Iasi inspires you!, a ZF project supported by Banca Transilvania. Lucian Haraga Jr,…

♦ Every Tuesday, from 4:00 p.m., entrepreneurs and executives from the “capital” of Moldova and the surrounding area come to tell stories in the show “Iași inspires you!” about how the city and the area have developed recently, but also about what still needs to be done for a harmonious growth.

The Semtop Group, active in agriculture, started with 400 hectares of land in Iasi County, and today it has reached 8,000 hectares, most of which are irrigated. Moreover, the Haraga family, which owns the business, also invested in tomato greenhouses and cow farms.

“Semtop started in 2012, with the establishment of the first company in our group. We started with an area of ​​400 hectares of large crops. From then until today, we had an accelerated growth”, says Lucian Haraga Jr, strategy & risk director of Semtop Group. He is the representative of the second generation of the family that controls the business. The entrepreneur was present in the show Iasi te inspiră!, a ZF project supported by Banca Transilvania.

“Currently we exploit 8,000 ha, of which over 6,000 ha are irrigated. And this is very important in the current context. At the same time, our main competitive advantage is the fact that we are the largest seed producer with Romanian capital in Romania, and that by surface area.”

About 80% of Semtop’s income derives today from actual production activities, whether we are talking about seed production, complementary vegetable production or animal husbandry. “Agriculture has a specific feature that consists in the fact that the rotation cycle of money is very long, that is, we sow in autumn and harvest somewhere in the middle of summer, so we have eight to nine months in which we practically invest in an area of ​​land to be productive, but we don’t know what we will get.”

“And during this period, obviously, we need collaboration and support from the banking sector.”

However, Lucian Haraga states that his family also wanted a diversification of the portfolio, which would balance the situation.

“Naturally, we turned to the tomato area, a product that we can sell daily. We thus have a hydroponic greenhouse. At the same time, we focused on the animal husbandry area, specifically dairy cows, which also brings us a recurring monthly income.”

He specifies, however, that he is not thinking of closing this circle with an investment in the milk processing area, stating that the market is already dominated by a few big players.

“In the dairy processing sector, it is very difficult to compete with the big European concerns, especially those from France. If we found a niche, maybe we would think.”

The area of ​​traditional products is also developing a lot in Romania. Homologation is being attempted in this sense, but there is a whole logistics behind it.

“Such an investment would eat away at the time we devote to our competitive advantages, such as the seed production area.”

Here, Semtop works with both internal and external partners.

“We work with all the big players in the seed market, from Bayer, the former Monstanto, to Corteva, the former Pioneer, or KVS”, explains Lucian Haraga. He has been involved in the family business since 2016, but admits that he did not want this from the beginning.

“My father is an agricultural engineer. In 1984, he started his activity in the university environment, and later in the production units from the time of communism. Thanks to him, I always had contact with agriculture. I used to go to the fields since I was little.”

However, his first direction of development was different. He studied management and investment management in London for five years. Then, he worked for a year in a financial institution. During the Brexit period, the opportunity to return also appeared.

“I came back in 2016 from London, taking over the financial part first. Later, I also completed my studies on the agronomic side, at the moment I am going to defend my doctoral thesis at the University of Agronomy in Bucharest.”

Passion developed it gradually, but he discovered that it is a field that allows you to reinvent yourself every time, he says. However, it is a business that brings challenges. The main two today are the lack of labor and the border conflict, with its impact on agriculture. Another problem is the weather.

“Concentrating our attention in the vegetable area, which represents a significant share of our business, despite investments in irrigation, in very difficult years from a climatic point of view, we suffer. We don’t have the consistency we would like in production.”

For example, the years 2020 and 2022 were very difficult due to the drought. The year 2022 also stood out because of the situation in Ukraine.

“What is happening at the border has massively affected the grain market. It was a difficult situation for everyone, but especially for the north-eastern part of Moldova, which is the first barrier for cereals from that area.”

At the opposite pole, the best moment for the Semtop business was when the nearby seed processing factory was launched, a project carried out by an American partner.

“They developed that factory in our vicinity precisely because we deliver quality seeds and they could count on us to bring a constant flow. The purpose of the factory is to export to Europe, including Ukraine. At one point it also delivered to Russia, but not at the moment. It’s an investment that brought, horizontally, at the level of the local community, more than 1,000 new jobs.”

This project secures a part of Semtop’s income in the long term. But here too, as in other business areas, the Haraga family tries to diversify, because it does not want to depend on just one client.

Regarding large crops and still speaking of development, the executive talks about the acquisition of farms with irrigation or with the potential to install such systems, which can make the difference in difficult years.

