new dairy farm for sale

1200 head of Dairy Herd


Lands 5200 гектаров

Possibility of increasing up to 8000 hectares of property


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Description of the Investment Proposal

The investment site is located in the Novgorod region of Russian Federation, in the city of Chudovo. The total land area exceeds 5600 hectares.

lands belonging to the investment site


Proximal environment of the investment site

St. Petersburg

St. Petersburg  (car) – 120 km (1.5 hours)

Pulkovo airport – Chudovo – 100 km (1.3 hours)

St. Petersburg city center – Chudovo on a high-speed train Sapsan – 1 hour

Velikiy Novgorod

Velikiy Novgorod (car) – 72 km (40 min)


Krechevitsy airport – Chudovo – 63 km (35 min)

Moscow

Moscow (car) – 580 km (7.6 hours)

Vnukovo airport – 616.5 km (8 hours)

Domodedovo airport – 650 km (8.5 hours)

Moscow city center – Chudovo on a high-speed train «Sapsan» – 3 hours

Average highest and lowest daytime temperatures per year

During the year the temperature ranges from -13°C to +24°C, rarely reaching as low as -23°C or as high as +29°C.

Chudovsky district, where the investment site is located, is situated in the temperate climate zone. A prolonged, relatively warm and humid winter, a cold short spring, a cool arid summer and a warm, wet autumn are determined, in many respects, by the proximity of the plot to the seas, as well as Ladoga and Onega lakes. South and southwest winds prevail.

in the Chudovskiy region lasts from May 30th to August 31st with an average daily temperature of +18°C. The hottest day of the year is July 18th, with an average high temperature of + 24°C.

lasts from December 12th to March 4th with an average daily temperature of 0°C. The coldest day of the year is February 15th with an average low temperature of -13°C and a high of -6°C. The average depth of bare soil freezing is 1.5 m

Daytime hours

The length of day varies markedly throughout the year. The shortest day is December 21st, when the daylight hours amount to the total of 5 hours 54 minutes; the longest day is June 20th, when the daylight hours add up to the total of 18 hours 51 minutes

The earliest sunrise is on June 15th at 4:34 a.m., while the latest sunset is on June 26th at 11:27 p.m. The latest sunrise is on December 27th at 10:03 a.m., and the earliest sunset is on December 15th at 3:51 p.m

Precipitation

The average annual rainfall reaches 639 mm and is distributed as follows
Precipitation (mm)
Average Rainfall Days

According to statistics, the rainiest day is September 26th, the probability of rainfall on this day is 58%. 

Average Snowfall

The highest amount of snow in the year falls on January 20th, the probability of precipitation on this day is 40%. Moderate snow accounts for 18% of all precipitation. The period in which snow is most likely to occur is from October 31st to April 9th

Natural environment

Along with spruce and pine, small-leaved species are widely distributed: birch, aspen, alder. There are also oak groves, interspersed with maple, linden, elm, ash. The forests are rich with mushrooms, berries, medicinal herbs and plants: lingonberries, raspberries, kalgan, yarrow, May lily of the valley, large celandine, wild rose, etc

The region’s fauna is also diverse. Swamps and ponds are full of otters, minks, beavers and muskrats, as well as waterfowl - geese, swans, ducks. Bream, pike, perch, roach, burbot, ide inhabit rivers and lakes. One can also come across catfish, asp and perch. Forests are perfect for moose, brown bears and wolves, hares and foxes, ermines, martens, squirrels, black grouse, capercaillie, and grouse. Among the rare representatives of flora and fauna one could find osprey, peregrine falcon, white-tailed eagle, black and white stork, swallowtail butterfly, forest anemone, perennial lunar, Baltic palm root

The total area of the species state hunting reserve of regional significance in the district exceeds 10,000 hectares.

70%
of the Chudovsky district is covered by forests

Soils and topography

The region is mostly flat, where low-lying and sometimes swampy plains predominate. The maximum height above the sea level is 63 m. The area is not distinguished by a variety of minerals. Along with clays, sand and gravel materials, deposits of oil shale (kukersit), limestone, marl, and peat were discovered. Mineral water reserves are also available.

