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Small-town Canadian builds thriving factory in Kazakhstan

03 december 2013, 11:40
0

In 1989, during Mikhail Gorbachev's glasnost era, the premier of Canada's Saskatchewan Province invited a Soviet agricultural delegation to tour farm-equipment factories in his territory.

The Soviets were finally open to buying Western equipment, and Premier Grant Devine wanted to help Saskatchewan manufacturers develop a new market.

The head of the Soviet delegation was a rising political star named Nursultan Nazarbayev.

“He came with eight guys, and they brought a shopping list of five kinds of agricultural equipment,” said Don Wallis, one of the Canadian manufacturers who met the Soviet delegation. “I was the only one who made big pull-type swathers” – crop-cutting devices mounted on combines.

Nazarbayev's presence in the delegation would prove a stroke of luck for Wallis, a farmer and livestock owner from Rosetown, Saskatchewan, whose agricultural-equipment business was in its infancy.

When the Soviet Union disintegrated in 1991, Nazarbayev would become president of Kazakhstan, giving Wallis a shot at the newly independent country's lucrative farm-equipment market.

He didn't just take advantage of the opportunity. He became a Nazarbayev icon -- a foreigner who gives Kazakhstan's economy the greatest investment pop by manufacturing here and hiring Kazakhs.

Wallis became part of a Saskatchewan farm-equipment entourage that visited Kazakhstan in April 1990 at Nazarbayev's request. He was the only one to make a sale – four swathers.

A grain-cutting device made in Kazakhstan – a DonMar swather. Photo courtesy of DonMar

A swather production area in DonMar's factory in Kostanai. Photo courtesty of DonMar

Today Wallis' 117-person DonMar factory in the bread-basket city of Kostanai produces three kinds of equipment. His swathers and headers are used in harvesting and his sprayers to apply herbicides.

The company, whose website is www.donmar.kz, is named for Don and his wife Marion.

Wallis literally bet the farm on his Kazakhstan business. He sold his spread in Rosetown, where he raised grain and beef and made agricultural equipment, to finance his Kostanai operation.

“I've tied up everything here,” said Wallis, who now lives in Vancouver, Canada, but travels to Kazakhstan several times a year.

Becoming successful here wasn't easy, however, Wallis can vouch.

Agriculture was one of the many economic sectors that struggled during the 1990s, when the country was transitioning from a planned to a market economy.

Kazakhstan's newly privatized farms, which had been carved out of Soviet collectives, were relatively small – 20,000 to 30,000 hectares each.

And few farmers had money for equipment and supplies – fertilizer, herbicides and even diesel fuel – that would improve their efficiency.

The bottom line was that in the 1990s Kazakhstan was unable to afford what Wallis had to offer.

The question was whether to hang in and try to develop a business long term, or give up.

He decided to hang in.

It's a good thing he had staying power because his first production effort failed and his second took awhile to gain traction.

The first was a joint venture with a Kazakhstan partner in 1992 that turned out a shoddy product.

Wallis said he couldn't get the workers at the plant in Akmola Province – near present-day Astana – interested in quality.

Maybe the Soviet system had dashed any incentive they might have had to make a good product. Or maybe the hard times just before and right after the breakup of the Soviet Union had demoralized them.

For whatever reason, “nobody cared,” Wallis said.  

The venture's first two swather prototypes failed field tests administered by the Nicholskaya Test Farm near Borovoe.

The next year the venture brought two more prototypes to the test station.

When the trials were over, the Nicholskaya brass told Wallis: “Don't bring that junk back here again.”

But Wallis was determined. In 1995 he began renting a factory in Tselinograd, the city that would become Astana.

His own field tests of the factory's swathers in 1996 gave him the confidence to return to the test farm in 1997. This time his products passed.

DonMar founder Don Wallis has been doing business in Kazakhstan more than 20 years. Photo courtesy of Don Wallis

DonMar founder Don Wallis has been doing business in Kazakhstan more than 20 years. Photo courtesy of Don Wallis

With quality no longer an issue, the next question was whether Kazakhstan farmers had the money to buy the factory's products.

