In a display of private sector engagement, the Swiss Increasing Market Employability Program – IME has spearheaded a strategic initiative in the sustainable agribusiness sector in North Macedonia. This intervention, employing a private sector engagement modality, sets out to achieve several critical goals, including implementing contract farming model for planned production, strengthening the supply chain, increasing the number of watermelon producers, and providing training and mentorship from seasoned agronomists.
The Swiss Increasing Market Employability Program – IME has joined forces with ‘Fresh Line’, a prominent four-party logistics company based in the Balkan region, with a unique business model, which combines its own production with joint ventures and buyouts from specialized growers. The production came as a result of a unique demand relationships with buyers in Germany, Sweden, Czech Republic, and Poland, including supermarket chains like REWE Group and COOP. The intervention is characterized by a comprehensive approach encompassing production and post-harvest handling.
Within this modality, IME is co-financing crucial project components, including acquiring high-quality seedlings, certifying the value chain, and providing technical assistance to farmers, by supporting activities such as: engaging experienced mentors – agronomists, obtaining food safety and social certifications, creating educational materials, and seedling production costs. Fresh Line’s substantial investment includes procurement of high-quality seeds, co-financing seedling costs, food safety certification, and expenses for packaging and logistics to the EU market. The contract farming model of cooperation led to increased sales for local farmers, enhanced product quality, and access to new international markets.
Four major producers have been strategically chosen, spreading across 32 hectares in different regions of Shtip, Strumica, and Demir Kapija. These locations have been carefully selected to optimize watermelon production, with planting techniques fine-tuned to extend the harvesting season from June to August. Furthermore, they offer an ideal environment to produce seedless watermelons, thanks to a combination of favorable climatic, soil, and geographical conditions. With a Mediterranean climate featuring warm, dry summers and mild, wet winters, these regions provide an extended growing season free from frost – a key requirement for watermelon cultivation.
Contract Farming as a Preferred Model for North Macedonia’s Agribusiness Sector
Within the challenges in North Macedonia, where farmers face distrust, disappointment, limited cooperation, and restricted market access, contract farming emerges as a potential remedy. Playing a pivotal role in modern agricultural practices, this collaborative approach involves formal agreements between farmers and companies, providing a secure market for produce and stability in income. Agribusinesses benefit from a consistent and quality supply of raw materials, fostering innovation and improved agricultural techniques. Contract farming offers traders and exporters of fresh fruits a secure and consistent supply of high-quality produce, reducing market uncertainties. This collaborative arrangement facilitates better planning, efficient resource utilization, and access to a network of reliable farmers. Additionally, it promotes the transfer of agricultural best practices and technologies, enhancing overall productivity and ensuring a sustainable supply chain.
This mutually beneficial partnership enhances productivity, ensures food security, and contributes to the overall sustainability of the agricultural sector.
Private Sector Engagement Modality and the Comprehensive Production Process
This initiative represents a pioneering effort, as seedless watermelons are not traditionally grown in the country. The innovative approach not only encompasses the cultivation of the product but also the introduction of a contract farming model, a partnership with a nursery for seedling production, and the deployment of experienced agronomists for on-site oversight, mentorship, and knowledge transfer with each of the involved partner partners.
What sets ‘Fresh Line’ apart is not only the product itself, but also the innovative production model. Fresh Line’s role as a comprehensive supply chain integrator is pivotal in this cooperation. The company organizes the entire production process, from contracting with farmers and seed suppliers to overseeing and mentoring the production of high-quality seedlings, providing invaluable know-how, and ensuring advisory services for every step of the process. This private sector engagement modality efficiently addresses various deficiencies while establishing robust linkages with farmers.