Investment site soil samples were taken from four opposite areas of the land and analyzed in a New Zealand laboratory. Soil analysis results are shown in the figures below.

Conclusion

The degree of soil acidity is normal.

Phosphorus - indicators are good in all samples taken.

Manganese is normal.

Calcium is normal.


The laboratory is accredited by the International Accreditation Association of New Zealand (IAANZ), which represents New Zealand in the International laboratory of the Accreditation Community (ILAC).

District Infrastructure

Roads

The described investment site is situated in an advantageous location between the two Russian megacities - Moscow and St. Petersburg – as it is placed in close proximity to the intersection of the M-10 and M-11 highways.

M-10 "Russia" highway

The M-10 route runs through the Chudovsky district, the distance from Moscow to St. Petersburg is 680 km.

 On January 1st, 2015, the Orders of the Ministry of Transport of Russia No. 273 dated August 21st, 2013 “On approval of the procedure for equipping vehicles with tachographs” and No. 470 dated December 17th, 2013 “On Amending Order No. 36 of the Ministry of Transport of the Russian Federation dated February 13, 2013” entered into force. The approved documents contain requirements for the mandatory equipping of trucks and buses engaged in commercial transportation with tachographs. The main objectives of the tachographs introduction are reducing accident rate on the roads, tracking the position of vehicles and monitoring the work and rest of drivers. With regards to the observance of the work and rest regime by the drivers, the daily driving duration cannot exceed nine hours, after which the driver must be provided with a continuous rest. 

The city of Chudovo is located 580 km from Moscow. The duration of this journey by car on the M-10 highway is 8-9 hours on average, after which, according to the law, a truck driver must undertake an 8-hour stop for rest. This factor contributes to the emergence of a large-scale parking lot and the development of a full range of related services in the form of cafes, restaurants, hotels, car services (repair and tire shops, car washes), gas stations, etc.

 The described investment site is located right on the side of the M-10 highway and is equipped with convenient entry/exit routes and an acceleration brake band for freight vehicles.

 The M-10 highway crosses several rivers: Sestra (near Klin), Volga (near Tver), Msta (near Novoselitsy), Volkhov (near Krechevitsy) and others. Bridges longer than 50 m have a carrying capacity of 60 - 80 tons. There are also bridges with a carrying capacity of 40 tons in the Tver region (127 km, 132 km).

M-11 highway

The new high-speed highway M-11 Moscow - St. Petersburg also runs through the Chudovsky district. The total length of the highway is 669 km, with the distance from Chudovo to Moscow being 586 km. The construction of the Moscow – St. Petersburg highway was completed in November 2019 and now the route is fully operational

The M-11 highway mainly runs parallel to the M-10 “Russia” highway and crosses it at 6 points: at km 58, km 149, km 208, km 258, km 334, km 543 with transport interchanges on different levels. This allows to switch the movement of traffic flows from the M-10 "Russia" to the expressway and vice versa. 

Comparative characteristics of highways M-10 and M-11
М-10

Total length 706 km

Road category IA (highway)

Maximum speed 120 km/h

Number of lanes 2-10 (depending on the sector) in both destinations

Lane width 3,75 m

Lighting everywhere including transport interchanges

Traffic 130,000-170,000 cars/day

М-11

Total length 669 km 

Road category IA (highway) 

Maximum speed 150 km/h 

Number of lanes 4-10 (depending on the sector) in both destinations

Lane width 3,75 m 

Lighting everywhere including transport interchanges

 Traffic 190,000 cars/day

R-21 Kola motorway

R-21 "Kola" is a public highway with an important logistical value, as it runs along the route St. Petersburg - Murmansk - Borisoglebsky (border with Norway). 

This is the only route that crosses all of Karelia and is part of the European route E-105, linking Russia with Norway, while also connecting with the M-10 highway.

R-21 crosses the rivers Neva, Volkhov, Svir and Olanka. Bridges through water barriers have a loading capacity of 60-100 tons.

