Pigs and protection money: German farmers seek their fortunes in Russia

Der Spiegel | 12 January 2012
Photo: Yevgeny Kondakov/ DER SPIEGEL

By Steffen Winter

Back in the 18th century, Catherine the Great invited German farmers to come to Russia and cultivate the land. Over two centuries later, the country is recruiting Teutonic pioneers once again, in a bid to put vast tracts of fallow land to use. The land holds great opportunities for agricultural entrepreneurs -- provided they have strong nerves.

The roads are a problem. The dark, frost-damaged asphalt is patched in many places. As the black Toyota Camry bumps along the road, Alexander, the driver, glances quickly into the rear-view mirror and steps on the gas, passing trucks that look like they haven't seen the inside of a repair shop in a long time.

Sitting in the back seat, Stefan Dürr is being thrown back and forth on the bumpy road. As he looks out the window, he sees trees and low shrubs flying by. Beyond them is a vast, shimmering Russian landscape, a region of dark fields and kilometer upon kilometer of black earth -- the Voronezh Oblast. The German points to the signs along the side of the road. On one sign, the words EkoNiva Agro are painted in black on a white background. "It all belongs to us," he says cheerfully.

When Dürr, 47, a former activist with the Bavarian Young Farmers Association, studied agriculture in the northern Bavarian town of Bayreuth, he anticipated leading a comfortable life on his grandfather's farm in the Odenwald region near Heidelberg. Instead, he is now the owner of more than 170,000 hectares (about 420,000 acres) of prime Russian farmland.

With his curly hair, and in his blue wool sweater and gray jeans, Dürr could be mistaken for a tractor driver. But he has achieved breathtaking results as a businessman. He now speaks Russian with almost no accent, and is cultivating fields in the Kursk, Voronezh, Orenburg, Novosibirsk and Kaluga regions. Through his holding company, EkoSem-Agrar, he employs 2,800 people in farming, owns a herd of 28,000 cattle and most recently generated revenues of €80 million ($102 million). In good years, he earned €200 million selling agricultural machinery, a business he has since spun off. According to Dürr, EkoNiva, one of his subsidiaries, is among the top 30 agricultural companies in Russia.

Plans to Expand

Dürr's success story, and his pioneering achievements as a Western European deep in the heart of Eastern Europe, serve as a model for the Russian government. Almost 250 years after Empress Catherine the Great attracted tens of thousands of German settlers to her realm, Russia is once again courting Western settlers to revive a farming industry that is ailing in some areas.

Dürr has, in fact, attracted imitators. The Westphalian meat baron Clemens Tönnies has just announced a plan to invest millions in Dürr's neighborhood. Together with a Russian partner, Tönnies wants to build 10 new pig farms, which are expected to produce 62,500 tons of meat a year. It is one of the largest projects ever planned in Russia, and it promises an investment of more than €100 million in the Voronezh region.

Eckart Hohmann, a former banker with the German state-owned bank WestLB, is already there. He and a business partner from the northeastern German region of Mecklenburg are farming an area of 29,000 hectares 400 kilometers (250 miles) south of Moscow. His "Rheinland Farm" produces brewers' yeast, seed grain and wheat. "The Russians practically forced the land on us," says Hohmann, adding that the business already achieved profitability some time ago. Not far from his farm, three farmers from Ingolstadt in Bavaria are cultivating a total of 4,000 hectares -- and they plan to expand.

Some 23 million hectares of fertile farmland is currently not being used in Russia. Much of this land is in the coveted Black Earth Region. In the early 1990s, after the fall of the Soviet Union, collectives everywhere went bankrupt, and the country was forced to import grain. The Kremlin has since made agriculture a top priority, and it is openly recruiting Western expertise.

Its efforts have been successful. When Bavarian Agriculture Minister Helmut Brunner returned from a tour of Dürr's vast farms, he was so enthusiastic that he practically called upon Bavarian farmers to leave the country. "The Russians have made it clear that they want more Bavarian farmers," Brunner said.

On Landtreff.de, an Internet former for farmers, a thread titled "Let's go east" was filled with glowing comments. "Let's go, lads," one farmer wrote enthusiastically. "The thawing permafrost soil is waiting for us beyond the Ural Mountains. Get over there and farm as far as the horizon!"

Falling in Love with Russia

Dürr's liaison with the east began a long time before online communication became commonplace. He became a pioneer at a May Day festival in 1989 in the Bavarian town of Weidenberg. He was drinking a beer when an official with the German Farmers Association approached him. Then-Russian President Mikhail Gorbachev and then-German Chancellor Helmut Kohl had just signed a student exchange agreement, and officials in Bonn were desperately looking for volunteers. Dürr, who was 25 at the time, saw himself facing the choice between his grandfather's farm in the Odenwald and an adventure in the Soviet Union.

