Two successful farmers in Kherson share their vision of agribusiness

by Roman Woronowycz
Kyiv Press Bureau

KHERSON - Petro Didkivskyi, a private farmer in Kherson, believes the government should legalize commercial land transactions immediately. Serhii Rybalko, on the other hand, who also farms a plot of land in the Kherson region, maintains that if land becomes available for sale, oligarchic businessmen from Ukraine and Russia who are attempting to monopolize Ukraine's economic sector even now would quickly put him out of business.

"The Ukrainian private farmer only today has a little room to breathe," explained Mr. Rybalko, illustrating his point by spreading his thumb and forefinger about an inch apart. "If the sale of land is legalized those who lease their land to us at the moment will want to sell it. We are not yet in a position to be able to afford to purchase that which we rent."

While Mr. Rybalko said he would like to see a moratorium on the sale of land to extend for another decade, Mr. Didkivskyi was adamant that now is as good a time as any to legalize commercial land transactions.

Messrs. Rybalko and Didkivskyi are modern, young Ukrainian businessmen competing in the same economic sector. They could be rivals, but they are friends and colleagues. While the two live about 100 miles apart, they get together regularly to talk about their problems and perspectives. They often share a drink and discuss the state of the winter planting and the price of tomatoes.

The two farmers are part of an ever-expanding force of about 4,800 private commercial farmers in Kherson - the most in any Ukrainian oblast thus far. They and their colleagues are almost forced to remain close and cooperate because Ukraine's private farming sector today remains as sparse as the once mighty Kherson steppe on which these two farmers plant their crops. It is so underfunded and underdeveloped that most private farmers can only look to themselves and a small group of international consultants and aid organizations for advice and support. There is plenty of room for many more like them - those who have the initiative and the right mindset to look at farming as a business.

Mr. Didkivskyi's reason for wanting land fully privatized also provided an insight into his motivation for going into farming.

"I have kurkul [kulak] blood in my veins. I want the independence to buy and sell what is mine. I don't need the government hanging over my shoulder," he said.

While Mr. Rybalko, 34, produces a wide variety of crops and raises pigs on his 1,200-hectare (3,000-acre) Adelaida Farm, Mr. Didkivskyi, 42, sticks to four traditional types of vegetables - cucumbers, potatoes, tomatoes and cabbage - on the more humble 234-hectare (585-acre) plot he works, which is called Tavria Farms.

The two agro-businessmen began to ply their trade in very different ways, but they have at least one basic similarity: both are pioneers in Ukraine's still slowly developing private sector of agriculture, who have gone through the bad times and now see a light on the horizon as Ukraine's agricultural sector begins to raise itself from the carnage left by collective farms and Communism.

The Tavria Farm and the Adelaida Farm both made profits this year and last, which were good years for Ukraine's agricultural industry in general. With a grain harvest of 40 million tons in 2001 and 37 million tons this year - the best in over a decade, Ukraine is slowly beginning to approach the 50-million-ton mark previously achieved in peak years.

Originally, both Mr. Didkivskyi and Mr. Rybalko were well-enmeshed in the Soviet system, which banned private ownership and hindered individual initiative. Mr. Didkivskyi was a leading figure in the Communist Youth League in his hometown, while Mr. Rybalko's father was director of a collective farm in Kherson. Today both are adamantly against any form of collective ownership or government intrusion in capital markets.

"I really believed in that system, explained Mr. Didkivskyi as he recalled his years as a member. "But I always had a lot of initiative and relied on my abilities, perhaps, more than others," explained Mr. Didkivskyi. "Then I suddenly decided that private ownership was the only way to build a life."

Mr. Didkivskyi, who lived 40 miles from the Chornobyl Nuclear Power Plant in Zhytomyr Oblast with his wife and child, moved to the Crimean peninsula of southern Ukraine several days after the calamitous accident at the nuclear facility in 1986.