To ensure high-level quality and compliance, ‘Fresh Line’ has taken decisive steps towards obtaining International Featured Standards (IFS) certification process for the packing facility, ensuring compliance with high-quality and safety standards. Additionally, the company invested in obtaining both Global Good Agricultural Practices (GAP) and Global Social Practice (GRASP) certifications, demonstrating its commitment to sustainable and socially responsible agricultural practice on a farm level. This dedication to certification proves Fresh Line’s commitment to excellence and their steadfast pursuit of industry-leading standards, in accordance with the requirements of the leading European supermarket chains.
With the support of the Swiss Increasing Market Employability Program – IME implemented by the Palladium Group, ‘Fresh Line’ aims to achieve broader transformation in the watermelon value chain, ensuring the long-term sustainability of their investment. By offering full support to farmers in transitioning from conventional to seedless watermelon production, coupled with secured buyers, they aim to increase seedless watermelon production for export.
Successfully Managing and Overcoming Challenges
The journey wasn’t without its trials. Despite the groundbreaking efforts, the project encountered challenges, notably heavy rains in April, making the seeding process arduous. The solution was to engage 120 additional seasonal workers, which ensured the project stayed on track. Challenges persisted during the ripening phase, as a water supply issue plagued one of the major producers in the Shtip area, resulting in a significant reduction in yield.
Nevertheless, the producers displayed resilience and adaptability. Despite the challenges, the partner farms managed to produce and sell 480 tons of seedless watermelons, with majority making their way to ‘Fresh Line’ for export in Germany and the Czech Republic, while the remaining products found a market domestically.
Higher-than-expected earnings per kilo but also reduced transportation costs resulted in total earnings from the seedless watermelon export amounting to 153,000 CHF. The buyout price of the watermelon was around 63% higher than what was originally agreed between the four producers and ‘Fresh Line’, which represents an additional incentive for farmers to continue and increase production for the years to come.
Empowering Farmers through Knowledge Transfer and Capacity Development
In the heart of the development intervention also lies a firm focus on knowledge transfer and capacity development. Seasoned producers and agronomists with extensive expertise in seedless watermelon production have been appointed, providing invaluable oversight and guidance at every stage of the process. Their proficiency in utilizing bio-stimulators is bound to foster continuous elevation of quality, and the establishment of a long-term, reliable production.
What is more, the project also incorporates educational videos illustrating the entire process ‘from farm to consumer’ for seedless watermelon cultivation, through the specialized information platform for the agricultural sector in the country ‘Agrotim’. Through interviews, media coverage, and case studies showcasing the applied technology and profitability of this production, more farmers will become acquainted with the opportunity, spurring interest in participating in seedless watermelon contract farming next year. It is also worth noting that ‘Fresh Line’ has been recognized as a role-model in contract farming in the country, by receiving the ‘Award for Promotion and Development of Contract Farming in North Macedonia’, issued by the media outlet ‘Modern Agriculture’.
Producers Remain Optimistic about the Future
Following the pulse of EU markets, ‘Fresh Line’ envisions a continued partnership with the farmers and extending the contract farming arrangements with other farms for production of seedless watermelons on more hectares for next year. This intervention not only represents a milestone in seedless watermelon production, but also showcases an effective model of cooperation between producers, traders, and other industry experts.
Having all this into account, the entire comprehensive approach, driven by the private sector engagement modality will strengthen the related value chain in North Macedonia, ensuring long-term sustainability. With continued support, this venture is set to redefine the agribusiness landscape and open new doors for Macedonian farmers. The future looks bright for both ‘Fresh Line’ and the local farmers, as they embark on a journey of sustained economic growth and increased employment, especially in the rural areas.
The Increasing Market Employability Programme (IME) is aimed at strengthening the business sector in the Republic of North Macedonia. Our mission is to create an enabling environment for our identified high-growth target sectors: Sustainable Agribusiness, Adventure Tourism and Information and Communication Technology (ICT). We aim to expand markets and boost competitiveness amongst domestic players in these sectors, to catalyse an overall improvement in the quality of products and services and create sustainable and decent jobs for high-skilled labour force in North Macedonia, especially women and youth.