|                                                                                                                                                             |  | FOOD PROCESSING IN VOLGOGRAD                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**BISNISHome PageSearchBISNISEmbassyReportsCountryReportsIndustryReportsPublicationsSourcesof FinanceLeadsand EventsExchangeRatesState ExportsOtherSources** |  | December 1997/January 1998by Galina TokarevaThe Volgograd oblast has traditionally been an important center for agriculture and food
processing.  During the Soviet era, food processing in Volgograd was heavily subsidized, but
today it suffers from a serious lack of investment.  The recent interest of U.S. consumer product
companies in Volgograd suggests that opportunities exist for other U.S. firms in this important
regional market.Major meat and poultry processing plants are situated in Volgograd, Volzhsky, Kamyshin,
Uryupinsk, Mikhailovka, and several other cities and towns in the oblast, which lies 1,000
kilometers (approx. 640 miles) southeast of Moscow on the lower reaches of the Volga River.  In
Soviet times, roughly 60 percent of their output was exported to Moscow, Leningrad, and other
regions of the USSR.  Dairy products are manufactured in Volgograd, Kamyshin, Mikhailovka,
and Uryupinsk.  Volgograd's three milk processing factories once produced  more than 400 tons
of milk daily, when operating at peak capacity.The Impact of Privatization
Since 1991, most Volgograd food-processing enterprises have been privatized.  Presently, 52.6
percent of operating businesses in the industry are private, while 24.7 percent are a combination
of state and private property.  In 1995, private enterprises employed 55.5 percent of the food-processing labor force, a total of  24,519 workers.Since privatization Volgograd has reduced somewhat its reliance on imported food, although it is
still a net importer of food products.  In 1996, exports were worth $41 million, compared to $30
million in 1995.  Imports declined during the same period from $83 million to $66 million.Foreign Companies
U.S. consumer products companies active in the oblast include Coca-Cola, which has a bottling
plant in Volgograd, Pepsico, RJRNabisco, and Kodak.  All advertise aggressively in a
marketplace still relatively new to foreign products.  Four joint ventures in the food production
industry are registered in Volgograd, as well, three of which are operating.The local food processing industry is in dire need of capital to renovate equipment and develop
more competitive products.  The management of most enterprises understands how difficult it is
to compete in a market economy, although some local mangers maintain expectations that may
not be entirely realistic in Russia's contemporary economy.  With the basically welcoming attitude
of the regional government, American food processing companies could find many applications in
Volgograd for both their technology and business skills.For more information on food
processing in Volgograd oblast, visit BISNIS Online at
www.mac.doc.gov/bisnis/country/9712grad.htm.Galina Tokareva is Deputy Director of the American Business Center--Volgograd.This report is provided courtesy of the Business Information Service for the Newly
Independent States (BISNIS)