The grass isn’t always greener on the other side of the fence
Don’t have time to read? Listen here:
Recently I spent a week in Ukraine.
My dad had done quite a bit of business in Ukraine with his invention the Anderson Opener, and we used to have Ukrainian agronomists live at our farm during the season to test solutions for farming in our fields.
I visited a company called Agro-Soyuz in eastern Ukraine, about 100 miles from where the war’s going on with Russia.
Agro-Soyuz has a huge manufacturing facility, massive parts distribution, a farm operation of about 25,000 acres of corn, sunflowers, wheat and soybeans, plus a few other businesses. You go anywhere near it, and everyone has heard of the facility. It’s just amazing: they’ve got cattle, pigs, ostriches, and even a bunch of german shepherds that guard the factory.
I had really wanted to visit the company and the partners ever since my dad told me about it as a kid, so I did. But I also learned a bunch of things that made me want to come back and kiss my American soil.
1) No private property rights
You cannot own farmland in Ukraine. You can build buildings and own land in that regard, but you cannot own farmland.
Imagine if you couldn’t farm your own land, if everything you farmed was guaranteed to be rental property…
The people at Agro-Soyuz have 25,000 acres and 700 landlords. Those landlords can’t sell their farmland, and they only own about 10 or 20 acres each. So they own these tiny patches, which have been stitched all together.
In one large field you may have 100 landlords, who aren’t necessarily getting the same rent. It’s just a crazy mess.
We were 100 miles from actual war. At the risk of stating the obvious, that’s just not an environment to be in. What an enormous risk factor for anyone trying to do business in the area.
Be thankful. I mean, it’s war. When’s the last time you had a war within 75 miles of your farm?
3) Massive business corruption
When I was in Ukraine, I met a guy in Kiev (the capital) who builds skyscrapers.
I asked him about building permits, thinking there must be a lot he had to obtain to build skyscrapers. He told me it was necessary to offer bribes for all building permits. It’s total corruption: you have to bribe everyone in business, so you have to have a lot of money to really get anything done.
Sounds expensive—not to mention exhausting.
4) Currency collapse
We’ve all heard these people on the radio warning that the U.S. dollar’s going to collapse, that we should all buy gold and silver. While there’s some validity to that warning, the United States has a fairly stable currency by comparison.
In Ukraine, it used to be that 1 U.S. dollar would get you 8 hryvnia (their currency). So, the ratio was 1 to 8.
At the peak of the war, when Russia took the Crimean landmass from Ukraine, it was 1 to 49.
Think about it: phones, cars, and computers are mostly imported there. What if all of that—and everything you buy—all the sudden became six times more expensive overnight?
5) Machine gun management
The police and laws are corrupt in Ukraine, so businesses basically take what they want from other people. It’s a crazy situation.
When I was over there, the partners actually told me, “Yes, we want to add another 25,000 acres to the farm, but without corruption the cost just to take over the leases will be several million. Being an honest businessman in Ukraine is very challenging.
6) Extreme interest rates
Some of the people I met had lived in the United States. One man said, “It’s amazing. In America, I wanted to buy a Volkswagen one day, so I went to the dealership and got a new car.” He took out a loan and by the end of the day had a new car.
In Ukraine, if you want to do that same deal, assuming you could convince the dealership you would pay them back, your interest rate would be somewhere between 20-25%.
To put that in perspective, every three years, you’ve bought the entire car again. And interest rates would be the same if you tried to borrow money to operate your farm.
7) Low access to capital
Because of all of the above, there is extremely low access to capital in Ukraine. Who would want to put money into a country that goes through that volatility in interest rate and currency and is experiencing war?
Further, few people put their money in Ukrainian banks; they generally use Turkish or American banks for protection. If politicians try to get into those banks, they’re going to have problems. They’ll get crushed.
All the local banks are corrupt. They have an FDIC, which is a deposit guarantee, for about $2,000. In the U.S., the guarantee is for about $175,000. So if the bank goes broke, you don’t lose more than that.
Imagine if you couldn’t trust the banks here. And not everyone there has access to non-local banks.
The lesson at the end of the day? Kiss your American soil.
You have it good over here. So do I. If you want to confirm that reality, go to a few other countries—even the more developed ones. The grass isn’t always greener.
We’ve got a lot to be thankful for.
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