Characteristics

Total length 1,592 km

Road category IA (highway)

Максимальная скорость движения 90 км/час

Number of lanes There is no dividing line along the main portion of the road

Lane width 7 - 8 m

Traffic low-intensity to medium

Western Europe - Western China International Road Corridor

new "silk road"

The construction of a new "Silk Road" - the international automobile corridor "Western Europe - Western China" is supposed to reach completion by 2020. The project plan suggests that the road will run through the lands of the described investment site and cross the M-10 and M-11 highways. This highway is predicted to improve transport links between Europe and Asia

According to the implementation plan, the highway should begin at the Western High-Speed Diameter (possibly, up to the border with Finland) in St. Petersburg and go along the M-11 highway. Before reaching the Moscow border, the route will pass by the Central Ring Road. Further, the highway will go along the existing Moscow-Kazan motorway, passing through Nizhny Novgorod. In Tatarstan the highway will get over the bridge at the mouth of river Kama. The road will pass through the cities of Belebey and Sterlitamak.

The construction is fully completed in Kazakhstan. The route spreads from the border of the Russian Federation near the village of Martuk in the Aktobe region and goes through the city of Shymkent in the South Kazakhstan (via Aktobe and Kyzylorda), Taraz and Almaty up till the border with China.

Road construction in China is also completed. Passing through the cities of Khorgos, Urumqi and Wuhan, the highway reaches the coast of the Yellow Sea in the city of Lianyungang.

Total length 8,445 km

Road category IA (highway)

Number of lanes 4 or 6

Estimated speed 100 - 150 km/h

The planned volume of goods transported Up to 33 million tons/year

Railways

The most important railway lines connecting St. Petersburg with Moscow and the internal regions of Russia pass through the Novgorod region.

 The federal railway junction Chudovo is located on the high-speed section of the Moscow - St. Petersburg railway. It takes Sapsan high-speed train three hours to reach the center of Moscow from Chudovo and 1 hour to reach the center of St. Petersburg.

Freight passes through Chudovo along the Moscow-Murmansk highway. Two junction stations “Chudovo-Moskovskoye” and “Chudovo-Kirovskoye” have everything necessary for carrying out freight transportation in four directions. In addition, access roads were laid to six enterprises in the district. 38.5 km of the railway pass through forests.

The main railway lines running through the stations of the Novgorod region:

1. St. Petersburg ↔ Moscow 

2. St. Petersburg ↔ Smolensk 

3. St. Petersburg ↔ Yaroslavl 

4. St. Petersburg ↔ Ufa 

5. St. Petersburg ↔ Bryansk 

6. St. Petersburg ↔ Belgorod 

7. St. Petersburg ↔ Vladikavkaz 

8. St. Petersburg ↔ Vitebsk 

9. St. Petersburg ↔ Kaliningrad 

10. St. Petersburg ↔ Minsk 

11. St. Petersburg ↔ Brest 

12. Moscow ↔ Murmansk 

13. Moscow ↔ Pskov 

14. Moscow ↔ Velikiy Novgorod 

15. Moscow ↔ Tallinn 

Water transport routes

       The hydrographic network is represented by the Volkhov River with tributaries, lakes, swamps, small streams and ponds. Only Volkhov is navigable within the region, its width on the entire 75-kilometer stretch exceeds 200 m. Two reinforced concrete road bridges connect the riverbanks near the settlements of Gruzino and Selischi. The major tributaries are the Pchevzha River (length 157 km), Tigoda (length 143 km), Oskuya (length 114 km) and Kerest (length 65 km).

 There are many rivers and lakes in the Novgorod region, almost all of them belong to the Baltic Sea basin. The only exception is river Mologa with tributaries belonging to the Caspian Sea basin   


Rivers

      The river network density in the Novgorod region is uneven. The majority of large rivers are located in its western part and include rivers Volkhov, Msta, Pola, Lovat and Shelon.


      River Volkhov is a transport route, it flows from Lake Ilmen into Lake Ladoga, and is navigable all over. Of the 224 km of Volkhov’s length, a third is in the Novgorod region. The river has flat, low banks, flows slowly. Its fall from Ilmen to Ladoga does not exceed 15 m. The current speed, even at a high water level, is smaller than 1 m/s. Sometimes the reverse course is observed due to the tributaries, which occurs when the water level in Ilmen is low. Volkhov’s width near Novgorod is 220 m, the maximum depth is 9-10 m.

