5 July 2002

A RAGS-TO-RICHES

STORY

Kazakhstan, like many of the countries

of the former USSR, is struggling to

rebuild its agricultural industry in a

free market world. But some

individuals are proving that there is

scope for the go-ahead farmer to

succeed, as David Addis found

PETER Pitkovskei grows wheat on 800ha (1977 acres), 500ha (1236 acres) of which he owns, 200ha (494 acres) is rented and a further 100ha (247 acres) he runs for his brother-in-law.

What makes him unusual is that, until a dozen years ago, he was a driver for a bigwig in the Soviet plant protection system.

Then along came Perestroika in 1991. Kazakhstan parted company with Russia and, to encourage its new farmers, was handing out land that had previously been collectivised to anyone who wanted it. Moreover it was free and they were offering unsecured loans.

Mr Pitkovskei saw his opportunity and went for it. He accepted the land and took out a loan, "enough to buy 20 cheap cars."

He bought three Belarus tractors and set to work, with his eldest son who was then in his late teens. Eight months later he had repaid the loan and vowed never to borrow money again. An additional government incentive was that new farmers were not required to pay taxes for the first three years.

Now he can proudly show off the wheat storage facility that he runs beside the railway with 12,000t under cover, admittedly in old fashioned single story sheds. In his machinery yard are four combines and 10 tractors, mostly crawlers. Work was going on stripping the engine of one Russian-style crawler ready for the new seasons work; the workshop would not disgrace a Hampshire arable farm.

This country is the ninth largest in the world, the size of Western Europe, yet with barely 15m people and a dwindling population due to emigration and a declining birth rate. The disastrous legacy of Soviet central planning is huge areas of steppe that were ploughed up from 1954 following President Kruschevs Virgin Lands campaign.

The venture failed and much of the area is now abandoned, leaving the soil degraded or so over-fertilised that local rivers and land are seriously polluted. From time to time I saw the sagging remains of concrete irrigation systems or massive broken-down sheds for housing the cattle that were supposed to be fattened on the grain. Moreover locusts, which were strictly controlled under the Soviet system, started breeding in massive numbers on the derelict land. Mr Pitkovskei spoke of having to spray three times a year to control the insects and seeing them like a black carpet inches thick on the ground.

In 1993 up to a third of what should have been a bumper wheat harvest was lost due to poor harvesting methods, lack of storage and shortage of transport. It was partly this that prompted Mr Pitkovskei to develop his grain store. By charging local farmers by the month – at around $1/tonne/month – he can bulk up loads and make the space work for him.

I watched as some third-grade feed wheat was run through an old-fashioned outdoor elevator and sieved before being loaded on a Gaz truck. "Last year," Mr Pitkovskei told me, "Kazakhstan produced 16m tonnes of wheat. Usually Russia buys at least half our production but now it isnt buying and were stuck with it. I could sell to other countries, but transport is the problem. I reckon it would cost me nearly $80/t just to ship it to Hamburg, and with my production costs between $40 and $50/tonne, Id have to get a really good price to make it worthwhile.

"Last year I was getting $120 for first class (bread-making) wheat. This year Ill be lucky to get $60, and its worse still in Western Kazakhstan, which borders with Russia, where the price is a mere $45. Theres 4m tonnes of wheat just sitting in Kazakhstan right now in stores like mine. If were lucky we might be able to sell 1m before the new seasons grain comes on the market."

An added problem is that the number of livestock has been steadily decreasing, so lowering the market for feed wheat. His raion (district) used to have 100,000 cows, sheep, pigs and horses. Now its less than 10,000. "People just cant make livestock-rearing pay."

"Of course," says veteran agricultural journalist Alexander Korablin, "you must realise that Mr Pitkovskei is exceptional. There are around 0.75m farmers in Kazakhstan, yet probably less than 5% of them are as go-ahead as him. Generally in our country one farmer can produce enough food for just ten people. Compare that with what an American or British farmer is supporting – ten times or more?"

As Mr Pitkovskei stands on a hummock a metre or so high, with the fierce wind blowing straight across the steppe, he shows what appears to be one vast field of easily workable soil. He spends $2/ha on chemicals, which I understood to mean fertiliser, and he works on a four year rotation, with part of the land fallow, which practically makes him organic.

Thinking of the stories I had heard about huge numbers of workers running hugely inefficient farms that were little different from the old collectives, I asked him about his work force. "I employ at most 10 people, and that includes a cook," he replied. "There are some casual workers, but essentially I have five field workers, including my middle son, who drives a tractor. They work a 10-hour day and are paid $9/day (an excellent wage in a country where the average wage is $20/month for a farm worker) with free meals and as much free wheat as they want for themselves and their own livestock."

He points out that with the extreme climate in Kazakhstan, where the average winter temperature is -15C and -40C is not unknown, they can do no farm work at all for two months of the year – though he claims not to have had a holiday for six years.

"Now milk," he reflects. "Theres another problem. Theres no money in that. The dairies only pay 5 cents/litre and sell it for 40c. Yet the crazy thing is that youll pay more per litre for a beer or a bottle of mineral water." Could he make yogurt or ice-cream? "Sure," he replied, "its a good idea. But an ice cream machine would cost us $50,000 and youd need to group together to be able to afford that. Maybe in the future."

Mr Pitkovskei is clearly running a successful operation. Hes on the board of the national farmers association and foreign fertiliser and chemical companies have held trials on his farm. He says his land at present yields 2.6t/ha (1t/acre) and is clearly capable of more. By his own admission, of the 170 farmers in his district at best only 30 are successful.

In this vast under-populated country, what are needed are not more Soviet-style grand five-year plans, but rags-to-riches entrepreneurs like Mr Pitkovskei. The country is developing fast, and has income from oil, but its on people like him and his sons that it will depend for its agriculture and environment.

Peter Pitkovskei – farmer with Alexander Korablin behind overlooking his land.

Above: Peter Pitkovskei at his grain store. Below: Combines in his machinery yard are Russian Krasnors.