Monday, June 23, 2014

Five Myths about Moldovan Agriculture

After two years of being here, I still can't say I'm an expert in anything.  However, I can say that I have become much more informed, especially when it comes to agricultural development.  Below, I give five myths followed by truths and sample cases, which will help shed some light on the Moldovan agricultural situation.

1.       Money is the problem.  "If only I had $xxxxx to invest, I could really make money."

Truth: A lack of money is rarely the problem in the end.  Sure, money is absolutely necessary in reaching a certain economy of scale that will be able to capture some profit, and it takes time to make enough money to do that.  However, the real challenges are the critical steps that occur from the time of investing the money to turning a profit.  The biggest problem I have seen over and over again through this process revolves around the failures of human resources to do the job, whatever it may be, correctly.  That and the lack of insurance against inclimate bad weather. Investors are looking but they need some assurance that their money won't be wasted and that farmers are willing to meet their product demands.  That also requires farmers to be open and focused on meeting the demands of new customers (which could mean growing different crops or using different methods).
Case in point: Black Sea Seeds Company in Moldova produces organic seeds for the Dutch market.  Under the direction of the owner of the company here, they have invested time and money in finding the land, working with farmers, purchasing equipment, and  following through on both the production side and complicated business side of exporting products (let alone organic seeds!) to Holland.  A lot of money is needed for this venture, but that was never the problem.  It's the hard work in getting from point A to point B without too many detours that is the most challenging.  Imagine all the work between these two points:
  • Point A:  No registered business. No land. No contracted farmers. No managers or consultants. Little know-how on navigating Moldovan complicated business laws.   
  • Point B: Up and running business.  Organically certified land under contract.  Capable farmers, workers, managers, and accountants hired and doing their job correctly.  Technical knowledge of farming, business practices, and export processes acquired. 

Black Sea Seeds CEO Diana Hoorn on her farm.
2.       Moldovan farmers have no new market opportunities. They are confined to domestic markets.
Truth: Moldovan farmers may not be able to tap into markets due to broken links in value chains, the farmers' own lack of will or education, or their lack of cooperation amongst each other. However, I am not alone in believing that plenty of markets are available (such as organic commodities, salad greens, grassfed beef, year-round fresh fruit and vegetables through greenhouse use, and other niche markets).  International investors are interested in the Moldova agricultural sector, but they need to find the right people, those willing to do the dirty work.  The paper work, management, educational side for growers, accounting, and production need to be done by mostly local people who care about little details and focus on quality work.
Case in point: Currently, I've been consulting with an American organic sunflower oil company, who wants to diversify their supply of sunflowers (mostly away from Ukraine).  This could pose a great opportunity for some Moldovan farmers, who could receive a premium price for their sunflowers and have a forward contract at a high volume.  As I am in discussions with different stakeholders, there's just one missing link: who will convince farmers to agree to this opportunity and to train them in organic farming processes?!  I haven't heard of one person who can locate a strong contingent of local farmers who are open and serious about this idea.  I'm also not talking about small landholders of 3 hectares but bigger farmers who have already shown some capacity for commercial farming.

