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Agro-Inwest — Import Substitution Model

Previous article 2 october 2017

Interview with Meshkova Irina Vladimirovna


Moe Leto brand was launched a little over a year ago and was a true gift for consumers of the Central Federal District of Russia — now fresh vegetables which were ripening in the greenhouse just yesterday can be bought in the major retailers. The rapid rise in popularity of your vegetables is just natural — Russian consumers are tired of imported vegetables of questionable quality and prefer local producers.

I’m really curious to hear the history of one of future agricultural giants, as analyst predict, at first-hand.

Q: Irina Vladimirovna, tell us what you started with.
When were the first greenhouses launched?
Why did you choose this very place?
What is the current planting area?

A: You’re right, the idea of a Russian agricultural complex came up in the situation of urgent necessity. Russian consumers can buy genuine GMO and chemical free fresh vegetables only in summer when southern enterprises and private greenhouses come into market. In other seasons, we witnessed apparent deficit of fresh eco-friendly products. That’s why we came up with an idea of filling this gap and growing high quality nutritious vegetables for Russian consumers all year round. Moe Leto brand is a guarantee of fresh produce not only in warm summer and fruitful autumn but also in winter and spring — throughout the year. State-of-the-art agricultural technologies ensure summer climate every day. The greenhouse complex was commissioned in 2014. At the time, we had 20 hectares for vegetable cultivation, including 18 hectares for growing and 2 hectares of nursery beds. Today we have 43 hectares of productive area and another 25.5 are coming. According to our development plan — and we’ve always adhered to it — by the end of next year, we’ll be harvesting 112.5 hectares! The greenhouses are located in the Kaluga Region, and it’s for a reason. This is an ecologically clean, almost pristine area away from cities, highways, hazardous industries. This is also an economically attractive region as our enterprise is located in the free economic zone. This way we can save costs (customs and import VAT) and ensure attractive prices for our customers.

Q: What exactly do you produce?
What vegetables do you sell using your brand?

A: To begin, I’d like to point out some characteristics of our produce which give us a competitive advantage. First of all, our vegetables are truly sustainable. We collect rainwater for irrigation, use bumblebees for pollination and biological methods of pest control — pests (who are unlikely in the first place) are killed using their natural enemies (predatory insects). We have biologists specializing in entomology. We also cooperate with experts in biological protection (Koppert, Biobest). And we don’t treat our plants with any chemicals. Our production fully corresponds to all phytosanitary regulations, and we regularly submit samples of harvested vegetables for testing for all required parameters. Quality is key! Our produce includes the most popular varieties of tomatoes and cucumbers. We have a range of over ten varieties. A large share of our range is represented by mini tomatoes — cherry and plum tomatoes of various colours (red, yellow, brown Kumato tomatoes). Mid-size varieties are also in high demand. We have a few varieties of those different in shape, colour, and taste. We take pride in our exclusive varieties that are grown only here, including exotic giant Mama Mia tomatoes — real beauties of extravagant shape with refined scent and juicy pulp. And a new product — Amoroso. These are sourish sweet cocktail tomatoes. They are slightly bigger than cherry tomatoes but smaller than classic ones. Amoroso have a pronounced tomato flavour. All our products are sold through retail channels under Moe Leto brand in convenient high quality packages of various weight from 250 g to 3000 kg (special offer for HoReCa clients). Our product range is flexible and is continuously expanding and adapting to the market. New varieties are selected jointly by the commercial and the agricultural functions. We regularly exchange experiences with European manufacturers, our specialists visit global exhibitions and often bring new foreign varieties for cultivation. For that, we have a dedicated testing area supervised by experienced agronomists. We have a very close relationship with such producers of seeds as Rijk Zwaan, Enza Zaden, De Ruiter that are the global leaders in their segment which eliminates interference with the genotype (GMOs). The efficiency of the selected variety is determined by its productivity and quality. For example, the quality of the tomato is determined by its size, weight, and flavour. For that reason, before making a final decision on launching a new variety, we test the first yield in a dedicated laboratory, including measuring sugars and acidity, which determine the taste.

Q: What are your relations with wholesalers and retailers?
How do you attract and retain partners?

A: Indeed, relations with our partners are one of the key factors of our success, and we pay to it our fullest attention, the same as to our quality. Today we have two main sales channels — retailers and wholesalers. The former channel is the most promising and fast-growing. It includes federal and local retail networks. We have a wide selection of high quality well-packaged products. A lot of consumers do love our vegetables. That’s why retailers are seeking to cooperating with us. We're planning on expanding this area in terms of both quantity and quality. We attract new partners, develop our marketing programs to support Moe Leto brand, etc. Our wholesale channel is also well-developed — local entrepreneurs and businessmen purchase our products and sell them in many Russian towns by retail. We provide support to our partners in such areas as logistics, packaging, and others. We have a flexible pricing policy which adapts to seasonal and other trends. Our partners can always reckon on consensus and mutually beneficial cooperation. In general, I can literally say that our products are in high demand all year round, so we don’t have to prove our efficiency or profitability of cooperation with us. Despite the fact that Agro-Inwest is quite a young company in the Russian agricultural market, we have already gained a reputation of a reliable supplier and manufacturer of popular premium vegetables.