Volkhov is ice-free for about eight months a year. In winter Novgorod’s population can spot wormwoods on the river. This is due to the influx of Ilmen’s warmer bottom waters and the presence of warm springs. Spring ice drift on the river lasts for 10 - 20 days.

Lakes

The Novgorod region can be rightfully called lake land. It has many large and small lakes, with the largest being lake Ilmen, which is situated in the western part of the region. Ilmen is navigable and is located in the center of the Priilmenskaya lowland, at an altitude of 18 m above the sea level. It has the shape of a triangle, its banks are rugged, low, swampy. Only on the southern coast does a limestone ledge rise from the water. This high, steep coast is a geological monument of nature. The lake is 43 km long and 33 km wide at the average water level. The average depth is 3-4 m, the greatest - 10 m. Volkhov river flows from the lake. Seasonal water fluctuations in Ilmen are larger than six m in amplitude. While the highest water level is observed in spring (from April till June), in the summer it declines.

The water temperature in July is +18, + 20 °. Such factors as the flow of the lake, the open surface in the warm season, wind waves and a shallow depth all contribute to the saturation of its waters with oxygen. It is also rich in nutrients for fish. About 40 species are found in the lake basin: smelt, bream, pikeperch, pike, burbot, roach, etc. Thanks to such a large biological diversity, Ilmen is called the "golden bottom".


Valdai Lake is the deepest lake in the region (up to 60 m). An artificial channel connects it with the Lake Uzhin. Both lakes are navigable

Swamps 

Marshes occupy up to 8% of the Chudovsky region’s surface. The main types of swamp replenishment is through precipitation and groundwater. 

Water supply and sanitation

Water supply

The two main sources of drinking water in the Chudovsky district are surface water (78.2% of water consumption) and groundwater (about 21.8%).

Wastewater

The capacity of existing treatment facilities is generally sufficient and adequate for the volume of wastewater

Gas supply

Currently, the gas supply to the Chudovsky district is carried out with either natural gas or liquefied hydrocarbon gas. The main gas pipeline passes through the investment site, which makes it possible to satisfy the gas requirements of the enterprises located on it. Natural gas is used by all industrial enterprises for both the technological and industrial heating needs, as well as by the population and the municipal enterprises together with boiler houses.

The sources of natural gas supply in the Chudovskiy district are five gas distribution stations (with an outlet pressure of 0.3MPa): Zuevo, Krasny Farforist, Uspenskoe, Chudovo and Tregubovo. Natural gas is supplied via medium-pressure networks to the GRU of boiler rooms and hydraulic fracturing. After hydraulic fracturing, low-pressure gas is distributed through the street network to consumers.

Gasification of the village of Oskuy, located in close proximity to the lands of Chudovo LLC, is already in the development prospects of the region. The length of the medium-pressure gas pipeline from the village of Gruzino to the village of Oskuy is 21 km.

Centralized natural gas is currently provided to the population of seven settlements, which constitutes 85% of the region’s total population

One of the most effective areas of gas use is its growing popularity as a motor fuel for vehicles. Nine gas stations (with a total of 32 gas stands) operate in the region to improve the supply of more economically efficient fuel to the population and enterprises

The average gasification level of the Novgorod region with natural gas today is 55.2%: in cities and urban-type settlements - 72.5%, in rural areas - 18.2%. The length of gas networks in the region exceeds 1.4 thousand km.

Heating supply

In the Chudovskiy district, 18 boiler houses provide residential buildings and enterprises with centralized heating supply utilizing solid, liquid and gaseous fuels. The production capacity of four coal-fired boiler rooms is 9.55 Gcal/h, the connected heat load is 2.12 Gcal/h. The production capacity of gas boiler houses is 88.35 Gcal/h, the connected heat load is 49.22 Gcal/h.

Four boilers running on natural gas have reserves of thermal power, one of them is situated in the city of Chudovo.

