What is He Looking for in This Faraway Country?
“Christian, when the agricultural work ends…”
“Oh, there are no work breaks for us here. We have a cycle, with one thing following another. Now we are assembling the grain elevator and sowing winter crops”.
“By the way, where do you get your seeds?”
“For winter wheat – here in Russia. Russians have adapted it well to their weather. As for everything else – seeds for oats, sunflower, rape, peas and other crops – well, sorry, we bring them in from Europe. It’s a pity we have to, but they are of better quality there. Our plans include cultivating soya, lupine…”
In deciding where to run a business connected with sowing grain crops, we knew that it had to be in the black earth zone.
“However, to pursue the topic of the seasonal nature of the work, you must already know that peasants take more rest in the Russian winter, with its frosts and snowstorms?”
“We too give our workers winter leave! Some have to keep going, of course, working in the warehouses, but we send most of the machine operators on leave from the beginning of December to the 15th of March. That’s paid leave, of course.”
“Why would you do that?”
“Firstly, people need to know that there will be work for them in the spring. This gives stability and confidence in the future. Secondly, we do some overtime in the summer, plus the fact that there’s no leave at harvest time. That’s how days-off accumulate. We treat our workers decently here.”
Each Western entrepreneur has had his own route into business in Russia.
“Where do you, such kind people, come from? What attracted you to Russia? How did you end up specifically in the Sevsk district of the Bryansk region?”
“Nothing happens by chance. In deciding where to run a business connected with sowing grain crops, we knew that it had to be in the black earth zone, not much subject to drought. Another point is that there was land available here. Very few or no claimants to this land. What’s more, in the Sevsk district of the Bryansk region, there are the most neglected fields, where birch trees are growing with their trunks already 12 cm (about 4,7 inches) in diameter. So the local politicians…”
“The local authorities…”
“…the local authorities were quite delighted to see us arrive with our desire to bring these fields back into use for crop rotation. So to sum up, the climate and politics took the lead here.
Artem Pichugin, CONCOL consulting company
“The Russian grain crop market has already recovered from the abnormal heat of 2010, when the volume of grain crops collected proved to be even lower than in the crisis year of 2009. According to the latest estimates the grain crop in Russia in 2011 totaled about 90,000,000 tonnes (last year’s figure was at the 61,000,000 tonne level). There is a huge potential for agricultural enterprises. Russia is striving to regain its leading positions in the international market, since the development of this line of business could become one of the opportunities to reduce the dependence of the resource-oriented Russian economy on the situation in Western markets. And this is in spite of the fact that in terms of grain yield, the Russian market is clearly losing out to the European and American markets. This is due to both climatic and technology factors. However, the technology lag of agricultural enterprises backed by Western capital, and of Russian ones too, has been quite successfully reduced in recent years…
On average, the volume of investments in major projects comes to about 30,000,000 USD, which pays for itself in 10 years or more. As for medium and small businesses, the recoupment period is about 4-6 years. It also seems that some investors assess the prospects of investments in agriculture as being even better than in the oil and gas sector”.
The UFG Group became an investor, and I’m running it along with Herr Eckart Hohmann. He’s the CEO, dealing with financial matters and sales of produce, and I’m the COO, responsible for the work organization, cultivation technology and crop harvesting. I should like to stress that businessmen very rarely rush headlong into Russian market. Herr Hohmann had worked in Russia for eight years before he started here. For the first four years, he worked in a bank, supplying credit for the agriculture business, then he set up his own business with 2,000 hectares (about 5,000 acres) in the Orlov region. I was a consultant technologist for plant cultivation in one of the firms in the Voronezh region. Each Western entrepreneur has had his own route into business in Russia, but almost always starting gradually, trying things out on a small scale. Quite right too – less risk of making a mistake and be disappointed”.
They Must Take Us into Consideration
“Didn’t you yourself have any disappointments in running your own business? Are you happy with the Russian laws and your relations with the local authorities?”
“We have pretty much avoided major problems. We have bureaucrats in Germany too, only you have more of them. But what is remarkable and helpful to us foreigners in Russia, is the desire of the authorities, from the Governor level and above, that investments and advanced technology should flow into the country. I would put it this way: the project itself, which is gaining ground and proving its efficiency, is putting pressure on the politicians. They have to take us into consideration. Furthermore, we are not burdened with past debts. We have just bought the land, not collective farms or property. We have not had to sack people or deal with old buildings and equipment. We started from scratch, and began working using the most modern methods and equipment. However, the first problem awaiting us was selecting the personnel”.
No Patience to Put up With it…
“What didn’t you like about our machine operators?”
“Honestly? Russia is still stuck in the nineties as regards to bringing new equipment into use. During the years since then, you have not mastered the new methods for the cultivation of grain crops. So we had to teach everyone, from managers to tractor drivers. We even had to invite in some specialists from the neighboring Kursk and Voronezh regions”.
“What about personnel turnover?”
“For the first year and a half, it was a big problem. We have the finances to develop production, we have the equipment and technology, but we don’t have the patience to put up with slacking and unwillingness to put everything into work, to talk people out of shirking work, to urge people to keep up the quality… We gradually weeded out those who couldn’t keep up with our pace or our demands. On the other hand, now we have a core of workers we can trust and rely on. We now have 100 people working for us, and we started with 30…”
Get more discipline into your workers, and then you might catch up with us and even manage to overtake us. You have great people with golden hands, but the overall level of discipline…
“You speak good Russian…”
“So we’re not planning to go anywhere, unlike some say: ‘They’ll grab all they can and be off back to Germany!’ It isn’t just money that we’ve invested here. We’ve put heart and soul into our business, into these fields. We now have 20,000 hectares (about 50,000 acres) under crop rotation. Next year we plan to acquire a further 10,000 from the neighboring Suzemsk district.
