AGWEEK EXCLUSIVE: A career on the growMOSCOW- Watching as Howard Dahl reads signs in public notices and signs in downtown Moscow, I am amazed at how he has been able to read the signs that have led to success for his company and so many North Dakotans.
By: Mikkel Pates, Agweek
MOSCOW - Watching as Howard Dahl reads signs in public notices and signs in downtown Moscow, I am amazed at how he been able to read the signs that have led to success for his company and so many North Dakotans.
I first met Howard in the mid-1980s, when his father, Gene Dahl, introduced us. I'd known Gene through his years as chairman of the board of Steiger Tractor Co. - a signature North Dakota/Minnesota company. Gene was the son-in-law of E.G. Melroe, who started a company that eventually developed the Bobcat brand, another signature company for the state.
Back then, Gene asked if I'd be interested in talking to Howard about a story for The Forum of Fargo-Moorhead about Howard's Concord air seeders Howard and his brother, Brian, had been building his business for several years by then, bringing pneumatic seeders and minimum-till technology to the Upper Great Plains.
Gene smiled a lot at this interview, but I remember Howard was distracted.
"The late 1980s were a very difficult time for anyone building farm machinery," Howard recalls, years later.
Howard had grown up in Gwinner, N.D., home of Bobcat. He'd gone to the University of North Dakota in Grand Forks, then on to work for Campus Crusade for Christ in southern universities. He met his wife, Ann, in 1972 and went on to graduate school at Trinity Evangelical Divinity School, where he earned a master's in the philosophy of religion. He loved the academics, but was pulled back to his heritage in Fargo, N.D.
He'd spent time in Hungary on behalf of his father's company in 1974 as Steiger began to use axles made in that country. He found himself interested in the lives of people who had lived under the atheist mandate of the state.
In 1977, he and younger brother Brian, also a UND grad, joined him in founding Concord Inc.
Dahl doesn't answer simply when asked whether it was an easy decision to return home to take up a manufacturing legacy that was two generations old in agricultural manufacturing giants. Brian says a relative advised him to go into business with his brother.
Choosing to come home was a matter of discerning God's will, through "many counselors," and then "letting the peace of Christ rule in your heart," he says.
Brian says Howard always has focused on the "what" to do, and Brian has focused on "how," or the process.
Solving the puzzle
In the mid-1980s, Concord was taking off in North America, and he started looking at the Soviet Union markets.
Part of the success of the company has been finding outside advisers.
"Dad always insisted on outside board members," he says, noting that the early ones were Roald Lund, former North Dakota State University agriculture dean, and Norm Jones, of Metropolitan Federal Bank.
One of Howard's early target markets was in Siberia, where large-scale wheat production was in need of his no-till drills.
"We knew that our air seeder was performing well in very large fields, and they have some of the largest fields in the world there," he says.
The climate was not unlike northern Minnesota or the prairie provinces of Canada. It was like home.
In fall 1991, Concord had shipped five machines to the then Soviet Union. In March 1992, Howard went them to see them running - first in the Stavropol region in the Caucuses, and in the fall to Siberia, to the Kemerovo Oblast (province), across the border from Mongolia and Kazakhstan, hosted by a Russian agricultural scientist.
The market was a fascinating puzzle. In the early 1990s, Dahl in one deal bartered 10 Concords for rapeseed, which could be sold to the Germans for making vegetable oil. He remembers one case where a potential customer offered polar fox pelts for a machine, a deal he probably should have made.
Among other things, Dahl later discovered he'd initially had a poor translator and didn't know it. He didn't make as much progress as he should have in matching his products with an exciting market, but he was on the right side of history.
He's never taken formal Russian language training, but has learned "many words" through practice and often can understand what he needs to. Understanding as much as he can is his goal, and he's read numerous books on the economic, political, cultural and spiritual heritage of a place that nearly is his second home.
Everybody raises wheat
The timing for the Dahls' early entry into the market was fortuitous.
The large "state farms" were privatized by giving each worker a proportional percentage of the farm.
At first, the lands were rented out and, in the past several years, they've been aggregated by wealthy Russians and Westerners. The small farms before the 1930s had been made into "collectives" in the Stalin years, and these, too, were privatized. It was a kind of free-for-all.
The oligarchs were amassing fortunes and people who understood the market had an advantage.
"Everybody raises wheat - all over Russia," he says.
He also looked south to Krasnodar, a city that of the same name as a region. Krasnodar is in the southern part of Russia, on the Black Sea.
In 1998, Concord sold more than 200 air seeders through the governor of Krasnodar. Shortly after the sale, in August of that year, the ruble depreciated by 80 percent, and Russia faced an enormous financial crisis. It particularly hit agriculture because oil and gas were priorities for the government. For the next three years, sales were difficult.
