the Ukrainian
population) and the growing middle class (12-15% of the population).
Concomitantly, the rapid development of the Ukrainian food processing
industry is opening the door for U.S. ingredient suppliers. (Please
refer to [Food Processing Report
UP7003](http://www.fas.usda.gov/gainfiles/200702/146280219.pdf).)

Ukraine is endowed with inputs critical to establishing a strong
agricultural sector. If the government is able to sustain reforms in the
agricultural sector that are designed to increase farm efficiency and
stimulate growth, then Ukrainian agriculture will continue to grow.

However, it's important to note that many policy makers are still
actively attempting to decrease efficiencies by applying administrative
controls to limit the increase of agricultural and food prices or
limiting market development. Opponents to these measures are attempting
to prevent implementation of many of these provisions because they will
decrease farm efficiency, drain the national treasury and are WTO
inconsistent.

## Investments 

Due to the nontransparent business environment, the inflow of foreign
direct investment (FDI) is not as significant as FDI flowing into
Eastern Europe and Russia. The aggregated amount of FDI into Ukraine
since Independence totaled \$32.9 billion as of April 1, 2007. In 2007,
per capita FDI amounted to \$712, which is not significant compared to
Poland's \$2,800 and Hungary's \$6,700. The net increase in foreign
capital in 2007 was \$8.5 billion, almost two times higher than the
total amount of foreign investments in the economy between 1991 and
2003. The U.S. is the seventh big source of foreign investments with
\$1.5 billion.

Ukrainian agriculture only attracts 5-6% of total direct investments.
The following industries were recipients of FDI: tobacco, beer,
beverage, confectionery, food concentrate (dry goods and condiments) and
sunflower oil sectors. Additionally, investments in sugar, ice cream,
meat, fish processing, dairy processing, fruit and vegetables processing
have also increased considerably. Foreign investment is concentrated in
certain regions of Ukraine. Kyiv and the surrounding area received over
one-third of all foreign investments.

## Retail trade

The strong growth in the local food retail sector contributed to the
increase in sales of processed food products. The number of supermarkets
and hypermarkets continues to expand. In 2002, the retail network was
comprised of approximately 600 hypermarkets and supermarkets. In
2004-08, the number of outlets expanded significantly due to the
overwhelming acceptance by consumers. Ukrainian supermarkets maintain
the widest product mix and the largest proportion of imported products.
Despite the rapid expansion of supermarkets in large urban areas, many
food products continue to be sold through open-air markets and small
convenience stores. In the first half of 2006, gross sales in the food
retail sector reached 101 billion UAH (\$20 billion), which is 28%
larger than the year before. FAS [Retail Trade Report
UP6020](http://www.fas.usda.gov/gainfiles/200611/146249545.pdf) provides
a detailed description of Ukraine's retail sector.

## Foreign trade

## 

Upon accession to the WTO Ukraine decreased its import duties to
reasonable levels. At the same time it maintains cumbersome systems of
veterinary and sanitary control, state standards and imported goods
certification. Abolishment of most of these trade barriers is yet to be
done to bring the country in compliance with the WTO rules. All these
non-tariff barriers to trade add to high distribution and shipping
costs.

Because Ukraine signed free trade agreements with Macedonia, Russia and
other countries within the Commonwealth of Independent States (CIS),
food and agricultural products from these countries have price
advantages over imported products from the United States. In 2007, as
much as 37% of Ukrainian imports were sourced from EU-27 countries, 42%
from CIS states, and only 2% from the United States. Despite the U.S.
capturing a relatively small share of the trade, in 2007 U.S.
agricultural products accounted for \$228 million (6% of all
agricultural imports), which is a significant increase over 2006's \$145
million. The opening of the Ukrainian red meat market in the middle of
2008 and WTO accession will further facilitate trade growth for U.S.
products in 2009. (Note: These are official numbers that fail to capture
the significant volume of products imported through the shadow economy.)

Ukraine is in the process of modifying sanitary and phyto-sanitary
standards to comply with international norms and standards. These
changes were also a requirement for accession to the WTO. Some existing
standards and veterinary regulations have complicated trade of U.S.
ready-to-eat products, food ingredients, fish, poultry and red meats.

Ukraine is, and will continue to be, a major exporter of food and
agricultural products, especially within the CIS region. Since the late
1990's, Ukraine has become an established supplier of grains and
oilseeds to the world market. Most Ukrainian grain is sold to the Near
East, Eastern Europe and EU countries. Since 2001, Ukraine has been
exporting a large amount of dairy products, primarily supplying Russia,
former CIS countries, Japan, Africa and the Near East. Exports of
processed and high value added products are not significant, but quickly
growing.

**Advantages and Challenges Facing U.S. Products**

  ----------------------------------- -----------------------------------
  Advantages                          Challenges

  Rising incomes and structural       Strong competition in the local
  changes in consumption lead to      market from domestic producers and
  greater demand for value added, top increasing imports from CIS (mainly
  quality food products.              from Russia), EU and Baltic
                                      countries.

  Investment growth in the food       Long-established consumer
  processing industry increases       preference for domestic fresh
  demand for additives and other      products with no additives. Current
  ingredients not produced in         veterinary requirements impede the
  Ukraine.                            import of red meat and biotech
                                      products.

  Joining the WTO made access for     High distribution, shipping costs
  imported goods easier.              and import tariffs.

  Growth of international fast food   Strong competition among imported
  and restaurant chains in Ukraine    food products and ingredients.
  that use standard procurement       
  systems and that source food        
  ingredients from the U.S.           

  The retail sector is looking for    Low awareness of U.S. products;
  innovative high value added food    extremely low presence of U.S.
  imports.                            products on the shelves of
                                      supermarkets and discounters.
  ----------------------------------- -----------------------------------

U.S. food and agricultural products traditionally suffer from low
customer awareness in Ukraine. Several constraints and misconceptions
have contributed to the small market presence of U.S. foods:

-   U.S. companies have little reliable information about the country,
    current market opportunities and potential business partners.

-   Minimum quantities offered for export are often too large for the
    Ukrainian market.

-   A perception that persists among Ukrainian importers is that landed
    costs of U.S. products are higher relative to European products due
    to higher transportation costs.

-   The perception that U.S. exporters are simply too far away to follow
    market trends and service the Ukrainian market.

# SECTION II. EXPORTER BUSINESS TIPS

## Local Business Practices and Customs

###### Entry Strategy

There is no single market entry strategy recommended for new-to-market
exporters. First, the exporter should define whether Ukraine is a major
market for the product, or if only occasional deliveries will be made.
The following factors should be considered:

-   Market product need, given consumers income trend and particular
    food sector development prospects (separate market research in order
    to assess product prospects maybe required);

-   Availability of similar domestically produced products, (often
    Ukrainian producers are effective in building barriers to trade by
    lobbying the GOU, Parliament, veterinary or health inspection
    services).

-   Calculation of the landed cost of a product in order to make price
    comparisons vis-à-vis competitors.

-   Availability of similar products from EU or FSU suppliers. Also,
    comparative advantages / disadvantages of U.S. products relative to
    products from major competitors (e.g. quality, price, transportation
    expenses, packaging, labeling, etc.)

