Tycoon's ag unit slates Russian 'dishonesty' claim
15.09.2013 / Agrimoney

The head of Kuban Agro, the farming arm of tycoon Oleg Deripaska's business empire Basic Element, has hit back at claims of dishonesty among Russian farm workers – seeing a shortage of staff as the sector's real problem.

Andrey Oleynik, Managing Director of Basic Element's Agribusiness, dismissed as "completely wrong" the comments by Velcourt, the UK-based farm consultant and investor, that singled out Russian agriculture workers in accusations of "endemic" dishonesty, and of a lack of accountability in management.

"There are situations like that. There are workers like that," Mr Oleynik told Agrimoney.com.

"But you have to look at the situation on an individual basis.

"There are dishonest workers in any sector, starting with the statesman, to the collector of the rubbish.

"But to generalise, and pick on agriculture, and Russia, is completely wrong."

The real staff issue

Where Russia did have an employment problem was in finding sufficient staff, particularly trained and qualified workers, to drive the improvement of a Russian agriculture sector running well below its potential.

"Right now, we are suffering a shortage. People are not willing to take jobs in the agriculture sector, as they do not like the idea of working in rural areas," he said, urging programmes to introduce more young people to farming.

While luring extra workers might require raising wages, eroding the low salary base which has helped Russia remain a tough price competitor on grain markets.

However, it would be a price worth paying, Mr Oleynik said.

"Sure, you would pay higher wages. But you would get higher productivity.

"You would get better yields per hectare, and better profits per hectare."

'Huge potential'

Indeed, the potential for Russian agriculture is "huge", if the country could make the most of its assets.

"Grains production might reach 150m-170m tonnes," nearly twice current levels, "and exports might be 50m-70m tonnes. And within the next 10 years," he said.

"It could happen even sooner than that."

After all, Russia, unlike many other leading agricultural nations, has plenty of land to spare, with "only a little over half" prospective farmland being used.

"Everywhere in Russia, agricultural land can be increased," he said, although naming in particular the Amur region in the east as a potential site for development.

"We could increase harvests of all types of crops."

'Not enough tractors'

But making the most of this asset also means improvements in mechanisation, as well as staffing.

"We are behind Europe in technology. We do not have enough tractors in Russia," possessing half the coverage of high powered tractors, on a per-hectare basis, he said, urging cheap loans and subsidies to encourage farmers to improve their machinery fleets.

The idea of farm equipment upgrades is one in which Mr Deripaska's Basic Element empire, of which Kuban Agro – with its 86,000 hectares of land under cultivation, and operations from elevators to dairy to elevators to sugar refining – is just one part.

Basic Element's Russian Machines business last month unveiled a joint venture with Agco, the maker of Massey Ferguson and Fendt tractors, to set up a manufacturing plant near Moscow.

Basic Element's other operations stretch from airport services to banking, although Mr Deripaska whose net worth is $8.5bn, according to Forbes, is perhaps best known as chief executive of Rusal, the world's largest aluminium company.