The traditional method of travel, a horse and cart, in rural Moldova seen here carrying hay.
3.       Technology is outdated, and systems are broken. Moldovan agriculture has no ability to improve.  
Truth:  Indeed, barriers to accessing improved technologies at a reasonable cost to Moldovan farmers can be very challenging.  The challenges are not impossible to overcome, but farmers must be savvy enough and ambitious enough to want to learn about how to improve the way they do things.  I'm not so sure they all have quite the knowledge or the hunger to acquire it.  If it's not that, then some might also have a few barriers to accessing the appropriate technologies.
Case in point: I worked with one farmer, Ion, in a quest to acquire a corn picker that is specific to fresh sweet corn. One might think that Moldovan villages would have good manual labor to offer, but many able hands and bodies have left to work elsewhere.  Those that are left may not always be the most hardworking or trustworthy (a severe case of "Brain Drain" that can hardly be compared to the mild form of what we call Brain Drain in Nebraska).  This leaves farmers with a choice between an unstable harvest laborer cohort or a challenging upgrade in technology that could cause a cash flow problem.  With Ion, my main role was to be a translator for him so he could communicate with the one and only company selling the desired equipment in Europe (outside of Ukraine which was too unstable).  Translating from English to Romanian was practically essential to ensuring a successful transaction, as discussions of prices, taxes, equipment specifics, logistics and other things would not have made so much sense.  (Google translate can only go so far...)  I give this as an example that supports the hard truth that it can be very difficult to make technology upgrades, but it's not impossible.  If I wasn't here, Ion is still determined and scrappy enough to have done it himself.
A market in Causeni, selling the traditional products of the season
4.       A typical Moldovan farmer knows everything he needs to know.  He's pretty much a jack-of-all-trades, so there's no need to tell him how to improve his operation.
Truth: A great need for legitimate educational training for farmers exists. I have been disappointed by the lack of relevant trainings that help farmers improve their bottom line.  Local consultants in rural extension offices are surely a valuable link for quick technical knowledge, and these offices offer administrative support that otherwise would leave farmers hard pressed to finish all that voluminous paperwork they must complete in order to obtain any form of subsidy (such as financial assistance for new equipment, greenhouses, irrigation systems, and disaster relief). However, I still see a need for more engaging educational opportunities for farmers.  Rather than farmers being requested by local agents to come to seminars (and certainly to come to sign the paper that says they attended), farmers would freely come for reason of education and value.
Case in point: Culturally speaking, the Soviet way of doing things historically left no room for error. Even though of course everyone makes mistakes at some point, collective farm mistakes had to be hidden.  The Soviet Union as a centralized economy also made most decisions for collective farms.  If the government said a farm needs to produce 50 tons of x crop and the farm only produced 47 tons, the farm would still report 50 tons as requested.  These old habits of stretching the truth impacts today's Moldovan agricultural economy. Many farmers today don't want to admit that they may have failed at something at some point and struggle with calculating risk accurately in business decision making, as they haven't had the education or practice with it.
For farmers in Moldova today, they must admit to the things they don't know.  This means learning about the methods of agriculture and processes of business that can be improved such as implementing no-till practices; learning about improving soil fertility and crop yields with low-cost technologies; making and using budgets and business plans; and focusing on a long-term strategy for farm improvements.  Some farmers and agribusiness people in Moldova do focus on these things, and I am grateful for them!  I just wish I found them in greater numbers and with more honest tenacity for rural development success.

A long-time employee of Asconi Winery filtering wine in modernized tanks
5.       Moldovan wines are too unknown for them to be able to expand production and expand into new markets.
Truth: Moldova's got nothing as far as its representation for good wine like many other Old World wine countries (France, Italy, Spain, Germany, etc.), but they still have the ability to market themselves as European wine at perhaps a lower cost.  Besides creating a quality product, winemaking has much to do with marketing your wine to the right audience and in the right way.  Moldova has a competitive advantage here by its unique winemaking history and location and perhaps by the lower cost of production here as well. (Equipment is still very expensive!)
Case in point: One winery, Asconi, produces over a million bottles annually and exports almost all of it. Historically, their biggest customer was Russia as it was a safe, constant client for Moldovan wines. As the Russian market has become more and more unreliable in the last 10 years, wineries including Asconi have looked elsewhere to sell their wines.  Markets for Asconi currently include the Czech Republic, Poland, Nigeria, South Africa, Israel, Lithuania, and others.  Moldova also has an opportunity to reach the ever-growing mass of wine-drinking Asians as well.
This discussion about Moldovan agriculture is still quite basic.  I'm sure that each myth and truth would lead to much more commentary, but this provides a basic taste of some of the challenges and opportunities found in agriculture here that I have observed.  I am still so proud to know many farmers here that work so hard, and I applaud them for their efforts.

