Putting it all into practice

With commercial cereal operations in Ukraine, Russia and Estonia, Trigon Agri is a great example of how to approach the business of international farmland.

3 April 2014, Interview by Ian Bailey


Trigon Agri is an integrated farming business with significant assets and operations in Eastern and Central Europe. As we have highlighted, title, infrastructure, management and risk mitigation are core requirements to investing successfully in this market. Trigon Agri is an example of what can be achieved with suitable capital, management and drive. An interview with CEO Ülo Adamson offers a glimpse into how this has been achieved.

Q What were the motives behind starting the business in 2006 and why did you choose Russia to launch the venture?

A Globally agricultural production is down, but the Asian markets in particular are driving an increased demand for food, especially protein as their diets become more westernised – they need to be fed from somewhere. Russia was the right country for us to start in being relatively close to western Europe, entry prices were reasonable, large scale farming was possible and the infrastructure was fairly well established. We feel optimistic Russia will become more integrated with Europe in terms of trade. It is attractive to investors because of the capital being invested there and there are good tax allowances. Of course there is some political risk but the attractiveness of the investment currently outweighs it.

Q How have you obtained the land required and what is the optimum size of a holding?

A We have been able to obtain the freehold interest by buying through a Russian owned intermediary investment holding company from which ownership can be obtained after two years. This makes our ownership structure very transparent. The optimum size per holding is a minimum of 10,000 hectares but we try to cluster 3-4 blocks in one location. This means we are farming 40,000 hectares providing the best efficiency of people and machinery.

Q What has been the key to your acceptance by the local communities?

A Being attentive to social aspects connected to our farming operations has been essential. We have been sensitive and endeavoured to understand the local needs. As well as employing local people where we can we have sponsored churches and/or schools as a sign of our commitment.

Q As well as arable production, are you also growing a dairy enterprise?

A Dairy farms represent a small fragment of our business and we keep this element entirely separate from our cereal enterprises. These tend to be situated further north in Russia nearer St Petersburg where there are more consumers. We currently have two separate units with 4,000 milking cows, and our structure mirrors that used in North America. In seven years we aim to be milking 8,000 cows. We do not envisage this business moving beyond the provision of raw milk into processing because a minimum of 20,000 cows would be required.

Q How did you overcome the management and operational challenges?

A We have contractor partners but have avoided long-term projects with Russian partners; the reasons are largely based around differences in culture and long term objectives. We employ local workforces and management teams and have drawn a lot of our expertise from Estonia who are key to the success of our management. They are the right partners for us and the local workforce have a good understanding of the local social customs and culture.

Q What about delivery and supply of inputs and machinery – has this been a challenge?

A While access to machinery and inputs is more difficult, it is not a big issue for us. This is not as efficient as we are used to in the West however, we manage with longer lead in times and neither is critical for investment.

Q We know water is a vital resource for agriculture, how important is its availability to the business?

A Access to a natural water supply and irrigation, combined with low transportation costs at a domestic level, are vital elements to our investment strategy. Soil quality is secondary and we will happily compromise on that element for a good water supply and infrastructure.

Q What is the optimum average income return on capital across the portfolio and how long does it take to achieve?

A Our target is 20%, which we believe is realistic, and where we started from a low capital base we are already exceeding this target. Where such a target is unachievable for reasons beyond our control we have tried to resolve the issue. For example, we swapped some land in 2012 which was too far from a port. We envisage that this target should be achievable within a three to five year window of our initial investment where the investment was an entirely new holding for us, where it was an add-on we look to shortcut this to two years.

About Trigon Agri

An integrated producer

Trigon Agri is a listed company in Stockholm which was launched in 2006 following funds raised from Scandinavian high net worth individuals. The company has gone onto acquire farms in Ukraine, Russia and Estonia including around 167,000 hectares of commercial cereal operations and two large dairy farms. The business has invested in core value chain infrastructure and storage facilities as well as sales and trading operations. It is this extensive land bank and integrated value chain infrastructure that allows the business to control their operations and sales, and ultimately grow in a challenging market.


Key Contacts

Ian Bailey

Ian Bailey

Rural Research

Margaret Street

+44 (0) 207 299 3099


Hugh Coghill

Hugh Coghill

International Farmland

Margaret Street

+44 (0) 20 7016 3818


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