'Farmer John' rolls out the cheddar for cheese-starved Muscovites

By bne IntelliNews October 13, 2015

Jason Corcoran in Moscow -

A British farmer who bent Vladimir Putin's ear over milk prices is hitting back at Russia's recession with a cheese offensive, ramping up his output of cheddar, edam and stilton for Muscovites who crave quality brands amid the ban on Western food.

John Kopiski, whose Bogdarnya dairy farm is located 200 kilometres east of Moscow in the Vladimir region, already supplies large supermarkets including Azbuka Vkusa, Stockman and the Crocus Group with 150 kilos of cheese per day, and plans to double production to 300 kilos as demand for his artisan cheese takes off.

Having fought off bankruptcy for years, the sanctions and counter-sanctions of Russia and the EU over the Ukraine crisis have not been the worst news for Kopiski. Russian producers are frantically making cheese since Moscow imposed the Western food embargo in August 2014 - but no one is doing it very well.

Generally, home produce is being rediscovered among a gradual renaissance in the agriculture base: top steak restaurants in Moscow are stocking angus beef from Voronezh and scientists in Siberia are developing their own mozzarella, mascarpone, and roquefort.

Kopiski is also right on cue with such offerings such as his Farmer John cheddar, which may not have the mature kick preferred in Britain, but is nutty with a soft creamy texture and runs rings around local types, say foreigners who tasted it. Or how about a wedge of pumpkin cheese with seeds (pictured, left), for the more discerning palate?

"Sanctions have helped us a bit," Kopiski, 66, told bne IntelliNews. "But if there's a foreign cheese at 1,200 rubles and a Russian cheese at 1,000 rubles, many people will still buy the foreign cheese because there's still a distrust of Russian products. Fortunately, I have gotten exposure which tends to build a market following."

Taking it to the top

Kopiski shot to minor stardom in Russia in April when he was one of the first people to quiz Putin during the president's annual phone-in in April.

Introduced by the anchor as "simple Russian guy John", Kopiski complained to Putin live on national television that farmers like him were starved of credit because of crippling interest rates and because bank won't provide loans with a long maturity to allow farmers to develop.

His long Tolstoyan white beard set off by a mint green paisley shirt, the former coal and steel trader suggested to Putin that his advisers might be concealing the real state of the economy from him and how bad things were in the dairy industry. Intrigued by the studio guest, the Kremlin boss took a visible shine to the straight-talking, heavily accented farmer.

Kopiski, a Russian citizen since 1997, informed Putin that he had 1,700 head of cattle producing 10,000 litres of milk each a year, but that he couldn't make enough money because of regulated low prices for his product.

"We had some people visit us afterwards from the government as protocol but nothing negative came out of it," Kopiski said. "Sales didn't jump immediately but it helped with the tourism side because people wanted to stay at the farm and meet the guy who is pissed off with chinovniki (bureaucrats) and said as much to Putin."

Appearances on Russian TV shows and features in magazines and newspapers followed as Kopiski became a figurehead for the struggling dairy industry.

Newbie vs cheese fraudsters

As far as cheese making goes, he can plug some unsavoury holes left in the market by rogue producers who are now being exposed: the national agricultural watchdog Rosselkhoznadzor said on October 2 that almost 80% of cheese in Russia's shops is counterfeit. The regulator discovered many producers have been using palm oil, which is cheaper than milk, to pad out their product.

"They charge 200 to 300 rubles a kilogramme for this stuff but they shouldn't be allowed to call it cheese - it should be called fatty-slices or something," says Kopiski, who can draw on some useful business experience as he works this vein of the industry.

He first came to Russia in 1992 after stints in Bangladesh, Pakistan, Hong Kong and South Africa to work on a coal and steel project for Balli Group, a London-based steel-trading company. He first started making cheese while in India and Bangladesh and only turned to farming initially as a hobby in Moscow after falling in love with a local woman. They married, settled down and started building the farm after Kopiski converted from Catholicism to Orthodox Christianity.

Since 2004, he and wife Nina have invested millions in developing the farm and agrotourism. But cheese production only started at the farm three years ago.

Showpiece yet to yield

Built on a defunct Soviet-era collective farm dating back to 1928, Bogdarnya also has a hotel, restaurant, a banquet hall, horse stables, a farm zoo, troika-racing and paintballing for corporate events. The business has been hailed as a contemporary showpiece but Kopiski says he and his silent partner have yet to recoup a single ruble of their RBL2bn investment.

"We are covering the costs at the moment," he said. "Taking a profit out of it is impossible, but that's the same for dairy farmers everywhere."

Kopiski, who already sells dry-aged beef, lamb and veal products, has plans to produce salami and bresalo. The farm produces milk and a wide selection of other dairy products such as yogurt, kefir, cream and tvorog, but cheese is “by far” its most popular product, he says. He is now experimenting with other types like emmental, philadelphia, Georgian suluguni and stilton.

However, development of sales through retail is stymied by the shops doubling the price of Kopiski's cheese due "to the cost of marketing and whatever margins they want". But for the past month, Muscovites have been able to buy direct from the farm after the mayor set up a number stall for farmers on the capital's main Tverskaya behind the horsebacked statue of Yuri Dolgoruky free of charge.

"That allows us to sell for 1,000 rubles [$16 a kilo] and we are selling 15-20 kilogrammes everyday and that seems a price that the market can take," Kopiski said.

There were plans for an initial public offering of the business, which now has 175 employees, but the 2008 global credit crisis put paid to that. "Now the government has come out with a scheme that if you build a new dairy farm, up to 30% of the cost will come from a grant," he said. "But I started my farm when the ruble was 28-32 [to the US dollar] and now it’s 60, so that 30% just about offsets the cost increases.''

"You are still ending up with a business where you are not going to get the kind of returns that Russians would like out of it and land prices are not increasing these days. It's very long-term and maybe in 20 years my kids will be very happy when my land is €25,000 a hectare."

Kopiski, a self-confessed workaholic, has five children but none of them are keen to take over the reins. "I am 66 and if I live to 90, I will work on the farm," he said. "My sons don't want to work on the farm and if someone came along tomorrow and made me an offer we couldn't refuse, then we would take a look at it."

For now though, Kopiski is stoical about the ups and downs of the business. "We have a nice life and if there's a real crisis, I have meat, I have got bread and I have got samogon (moonshine) - so I am a rich guy."

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