Agriculture Minister Tkachev, the (Un)likely Beneficiary of the Winter Olympic Games in Sochi

Russian business daily Vedomosti writes about the success of Tkachev Agrocomplex Company Ltd., a major agricultural holding with revenues of 38.7 billion rubles (USD 600 million) in 2015 and leading market positions in milk, wheat, and rice production. Located in the southern Russian region of Krasnodar, the holding consists of 60 farming companies and a retail chain with 600 outlets.
Mr. Tkachev, currently serving as the Minister of Agriculture in the Russian Government, bought the company that became the foundation of the future agricultural holding through voucher privatization in the 90’s – not surprising, as his father managed the company (and got Tkachev his first job there) in the Perestroyka years. Tkachev begun building his political career as well, becoming a representative in the regional parliament in 1994 and a Federal Duma deputy in 1995. In 2000, he became the Krasnodar Region Governor and got a big break when Russia became the host of the 2014 Winter Olympic Games in Sochi, located in the region headed by Tkachev. After the games, Tkachev’s agricultural holding received generous financial backing by state-owned Sberbank and Russian Agricultural Bank and started its aggressive expansion, eventually doubling its revenues and land under management.  One of the factors that helped Tkachev’s expansion was a wave of bankruptcies that affected the agricultural sector in the region, enabling his holding, formally owned by his family members, to acquire companies at very low prices and refinance their debt with the aforementioned state banks at favorable rates.  However, on a couple of occasions, Tkachev’s competitors withdrew their offers for the purchase of acquisition targets without explanation, enabling Tkachev to buy the desired companies at lower prices. Financial contortions, generous attitude of the banks and reticent behavior of Tkachev’s competitors indicate that Tkachev’s business success might be more than meets the eye. At any rate, it coincided with Tkachev’s participation in the most important PR project of Putin’s third presidential term and demonstrated that in Russia, business success often mirrors political career.
Tkachev’s business continues to receive government support: in 2015, the Russian Government paid 1.13 billion rubles (USD 17 million) in subsidies to Tkachev Agrocomplex Company Ltd., or approximately 20% of all agricultural subsidies in the Krasnodar region.  To be fair, this is not uncommon, and other major agricultural holdings in Russia receive significantly larger subsidies.

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