-   Availability of a local distributor familiar with the product. It is
    advisable to initiate personal contact in order to discuss marketing
    strategies, funding for advertising, slotting allowances, BTL
    in-store promotions, tasting and sampling events. Suppliers may also
    want to consider trade fair participation to increase awareness of
    their products.

-   Tariff and non-tariff regulations affecting the product. (Note: in
    some cases large Ukrainian food producers lobby tariff reductions
    for much needed ingredients and have the clout to settle veterinary
    or SPS problems should they arise.)

Currently, most U.S. food and agricultural product exporters work
through a Ukraine-based importer or through the procurement service of
the buyer (the latter is the most convenient if there are only 2 or 3
potential buyers). Local distributors are more flexible, usually have
established marketing channels and can provide local customers with
short-term (5-30 days) credits in kind. They are also responsible for
the entire logistical chain and inland transportation. Due to frequent
changes in Ukrainian legislation, non-transparent custom clearance
rules, SPS and veterinary procedures and corruption, it is recommended
that the Ukrainian partner handle all logistics. Some Ukrainian
distributors have already established representative offices in major
exporting countries.

U.S. companies should approach potential Ukrainian partners with extreme
caution. While information on Ukrainian companies has improved, there is
still a significant dearth of background data and credit histories on
potential Ukrainian distributors. This presents the greatest obstacle to
finding reliable, competent distributors. In order to obtain a due
diligence report on a potential Ukrainian partner, a U.S. company is
advised to contact either a law firm or an internationally accredited
financial service company. It is advised that all U.S. companies
consider legal counsel before and while doing business in Ukraine.
Ukrainian laws and regulations are vague and open to interpretation,
providing ample corruption opportunities for officials at every
bureaucratic level. U.S. businesses are advised that establishing a
partnership with a Ukrainian company is a challenge that is beyond the
control of the U.S. partner and his legal advisors.

If the Ukrainian market looks promising, establishing a representative
office is recommended to deal with buyers directly. Personal
relationships are very important in Ukrainian business practices and
often problems cannot be effectively resolved over the phone. It is a
very common practice in Ukraine to purchase inputs directly from the
producer. Even if the exporter's policy requires importers to work
through the foreign-based distributor, most Ukrainian partners will
still attempt to contact and work directly with the producer. In the
past, many U.S. companies dealt with Ukrainian partners through a
Russian-based representative office (mostly Moscow). This is no longer
the case because trade regulations and laws that were once common
between the two nations differ more and more. (Note: the Ukrainian food
ingredient market is small at the moment and relatively few products can
justify a representative office in Kyiv).

Select U.S. products may also enter the Ukrainian market through a
different route; via a Ukraine-based U.S. intermediary able to manage
the distribution scheme more efficiently than a Ukrainian importer. This
is vital if the Ukrainian importer lacks technical skills and expertise
in product promotion.

Exporters of high value added products must note that larger Ukrainian
retail chains use their own procurement centers. Few wholesalers
undertake nationwide distribution, and very few carry a complete range
of products. In many cases, supplier choices are based on informal
personal relationships and ownership ties, rather than driven by quality
and price factors.

## General Consumer Tastes and Preferences

Consumer preferences differ significantly among various income and age
groups. Similar to other nations, young consumers tend to experiment
with new products, but many of them remain at the "tasting level".
Middle-aged and elderly consumers are much more conservative in their
taste preferences and often treat new products with caution. Consumers
of all ages and income groups are highly patriotic in their choices and
often will not buy an imported product if a domestically produced one of
comparable price and quality is available.

All categories of consumers analyze the content/ingredients of products
with great care. There is widespread belief that preservatives,
stabilizers, colorants and flavoring agents are not healthy and one
should avoid them if possible. However, consumers pay little attention
to fat, sugar or protein content. The trend for healthier food
consumption (low fat and reduced cholesterol, sugar free) is not yet
evident in Ukraine. The diet of many low-income people is not
nutritionally balanced and health concerns are found only in big cities,
where consumers are wealthier and can afford more expensive products.

Biotech products have a negative public perception in Ukraine and the
government has tried and will likely continue to try to impose
compulsory labeling. On May 31, 2007, the Ukrainian parliament (Rada)
voted on and adopted the umbrella law "On the State System of Biosafety
in Creating, Testing, Transporting and Using Genetically-Modified
Organisms". Ukrainian legislation on biotechnology in general is in
development. Presently interested companies can bring GM seeds to
Ukraine for further testing.

With average per capita income still quite low, Ukrainians spend
approximately 60% of their incomes on foodstuffs. Prepared home meals
are preferred over dining out. Women account for 49% of the total work
force (20.5 million people) and contribute to the increased demand for
meals consumed away from home, easy to cook and ready-to-eat products.

The market trend for frozen and convenience food is relatively new in
Ukraine, but with a large proportion of two-income families and growing
incomes of city dwellers this market segment is expanding very rapidly.
It should be noted that microwaves are not as widespread in Ukraine as
in the U.S. and Western Europe.

Almost 33% of the population lives in rural areas. Their incomes are
quite low and many people rely on subsidiary household plots to provide
staple foods. Many rural families sell vegetables, meats and traditional
dairy products in open-air markets. The majority of their consumers are
low income and elderly (these two categories overlap considerably).

## Food Standards and Regulations

For an extensive explanation of Ukrainian Food and Agricultural Import
Regulations and Standards, a prospective exporter should refer to FAS
Kyiv's [FAIRS Report
UP8014](http://www.fas.usda.gov/gainfiles/200807/146295315.pdf), which
is available on the FAS/USDA web site. An abbreviated review of
Ukrainian import regulations and food standards is provided below.

Ukraine maintains a complicated food safety control system that is
supervised by various state agencies, which often have overlapping
functions. The following agencies of the Government of Ukraine (GOU) are
involved in assuring the safety of domestically produced and imported
food products, and animal and plant health issues:

-   State Epidemiological Service establishes food safety standards and
    is responsible for ALL aspects of food safety;

-   State Committee for Veterinary Medicine is responsible for animal
    health, safety and wholesomeness of meat, seafood and other products
    of animal origin;

-   Main State Phytosanitary Inspection Service is responsible for plant
    health issues;

-   State Committee of Ukraine on Technical Regulations and Consumer
    Policy is responsible for compliance of food products with existing
    quality and safety standards;

-   State Ecological Inspection Service is responsible for radiological
    and environmental control.

Ukrainian legislation is subject to unpredictable and sporadic changes;
therefore, it is difficult for foreign suppliers to be aware of the most
current food safety regulations. U.S. suppliers should work with
experienced importers who are familiar with the latest import
requirements. Currently, certain standards used in Ukraine are
inconsistent with standards established by international standards
setting bodies, and with internationally accepted trade practices.

Imported food products must meet the same requirements as domestically
produced foods. While enforcement of food safety norms has been
generally effective, outdated nutritional norms have not been rigorously
enforced.

All food products sold in Ukraine must have Ukrainian language labels
attached to the package that contain the following information:

1\) Name of food product;

2\) Nominal quantity of food product (weight or volume in metric system
measurement);

3\) List of all ingredients found in the food product, including other
food products and food additives used;

4\) Nutritive values and energy, if applicable;

5\) Expiry date, or the date of production with indicated shelf life;

6\) Storage conditions;

7\) Name, country, address of producer, packer, exporter and importer of
the product;

8\) Terms of use (if any);

9\) Presence of genetically modified organisms (GMO);

10\) Consumption of food product warnings for certain consumer
categories (children, pregnant, senior people, athletes etc.)

