RI’s correspondent visited a small region 700 km south of Moscow and came back convinced that he had seen the future
In part 1 of this article I explored the Belgorod economic miracle.
Now I’ll explain how it was achieved.
This is what I got from an 80 minute interview with the Belgorod regional Governor Yevgeny Savchenko, and from formal and informal talks with his team.
Savchenko (66) is the longest serving Russian provincial governor, having been appointed in 1993, reappointed once, and elected four times under changing legislation. He’s now in his 6th term.
His agricultural development strategy is based on supporting vertical agribusiness, that is, companies that embrace the full production cycle, from feed to breeding to meat processing to distribution.
He told us he’d picked up the idea from Belorussia in 1994, then explored US and Canadian models. In the 1990s, when Russia was in a privatization frenzy, the Belgorod regional government started buying arable land from small owners who had received plots for free after the collapse of Soviet collective farms.
“State ownership of land is a cornerstone of our success, he says, we would never have been able to attract serious investments if we had had to negotiate with many small owners.”
Now the state owns 50% per cent of all arable land in the region and almost all the land around Belgorod. This allowed it to build 50 thousand individual homes with substantial discounts, turning the city of Belgorod into an agglomeration.
At the end of the 1990s, it began turning barely surviving or bankrupt enterprises into integrated agribusinesses, the flagship companies chosen for their directors. BEZRK-Belgrankorm, organized around a fish feed production factory BEZRK whose then director, Alexander Orlov, is now the company’s main shareholder and Chairman of the Board of Directors, is listed among the top four Russian agricultural companies. The name of the fish feed plant is nostalgically preserved as part of the company’s barely pronounceable title. (Its consumer products are marketed under a better sounding brand, Clear Dawns).
The breakthrough came around the mid-2000s, when the administration offered regional state property consisting of administrative buildings, including the office of the governor, a theater, a museum, recreational facilities etc., as collateral for bank loans, garnering an investment pool of about 10 billion rubles (at the time, the dollar was under 30 rubles). “Not a single repayment was missed”, the governor says proudly, and that’s what allowed the miracle to begin.
In 2010, the Federal Food Security Doctrine was adopted accompanied by subsidies and tax relief for agricultural enterprises, and by the time the exchange of sanctions between the West and Russia began, Belgorod’s agribusiness was ready to expand its market shares in traditional areas and to diversify into new niches.
Most of the investment in greenhouses, apple plantations, microbiology, agricultural machinery had already taken place. And despite the sanctions, the region remained attractive for foreign investment. Last year Hohland-Russland, an affiliate of the famous soft cheese brand Hohland, added new facilities at Prokhorovka. The Agro-Belogorye group is building a machine plant with German Big Dutchman and Schikling.
What struck me in Belgorod is that Governor Savchenko and his team are not simply good managers, they are ideologically motivated by what they call solidarnoye obshestvo, which translates roughly as ‘a solidarity society’.
On the government website you can find the 2011-2015 Strategy for Shaping a Regional Solidarnoye Obshestvo. Its philosophy is outlined in this quote from one of the Governor’s speeches:
“From the point of view of Belgorod citizens a solidarity society is a cohesive society, with common aims, where creative activity benefits the region and the Motherland. It’s based on the key notions of unity, spirituality, morality, patriotism, trust, active empathy and responsibility.
“The solidarity society is not new in the context of Russian culture and history. The philosopher Nikolai Fedorovich Fedorov formulated several solidarity slogans over a century ago: “Live not for yourself, not for others, live together with and for everyone.”
“A solidarity society is the antithesis of, and a necessary alternative to the consumer society. Human beings are not consumers, nor onlookers, nor objects in it. They are creators, builders, active subjects of social and economic life.”
And in this region you hear the words solidarnoye obshestvo almost as often as ‘sanctions’.
In economic terms it implies several things:
The region is a strong partner in both business and social development. For both business and individual housing construction it provides land for free or with substantial discounts, laying roads, gas, and electricity lines.
Local business actively supports road construction and recreational zones in each district. Cultural centers (‘houses of culture’ in Soviet terminology still used) include medical, sports and fitness facilities, artistic workshops for children and adults, and cinemas. Companies provide homes for their employees, who can acquire them with very good discounts after 5 or 7 years of work.
A House of Culture in the village of Soldatovo in Rakityansky district (population of 35 000), was built around a lake adjacent to a football and athletics stadium and a well kept recreational area by BEZRK-Belgrankorm. Most services are free for the almost 7 000 company employees and their families, and are affordable to outsiders.
Agriholdings support vocational training schools, primarily but not exclusively to train personnel for their companies. They build churches in this Orthodox region.
Gennady Bobritsky, Chairman of the Board of Directors of ZAO Prioskolye, a leading poultry producer employing 22 thousand people told us that after they introduced three year paid maternity leave, women began producing children one after the other, so the company had to limit the benefit to one child.
In the 2014 Rating of Perceptions of Social Well Being of Russian Regions compiled by the The Civil Society Development Foundation the Belgorod region is listed 3rd, right after Tatarstan and Yamalo-Nenetsk, two oil rich regions.
Upon returning to Moscow I thought of my late grandfather, born in 1900 to a peasant family becoming a Communist in 1918 and fighting in the Civil War for a brighter future. His life was full of hardships, his parents suffered from Stalin’s repressions, but he remained loyal to the ideals of his youth. He had high hopes for Gorbachev’s perestroika and became a sick man overnight when Yeltsin announced the disintegration of the Soviet Union in December 1991.
If he could see what I saw in Belgorod, I think he would say that the dreams he had for Russia’s future came true.
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