Electricity supply

Today, the electricity in the Chudovsky district is provided by:

• one substation of 330/110/35/10 kV "Chudovo"; 

• two substations of 110/10 kV: “Spasskaya” 110/10 kV, “Energomash” 110/10 kV; 

• one traction substation TPS “Ridges” 110/10 kV; 

• three substations of 35/10 kV: 35/10 “Gruzino”, 35/10 “Krasny Farforist” and 35/10 “Oskuy”. 

 

Electric networks of 10 and 0.4 kV are mainly supported by overhead lines, the bulk - by bare wire and a very small part is made by cables and self-supporting SIC wire

Main oil pipeline

Druzhba oil trunk pipeline passes through the Novgorod and Leningrad regions. This pipeline, with a total length of about 8,900 km (of which 3,900 km is in Russia), is the largest pipeline system in the world. Its northern section passes through Belarus, Poland, Germany, Latvia and Lithuania, and the southern section – through Ukraine, Czech Republic, Slovakia, Hungary and Croatia

The pipeline system includes 46 pumping stations and 38 intermediate pumping stations, the tank farms of which contain 1.5 million m³ of oil. 66.5 million tons are annually exported via Druzhba to non-CIS countries, including 49.8 million tons through the northern branch.

The Initiator of the Investment Offer Chudovo LLC

Company History and Property

The investment site with all available assets became the property of Chudovo LLC in August 2015. Chudovo LLC managed to increase the number of livestock and the level of milk production through the substantial capital investment.


Company Assets

    Land assets

Chudovo LLC possesses one of the largest land plots in the Novgorod region. The actual land area of the company exceeds 5600 hectares, of which: 

• under cereal crops - 1,000 hectares; 

• under perennial grasses - more than 2,000 hectares; 

• under annual herbs - more than 1,000 hectares 

Dairy farm

A dairy farm, which is also a part of the company’s property, is located in the northern part of the owned lands.

Specialized equipment fleet

Currently, the company’s fleet includes more than 30 units of equipment that allows for land cultivation, harvesting the required amount of feed, etc.

Acquisition of additional equipment in connection with the planned increase in livestock is also projected in the future.

Labour Resources

As of 2019, the population permanently living in the Novgorod region is 600,296 people, of which 19,792 people live in the Chudovsky district. The working-age population accounts for 60.7%. In addition, a favorable economic policy and convenient geographical location of the region attract highly qualified specialists from St. Petersburg and Moscow. Significant replenishment of personnel occurs due to favorable conditions for labor migration, there is a possibility of attracting workers from other regions of Russian Federation, as well as from other countries

Migration dynamics in the Novgorod region

Currently, 87 people work as members of staff at Chudovo Dairy Farm. The HR department has carried out a large-scale work to resolve the personnel issue and attract highly qualified specialists. To date, the full-fledged operation of the farm is provided by:

• a veterinarian; 

• an inseminator; 

• an agronomist; 

• a laboratory assistant; 

• milkers; 

• feeders; 

• cattlemen; 

• herd count technicians; 

• shepherds; 

• tractor drivers; 

• electric welders; 

• agricultural machinery mechanics, etc. 

Russian Dairy Market

Due to the introduction of food embargo in March 2014, imports of dairy products to Russia decreased significantly: by 50% for cheese, 37% for butter and 32% for dry milk. The group of prohibited goods also includes milk, cream, yogurt and kefir.

As of the end of 2017, the total number of cows on farms of all categories in Russia totaled 8,226 thousand heads, which constituted a 0.5% decrease as compared to the previous year. On the other hand, milk production in the country for the same period of time has increased by 1.4% and amounted to 31,183.5 tons. Such a divergent trend could be explained by the ever-increasing productivity of dairy business as a whole and the rising per-head milk yield in particular, which is predicted to stay relatively constant in the nearest future.

Despite serious changes in foreign trade, the overall volume of Russian dairy market has been relatively stable in the recent years. At the same time, a sufficiently high dependency on imports for the majority of dairy products is still observed, in spite of the policies promoting active import substitution.