Stick-on labels that meet Ukrainian food safety law requirements are
allowed and can be affixed on the side or over the standard US label.
Customs authorities require compliance with the Ukrainian labeling
requirements prior to granting final clearance to the product. Some
importers prefer to deal with products that already contain labels and
meet Ukrainian requirements while others prefer to attach labels in the
customs licensed warehouse in Ukraine. Health claims and statements
targeting particular consumer groups (children, pregnant women,
athletes) are prohibited without prior approval from the Ministry of
Health.

The product's expiration date (or shelf life indication containing the
date of production) must appear on the label. Although Ukrainian food
safety legislation allows producers to determine the shelf life of the
product, it is highly advisable to verify with the importer whether it
meets existing Ukrainian technical regulations (GOST or DSTU).

Biotechnological content labeling requirements have been in place since
November 2002. The Ukrainian Cabinet of Ministers adopted Decree \# 985
on August 1, 2007, requiring the government of Ukraine to begin labeling
biotech food products that contain GMO elements above 0.9 percent. The
decree calls for labeling to be in place no later then November 1, 2007.
Baby food that contains biotech products cannot be imported, produced or
sold in Ukraine. Further development of this issue will informed on the
FAS web-site with reports.

# 

Ukraine maintains a positive list of food additives. Recommendations
from the CODEX Alimentarius Commission, an international food safety
standard setting body is considered in approving new food additives;
however Ukrainian authorities conduct their own risk assessment for each
new substance. Importing food products that contain food additives that
have not received official approval is prohibited.

Ukraine establishes its own maximum residue limits for chemical and
biological contaminants in food products. The Ukrainian sanitary service
recognizes the norms established by the Codex Alimentarius Commission
for non-registered pesticides in the case of imported foods.

Many imported food products are subject to mandatory certification in
Ukraine. The applicant (either exporter or importer) is responsible for
the cost of the certification. There are usually two options available
to exporters and importers depending on the value and the frequency of
shipments. The first option envisions compliance of a foreign facility
to existing Ukrainian norms and regulations on quality and safety. The
supplier receives a certificate of conformity valid for two-to-three
years that avoids having to certify each shipment. The second option
involves certification of each product shipment with mandatory
laboratory tests upon arrival in Ukraine.

All food products of animal origin are subject to veterinary
surveillance and control in Ukraine. A prospective U.S. exporter should
refer to [FAIRS GAIN Report
#7015](http://www.fas.usda.gov/gainfiles/200707/146291872.pdf) for more
information even if the exported commodity is not subject to veterinary
controls in the United States. A Ukrainian state veterinarian conducts
inspections at the border for canned products that contain any amount of
meat or animal fat, animal feeds of plant origin (such as soybean meal),
ready-to-eat seafood products, and frozen fish. The report also contains
multiple reference lists.

## General Import and Inspection Procedures

Import regulations in Ukraine are similar to regulations found in other
countries. All applicable duties and taxes are collected by customs
authorities upon clearance of imported goods at the border, unless the
cargo is forwarded to a bonded warehouse. Ukraine maintains both an *ad
valorem* and a fixed minimum per kilogram duty rate for the majority of
food products. The higher rate of the two is applied. For certain
less-expensive products, the official *ad valorem* import duty as a
percentage of value is very small, thus, the official *ad valorem* duty
would never be applied. Charged in Euros, import duties have been slowly
rising over the last three years as the U.S. dollar has devaluated
relative to the Euro. At this time, the only commodity subject to a
quota restriction is raw sugar.

Agricultural and food products imported into the customs territory of
Ukraine are subject to sanitary testing, compulsory certification,
radiological, veterinary and/or phytosanitary inspections. Every
shipment arriving in Ukraine is inspected and sampled regardless of the
statements made in the accompanying health certificate. Custom
clearances and co-related inspections are fee-based and are viewed by
many regulatory agencies as a source of additional revenue. It's common
practice for two or more GOU agencies to test import samples for the
same safety indicators. The testing procedure takes up to 7 days, which
makes the import of some highly perishable products difficult at best or
impossible.

Due to small import volumes from overseas, U.S. exporters should be
prepared to ship mixed product loads in one container. A separate health
certificate is required for each homogenous product lot within the
container. There may be specific import requirements (alcohol, tobacco,
etc.) or prior notice requirements for certain products. At the planning
stage, exporters are advised to verify with their importer what types of
controls are applicable to the product. Any food product (except those
produced for personal consumption), food raw materials and agricultural
products are prohibited entry into Ukraine without documented evidence
of their quality and safety. Control over adherence to the procedure of
food and agricultural product imports rests with the Customs Service of
Ukraine. The product will not be granted final clearance until all legal
procedures are met. The following documentation is required for customs
clearance:

-   Copy of a contract and an invoice;

-   Bill of lading;

-   Freight custom declaration;

-   Certificate of conformity;

-   State sanitary and epidemiological expertise certificate, (or
    certificate on state registration of special food products);

-   Veterinary certificate (if applicable);

-   Import permit and original phytosanitary certificate (if
    applicable);

-   Manufacturer's Certificate of Quality.

Ukrainian is the only official language recognized in Ukraine. All
documents must be bilingual, submitted in Ukrainian or be accompanied by
an official translation.

## Competition

For the past six years, Ukraine has been a net exporter of agricultural
and food products. During this period exports totaled approximately
\$10.1 billion dollars, and imports \$6.5 billion dollars (HTS 1-24
groups). In 2006, total exports of agricultural products from Ukraine
reached \$4.7 billion dollars (13% growth from 2005), exceeding
agricultural imports (\$3.2 billion dollars). For 2005, agricultural
imports accounted for \$2.7 billion dollars, significantly larger then
the \$1.9 billion recorded in 2004 (excluding wood products).

####### Import of Agricultural Products in 2007

![](media/image2.wmf){width="3.3333333333333335in"
height="2.7708333333333335in"}

*Source: State Statistics Committee of Ukraine*

The development of the food industry in Ukraine has led to a significant
increase in the use of raw materials and additives for foodstuff
production and comprises the majority of Ukrainian imports. For more
information on opportunities in Ukraine's food processing industry,
please refer to FAS Kyiv's report: UP7003 [Food Processing Ingredients
Sector Report](http://www.fas.usda.gov/gainfiles/200702/146280219.pdf)
found on the FAS homepage.

Demand for ingredients increased due to the growth in the meatpacking
and dairy processing industries, and increased production of fish
products, confectionery and beverages.

![](media/image3.wmf)

*Source: State Statistics Committee of Ukraine*

*\*By volume of the produce; tobacco industry is not included*

In 2005-2008, imports of the following commodities experienced the
highest rates of growth:

-   Food additives (stabilizers, emulsifiers, flavorings, proteins,
    pigments, ferments, albumin, oil-and-fat mixes, modified starch
    etc.)

