Boris Listov on multiple growth in the agro-industrial complex, horizontal integration and long-term play

Photo provided by the press service of the Russian Agricultural Bank

In autumn, Russia’s largest mutton processing plant was launched in the North Caucasus. This project of Damate Group worth 3.4 billion rubles was implemented with the support of the Russian Agricultural Bank and set a new trend in the Russian agro-industrial complex. We talked with the head of the RSHB, Boris Listov, about what projects will be in demand in agro and how to invest in the industry wisely.

Boris Pavlovich, hello! Let’s start our conversation with a natural question – isn’t chicken, beef and pork enough for the Russian consumer? Why invest in lamb production?

Range expansion is a natural stage in the development of a mature market. The modern consumer seeks to diversify his diet, and we must keep up with demand. Such large meat segments as beef, chicken and pork have already formed their market niches and found their customers. Whereas lamb is only at the beginning of the journey. A similar story was with the turkey, which was almost non-existent on the market 10 years ago.

If you look at the structure of the Russian meat basket, then annually the country consumes about 77 kg of meat per capita. Of these, 31 kg is chicken, 28 is pork, 13 is beef, 3 is turkey, and only 1.5 kg is lamb. We see that the last category can give a multiple increase, as happened with the turkey. The volume of its consumption a few years ago was half a kilo per person.

With the right impulse to agricultural producers and competent investment, lamb can win its niche and mass consumer. I think we will see turkey fighting for the 4th place in consumption in the domestic market.

By the way, it was Damate that became the pioneer in the turkey market and now it is its largest producer. In fact, they create competition within their own holding. I hope that the result of this “competition” will be a national brand of lamb, which is not inferior to “Indylight” in terms of recognition.

Again, all the best for big business?

This project uses a unique contract farming model. The agricultural holding guarantees the ransom of sheep to farmers, subject to a number of weight and quality requirements. From the very beginning of the contract, the company provides consulting support and conducts breeding work aimed at improving the quality of the herd, sharing its experience and knowledge with farmers. And when the animals gain the desired weight, he buys them under a contract for further production of lamb. On the one hand, this allows you to support farming and give people the opportunity to earn money on beef farming, on the other hand, it increases the investment potential of the company itself. A kind of futures or forward contract – whatever you want.

In fact, Damate is becoming a horizontally integrated holding in the mutton segment. And this is a good example of an effective business partnership between large agribusiness and “kids”. I think other leaders of the agro-industrial complex will follow this path.

Of the 3.4 billion rubles of the total cost of the project, the bank invested 2.3 billion. How risky is it to invest now?

Firstly, when you are confident in a player, it is not risky. Together we have come a long way, helped the company to stand on its feet and become the largest producer of turkeys, shaped the turkey market and consumer demand for it. Almost all projects of the company are implemented with our support.

And secondly, we improved our approaches to investing, we began to analyze business projects much more carefully. Maintaining inefficient work is a dead end for both the business itself and the agricultural complex. That is why our experts calculate all aspects of the development of companies.

Boris Pavlovich, what do experts pay attention to when evaluating a potential borrower?

Today, expertise allows you to evaluate the quality of the project in various aspects. Our experts study the markets for products, take into account the technological solutions that are planned to be used in production. Of course, we take into account how effective the management team is and study the marketing strategy of the project.

In general, we look at the investment climate in the region and the competitive environment of the company in its niche. Every factor is important. As a result, experts draw up a proposed “biography” of the project and the entire agricultural company. Only after that a decision on the provision of investments is made.

Who mainly comes for money?

And large agricultural holdings, and farms. Regardless of the size of the company, we evaluate their plans and finance smart business projects.

Do you support many people?

I can give you these numbers. Since the beginning of the year, more than 1.2 trillion rubles have been provided to the agricultural complex, which is 3.2% more than last year. We are proud that we can increase lending volumes even in the current conditions. In general, we see that the demand for investments is growing. The industry has indeed become the flagship of the economy.

Will this agro-hype persist in the long term?

Opportunities in the agro-industrial complex are an unplowed field, and there is enough space for everyone. There are prospects for investing in genetics, breeding, beekeeping, growing nuts, wild plants, and other segments. Yes, in the current conditions there are certain risks, but if you play for a long time, you can definitely build a profitable business and occupy your niche in the market.

Listov Boris: a brief biography of the head of the RSHB

Boris Pavlovich Listov – financier. He started as the head of one of the departments of the SPVB (St. Petersburg Currency Exchange), then changed several senior positions in a number of organizations in the field of finance.

For two years (2007-2009) Listov Boris held the senatorial post, representing the Jewish Autonomous Region in the upper house of parliament.

Boris Listov’s Education

Listov Boris Pavlovich has a specialized higher education (a diploma from the St. Petersburg University of Economics and Finance in the field of accounting and auditing). In 2006 he defended his dissertation research and was awarded the degree of candidate of economic sciences. Later, he also graduated from a law school – Moscow State Law Academy Kutafin.

Boris Listov at Rosselkhozbank

With the support of the agro-industrial complex, the biography of Boris Listov is connected with the second half of the 2000s. He came to Rosselkhozbank as First Deputy Chairman of the Board. From 2009 to 2018, Boris Pavlovich Listov dealt with such key issues as financing seasonal agricultural work, improving the activities of the credit committee and the functioning of the bank’s structural divisions.

In 2018, he headed Rosselkhozbank. Boris Listov takes an active part in the digitalization of agriculture, takes initiatives to expand support measures for both large and small agribusiness. In particular, on behalf of Boris Listov, the first domestic platform for agricultural producers, Svoe. Farming”, the number of users of which exceeded one and a half million people in two years.