Page 20 - Buy Russia - bne IntelliNews monthly magazine April 2017

20 I Companies & Markets bne April 2017
English farmer ploughs a deep furrow in Russia’s biggest irrigation project
Jason Corcoran in Moscow
An English farmer from Lincolnshire is ploughing a deep furrow in Russia’s biggest irrigation project in the fields of the southern Stavropol region.
Robert Covell has been helping to run a 22,000-hectare production business in this part of the North Caucasus –
a 1,400-kilometre hike from Moscow – since 2012. The ambitious project by IrriCo consists of 6,500 hectares in new irrigation and a further 1,500 hectares in development producing grain and vegetables. About 2,000 jobs have been created directly by IrriCo and related businesses.
“It’s Russia’s biggest irrigation project by some way,” Covell tells bne IntelliNews in an interview. “We are growing under irrigation corn, soya, irrigated wheat along with potato, onion and carrot and we have various other veg under trial. We have just started building a packing house and veg storage and the first stage of that should come onstream by June 1.”
The IrriCo project is focused on acquiring large scale operating farms in Southern Russia, improving operations with modern machinery and management practices, and installing the latest irrigation technology in conjunction with the existing irrigation canals from the Soviet period.
Once money was raised, Covell helped to find, select and buy farms. He moved to IrriCo initially as chief executive and lat- terly as development director and board advisor with produc- tion and capex oversight. In those role, he bought two farms, completely refurbished and built all systems including machin- ery, storage, centre pivot irrigation, staffing and production.
Covell has been retained by the company, and is currently concentrated on development of additional irrigation and vegetable production ramp-up. His Twitter account charts the project’s progress as well as the challenges and extreme weather conditions that it faces.
The original plan in 2011 had been to set up an agricultural
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Lincolnshire farmer Rovert Covell has big development plans for Stavropol and beyond
fund. Russia’s VTB bank was to partner with the international infrastructure specialist Macquarie, but the Australian lender pulled out of the joint venture at the last minute.
VTB had big plans and was seeking to attract from $500m to $1bn of the investments to invest in agriculture all over the country in a phased development strategy. Jim Rogers, the legendary investor and co-founder of the Quantum Group of Funds with billionaire George Soros, was even hired as an adviser to the division.
Sovereign wealth money was committed from Middle East sources, but the Syrian conflict blew up and the commitments were withdrawn.
VTB decided to go it alone and hired away Jason Silm from Macquarie to run its agriculture investments division. Shortly afterwards, Covell was recruited as chief operating officer. Covell was then asked to come up with another plan and he drew up a project to focus on irrigated grains and irrigated vegetables.
VTB stumped up an initial $25mn and raised another $25mn from KRSK, a development authority for the Caucasus region, and the funds were used to set up IrriCo and to purchase its first farm in 2012 in northern Stavropol.
A second farm in the region was purchased in 2013 after ADM Capital, a Hong Kong-based investment house, joined the venture with a $30mn contribution.
Irrigated by Stalin
Stavropol was chosen because of its existing irrigation system. Soviet dictator Jospeh Stalin forced prisoners in the late 1940s to build a 50-kilometre canal at Ust-Dzheguta on the upper Kuban River, which leads water northeast via the Kalaus River to the Chogray Reservoir on the Manych River. Fed from meltwater in the Caucasus mountains via a dam on the Kuban River, Covell says the system compares very