Large agrogroups in uncertainty about Russia

Russia and Ukraine are agricultural superpowers, and therefore interesting for the Dutch agricultural and food sector. Quite a few agricultural companies in our country have interests there and are sometimes also physically present. 

Flight ban affects genetics export
One company that was directly affected by the war is pig genetics company Klasse Ki. Director Stefan Derks has been on a rollercoaster in recent days. Celebrating Carnival was not an option for the southerner due to all the hectic pace. Now that Russian airspace is closed, a major logistical problem immediately arises. The company supplies pig genetics to customers in Russia every week, but that has no longer been possible since the end of last week.

Class Ki has quite large interests in Russia. "About 15% of our sales go there. We are now waiting for the new reality. However, it is difficult to estimate the situation, we will probably know more in a week." Russian customers are also overwhelmed by the decision, Derks notes. “They are also powerless.” Customers include the Russian state-owned company RusAgro Group, Derks indicates. “Overall, it's a scary situation.”

De Heus, Lely, HZPC, Agrifirm
The 'big boys' also have significant interests in Russia. Take, for example, animal feed group De Heus, which has two factories in Russia. Robotics company Lely is also active on the Russian market with several branches and related dealers. Because dairy farming in Russia is growing rapidly, this offers great potential for the sale of milking robots. Agrifirm, through its subsidiary Nuscience, has interests in Russia and Ukraine. The cooperative announced that the office in Kiev and the production locations have been closed for safety reasons. "The conflict obviously affects our business," a spokesperson said. 

Seed potato trading house HZPC has been present in Russia since 2019. Then seed potato production started, because exporting from the Netherlands was no longer possible. This is a result of trade embargoes from 2014 after the annexation of the Ukrainian peninsula of Crimea. That embargo was extended by Russia for a year in September last year. 

Agricultural machinery distributor APH Group from Heerenveen significantly expanded its interests in Eastern Europe at the beginning of this year. Then Agri 2.0 was acquired, a distributor of precision agricultural technology and seed drills with offices in Russia and Ukraine. In addition, many agricultural machines are exported from the Netherlands to Russia. The company responded quite coolly to the tensions in the Trouw newspaper. "No matter what happens, business always continues. We have learned that lesson in the past," says director Wytse Oosterbaan. FrieslandCampina left Russia right on time. The Russian subsidiary Campina LLC was sold halfway through last year to bring more focus to the portfolio.

Many questions for the Agricultural Council in Moscow
Henk Stigter works for the Dutch agricultural council in Moscow. He indicates that many Dutch agricultural companies with interests in Russia are confused. "We are currently faced with many questions that we are first trying to bundle." According to Stigter, these include sanctions regarding the Swift payment system. "Because developments follow each other at a rapid pace and the situation changes almost hourly, it is difficult to provide clarity. Tomorrow morning we will organize a meeting with all stakeholders who have registered for it, and we will try to provide more clarity."

Regardless of any government sanctions, the banks have already taken action. Bloomberg reports that Rabobank and ING will restrict lending for commodity trade to and from Russia and Ukraine. Other international banks such as Credit Suisse Group have even stopped doing so.