Tuesday, June 17, 2014

Strongman Putin... not so strong



Hello esteemed readership of Moldova Cornhusker! It is my distinct honor and pleasure to be a guest blogger here. This region of the world has been in the news recently, and so I was invited to provide a blog post to shed some light on the bigger picture surrounding these events. 

For the past several months, Russia and Ukraine have been embroiled in a conflict that has pulled Europe and the United States into the mix as well. Now, Ukraine finds itself robbed of Crimea, and fighting for several regions in the eastern part of the country. There have been a lot of theories put forward about how this all happened, and what it says about power in the region and in the world. But I think it is important to pull back a little and look at what this conflict means as a whole.

To understand this, let’s begin with Russia. Russia has a long history, and has enjoyed various periods in its history when it was a considerable power on the world stage. Most recently, as the controlling republic in the Soviet Union, Russia controlled one fifth of the world’s land, had significant influence over countries in Eastern Europe, Latin America, and southeast Asia, and was one of only two superpowers in the world, considered on the same level as the United States.

Much has changed. Following the collapse of the Soviet Union, many of its old European allies joined the European Union, and its other allies could no longer depend on it for support. It shrank from being a global power to a regional power, and for a decade, was lectured by the West about its failed experiment with communism. For a country with so very much pride, it was very humiliating.

It was in this context that Vladimir Putin entered the Russian political scene. With ambitions to return Russia to the global stage, Putin had a vision for a much stronger Russia, and began several initiatives to try to realize it. Putin envisions a customs union, similar to the EU that would encompass many of the old Soviet republics. Belarus and Kazakhstan joined Russia in this customs union – but no one else. Instead, the Western institutions of the EU and NATO march ever closer as more and more countries join them.

Moldova and Ukraine are two of the most recent countries that Russia has eyed for membership to its customs union, but have contemplated EU membership instead. To understand this significance, let’s give a little background on Moldova and Ukraine, whose histories are not the same, but similar enough recently to draw parallels. Both Moldova and Ukraine have populations that are divided. Roughly half dislike Russia and have aspirations to join the EU and grow closer to the West. These people also often tend to favor speaking their national language, Romanian and Ukrainian. The other half tend to be suspicious of the EU and more comfortable with closer ties with Russia. These people often are ethnic Russians, or non-majority ethnicities, and often prefer to speak Russian.

In 2013, the opportunity for greater ties with the EU came in the form of an Association Agreement, an accord that would be the first step to EU membership. In Moldova, the pro-EU government declared its intent to sign the agreement, to no one’s surprise. In Ukraine, the normally pro-Russia government of President Victor Yanukovych also declared its intent to sign the agreement, to the surprise of many.

Putin responded to both countries by embargoing imports from those countries, and threatening hikes in the price of natural gas. He leaned heavily on both, but especially on Ukraine, to renege on the agreement, with the promise of debt relief and lower gas prices. Days before the association agreement was signed, President Yanukovych went back on his commitment to sign the Association Agreement, and accepted Putin’s many generous offers. Most analysts believed this was his intent all along, leveraging the threat of closer ties with the EU to extract ever-greater gifts from Russia. Moldova signed the agreement, along with Georgia and Azerbaijan.

What Yanukovych didn’t anticipate was the extent to which this would anger the Ukrainian people. Protestors streamed into Maidan Square in Kiev, and stayed there through the freezing winter and into the spring. The protests were largely peaceful, but towards the beginning of spring, turned violent. Yanukovych was forced from office, by the Ukrainian protesters and under pressure from the US and European governments. He fled to Russia.

For Putin, this was a turning point. Despite his tremendous effort, he had lost Ukraine. With surprising speed, he annexed Crimea and incorporated it into Russia. This gave the impression of Russian strength. But like many impressions, it is wrong.

