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John Deere sees bountiful harvests ahead in Ukraine

John Deere sees bountiful harvests ahead in Ukraine

27/04/2015

Agriculture is sexy, beamed an excited Igor Kutovoy, the country manager of John Deere. His eyes sparkled at the mere prospect that Ukraine - already a leading world grower of sunflowers, wheat and corn - could more than double yearly grain harvests to more than 100 million tons.

Ukraine will become the Dubai of agriculture, Kutovoy told the Kyiv Post at his office in the Sviatoshyn district, referring to the United Arab Emirates capitals success with oil. Whats certain is that there will be many more mouths to feed. The worlds population is expected to reach 9.5 billion people by 2050, according to the U.S. Department of Agriculture.

Demand for grains like corn, rice, soybeans and wheat has already climbed by 40 percent since 2000, according to the USDA. To increase harvests and bring the surplus grain to market, however, Ukraine will have to improve rail transport links, expand grain storage capacity and continue upgrading its ports, industry experts said.

Outmoded machinery is also holding back the nation. Approximately 70 percent of agricultural equipment being used in Ukraine is obsolete, according to the European Bank of Reconstruction and Development, which has supported lending programs for farmers to lease or purchase high-quality farming machinery.

This is where John Deeres machines hope to come in. The Moline, Illinois-based global giant racked up $36 billion in worldwide sales last year, but doesnt publicly break out figures by country.

Machinery is sold through six dealers in geographic regions, the largest one in Dnipropetrovsk. Deere products are usually the most expensive, he said. And, in economically troubled Ukraine, high costs are naturally an obstacle to more sales.

But Kutovoy said the companys equipment is worth the expense.

John Deeres tractors are usually on the cutting edge in technology, both in the iron and brain part, the precision, the connectivity of the machinesare perfected to a level that is unheard of, he said. Once a fields coordinates are entered into a tractor, the John Deere machine will provide better precision on autopilot than if it is run manually, according to Kutovoy. In terms of performance, uptime and cost of operations, we clearly lead the pack in all these positions, he said.

Leasing made up 25 percent of business last year. The value of John Deere equipment imports usually puts it among the top 20 importers in Ukraine, according to the Donetsk Oblast native. In 2014, the company imported 793 units of agricultural equipment with a customs value of $87 million, including 305 new tractors, according to Valeriy Berlet, director of Marcom, a Kyiv-based marketing and communications agency.

Given Ukraines large fields, the manufacturers 300-horsepower tractor is the most popular item and sells for $200,000, followed by rotor combines.

You cant plow a large field with a Belarusian 80-horsepower tractor, he said.

John Deere entered the market in 1996, when the company made its biggest single sale by supplying 1,049 combines to the government at a price of $187 million. Ever since then weve had a special relationship with the Ukrainian government, Kutovoy said.

After earning a masters degree in business administration at the INSEAD campus in Fontainebleau, France in 2012, he was recruited to head the John Deere Ukraine branch. Since 2007, he had held executive positions for a Caterpillar distributor and French producer of fertilizers.

Kutovoy said that, above all else, his masters in business administration taught him compassion. 

Its not about your ambition or desire to go to the very topIf you want to succeed, you want to be helpful to as many people as possible without expecting much in return, he said.

When the EuroMaidan Revolution erupted in 2013, the local branch of the ruling Party of Regions had occupied the first floor of the office building housing John Deere. Kutovoy first considered taking a vacation to volunteer, but I felt I would be exposing the company to a lot. So he started bringing supplies to hospitals for all the wounded, the protesters and police.

When lethal violence broke out in late February 2014, it was personally moving to mewe took security measures and closed the office for two days.

As a native of Torez, a Donetsk Oblast city that is currently occupied by Russian forces, Kutovoy said it is difficult to see the country under so much stress right now.

Under the current government, he said life can change for the better if people take more responsibility.

The Maidan has only kicked things off. The real game is now, Kutovoy stated. People should start doing what theyre paid to do. They should look for not short-term gain, but something that is sustainable. This country has already amazing agriculture. Thats what many people miss.

During his free time, the country manager assists an informal network of Western-educated executives called ReformsUA by offering advice and feedback on agricultural issues without using company resources.

Kutovoy is intimately familiar with the West, having spent seven years in the U.S. from 1994-2001, when he received a bachelors degree in finance from Grand Canyon University in Phoenix, Arizona. When he returned at the age of 23, he started working as a project manager on a mid-sized farm in Dnipropetrovsk Oblast.

In his personal life, he finds that golfing gives him time to think. He also enjoys traveling, having already visited 30 countries.

But his thoughts invariably return to agriculture and Ukraine. His advise to parents of university-aged children? If they arent good at computer programming, have them study agriculture, have them become an agronomist, he said.

Kyiv Post