The onset of the pigs: how Miratorg conquered the Russian food market

The Linnikov brothers' company has become a major importer of meat and pork producer in the country. How did the market and the political situation help Miratorg?
Origin source
These cowboys in hats with curved margins, leather pants, Chaps and boots with spurs jump on the verdant meadows. They can on the eye to determine the weight of steers grazing in a matter of seconds to throw the lasso the cattle. And this is not Idaho or Texas, and the Bryansk region. The Cowboys hired by the US agro-industrial holding "Agribusiness" in Bryansk implementing a project on breeding a special meat breed cows - Aberdeen Angus. A couple of years ago came here Dmitry Medvedev - to look at the economy. Price of the issue, that is, the volume of investments - $ 800 million, 75% of the needed money gave VEB for 10 years.

But if the same 10 years ago to count, it turns out that the "Agribusiness" appeared, one might say, nowhere. "Until the 2000s, we did not notice them at all on the market", - says the owner of the largest importing companies. However, when from abroad, "Agribusiness" began to increase the volumes of import trade in 2003, the Russian government has introduced quotas for meat. And when the development of the agricultural sector has been declared a national priority, - invested in the construction of the pig farms. Now "Miratorg "- and the largest importer of meat, and the largest pork producer in Russia. A total ban on imports of meat and meat products from Europe, North America and Australia holding only hand he had long established supply chain from Brazil, in the Bryansk region launched a powerful poultry complex, and this fall will sell their own beef. Who and how to set up this giant meat?

import Engineers

President and co-owner of "Miratorga" Viktor Linnik from an interview with Forbes refused, citing the political situation, and we had to gather information by talking to those who know the chapter "Miratorga" and his brother's partner Alexander.

It is known that both of them in the late 1980s - early 1990s worked as an engineer in one of the defense design offices and at a private enterprise engaged in LCDs.

"They are always together: studying, working, creating business - twins, in a word," - characterizes the business of their mutual friend.

In 1991 Linnik tempted by the prospects of the new economy.

"Salary machipa then was 160 rubles a month, which is $ 50-60, while in tourism we could earn $ 100 a day "- said in an interview with" Agroinvestor "Viktor Linnik. Together with his brother he met foreigners at the airport, place them in hotels, there are guided tours. One of the customers once threw brothers artless idea: buy the car of milk powder from the Netherlands and resell it in Russia. He gave the Russians the commodity credit. Linnik tasted good money and engaged in the import of food products, including meat. In 1995, they founded the company "Agribusiness".

In those years, become an importer of no great difficulty. Russia has enormous market, and Western manufacturers are happy to provide Russian businessmen commodity credits. The moment of truth for the "Miratorga" was the 1998 crisis. After the rapid devaluation of the ruble, many importers were unable to fulfill their contracts. All justified by force majeure, but not Linnik, Forbes says the source, "On what terms they have agreed with the suppliers, I do not know, but it was after they show the crisisand as reliable partners that impressed foreigners. "

Then it became clear that the need to take no chicken - "Bush's legs" is not engaged in just lazy, and other types of meat - pork and beef, says Sergei Yushin, head of the National Meat Association executive committee (set up on the initiative of "Miratorga"). Linnik Brothers decided to import pork and beef from the weak development of the Russian importers in Latin America. "Brazilians have sold meat at prices lower than the EU and the US" - said Yushin. The owner of a major meat importer, on the contrary, refers to the step of absolute risk: the Brazilian meat was expensive, even though the preference on the part of the Brazilian government, which has been actively develop agriculture and bring it to new markets.

"Agribusiness" has always been a private company, "- says the top manager of a major importer of meat, who wished to remain anonymous. So thoroughly do not know how Linnikov company managed to conclude in 1999 an exclusive contract with the Brazilian corporation Sadia. According to the vice-Presidiothat "Miratorga" Alexander Nikitin, first bought the company Sadia products through a trader, then - under contract with the European representation, and then the delegation "Miratorga" flew to Brazil to negotiate with the owner of Sadia. "We were given an exclusive, because we have taken to ensure the volume", - explains Nikitin. A year later, "Agribusiness" got another exclusive contract - with the Brazilian company Minerva Foods, the largest beef producer in South America.

