To Russia, with Love

Written by Chris Atchison
Company: Alta Exports International Ltd.
Location: Calgary
What it does: Produces breeding cattle and bovine genetic materials and technologies

When news broke in May 2003 that a single case of bovine spongiform encephalopathy (BSE) had been discovered among Canadian cattle, Gary Smith could only watch in horror as key export markets shut their borders to Canadian beef — and, along with it, the high-quality cattle, bovine semen and embryos produced by Smith’s three-year-old firm, Alta Exports International Ltd.

“We went from earning $4 million or $5 million a year to nothing,” says Smith, president of Calgary-based Alta. So, the 30-year industry veteran did what any self-respecting entrepreneur does when all hope seems lost: he went hunting for his next customer.

Fast-forward six years: Alta is generating three times as much revenue as it did pre-BSE, with a booming business in the country of its salvation: Russia. Ranchers in Kazakhstan and China are also Alta customers; and, if all goes according to plan, the Uzbeks will be next. That’s the result of targeting the markets with the highest potential for its product, exploiting existing business relationships and recruiting the right foreign sales agents. By demonstrating this combination of financial success and trade savvy, Alta has earned the 2009 Canada Export Achievement Award for the Prairies and the Territories.

Extensive research by Smith and Alta Exports vice-president Kate Kolstad had indicated that Russia should be a prime candidate for Alta’s products. The collapse of the Soviet empire had triggered the dismantling of Russia’s breeding programs, which decimated its cattle stocks. The livestock available for import from Western Europe was of lower quality and quantity than Canada had to offer, and U.S. and Australian producers had yet to make inroads into Russia. What’s more, the combination of oil wealth and vast tracts of grazable land made the country a potential cattle-production superpower. “We knew there was a need, and we knew we had the product and the technology,” says Smith.

Still, Smith knew the challenges of breaking into Russia, including the BSE blemish and the lack of a health protocol required to govern cattle trade between Canada and Russia. So, Alta organized a trade mission with representatives from Alberta Agriculture, the Canadian Food Inspection Agency and several cattle-industry organizations. Its goal: to persuade the Russians that Canadian cattle and genetic products were of great quality and value. In presentations, says Smith, the team dwelled on the notion that: “We have some of the highest-quality bovine genetics in the world, and we’re known worldwide as a nation of people who are good to deal with.” Some delegates who could trace their ancestry to Russia even made a point of declaring their heritage. “[The Russians] realized these Canadians were somebody they could relate to,” says Smith. “That was a real selling point.”

The Russians bought it. Canada and Russia soon negotiated the necessary health protocols, and in 2005 Alta received its first Russian order, for 1,975 head of breeding stock. Anticipating competition from U.S. and Australian suppliers, Alta tapped the Canadian government for help in developing a network of Russian sales agents. To ensure productivity, Smith insisted that Alta’s sellers work on a commission basis. “In many cases,” he explains, “hiring gives too much of a level of comfort and sales don’t happen.” These local agents also feed Alta information on Russian agricultural trends, regulatory changes and new client opportunities.

To establish itself as a reliable supplier, Alta went to great lengths to guarantee the quality of its sperm, embryos and cattle — which sell for US$4,000 to US$6,000 per animal. Alta flew its personnel, including veterinarians, to Russia to teach customers about everything from embryo storage to bovine nutrition, thus helping to ensure each animal developed to its full potential.

On the heels of Alta’s Russian success, the company moved into Kazakhstan — flying seven 747s full of Holsteins there two years ago. Alta has also rebuilt part of its China business and is organizing its first foray into Uzbekistan, another country with vast expanses of land ideal for raising cattle. Exports already comprise almost all of Alta’s business: of the $15 million in sales it generated last year, $14.8 million came from beyond Canada’s borders. But by diversifying the company’s export base, says Smith, the company can shield itself from future crises like BSE.

Over the course of Alta’s turnaround, Smith has learned many valuable lessons in doing business in foreign cultures — including when to limit indulgence in a host’s hospitality. “Serving vodka is a tried-and-true method of congratulating you on your friendship and the success you’ve had with your clients in Russia,” says Smith, “and it’s also used to break you down in your negotiations.”

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