It's the road Ukraine chose to go, and the Association Agreement is another step to accomplish this, says Mikel Honders
On April 6, the Netherlands will vote yes or no to a deeper cooperation between Ukraine and the EU.
The destiny of Europe's biggest nation is potentially in the hands of the citizens of the Netherlands. The future of nearly 46 million people now depends on whether the Dutch decide to support Ukraine's association with the European Union.
This is exactly why, Ukraine Today with the cooperation of Euromaidan Press has launched #DUTCHINUA project. Our goal is to gather the views and opinions of the Dutch businessmen and entrepreneurs who work in Ukraine. As well as provide analysis by the experts from the Netherlands who can assess the influence of the referendum on the future of Ukraine and the E.U. as a whole.
Some commentators say little is known about Ukraine in The Netherlands; either that or people are simply not interested - but it's a vote that could derail Ukrainian efforts to forge closer economic ties with Europe. In fact, there are already extensive business links (between the two countries). Joining us right now to tell us more is the commercial director of Galicia Greenery agricultural company Mikel Honders.
Volodymyr Solohub: Mr. Honders, your company decided to come here to Lviv region and start growing greens. Tell us what was the main motivation to do that?
Michael Honders: The main initiator of the project is Food Ventures, they are developing projects and they focus on emerging markets in the Black Sea region. So that's also why they decided to go to Ukraine. It's a long history. The idea already started in 2010, and the company started in 2012. The reason for Ukraine is also because of our partners, which are big cooperatives from The Netherlands, 'Prominent and Rainbow', they have an interest in exporting vegetables form the Netherlands, and they see the future in local production. 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 in Ukraine.
V.S.: You said that the company came to Lviv region in 2012, and actually this is your first season - the first time you started growing was 2013-2014. Tell us how your business is now coping with all the difficulties that Ukraine as a country is facing?
M.H.: We were prepared for a lot of difficulties. When we came to Ukraine we knew it wouldn't be easy. That's also why there's nobody here. If it was easy, everybody would be here. But we didn't expect a devaluation from 10 to 30 and a war. That was not in the books. That was another difficulty for us. In the beginning, in 2012, we lost our initial Ukrainian partner, and we had to find a new investor, a Ukrainian partner. Which, with all things happening in Ukraine, was rather difficult, and impossible. We decided with our current shareholders with the money which was in from The Netherlands, that there were two things: either stop the business and go back to The Netherlands, or keep fighting in the country with the project with the money which we have started. To show that it works, that it's possible, that the idea is still there even if your country's at war. And that was when we started with the salad park. We started, we showed that it works, that it's not a story anymore. 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.
V.S.: Tell us about plans for the nearest future. You already set up, you are in your first season of growing greens. What's next for you?
M.H.: We see that it's a very profitable buisiness, so this year we want to double the salad park. How much we can increase depends on the partners which we can find. With the current shareholders we said "OK, we will do the first step", because that's also a thing with investors. They want to see soemthing, if we don't do it, why would they do it? So we did this part, we see that it works, we will continue, and we are finding a partner who can together with us develop the whole company. So there should be a five-sector greenhouse soon.
V.S.: You're saying that you're trying to find a partner. Is there anyone in sight?
M.H.: In 2012 when we lost our initial partner it was rather difficult and impossible. So back then, all the partners, who we were speaking to, said "let's put it on hold, all Ukraine is on hold, we will do nothing, everybody stopped." That was very difficult for us, we had to do everything ourselves. And now we see that all the people who stopped at least came back to talk. They see what's happening, they see the country developing in the right way, and that's why much more people are interested in the project.
V.S.: Mr. Honders, apart from the currency devaluation you spoke about earlier, what are the other main challenges which your company faced when you started doing buisness in Ukraine?
M.H.: 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 most things like 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. We faced people who tried to earn money, who tried to come in with things that you would never expect. For example, if you are used to doing business in The Netherlands, you would never expect all these small things. 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. Let's say if I bring something to The Netherlands, tomorrow I can import it. What is going better now, we see that today it's much easier to do these things. In customs we see things changing, let's say they have a long way to go still.
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V.S.: If you're comparing doing business in Ukraine and in The Netherlands. Obviously, in The Netherlands, it's much more easier, more developed, much more business-friendly, if you allow. What are the benefits of doing business in Ukraine?
M.H.: There's not only one solution. In The Netherlands, everything is arranged. For every problem there are fixed steps, which you should take, and that problem will be solved. Here there are sometimes 10 possibilities. Here you can be creative in solving problems, that's a really nice thing. 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 in Ukraine that it's a challenge, but if it's difficult, it also means that there are benefits. If we look for pricing for products, we can almost go to a Dutch level. If you compare salaries, it wouldn't be reasonable.
