On-farm Potato Storage Feasibility Study

Cesar Flores

Agribusiness Development Specialist 191 University Blvd # 118 Denver CO 80206 USA

Phone: 1 303 260 8721 Skype: cezarflores

E-mail: [email protected]

On-Farm Potato Storage Feasibility Study

Kiev Fruit and Vegetable Grower’s Association

Executive Summary This report outlines the results of an investigation into the feasibility of expanding potato storage on a farm in central Ukraine. Construction of an on-farm small-scale storage facility would serve as a pilot project for demonstration to other members of the Kiev Fruit and Vegetable Growers Association. Goals of the project are: • •

Add value and increase profits through storage and off-season sales Increase competitiveness through enhanced packaging solutions

Situational analysis Kiev Fruit and Vegetable Growers Group Farm is currently producing a low-risk mix of “Borsch” vegetable crops; Potato, Beet, Carrot, and Onion (table 1.). A very small portion of the crop is stored in a rented cellar (photo 1). A large quantity is stored outside in piles protected only by sheets of plastic until sales are made (photo 2). Consequently, product quality suffers, losses are high and sales must be made during the lowest price season.

Photo1. Cellar storage of potatoes

2006 Crop Tomato Onion Potato Beet Carrot Cabbage Cucumber Table. 1

Photo 2. Outside storage of potatoes

2006 Marketing Channels 90 T 90 T 200 T 80 T 120 T 0 0

Channel Farm gate Direct to Retail Through wholesalers Contract with Processors Supermarkets

Percent of Sales 15-20% 10% 0% 70-75% 0%

Table. 2

Most of the production is currently marketed under contract with processing plants. The smallest percent is channeled to the most profitable direct-to-retail segment, and the remaining quantity is sold at the lowest price at the farm gate (table 2). Supermarkets are not sought out, due to excessive transaction costs.

Profitability Strategy The following strategy is recommended to increase profitability:
Move sales into the more profitable high price season, through medium and long term storage with an added-value infrastructure investment of 130,000 UAH.
Increase the proportion of sales to more profitable distribution channels, by targeting upscale consumers through better post-harvest handling and new added-value packaging solutions.

Storage Facility Structure Design and Construction It is recommended that the new storage facility site be located as close to the fields as possible, minimizing handling, preserving product quality and limiting transport costs. A suitable location has been selected 2.5 km from the fields. The state-of-the-art construction method uses Insulated Concrete Forms (ICF). ICF construction involves on-site assembly of polystyrene forms into which concrete is poured to create the walls. The foam block is left in place after the concrete is placed to provide insulation as well as a convenient anchor for interior finishes and the exterior. This type of building is strong, well insulated, long-lasting, weather-resistant and fireproof. The storage facility construction can be phased-in over 2 or 3 seasons:

Phase I: 1. Insulated air-cooled storage facility big enough for one season of good harvest crop yield = 1000 Tons / 12m x 50m 2. Attached simple packing shed utilizing manual sorting, washing, and packing

Phase II - III: 1. Installation of a refrigeration system and cooling room 2. Expansion of insulated storage to handle increases in crop sizes or crops purchased for speculation 3. Installation of mechanized packing lines

Storage Specifications Proper storage of root crops should be similar to their ideal growing environment: Cool, wet and dark.

Ventilation Ventilation is the most important component of the storage facility for maintaining:
…Correct temperature. This is the most critical factor.
…Relative humidity
…CO2/O2 mixture The ventilation system should include: 1. 2. 3. 4. 5. 6.

Intake Fans Air plenum Ducts Exhaust Control system.

Recommended ventilation rates for potato are: Potato

12.5 – 15 Liters/second/Ton

Intake dampers should be designed to close return air supply proportionally as the intake door is opened. As more fresh air intake is required, return air carrying excessive heat or humidity will be forced out of the building through the exhaust vent. A sample ventilation system using floor ventilation that can be either adopted or modified as needed:

Sample Ventilation plan

Humidity It is essential that a humidifier be located immediately downstream of the fans. A water-saturated fibrous media system is recommended. High-pressure nozzles, centrifugal spinning disk systems are less desirable as they are not easy to regulate. It is difficult to add moisture to cold air and the key to success is to produce extremely fine droplets of water to the airflow of the storage. The easiest and cheapest way to measure RH is to use a sling psychrometer, but its readings should only be used as a guideline. The air in the carrot storage will feel cold, clammy and bone chilling when conditions are correct.