While still in Zhytomyr, Mr. Didkivskyi had raised hogs and had some agricultural experience. So, when he heard through a relative that he might qualify for several hectares of land in a government-sponsored private farming initiative, part of Soviet President Mikhail Gorbachev's "perebudova" program, he applied. After being awarded the first five hectares of the project by the Kalanchak Raion of Kherson Oblast, he made the move to the Ukrainian steppes and became Kherson's first private farmer since the Soviet revolution. Today Mr. Didkivskyi is most proud of the fact that he developed his property without government assistance.

"I built the road that leads to the farm, I developed the irrigation and brought in the electricity, and began to work," explained the farmer with a smile of satisfaction as he looked over his several buildings and the surrounding territory - wet and muddy from two weeks of rain - and the late model Mazda automobile parked next to his office.

Before long, he owned 140 hogs and had combined his land with that of a family friend. After communism was discarded with the Ukraine's independence in 1991 and first land act passed in 1993, Mr. Didkivskyi began to accumulate property by leasing it from workers of the former collective farm, who had shares for rent.

Now Kherson's first private farmer owns seven light and heavy trucks, and five tractors. Mr. Didkivskyi estimates his worth at some $300,000. He has 55-full time workers and hires another 55 to 60 people during harvest. He does not, however, own a combine or a harvester and seasonal workers continue to pick his potatoes, cucumbers, tomatoes and cabbage by hand.

"Ukrainian labor remains so inexpensive that it is much more economical for me to hire these workers. I save some money and they make some money," explained Mr. Didkivskyi.

His future prospects look good, as well. This past season he harvested 120 tons of tomatoes, 180 tons of cucumbers, 90 tons of cabbage and 42 tons of potatoes. By the first week of November he had sold it all at the farmers' market in Kyiv, where he has done his trading for a decade. In the next months he can concentrate on adding five more hectares of greenhouses to the six hectares he already has under glass, which allow him two harvests a year.

Farming cooperativean advantage

While Mr. Didkivskyi continues to go it alone as the fiercely independent farmer that he is and has no strong desire to become a gigantic agricultural entity, his friend and colleague, Mr. Rybalko, believes in two well-known clichés: "bigger is better" and "the more the merrier."

"Today the agricultural market is nearly completely developed," explained Mr. Rybalko. "The only way for smaller players to get in and have an impact is to combine their efforts."

Two years ago he joined his farm with six others to form the Pivdennyi Soyuz farmers' cooperative that sells the harvests of their combined 8,500 hectares. Last year Pivdennyi Soyuz sold 1.2 million hrv worth of wheat, barley, sunflower and tomatoes, which amounted to a net profit of 70,000 hrv per farmer. By combining their harvest for market sale, the partners were able to demand higher prices, which effectively allowed them to increase their profits by several percent. At the same time, they have cut costs on fertilizer by buying in huge quantities.

Although agricultural consultants who visit him from the International Finance Corp. suggest that he should limit the variety of his planting, Mr. Rybalko is interested in continuing to grow a wide variety of crops as a hedge against bad harvest years and natural disasters.

"In Kherson you can have anything from a sudden frost, or a deluge of rain, to a dry summer like this year, and that can easily kill your profits," the aggressive entrepreneur explained. "Until we have developed a system to insure ourselves against financial losses from uncontrollable natural factors, I believe that a diversity of crops is best."

Mr. Rybalko, who belies his 34 years of age in the maturity and confidence he exudes, has another reason for growing a variety of crops. Two contracts he has annually won for several years - one to supply vegetables to a majority of the many sanitariums that dot the southern coast of Crimea, the other for vegetable supplies for government buildings and schools in the local raion - call for more than just a large amount of tomatoes.

That's why he cultivates beets, potatoes, onions, cabbage and some cauliflower, in addition to his red beefsteak tomatoes on about 25 percent of his 3,000 acres of land. About half of the total acreage of Adelaida Farm is planted in wheat and barley, while another 25 percent goes to rapeseed, sunflower and soybeans.

