NATIONAL PROGRAM ON AGRIFOOD MARKET S INFRASTRUCTURE DEVELOPMENT new

NATIONAL PROGRAM ON AGRIFOOD MARKET’S INFRASTRUCTURE DEVELOPMENT: new opportunities for producers and exporters

Background o Annual production of about 1 million t of fruits and vegetables, by 2015 it should be doubled and might reach 2 million t (during USSR – 3 million t) o Markets fragmentation and lack of a common trade basement o Isolated price formation o 80% - to export, globalization brings trade sophistication o Necessity to form mixed lots of goods for direct export to retail networks

NATIONAL PROGRAM ON AGRIFOOD MARKET’S INFRASTRUCTURE DEVELOPMENT o Three basic pillars: n Packing Houses n Regional Agricultural Markets and Logistics Centers n Wholesale Markets and Agrifood Centers on the Euroregions level

Economic & geographic position (Europe) o On cross road between West & East, North & South o Long experience in trade with East o Well positioned and promoted name on traditional markets

Wholesale Market Establishment (General Objectives) o Presence of more than 500 operators in fruit and vegetables trade (producers, wholesalers, exporters, brokers, etc. ) o Direct access to high quality products for local distribution networks and wholesalers o Annual turnover of 200 thousand tons of fresh fruit and vegetables at initial stage o Stimulating agrifood produce diversity: fruits, vegetables, berries, nuts, honey, mushrooms, flowers, fish, meat, milk, etc. o Habit-forming for consumers to buy products in a single place

Wholesale Market Establishment (Specific Objectives) o Integration of primary producers in a modern marketing and distribution chain o Price stabilization, reduction of exaggerated price variation, assurance of transparency in price formation and market transactions o Strengthening export of fresh products to the neighboring countries o Consolidation of import operations with essential price reduction effect

Partners of the Center o o o Chisinau Wholesale Market is a public-private initiative launched by the Ministry of Agriculture and Food Industry which is the main promoter of this initiative Association of Producers and Exporters of Fruits “Moldova Fruct” with its 40 members fruits producers and exporters has been and is the first private partner at the launching of the Center National Federations, sector Associations and producers groups are invited to participate in this project Participation of local producers is crucial (both for launching of transparent mechanism of price setting and to ensure the market with appropriate products) Involving local and international shareholders as a unique opportunity to develop mixed trade relations with international society

Economic & geographic position (Moldova) o Positioning the Wholesale Market in the central zone of the Republic of Moldova brings an evident advantage of easy access to all potential operators and clients o Location nearby the country capital facilitates the Market being in permanent contact with the majority of business partners and relevant state

Economic & geographic position (Chişinău) o The Company is planned to be situated in the industrial zone of Petricani district, Riscani Sector of Chisinau Municipality, having access to all transportation facilities (auto, rail ways) and basic infrastructure (electric & thermal energy, natural gas, water & sewage, waste management, etc. )

Structure of the Center o o o o Halls for fruit & vegetable trade under cold Trade spaces under roof, but no cold Trade spaces in open air for on-car sales Cold stores and freezer rooms for fruits, vegetables, meat, fish, etc. Logistics centers, sorting and packing facilities, labeling, Management and quality control unit Auctions and trade fares facilitation, price data base formation Support services (office space, meeting rooms, parking, security, bank, exchange, food & resort, hotel, city shuttle, etc. )

Structure of the Center

Structure of the Center

Structure of the Center

Structure of the Center

Expected Benefits o o o Improved food security and consumption quality Enlarged range of high value food products Losses reduction while trading with fresh products Establishment of stable and accessible prices Increased direct sales by farmers Improved informational support and a coordinated marketing policy Permanent presentations and exhibitions Improved quality of basic infrastructure, less pressure on roads and traffic flows in the city center New jobs creation Increased platform for taxes due to formalized trade Additional profits by producers, exporters and other operators of the wholesale market (from direct sales and dividends from co-owner status)

Investment Project Budget o The total investment is about 40 million Euro o Implementation of the first phase, without land: 12 million Euro o Income from rent of trade spaces: 800, 000 Euro/annually o Income from logistics services and other: 500, 000 Euro/annually o Return of Investment – 8 -10%

Registration of the Company J. S. C. “Centrul Agroalimentar din Chişinău” o A Joint-Stock Company registered at the State Chamber of Registration on August 26, 2010, Nr. 1010600030180 o Initially an emission of 20000 lei has been registered, being placed 20 shares in a nominal value of 1000 lei each, all of them belonging to the Ministry of Agriculture and Food Industry o The 33, 03 ha land concessional rent contract has been signed and the procedure to form an Industrial Park has been initiated o An additional emission of shares in amount of 5 million MDL has been launched and farmers, producers and market operators of the fruit and vegetables were encouraged to participate in the company extension and initial capital collection for necessary technical design works

Investment Plan (Euro) Stage 1 Stage 2 Stage 3 TOTAL 12 Ha 10 Ha 11 Ha 33 Ha Fresh products sector Extension of the fresh products and flowers sector Food products’ park 7. 000 7. 000 21. 000 Fridges and packaging houses 750. 000 1. 500. 000 1. 000 3. 250. 000 Equipm 0 ent 500. 000 1. 000 500. 000 2. 000 Roads, parking, etc. 2. 000 3. 000 1. 500. 000 6. 500. 000 Offices 1. 000 750. 000 500. 000 2. 250. 000 Other unexpected expenditures 750. 000 500. 000 2. 000 TOTAL (WITHOUT LAND) 12. 000 14. 000 11. 000 37. 000 613. 725 818. 300 409. 150 1. 841. 175 12. 613. 725 14. 818. 300 11. 409. 150 38. 841. 175 Buildings Land TOTAL WITH LAND

Financing o Equity to be provided by the private sector o Public institutions will facilitate rapid promotion of the proposed initiative o The initial capital will be supplied by the private sector from Moldova o Additional capital could be raised from the local banks and foreign investors under attractive conditions o The Ministry of Agriculture and Food Industry will provide land as its share in the overall investment

Implementation stages Autumn 2010 1 Completion of the feasibility analysis, selection of the land plot for the Market Determination of the governmental support and registration of the company, execution of the second emission of shares and raising the necessary local capital to launch operations Development of the Technical design documents and business plan projections Obtaining of co-financing confirmations from interested investors Launching of the III-rd emission to raise additional capital from local and international partners Bidding for selection of an international company capable to execute construction works Selection of operators, signing rent contracts, completion of individual civil works and support services facilities 2 Winter 2011 1 2 Spring 2011 1 2 Summer 2011 1 2