September 01, 2000

To Russia With Potatoes

Steven Lawtiens just wanted to farm. But, in his native Holland, an agronomist’s degree and farming skills handed down by his father were not enough to start a farming career. He needed land, and, in Holland, land is at a premium. Over the last five years, the market price for land in Holland has doubled, to $60,000 per hectare. So why not rent a farm? Because you end up working just to pay the rent, with nothing left to live on. And then there are the production quotas. Holland, like most of Europe, is “suffering” from overproduction of foodstuffs. So farmers are allocated a production quota—without this, you cannot sell your goods.

So Lawtiens turned his eye eastward. For the past year he has been farming in Moscow’s Dmitrovsky district. The economics could not be more different from Holland. Here, land is plenty and cheap: just $300 per hectare. And, of course, Russia has no overproduction problems, quite the contrary. But it does have its own “specific” problems.

Lawtiens runs a 180 hectare farm which the Dutch firm he works for, Rassvet Flayvo, rented for 49 years. Rassvet Flayvo was set up as a joint stock company in 1998, with seven Dutch shareholders and a $1.5 million bank loan. The company initially sought to establish a dairy operation in Russia. But the August 1998 financial crisis scotched those plans and the firm decided to get into something that offered more immediate returns on investment. So they planted potatoes.

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