Import dynamics for various dairy products in Russia


Milk consumption patterns by segment (market share, %)

Despite the introduction of the food embargo, Russia is still a large dairy market. Moreover, it remains one of the most promising in terms of growth in the consumption of dairy products, especially in the segment of dairy products with high added value.

Correlation of the change in the number of cows, their productivity and milk production in Russia


Russian Meat Market

In 2018 the total volume of Russian meat market has amounted to 10.7 million tons, which is equal to about 73 kg of meat per person. Poultry holds the largest market share – 46%. While beef and mutton do not significantly change their positions, the amount of poultry consumed increases each year. In 2016 total meat consumption averaged 70.8 kg, of which 21.5% was beef. Today beef makes up about 18.8% of all meat consumed – or approximately 13.7 kg. However, the Ministry of Economic Development predicts that the Russian economy will face growth in the near future, along with which the consumption of main types of meat will gradually increase till up to 80 kg per person per year.

Imports of meat of all kinds to Russia are steadily declining: in 2018 they amounted to 719.8 thousand tons, which is 26.5% less than in the previous year. The main reasons for such a sharp decline in meat imports are the embargo and devaluation of ruble, which made the import of meat into Russia mostly unprofitable or economically unattractive. In addition, the import rates were negatively affected by high rates of commercial loans and the deterioration of their availability for foreign trade in the foreign exchange market. As a result, dozens of importers completely ceased operations.

Meat imports into Russia 2017 – 2018, thousand tons


Potential for Business Development

Project Investment Potential

Chudovsky district is a dynamically developing area of the Novgorod region and Russia as a whole, as it has a number of important advantages compared to other regions in the country:

1. The advantageous geographical location between Moscow and St. Petersburg - Russia's two largest consumer markets, close proximity to the borders with the Baltic States, Belarus and Scandinavia, as well as a wealth of ports, airports and customs terminals of the Northwest and Moscow Federal Districts;

2. Developed transport network: the M10 and M11 motorways pass through the district, the October Railway connects the two capitals, while the navigable Volkhov River provides a decent water route. From a viewpoint of logistics, such conditions allow for the most convenient ways of transporting goods;

3. Diversification of the region’s economy: the leading role in the region’s economy belongs to the agricultural and industrial production complexes.

4. Developed trade and small business sector;

5. An extensive telecommunications system;

6. The presence of a market for highly skilled labour;

7. The desire of the state and local governments of the region to promote the economic growth of the municipal district.

The favorable investment climate created in the Novgorod region resulted in a steady flow of capital. As of the end of December 2013, the volume of accumulated foreign investment in the region’s economy amounted to 2.1 billion US dollars, including foreign direct investment of 1.8 billion US dollars, or 85% of the total foreign investment.

In 2013, the non-financial sector of the economy received 378.5 million US dollars, including foreign direct investment of 146.8 billion rubles, or 38.8% of the total foreign investment received. This capital came from 23 countries of the world such as Canada, Finland, the Netherlands, Ireland and Germany, which accounted for 72.6% of total foreign investment received in the region, or USD 274.9 million.

In 2018, the non-financial sector of the region's economy received 106.6 million. U.S. dollars of foreign investment, which represented an 11.1% increase as compared to the previous year.

The dynamics of foreign investment flows

(Source: Novgorod Region Investment Portal)

Companies widely known in their respective industries are represented among organizations with foreign participation, testifying to the high reputation of the Novgorod region as one of the most attractive investment territories in the North-West of Russia. The region is chosen by over 160 companies with the participation of foreign investors, including such world-famous entities as:

Dirol Cadbury  United Kingdom

 Chocolate and chewing gum production

Dresser Industries United States

Shut-off fixture production

Uralita Spain

Shut-off fixture production

Benteler Germany

Mechanical engineering

UPM Kymmene Finland

Woodworking enterprise

Amcor Flexibles United Kingdom

Flexible packaging production

Remarkably, the interest of foreign investors in the region is not waning in connection with changes in the political relations between the EU and Russia: more than 13 investment projects are under development, and negotiations are underway with representatives of foreign companies from Germany, USA, Finland, Sweden, Slovenia.

