Buy a farm in Russia, get more than you pay for

September 8, 2008

soldatov.jpgThe chief executive of Russian agribusiness company Razgulay, Alexander Soldatov, set out to buy up old collective farms, and ended up with a milk business. The cows just came with the land, he said. 

 Razgulay is investing to expand its land bank, betting that Russia’s arable land will be parcelled out to private owners by the end of 2009. Sometimes, he said, he is able to buy virgin meadow. When he buys a collective farm, it comes with Soviet-era trappings, including an obligatory herd of cows and a command-economy version of a business plan approved by the regional government. The milkmaids — who in contemporary Russia are effectively shareholders in the collective farm — usually come too.

 “You don’t just buy shares,” Soldatov said.

Razgulay follows the plan and tries to bring in modern dairy technology, he said. But the milk business is as tough in Russia as it is in the west, bringing low margins. He expects no profit on it for three years.

“It’s a burden,” he said.

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