A conversation with Artis Freibergs, Executive Director of Baloži and Co

Your company exports peat to 45 countries. Is there enough of the resource (peat)?

We lease the peat bogs where we operate from Renda Parish, Kuldīga Municipality. We are currently working on 610 hectares. Back in the day (2009), there was a lot of talk and writing about 'our' Ozoli bog because it was handed over for management without a lease fee. That wasn't entirely right; the old contracts were terminated, and a tender was organised.

Next to our production facility, there used to be a small village (Ozoli), which was built in the Soviet era specifically for the workers employed in the bog; there was a kindergarten, a canteen, and three blocks of flats. One has now been demolished—as you can see—another is abandoned, and in the third, mostly elderly people live—family members or relatives of former bog workers... We still employ two people from those times—the second generation—parents started it, and their children are continuing. The village was built in the bog. I found old plans showing that they once intended to expand it. Back then, there was no factory here, just a site for peat extraction. Where our current factory stands, there was a ramp where peat was transported along a peat railway and loaded onto transport for removal. Mostly, litter peat was extracted, which was transported to nearby farms. When the bus route to Kuldīga was closed, people gradually began to leave. The large white building visible in what is now the 'nominal village centre' is the old Ozoli manor. Two years ago, its ownership changed, the building was tidied up slightly, trees were felled and… we are watching and waiting to see what happens next!

Peat extraction is continuing in the Ozoli bog, and we have five more bogs around us that are currently untouched.

I would like to emphasise that it is more cost-effective to export peat to different countries and in various directions. The number 45 is by no means too high! Our work is to a certain extent seasonal and depends on transport. For example, if there are problems delivering products to Turkey, but the road to Italy is clear, we send them there! There are opportunities to vary. Our work profile is horticultural peat, and we only produce peat; we fractionate it (sieve it and divide it into fractions) and pack it into large bales.

In Latvian shops, we see both local and Estonian peat…

The cost price of (Latvian) peat is higher, so the Estonians are quite active in the Latvian market. The quality and price of each (Latvian, Estonian) peat differ slightly. Although—I see both 'Laflora' and Tukums peat products in shops—you cannot say that the Estonians are 'overwhelming' us.

Development… How are you planning it?

We have submitted the necessary documents to 'Latvijas valsts meži', wishing to find a way to continue production and work on new areas. So far, we have not encountered any particular requirements or obstacles. As I mentioned, peat extraction took place here during the Soviet era, so there would be no rational justification for objecting to anything. As far as I know, more serious activities against operations in bogs have taken place in the last five years. As I said, we have expressed our interest in developing the Skudru bog—we shall see how we get on!

Based on our own calculations, we can continue working in the current areas for no more than eight years—naturally—we are looking for further fields of work. There is a plan: to work here—in the Ozoli bog—and in parallel develop new areas, which would allow us to reasonably plan cash flow, distribute it over the years and planned works. It is not simply a matter of 'taking' a bog, 'jumping' in and operating... One issue is participating in the tender, the other is the development of the bog and the preliminary work, which would require at least two years.

Is the peat market stable?

One could say so. In my opinion, there are no problems with sales for any manufacturer; another question is how much we can vary the price.

The largest export goes to…

Last year (2018), our biggest order was from Poland. However, we had an unfortunate incident at the factory with a fire that occurred in November. (A defect in the electrical supply line happened at night, which is why we could not react quickly.) We hope to restore production to its previous level by this autumn; the damaged buildings have been repaired, and there is a small delay with the equipment, as there is a certain queue for its production. They have promised us the delivery of the equipment in August. As I mentioned, we participated in a tender in Poland, which we won. Given the fire, we proved that it did not happen due to our fault, and there were no penalties from the Poles…

Our employees come from various parishes in Kuldīga Municipality. People come to work from Vārme, Renda and Kuldīga, and, as I mentioned, there are also two locals. We have 26 permanent employees, and during the summer season, about 60 people work here.

How did you start working in the peat industry yourself?

My father worked here—in Ozoli—and the company owners are German. At the time, they were looking for someone who spoke German. I came for an interview and gradually started working. At first, it was quite difficult because there was no clarity on how the company would develop, or if it would develop, but now 11 years have passed working in the bog.

For the German entrepreneurs, the main condition was that there must be somewhere to sell the peat! They already had previous operations (joint ventures) in Latvia, and the company was operating in the areas of Aknīste and Rucava. Here, in Renda Parish, the idea was to start everything with a new name…

The name is misleading, though!