Putin set out with the vision of expanding Russian power and bringing other, smaller nations under its influence as had been in the past. Ukraine was a key part of that vision. Strategically, Ukraine would be a buffer between Russia and the West, and had the incredibly important naval base of Sevastopol in Crimea, from which Russia projected naval power into the Mediterranean. Historically, the Russian Empire was born in what is now Ukraine. In fact, its old capital was once Kiev. Culturally, the Ukraine people are Slavic, just as Russians are. And economically, while not as big as Russia, Ukraine is big, and would have contributed enormously to an economic union that Russia would dominate.

However, by moving towards Europe, Putin was left with a difficult choice. If he let Ukraine drift towards Europe, Russia would likely eventually lose access to the naval base in Crimea, and would be finished as a naval power forever. If he annexed Crimea, he would remove a large part of the pro-Russian electorate in Ukraine, ensuring that future governments would always be dominated by pro-EU politicians, essentially ceding Ukraine to the West forever. In the end, he chose to annex Crimea.

Putin’s actions have had several very negative consequences for Russia. Not long ago, it was perceived by many as a modern and rising power economically, one of the BRIC nations, and spoke on international affairs with a degree of respect. Much of that credibility has been lost. Putin has preserved Russia’s access to Crimea, but the peninsula itself was subsidized by Ukraine, and will certainly need subsidies from Russia. Indeed, part of the Crimeans motivation for seeking Russian annexation was the expectation that their quality of life would improve. So now, Putin must deliver that, at Russia’s expense.

His actions have also drawn the condemnation and sanctions from the West, pushing Russia closer to recession at a time when its economy is already weak. His justification for the annexation, a right to intervene militarily to protect ethnic Russians wherever they live, has struck fear into countries that also host ethnic Russians. Already, NATO is building its military presence in the Baltics and Poland – exactly the opposite of what Putin would like to see. And the former Soviet republics in Central Asia are seeking closer ties with China to assert their independence from Russia.

Putin’s actions have made him very popular among Russians, and have left Western populations feeling like their leaders are weak, especially in the United States. But these opinions couldn’t be further from the truth. Putin brought all of his influence to bear on Yanukovich to bring Ukraine into line. But the opposing influence of Western governments ultimately pushed him out. Instead of enjoying a newly empowered and glorified Russia, with its neighbors solidly in its sphere of influence, Russia is using its influence to keep them fractured and unstable. By inserting his influence into Moldova’s breakaway region of Trandsnistrea, and provoking further violence in Ukraine’s eastern regions of Luhansk and Donetsk, he can make them ineligible for membership in the EU and hold the West at bay. It is a far cry from what he had hoped for.


Philip Schnorbach serves in the rayon center of Ștefan Voda in Moldova, working as a consultant to the business incubator there.  Outside of being involved in several different youth business education initiatives, he likes to spend time with his host family, his English club, and his favorite Moldova Cornhusker up the road.

Sunday, June 1, 2014

My affair in Moldova

There's something I haven't told you.  I have this huge infatuation, dare I say I'm having an affair, in Moldova.  Really, I am left burning with passion when I think of him.  I look outside, and he is there staring back at me.  I come to the dinner table, and he himself provides an abundant, tasty meal for me.  I visit him every day, and there's both a distance and intimacy I can't quite fathom.  His name is Agriculture.  In my mind, he's brilliant, lifesaving, beautiful, and wholesome.

Agriculture.  If you know me well, you know that this subject is one that I get really excited about.
With just 45 days to go in my service, I must talk about this topic a bit more in-depth for you to understand just why I am engaged in this affair.  It's both beautiful and twisted.

Let me tell you how I really feel
I have for the last two years been so excited and so discouraged with agriculture in this country.  I have been so positive and vocal about my love for rural life but at the same time so vastly disappointed by the lack of hope and productivity within the Moldovan agricultural economy.  I have cherished moments when I have had the chance to help a Moldovan farmer (especially the young ones) but also have felt so pissed when I see the huge challenges they face.  I have enjoyed partaking in many traditions in this country but have also despised the Soviet mentality, which leads many unable to manage their own agribusiness well or employ others to independently work the land without being too micromanaged.  Ugh. I have so much to share about this subject that I could write for days.  

