Relocating businesses to other regions

Relocating companies in the agricultural sector primarily means relocating staff. The agricultural industry being complex production, a great amount of machinery, storage facilities and production stocks can only be moved in case of an operational emergency.

Kirill Braga / RIA Novosti

Relocating the agricultural sector is different from relocating other industries because its purpose is not to reduce costs. Relocation is becoming relevant as never before as a potential solution to the industry’s key problem, which is staff shortage. Major Western companies are leaving the market thus creating conditions for a quality reset for this strategically important industry. The government has allocated around RUR 285 bln ($3.5 bln) for the state program focusing on the development of agriculture and regulation of agricultural, commodity and food markets this year. This money will fund concessional loans, stimulating production, reducing logistics expenses and strong support of the entire production cycle. However, the effective staffing support measures are still lacking – not because compensation is low but because jobs are not considered prestigious. The weight of the agricultural industry in the country’s economy is clearly bigger than its status in the system of staffing values.

The agricultural sector is in great need of qualified workers. In the recent years, nobody has wanted to stay in rural areas or, even more so, move from major cities like Moscow and St Petersburg. Reasons for this urbanization are clear: a huge gap between the quality of life, poor career guidance for youth in rural areas, lack of social, sport and entertainment infrastructure and general unpopularity of farming jobs. Obviously, the situation will soon start to overturn.

Lazarevskoye Breeding Company is a major employer of the Tula Region with a 40-year operation record. More than 730 people work at its production facilities and the company actively recruits despite external conditions, which confirms the industry’s financial stability and steadiness. The company offers competitive working conditions, wages and official employment. Workers can be provided with dormitory accommodation. The employer supports construction of schools and sporting facilities. There is a voluntary healthcare insurance program for staff members who have been with the company for more than five years. The company is about to launch its non-financial motivation system. Some workers have their entire families employed and bring their adult children who grew up alongside the company.

The old-fashioned stereotypes about farming are no longer relevant: we are expanding, upgrading our facilities, purchasing latest equipment and launching large-scale digitalization. All that requires more staff. Our company has a mentorship and training scheme to help newcomers quickly learn about our operations, what requires particular attention and how to minimize potential errors. In addition to basic skills, workers must have carryover competences specific for digitalized production – primarily, knowledge of IT.

In addition to direct relocation of professionals to the regions, developing agricultural tourism appears to be a working tool as it engages the public in agriculture, forming a modern understanding of how work is organized, with hands-on experience that may attract new people. The agricultural industry needs active promotion, including through involvement of business communities.

We forecast a steadily growing interest in this area in the nearest future. Russia’s huge territory and different types of climates in the regions allow the country to grow most of its own food. Russia has 10% of the world’s arable land and ranks first in terms of exports of wheat, rye, oats, barley, sugar beet, sunflower seeds and buckwheat. According to forecasts, in 2022 Russia will increase areas under oil bearing crops by 4-5%. Given the improvement of agricultural productivity, the total yield in 2022 might grow by 10% as compared to 2021, if the weather is favorable.

On March 6, the Russian government announced new support measures for the agroindustrial facilities. The measures are needed to hold the spring sowing campaign and support both backbone and small and medium-sized enterprises. All this shows how the sector will develop, and given that most agricultural facilities are located in the regions, it shows the development of regional businesses in general.

By Kristina Romanovskaya, owner and General Director of Lazarevskoye Breeding Company

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