A short time later, he was standing in a collective farm near Moscow, between 110,000 pigs and seemingly endless fields, an intern from the West who had arrived in the middle of perestroika. He advised the head of the ailing operation to grow rapeseed instead of just wheat. "Khorosho (OK)," said the boss, "but only on 50 hectares to start."

Dürr still looks wide-eyed with astonishment today when he tells the story. "Fifty hectares!" He was familiar with the 14 hectares of the family farm, but the collective farm consisted of 5,000 hectares.

The German enjoyed the student parties in decadent, sophisticated Moscow, and after three months he started speaking Russian. He still raves about the beginnings of that "crazy period." The Russian virus had infected him.

Dürr stayed for six months. At the end, he explained to the Russian agricultural administration how East German collective farms were being privatized. On behalf of the German Agriculture Ministry, he brought Russians to the eastern states of Brandenburg and Thuringia, drank vodka with them and learned the best Russian toasts. His tours were praised as part of a "German-Russian dialogue on agricultural policy," and his salary was paid by the Agriculture Ministry.

As a government consultant of sorts, Dürr soon brought his expertise to the Land Reform Task Force of the Russian parliament, the Duma. His recommendations differed markedly from those of the market radicals. He was strongly opposed to disorderly privatization and feared land speculators, and he was worried that agriculture would also fall into the hands of the oligarchs.

A Toast to Russian Agriculture

Dürr, the German counterweight to Russian oligarchs, is sitting in the village pub in Shchuchye, 600 kilometers south of Moscow. He married a Russian woman in 1994, and three of his children were born in Russia. The street is still called Sovetskaya, but the pub is now his. He farms the 63,000 hectares outside, has 13,500 cattle in nearby pastures and sponsors the local kindergarten.

The bar is full. Almost 100 of Dürr's business partners have come to the village to tour his new stables and a production building for agricultural machines. The district administrator utters a few words of praise. The German gives a short speech in Russian. Bottles of Pyat Ozer, a Siberian brand of vodka, are on the tables. It is noon. Dürr delivers his toast to the health of Russian agriculture as if he were firing a volley from a machine gun. The audience roars: "Urra! Urra! Urra!"

Dürr acquired his first collective farm, named "The Quiet Don," in the region in 2002. Until then, he had earned his money by selling seed and exporting East German agricultural machines. He bought old forage harvesters from an East German enterprise called "Progress" for 1,000 deutsche marks, fixed them up and sold them in Russia for 13,000. He eventually earned enough money with the venture to buy 11 former collective farms in the Voronezh region alone. It's ideal farmland -- thick black earth with an extremely thick layer of humus soil, well mixed by hamsters, gophers and worms. Today Dürr cultivates almost half of the agricultural land in the district. He has just turned in a record harvest: 117,000 tons of sugar beets, 51,000 tons of corn, 180,000 liters of milk per day -- an increase of 70 percent.

Has the German transplant turned from being the savior of collective farms into an oligarch? Dürr begs to differ. "I don't speculate with the land. I grow crops, live from agriculture and create jobs." He sees himself as an idealist who got to know the other side of the Russian soul long ago, and who knows why, two decades after perestroika, more fields than ever now lie fallow. According to Dürr, one of the reasons is that many collective farmers traded their ownership shares for crates of vodka.

Part 2: Solving Problems Outside the Legal System

Nevertheless, there is still the question of what drives a German farmer to faraway Russia. The answer is simple, and has to do with the numbers. The larger a farm is today, the more effectively it can be cultivated. Thanks to GPS and satellites, farming has become largely automated. In addition, diesel fuel is significantly cheaper in Russia than in Germany, and there is also no milk quota. The price per liter of milk is currently about 30 euro cents in Germany, while in Russia prices can be as high as 42 cents. There are also government subsidies to cover interest costs, minimum prices and import duties to stave off the foreign competition. Dürr's company, EkoNiva, received €8 million in subsidies from the Russian government in 2010. The world's largest country spends a total of €5 billion a year to subsidize its agricultural sector.

Local officials do not always appreciate the Kremlin's good intentions, as Dürr learned in his first few years in Russia. The district administrator in the Orenburg region harassed him for four years. According to Dürr, the man came to him and demanded his "share." "But I don't pay anything, as a matter of principle," says Dürr. After that, the authorities stood in his way whenever possible.