-   Palm oil or fractions

-   Fish

-   Swine, live except pure-bred breeding

-   Grape wines

-   Cocoa powder

-   Spirits

-   Tobacco and cigarettes

-   Coffee extracts, essences, concentrates

-   Live fowl

-   Bovine cuts boneless

-   Cut flowers and flower buds for bouquets

Some imported soya products are used as ingredients in food and compound
feed industries (such as soya meal and flour, soya protein concentrates,
lecithin, vegetable oil mixes and isolates on soya base for
confectionery, dairy and meat industries).

Food products imported from EU and CIS countries are now the major
competitors for U.S. commodities in Ukraine and will continue to be in
the foreseeable future.

U.S. suppliers have actively explored the Ukrainian market. In 2007,
poultry products accounted for 19%; miscellaneous edible preparations
for 5%; pet food for 2%; frozen fish & seafood for 17%; and tobacco
products for 35% of total U.S. agricultural exports to Ukraine.

Below is a list of the top 10 U.S. export commodities experiencing the
highest import growth rate in Ukraine (for 2006-2007 with turnover over
\$1 million):

-   Preserved Food (mostly Juice Concentrates)

-   Tobacco

-   Prepared Meat/Fish (Salmon Roe)

-   Pet Food

-   Beverages (Ethyl Alcohol)

-   Sugar (Chemically Cleaned Fructose)

-   Fish and Seafood (Whiting and Hake)

-   Seeds for Planting (Corn Hybrids)

-   Miscellaneous food

-   Miscellaneous grain and seed

For many staple products, domestic production meets demand. Imported
food and agricultural products have difficulty competing with domestic
products due to high import duties and generally efficient production of
unsophisticated food products. Imports add to the variety of foods
available on the market and also include products that are either not
grown in the country or for which domestic production is insufficient to
meet domestic demand.

# SECTION III. MARKET SECTOR STRUCTURE AND TRENDS

## Retail Food Sector

###### Open Air Markets

Given relatively low salaries in small towns and rural areas, open-air
(farmers) markets continue to supply the majority of Ukrainian consumers
with foodstuffs. Most salespersons in these markets are rural dwellers
selling their own produce grown on household plots. Rural middlemen sell
meat products they procured in neighboring villages. Some open-air
market retailers open small kiosks, while others continue to use
counters provided by the market administration. All products sold are
subject to veterinary and sanitary surveillance, which is conducted by
market veterinary and sanitary inspectors. All products that are tested
in market labs are labeled.

In 2003, according to official GOU statistics, there were 597 open-air
markets selling foodstuffs (10% less than in 2002). Out of 597, 99
markets are located in Kyiv and have a total floor space of 599,000
square meters. In 2003, the following regions contained the largest
number of open-air markets in Ukraine: Donetsk region, Odessa region,
Dnepropetrovsk, Autonomous Republic of Crimea, Lugansk region, and Lviv
region. (Please note: More current information on open-air markets is
not currently available.)

Some consumers believe that purchasing food at open-air markets is
cheaper than in supermarkets. Elderly consumers also believe that
products found at wholesale open-air markets are organic and of higher
quality.

According to some estimates, 40-50 percent of total food product
transactions occurred in open-air retail outlets. For some commodities
(meat products and offal), sales in open-air outlets account for 90%.
Sales of fresh vegetables, fruits, honey, and dried fruits are also
dominant in open-air markets. Sales of dairy, sunflower oil and
alcoholic products have gradually moved from open-air markets into
retail stores, mostly out of necessity. Open-air markets lacked storage
equipment, had persistent quality concerns and a significant share of
counterfeit alcoholic products. These markets also suffered from low
service standards. Also, local authorities are pressuring these outlets
to guarantee appropriate sanitary conditions. The only U.S. food product
that has been spotted in many open-air markets all over Ukraine is U.S.
poultry meat and offal. In many cases, these products are smuggled into
Ukraine and remain popular among consumers due to very competitive
prices.

Some central markets located in large cities have become elite retail
institutions offering high-quality products for wealthy consumers
looking for a unique shopping experience. The best examples are
Bessarabskiy and Vladimirskiy markets in Kyiv. These century old open
markets located in the central part of the city service residents in
Kyiv, including foreign diplomats and the Ukrainian elite. These markets
are of interest to American exporters of delicatessen meat products,
seafood, semi-prepared and microwaveable foods, mixtures of exotic dried
fruits, nuts, elite confectionery, and alcoholic drinks.

###### Supermarkets, Hypermarkets and Discounters

This segment of the Ukrainian retail sector is developing the quickest
in bigger towns and cities, despite only being responsible for
approximately 30-40% of retail food sales. In larger cities this sales
channel dominates. In Kyiv over 84% of all consumers purchase their food
in supermarkets. FAS [GAIN Report \#
6020](http://www.fas.usda.gov/gainfiles/200611/146249545.pdf) provides a
more detailed description of Ukraine's retail sector. The average
Ukrainian hypermarket is 3,895 square meters. The number of supermarkets
(universal self-service stores) in 2005 exceeded 2,000 (27.4 % increase
from 2004). The average floor space of a Ukrainian supermarket exceeded
1,000 square meters.

An average supermarket carries between 25 -- 30,000 items. Approximately
80-90 percent of products sold are of Ukrainian origin. There is a wide
range of dairy products, fish, meat, bakery, and spirits. The largest
chains work with almost 1,000 different suppliers represented by large
wholesale companies, producing companies, and importers. Local chains
are actively introducing western standards and quality assurance
mechanisms.

Foreign chains "Billa" (Austria), full fledged discount chain "Metro
Cash and Carry" (Germany), SPAR (the Netherlands) and Russian chain
"Paterson" entered the Ukrainian market between 2001 - 2005. SPAR has
sold its business and left the market in 2004 while others continued to
expand. Metro is planning to build seven Metro C&C centers in Ukrainian
cities with a population over one million. Auchan (France) entered the
market trough the purchase of a significant share of the "Furshet"
retailer. Currently, many companies are planning to begin operations in
the largest cities of Ukraine. The most likely new entrants are Tesco
(Great Britain) and Carrefour (France), which are conducting market
research. In anticipation of fierce competition, local retailers are
expanding rapidly. Expansion plans have been announced by Fozzi Group,
Furshet chain, Velyka Kishenya and ATB convenience store network.

Domestic networks are developing intensively through the mergers and
acquisitions. The "Velyka kishenya" chain took over the Begemot chain,
which experienced financial difficulties, while Fozzi Group has
purchased Tikko-Market in 2005. Currently, supermarkets still compete
primarily with traditional open-air markets rather than with each other.
Larger supermarkets in Kyiv, and in some other major cities, have slowly
evolved into shopping malls were shoppers can also shop in boutiques and
watch movies while visiting the big "anchor" food retailer.

###### Convenience and Over-the-Counter Small Stores

The number of convenience stores in Ukraine reached 101,400 in 2005,
which makes them the third largest retail business sector after open-air
markets and supermarkets. Convenience stores are located all over
Ukraine, in big cities, towns and big villages. Many of them are
privatized Soviet convenience stores that have not changed their trade
practices much. Privatized by their employees, these stores often have
no resources for renovation, new refrigerators, showcases or other
essential equipment. Concomitantly, some supermarket chains (ATB, Fozzi
Group) are attempting to develop modern-style retail outlets by
purchasing and renovating stores in attractive locations in larger
cities.

