Financier and cabbage: is it possible in Russia to capitalize on organic greens

Daniel Lawrence and Olga Korogodina

Trendy vegetable

“When I come to USA, I’ll be in Paradise: everything is a whole lot, but all uninteresting. And in Russia so many problems, so many possibilities, it is a great country for entrepreneurs,” says the suburban farmer Daniel Lawrence adey (in Russia he is used to just introduce myself to Daniel Lawrence) .

In 2010, the 26-year-old Daniel arrived in Moscow from the USA. The year before he graduated from the MBA course at the University of North Carolina, but could not find work: Daniel majored in financial markets and investment banking, and 2009 was not the best for finding work in these areas. “Buddy, who worked in Russia, was asked to come here, convinced that there is a lot of opportunity,” says the American.

In Moscow, Daniel started teaching business English as a tutor, and at the same time experimented with different business projects, for example, tried to sell frozen yogurt, but it does not matter.

In 2013, the American noticed the growing popularity in the States cabbage Kale: she always met him in the shops, menus in cafes and restaurants: “then I have been to the USA once or twice a year, and when you come so seldom, you will immediately notice changes: Kale was everywhere. All two weeks I was eating it in salads and smoothies, I like it.”

Cabbage salad

Cale (Kale) is a type of wild Kale. Kale is known since Ancient Greece. Modern fashion dictate U.S. restaurants turned the cabbage into a fashionable new. Kale is known for its low calorie (100 grams of its leaves only 36 kcal), high fiber (5 g in each 100 g of product), it contains a lot of vitamins and nutrients. Kale is eaten fresh, fried, stewed, cooked him chips.

Lawrence returned to Moscow, but all his attempts to find Kale in the city were unsuccessful. Then he tried to put salad at the cottage with friends, and it turned out that the Russian climate is quite suited for him. Soon Lawrence was with a friend in a cafe, the menu was a dish with Kale. After questioning, it turned out that Cale brought to the cafe from abroad, and very rarely. A friend told the Manager at the diner that Daniel grows Kale, and the Manager immediately said he was willing to buy it. “That night I couldn’t sleep, thinking about the fact that I only have four hive this cabbage at the dacha of a friend,” recalls Daniel. He decided that he had found an interesting niche, because sooner or later the fashion of the American new beginning to be in demand in Moscow.

At that moment Daniel appeared minded: a graduate of the Moscow financial-industrial Academy Olga Korogodina he met when she decided to improve his English. “I’ve spent eight years working in the investment company Valartis International in the field of development, I had a great job and good prospects, — says Olga. But going home after a hard day, I felt that I do not have a tangible result. After the birth of her daughter to return again to office life I wanted, and I decided to get an MBA in the Higher school of Economics to start your own business”. Daniel convinced her, that growing Kale is a great option to start.

Cabbage lumpy

For growing Kale partners first needed a greenhouse. In the summer of 2014 they began to drive around the suburban farms: was looking at the satellite photos Google maps the frames of the greenhouses and went to look for their owners. “Once our car was attacked by dogs, it was a little scary,” recalls Daniel.

Any farm found in the Dmitrov district of the Moscow region — with the Soviet greenhouses, broken and unused for over 20 years. “All good greenhouses were already engaged, — explains Korogodina. — We gave the unit with the greenhouses in which the grass was higher than my growth, which had neither electricity nor water.” But managed to save. According to Daniel, renting 16 greenhouses (1.5 hectares) of former Dmitrovsky farm together with the cost of connecting electricity and water in first year cost only 200 thousand rubles.

The total initial investment in the project in the first year amounted to about $100 million private savings Daniel and Olga. “We could spend three times less if we had more knowledge on how to repair the greenhouse,” admits Korogodina. In the first winter, the entrepreneurs experimented with curtains that hold the heat and ordered a special bulb from China, but the lamp did not miss a custom. In the end, the first harvest, the farmers have lost almost all frozen. Olga transplanted frozen Kale, and spring, when the sun became warm, he was alive and gave a small crop.