In 2001 and 2002, things took off again as the ruble recovered.
"The infrastructure was in place, so that anyone with vision and capital could assemble large farm holdings," Dahl says. "People were buying sugar factories for $100,000, if you could keep people employed."
At this time, there were four-wheel-drive tractors - mostly the 270-horsepower K-700s, built by Kirovets or "Kirov Zavod" (plant) of St. Petersburg, which once employed 54,000 people at a single location. The K-700 tractor was able to pull 28-foot-wide machines easily, but nothing more than 40 feet.
Concord experienced rapid growth both in the U.S. and in the former Soviet Union. Case offered to buy it in 1995. Significantly, the Dahls retained the marketing rights to the air seeder business in Russia until 2001. The Dahls were out of the "air seeder" business for about seven years, but eventually got back to its roots in air seeders with the acquisition of Fargo Products, a company developed by former Concord employees.
Dahl says Concord, and later Amity, grew in Russia and Ukraine based on earned trust.
"Initially, we did letters-of-credit on almost all shipments," he says, however he took risks with a certain, few individuals with whom he'd built relationships.
"We made many mistakes," he says. "Sometimes the tactics needed to be completely changed, but the big picture - the strategy - was right. Our equipment was well-suited for this market."
By 2003, it became obvious how important the Russian/Ukrainian markets were to the Fargo-based company. That year, Amity sold 146 "sugar beet combines" in Russia and surrounding countries, even as they'd sold only 80 in the U.S. Since then, the sales have evened out, Howard says, with roughly the same number of "rows" sold in the two markets.
Dahl says Russia and Ukraine have been key to viability of Amity's Wil-Rich and Wishek sales, and to their workers back in North Dakota.
Says Dahl: "It's really made the difference between being a struggling company and a very successful company."
Russian ag history: a tale of oppression
What makes Russian agriculture so different from United States agriculture?
The answer is that U.S. history is based on democracy, personal property and the rule of law. Russian culture is more than 1,000 years old, and in the past 250 years, those who work on the land have been dominated by one oppressive culture after another.
Here is a chronology of some of the amazing and cruel turning points that have had an influence on Russian agriculture over 250 years. Many items are from Robert Service's book, "A History of Modern Russia." Items pertaining specifically to agriculture and "Germans from Russia" immigrants are in bold-face.
n 1762: Catherine the Great (Catherine II) adopts "enlightenment principles" and expands boundaries to the Caspian Sea. Catherine, of Germanic descent, invites Germans into Russia to farm.
n 1812: Napoleon invades from France, reaches Moscow, but armies retreat because of winter.
n 1853-1856: Crimean war: the Russian Empire fights with the French Empire and allies over control of the Ottoman Empire - the Turkish Empire that started in Constantinople.
n 1861: Alexander II frees Russian peasants previously "bonded" to noble land owners. Now they'll pay taxes to village communes rather than to particular households or individuals. Affluent peasants become known as "kulaki," or fists.
n 1872: Germans from Russia, conscripted to the military and losing privileges, start migrating to the U.S. Lured by the Homestead Act, the bulk come from 1890 to 1910, with those in North Dakota and South Dakota coming largely from the Black Sea areas near Odessa. Some North Dakota counties are 80 percent Russian-born by 1910.
n 1905: First Russian revolution attempts to take out Romanov dynasty. "Bloody Sunday" is put down by the Emperor.
n 1907: Democratic Labor Party dissolves into Marxist factions - the Bolsheviks (Majoritarians) led by Vladimir Lenin, want the party to lead the working class, disciplined and centralized, anticipates terror to establish dictatorship. Rival Mensheviks (Minoritarians) want a "bourgeouis" revolution and a development of a capitalist economy before shifting to socialism.
n 1913: Many Russian regions adopt western farming techniques. Wheat, potato and sugar beet production increases by 2 percent per year. Village land communes periodically redistribute land within members. Peasant "khodoki" travel for seasonal work in central and northern Russia.
n 1914: Austrian Archduke Franz Ferdinand is killed by a Serbian nationalist in Sarajevo, triggering World War I. Germany supports Austria. Russia supports Serbia. Mensheviks and Bolsheviks are arrested for opposing war. State starts regulating grain trade. Lenin publishes "April Theses," urging an overthrow of the government.
n 1916: Russian Imperial Army has conscripted 14 million men, mostly peasants. Farms in west-bank Ukraine average 15 acres.
n 1917: Bolshevik revolution starts, under the slogan, "Peace, bread; power to the Soviets; workers control; land to the peasants, national self-determination." Peasants in "elective land committees" allowed to take over land that had been idled in wartime. Lenin's "Decree on Land" allows them to expropriate estates without paying. Land is an "all-people's legacy." (In wartime, North Dakota outlaws teaching German language in high schools. Hutterites are jailed in South Dakota, so some move to Canada. South Dakota prohibits German speech in "all public conversations" except for 15-minute summaries in worship services.)