Once popular, small kiosks that offered a wide variety of food products,
tobacco and alcoholic beverages, are quickly loosing popularity. A
significant number of these operations remain on the streets (296,600
kiosks as of 2005), but are slowly evolving into cigarette and snack
dispensaries, as well as into hot-dog stands. Only non-alcoholic
beverages, beer, chocolate bars and potato chips are usually sold at
kiosks. Facing stiff competition from supermarkets, many convenience
stores have switched to 24-hour operations and have decreased the number
of food products offered.

The average convenience store is between 300 to 500 square meters.
Product lists include 1,500 to 3,500 articles. The variety of products
available in these stores is not as extensive as in supermarkets,
facilities are not as nice and products are often more expensive. These
outlets are popular among pension age consumers who prefer to shop
closer to home and who are still distrustful of purchasing goods in
modern supermarkets. Convenience stores also target consumers who
purchase products with very short shelf life (bread, dairy products,
fruits and vegetables, etc.). They are popular in small Ukrainian towns
where the construction of supermarkets is not profitable.

## HRI Food Service

The HRI sector in Ukraine remains small, but is developing quite
rapidly. In 2005, the number of restaurants, cafes, bars and other HRI
institutions in Ukraine exceeded 56,600 with total accommodation space
of 2.7 million seats. FAS Kyiv's [GAIN Report #7004](../v) provides a
more detailed description of Ukraine's retail sector.

New fast food outlets and restaurants with international-style cuisines
have begun to alter the structure of the food service sector. The market
niche for expensive and elite restaurants is saturated, so the lower
cost mass market is developing. Existing restaurants are divided into
three categories: fast food, canteens and cafés, mid-level restaurants,
and restaurants with "high-quality cuisine". The majority of outlets
belong to the first group. With over 17.6 million visitors in 2005,
tourists have become the major driving force behind the success of the
HRI sector and the introduction of new food products to the Ukrainian
market.

In addition to fast food establishments that offer pizzas, hot dogs and
hamburgers, outlets of various ethnic cuisines, such as Mexican,
Chinese, Vietnamese, Japanese, Italian, Indian and others, have entered
the food service industry. However, the majority of customers prefer
family-style menus featuring traditional Ukrainian food. In addition to
McDonald's (with 56 restaurants in Ukraine), there are other fast-food
restaurant chains like McSmak, "Pizza Chelentano" and "Kartoplyana
khata" (Potato house), "Shvydko", "Rostik's", etc.

HRI Prospects: The HRI sector will continue to grow. The number of
customers is expected to increase as "eating out" habits become more and
more popular among the middle class and wealthy Ukrainians. Restaurant
chains consisting of coffee bars, healthy food restaurants (separate
eating, healthy food), and a fast-food fish chains, are not developed in
Ukraine. These are good prospect areas for new restaurants.

## Food Processing Sector

The food-processing sector in Ukraine has developed rapidly in the past
5 years with an average growth rate of over 15%. The food industry's
share in manufacturing is almost 20%. In 2005, the industry grew by
13.7% with a total output of \$10.4 billion dollars (2004 - \$8.9
billion dollars -- both are FAS/Kyiv estimates). Over 19,000 enterprises
operate in the food processing sector of Ukraine. The fastest growth
rate is found in fruit and vegetable processing, edible oils production,
pastry and biscuits, baby food and alcoholic beverages production.

Ukraine's Food Processing Industry Output (1,000 MT)

  ----------------------------------- ------- ------- ------ ------- -------
                                      2003    2004    2005   2006    2007

  Beef and veal (fresh or chilled)    186     141     143    156     159

  Beef and veal (frozen)              97.9    57.0    50.1   43.9    61.5

  Pork (fresh or chilled)             80.2    74.1    81.4   130     179

  Pork (frozen)                       18.9    13.9    18.0   25.4    24.0

  Poultry (fresh or chilled)          131     201     274    326     458

  Poultry (frozen)                    38.5    39.8    58.0   90.5    90.1

  Sausages                            271     332     309    301     330

  Sunflower oil (not refined)         1257    1343    1382   2078    2230

  Milk fluid                          645     716     863    818     866

  Butter                              1371    116     120    104     100

  Spreads and oil mixes               \...    53.0    80.3   71.1    83.8

  Soft Cheese                         57.7    71.3    83.5   93.2    93.2

  Hard Cheese                         173     224     274    217     246

  Whole milk products                 427     467     499    523     534

  Bread                               2335    2307    2264   2159    2034

  Sugar                               2486    2147    2139   2592    1867
  ----------------------------------- ------- ------- ------ ------- -------

*Source: State Statistics Committee of Ukraine*

Imports of food ingredients are estimated at \$2.4 billion for 2007
(including products for further re-packing). Major imported products for
the processing industries included poultry, fish, palm oil, cocoa
products, juice concentrates, spices and seasonings, vegetables,
additives, tobacco and others.

The development of the food processing industry is currently impeded by
inadequate domestic supply of raw agricultural products and limited
export possibilities. Only a few food processors comply with EU quality
requirements and packaging standards (mainly dairy, meat, confectionery,
and beverages). Large food processors purchase raw materials and food
ingredients directly from foreign exporters. Large wholesalers and
distributors also supply the sector.

Sector trends: The Ukrainian food processing industry will be driven
mainly by increased demand, through production of dairy products,
especially hard cheese and butter. Production of beef will be driven by
demand in Russia and some Former Soviet Union countries.

Note: Please refer to the diagram "Ukrainian Food Processing
Sub-Sectors" under the Competition section, page 11.

# SECTION IV. BEST HIGH VALUE PRODUCT PROSPECTS

Given the potential of the Ukrainian agricultural industry and
relatively low incomes, U.S. high value added products will penetrate
some niche markets, especially for those products that are not produced
in Ukraine or are produced in limited quantities. In many cases,
Ukrainian agriculture is not capable of producing products of
consistently high quality (e.g. high quality beef steaks and pork
medallions). There are markets for specialty products including low-fat,
low-salt and sugar-free products, cake & bread mixes, corn meal, Graham
Crackers and chocolate chips. U.S. suppliers could also supply new
market segments that are just beginning to develop. This includes
microwaveable and semi prepared food as well as TV-dinners. Potential
importers must be aware that promotion of innovative or new to market
products is expensive.

Other potential U.S. export items include snack foods, raisins, dried
foods, nuts, spices, peanut butter, frozen and dried yogurt, soft
drinks, frozen juices, fruit & vegetable pure and concentrates, fresh
fruits and vegetables, wine, frozen foods, meat (especially chicken and
turkey), pasta preparations, frozen and canned seafood, frozen and
canned vegetables and fruits, soft cheese, soya sauces, salad dressings
and breakfast cereals, baking improvers and bread mixes, and dry gluten.
Quick-to-prepare main and side dishes as well as ethnic international
foods are all gaining popularity.