That was until the German discovered a solution that was as democratic as it was clever. EkoNiva, the largest farming operation in the area, supported the district administrator's opponent in the next election. The challenger won, and Dürr was left to farm in peace.

He learned how Russia works, and how people can assert their rights outside the law, through an encounter with armed, masked men who paid him a visit in his Moscow office. They demanded €800,000 in protection money, but after tough negotiations they agreed to accept €300,000. But then Dürr turned to his contacts in the government and complained to the Russian deputy prime minister. A few days later, a package arrived. It contained €300,000 in neatly stacked bills. EkoNiva was never harassed again.

A Politician and Diplomat

Dürr is now much more than just a farmer working in another country. He is an important businessman, a politician and a diplomat. He has learned that there are still issues of German-Russian history lurking in his enormous agricultural realm. His fields surround the old settlement of Rybenskoye. German is still taught in the local school, and the words "Mein Heimatort Rybensdorf" (Rybensdorf, My Hometown) are written on the light blue wall in one of the classrooms. Immigrants arrived in the area from Sulzfeld in southern Germany in 1765, in response to an invitation from Catherine the Great.

A teacher wearing a thick fur coat hurries across the street when she sees that Germans have come to visit. She is familiar with the history of Rybensdorf and has brought along old pictures. The first group of settlers consisted of 54 families. They had names like Deutsch, Dreher and Adam, and they planted tobacco and tried raising silkworms. In their heyday, around 1875, there were 2,400 Germans living in the area, where they had established satellite colonies with names like Michaelstal, Olgenfeld and Ruhetal.

But then the tide turned, and the local inhabitants began forcing the German-born settlers to leave. The German church is the only prominent reminder of this period that has remained halfway intact. The tower has collapsed, and it takes the combined strength of several people to open the large door to the nave by a crack. The Soviets used jackhammers to enlarge the entrance so that a tractor could drive through. They stored grain in the former church.

Dürr soon learned that the Voronezh region also bears a heavy historical burden. The German army spread fear and terror in the area during World War II. In June 1942, the Red Army waged a bloody battle to defend Voronezh against the German Army Group South. After the battle, 370,500 Russians lay dead on the black earth or were missing, while the Germans lost 19,000 soldiers. The Russians struck back a year later.

Today the region is still a giant cemetery, riddled with war monuments, some of which are in Dürr's fields. Local museums contain items from the Wehrmacht, the Nazi-era German armed forces.

Patron of the Region

The large landowner from Germany has his own way of overcoming the skepticism of local residents. His company renovated a war memorial to the Soviet army in Shchuchye. On May 9, the Russian holiday that celebrates German capitulation, Dürr places wreaths at the war memorials in 10 villages in the region.

He is already seen as one of the region's patrons. He spent 8 million rubles (about €200,000) to build the kindergarten in Shchuchye. Whenever Dürr walks into the kindergarten today, he is treated like a visiting dignitary from another country. The staff reverently serve him tea and bring out the guest book, and the children pose for photos with Dürr and present him with gifts they have made.

Sometimes it seems as if Dürr were buying his way out of the stigma of being a German. His company sponsors a local soccer team, Lokomotiv Liski. It paid for the renovation of the dome of the Cathedral of the Blessed Mother of Vladimir in the same town, and it is funding the construction of a new church in Zaluchnoye, as well as supporting a martial arts school.

The local people like working for Dürr, because he pays more than the average wage and, as an old man says sarcastically, because it is always better to work for a German than for no one at all. Local residents also say that new Russian farmers in the neighborhood, like a relative of former Moscow Mayor Yury Luzhkov, are known for their poor treatment of employees and business associates.

Dream of Buying the Family Farm

District Administrator Viktor Shevtsov wants Dürr to stay in the area for the long term, and he is trying to convince him to buy more land. Dürr was even given his choice of building land for a small house. He decided on a breathtaking, cliff-top site above the Don River, and local officials promptly classified the plot as building land. Meanwhile, Dürr has even been awarded the Pyotr Stolypin Prize for the "Russian Agricultural Elite," the first German to be honored in this way.

As if to live up to the award, the Odenwald native now plans to expand his operation to 250,000 hectares, an area the size of the German state of Saarland. He also wants to float his company on the stock market -- in Germany, where he still pays a portion of his taxes.

Compared to all this, his "old dream" in his native Germany is a very small operation: his grandfather's farm, which had to be sold in 1990 because of inheritance problems. He recently contacted the current owners, who are interested in selling. Fourteen hectares is a ridiculously small amount of land in Stefan Dürr's agricultural empire. But he is not about to pass up the opportunity to buy back the family farm.

Translated from the German by Christopher Sultan

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