Here on the Great Island of Braila in the middle of the Danube River in Romania, the summer day is hot and dry, perfect for the beginning of the barley harvest. On the Agricost farm, 20,000 acres of barley wait for the combine. The crop looks good; conditions have been ideal.
Agricost farms 145,000 of the 175,000 acres on the island. It also owns the only ferry to the island, and it owns the grain storage, plus the ship loading facility beside it.
It’s hard to convey how unlikely this all seems.
One third of all the EU’s farms are in Romania, according to 2013 numbers from Stats Europe, but most of those farms are very small, even subsistent.
Only about one per cent are over 250 acres, compared to EU average of 6.3 per cent.
Romanian farms are also tied with Latvia for having the lowest overall productivity of any country in the EU.
Plus, there is the island itself, which makes Agricost even more unlikely, although that’s an interesting story too. In fact, it would have been impossible to farm here until 1965, since the Great Island of Braila was only a swamp until the communist regime under Ceausescu used forced labour and political detainees to drain and dike the island, turning it into fertile agricultural land.
Today Agricost produces some of the best crops in the country, achieving almost double the average Romanian farm yields.
The alluvial soils deposited by the Danube River are rich but tricky, says Lucian Buzdugan, Agricost’s chief administrator. “The soil has a very short window in which it can be worked.”
Main crops grown on the farm are corn, wheat, soybeans, sunflower, and barley, with 6,000 acres of alfalfa and 650 acres of peas grown in 2017.
The climate is similar to southern Ontario with hot summers and snow in winter, but the farm itself looks more like the Canadian Prairies, with expansive wheat fields and flat land all under a wide blue sky, while in the far distance are the hazy blue outlines of some of the most ancient mountains on earth, the Macins.
Next to the wheat is a tall, lush corn crop, while bright yellow dots in the sunflower fields signify their approaching bloom. “Soon some 300,000 bee colonies will arrive,” Buzdugan says.
Agricost provides the beekeepers with a place to camp, and gives them food and security in return for the pollinated flowers.
Building a mega-farm
I ask Buzdugan how it can be possible to be successful on a farm of this size, and he confidently says, “What is possible on a small scale is possible on a large one.”
“I have very good staff.”
It turns out that this is crucial too, because Buzdugan means a lot more than that his employees know how to drive their tractors.
Agricost is privately owned, with Constantin Dulute as main shareholder, and it is operated by eight directors (each with an engineering or economics degree), over which Buzdugan is chair.
Each director is responsible for a business sector, i.e. production, accounting, investment, mechanical, commercial.
Next, the land is divided into 29 farms of 5,000 acres each, which Buzdugan says is key to their business strategy. Each farm has a farm manager, an accountant and an assistant manager. Decisions are made as a team, with regular meetings to discuss how to improve production.
Of utmost importance for Buzdugan is that each manager must act with a high level of professionalism. To achieve that, the company is prepared to invest in its employees.
When I ask a similar question of Dulute, the answer is similar. Professionalism is key.
Dulute points out the company annually sends 25 per cent of its employees overseas for training. Professional qualification courses are offered to 260 employees per year, besides regular company training to all 705 employees, with decision-making an important focus.
Employees receive monetary incentives to take training, and free transportation and meals.
As well, the company also takes care of its employees, including a medical clinic and first aid station. And Agricost employees enjoy a higher than average wage, says Buzdugan, earning an average of 800 Euros per month. Minimum wage in Romania is 270 Euros per month. (one euro is roughly C$1.50)
“I want to emphasize that for us it’s not just money that is important but the people, the community and the environment,” Buzdugan says.
Buzdugan, 70 years old, has been with the farm since it was acquired by auction in 2001, and he believes in training for himself just as much as for his employees.
Born into a peasant family in northern Romania, Buzdugan studied agricultural engineering. He began as a farm worker, was promoted to supervisor and eventually to agriculture director of his district. In 1976 he spent a year in Iowa on a corn farm. “That was life changing for me,” he says.
Just last December, Buzdugan received his doctorate with a dissertation based on eight years of studies into the the cultivation of canola.
When he came to Agricost the farm was run down with total production at only 90,000 tonnes per year, and he admits his early years were often difficult, but he’s proud to confirm that in 2016 total production achieved was 416,000 tonnes.
The next goal is 500,000 tonnes per year, he says, but it is being pursued with matching goals to reduce costs and to increase productivity to 1,000 tonnes per employee.
Little things make the difference on almost any farm. On one this scale it is vital. It was on a visit to a French vineyard that Buzdugan was introduced to a water demineralization plant to improve water quality for spraying. Last year a plant was installed at each of the 29 farms at a total cost of one million Euros. That cost was recovered within one spraying season. With the improved water quality, they were able to reduce chemical rates by 20 per cent.
“The chemical companies are not happy,” Buzdugan says, but there were additional benefits including greater spray efficiency since they were able to cut spray volumes in half, and reduced risks for soil residues.
How to grow
It’s the sort of gain that makes a large farm competitive, and it ties straight into the group’s business strategy.
Agricost’s mission statement is “to develop a strong agricultural concern through the implementation of new technologies along with efficient resource management in harmony with the environment.”
Buzdugan and his staff are continually searching for better and improved methods of production. Having their own laboratories and research and development station on the farm allows them to work on technologies specific to their needs.
Field trials are conducted in partnership with Dupont — all new varieties and technologies are first tested on one half hectare, then five hectares, then 100. Only if something passes those tests is it then used on a large scale.
In 2016, 11 kilometres of windbreaks were planted, with another 70 kilometres planted this year.
The windbreaks will trap snow, increasing soil moisture, and they will also reduce wind damage to crops.