## Products with Best Sales Prospects in Ukraine

+-------+------+------+------+----------+------------+-------------+
| ## P  | **20 | **   | **3  | *        | **Key      | **Market    |
| roduc | 07** | 2007 | -Yr. | *Import\ | C          | Att         |
| t Cat |      | Impo | A    | Tariff\  | onstraints | ractiveness |
| egory | **Ma | rt** | vg.\ | Rate\*** | Over       | for the     |
|       | rket |      | Ann  |          | Market     | USA**       |
|       | Si   |      | ual\ |          | Dev        |             |
|       | ze** |      | Imp  |          | elopment** |             |
|       |      |      | ort\ |          |            |             |
|       |      |      | Grow |          |            |             |
|       |      |      | th** |          |            |             |
+-------+------+------+------+----------+------------+-------------+
| *     | 609  | 140  | E    | 5-15%    | High       | U.S.        |
| *Poul |      | ths. | xtre | for      | customs    | product has |
| try** | ths. | tons | mely | poultry  | duties;    | well-       |
|       | tons |      | Vola | parts    | Former     | established |
|       |      |      | tile | and      | Free       | positions;\ |
|       |      |      |      | whole    | Economic   | Low prices  |
|       |      |      |      | birds;   | Zones      | attract a   |
|       |      |      |      |          | remain the | lot of      |
|       |      |      |      |          | only       | buyers.     |
|       |      |      |      |          | import     | Local       |
|       |      |      |      |          | outlet;    | producers   |
|       |      |      |      |          | C          | will not be |
|       |      |      |      |          | ompetition | able to     |
|       |      |      |      |          | with       | satisfy     |
|       |      |      |      |          | Brazilian  | demand in   |
|       |      |      |      |          | and EU     | near        |
|       |      |      |      |          | p          | future.     |
|       |      |      |      |          | roducers;\ | U.S.        |
|       |      |      |      |          | Quick      | product is  |
|       |      |      |      |          | growth of  | priced      |
|       |      |      |      |          | domestic   | correctly   |
|       |      |      |      |          | p          | and the     |
|       |      |      |      |          | roduction; | pr          |
|       |      |      |      |          | Perception | ice/quality |
|       |      |      |      |          | of U.S.    | ratio has   |
|       |      |      |      |          | product as | an          |
|       |      |      |      |          | cheap and  | advantage   |
|       |      |      |      |          | of low     | over        |
|       |      |      |      |          | quality.   | Brazilian   |
|       |      |      |      |          |            | and EU      |
|       |      |      |      |          |            | product.    |
+-------+------+------+------+----------+------------+-------------+
| **B   | 570  | 13   | Vola | 15%      | Consumer   | In          |
| eef** | ths. | ths. | tile |          | u          | significant |
|       | tons | tons |      |          | nawareness | specialized |
|       |      |      |      |          | of U.S.    | beef        |
|       |      |      |      |          | high       | production; |
|       |      |      |      |          | quality    |             |
|       |      |      |      |          | beef;      | Constantly  |
|       |      |      |      |          | Sizable    | growing     |
|       |      |      |      |          | domestic   | beef        |
|       |      |      |      |          | p          | prices;     |
|       |      |      |      |          | roduction, | Niche       |
|       |      |      |      |          | C          | markets for |
|       |      |      |      |          | omplicated | meat        |
|       |      |      |      |          | import     | delicacies  |
|       |      |      |      |          | p          | (steak,     |
|       |      |      |      |          | rocedures. | etc.) and   |
|       |      |      |      |          |            | meat offal; |
|       |      |      |      |          |            | Fast HRI    |
|       |      |      |      |          |            | d           |
|       |      |      |      |          |            | evelopment. |
+-------+------+------+------+----------+------------+-------------+
| **P   | 728  | 71   | Vola | 10-12%   | C          | Shortage of |
| ork** | ths. | ths. | tile |          | ompetition | pork in the |
|       | tons | tons |      |          | from       | country;    |
|       |      |      |      |          | Brazilian  | declining   |
|       |      |      |      |          | pork and   | production; |
|       |      |      |      |          | Polish     | high        |
|       |      |      |      |          | smuggled   | prices;     |
|       |      |      |      |          | pork,      | Demand for  |
|       |      |      |      |          | c          | stable      |
|       |      |      |      |          | omplicated | deliveries  |
|       |      |      |      |          | import     | of both     |
|       |      |      |      |          | p          | cheap and   |
|       |      |      |      |          | rocedures. | high        |
|       |      |      |      |          |            | quality     |
|       |      |      |      |          |            | product.    |
+-------+------+------+------+----------+------------+-------------+
| *     | 682  | 405  | 10   | 0 -- 5%  | Regular    | Growing     |
| *Fish | ths. | ths. | -20% | for all  | deliveries | demand for  |
| and   | t    | tons |      | frozen   | of high    | higher      |
| Seaf  | ons\ |      |      | fish;    | quality    | quality     |
| ood** | (i   |      |      | 10% for  | product    | seafood     |
|       | nclu |      |      | prepared | from       | from        |
|       | ding |      |      | fish,    | Norway;    | consumers;\ |
|       | c    |      |      | live     | Shortage   | Very modest |
|       | atch |      |      | fish,    | of         | assortment  |
|       | for  |      |      | M        | suitable   | in markets; |
|       | own  |      |      | ackerel, | equipment  | S           |
|       | use) |      |      | Trout,   | at retail  | kyrocketing |
|       |      |      |      | some     | trade      | demand from |
|       |      |      |      | Crus     | outlets;   | s           |
|       |      |      |      | taceous, | Deficit of | upermarkets |
|       |      |      |      | Anchovy, | proper     | and HRI     |
|       |      |      |      | Salmon   | storage    | sector.     |
|       |      |      |      | and      | facilities |             |
|       |      |      |      | L        | with below |             |
|       |      |      |      | obsters. | --20C      |             |
|       |      |      |      |          | te         |             |
|       |      |      |      |          | mperature. |             |
+-------+------+------+------+----------+------------+-------------+
| **    | 25   | 13   | 20   | From 0%  | Sharp      | Intensive   |
| Dried | ths. | ths. | -30% | to 20%   | c          | development |
| f     | tons | t    |      |          | ompetition | of          |
| ruits |      | ones |      |          | with Iran  | co          |
| and   |      |      |      |          | and        | nfectionery |
| nuts  |      |      |      |          | Turkey.    | industry    |
| (ex   |      |      |      |          | Desire of  | and start   |
| clud. |      |      |      |          | packers to | of retail   |
| peanu |      |      |      |          | save on    | sales of    |
| ts)** |      |      |      |          | raw stock, | rare dried  |
|       |      |      |      |          | procuring  | fruits      |
|       |      |      |      |          | low        | (exceed     |
|       |      |      |      |          | quality    | world       |
|       |      |      |      |          | stock from | prices by 3 |
|       |      |      |      |          | Iran,      | -- 6        |
|       |      |      |      |          | U          | times).\    |
|       |      |      |      |          | zbekistan, | High        |
|       |      |      |      |          | and        | quality of  |
|       |      |      |      |          | A          | U.S.        |
|       |      |      |      |          | fghanistan | product;    |
|       |      |      |      |          |            | Development |
|       |      |      |      |          |            | of          |
|       |      |      |      |          |            | pr          |
|       |      |      |      |          |            | emium-class |
|       |      |      |      |          |            | co          |
|       |      |      |      |          |            | nfectionery |
|       |      |      |      |          |            | products    |
+-------+------+------+------+----------+------------+-------------+
| **C   | n/A  | 105  | 35%  | 5-15%    | High       | High and    |
| anned |      | ths. |      | D        | c          | growing     |
| f     |      | tons |      | epending | ompetition | demand for  |
| ruits |      |      |      | on       | form EU    | value added |
| and   |      |      |      | Product  | products;\ | imports at  |
| ve    |      |      |      | Type     | Smuggling; | the expense |
| getab |      |      |      |          | Cheap      | of, and     |
| les** |      |      |      |          | canned     | gradual     |
|       |      |      |      |          | food niche | rejection   |
|       |      |      |      |          | occupied   | of          |
|       |      |      |      |          | by         | ho          |
|       |      |      |      |          | Ukrainian  | me-produced |
|       |      |      |      |          | t          | products;   |
|       |      |      |      |          | rademarks. |             |
|       |      |      |      |          | The        | H           |
|       |      |      |      |          | majority   | igh-quality |
|       |      |      |      |          | of         | product     |
|       |      |      |      |          | population | niche is    |
|       |      |      |      |          | is         | not         |
|       |      |      |      |          | inclined   | completely  |
|       |      |      |      |          | to supply  | filled.     |
|       |      |      |      |          | its own    |             |
|       |      |      |      |          | needs with |             |
|       |      |      |      |          | home-made  |             |
|       |      |      |      |          | canned     |             |
|       |      |      |      |          | fruits and |             |
|       |      |      |      |          | vegetables |             |
+-------+------+------+------+----------+------------+-------------+
| *     | 250  | 98   | Over | Signi    | High       | Relatively  |
| *Wine | mil  | mil  | 95%  | ficantly | import     | high level  |
| and   | lion | lion |      | Varies   | duties,    | of alcohol  |
| spir  | li   | li   |      | by       | tough      | c           |
| its** | ters | ters |      | product  | c          | onsumption; |
|       |      |      |      | (        | ompetition | Demand for  |
|       |      |      |      |          | with       | exotic      |
|       |      |      |      |          | Ukra       | drinks      |
|       |      |      |      |          | inian-made | (whiskey,   |
|       |      |      |      |          | spirits    | gin, rum,   |
|       |      |      |      |          | and drinks | bourbon).   |
|       |      |      |      |          | produced   |             |
|       |      |      |      |          | in the CIS |             |
|       |      |      |      |          | states     |             |
+-------+------+------+------+----------+------------+-------------+
| **Pet | N/a  | 50   | 20   | 5-10%    | Large      | Tr          |
| f     |      | ths. | -30% |          | supply of  | aditionally |
| ood** |      | tons |      |          | Ru         | large       |
|       |      |      |      |          | ssian-made | number of   |
|       |      |      |      |          | cheap pet  | home pets;  |
|       |      |      |      |          | food;      | Increased   |
|       |      |      |      |          |            | population  |
|       |      |      |      |          | S          | incomes     |
|       |      |      |      |          | muggling;\ | followed by |
|       |      |      |      |          | Strong     | growing     |
|       |      |      |      |          | tradition  | demand for  |
|       |      |      |      |          | of feeding | ready to    |
|       |      |      |      |          | pets with  | use pet     |
|       |      |      |      |          | table      | food.       |
|       |      |      |      |          | scraps;    | Co          |
|       |      |      |      |          |            | mparatively |
|       |      |      |      |          | Long       | low import  |
|       |      |      |      |          | re         | duty        |
|       |      |      |      |          | gistration |             |
|       |      |      |      |          | and        |             |
|       |      |      |      |          | cer        |             |
|       |      |      |      |          | tification |             |
|       |      |      |      |          | p          |             |
|       |      |      |      |          | rocedures. |             |
+-------+------+------+------+----------+------------+-------------+