Arithmetic quotas

Bet on Brazil played in 2003. Import quotas were introduced by the historical principle. The scheme was as follows: for each country-supplier record certain share of the total import for each category of meat (poultry, pork, beef), and importers have received quotas of the countries according to the total volume of goods that are imported. So "Agribusiness", who worked with Brazil, whose share in the Russian market was small, got the right to import products from the United States. In the US poultry accounted for 75% of the Russian poultry market. Imports of chicken in excess of quotas has been banned, pork and gvyadiny - enabled by high customs rates.

"Agribusiness", as well as other large importers, started to increase its share in imports - recalls Mushegh Mamikonyan, member of "Cherkizovo" Group Board of Directors and the President of the Meat EEA Council, which brings together processing plants. "Agribusiness" a lot of import over quota, - says another Forbes said. - This scheme allows narabatyvaya itself history, imported the same amount the following year for the quota. " For volumes Linnik, says one of the importers, were atypical sales policy and sold off the ship in two to three days (meat refrigerated ships carry for 3000-10 000 t), where you can stretch out for a week or two, and get in the end more.

The importation of meat in excess of quotas has been generally favorable - domestic production has not yet caught up with import substitution. But he demanded money, for example, within the quota pork imports were subject to a rate of 15% of the customs value, but not less than € 0.25 per 1 kg and above the quota - 80%, but not less than € 1 for 1 kg. The minimum difference is € 0.81 per kilogram, that is, with every tonYining over-quota tariff on the cost the company in 2003 are higher by $ 1,000 during the Brazilian pork export value of $ 880 per ton.

"Agribusiness" to act for the sake of profit volumes and sometimes could even sell the game meat below the purchase price - long-term import contracts was more important.

A close friend of businessmen says that Linnik "very professional" come to the point. According to their ex-partner, "Agribusiness" I was also able to obtain accreditation of the Rosselkhoznadzor on import of meat processing enterprises. And the share of imported raw materials in the Russian meat processing until the mid-2000s, more than 30%. In 2005, revenues "Miratorga" amounted to 9.3 billion rubles, net profit - 320 million rubles.

According to the businessman from among the long-term partners "Miratorga" brothers Linnik, engaged in import, we created an excellent distribution network in Russia, which allowed them to start the production of meat products. Together with Sadia (a global supplier of McDonald's) and with the support of VEB "Agribusiness" built in Kaliningrad factory "Concordia". A quarter of itsoschnostey intended for the Russian McDonald's. Partners have invested 2.2 billion rubles. But at some point Linnik understood that the company is not the most advanced and effective. For example, Brazilians persistently believed that Russia cheap labor, so there is no need to automate the enterprise. "They were able to discuss the issue for months, which have Linnikov hesitated for a couple of hours," - he says Forbes said. At some point, a misunderstanding has reached a critical point, and the "Agribusiness" bought out the 60% of Brazilians 'Concordia' shares in June 2009 for $ 77.5 million.

Exemplary farrowing

"Improvement of rural life, the development of agro-industrial production is considered, of course, a priority", - said Russian President Vladimir Putin in September 2005. Investors are given the green light - the state at the highest level to support the development of domestic agriculture. Support, in particular, has resulted in interest rate subsidies on loans to commercial banks in the amount of 2/3 of the Bank of Russia refinancing rate for up to 8 years, if the loan is taken for the construction and moernizatsiyu breeding complexes.

Private investors at that time actively invested in a poultry complex - a group of "Cherkizovo" Igor Babaev, "Optifood" Alexander Obolentseva, "Prodo" partner Roman Abramovich, 14, and even the "Interros" Vladimir Potanin 8. The fact that the production cycle in the poultry industry is 40 days, whereas in pig - at least six months, and beef cattle - two or three years.

Linnik saw the potential in this sector: on the one hand, import is limited, on the other - it is in the pork market share of imports was greatest. Competing on price - almost a win-win approach.

In the same 2005 "Agribusiness" has acquired 40% stake in Belgorod two pig farms belonging to French company BelgoFrance. "It was a first attempt at writing, besides anything decent at that time in the pig on the market did not exist", - says Sergey Yushin. According to him, Linnik expected to develop the project together with the French, to learn from them. Two years later, brothers-businessmen bought the company completely from frantsuzstheir partners. "Agribusiness" in August 2007 is ideally located at 2.5 billion rubles bonds and 35% of the proceeds sent to the pig project.

