Rising grain prices ignite interest in Russia's farmlands
Record grain prices this year have sparked a surge of investment interest for farmland in Russia and Ukraine.
Companies are in a frenzy to get into the market, the UK's Guardian newspaper quoted
Sevki Acuner, deputy director for agribusiness at the European Bank for Reconstruction and Development (EBRD) as saying.
Acuner told a conference organised by analysts Troika Dialog that the bank has received an increasing number of project requests during the last 6 to 9 months from investors trying to gather land in the former Soviet Union.
The bank is looking at three to four transactions, not just in Russia but Ukraine as well, he said, adding that companies would have to grab whatever land is available to reach critical mass.
Troika Dialog, in a report issued earlier this month, estimated that the Commonwealth of Independent States has 13 percent of the world's arable land, yet grows only 6 percent of its crops and farms just 3 percent of the world's meat.
Huge swathes of farm land in Russia had been left fallow since the fall of Communism and the country's livestock herd also shrank in the years that followed.
Russia is now the world's largest meat importer and is looking to revive its livestock sector. Fertiliser and other farm costs are also lower in Russia
Some companies are primarily looking to buy or lease land and then focus on improving productivity while others seek investments in livestock, meat processing or grain storage.
However, there is a caveat: foreign landowners could become targets should nationalist sentiment arise.
Furthermore, the harsher climate in Russia could also mean unpredictable yields.
Companies were advised to focus on processing than pure land play, the paper reported.
It would also take far longer for fallow land to get up to production levels compared to lands that are already in production, Trigon Agri Chairman Ulo Adamson said.
Trigon Agri has expanded from the Baltics into Ukraine and Russia and has invested in both cereal and dairy farming.