A Golden Autumn

For Russia-The Netherlands

The Russian agrobusiness is looking to Dutch know-how, from gps's on tractors on farms to educational programs, to get ahead.

The summer's scorching temperatures in Russia have had a devastating effect on farmers and the agriculture industry and has emphasized the need for continued modernization.

The Russian government is already in the middle of a huge development program stretching to 2012 that is designed to build up the agricultural sector and rural areas and which has seen Dutch agribusiness take a vital role.

The program is "of enormous importance for the development of local livestock and agricultural production," says Suzanne van Tilburg, agricultural counselor at the Dutch Embassy, saying it is a stimulus to bring agricultural trade and investment relations between the two countries to a higher level.

"Dutch agribusiness companies and agricultural institutions are interested in developing new initiatives, activities and projects," she says.

Such companies are at the forefront of working with Russian agricultural businesses in terms of technology transfer, the passing on of experience and education.

Savvateyevs' Nursery is spread across 30 acres in the northwestern part of the Moscow region, growing a variety of decorative shrubs, conifers and fruit trees.

"We worked with one of the leading Dutch planting companies, Combinatie Mauritz, which has a lot of experience with decorative trees," says Irina Savvateyeva, who set up the nursery with her husband in 2005. "We really benefited from their experience when they came to Russia."

She sells through two main dealers, the White Dacha Flower chain, which serves the Moscow region, and the Astra Garden Center, located in the Tyumen region. She also supplies private clients and landscape designers who use the Savvateyevs' nursery plants in private gardens and parks throughout the country.

 "Our turnover increased 40 percent last year. We are a relatively new company so we are growing quite quickly," says Savvateyeva, saying that the recent financial crisis left the company virtually unscathed. "Everyone has to be more careful with their strategy, though; I don't feel we can increase prices at the moment."    

The crisis did, however, have a significant impact on bilateral trade in the agriculture sector. Dutch agricultural exports to Russia declined by 26 percent last year, from a peak in 2008 of 1.46 billion euros to 1.09 billion euros. Exports to Holland also decreased in the period, from 112 million euros in 2008 to 87 million euros in 2009. It was only animal feed shipments to Russia that did not fall during the crisis. Meat was the hardest hit, with exports falling 64 percent in 2009, and margarine, oils and fats and the vegetable sector also saw a sharp decline in trade.

Figures from the start of 2010 are pointing toward a recovery.

"The trade figures from the first 5 months in 2010 for Dutch vegetables and fruit show an increase of 17 percent compared with the same period in 2009," says van Tilburg, adding that 70 percent of all flowers in the Russian Federation are supplied from the Netherlands, and there is potential for further growth.  

Alongside trade, cooperation is also developing, particularly in the educational sphere. One program aiming to bring more Dutch know-how into Russian agriculture is the MBA Agribusiness program, launched this year by Wageningen University in cooperation with universities in Kazan and Belgorod. Program director Professor Ruud Huirne says courses in both cities were full, with 60 participants, mainly farm managers, taking part in the program, which began in January 2010.

This first round of students are set to graduate in the middle of next year, and if the course proves successful there will be a new intake in January 2012.

"Right now we are gauging interest and following the progress of this year's intake. We are already getting requests from other regions in Russia and we are open to suggestions, but we need to consolidate the work of this program  before we can extend it to other cities," Huirne says.

Huirne sees the program as filling the gap between major investments in agricultural technology and equipment and the level of education and experience among those who are supposed to implement them.

"A lot of technology, animals and glasshouses are imported to Russia. But people tend to forget two things — staff and management. Farm managers are not always up to date with the technology yet."

The course has been designed to teach Russian managers not only how to use the latest technology but also how to integrate various aspects into their business strategy to maximize quality and production volumes.

"The biggest challenge is integration," Huirne says. "The second half of the course deals with connecting different parts of the farm, creating stronger links between different departments as well as looking at aspects of quality and risk management and marketing."

The ministry stuck by its forecast for full-year contraction of just 2.2 percent, suggesting things could improve before too long. That optimism was picked up by Shuvalov.

It's not just a case of bringing the Dutch experience to Russia, however. While Dutch professionals are comfortable with the technology and have a wealth of experience implementing it back home, Russia is a different environment and therefore raises some new challenges.