“The corn crop is a spring crop and, often, it is sensitive to drought. For Iaşi county, I think it is still the main crop in terms of surface area. In 2020, for example, there were areas where the production was 800-900 kg for a non-irrigated land. On irrigated land we could even get 8-8.5 tons. Irrigation allows to achieve a production that represents 80% of the normal one. I mean a drought year versus a normal climate year. Without irrigation, we could only reach somewhere around 30-40%.”

Semtop has two farms and each has its own irrigation system, based on the former irrigation system, created in communist times. It’s about the old infrastructure.

“Of course, there wasn’t much left of it when we came, just the canals that have clogged up over time.”

The investments went into the area of ​​pumps, installations, plus the unclogging of these channels.

“What we could reintroduce into the irrigation circuit, we have already done, for the most part. From now on, more innovative solutions are needed. Rather, I would say that we are interested in investing in farms with the potential to install other irrigation equipment.”

Lucian Haraga states that agriculture is one of the sectors directly affected by the conflict in Northern Romania, but not only by this conflict, but also by the measures taken to support Ukraine. The impact is still felt, it will certainly be felt this year as well, especially for grains such as wheat and corn, Ukraine being a big player in this area.

“Certainly, an impact will still be felt in the area of ​​prices. Obviously, a large part of the grain trading business currently taking place in the Romanian market is done by the same companies that do trading in Ukraine as well. Thus, they try to facilitate the export from there as well, along with the export of the Romanian ones. The direct impact is on the price.”

Under these conditions, 2024 is a year of resilience for all farmers. He says that the last 2-3 years have tried a lot on the financial discipline of farmers and, unfortunately, those who failed to follow a discipline are feeling it. As well as those who were, perhaps, very excited about the year 2021, which was a really good year for the agricultural area. Thus, they focused their attention on some large investments, often made with money from the working capital, a fact that destabilized the financial situation.

“And that feels really cool right now. So I would say that it is a year of resilience for local agriculture. Our objective is to try to keep our turnover at the level it was last year or to have an increase similar to the value of inflation at this moment.”

The turnover of the entire group exceeded 330 million lei last year. At the moment, 520 people work for Semtop.

“Within our business, just by investing in greenhouses, we brought back 20 wives and mothers to the local community.”

If we talk about investments, there are two main directions. On the one hand, the money will go to machinery. In agriculture, the equipment park must be renewed every few years. There is not only moral but also technical wear and tear.

“Many times, the investment in this sector consists of bigger machines with a higher working capacity. And this is not because it is a pleasure for us to work with large machines, but because the labor force is less and less. It’s complicated to have equipment worth hundreds of thousands of euros that you give to people with less training. Because these machines use a lot of technology, they are used by highly educated people.”

In agriculture, there is a difference between what happens in the eastern part of Europe and in the western part, he explains. Almost everything that means research in the area of ​​machines and new equipment is done based on the requirements of those in the West. There, many times, the one who actually works with such a machine is the owner of the business or someone from his family.

“Technology also comes with a limitation of access to work for those who do not have a high level of educational training.”

Also in the area of ​​investments, in addition to renewing the fleet of machines with more productive ones, in order to practically mitigate this labor force risk, the Haraga family is also looking at farms with irrigated potential that they could purchase.

“We don’t enjoy the evil of others, and we in turn have gone through hard times, but often such a moment or context leads to a screening of those who do not have financial discipline. There is a possibility that opportunities will appear in the market. I think we can go down to somewhere in the Braila area.”

For Semtop there is a specificity related to seed production. They are later or earlier hybrids. The later ones need additional thermal resources, and this can be ensured in the south of Romania. “So it would be a geographic diversification for us.”

Contrary to expectations, for the entrepreneurs behind the Semtop group, Iasi was an opportunity from an agricultural point of view, says Lucian Haraga.

“In the agricultural sector, Iași county (compared to other areas in Moldova) kept pace with the rest of the country. We had the opportunity to invest here because my father was born in Iasi. I was also born in Iasi, although I was in Bucharest for a very long time.”

In Bucharest, there is not much land to work from an agricultural point of view, that’s why the Haraga family returned to their origins.

“Plus, the barrier to enter such a business in Iaşi County was certainly lower, starting from the price of agricultural land. Likewise, when we came, there was no grain storage silo within a 55 km radius. The county’s lack of development at that time represented an opportunity for us.”

But now, things are changing.

Even in the context of the Russian-Ukrainian conflict, Lucian Haraga observes a massive development at the county level due to investments, primarily through PNRR, but also through the funds coming to create an infrastructure for future export to Ukraine, for the reconstruction activity.

“We didn’t even dream of highways and now we are talking about two that pass through our county. We are working now, we are working faster than we ever imagined. For us, the A8 is more stringent.”

Air transport infrastructure is also under development. The new Schengen terminal in Iasi was also launched, a terminal with a very large capacity.

“Of course, it also takes a large part of the air traffic going to the Republic of Moldova. We can see the premises for a good development of the county in the next period”, he concludes.