Chudovo LLC is currently negotiating with an Italian soft cheese company on the issue of providing an investment site and raw materials for the enterprise.

Legislative Support

The administrative resource of the Novgorod region is aimed at serving entrepreneurs and creating comfortable conditions for the implementation of investment proposals. It has become a common practice for the administrations of the region and municipalities to accompany promising investment projects with the participation of foreign capital, assisting them in solving various problems and thus contributing to the projects’ faster implementation. An Association of Enterprises with Foreign Investments was created from representatives of companies with foreign participation in the Novgorod region. The major discussion topics raised during the association’s meetings are problematic issues arising during the projects’ implementation, as well as their most efficient resolution in cooperation with the regional administration.


Economic policy of regional authorities:

• The consistent and continuous nature of the economic transformations carried out by the Governor of the region; 

• continuous application of the law on non-deterioration of starting conditions for an investor working in the Novgorod market; 

• calculation of the investment funds payback period is carried out in accordance with the methodology approved as the regional law and developed by the well-known consulting company Arthur Andersen; 

• the active use by the Coordinating Council of regional producers of goods and the Association of Enterprises with Foreign Investments of the right of legislative initiative delegated by the Administration of the region. All regulations aimed at creating a favorable investment climate can be divided into three groups: 

 • guarantees to investors; 

• tax credits; 

• ensuring the investment attractiveness of Novgorod enterprises. 


Moreover, the law “On tax incentives to enterprises and organizations located in the Novgorod region” is currently in force. According to this law, enterprises that use foreign investment, engage in production activities and are registered in the region are exempt from paying those taxes to the regional budget, for which the right to grant benefits belongs to the subjects of the Federation, until the moment the full return on investment is received.

In addition, these businesses are exempt from paying part of the taxes to the territorial road fund. Newly created enterprises with domestic and foreign investments are reimbursed for value added tax in the part credited to the regional budget. Organizations that incur marketing costs are also partially exempt from the taxes on profits.

Furthermore, there is also a law that allows for the exemption of bank revenues from the income tax in the part that is credited to the regional budget, provided it targets funds to the direct investments.

The law “On investment activity in the Novgorod region” allowing investors to bring together all the “rules of the game” is enacted in order to create the most comfortable conditions and establish additional guarantees for organizations implementing investment projects.

Historically favorable legislative conditions in the region play a positive role. Thus, Novgorod investment legislation is moving towards a systematic improvement of the provisions of federal regulations to the extent that the competence of the authorities and the means at their disposal allow it to do so.

Promoting investment activities:

   • Support for investment projects by federal and regional authorities continues until the full completion of its implementation. Potential investors are provided with complete free informational support. Concessional lending for investment activities is also available, at 0% yearly interest. The costs of building a dairy farm are partially reimbursed, in the amount of 30%. Various other support programs for agricultural producers are available. 

• Upon the presentation of projects to the registration and regulatory authorities of the region, Project curators are appointed from among the leaders of the region and local authorities. 

• The accepted proposals may involve possible placement in Novgorod and the region of both joint enterprises and those, wholly owned by foreign partners, with sites selected by investors, as well as other offers of economic cooperation 

Risk Factors and Strategies to Reduce Them

This section of the investment proposal analyzes those project risks that are not amenable to formal analysis. The probability of following risks occurring during the implementation of the project is evaluated in terms: “high”, “medium”, “low”.

Risks arising during the capital investment phase: 

 • Supplier’s failure to fulfill their obligations (low quality, defects in equipment, technology); 

• Untimely delivery and installation of equipment; 

• Incompatibility of Russian equipment with imported; 

• Disruption of construction time; 

• Exceeding the estimated cost of the project. 


In order to minimize this kind of risks, Chudovo LLC is ready to provide the services of its competent employees, who are well oriented on the Russian dairy production market: purchasing managers, logisticians and translators, who can arrange the purchase of equipment and its installation from leading importing and domestic manufacturers that have previous experience working with similar projects in Russia. Thus, these risks can be assessed as “low”.

Risks associated with production:

• Difficulties with the procurement of raw materials; 

• Failure to reach project capacity (the emergence of technological or commodity constraints); 

• The production of dairy products of inadequate quality. 