Russian Stories
“And what else are they saying on the Russian fields about you foreigners?”
“That we… are poisoning the fields with fertilizers! But do they think we don’t realize that too much fertilizer will ruin the most important thing, the harvest itself? Do they think we want to work at a loss? What’s more, we are attracted to Russia by the scale of the projects! Where in Germany, or anywhere in Europe for that matter, could we spread out over fields like these? Now we are building a grain elevator – we don’t even have anything like it at home in Germany. The whole complex, including drying and sorting, will handle 400 tonnes (about 880,000 pounds) of produce simultaneously. The two sorting machines will themselves sort the grain into first and second class, and unload 200 tonnes an hour. The gas-operated dryers can process up to 60 tonnes of grain, depending on its humidity. The storage devices deal with a thousand tonnes each. We shall also be willing to accept grain from outside for processing, which will bring in some extra cash.
We’ve built four produce storage units near the elevator, each about 100 meters (328 feet) long and about 50 wide. We’ll have two more in the near future. So we’re in it for the long run…”
“But do you have enough equipment to harvest the grain? Are the figures impressive?”
“The amount of equipment is not supposed to be impressive. There should be just enough of it to deal with our 20,000 hectares. Let’s take the productivity of the machines. One grain harvester combine harvests 1,700 ha., take into consideration the total area and we find that we need 12 tractors and 12 grain harvester combines. When we get the other 10,000 ha., we’ll add six more of each. But we don’t want an excess amount of them.”
“Is there a great difference in the laws of our two countries applying to production?”
“Yes, there’s a difference. But on one hand, we’ve come to you and we’ll live by your laws. On the other hand, we aren’t going to let the local authorities tell us where and what to plant or how to harvest and store. There are sometimes misunderstandings with the locals. It sometimes seems strange to us that some beekeepers, for example, bring their hives full of bees onto our fields and consider it natural. But, let’s say, we need to dust the buckwheat. Where should we look for the beekeepers? Why, while he has trespassed on our private property, should we have to warn him about the use of poisonous chemicals against pests? Then the rumors go round that even the bees die on our fields. And yet we’re always being displayed to all kinds of managers of agricultural production enterprises as an example.
Valeriy Gudakov, Head of Administration of the Sevsk district of the Bryansk region:
“With the arrival of our German colleagues, the land has begun to produce what it should. The land has come alive, and so have the people. And this is no exaggeration. A peasant likes to see not only well-kept fields; he also likes to see the standard of farming. More so, since the investor is working the soil without a plough, which has never been done here before.
The investor has pushed the managers of our agricultural enterprises into buying new equipment. While they had the fields to themselves, it seemed they could go on working in the old way, but when a competitor turns up with new tractors and grain harvester combines, it becomes clear that you have to re-equip yourself to stand up to the competition. They have started getting credits and investing the money in the technical re-equipment of their enterprises. And this at once shows itself in the quality of produce.
The work load in the German firm is also keeping our workers on their toes. They’ll work round the clock, weather permitting. That’s what we say to our farmers at conferences: learn to value time and maintain strict discipline, particularly at harvest time! Those managers who take a long-term view do not consider it shameful to go to their German colleagues to benefit from their experience. After all, they don’t make any secret of it.
We are happy for the young people too. The average salary in the German firm is 29,000 rubles (about 1 000 USD). The young men feel that they can earn well at home, without having to go to Moscow or other cities. These are the first signs of young people staying in the country. This too we owe to our partners.Initially, the heads of local administrations asked questions: Why are our guests wearing out our roads and taking huge amounts of water from our reservoirs? These were reasonable questions. We asked them our German friends. I must say that their reaction was positive: they ran graders over the potholes in all the dirt roads, leveling them out for their own vehicles to run on, but it was a plus for our drivers too. They have begun drilling wells for their own use. And at the same time, they are giving free help to a kindergarten in Sevsk and taking part in supporting social work in the region.
We, leaders of the municipal district, in connection with the coming of the Germans, have our dream: let such investors come into livestock sector too! It would create a whole lot of jobs for women!
Each One Has His Own Path
“Aren’t you afraid of competition?”
“No. It’s not enough just to look at or even study our methods of working the soil. You have to study the whole cycle, the whole production chain, learn to work systematically… Get more discipline into your workers, and then you might catch up with us and even manage to overtake us. You have great people with golden hands, but the overall level of discipline… I go on a lot about it, because more effort has gone into forming the work force than into anything else. And political stability in the country is, of course, something else that’s important to us. And we all gain from the fact that we have brought our European experience into your agriculture.
“What advice would you give to European businessmen who are thinking of starting their own business in Russia?”
“Each one will have his own path. But if you really want to work on large scale projects, there’s no point in being afraid of the difficulties. Furthermore, they still want foreign businesses in Russia.”
“Heavy rain is forecast for the Bryansk region…”
“Let it rain. Rain has its own usefulness and beauty. Nature has its laws, and we who work on the land take what comes from the sky as a gift. We laugh, we cry, but we take whatever comes. And we know how to work in whatever conditions we’re facing. That’s our strength…