Q: Are you interested in the vegetable auction which is being developed?

A: At the moment, we are quite satisfied by our financial figures but we’re always ready to develop new sales channels. If preliminary estimates show that this channel can help improve our financial performance, we’ll definitely join it. The demand for our tomatoes at this stage (prior to the upcoming commissioning of another 25.5 hectares) often exceeds the supply, that’s why we have to control our sales policies and set a strict share of the retail channel as we value our reputation and observe the guaranteed supply terms and conditions.

Q: What is your current capacity?

A: Our supply and manufacturing capacity is growing rapidly and continuously. After commissioning of the new greenhouses, we expect a proportional growth of our vegetable production. Last year, we produced 12,000 tons, and the estimated capacity for this year (taking into account the new greenhouses) will exceed 25,000 tons. We also expect an increase in production capacities in the mid-term and long-term both due to area expansion and technological improvements which ensure better yield per every square meter without compromising quality. Thus, this year, in cooperation with Philips Lighting experts, Agro-Inwest designed a unique and the world largest LED lighting project to simulate natural sunlight. This project will reduce energy costs and ensure round-the-clock ripening of every ovary in our complex.

Q: Large-scale manufacturing means serious HR challenges.
Tell us about your specialists and vegetable growers.

A: Our greenhouse complex provides a large number of jobs for the locals. All workers undergo a compulsory training under the supervision of experienced personnel and they are usually really passionate about their new job. As for field experts and jobs that require special education, we employ graduates of the leading Russian universities and invite European specialists. For example, our Chief Agronomist is from the Netherlands and has a huge experience in vegetable production. We are committed to train our personnel — the company employs a lot of students and graduates of the Agricultural Academy who don't have practical experience and start their careers with us. They’re young and motivated. They’re trained in the corresponding areas and start as assisting agronomists or supervisors with further growth prospects. We have close ties with the Administration of the Kaluga District that supplies our HR Department with the lists of advanced students graduated from the Agricultural Academy. We have to continuously monitor emerging technologies, that’s why our specialists regularly take part in various workshops in Russia and the Netherlands. We also have internal training systems supported by our HR Department which constantly monitors discipline, OHS, and competences and development of every employee. I can say without false modesty that people do want to work with us. We even have a queue for casual jobs — we always have 70-80 people as a reserve. Agro-Inwest has a reputation of a responsible and reliable employer that delivers on its promises. The average monthly wage in the company is RUB 30,000. It’s a good figure for this area with the average wage being RUB 15,000. We currently employ more than 900 people, and we plan to extend our staff by 250 employees for commissioning of the next part of our complex of 25 hectares. It will be favourable for both specialists who have outgrown their current position and new employees who are waiting for a job offer as a reserve. We also have a very long-term and socially beneficial project — we have career days for school children where we demonstrate the entire manufacturing cycle. Even now this has a positive impact on their future occupational choice — a lot of students want to find their true profession while still at school. We do care about continuity of generations and stable staff but moral incentives and true passion are very, very important in our profession because our product is a living organism. True love of plants is another, and I believe the most important, secret of our high yield. This is the thing that determines our long-term prospects.

Q: What key objectives does the investor set before the management of your enterprise?

A: The goal of any investor is getting the best financial results. In our case, these results include yield and prices. Yield is determined by the technologies and the team. The price is determined by quality which also depends on the technologies and the qualification of the employees. We need to improve both of these, and this is the objective we have — cost saving given maintenance of the same indicators of efficient management. All our functions are working towards that goal, including agricultural engineers (I’ve already mentioned our new generation lighting project), the commercial department together with the marketing function, as well as the logistics and grading functions. We implement new quality standards, new high-tech packaging which preserve the appearance and ergonomics of our products, calculate distribution routes, and much more.

Q: Irina Vladimirovna, tell us about your short-term plans and prospects.
What objectives are you planning to achieve this and next year?

A: We’re planning to expand our greenhouse complex up to 112.5 hectares, which is 2.5 times greater than our current capacities, increase production volumes, expand our customer base and scope. We’ll need to improve automation of our processes. Currently, we’re in the process of doubling our production, which includes extensive growth in new greenhouses and intensive growth in the existing ones. We register and analyse any and all shortcomings and omissions in the work of the growers, and our experience says that every next harvest is better than the previous one! We want to secure our place in our niche — the niche of high quality fresh vegetables. Our philosophy is "from greenhouse to table.” Thanks to significant government support, we can implement the most advanced and efficient agricultural technologies, train our personnel with foreign leaders in high quality fresh vegetables to grow healthy produce that consumers will want to buy for themselves, their friends and relatives — produce we take pride in.

7 november 2017