"The French in the four years of work were able to create a herd of 2,500 sows, and we are for five years - 53 000. We just have different approaches to management, - said Viktor Linnik in an interview in 2009. - If we continue to work as a joint venture, it would lead endless discussions. " In parallel to the pig project "Agribusiness", too, eventually left alone. In early 2006, Linnik, together with the company "Agro-Belogorye" Vladimir Zotov, at that time the deputy governor of the Belgorod region, created an enterprise for slaughtering and primary processing of meat "Korocha". Planned capacity - 2 million pigs per year. The volume of investments - 6.6 billion rubles.

construction peaked in the 2008 crisis. The partnership fell apart, "Agribusiness" had to buy 49% of shares of "shorter" in "Agro-Belogorye". The reasons none of the parties did not disclose. The carnage was completed, and construction of pig farms stalled. VEB promised "Peacebargain "to allocate 1.36 billion rubles for the completion of the pig farm" Zhuravsky ", but negotiations dragged on.

In June 2009 in Belgorod visited Prime Minister Vladimir Putin and First Deputy Prime Minister Viktor Zubkov, who was responsible for agriculture. In the region where at that time formed the country's largest livestock cluster, it was decided to hold a visiting meeting of the government. The official, who participated in the meeting, said of Forbes, that the crisis all farmers are in dire straits, and Zubkov always Radel about agriculture. It was after that visit VEB granted "Agribusiness" necessary credit.

Credit growth

To become a leader in the industry, "Agribusiness" from the start of own production it took five years. In 2007, the company ranked sixth among the largest producers with a market share of slightly more than 2%, while the share of "Prodo" group reached 6%. Already in 2010, "Agribusiness" has become a leader with a share of 7.2%. The company's revenue reached 34.4 billion rubles, net profit - 3.1 billion rubles. But the company's net debt at the end of 2010five years increased by 10 times - up to 22.5 billion rubles.

Where's the money? State farmers subsidized interest rates on investment loans, and state-owned banks were given soft loans for projects in the following ratio: 70-80% - a loan of 20-30% - own funds. "Agribusiness" in time turned to the capital market for attracting resources. But unlike the group "Cherkizovo", the owners of which in 2006 sold some of its shares on the stock exchange, Linnik, wanting complete control over the company and do not have a load in the form of minority shareholders appealed to the bond instruments. The first publication "Agribusiness" held in 2007 and returned to the capital market after the crisis in 2011 and has attracted 3 billion rubles. It helped a good credit history.

"In times of financial crisis APH" Agribusiness "was one of the few who completely fulfilled the obligations under the bond issue, while the part of the representatives of the agricultural sector have not been able to do so, leaving an unpleasant aftertaste in the form of defaults, restructurings with infringement of the rights of creditors", - wrote analysts HARQrombanka speaking placement organizer.

Import Linnik brothers not abandoned, when they decided to become farmers. "Import helped them to finance production projects", - says Sergey Yushin. Once reached 75% in 2008. The share of imports in the revenue "Miratorga", follows from the investment bank analysts report "The opening of capital." By 2011 it had fallen to 35%. As follows from the statements of the company, "Agribusiness" is the largest importer of meat with about 9% of the shares. Viktor Linnik in an interview to television channel "Russia 24" in August 2014 admitted that on imports still account for up to 30% of the holding's revenues. But by 2016, its share should be reduced to 20%, he said.

When the company became the leader for pork, Linnik brothers decided to diversify the production portfolio. In the Bryansk region poultry complex was built. In February 2015, it should earn at full capacity - 100 thousand tons per year, which will allow the company to enter the top 10 poultry producers and take a 3% market share. The next stage - a project on the production of beef. One of the "Miratorga" partner says that Brotherhoodbusinessmen are 100% involved in the production processes and differ, "some incredible capacity for work": "They are my letters may even respond to five in the morning."

