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. Last Updated: 07/27/2016

Penza Black Earth Lures British Farmers

ReutersColin Hinchley, right, the operations director of Heartland Farms, talking to a tractor driver in a field near Penza.
BELINSKY, Penza Region -- On Russia's fertile Black Earth, two Englishmen are making money where other investors saw only risk.

"All of this was derelict land last year. We've turned it into fields of golden wheat," operations director Colin Hinchley says as he drives through a field six times the size of an average British farm.

Moscow needs investment to cut its dependence on food imports and, as the two Britons start turning a profit from the farm they have run for five years, others are being tempted to move to Russia's wide open lands.

Hinchley and Richard Willows, general director of Heartland Farms, form half the expatriate community in Penza, a city of 600,000 people 650 kilometers southeast of Moscow.

Both own property in a city where every 10th loaf is baked from their wheat.

"We're not trying to create Little England in the heart of Russia," says Hinchley.

"At first people weren't sure -- 'Are they going to come and rob us blind?' -- but now there's a buzz about the place."

Russia has made agriculture, which collapsed after the fall of the Soviet Union, one of four priority areas for development, offering tax breaks to those willing to invest in its fields.

Penza's coat of arms shows three wheat sheaves, representing the agricultural roots of a region located towards the eastern end of the Black Earth belt of fertile soil that stretches from eastern Europe to the Volga River.

Hinchley and Willows, a former grain trader, were running demonstration farms in the region when Penza Governor Vasily Bochkaryov invited them to stay.

"The governor said: 'We've half a million hectares sitting idle. Can you help?'" says Hinchley, 45, who was feted as a 'Hero of the Penza Soil' at a ceremony this year.

Bochkaryov led a delegation to Britain in February to drum up interest among other farmers. Two Scots have already made a reconnaissance trip and are planning to lease land in Penza.

Heartland, formed in 2002, is owned by British property developer Robert Monk. An initial outlay of ?4 million ($8.2 million) allowed the company to get started.

Heartland has leased 12,000 hectares for the maximum 49-year period and is acquiring 15,000 more in the Belinsky district in Penza, near the birthplace of writer and poet Mikhail Lermontov.

Monk has also bought 14,000 hectares of arable land in the region in what is believed to be the first purchase of its kind, Britain's Daily Telegraph reported, citing Monk.

Monk took advantage of the fact that offshore investors are allowed to wholly own Russian companies, which have the right to own land, the newspaper said.

A Russian subsidiary of Monk's Heartland Farms received permission from Bochkaryov to buy the land, for which the company paid about $250 per hectare, the newspaper said.

This year will be the first that Heartland turns an operating profit -- up to $1 million, Willows estimates. With world commodity prices near record highs, this could double in 2008 as more derelict land is brought back into production.

Heartland has brought modern farming technology to an area where scythes are still used. Clear title deeds and knowledge of land laws, as well as a presence in the local community, are key. Heartland is the shirt sponsor of Penza's two rugby clubs.

"Colin and I committed to live here to make this work, and that's what is needed," says Willows, 54, who left rural Lincolnshire behind to come to Penza.

Heartland employs 75 people, which will double after the new land is taken on. Tractor drivers earn an average monthly wage of $410, slightly more than on neighboring farms. Employees can receive bonuses of up to 25 percent monthly and work year-round, where before they were laid off in winter.

Willows also recognized the need to stamp out drunkenness, the scourge of farm laborers throughout Russia. Workers are docked half a month's wages for being drunk on the job.

"We understand life can be tough in the villages. But if you're drunk at work a second time, you're fired."

Eight combine harvesters, each worth $350,000, sit in a wheat field as harvest time approaches, their drivers crouch nearby smoking cigarettes as pop music blasts from the cabs.

In another field, Alexander Molostvov, 22, starts his 12-hour shift plowing derelict land for winter sowing.

"When I was a kid this was a collective farm. We are preparing it again for planting. Wheat, maize -- it's all very profitable now," he says at the helm of a GPS-guided tractor.

Older workers, who remember the collective farms, appreciate the modern farming methods.

"We didn't work the land with trade in mind. Now we work with accounts, with plans," Vasily Nadeyev, Heartland's chief agronomist, says as he checks grain samples for moisture.

Half of Heartland's produce is contracted to multinational companies with a presence in Russia. The company was the first to supply malting barley to Sun Interbrew's brewery. Now seven Penza region farmers are doing so.

"The difference is European management and technique," says Willows. "It's difficult to introduce, but worthwhile in the end."