Wallis got lucky again. Two years after the test station passed his swathers, farm consolidation began . It involved prosperous Kazakhstan farmers enlarging their spreads by buying or leasing others' land.

By the time the trend peaked in the next decade, some farms had reached a million hectares.

The mega-farms could spend millions of dollars on new tractors, combines and other expensive equipment imported from the West.

Giant farms weren't the only ones prospering, though. Farmers who cobbled together spreads of three to five farms were also doing well.

Mid-sized farms couldn't afford high-priced equipment from the West, but they could afford Wallis' reasonably priced swathers.

And Kazakhstan's grain-growing conditions made the swathers worthwhile.

In ideal conditions, farmers use a combine to harvest wheat or other grains. It cuts a crop, threshes it and piles it in one place.

Ideal conditions include all of a crop becoming mature at the same time, and the crop containing few  weeds.

In Kazakhstan, farmers often find 80 percent of a wheat crop ready for harvest – because it's dry – but 20 percent green and moist. A combine cuts well only when all of a crop is dry.

But a swather, a cutting device that a farmer puts on the front of a combine, can handle both dry and green wheat.

The reason many crops mature at different times is that a lot of Kazakhstan farmers use old-technology seeders. The machines drive some seeds deep into the soil but leave others near the top, meaning that parts of the crop mature several days ahead of others. 

Like immature wheat, weeds are green and contain moisture. That means combines have trouble harvesting wheat with large patches of weeds. Swathers can beat the weeds, though.  

Wallis' success started with 20 swather sales in 2000.

“In the first four years, I had to run around and sell the machines myself,” he said. In 2005 he knew he'd made it because “the farmers began coming to me.”

Wallis sold more than 300 pieces of equipment in 2008, just before global recession slashed Kazakstan's economic growth from 10 percent to 1.2 percent.

In the past four years his sales have rebounded with the uptick in the economy.

A swather production area in DonMar's factory in Kostanai. Photo courtesty of DonMar

A grain-cutting device made in Kazakhstan – a DonMar swather. Photo courtesy of DonMar

Last year DonMar sold a combined 200 swathers and headers, a line Wallis added in 2010.

He sees a great future for the headers, combine-mounted cutting devices that leave grain in rows that farmers can pick up easily.

The growing number of farmers who have switched to modern seeders can harvest with a header because today's seeders plant seeds at the same depth, allowing an entire grain crop to mature at the same time.

Many giant farms use new seeders, so Wallis believes he'll be able to sell headers to them as well.

Because Wallis makes his headers in Kazakhstan, he can sell them for 2 ½ times less than headers imported from the West. Headers made in the former Soviet Union – notably Belarus – are a bit cheaper than Wallis', but have decades-old technology.

Wallis is also beginning to sell herbicide sprayers.

Many Kazakhstan farmers resist using weed killers, believing they pollute the water table.

But others are making the switch because of the increased crop yields that herbicides generate.

Wallis said he's seen some Kazakhstan wheat fields that were more than 80 percent weeds – mostly wild oats and millet – and less than 20 percent wheat.

“If farmers here put (the herbicide) Edge down to kill wild oats and millet, Kazakhstan could double its wheat crop in two to three years,” he said.

Kazakhstan could generate even more wheat production by farming now-idle land, Wallis said. About 30 percent of the country's northern steppe is unused, he said. 

He believes the country should conduct a “serious study” about bringing more land into production.

Like the farmers he serves, Wallis' prosperity depends largely on the weather and global market trends.

In the past five years, Kazakhstan has had four years of drought and one year of too much rain, making harvests smaller than they should have been.

In contrast, the weather has been kind to his native Canada, giving it four straight years of record-breaking crops.

This year's crops in Canada and other parts of the world have been so good that they've driven the price of wheat down, hurting farmers everywhere, including Kazakhstan.

Despite the many hardships growers face, the ones I've known have always expressed cautious optimism about their prospects for the next year.

That's the tack Wallis takes. 

He's done well and – God willing – will be thriving in years to come, thanks to Kazakhstan's determination to continue developing its mainstay agricultural sector.


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