To prepare for a second winter, the partners decided to order a new tape of a width of 15 meters in Turkey, but here they were waited by failure: the film they expected to receive in September and received in November, when many vegetables are already frozen. Your loss then farmers is estimated at 1 million rubles.

<p>Daniel Lawrence and Olga Korogodina</p>

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Photo: Vladislav Shatilo/RBC

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Daniel Lawrence and Olga Korogodina

The first experience has taught the partners to save: if repair of the first greenhouse they spent 1.5 million rubles., now the total cost of the renovation of a greenhouse is 500 thousand rbl. this price includes materials (approximately 300 thousand rubles), about 50 thousand rubles is spent on the remuneration of workers, and another 150 thousand farmers lay for contingencies. “The problem is that in farming there is no budget, every time we make a spending plan, but to follow it due to external causes does not work, then break something, then wind the tape will break,” says Olga. But the repair of the old Soviet greenhouses is still a lot cheaper than new construction, according to Korogodina cheapest new greenhouse would cost about 2.5 million rubles.

The problem is not only in the harsh winters and leaky greenhouses. Farmers have relied on organic agriculture and refused to use chemical fertilizers, and it causes a constant challenge. “We have all the time someone eats: wireworms, cabbage fly, butterfly, caterpillar. It was impossible to apply methods from US, because we have a different climate, even with Canada can compare. At the same temperature are very different from the sun, it warms the winter, and we don’t,” says Daniel. Korogodina recalls the occasion when their Cale “attacked caterpillar”, Daniel found on the Internet a type of bacteria, which problem did American farmers, but it turned out that in Russia no one grows. Somehow I managed to find and order equivalent. “And from cabbage fly, it turns out, helps mountain flour, but in Russia no one uses as a natural insecticide,” recalls Olga.

Another problem is the seeds. Imported poorly acclimatized, and domestic had to grow. Only by 2016, the farmers were able to obtain their own seeds, which are gradually adapted to the local climate. Moreover, the first time farmers were no agronomist — still specialists for Kayla in Russia. “In agriculture, all very logical, you only need to read a lot and use your head,” says Korogodina. In the end, however, still had to hire an agronomist, a young graduate of the Timiryazev Academy of agriculture. “But in the end we do and educate, because he has no knowledge on organic farming, and all his professors wonder how we managed to grow tomatillo or okra,” says Korogodina.

Cale in numbers

18 hectares leases “”Super ” farm” in the Dmitrov district of Moscow region

$100 million of own funds were spent by the farmers for the construction of the “Super ” farm” in the first year

500 sq m area of one greenhouse

500 thousand rbl. costs to repair one of the greenhouses

2.5 million RUB is the cheapest new greenhouse this size

9 renovated indoor greenhouses at the farm in June of this year

7-10 days is stored Cale

0,8–1,5 thousand rbl. — the selling price of Kale (depending on season)

150 thousand goes to pay the heating and heat one of the greenhouses in the winter time

More than 300 manufacturers in the US are grown Kale

Financial markets and grass

Realizing that quickly capitalize on Kayla will fail in March 2015, the owners decided to grow more green onions. He was not so fastidious: soon came the first harvest. “When we started to sell it, I felt like I was on the stock exchange, every day on the telephone, recalls Korogodina. In the end, 5 tons, we were able to sell at a very high price of 180 RUB/kg with the average of 120 rubles/kg. Daniel recalls how shipped 100 kg of onions in his Infinity and transported to the markets Pushkino, Korolev, Moscow.

In may 2015 is ripe, finally, the first Kale — part of the crop left for seed, and a few pounds for the price of 1 thousand rubles/kg, the farmers sold to the restaurant Fresh. “They used to buy Israeli Kale, but it is bitter to the taste, as it cannot grow in hot climates, it needs a frost to sugar stood out,” says Korogodina.

