28 June 2002

The British are coming

Russian farming has suffered from 10 years of neglect.

But the first signs of recovery are appearing,

presenting new opportunities for western farmers, as

Europe editor Philip Clarke reports

EARLIER this month the Moscow Times ran an article under the headline "The British are Coming".

It described how, in the next few months, the first British farmers will arrive on Russian soil to establish farms on the rich, but idle land in the Penza region to the south-east of Moscow.

Over the next five years, the article goes on, that trickle will become a flood, with up to 80 British farmers taking on plots of 5000ha (12,400 acres) each, helping to rekindle Russian agriculture after 10 years of decline.

While newspaper journalists have a propensity to exaggerate, that is an accurate reflection of the plans and aspirations of Colin Hinchley and Richard Willows, who have set up the Heartland Farms project in Penza.

For the past year and a half, they have been accumulating blocks of land and signing them up on 49-year leases. So far they claim production rights on around 45,000ha (111,200 acres).

"We have land in six different sub-regions of Penza state and our aim is to build it up to 400,000ha (988,000 acres) in the next five years," says Mr Hinchley.

Some of this land – about 30% – is state-owned and has been relatively easy to assemble, he says, especially since the local administration has been very supportive of Heartland Farms involvement in the area.

But the remaining 70% is privately held and securing leases has been a more painstaking task. "When the collectives were broken up all the farm workers were given production rights to about 7ha each, even though they were never allocated specific plots," explains Mr Hinchley.

"As a result, much of the land in the region, as elsewhere in Russia, is unused. The people tend to just farm their existing plots around their houses to feed themselves. We have therefore had to organise meetings with entire communities and persuade each individual to sign over the rights to farm their land for them."

The contracts have to be long-term, to make it worthwhile taking the risk and putting up buildings. They also have pre-emption rights built in, for when the Russian land laws change to allow foreign ownership.

But owning the land is not the main objective.

The Heartland Farms project is all about bringing western farmers into the region and sub-letting the land to them.

"At a push we could farm the area ourselves," says Mr Hinchley. "But given the scale of the project and the volume of work to be done, it is better to sub-let as well."

He also sees himself on something of a mission to unite some of the people who are being forced out of British farming with some of the land lying idle in Russia.

"Both are such a waste of resources. Over 40,000 have left farming in the UK in the past two years, yet over here up to 40% of the land is doing nothing. Its good land, some of the best black soil around, and all it needs is good management and good equipment."

Sub-letting should also lead to a quicker, safer return on the substantial investment in time and money that Heartland Farms has put in over a number of years.

Some plots are ready and, as the Moscow Times correctly says, a number of British farmers have already been over for a closer look.

One of these is Richard Wastling, who contract and share farms around 2000ha (5000 acres) in East Yorkshire. "I thought there was a lot of potential, but its not without risk," he says. "The yields and gross margins are not that great, but its the scale that really appeals. To invest £0.5m and be able to farm over 10,000ha is very attractive."

Mr Wastling says he and his partners have looked at options in the Czech Republic, Hungary and Romania, but the Russian project seems the simplest way of getting involved. He plans a return visit this autumn.

Another potential investor is Clive Weir, who farms as part of a four-man consortium in Co Down and Co Antrim, Northern Ireland. "If were going to have to produce commodities at world prices, we may as well do it in a place where we can get inputs at world prices, too," he says.

His group is due to pay a second visit in August to look at a specific 5000ha block and take a more detailed look at the business plan. "If it still stacks up, we anticipate getting started out there next spring."

By that time, George Green from Aberdeen should also have decided whether to make the move to Russia. "Currently I contract farm in north-east Scotland and will honour my outstanding contracts. But longer term I am very drawn to Russia," he says.

"There is no opportunity to cut costs further in Aberdeen and we cannot survive at world prices. Thats why more farmers are looking at feeding whole crop, to eliminate the costs of harvesting and drying feed grains."

It is the scale, climate and quality of the land in Russia that attracts Mr Green, and the opportunity to grow a wider range of crops. He says he is "reasonably confident" the contracts that Heartland Farms has drawn up will stand the test of time, despite Russias turbulent political history.

But what sort of welcome can British farmers expect when they do get going in Russia?

According to Alexander Blinokhvatov, head of the local agricultural academy in Penza, foreign investment cannot arrive soon enough.

"We have been waiting a long time for good investors with clear heads and new management skills. We have around 2m ha of arable land in the state and at least 400,000ha is not cultivated."

Mr Blinokhvatov admits there is some local opposition to the foreigners involvement among some of the die-hard communists, who believe the British only want to exploit the land, export the food and repatriate the profits.

But most, he says, see that the government has invested nothing in agriculture in the past 10 years and accept that outside help is needed.

Similar views are expressed by Anatoly Tereshkin, who for the past two years has managed a 2000ha demonstration farm for Heartland Farms near Kamehka in the west of the province.

In those two years, using western machinery and basic, low input techniques, (shallow cultivation, elite Russian seed at lower seed rates, one fertiliser, two insecticides and one herbicide), he witnessed a doubling of wheat and sunflower yields to 4t/ha and 3t/ha respectively.

One of the biggest differences, he says, has been the use of Claas combines, which immediately reduce crop losses from 20% off the back of a Russian machine to just 1% or 2%. Weed elimination was the other big factor.

Mr Tereshkin says the experience has shown him what can be achieved and he says he would vote with both hands for more foreign involvement.

Not everyone in his village shares that view, he admits. "It depends who is going to get the jobs when the foreigners do arrive. In the past, under communism, we all had jobs and everything was provided for us. Now we have our freedom. But we do not have the equipment or expertise to make the most of it."

&#8226 Farming in the Penza region of Russia will feature in a special conference on Farming in Central Europe and the Black Sea Region, being organised by farmers weekly, Trade Partners UK, Advantage West Midlands and DEFRA at Shuttleworth College, Bedfordshire on Thur, Jul 11 at 4.30pm. More details from Jeremy Elgin on 07860-609979 or e-mail jeremyhelgin@aol.com &#42