n 1918: World War I ends, followed by Civil War. Tsar Nicholas II is murdered. Lenin gives peasants permission to grab gentry's homes, farm equipment. Some 3 million gentry flee. Young men, women get a larger say in communal affairs. Soviet territory is divided into provinces, each with grain procurement quotas. Peasants households starve. Bolsheviks invade Ukraine.
n 1920: In the face of food shortages, Lenin urges in vain that richer peasants should be rewarded for productivity gains rather than persecuted as "kulaks." The Eighth Congress rejects this idea.
n 1921: Lenin replaces grain requisitioning with a "tax in kind." A "New Economic Policy." NEP allows peasants to trade commodities elsewhere in the country.
n 1922: Civil war ends with defeat of Whites (Cossacks and other tsarist supporters) by Reds (Boshevik socialists). Lenin executes bishops for refusing to sell treasures to fund famine relief. The Union of Soviet Socialist Republic is established. Lenin, the Party Congress, allow peasant to hire labor and rent land. Lenin suffers a stroke and is succeeded by Stalin, "The Man of Steel," as general director.
n 1924: Lenin dies. Universal literacy becomes government goal. Farms diversify from cereals into sugar beets, potatoes and cotton and get horse-drawn equipment. State cuts produce prices by 6 percent, grain prices by 20 percent. Peasants refuse to deliver grain, creating a food shortage.
n 1928 to '33: Stalin assumes supreme power. He initiates first "Five-Year Plan," for economics, collectivizes agriculture and destroys the "kulak" class of entrepreneurs. Stalin orders peasants to deliver grain stocks and creates "collective farms." He initiates a "Machine and Tractor Station" system for sharing tractors and combines among collective farms. The centers must be paid "in-kind" with products, which exerts state control. The state imports U.S. and German machinery, as Bolsheviks shift to large, collective units. The state delivers half of the 100,000 tractors promised. Stalin sends 10,000 communists from Moscow to confiscate grain and punish farmers for feeding themselves instead of sending food to cities. Kulaks are assaulted, disbarred from collectives, shot or sent to labor camps, leaving "poor and middling peasants" to lead collectives. The state idealizes a large collective farm - the "sovkhoz." Workers (kolkhonzniki) initially are paid wages, but later are paid only by results: if the farm doesn't meet quotas the workers aren't paid.
n 1933: Kolkhozniki are allowed to cultivate a garden allotment. Famine kills an estimated 5 million to 12 million.
n 1937 to '38: Stalin's "Great Terror" purges millions, sending some to the gulag and some to execution. The Politburo assigns "arrest quotas" in territorial units. In 1937 and 1938, 681,692 are executed, including ex-kulaks. Stalin liquidates "practically the entire high command" in the armed forces. Russian Orthodox Churches are persecuted, with priests declining from 60,000 to less than 6,000 by 1941. Kokhozes and sovkhozes in the Vologda province beg for crusts of bread from convoys of prisoners.
n 1939: Stalin and Hitler secretly sign Non-Aggression pact, paving the way for World War II. Stalin orders seizure of land under illegal private cultivation.
n 1941: Hitler invades Soviet Union. World War II is dubbed "Great Patriotic War" by Soviets. June invasion in Ukraine causes massive agricultural losses. After the U.S. enters the war, the secret police makes it an offense to praise American technology. Authorities quietly drop a May 1939 restriction on the size of private plots on kolkhozes. Peasants are allowed to trade produce illicitly on street corners. The state provides food to the armed forces, but urban civilians have a small range of products, mainly bread.
The German occupation kills about 11 million Soviet citizens. Ukrainian peasants initially offer bread and salt to the invaders in the hopes that Hitler will break up collective farms and abolish state quotas. Instead, the invaders refused to denationalize the collective farms and transferred the occupied land into the Third Reich. They discovered they were to be executed, deported, or starved. The Germans raised the quotas for the kolkhozes.
n 1942: Germans reach Stalingrad and lay siege. U.S. ships sugar and compressed meat product "spam" to Russia. Manual workers receive 2,914 calories a day, below their 3,500 subsistence level. Countryside labor is largely "old women and men judged unfit for military conscription." The technical core of collective farms has "imploded" and whole areas collapsed to less than subsistence levels.
n 1943: German tanks are stopped at Kursk. German forces retreat from Stalingrad.
n 1945: World War II ends, Cold War begins. Soviets occupy Eastern Europe, including divided Berlin and Vienna. Nikita Khrushchev, a Ukrainian party leader, suggests kolkhoz farms are too small.