The company entered the tender for the development of the Ozoli bog under a different name. As I understood it, in the event of a successful result, the plan was to hand the bog over for extraction, but they kept the name 'Baloži'. Yes, it quite often happens that people call us and only then find out or realise that it concerns Kuldīga. It happens that they want to call 'the other Baloži'. 'Pindstrup' operates in Baloži, and they are our clients. They produce substrate from peat.

Last year and the fires in the bogs…

Yes! One of the problems that the residents of Latvia learned about last year in relation to the Stiklu bog is that there is no access (no roads) in such territories! If trouble occurs in the furthest corner of the bog, our (peat extractors') machinery can get there, but the firefighters cannot!

Over time, the roads have been more or less sorted out. Last year's fire disaster in the Stiklu bog is closely linked to the nature reserve and its regulations: the territory is large, no economic activity takes place there, and therefore access to the bog area is not possible everywhere! The rides must be kept in order so that it is at least somewhat possible to react, for example, by limiting the spread of fire. By the way—a disaster does not necessarily have to start in the bog—something can happen in adjacent territories, and the wind 'spreads' everything further.

A person's (firefighter's) ability to deal with a fire disaster in a bog is limited. If you pour water over smouldering peat, it 'settles at the bottom' and the top, dry part moves forward. The fire can also spread like that!

Is the company controlled often?

Environmental supervisors come every year—there is a visual inspection and a document check. They look at how much peat has been collected and compare it with the data in the record-keeping log. How much you have extracted per week or month, whether you have calculated correctly and are paying the natural resources tax. They also check whether you have operated outside the licensed territory. Once a year, firefighters visit us. Border guards also 'keep an eye' on us.

What are border guards doing in a bog in the middle of Kurzeme?

They check the personnel. They are looking for illegally employed foreigners! As far as I understand, they carry out checks in some companies in Kuldīga and pay us a visit at the same time!

When is the assessment for the Skudru bog promised?

In a year! The area of the bog is larger than 150 hectares. Two years have already passed since our first application; if we count the expected time for the tender, it will be three years in total. The situation is a bit absurd, about which I have already written an application, noting: if you organise a tender, perhaps you can provide a radius or territory (for example, 20 km) around the factory in the regulations, where a businessman already operating has some advantages. Because there is a possibility that another company or businessman who is not engaged in peat extraction participates in the tender, wins it, and then transfers the rights to operate! It may happen that the businessman working on-site, realistically evaluating their operation, cannot fit into the specified figures. Someone comes from the outside with their own mathematics!

What is the cooperation with the local government like?

The cooperation with the Kuldīga Municipality Council is good! For several years in a row, we have received recognition for the taxes paid to the municipal treasury. It should be added here that the attitude towards entrepreneurs in Latvian municipalities varies, because, as I mentioned, our investor also works in the Aknīste area, where the volume of taxes paid by the company is numerically higher than in Kuldīga, but they do not say 'Thank you!' for it! For locals—us—recognition might not be so important, but for a foreign investor, it is! In Kuldīga, we are appreciated! Until 2017, closer cooperation had developed with Renda Parish, but now business affairs are under the supervision of the municipality. I was born and raised in Renda myself, and I have been living in Kuldīga for some time now, where there are greater opportunities for children in terms of schools and sports training.

From the photographs, it can be seen that the company supports sports!

I do not play floorball myself, but it has 'become the norm' that in companies where the owner's children are involved in sports, support is given to the sport that the children train in. Floorball in Latvia is relatively new, it is supported, as is athletics. My position is to support children and youth! Adults will manage on their own, but the new generation in sports requires investment! Of course, we, like everyone in Latvia, have been affected by changes in the tax system, which 'hit the pocket' of both sports and entrepreneurs. But—what is good—it has not changed the company's policy on supporting sports!

About future plans…

The most optimistic scenario—we are given opportunities to develop and work in the surrounding bogs. If that succeeds, the further plan is to create a substrate production line. The worst—we extract the current area until the 'end' and stop.

I doubt whether peat extraction (the industry) should be perceived as a threat to the environment. I think one cannot look at bogs narrowly—there is a bog, therefore it is a reserve! One must look at whether the bog is a value, what we gain, and what we lose by developing the bog!
Note: the second photograph shows the Ozoli manor mentioned by Artis Freibergs