In 2011, the "Agribusiness" added onto the value chain "from field to counter" by opening its first eponymous supermarket in Moscow. Now holding has 64 stores in Moscow, Moscow region, St. Petersburg and other regions of Russia. Brothers Linnik seen in retail interesting and profitable business, which can be due to a small attraction of resources to have a good margin and profit, says a source close to the company. In addition, Deputy Prime Minister Viktor Zubkov said the state's readiness to support agricultural producers, who will be engaged in retail and trade. Further applications, however, did not get.

According to the familiar business, namely retail project shows that "Agribusiness" - an ordinary company, which are fallible.

Some shops had to be closed, and the strategy for the development of retail rewrite confirms other Forbes said.

Empire is not for saletsya

American cowboys invited to Bryansk, costing "Agribusiness" a lot of money: in the words of a farmer of the Bryansk region, the salary of a cowboy - $ 10 000 per month. Some of them came with their families.

"This is not a whim" Miratorga ", and by necessity - says a source in the company. - Do not know how in our country to deal with beef breeds of cows. " One cow Aberdeen-Angus is 90 000-100 000, says Sergei Yushin, so it is important to them followed by professionals. The project has Linnikov critics, among them Mamikonian of the Meat Board. He points out that industrial beef production - costly and long process, and the consumption of meat in Russia is decreasing from year to year. Yushin object: in the country supply shortage of quality beef, and the market is promising. With an annual capacity of 2.2 million tons a third of this amount - import. There's substitute.

Meat project "Miratorga" raises questions not only experts in Moscow. Regional farmers see it as the cause of all their troubles. The last meeting of the regional Duma Bryansk region July 242014 dawned really hot. The head of the local Department of Agriculture Boris Gribanov pains to avoid answering the main question that agitated the crowd. "Boris, tell yet how much of 1.419 billion rubles of subsidies received" Agribusiness "? - I could not stand anyone. "1.4 billion rubles," - gave Gribanov.

And this is not the first time. Three years ago, the Ministry of Agriculture of the Bryansk region has changed the conditions of farmers participating in the regional program for the development of beef cattle. "Bryansk Meat Company» (owned by "Agribusiness") as a result has received 625 million rubles allocated from the budget for agricultural subsidies to 635 million rubles.

Local farmers explain the success of "Miratorga" links "at the top". "You see what the wife's maiden name of our prime minister," - repeat Bryansk agricultural leaders and owners of larger Russian agricultural companies. Viktor Linnik repeatedly said: "It's just a coincidence. We're not related. "

Svetlana Medvedev really née Linnik. But as uveyaet senior official of the federal government, to the business' Miratorga "it has nothing to do.

"Agribusiness" build the largest complex in the country, has delivered more than all cattle, and therefore received subsidies more simple, explains the source Forbes, a member of the agricultural market.

In 2012, the Ministry of Agriculture began to delay the payment of subsidies. Large agricultural holdings at every opportunity pointed to delays. As a result, for example, "Rusagro" billionaire Vadim Moshkovich generally ceased to take investment loans. "To repay only those that have before", - says CEO "Rusagro" Maxim Basov. According to him, the state debt on subsidies (including interest payments on compensation has already taken loans) amounted to about 350 million rubles in the middle of August 2014. The amount of subsidy was reduced and "Cherkizovo": in I quarter 2014 in the seven times compared to the same period of 2013, although the group continues to build poultry complex in the Lipetsk region worth more than 20 billion rubles. No "Cherkizovo" or "Rusagro" not engaged govyadioh. From January to July 2014 the Ministry of Agriculture transferred to the regions only the means of the program of development of cattle breeding, pork and chicken were not included here. On Forbes about the issue of why it happened, the Ministry of Agriculture did not respond.

In the "Agribusiness" no interruptions to payments, said a representative of the company, and if the delay happens, it settled on a routine basis.

"These guys are - independent businessmen" - praised the owners' Miratorga "a senior government official.

Active support from the state, he explains that "Agribusiness" is too large and affects the interests of many people, including in rural areas, so it is impossible not to notice. Three years ago, holding considered the possibility of the IPO. But in a recent interview to television channel "Russia 24" Viktor Linnik said that the offering does not plan in the near future. "There are so many enclosed public money, they will not be allowed to privatize - ironically one of Forbes interlocutors. - The Empire is not for sale. "