The Land of Plenty

Moldova is said to have some of the richest soils in all of the world.  The country is vastly agrarian and has always been that way.  You see rolling green hills, small lakes with a hobby fisherman or two, a small forest, and a small herd of goats.  You go to a village and you see traditional old houses with beautiful flowers and gardens, a horse and cart with a pile full of hay, a cute babushka (an elderly woman) on a bench outside her gate selling her homemade cheese, and a few children running down the road playing.  You see a shepherd and his herd of cows down by the creek.  You see neighbors gathering at dusk to enjoy each other's company over some homemade placinte and house wine.  You hear someone playing jovial Moldovan folk music as they do their evening chores in their garden and with their livestock.  Life in rural Moldova is beautiful in so many ways.  So much culture, tradition, richness, and clarity is found by this image.

The Flip Side: Poverty

I would be remiss if I didn't give you a few more images in this scene that aren't so appealing. Walking through town, you might also see a market in June full of fresh, juicy peaches but only for a maximum two weeks.  Everyone seems to be selling peaches for just 3 lei per kilo (~$0.09 / pound), leaving really very little profit for the farmer.  This goes for many seasonal fruits and vegetables and for the majority of farmers who all sell at the same time at the same low price.  If a farmer were to sell it to a supermarket, s/he might likely need a serious investment in technology and production capacity, but then s/he would have to endure the taxes incurred by the government not to mention the seemingly endless paperwork and inspections (let's not forget that any one agency is able to hold you up for as long as they want... or for as long as it takes for you to give them a bribe so they say).  And in any case, doing business means someone is making money off of your business, so the Moldovans say.

As you walk through the village, you see several empty houses with unkempt yards from when the families left to work abroad never to come back.  You walk into a school and find that there may be committed teachers but with so few resources, overflowing classrooms, and very small salaries that they are left exhausted and lacking motivation day after day.  You find more girls than boys in the high schools, since many of the boys already at age 16 have gone abroad to find a more profitable form of work for the moment.  Around town, you might find many elderly women who receive a small pension and somehow year after year make it through a cold winter living off of what they saved from their garden, what they can take from their cow (if they're lucky to have one), and what money they have after spending most of it on utilities.  You will find often at least one family member working abroad for 3 months at a time, if not for years at a time.  And you will easily find a drunk man or two midday, wandering the streets and most definitely not in any position to work.  His capacity for doing stupid things to himself and his neighbor has just increased for the majority of the day.  That's also a good reason why you might find a guard overlooking every good farmer's plot of land to prevent someone, perhaps a drunk someone, from stealing equipment or produce.


Sigh.  This part of reality in rural Moldova is the bit that I'd rather leave out but know I must share.  This is the part that often makes me angry, makes me feel helpless, and at the same time puts fire in my bones to do something, even the smallest good thing, to make this dismal situation a little better.  It also makes me grateful for those brave hearts and strong minds that are engaged in agriculture in this country, who have worked their tails off to be here and to work the land productively.  It's with all these emotions that I frame it as an affair with agriculture, this sector that so vastly impacts the livelihoods of so many Moldovans (and billions around the world). In Moldova, I might go as far as to say, "Scandal!"


Moving Forward

"Agriculture... is the first in utility, and ought to be the first in respect."  
Thomas Jefferson said it well in 1803, and he could say it again today in Moldova and worldwide.  I made some splashes in my blog about IT education in Moldova recently, but agriculture is what really makes me tick.  Agriculture always has my attention and respect wherever I roam.  I also truly believe it deserves far more attention and respect by others in the Republic of Moldova from the highest ranks in the government to the youngest kid in the village. 

I envision a transformation through a focus on utilizing agriculture to its full potential in this country.  If this were to happen, it will certainly take years.  For now, stay tuned as I hope to share with you soon a few success stories I have found that give me hope.