"We hope to improve production and quality quite a bit by combining the latest technology with local knowledge. Together, it's a strong mix," he says.

Huirne points to the scale of farming in Russia as something that can also bring new insight and experience to the Dutch farming community.

"In Holland, a farm may have an average of 100 cows, but in Russia there are many farms with 500 cows and more. Our Russian colleagues can therefore teach us a lot about large-scale farming."

And despite the devastation that extreme weather conditions wrought in Russia this summer, Huirne sees a positive side.

"It triggered awareness; people are becoming more aware of the need to combat problems associated with dry weather, for example by looking at ways to improve soil quality and grow more heat-resistant crops. This will be really valuable as climate change becomes more extreme," he concludes.

Van Tilburg agrees that this summer's weather could stimulate areas of trade and cooperation. "In times of drought, irrigation is a key factor in terms of crop survival. I can imagine that Russian agroholdings would be more interested in technologies in this field. A group of companies that specialize in precision farming will be taking part in this year's Golden Autumn," he says.

Precision farming, which allows farmers to use satellite images and GPS to more efficiently regulate sowing, fertilizing and other farming basics in order to increase crop yields, is a high-tech solution to the increasingly complex conditions facing some farm managers.

"One major challenge here is Russia's short growing season," says Rene Kremers,  managing director of Difco International, a Dutch company specializing in precision farming in Russia. "There can still be snow in late April, but by May it could be 25 degrees [Celsius]."

With farmers often under pressure to get crops such as potatoes planted as soon as optimal conditions are reached, a "GPS system can allow farmers to plant all night or even double plant."

Agriculture Facts
  • The Netherlands is one of the three largest exporters of agricultural products in the world.
  • 65 billion euro's worth of agricultural products were exported in 2009.
  • The Netherlands accounts for 80 per cent of the world trade in cut flowers and bulb flowers.
  • More than half of the Netherlands four million hectares is used for agricultural purposes.
  • The world's first horticultural auction took place in the Netherlands in 1887.
  • The average milk production for a Holstein Friesian cow is 8,750 kg.

Kremers estimates that installing such a GPS system costs about 20,000 euros ($26,000), depending on the tractors a farm already has.

"When you take into account all the fuel, seeds, fertilizer and time you save, you can earn that back in a year," he says, adding that for this reason, precision farming in Russia can be extremely profitable for all concerned.

More effective monitoring systems that allow farm managers to keep a close eye on production from a central base can also save a lot of time visiting sites.

"I first became interested in precision farming when I was trying to move from managing 50,000 hectares to 500,000 hectares," he says. "By the time we reached 200,000 hectares we were already having problems and it was clear I needed more control."

An integrated satellite system can allow a manager to monitor the situation across the farm's territory, quickly make decisions about how to respond to challenges or change certain strategies and give the order to implement those changes, all from one place.

Difco is part of a consortium of eleven Dutch companies funded by the Dutch government to bring technology, training and experience to the Russian market.

It is one of the companies on show at this year's Golden Autumn, an annual agricultural expo that runs at the All-Russia Exhibition Center from October 8th to October 11th this year.

"Agriculture and related activities clearly play a very special part in the development of the bilateral relations," says van Tilburg. "Even though compared to Russia we are a small country, we are a leading agribusiness nation. We are the second-largest exporting nation of agricultural products worldwide, and we rank fifth in the market share of the Russian Federation."

The Dutch agricultural business is trying to expand that share and will have a huge presence including a separate pavilion dedicated to animal husbandry and to their potato industry.

Golden Autumn was established by the Russian government in 2000 to coincide with the national day of agricultural workers. Fifty Russian regions and 29 countries took part in last year's event. Deals signed at Golden Autumn in 2009 ran into tens of millions of euros, says the fair's spokesman, Alexei Kuchinov.

Fifteen Dutch companies took part last year, and that number is expected to be surpassed this Golden Autumn.    

Russia - Holland 2010
Russia - Holland 2010
This business bilingual colour publication is devoted to cooperation between Russia and the Netherlands in the fields of business, tourism and culture and is published in partnership with the Dutch embassy.
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