Mr. Rybalko did not care to mention the amount of support or influence he has received from his father, the director of the Communist-era collective farm from which he received the initial plot of land that allowed him to develop his business. However, in speaking with the son, it is quickly evident that whatever advantage he was given, he has developed the undertaking himself and is dependent on no one.

It is Mr. Rybalko who is the chief mover behind the two-year-old, non-profit cooperative, which voted him director at its recent annual meeting and it was his ability to balance the amount of various plantings on his farm that has allowed it to attain a profit for the last several years. Finally, it was he who decided to turn to a Western agricultural consulting firm to purchase higher quality seed and fertilizers and better farm machinery, which have allowed his yields to rise.

Mr. Rybalko, who lives in the village of Hola Prystan with his wife and daughter, got into the farming business after the first presidential decree on agricultural reform in 1992 allowed for 10 percent of the land of a collective farm to be turned over to private enterprise. That year he took 47 hectares along with bank credits, which were readily available in the first years after independence and at very reasonable 3 percent rates of interest.

"The rates were low and inflation was skyrocketing, so I quickly bought a tractor and a seeder for what was in essence pocket money," said Mr. Rybalko.

Within two years he had two partners, his brother and a friend, and they were working nearly 150 hectares, but continued to make a meager living.

It was then that Mr. Rybalko met Peter Mitchell, a Scotsman living in Ukraine who had an agricultural consulting firm that also sold farm equipment and supplies. Mr. Mitchell gave the young farmer $120,000 worth of a material loan of higher grade tomato, potato and grain seed, along with herbicides, harvesting equipment and a new sprinkling system.

"The quality of our work changed tremendously," said Mr. Rybalko, as he sat at the uncluttered desk in his office, which looks much like what construction companies employ in the field. A map of his land and plantings were displaced on the wall, and dirty work boots stood in a corner beneath a coat rack.

Today Mr. Rybalko has 14 tractors and six heavy trucks as well as all the imaginable types of farm implements. He employs 120 laborers full-time and another 80 to 100 on a seasonal basis. He has built a bakery to feed his employees, a flourmill to process grain and an oil processing plant for his rapeseed.

Kherson farming's dynamic duo, Mr. Didkivskyi and Mr. Rybalko - both are recognized as leaders of the private farmer movement in Kherson Oblast - thoroughly optimistic about their own potential, but somewhat disappointed in many of their neighbors.

"Too many of our people remain pessimists," explained Mr. Didkivskyi who is also the director of the Kherson Farmers Association. "And too many of them don't want to listen to us, to hear that the old ways don't work. I know of collective farms that have been turned into corporations, which still ask the raion government what to plant and how much."

Both farmers are thoroughly modern in their own approach to their business. They follow business plans and keep up on the latest technological developments. They enjoy all the modern attributes of 21st century life as well: computers, faxes, cellphones and satellite dishes attached to their comfortable, middle-class homes.

And they agree that today the Ukrainian farmer, if he is to continue to grow, needs realistic interest rates on bank credits, not the current usurious rates of about 35 percent.

"My business plan foresees profitability of about 150 percent, but I need to be able to get reasonable interest rates. I can't continue to pay 35 percent on the 100,000 hrv. I borrow annually," explained Mr. Didkivskyi.

As the two farmers - both of whom use Ukrainian as their language of preference, by the way - sat in a Kherson restaurant looking like the successful businessmen they are, Mr. Rybalko said that nothing can stop the Ukrainian farmer if interest rates drop and the government gets out to let free markets do their thing.

"In the village, life is percolating. Our collective farm that was once there now consists of 10 successful commercial farms. Land rents are rising. Things are getting better," explained Mr. Rybalko. "We do, however still need more competition, and we need to get the government with its monopolistic tendencies out of this business. If we succeed we will be stepping on Europe's toes within two to three years."

Copyright © The Ukrainian Weekly, November 17, 2002, No. 46, Vol. LXX

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