When I went to the first sale in June of 2015, the partners registered a legal entity — OOO “Super” farm.” According to SPARK, Lawrence owned 20% of the company, Korogodina — 80%, Olga says that they are equal owners. The fact that the land code of the Russian Federation forbids to own agricultural land to foreign citizens and companies, Russian companies, if foreigners owned more than 50%. The logo with the image of three leaves Kayla and wagon wheel drew Daniel from his hands.

Entrepreneurs sent out information letters about the project to retail chains and restaurants. One of the first who responded the farmer cooperative LavkaLavka — as told by the head of procurement cooperative Arthur Barmin, they had a lot of requests from buyers for Cale, but none of the farmers did not grow. Now there are the first competitors LavkaLavka buys Kale and farmer Sofia Tent of Tula region.

Following the cabbage in small parties began to buy online store “Fruit mail”, network of supermarkets “Azbuka Vkusa”, Calicano restaurant, supermarket “garden City”, Krasnodar network of a premium supermarket “Tabris”, etc. “unlike foreign suppliers, we are close, only 1.5 hours from Moscow. To us you can always come to watch,” says Korogodina.

In addition to Kayla in the summer of 2015, the farmers began to grow salad “Romanesco”, Brussels sprouts, spinach, cilantro. “We tried different markets,” explains Korogodina. She likes to compare the pricing of vegetables and herbs with the behavior of financial markets: manufacturers respond to the demand, but by the time when the crop prices begin to fall sharply: it is important to be able to predict trends.

For example, experiment with cilantro failed. Farmers planted an entire greenhouse of cilantro for one client from the food market Food City (the order was for 250 thousand rubles.), but when he came to cut the greens, said she was too high and did not take. In the end, the next day all the cilantro urgently sold on the market in Dmitrov and rescued several times less than planned.

For 2015, the company’s revenue amounted to approximately 400 thousand rubles, 60% of them brought Cale, 40% other vegetables. According to entrepreneurs, the majority of sales Kayla had come to the end of 2015, but because of problems with the Turkish film most of the harvest they lost. “We spent the whole year to make Kale claimed were orders and people waited for delivery, but we failed to harvest, we had to stay for 3 months until the spring of 2016, is a very long time,” laments Olga.

Kayla selling price ranges from 800 rubles. per 1 kg in the summer to 1.5 thousand. in the winter. Now “Shop Shop” is 100 g Kale are 216 RUB Such a high price Daniel explains the charge for the risks of organic farming and cultivation of new to Russian culture. In the US the price of cabbage is several times lower, but there it is grown on an industrial scale.

Kellonaika

“Two years we’ve been trying to figure out how to grow Kale in Russia. And only now we start to get something. This is an investment project, and we are at the very beginning,” — says Olga Korogodina.

Financial results the farm is not impressive now. In may 2016, the proceeds amounted to about 200 thousand rubles., sold about 200 kg of food, 50% of which is Kale. Operating costs five times more. About 120 thousand rubles is spent on organic fertilizer, about 50-150 thousand rubles. for packaging. The salary Fund is about 200 thousand rubles., water and electricity cost 50 thousand rubles, Together with other costs and taking into account the cost of the greenhouses for the winter season entrepreneurs are spending over 1 million per month. When will pay back these investments?

The calculation of the partners on the demand and sales. By late summer, the entrepreneurs hope to grow and sell it 2-4 tons of vegetables and herbs, and it’s only a quarter of the potential capacity of their farms. “Agriculture profitable on the volume,” says Korogodina. — In order to reach the payback, we need to sell herbs and vegetables at 3-4 tons a month.” Return on investment it expects in five years.

As claimed by Lawrence and Korogodina believe that they are not alone. At the end of 2016, the partners managed to attract a private investor, whose name they did not disclose. He has invested 16.5 million RUB. in the purchase of land, greenhouses and turned them in to farmers in the long term. Now “”Super” farm of 18 hectares of land of which 6 hectares under greenhouses, and 12 ha of fields, buildings, farm building. The company bought two tractors “Belarus” (though the 1992 and 1996), used plantocracy for 100 thousand. By June 2016 “”Super ” farm” is already 9 indoor greenhouse for the winter period, and another 18 need to be repaired. If the first time the businesses working together, now among employees have a tractor, the Deputy for economic activities, an agronomist and five workers.

