In order to find out how the war situation in Ukraine affects Agrolats Group companies and business in Latvia as a whole, we invited Mārtiņš Muižnieks, Deputy Chairman of the Board and CEO of Agrolats Group, to a meeting.
Mārtiņš, what are the feelings in Agrolats Group at the moment?
We all feel compassion for the people of Ukraine, rather than thinking about how it will affect us in monetary terms - and this seems much more important to me. People of Ukraine and Ukrainian land have made a significant contribution to Agrolats Group, since, for more than 10 years we had a successful agribusiness in Ukraine. For that we thank Ukraine, its people and its fertile land. What we should be thinking about now is - how we can help Ukraine?
I can only pray and urge everyone to be tolerant towards ones who will live and work for us.
I think a lot about what it was like during the Second World War, when people fled from Latvia to other countries, such as America, Australia, et cetera. It was the locals who helped them settle and provided support. We must do the same for the Ukrainians, it is our great duty.
How does Agrolats Group support Ukraine at the moment?
Given that Agrolats Group is large and multisectoral, we have the opportunity to provide support, and we have already provided and will continue to do. We want to focus on practical support - providing housing, labour, support with our products - water, ice cream, et cetera.
In your opinion, what impact can the war in Ukraine have on the Latvian business environment?
No conclusions can yet be drawn, nor is it possible to assess the long-term impact. There will be an impact, of course, and we will all feel it.
If we look at the impact of Covid-19 on business and how this impact has been mitigated, the solutions in this situation will not be so simple. I do not think it will be possible to single out and help certain sectors that need special support. The sharp rise in energy and raw material prices is affecting us all, both businesses and households, to such an extent that we fear we will feel the consequences for a very long time. I think the best-case scenario for the global economy would be long-term stagnation.
It is good that, since Russia's occupation of Crimea in 2014, ties with Russia have been weakened under the then sanctions. To a large extent, this has allowed us to prepare for the current situation. Significant restrictions were implemented in the banking sector, the origin of financial resources flowing into Latvia was more strictly checked, and co-operation with certain Russian companies was limited. Therefore, in my opinion, Latvia has re-profiled quite well, and now entrepreneurs should have an understanding of how to adapt their activities to the new conditions.
Grain prices are rising now, and in financial terms it is good for our group's companies, but it's hard to be happy about it at such time.
Which of the war-involved countries did Agrolats Group companies cooperate with?
Already three years ago, we made a strategic decision to close a large part of our international business and focus on the local market. We have also done this quite successfully. Agrolats Group has not been operating in Russia and Belarus for several years. Activities in Morocco have been significantly reduced. The war has affected the availability of brown glass beer bottles, which is relevant for our brewery "Tērvete". “Elagro Trade” is currently feeling the effects from the increased sanctions towards the purchase of fertilizers and other raw materials, but we are prepared to accept less profit if it means supporting Ukraine, at a time when it is paying blood for the freedom of its people. Cooperation with countries that support or are involved in hostilities in Ukraine is not possible, it is the least we can do to support.
Are there any conclusions about entrepreneurship that we can draw from the current political situation in the neighbourhood?
Of course, political risks are mentioned in all business books as risks to be reckoned with - the chances of them occurring are small, but the impact is great, and usually no one thinks about it in the first place. Will entrepreneurs change the way they think? I don't know, I doubt it very much. Rather, it will analyse the current situation and facts. It will be the inner conviction of every entrepreneur - where it is safe to invest and which, in turn, are dangerous regions of the world. In my opinion, the Baltic States have been a dangerous region for business in Western Europe for a long time, and only over time have we gained confidence in proving our political course in joining the European Union and NATO. It has helped a lot.
Should we thank the government for this development course taken by Latvia?
I think we can be satisfied with the course we have taken since independence and we can be happy about our society, which has chosen to follow this path. We have each come to realize on a daily basis that it is more valuable to do what is good and right than to constantly look for detours to circumvent something. With this in mind, we are helping to build a system that is focused on achieving structured goals. That is why we have come so far. However, a lot depends on the way society thinks.
What are the prospects for the near future?
I will be very happy when the war ends and if we can help Ukraine further. I believe that the agricultural sector in Ukraine is very promising. This could be one of the fastest areas to help the country to recover. Of course, the destroyed infrastructure will not be able to be restored so quickly, but the fertile land will not disappear. This is also a great opportunity for international companies if they won’t be afraid of the political situation in Ukraine. If I will have such opportunity, I am ready to help with my ideas and knowledge.