After investigating the possibilities far and wide, in 1993 two young Swedes, Carl Sturen and Johan Boden, then 19 and 21 years respectively, decided on the rich land of Ukraine's Kherson region as the place they would attempt to bring the most modern agricultural production and processing skills to fruition in a business venture that would mean profit and progress for farmers, processors and all in the agro-industrial complex.
Famous worldwide for its chernozem [black earth] that produces superb row crops, Ukraine has also been known as a country of merchants and itinerant traders. It was these traders [chumaki], best known for their long-distance salt trading, which became the corporate symbol for the company. Today the quality food products bearing the Chumak label represent one of the most successful foreign investments in the agricultural-industrial sector of Eastern Europe.
What is now a huge complex of processing facilities centered on the Kherson region city of Kakhovka began from the rehabilitation of two old canning plants in Kakhovka and Skadovsk, idle since Soviet times. Rebuilding and re-equipping these two plants was only part of the job. There was also the problem of working with the farming community to assure that the plants would have dependable supply of top quality vegetables available to make the production cycle complete.
"We successfully invested in the future", says Carl Sturen, CEO of the company. "Today we are seeing a return on the investment, which we began making over 10 years ago with the goal being to create a pure Ukrainian brand."
Today, the Chumak enterprises annually process more than 100,000 tons of tomatoes and other vegetables into about 100 product items that may be found on store shelves - and in kitchens - not only in Ukraine but in 15 countries around the world. First among those products was the top quality ketchup that now comes in five flavors and a variety of package types and sizes.
Now the product line has expanded to include mayonnaise, salad dressings, tomato paste and sauces, pickled vegetables and tomato juice. Most of the line is made entirely of Ukrainian field produce, except that some exotic spices not native to Ukraine are imported from India and other tropical countries.
As Chumak expanded it has become one of Ukraine's largest agro-processing employers with over 2,000 local people in permanent jobs. This cadre is supplemented during some seasonal operations by as many as 3,000 additional locally employed workers.
About 80 large independent farming operations in the Kakhovka and Skadovsk districts find steady work in supplying produce to Chumak in a permanent and mutually supportive partnership, said Volodymyr Burenko, director of Chumak's agricultural department. Chumak's constant demand and expeditious payment policies have allowed farmers to expand, become more efficient and more profitable, giving a powerful boost to the entire agricultural economy.
Chumak has been not only a buyer of produce but also a partner in helping farmers achieve their goals. "We monitor their fields, help them with advice and recommendations, and support them financially with loans that help them to acquire the newest technologies," Burenko added.
The increased volume of production and higher profitability has meant a better life not only for private farmers but also for farm workers at all levels. In the last two years alone, the daily wage for hired workers has jumped from 15 hryvnia (UAH) to 50 UAH per day.
"Higher wages are good in that they increase consumer purchasing power," Sturen emphasized. "However, the financial abilities of the farmers are not limitless. Therefore, we must take care of new technologies in processes of growing and harvesting crops to improve farmer profitability," he added.
Vitaliy Sotsenko, a 39-year-old farmer from Skadovsk who is chairman of the regional farmers' association, said that he has greatly developed his business, thanks to Chumak. He began with only 47 hectares and has now added 330 hectares of rented land, including more than 40 hectares on which he has installed highly efficient drip irrigation.
About ten years ago Chumak pioneered this water-saving technology, which substituted for the wasteful circular spray irrigation that was common previously. Last year Sotsenko supplied 1,500 tons of tomatoes, more than anyone else in the region.
"Now I am confident that my crops will be definitely needed. Moreover, Chumak is ready to give crop production loans that will be used to develop my business," Sotsenko said.
Those farmers working with Chumak receive not only assistance with loans but also the assistance of one of the most advanced agricultural research facilities in the country. Vadim Dudka, director of the laboratory, said that intensive farming development with support of Chumak was the impetus for creation of the center.
The laboratory not only provides analysis of crop diseases and pest problems, it also provides analysis of financial expenses, necessary agricultural resources and terms for their usage, equipment, and manning tables. With such management assistance, vegetable growers know how much it will cost them to grow one kilogram of tomatoes and what profit may be obtained, based on the forward pricing formula agreed between Chumak and the farmers.
With the assistance of the laboratory, farmers have learned that they may rely on the recommendations and technologies that are suggested for their projects. With this advanced assistance, the need for standard agronomic help is lessened or eliminated.
To further provide assistance to farmers and to finance its own expansion needs, Chumak has not only reinvested profits but also acquired loans from the most economical sources such as the European Bank for Reconstruction and Development (EBRD). Such financing allowed the company to build and equip modern plant additions, as well as to help farmers grow vegetables of the type and quality that are needed by the company. The most recent EBRD loan was directed toward a total updating of the company's production in Kakhovka.
"We not only provide financing to farmers, but, what is more important, we teach them new and efficient ways to grow vegetables," Sturen said.
For example, an Australian farmer, Louis Chirnside, chairman of the Australian Processing Tomato Growers and Australian Tomato Processors Association, was invited by the company to visit this summer in Kakhovka, where he became convinced of Ukraine's huge potential, particularly in growing tomatoes.
"Kherson region is a part of so-called Europe's 'tomato belt'," said Chirnside. "The region has a lot of sun, water, and good land, but new technologies are needed for taking care of plants. Also, seedlings of a different quality are needed, and, finally, special equipment to be used during planting and harvesting of vegetables."
Chumak maintains its own experimental fields in Kherson upon which farmers are taught the most modern techniques and novelties of vegetable growing. For example, farmers have been taught the value of the so-called "elevated seedbed," on which plants get more sun. Also, the Chumak facility experiments with drip irrigation, trying to enhance the efficiency of water usage.
Also, this year Chumak's experiment farm operations started working with two Italian tomato-harvesting combines, the first in Ukraine. The combines greatly increase efficiency in harvesting of tomato crops. The combines pick up the plants near their roots, throws away their tops, then it loads ripe tomatoes on a truck (the machine's computer distinguishes them by the color), while still green tomatoes remain in the field to ripen.
The company's economic activity has been also strongly reflected in social changes in the region as well. Oleksandr Karasevych, mayor of Kakhovka, said that Chumak is one of the biggest contributors to the local budget and the company provides financial assistance for resolving many issues for which the city does not have money.
With modern ideas and a strong commitment to growth that supports all in the agricultural and agro-industrial community, the company named for Ukraine's ancient salt traders has brought the chumak ideals of energy and enterprise into the 21st century.
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