Hectic, exciting, fascinating. With these words, Erik Smidt summarizes his five-year stay as an agricultural attaché at the Dutch embassy in Moscow. One of his highlights: the Netherlands-Russia year (2013). An all time low, not surprisingly, the mutual sanctions between the European Union and Russia and the enormous consequences this had for the trade relationship between the Netherlands and Russia.Erik Smidt
Smidt recently started working as coordinator of the Dutch Risk Reduction Team at RVO (Netherlands Enterprise Agency). The team is active worldwide in areas with major water problems, such as flooding and drought. The experts sent out by the team, give advice to governments to prevent similar problems in the future.
Smidt started in August 2012 as agricultural attaché in Moscow, in the run-up to the Netherlands-Russia year (2013). In that year, numerous events were organized to focus on the historical relationship between the two countries. King Willem-Alexander also paid a visit to Russia.
Smidt was closely involved in the realization of the Holland Village (October 2013) on the site of the biggest agricultural fair in Russia. He looks back on this event with great satisfaction: "On Saturday and Sunday, a hundred thousand people visited the village, on workdays more than 25,000 people. Holland Branding at its best, the name recognition of our country and therefore also of products of Dutch origin did increase enormously in 2013."
Smidt only could enjoy the results of the Netherlands-Russia year for a short period. It is all well-known, the political problems between Russia and the EU, after which the EU imposed sanctions. On August 1, 2014 Russia closed its borders for import of a large number of agricultural products from the European Union. The Dutch fruit, vegetable and dairy sectors were hit hard by this.
No pears, but there is seed
A hectic period starts for Smidt. "When it comes to sanctions and counter-sanctions, the embassy only has an advisory function for companies. For the rest you have to act according to the circumstances of business." There was not really a case of a total boycott. To us was the task to inform the Dutch business community, active in Russia, well. We have done so. What may cross the border, and what may not. For example no cheese, but baby food is allowed, no pears, but seeds are fine, no meat but sperm can be imported. The rules were and still are complex, furthermore these do change constantly."
Other markets found
The up-to-date and timely information for the business sector has contributed to the decent market position the Netherlands still has in Russia, says Smidt. "But even so in other market segments. Greenhouse builders, seed producers and, for example, suppliers of breeding cattle have managed to strengthen their position. In recent years dozens of Dutch companies in the agro-food sector have been active in Russia."
Increasing local agricultural production
The arrival of these companies also has everything to do with the new economic strategy of Russia. Smidt: "The Russian government wants to get rid of the import of foodstuffs. Less imports, increase of their own agricultural production and eventually export." The country has the ambition to become the food warehouse of the world."
Local agricultural production is therefore strongly stimulated. "This offers opportunities for suppliers of vegetal and animal starting material, but also for stable and greenhouse builders and producers of agricultural machinery. Dutch companies have cleverly anticipated on the new policy. From the embassy we have shown them the way and made the right contacts."
Made in Russia
Smidt observes that not only the economic policy has changed, but also consumer behavior. "Five years ago, consumer preference went to products from abroad, now Russians are massively opting for ‘made in Russia’. This increased demand stimulates local agricultural production. This in turn and at the same time offers opportunities for our country. There is a large demand for high-quality breeding stock, rootstocks of fruit trees and technology. The top position that the Netherlands occupies on the agricultural world stage is viewed with respect."
Many companies active in Russia
Many Dutch agricultural companies have been established in Russia in the meantime. Seed producers such as Enza Zaden, Rijk Zwaan and Bejo all have their own production locations. Cattle feed producers De Heus and Nutreco are based in the country. And recently Lely is manufacturing milking robots in Russia. "There are many more companies I can mention. From the agricultural office at the embassy, we are involved in almost all cases. It is often a matter of involving the right people in time. Having a network is crucial for the success of an agricultural attaché."
Looking for local partner
Smidt immediately admits that Russia is not an easy country to do business with. The rules that businesses have to comply with, change regularly. An entrepreneur must be able to deal with that. "That's why I always advise companies to start by looking for a local partner who knows his way around. Russians initially take a detached approach, it takes a while before they want to do business. Personal contact is essential. An entrepreneur who intends to be successful in Russia, has to show up on a regular basis. Ultimately that investment always pays off, because a lot of profit can be made in this country."