The presence at the described investment site of Chudovo’s own raw milk production plant makes it possible to fully control the quality and volume of raw materials. The risk associated with the procurement of raw materials is planned to be minimized by signing long-term contracts, where the volume of purchases of raw milk will be clearly fixed. Therefore, the risks can be described as “low”.

• Difficulties in the sales of production.

At the moment, there is an acute shortage of high-quality dairy products with an acceptable premium on the Russian market. Demand for products remains consistently high (see Chapter 3. The Russian dairy market). The economies of scale and high quality will enable the company to offer a competitive price. It is important to note that when the market conditions change, the enterprise has an opportunity to adjust the volumes and ratios in the production of dairy products taking into account current demand. When selling products, it is planned to carry out preliminary work with the channels in advance and coordinate this work together with the Ministry of Agriculture of the Russian Federation and the Administration of the Novgorod Region. Thus, risks can be rated as "low."

 Risks associated with fluctuations in macroeconomic parameters (inflation, exchange rate) and changes in the overall economic situation (tax environment, legislation, etc.):

Risks associated with fluctuations in macroeconomic parameters are inherent in the work of any enterprise. Questions regarding this issue are resolved on the operational basis. In addition, the project’s dependence on the general economic situation will be significantly lower, subject to the provision of benefits and state subsidies from the federal and regional budgets to foreign investors. Therefore, related risks can also be rated as “low”.

Important Figures and Information

This section introduces information that can be essential when making a decision of investing into the Novgorod region. All the figures are for reference only, the sources can be supplied upon request.

Cost breakdown

These costs play an important role in understanding how to price the final output and gain a large share of the market. 

• electricity: ₽6-8 per kW (€0,085 - 0,11);

• diesel fuel: ₽42-45 per liter (€0.60 - 0.64); 

• salaries: from ₽10,000 for unskilled labor up to ₽60,000 for specialists (€142 - 857); 

• milk at dairies: ₽28-30 per kg depending on the fat content and milk quality (€0.40 - 0.42); 

• milk in stores: ₽60-180 per liter depending on fat content, packaging, etc. (€0.86 - 2.57); 

• ammonia fertilizers: around €165 per ton (the largest plant is located 70 km from the farm); 

• the cost of construction is lower than in Europe by about 30%. 

State support programs 

In its efforts to promote agriculture and farming businesses, Novgorod regional authorities are currently offering support programs to relevant stakeholders. The complete list of such programs, as well as eligibility criteria can be found on the Ministry of Agriculture and Novgorod Ministry of Agriculture websites.  

• The reimbursement of a portion of capital costs for the construction of dairy farms is at 30% level. In other words, 30% of all costs incurred during the construction of the farm, hay sheds, silo trenches, lagoons for storing manure, etc. are reimbursed from the state budget; 

• Compensation in the amount of ₽60-90 (€0.86 - 1.28) per kg of breeding heifers bought for milk production; 

• Obtaining an investment loan at 0-2% for 10-15 years depends on the business plan, the scale of population involvement, production indicators, etc.; 

• Compensation for the purchased equipment up to 50% of the purchase price; 

• Compensation for the construction of a dairy plant up to 30% of all costs; 

• Assistance in the construction of housing for workers employed on a dairy farm – various programs are currently in effect; 

• Exemption from most taxes until the full payback on investment is received; 

• Depending on territory, it is possible to obtain electricity, gas, water, road construction, etc. at the expense of the federal budget; 

• Compensation of a portion of the cost of putting the land into circulation. This happens when land, that has not been cultivated for five or more years, is put back into circulation; 

• Compensation of transport costs associated with the delivery of agricultural products for export. 

These programs will be in effect until 2023. After that, they will most likely be suspended because there is a rapid construction of dairy farms in Russia at the moment, and the government plans to reach full supply of country with its own milk, as well as extra production for export by 2023. It is predicted that in the future these programs will be adjusted and aimed at supporting the industry and stimulating the output of the final product for export to foreign countries in order to replenish Russia’s budget.

Sergei +7 (921) 760-12-53