V.S.: What about the workforce? What are the qualities of local people that are different from the ones you have in The Netherlands?
M.H.: In greenhouses in The Netherlands we have a lot of people from Eastern Europe, from Poland, just because the labor costs are big costs in The Netherlands. If we compare that with Ukraine, especially now the labor costs are so low. That's a really big benefit for us. 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. We invest our time to train these people in The Netherlands, to show them our greenhouses. All these people who work here never saw it, they have no idea. Probably they heard about a greenhouse, but an old Soviet one without windows which are just standing somewhere. In The Netherlands there are so many greenhouses, they are developed, there are university studies for greenhouses. All agriculture studies are focused on outside growing. That was a real challenge for us to find these people - and also find them in Busk! 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 work to these people from Busk. I'm the only one not from Busk in this company. So that's really nice. They are really supportive, and people want to work. And they are good workers also, it's an important thing. If they don't have a salad, we have nothing to do.
V.S.: If we talk about you personally, you've been living in Ukraine for several years now. When you were first moving here, what were your main fears about this country?
M.H.: To be honest, I had no idea. It was more a coincidence that I ended up in Ukraine, it was nowhere on my list like I will work in Ukraine. The first time I crossed the border was by car, and I was afraid that they would take my passport and they will come back and if I don't pay I wouldn't get it back. That was the basic fear I had. Now I think it was so stupid, but then I had no idea. It was Russia for us, it's the East. So we don't know it, we've never been there, it was strange. But when you cross the border, when you see it, and especially when you come to Lviv - it's a European city. So people that come from The Netherlands to visit me here, they all come back. Every single one of them. They are so surprised how it looks here and what is happening here and that it's normal to be here. For me also, I see Lviv developing in the last 4 years, and it's a huge development. It's nice for me to be here.
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V.S.: Starting from January 1, 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 buisnesses to start coming in. Have you or has your buisness felt the inflow of foreign business in Ukraine?
M.H.: We felt it, for us what's important is that things will be here in a standard for everybody. Which standard it is actually doesn't matter so much. It should be the same for everybody. If another company from The Netherlands should come in, they should have the same rules, the same struggles as we have. Then you can be competitors on things you are doing, like growing. For us, and especially for our investors, which are big cooperations which are exporting products, for us it's important to get products from The Netherlands to Ukraine because they are coming. But in Poland, they get another staker, and they are not from The Netherlands anymore. If that's transparent and that with the Association Agreement, if the imports thing will be arranged in a way we find normal, then it's possible for all those companies to just do their buisiness and compete on the level we are used to. 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. So for us that's the most important. That's why we didn't start import yet, because we can't compete with this black import. It's just impossible for us. They don't pay VAT, don't pay import duties, so you're at least 30-40% more expensive. And that's what makes it for us a really interesting thing. 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.
V.S.: As you know, The Netherlads 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?
M.H.: I think it's the most important 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. We see what is going on in France with Le Pen, what is going on in The Netherlands with all these anti-Europe parties. They are also using this Association Agreement, in my opinion, as a tool to get the anti-Europe voice louder. At the other end, I also understand the fears of the people. 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 have a look at the country, they start to call "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.
V.S.: If you had a chance to address the people in The Netherlands right now, what would you say to them?
M.H.: Come and have a look before you judge about something you never saw. Not everybody will have the opportunity to visit Ukraine, that I understand, but don't let yourself be led by emotional politics like what comes from Putin, what comes from 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? Don't judge based on some emotional politics, in my opinion, that's a dangerous way to go.
V.S.: Mr. Honders, in your opinion, the EU Association Agreement with Ukraine, what kind of benefits does it give to The Netherlands?
M.H.: We are a trading country. We are trading for a very long time. We need this to export things. If I keep to the agricultural sector in The Netherlands, we are exporting almost everything. My father has a greenhous at home - nothing goes to The Netherlands. Not a single tomato. So this country has a huge potential in people that are demanding fresh products. the biggest advantage for The Netherlands is trading. Easy and transparent trading. Also, the labor force here, if you see what is going on here on the IT level, it's much higher than everywhere else. It's not without a reason that so many Dutch companies start their IT business here. Nestle is outsourcing. 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?
V.S.: If you were voting, how would you vote?
M.H.: 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. What you see with the new police, I have already seen that things are changing on a touchable level. I think that's the most difficult thing in Ukraine is that you can't really see a lot of things, so only unpopular decisions, so everybody is unhappy. But it's important to see things really changing on the streets. We see it with some small things with what we are doing in the last four years, we see things that are changing, that are not normal anymore and also in some governmental institutions they started to prove that they are not corrupt. They are really doing their best that there is no corruption. 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.