\* All imported products are subject to 20% VAT tax.

# SECTION V. KEY CONTACTS AND FURTHER INFORMATION

Ministry of Agrarian Policy of Ukraine

24, Khrezhchatyk,

Kyiv, Ukraine, 01001

+380 44 226 34 66

E-mail:<ministr@minapk.Kiev.ua>

[[www.minagro.kiev.ua]{.underline}](http://www.minagro.kiev.ua/)

State Comittee of Veterinary Medicine of Ukraine

24, Khrezhchatyk,

Kyiv, Ukraine, 01001

+380 44 279-12-70, 279-47-61, 279-49-81

E-mail: <udvi@minapk.gov.ua>

[[http://www.vet.org.ua/]{.underline}](http://www.minagro.kiev.ua/veterinary/)

Committee of Ukraine for Technical, Regulations and Consumer Policy
Ukraine

(Derzhspozhyvstandart of Ukraine)

174, Gorkogo st., Kyiv, Ukraine, 03680\
+380 44 268-84-12\
+380 44 268-74-26 fax

E-mail: [dssu@dssu.gov.ua](mailto:dssu@dssu.gov.ua )\
[www.dssu.gov.ua]{.underline}

The Ukrainian Chamber of Commerce and Industry

33, Velyka Zhytomyrska str.,\
Kyiv, 01601, Ukraine\
+380 44 212-2911\
+380-44 212-3353fax\
E-mail: [[ucci@ucci.org.ua]{.underline}](mailto:ucci@ucci.org.ua)

[[www.ucci.org.ua]{.underline}](http://www.ucci.org.ua/arb/index.en.html)

Ministry of Public Health of Ukraine

7 Hrushevsky st., Kyiv, Ukraine, 01021\
+380 44 253-52-71, 253-61-65, 293-24-39\
+380 44 253-69-75 fax\
E-mail: [[moz@moz.gov.ua]{.underline}](mailto:moz@moz.gov.ua)
[interdep@moz.gov.ua]{.underline}

[[www.moz.gov.ua]{.underline}](http://www.moz.gov.ua/)

Central Sanitary and Epidemiological Station of Ministry of Public
Health of Ukraine

41, Yaroslavskaya, str., Kyiv, Ukraine, 04071\
+380 44 416-43-54

+380 44 417-37-75fax

American Embassy Kyiv, Ukraine

Foreign Agricultural Service

US Department of Agriculture

Washington, D.C. 20521-5850

tel.: +38044-490-4005

fax: +38044-490-4110

E-mail: [[agkiev@usda.gov]{.underline}](mailto:agkiev@usda.gov)

[[http://kiev.usembassy.gov/fas/fas.html]{.underline}](http://www.usinfo.usemb.kiev.ua/faskyiv_index_eng.html)

[[http://www.fas.usda.gov]{.underline}](http://www.fas.usda.gov/)

# ATTACHMENTS

**TABLE A. KEY TRADE & DEMOGRAPHIC INFORMATION**

  ---------------------------------------- ----------- ----------- -----------
                                           **2005**    **2006**    **2007**

  Agricultural Imports From All Countries  2684/4      3166/5      4111/6
  (\$ million) /U.S. Market Share (%)\*                            

  Consumer Food Imports From All Countries 146/0.5     148/0.5     201/1.5
  (\$ million)/U.S. Market Share (%)                               

  Edible Fishery Imports From All          221.7/14    361/7       444/8
  Countries (\$ million)/U.S. Market Share                         
  (%)\*                                                            

