In transitions, Latvia
The world is now – with the corona virus spreading all over the world – in a transition to somewhere new, but we don’t know what that “new world” will be like. But there has been transitions before. Here is a story about how some of those global transitions were behind organic potato starch from Latvia.
Andrejs Hansons was born in 1947 in Latvia – a country that had just been annexed by the Soviet Union in the WWII. His parents were teachers who had settled in the South-western part of the country after the war. Andrejs graduated as a food technology engineer specialised in breweries and in 1975 he was advised to move to Aloja in the northern part of Latvia with the task to build a potato starch factory there. His wife was also a food engineer – specialised in meat – and she followed and was also employed in the same unit. The benefit of moving to a remote place in the country was that the young family could get an apartment to live in. In the Soviet Union jobs and places to live were not chosen, they were received. So it was somewhat coincidental that Andrejs settled down in the small Ungurpils village in Aloja district 45 years ago to become the manager of a potato starch factory and alcohol distillery and a highly respected figure in his community. He was not only the manager of a production unit but as such also the biggest employer in a very poor village and therefore responsible for the wellbeing of the community. Other employment in the village was in the local collectivised farm kolhoz.
When I asked what motivated him to work hard as an industry manager and community leader in the Soviet time – at a time when economical rewards did not exist in a modern sense – Andrejs answered that the word ”motivation” did not exist. He acted of responsibility for his community. He would take care that the young mother gets to hospital to give birth (there was only 1 car in the village) and that an elderly man who was to loose his life savings when the Rouble (the Soviet currency) was abolished in 1990 could get most of his savings back in the new national currency.
From Soviet times to market economy
Things started to change in Latvia in the late 1980’s and finally when the Soviet Union collapsed Latvia declared re-independence in 1990. The big transition from a centrally planned communist system to a market economy started in a situation where people didn’t understand what markets are. Andrejs and a group of people working in the factory formed a cooperative to run the factory. Andrejs told how he looked up from old documents where the potato starch had been shipped in the Soviet system. ”Then we travelled to St Petersburg and Moscow to find those people and were able to develop a customer base. We learned to sell!” For a short period money flew in. ”We didn’t pocket the money as many people in similar situations did at that time; we paved the roads in Ungurpils and installed electricity in the houses.” ”Before and after that nobody has paved roads here.” Troubles followed when the Kolhoz was abolished, lands given back to former owners or their heirs and nobody would grow potatoes anymore. However Andrejs was able to keep the business going, ”Financing was not available – only loans with 100-200% interest. I did not touch that money – otherwise I would not be here!”
Joint venture with Lyckeby
A group from the Swedish potato starch manufacturer Lyckeby visited Latvia right after re-independence in 1990 looking for contacts to the potato sector. They visited the Priekuli plant breeding institute and asked for contacts there. At that time there were several small potato starch manufacturers in Latvia. As a piece of luck only Andrejs was available for a meeting. The first joint venture in the food sector was formed where Lyckeby became shareholder in Aloja Starkelsen with 35% share of the company. The rest of the shares were held by the cooperative members including Andrejs himself. The company was developed with know-how and used equipment brought in from Sweden but getting potatoes from Latvian farmers was still a problem. Dividends were not paid and most of Latvian owners sold their shares to Lyckeby in order to cash out and invest in more profitable ventures. Most of them lost all their money. Andrejs was the last to sell. He had built a house in Ungurpils and had a house loan to pay back. Now Lyckeby owns virtually all the shares.
Becoming a farmer
Potato pulp is a side stream from potato starch production. In 2010 Andrejs and Janis Varpa started experimenting with using it together with grass for producing vermicompost. That is how the company Ekotri started. Over the years Ekotri has bought 150 hectares of farmland and 100 ha of forest in the area. As is typical for local farmers the land is not in one piece but scattered around the nearby villages. A lot of people who got their family’s land back were not interested to farm. They lived in the capital Riga or in many cases abroad. Therefore land became available to buy, active farms became bigger but each farm has land in several pieces. Now there is even competition to buy land and prices are not so low as in the early days after re-independence.
Ekotri was organic right from the beginning. Now Ekotri produces organic starch potato and organic brown peas for Aloja Starkelsen, gluten-free organic oats for export, organic buckwheat and grass in the crop rotation. Grass is fed to the California red worms in the vermicompost but gradually there is evolving a market for organic hay and ensilage as organic dairy production develops in the area. Andrejs’ only animals are the red worms. Experiments to feed the worms brown pea hulls instead of the grass have started.
Andrejs seldom sits in a tractor. Some of the machine work -planting and harvesting potatoes for example – are outsourced. His partner in Ekotri Janis does some of the tractor work and Ekotri employs locals. One problem is seasonality of the work on a farm without animals. Andrejs has become increasingly interested in forestry which is one possibility to give employment to the farm workers also in the wintertime.