Storage Management Temperature, ventilation, and humidity should be closely monitored and controlled for optimal product quality using the following guidelines during each stage: Pre-harvest 1. disinfect the storage, handling and harvesting equipment 2. Only store mature, disease and bruise free crops. Research has demonstrated that potatoes from healthy vines are much more resistant to storage decay than potatoes from vines that have been weakened from physiological stress Harvest The ideal harvest temperature is between 10° and 15°C. Do not harvest when the tuber pulp temperature is less than 5°C or greater than 20°C. Post-harvest Curing 1. Mature, healthy potatoes should be cured for about two weeks at 10-15°C and 95% relative humidity to prevent excessive shrinkage and to promote wound healing. 2. Cool potatoes, beets and carrots as quickly as possible from field temperature to curing temperature. Tests with long term storage shows that most of the moisture lost occurs in about the first 2 weeks of storage. Fast, uniform cooling with a high relative humidity is imperative. 3. Following the curing period, the potatoes should be cooled to the long-term storage temperature at a rate of 2-3°C per week. Long-Term Storage Ideal mid and long term storage temperatures and Humidity are: Vegetable Potatoes Carrots Onions Beets

Temperature 4-10° C 0°C 0°C ? °C

Relative Humidity 95% + 95% + 75% max!!! 95% +

Seasonal Price Analysis There are fairly consistent trends in seasonal price movements for vegetables in Ukraine. Only approximately 25% of potatoes are commercially stored in Ukraine, generating significant seasonal price increases. In 2006, prices for potatoes rose 55% between harvest time and the end of the potential storage period. Likewise, Beet prices rose 110% above the harvest price and carrots 30%. Onion prices gained 160%, and Carrots gained almost 200% (see tables below).

2006 Potato Retail Market Price 3,00 2,50

UAH

2,00 1,50 1,00 0,50

N ov

Se p

Ju l

ay M

ar M

Ja n

0,00

Month

Month

N ov

Se p

Ju l

M ay

M ar

5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00

Ja n

UAH

2006 Onion Retail Market Price

2006 Beet Retail Market Price 2,50

UAH

2,00 1,50 1,00 0,50

ov N

Se p

Ju l

M ay

M ar

Ja n

0,00

Month

2006 Carrot Retail Market Price 5.00

UAH

4.00 3.00 2.00 1.00

Ju l A ug Se p O ct N ov D ec

Ja n Fe b M ar A pr M ay Ju n

0.00

Month

Profitability Impact Highest prices for Beets and Potatoes peak in the late winter and early spring months, avoiding the need for refrigeration and are appropriate for Phase I of the project. Carrots tend to peak in late spring, early summer and may require refrigeration for maximum return. Onions peak in the summer months, requiring refrigeration. This upgrade is scheduled to be installed in Phase II of the project.

For potato, assuming a harvest price of .5 UAH per kilo and 1000 ton harvest, an additional 75 000 UAH in gross sales income can be realized if half the harvest can be sold at a 30% increase in price (table 3)

Impact of Storage on Gross Sales Price for Potato Storage Capacity

50%

75%

100%

Crop at Harvest Base Price UAH

250 000

375 000

500 000

+ 10%

275 000

450 000

550 000

+ 20%

300 000

450 000

600 000

+ 30%

325 000

487 000

650 000

+40%

350 000

525 000

700 000

Table 3

Packinghouse A complete storage and handling facility is more than just the storage and includes: shipping and receiving areas; washing, sorting, grading and packing areas; It is recommended to use manual processes during Phase I for post-harvest handling and then add mechanization as needed for Phase II.

Marketing Strategy Adding value to “Borsch” vegetables and appealing to the growing population of urban upscale shoppers can be achieved by:






Selecting cultivar varieties that are most in demand by consumers Sorting vegetables for size and perfect appearance Packing in smaller weight units of 2-3 Kg. net bags Removing dirt and cleaning vegetables before repacking Simple labeling with a brand and product information

Two retailers are currently buying direct from the farm, and accounting for up to 10% of sales, but this can be increased to at least 40 or 50% through careful package design and intensive marketing to locate additional shops.