Nebraska’s Chief Industries Confident About Business Relationship With Russia

Posted: November 3, 2014 in Econ 101, Free Trade, Sanctions on Russia Meaningless

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Businesses optimistic about state’s relationship with Russia

November 03, 2014 

Earlier this year, the to-do list at Nebraska’s Chief Industries included building and shipping about a hundred containers worth of grain bins and farm equipment to Russia and its neighbors. Then political unrest in the Ukraine developed into a crisis.

Russia annexed the Crimean Peninsula, pro-Russian protesters raided government buildings in eastern Ukraine, and the United States responded with rounds of sanctions against Russian officials and businesses.

Chief’s orders destined for the region now stand at a whopping total of zero, but Nebraska business officials say there’s reason for optimism.

Jim Grewe saw no signs of trouble in Moscow last month.

He travels to Russia two or three times a year, doing what anyone would do as vice president of international sales for Reinke Manufacturing, a company that ships irrigation systems built in Deshler, Nebraska, to buyers around the world.

In October, that included meeting with dealers and chatting up prospective buyers at Agrosalon, an exhibition that drew agribusinesses from all over the world.

“The people I talked to, everything was pretty positive,” he said. “Our business, really to date, hasn’t slowed down a bit in Russia.”

That’s not the case for every Nebraska business that ships to the former Soviet Union. But talk to many executives, and you’ll get a general sense of optimism about trade with a nation that was once the United States’ archrival and a backdrop for countless secret agent stories.

“I think it’s because of political stability over there,” said Allen Mitchel, vice president of sales for Chief Industries’ ag-industry division. “That sounds like an odd comment when you’re in the middle of Nebraska watching the news.”

Tension between the U.S. and Russia over the situation in Ukraine had an “obvious impact” at Chief, which makes grain storage and handling equipment.

“For the past three or four months, there’s been nothing that’s been going through either Russia or Ukraine,” Mitchel said. “That was a significant market.

“We just haven’t had any orders coming in.”

But talks between people there and people here are picking up, he said.

Elevator companies have expressed interest in working with Chief, and salespeople for the Kearney-based company are eager to keep conversations going.

“So when that time comes and the lights come on, we’re ready to go,” Mitchel said.

Fewer than 20 companies in the state explicitly say they export to Russia, and the country doesn’t rank among the handful who haul in the most Nebraska-made or Nebraska-grown goods, said Susan Rouch, director of the Office of International Trade & Investment at the state Department of Economic Development.

In 2013, Russia was 23rd among destinations for the state’s merchandise exports, bringing in about $50 million in Nebraska goods, according to data from the U.S. International Trade Association. By comparison, Canada, the state’s top customer, took in nearly $2.2 billion worth of Nebraska merchandise.

And looking at the numbers alone, the most heated stages of the Ukraine crisis did little to slow trade between Nebraska businesses and their Russian buyers.

As of June, Russia’s import figure was on track to be even higher than it was last year. With six months left in 2014, the state already had shipped more than $48 million worth of goods to Russian buyers.

At Reinke, for example, which has done business with Russia for about a decade, things are moving along at their usual pace.

“Our business really to date hasn’t slowed down a bit in Russia,” Grewe said. “Our dealers are still quite positive about the upcoming season.”

When it comes to beef, corn and beans, though, the state’s sales to Russia have taken an obvious plunge.

Exports of meat — once Nebraska’s hottest product in Russia — topped $96 million in 2012, then bottomed out in 2013 after Russia stopped accepting meat imports from animals treated with ractopamine, a feed additive used to promote lean meat production.

That happened before the sanctions and virtually obliterated the Nebraska-to-Russia ag pipeline. What little business remains has continued to shrink, down 48 percent during the first half of this year compared with the same period in 2013.

And Nebraskans aren’t importing much from Russia, either, though the country wasn’t ranked among the top 25 exporters to our state even before the sanctions, according to the U.S. Census Bureau.

Kasym Islamov, who sells some Russian staples out of his Eurasian store in the Haymarket, said he buys his items through a wholesaler and has felt no impact due to increased tensions with U.S.

Islamov is from Khujand, Lincoln’s sister city in Tajikistan — part of the former Soviet Union but not Russia. And he has no interest in getting involved in international politics.

“I don’t want to be involved,” he said. “We are just business.”



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