  Total Population (Millions)/Annual       46.9/-0.8   46.4/-0.8   46,2/-0,8
  Growth Rate (%)                                                  

  Urban Population (Millions)/Annual       31.8/-0,2   31.6/-0,2   31,4/-0,2
  Growth Rate (%)                                                  

  Number of Major Metropolitan Areas       7           7           7

  Size of the Middle Class (Millions)      16.5        18.9        21,5

  Per Capita Gross Domestic Product (U.S.  1856        2303        2462
  \$)                                                              

  Unemployment Rate (%)                    7.6         12.8        6.4

  Per Capita Food Expenditures (U.S. \$),  787         869         1002
  per year                                                         

  \% of Female Population Employed         53          48          47

  Average Exchange Rate US\$1              5.05 UAH    5.05 UAH    5.05 UAH
  ---------------------------------------- ----------- ----------- -----------

*Source: State Statistic Committee of Ukraine*

\*HTS 1-24 groups

**TABLE B. Ukraine's Agricultural Product Imports from the U.S.
(2003/2007)**

  ------------------- ------------- ---------- ---------- ---------- ---------- --------------- ---------- -----------
  **Product**         **January -                                               **January -                
                      December**                                                July                       
                                                                                Comparisons**              

                      **2003**      **2004**   **2005**   **2006**   **2007**   **2007**        **2008**   **%Chng**

  Bulk                2044          15219      13290      40749      98463      45960           8117       -82.34

  Wheat               0             9673       18         38         6          0               0          \--

  Rice                1175          0          85         278        888        570             403        -29.3

  Soybeans            29            56         0          356        3          3               0          \--

  Tobacco             776           5299       12814      40047      96393      44819           6575       -85.33

  Pulses              0             0          306        0          0          0               0          \--

  Peanuts             35            0          9          0          4          4               0          \--

  Other Bulk          28            190        58         30         1169       564             1139       101.95

  Intermediate        4027          12730      16150      8074       11602      6886            14460      109.99

  Soybean Meal        3             3          0          0          0          0               169        \--

  Soybean Oil         0             50         0          0          23         23              22         -4.35

  Vegetable Oils (Ex  0             132        148        37         66         26              0          \--
  Soy)                                                                                                     

  Feeds & Fodders     252           141        1944       1495       58         23              89         286.96

  Live Animals        165           140        366        0          975        0               405        \--

  Hides & Skins       124           120        61         128        79         64              368        475

  Animal Fats         1444          3195       2091       0          0          0               0          \--

  Planting Seeds      386           5503       8555       4987       6286       5186            9978       92.4

  Sugar, Sweetner,    132           145        409        445        810        357             477        33.61
  Bases                                                                                                    

  Other Intermediate  1522          3299       2576       981        3303       1206            2953       144.53

  Consumer-Oriented   10534         93539      72027      59609      100895     59839           101235     69.18

  Snack Foods         37            67         416        308        1018       845             315        -62.72

  Breakfast Cereals   4             27         23         35         131        88              217        146.59

  Red Meats, Fr/Ch/Fr 81            132        0          106        1644       1637            1356       -17.17

  Poultry Meat        5825          85336      62400      49586      83969      48803           85840      75.89

  Dairy Products      204           583        318        794        625        269             648        140.89

  Eggs & Products     153           145        259        307        0          0               0          \--

  Fresh Fruit         0             90         0          3          635        107             70         -34.58

  Fresh Vegetables    10            51         5          0          289        229             38         -83.41

  Processed Fruit &   389           496        450        289        905        659             328        -50.23
  Veg                                                                                                      

  Fruit & Veg Juices  58            140        62         93         329        221             269        21.72

  Tree Nuts           295           1561       1122       826        3176       1960            4266       117.65

  Wine And Beer       10            25         132        57         0          0               0          \--

  Nursery Products    0             0          30         29         78         78              807        934.62

  Pet Foods           2073          2799       4264       6004       6701       4114            5867       42.61

  Other Consumer      1394          2087       2546       1172       1394       828             1214       46.62
  Oriented                                                                                                 

  Seafood Products    3028          6629       17940      43938      66766      30551           22000      -27.99

  Salmon Whole/Evis   1017          929        2940       5416       15844      2528            6103       141.42

  Salmon Canned       140           247        92         72         0          0               20         \--

  Surimi (Fish Paste) 117           317        648        235        184        42              251        497.62

  Roe/Urchin/Fish     826           217        3310       6601       10329      2989            1803       -39.68
  Eggs                                                                                                     

  Other Seafood       928           4920       10950      31615      40409      24992           13823      -44.69

  Agricultural Total  16605         121487     101467     108432     210959     112685          123812     9.87

  Ag,Fish,Forest      20330         128445     121426     155108     281730     143823          155821     8.34
  Total                                                                                                    
  ------------------- ------------- ---------- ---------- ---------- ---------- --------------- ---------- -----------

*Source: U.S. Bureau of the Census Trade Data (new trade data from UN
Statistics Division for Ukraine is not available)*

**TABLE C. TOP 15 SUPPLIERS OF CONSUMER FOODS AND EDIBLE FISHERY
PRODUCTS to Ukraine (\$ Million)**

  --------------------- ---------- ---------- ---------- -------------- ---------- ---------- ----------
  **CONSUMER-ORIENTED                                    **FISH &                             
  AG TOTAL\***                                           SEAFOOD                              
                                                         PRODUCTS                             
                                                         (HS-03)**                            

  **Country**           **2005**   **2006**   **2007**   **Country**    **2005**   **2006**   **2007**

  Russia                70.7       57.9       83.6       Norway         100.1      144.0      179.4

  Germany               23.6       31.4       48.2       United States  13.7       25.4       37.7

  Netherlands           10.3       12.6       15.6       Iceland        11.8       28.1       35.9

  Hungary               7.1        12.6       11.6       Vietnam        0.6        10.3       26.4

  Denmark               3.7        4.9        5.7        China          6.8        21.7       25.6

  Switzerland           0.9        3.9        4.5        Estonia        5.9        15.6       17.1

  United Kingdom        3.4        4.1        3.6        Canada         8.7        16.3       16.3

  France                2.5        2.2        3.3        United Kingdom 5.3        14.9       15.5

  United States         0.8        0.8        3.1        Argentina      8.4        12.7       13.6

  Belarus               4.0        0.9        2.8        Russia         14.3       13.7       10.8

  Poland                5.1        3.5        2.3        Chile          5.4        9.9        8.7

  Italy                 0.4        0.5        2.3        Denmark        2.0        5.9        7.9

  Austria               1.0        1.6        2.1        Spain          4.0        6.8        6.7

  Belgium               2.1        2.0        1.9        Netherlands    5.5        3.0        6.4

  Finland               0.4        0.9        1.6        New Zealand    0.9        2.7        4.6

  \--The World\--       146.1      148.1      201.7      \--The         221.7      361.2      444.5
                                                         World\--                             
  --------------------- ---------- ---------- ---------- -------------- ---------- ---------- ----------

*Source: State Statistic Committee of Ukraine (trade data from UN
Statistics Division for Ukraine is not available)*

*\* Based on Ukrainian Statistics and BICO definition of
Consumer-Oriented Products by HS Code.*