n 1953: Stalin dies. Khrushchev heads Communist party, renamed from the Bolsheviks. Khrushchev promotes plowing virgin lands in Kazakhstan as a cheap, fast way to increase food output. In three years, 89 million acres are added and put under the plow, a "staggering expansion," and equal to the cultivated acreage in Canada.
n 1954: Pay for a kolkhoznik is one-sixth of a factory worker. Famine in Ukraine and Moldavia is such that there is cannibalism.
n 1956: Nikita Khrushchev repudiates Stalin's "personality cult," labeling him a blunderer and killer, even though Khrushchev participated in purges.
n 1957: Soviets send up first "sputnick" space craft, triggering the space race with America.
n 1958: Tractor Service Stations are phased out, and the equipment transferred to farms. Cuba aligns itself with the USSR the next year.
n 1959: Khrushchev allows a "model kitchen" in an exhibition of the American way of life in Moscow. He visits the U.S. in September, tells westerners in the United Nations "We will bury you." He sees Iowa corn and - upon his return to Russia - instructs all kolkohzes to grow it, even though agronomists tell him it's not suited everywhere. Fudging figures becomes a standard in industrial, agricultural reporting. Theft from farms becomes normal.
n 1960: Wheat output rises 50 percent from 1950 to 1960. Milk and meat output rose 69 percent and 87 percent respectively. Food was consumed in the greatest quantity in the country's history. Soviets become grain exporters. The state institutes minimum monthly payments for collective farms. Prices paid are below the cost of production.
n 1962: Over-plowed "virgin lands" in Kazakhstan become a dust bowl.
n 1964: Khrushchev is ousted. Denouncers say his industry intrusions were bad, his policies in agriculture "even worse." Leonid Brezhnev, who had played a major part in the virgin lands campaign, becomes Soviet leader. Agriculture begins an average of 3 percent rise in annual output through 1970.
n 1965: Siberia produces first oil. Brezhnev says chemical fertilizers and mechanical equipment as the "main solution" to increased grain needs.
n 1970s: Brezhnev reinstitutes central controls on collective farms and directs 27 percent of state investments into collective farms, plus funds channeled into farm equipment, chemicals and fertilizers. Russia gains when Organization of Petroleum-Exporting Countries increases the price of oil. Russian grain purchases make history. Brezhnev increases the expansion of private plots to 1.2 acres. Private plots are 4 percent of the land but produce 30 percent of the production. Poor roads and paying workers for quantity not quality help wreck rural culture.
n 1980: There are 25,800 collective farms averaging 16,300 acres and averaging 515 employees, governed by a chairman and board of directors. There are 21,000 "corporate" state farms averaging 42,730 acres and 550 employees, with the state supplying capital and workers receiving wages. The USSR farms 555 million acres - 40 percent more than the U.S. and five times Canada's ag lands.
n 1985: Mikhail Gorbachev becomes Soviet leader, following brief stints by Yuri Andropov and Konstantin Chernenko. Gorbachev, born in 1931, was from a Russian/Ukrainian family of peasants, some of whom had been persecuted in mass agricultural collectivization. During and after World War II, Gorbachev initiates "glasnost" (openness) and "perestroika" (reconstruction). He creates a "super-ministry" of cultivation and food processing.
n 1988: Agriculture is deemed so inefficient that 40 percent of imports are agriculture.
n 1989: Berlin Wall falls. Poland, Hungary, East Germany, Czechoslavakia, Romania, Bulgarian regimes become independent.
n 1991: Boris Yeltsin becomes Russian president. Soviet Union is dissolved, replaced by Russian Federation, with independent states: Ukraine, Belarus, Georgia. Gorbachev steps down from nonfunctional role.
n 1999: Yeltsin appoints Vladimir Putin prime minister of Russian Federation. Yeltsin resigns presidency.
n 2000: Putin becomes president, and re-elected in 2004. A shift to wealthy Russians and westerners investing in agriculture increases.
n 2008: Putin steps down as president May 7. Dmitry Medvedev, becomes president, makes Putin prime minister, a less important role. Medvedev, a professor and author of a civil law textbook, had been a legal affairs director and shareholder in a timber company in the early 1990s and was head of Putin's presidential staff. Medvedev later was first deputy prime minister, in charge of agriculture, among other things. Putin had appointed him chairman of Gazprom's board of directors and made him lead negotiator with Ukraine and Belarus in gas disputes.
n 2009: Russia's Black Sea region represents 8 percent of world grain production but 19 percent of world production growth as farmers adopt western technology. The region has increased from 5 percent of world wheat exports to 25 percent, and is a world low-cost producer.
n 2010: Russian government imposes grain export embargo because of drought.
n 2011: Putin announces he'll consider running for president, with elections set for April 2012.