19 July 2002

Eastern promise in abundance but…

Increasing numbers of British farmers are looking at

farming opportunities in central and eastern Europe.

Europe editor Philip Clarke reports from a FW-backed

conference, intended to give them some pointers

OPPORTUNITIES still exist for British farmers to get involved in central and eastern Europe, though only for those with business acumen and the will to succeed.

Nowhere are these openings more apparent than in Russia, says Richard Willows of Heartland Farms, which has been assembling blocks of land to sub-let to western farmers south-east of Moscow.

"Farming in the UK and the EU is reaching the point of despair," he told the recent farmers weekly/Trade Partners UK conference on Farming in central and eastern Europe and the Black Sea Region, at Shuttleworth College, Bedfordshire. "Subsidies are clearly not going to last and large numbers are leaving the industry."

Yet in Russia, large tracts of land were lying idle, he said, and all it needed was western machinery and management to bring it back into production.

"Wherever you go in the world, wheat is currently trading at around $85/t (£59/t). Given that opportunities to boost yields are limited, the only way out is to cut costs. In Russia we have some of the best soils and lowest costs anywhere, offering a chance of high returns from a modest input regime."

While there were clearly risks involved, it was significant that the Putin government had made agriculture a priority and was determined to lift output to cut the current $13bn (£9bn) food import bill. Overseas investors had a vital role to play.

Similar opportunities were identified in Romania and Bulgaria by Trade Partners UK export promoter, Hugh Crooks, though his comments came with a health warning.

"The region has some of the most fabulous soils anywhere, but dont get mesmerized," he said. "They are capable of growing a huge diversity of crops, but there are not automatic markets and some people want to come and steal the produce."

Labour in Romania and Bulgaria was also high quality and cheap, he said, with agricultural workers paid just £1.50/day. And there were significant grants available for outside investors under the EUs SAPARD programme, to pay for things such as on-farm improvements and food processing.

But success depended on meeting several key rules. These included observing all government regulations scrupulously, ensuring all land agreements were watertight, steering clear of bribery and establishing integrated markets. Farmer investors should also make full use of the considerable expertise at the British embassies in the region.

"You need to manage the business very closely," said Mr Crooks. "Some people get abroad and think they are on holiday. You cant manage the business from long distance."

This point was emphasized by Chris Graf Grote, whose Farmwealth company runs 25,000ha (62,000 acres) in Poland and 7000ha (17,300 acres) in the Czech Republic.

"We decided at an early stage we would not start a business without a local partner. Were it not for our local partners, we would not have a business." &#42

Hugh Crooks:EUfunds can help pay for investments.

Chris Graf Grote:Local partners are essential.