“We hope that the fashion for Kale come, finally, to Russia, and we’ll be able to meet the demand. The experiment is risky, of course, but interest is growing Kale in his eyes,” — says Olga. For example, in 2015, the farmers suggested a trial batch Kayla entrepreneurs with the Dorogomilovsky market, but they refused to take outlandish cabbage even free — they say, no one knows what it is. But in March of 2016, the property market went to businessmen and asked me to buy cabbage. Had to turn down all party Kayla was already reserved for vendors, says Korogodina.

Side view

The client

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“Cale, Russia will survive”

Boris Akimov, founder of LavkaLavka farmers ‘ cooperative

Currently, in Russia everything that is connected with the production of vegetables is on the rise, so the farm to attract the interest of investors. However, the caveat is that the “”Super ” farm” specializiruetsya ecological method of cultivation products. This approach causes an increased cost of production, and with a more expensive product and compete harder. It’s a risk, but at the same time and advantage with the right marketing. When scaling properly convey the benefit (ecological production), then the consumer will become clear why the price is higher. If to bring the benefits of will not be able to compete with industrial production will be difficult, their prices will always be considerably lower. As for Kayla, I think this product will catch on.

We invest ourselves and often bring investments for our vendors-farmers, but many of the investors are private individuals who are not experts in agribusiness. For our investors the guarantee of quality we are. Farms like “”Super ” farm” are of interest to investors who are not just looking for profit, and I think it is important and interesting investments in the environmental sector.

Expert

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“Many manufacturers offer outlandish products that can be a means for them to market”

Andrei Sizov, Executive Director of the analytical center “Sovekon”

Kale is quite long circulated in Western Europe, and in recent years has really become very popular in the United States. This is a typical story of the emergence of the next superfood (as inoa, Chia, etc.) is a relatively new and little-known product, quickly entering the fashion on the background attributed to him extraordinary usefulness. The majority of these products are really useful as part of a varied diet, but a panacea for all problems are not. Over time, the fashion often subsides.

Search new products — a logical tactic for small producers. But if we talk about Kayla, if he will survive in Russia the same popularity as in the US, other manufacturers are also fairly easy to do its issue.

Competitor

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“We also pay attention to new trends”

Anton Semenov, General Director of agricultural firm “Belaya Dacha”

Kale is popular in America. But I don’t think if Cale to plant 16 hectares of land in the suburbs, it will be possible then the entire crop to sell. On the other hand, ten years ago, no one in Moscow knew what arugula, Mizuno, chard, spinach, Romano, Friese and radichio. And now there is no coffee shop where there would be a salad of arugula with shrimp or Caesar Romano: because before the salads generally consisted of tomatoes and cucumbers. Now many take this to mean that the salad should be light, consisting of different salad leaves. An iceberg, arugula, spinach and Romano there is an obvious demand, these four items are consumed in significant volumes.

So if the guys from “”Super ” farm” work to instill in Russia Cale, it would be great. We also pay attention to new trends, try on our different cultures or mixes do testing. I would not now say that in Russia everything will eat Kale, I would have first tried to grow it, to do testing, it’s not fast. After that, would be to accustom the market to the product, offered it in restaurants, and then would assess the market and talked about the potential. We usually act themselves.

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“Fashion Cale has quietly came to Russia”

Arkady Novikov, restaurateur

Eight to ten years ago I bought a greenhouse in which we grow strawberries, strawberries, Kale, arugula. I wish every restaurant had a garden and they grew the herbs he wanted. I think it’s very cool, if possible on the roof to make a little greenhouse or on a piece of land next to the restaurant. This Kale is already quietly came to Russia, maybe not as much as in America. My daughter likes healthy food and eating, and she often eats Kale. We use it in restaurants.