The advantage of “big”
“It is certain that introduction of advanced technologies, faster recovery of investments, as well as profitability, are easier in large farms than in small ones, without minimizing the role small farms play,” Buzdugan says.
He cites the situation in Germany after unification, when the eastern part of the country where agriculture had fallen far behind under communism, recovered and even overtook the western part, precisely because of, Buzdugan says, the larger sizes of it farms.
Although large farms in Romania are still few, almost all of them are profitable or even very profitable, he says. “The high degree of Romanian land scattering presents the main serious handicap for the development of a performing agriculture.”
Typically, when a farm owner dies, land is distributed among the children, resulting in ever smaller parcels, many of which are barely an acre. That can mean a nightmare in rental agreements for a farmer seeking to expand.
Agricost is in the fortunate situation that their land is owned by the state, with which they have a 20-year lease agreement.
“I believe that in the EU the level of medium-size farms will prevail in the farming economic environment,” says Buzdugan. In other words, European agriculture will likely continue to be dominated by operations of about today’s sizes, both because of tradition and also because of subsidy programs. He believes though, that EU farmers have the potential to work together in association in order to get the kinds of benefits that Agricost enjoys, and that individual farmers will get more aggressive about renting.
Corn is the largest crop in Romania (polenta is one of their staple foods), and it is the most profitable one for Agricost, which produces both grain corn and corn silage. Agricost has improved their yields and reduced inputs by reducing the traditional spacing in corn from 28 inches between rows and 7.5 inches in row, to 20 inches and 10 inches, respectively.
The change results in better use of in-row water and nutrients, Buzdugan says, and the increased profit in one year paid for the new corn harvesting headers on all the old combines, made necessary by the narrower spacing.
Many western Canadian farmers have begun seeding their canola with the corn planter. Agricost seeds wheat with the corn planter for all the same reasons. The number of seeds per square metre was reduced by half, giving each seed a larger nutrition space. All side shoots are fully developed. Photosynthesis is increased and plant disease decreased, resulting in heavier kernel weight by five to 10 per cent.
By changing the row spacing from seven inches to 10, they could use the same air seeder for both crops. As corn and wheat are seeded at different seasons, this works really well.
“Wheat has tradition in Romania,” Buzdugan says. Seed is 100 per cent Romanian in origin. Wheat yields in 2016 were between 6.5 and 7.0 tonnes per hectare, with the Romanian average at 3.9 tonnes.
Twice a year Buzdugan receives delegations of Argentinean and Brazilian soybean farmers. These tell him that Agricost is better positioned for soybean production than they are. The Brazilian yield average is three tonnes per hectare with GMO seed, Buzdugan says, while Agricost boasts a yield of four tonnes per hectare without GMO.
As a member of the European Union since 2007, Romania is forbidden to cultivate GMO crops. It’s a wrong-headed policy, believes Buzdugan, who points out that the same European Union annually imports 32 million tonnes of GM soybeans. Forbidding the cultivation but allowing the consummation of GMO products is hypocrisy, states Buzdugan. “If something is not good, we shouldn’t consume it.”
If Romanian farmers could use GM seed, Buzdugan believes the country would become the Argentina of Europe. For “his” farm, the greatest gain in planting soybeans is the nutrition it puts back into the field. Agricost already crops 25 per cent of its acres in legumes, primarily in soybeans. The plans are to increase that to 50 per cent.
The entry into the European Union provided Romanian farmers access to EU subsidies, and Buzdugan says the 175 euros they receive per hectare represents 30 per cent of Agricost’s farm income, but he says it is directly invested into new technology and machinery.
Agricost has already reduced fuel usage by 30 per cent, mostly by converting to minimum- or zero-tillage equipment. With the complete conversion of all their planting equipment and by improving their irrigation systems they hope to reduce usage by another 20 per cent or more. (A good part of the five million litres of diesel used annually is consumed by the 400 irrigation pivots.)
Agricost is strategically placed for exports, with 30 to 40 per cent of their wheat sold to Europe to the west, while alfalfa is sold to the Arab lands to the south. Braila is the last stop on the Danube for larger ocean-going ships. Agricost can fill a barge headed to the strategic port of Constanza in the Black Sea in three to four days, shipping from their own ports off the island.
Most of their crop is sold to the big export companies, like Bunge, but also to Maria Trading, a new company with very good relations. “Large farms can achieve a better price by two to five per cent,” says Buzdugan. Greater product quantity, more uniform lots, and the ability to load directly into the barge has definite advantages.
“The risk of loss is much smaller for large companies than for small ones, even in times of agricultural volatility,” Buzdugan believes. Large farms can reduce costs per acre or per bushel using high-efficiency equipment, by reducing power demand and workforce, and by having their own storage facilities that not only allow direct sales but also the development of processing sectors in order to increase added value of the raw product.
Agricost is on the right path, Buzdugan says. “Large farms are sustainable because they become important players on the market, particularly in the context of increased food demand.”
Agricost’s organizational chart
Agricost has eight directors, with Lucian Buzdugan and president, and with each director having specific business unit responsibilities:
- Department of production with 29 separate farms, each a complete financial unit, with a chief farmer and a chief economist; an alfalfa plant producing pellets and hay for export; and the seed plant.
- Department of service provision: road maintenance and transport; crop protection; shipping; and power
- Commercial department: four “points of delivery”: grain storage, grain drying, material depot, and fuel depot.
- Economic department: economic and Smart Budget departments.
- Department of investment: construction and maintenance.
- Research and development: laboratory and testing.
- Support department: monitoring, human resources, legal department, security, clinic, emergency clinic, environment and civil defense, cantina sector.