Agrokredit magazine, No.10, October 2009
On the eve of the Farmers’ Day the president of the Russo-German Company EkoNiva was awarded the order “For Merits to the Federal Republic of Germany”. Stefan Duerr was among the first German investors who started working in Russia’s farming. In December this year, the EkoNiva Company will mark the 15th anniversary of its functioning. Our talk is about those years, about problems Russia’s farming faces today and about merits for which Stefan Duerr received this high award.
By Svetlana WEBER
From the “black hole” to new technologies.
- You found yourself in our country for the first time in time when it was known as The Soviet Union. What were your first impressions?
- In 1989 I arrived in Moscow region as a student of agronomy. Subsequently, I had practice at the farms of Kursk region. I’m glad I witnessed the Soviet system of work. Back then not all was as bad as it is sometimes described now. It was the nineties that was a crime against farming. In the chaos and mess of the time it was a gross mistake to give land away for owning. When land was state-owned, there was a unique opportunity of disposing of it wisely. However, this didn’t happen. The land was distributed as shares instead of being offered for a long-term rent. As a result, today the bulk of land is owned by people for whom farming is not a priority.
- In those years, pursuant to the resolution of the German Ministry of Agriculture, you advised the farming committees of the Russian State Duma and the Federation Council. Which problems were then particularly acute?
- For instance, what’s to be done with the former kolkhozes? We, the German advisers, were probably the only people who came out for the preservation of large agricultural enterprises in Russia. We did so even though the major American and British advisers recommended preserving only private farms. After reunification of Germany, the first impulse was to split collective farms, but soon became clear that this doesn’t make sense. Large farms are more efficient. I think it’s one of my merits that we succeeded in preserving large farms.
- How did you switch from politics to a more practical activity like the supply of farming machines and seeds?
- Since 2000 the Russian farming has been receiving more and more attention. The policy of Aleksey Gordeyev as a Minister of Agriculture, was very wise. A rapid development began. Agriculture was no longer called “the black hole”. Farmers started taking interest in new technologies. However, their introduction needs adequate farming machines and highly productive seeds. We began to work in this area, offering the world’s manufacturers’ best machines and modern varieties of European-selected crops.
- Anatoly Artamonov, the governor of Kaluga region, repeatedly noted the merits of EkoNiva in re-equipping Russia’s farming industry. You are one of the biggest suppliers of farming equipment for Russia. How did your work proceed last year, when the import of machines stopped receiving subsidies, the banks practically did not provide credits for acquiring them and the customs dues went up?
- Of course, it’s not easy to work in such conditions. But the important factor is not us. At that time we did our best to promote another industry – the agricultural production. What annoys most is that the limitations hampered for at least a year the re-equipment of the agro-industrial sector. To be able to compete against the leaders in the production of food stuffs it is necessary to use the same modern equipment and technologies. Unfortunately, today the Russian producers of agricultural equipment can do no such thing. Therefore the farmers must save the agricultural machine building at their own expense. Similar attempts have been made over the years to extricate the Russian car industry. To date, nothing good came of this. I think we must involve foreign companies with excellent know-how, the companies that would establish the production in Russia. For a huge country like Russia it’s unwise to obtain combine harvesters only through imports. Now the farmers have an opportunity to receive funds for acquiring imported agricultural equipment, for instance via Rosselkhozbank by means of associated funding under credit lines opened by insurance companies of the countries supplying the equipment. The final interest rate for customers will be some 7 to 8% per annum in hard currency. It’s good that the government has, at last, realized that closing the Russian market completely would be a mistake. We don’t wish the situation with seeds would repeat that with machines. Much is talked today about the development of selection and seed production in Russia. This, indisputably, is an important issue. We must revive the industry which has been neglected for 20 years. However, we must not rush to extremes, a common practice in Russia. Decrees alone will not resolve the problem. This work needs much time and effort. Probably, we’ll have to involve foreign companies in this endeavour. Of course, we should stake on the Russian seeds, which doesn’t mean, however, that the prohibition of foreign-selected seeds. Should it happen and the Russian farms use obsolete domestic seeds that would be a throwback.
The crisis: a year on
- How do you assess the impacts of the global finance crisis on the farming industry?
- For the farmers the crisis began not on 15 September as Lehman Brothers went broke, but somewhat earlier, when the prices of the 2008 grain settled much lower than expected. Nobody knew what lay ahead. It was real hard to work under such circumstances. In spring, all were sowing, though not intensely. It was good that Rosselkhozbank did not cut credits. For farms with financial difficulties the credits were prolonged. The worst of it all was that the investments were stopped altogether. Construction was completed of what was still in progress, but nobody made any more new investments during that time. The milk prices were such that talking about profits in dairy industry was naïve.
- What was positive about the crisis?
- Due to the crisis, many foreign and Russian investment foundations that were buying up land at ridiculous prices quitted the agricultural business. This cut down the price to a reasonable level. Now the land is affordable to those who really wish to work in agriculture, instead of profiteering.
- What is the situation like today?
- This year, all were looking forward to a reasonable grain prices. But this didn’t happen. Low prices are survivable for a year. But two years is a trying experience. Not all farms can cope with this. We must seek to reduce the production cost. But at the same time something must be done about the prices. That’s where the government must resolutely step in, along with the Ministry of Agriculture. Farmers must not sit idle, complaining about bad prices. They must come up united before food processors and traders. And the fair lobbying of interests in the government is also a right move. Gradually, the milk prices are rising. Today, many farms report that they are not cutting down their cattle stock, though, in fact, they are slaughtering cows. I think that following the accounting date, the 1 January 2009, this will emerge in the statistics. We stake on milk and are resolved to build up the dairy production. Now, the EkoNiva facilities produce nearly 100 tons of milk per day. Next year, we are going to increase the output to 130-140 tons per day. There are all the makings for this, including the national projects financed by Rosselkhozbank in Kursk, Voronezh, and Novosibirsk. Feeding the Russians with dried milk is inadmissible.
Teach and learn
- You have been in charge of the Russo-German Agro-Political Dialogue project for 15 years. This work received a state award. What did you achieve during this time?
- At first our relations developed thus: Germany was teaching and Russia was learning. But soon it became clear that each had what to learn from another. A full-scale exchange began of knowledge and expertise. The agrarian consultations grew into an agro-political dialog covering a compete range of issues. The German-Russian relations in farming became a good example for other countries. It’s a pity that Germany is not any longer addressing some agrarian problems on its own, since they are within competence of the EU. In its turn, in dealing with farming problems the EU is often guided not by common sense but the political situation. In the end, agriculture becomes a tool for settling political issues. The agrarians of all countries suffer for the benefit of politicians. It can’t be tolerated. Political problems must not be resolved at the farmers’ expense.
The Russo-German company EkoNiva has been operating in Russia’s agriculture since 1994. It unites 25 enterprises working in various segments of farming in 16 regions of Russia.
The main areas of operation:
Stefan Duerr was born in Baden-Württemberg state, Germany. He graduated from the Bayreuth University, taking a degree in agronomy, soil study and geological ecology. Since 1993 he has been living in Russia. Awarded with a silver medal of the Russian Ministry of Agriculture “For Contribution to Development of Russia’s Agro-Industrial Complex”, an order “For Merits to the Federal Republic of Germany”, a laureate of P.Stolypin “Agrarian Elite of Russia” National Prize.