Mikel Honders comes from a family of Dutch farmers and knows how to grow and deliver fresh vegetables throughout the seasons. In this interview he shares his experiences on Ukrainian market. You can read the full version of the interview on Ukraine Today.
Galicia greenery is 100%-owned by Dutch shareholders. The greenhouse is located in Busk, a town about 50 kilometers from the western Ukrainian city of Lviv. It’s unique for the region. Inside, vegetables and other produce can grow all year round.
At the moment Galicia Greenery grows 7 types of salad, ruccola and is testing herbs like dill, or rosemary, parsley, etc.
Galicia Greenery’s main customers are retail chains in Lviv and Kyiv. Big restaurants in the western Ukrainian city are also on the books. They enjoy the benefit of having salad in their kitchens just hours after it was taken out of the water in the greenhouse, Mikel Honders, Galicia Greenery Commercial Director says.
Why open a business in Ukraine?
The main initiator of the project is Food Ventures, they are developing projects and they focus on emerging markets in the Black Sea region. To drive 3-4 days with a fresh product doesn’t make so much sense. So that’s the reason for Ukraine. 45 million people, 70-80% import of fresh vegetables. There’s a huge demand of local production. In the summer there’s a lot of production, but in the winter there’s a lack of products. So that’s the main reason why we are in Ukraine.
How is the business now coping with all the difficulties that Ukraine is facing?
When we came to Ukraine we knew it wouldn’t be easy. That’s also why there’s nobody here. If it would be easy, everybody would be here. But we didn’t expect a devaluation from $10 to $30 for one Hryvna during the war.
We decided that there were two things we could do: either stop the business and go back to The Netherlands, or keep going, to show that it works, that it’s possible, that the idea is still there even if your country’s at war. So now it’s a real company, and we are developing now. That’s also why this year we will build another part of the greenhouse to continue our operations.
Apart from the currency devaluation of which you spoke earlier, what are the other main challenges which your company faced?
Bureaucracy. It’s a huge machine. If it starts turning, it turns, but, let’s say, it should turn the right way. For us, the import pyramid was a difficult thing, it took a lot of time, but we had huge support from the local government, from the European business association, which helped with all kinds of difficulties. And the main thing what it costs, if you have patience, is time. It doesn’t have to cost money. It’s not what people think that you have to pay everybody here and they will work. It costs time. In our case, it took half a year to get a permit to import a greenhouse, while in The Netherlands I can import an item in one day. What is going better now, we see that today it’s much easier to do these things. In customs we see things changing.
What are the benefits of doing business in Ukraine?
Here you can be creative in solving problems, that’s a really nice thing. There’s not only one solution, sometimes there are 10 possibilities. In The Netherlands, everything is arranged. For every problem there are fixed steps, which you should take, and that problem will be solved.
Another thing is, that the market here is much more interesting for us than in The Netherlands. We have so many producers in The Netherlands who are exporting to Ukraine, to England, Germany, everywhere in Europe. So that market is more or less full. If they export to Ukraine, it must be reasonable for us to produce here. An interesting thing is that in Ukraine it’s a challenge, but it also means that there are benefits.
Inside the greenhouse:
What about the workforce? What are the qualities of local people that are different from the ones you have in The Netherlands?
A big benefit for us is the low labor costs. People want to work. Of course we also have people who don’t like it and leave, but most of them want to work. And the middle management, the agronomist who is running the greenhouse, and the sales guy who is selling the products, it’s the most important for us. It’s not a problem to import them, but we are here in Busk, we want to support the local community in Busk and give these people from Busk work. I’m the only one not from Busk working here. We invest our time to train these people in The Netherlands, to show them our greenhouses. All these people who work here have never seen one. Probably they heard about a greenhouse, but an old Soviet one without windows. In The Netherlands there are so many greenhouses, they are developed, there are university studies.
Starting from 1 January 1 of this year, a set of provisions of the Association Agreement between the EU and Ukraine have come into force. The Ukrainian government has been placing big hopes on this agreement for the foreign businesses to start coming in. Have you or has your buisness feld the inflow of foreign business in Ukraine?
We felt it, for us what’s important is that things will be here in a standard for everybody. It doesn’t actually matter so much, which standard it will be. It should be the same for everybody.
You should just be the best in your company and not doing your best to avoid taxes. So as long as that is fixed, then everybody can do business in an honest way.
In The Netherlands, everything is arranged… In Ukraine you can be creative in solving problems, that’s a really nice thing. – Mikel Honders
Ukraine has a huge demand for products. And we want to produce it here, but can’t produce it in the next years, it’s impossible to grow that fast. So we need this import. And then let us import it directly from The Netherlands.
For us it’s important with the Association Agreement that we can do transparent business, which is the same rules for everybody. And I htink that’s the most important thing.
What kind of benefits does the EU Association Agreement with Ukraine give to the Netherlands?
We are a trading country and we have been for a very long time. We need the Agreement to export things. The Dutch agricultural sector exports almost everything. My father has a greenhouse – nothing goes to The Netherlands, not a single tomato. So this country has a huge potential in people that are demanding fresh products.
Also, the labor force here, if you see what is going on here on the IT level, it’s much higher than everywhere else. People from all over the world are here with IT. There are educated people, this country has a huge future for that. As a trading country, how can we refuse such a huge market?
As you know, The Netherlands is one of the countries which didn’t ratify the EU-Association agreement with Ukraine, and they called a referendum on this matter, even though it is of a divisive nature. What do you think about that?
What’s most important is that people get the right information before making their decision. Now there are some emotional politics going. People who are against Europe are using the referendum also to show their voice against Europe.
If you look at the news from Ukraine from 2013, you always saw bad things. You saw Donetsk, you saw Crimea, you saw the downing of MH17. So I understand that people have fear. But I think that when you give the right information and we show how it really is. For instance, when people are coming here to visit me here and the country, they’re being asked “should you go, should you do it, is not dangerous.” But when they are here, they call somebody and say “next time we do it together.” I think people don’t know. And that’s the most important thing, to inform people honestly what it means with 45 million here who are willing to work, who can buy things. That’s a really big advantage. That’s why were are here, to inform people that it’s a normal country and that they really can develop and they have a huge potential.
If you had a chance to address the people in The Netherlands right now, what would you say to them?
Come and have a look before you judge about something you never saw. Not everybody will have the opportunity to visit Ukraine, I understand, but don’t led yourself be led by emotional politics like what comes from Putin and other politicians, who try to make people afraid of what they never saw. And I think that’s a strange thing, like the ghost in the closet. You never saw it, but you’re afraid of it. Do you have all the information to judge yourself?
If you were voting, how would you vote?
I will vote and I will vote in favor of the Association Agreement. Maybe it won’t be immediately effective in our company, but it’s the road Ukraine chose to go, the European way. For me, it’s another step to accomplish this. To get European norms in this country in the way of doing business. Now you already see that things are changing on a touchable level, like with the police.
There are unpopular decisions being made, so everybody is unhappy now. But it’s important to see things really changing on the streets, see how some governmental institutions started to prove that they are not corrupt. And of course they are not there yet, it’s not like everything is good already. But for me the most important is that they made a decision which direction to go. They go one step forward and two back sometimes, but at least they are heading the right way. That’s the most important thing. And when they are there, that one I don’t know, but they will get there.