Global Policy Forum

Russia Offers Agricultural Land for Southeast Asian Farmers to Grow Crops

In an effort to foster trade and boost exports, Russia is looking to sell about 24 million hectares of arable land, below-market price, to Asian countries seeking to invest in foreign farmland for food security purposes. Currently, a reported 409 million acres of farmland are unused in Russia. The Russian government plans to acquire more land for lending, by annulling ownership rights to land that has not been cultivated for three years. Russia’s focus on Southeast Asia is part of a wider effort to build stronger ties with the fastest growing region in the world.

By Karl Lester M. Yap and Marina Sysoyeva 


August 12, 2011

Russia is offering agricultural land to Southeast Asian nations to grow crops and help secure reliable food supplies, part of wider efforts to foster trade and investment ties in new markets.

“We suggested today to companies in the region to enter the Russian market given its large scale and to establish themselves to produce food for your own supply,” Deputy Economy Minister Andrei Slepnyov said yesterday in an interview in Manado, Indonesia, where he is attending a meeting of the Association of Southeast Asian Nations trade ministers.

Russian President Dmitry Medvedev is turning to Asia to boost exports as his country’s economy struggles to grow at the pace it did before a 2009 recession. Russia is targeting grain buyers in Southeast Asia to regain its share of the world market after lifting an export ban in July, the Moscow-based Institute for Agricultural Market Studies said Aug. 1.

“Many Asian governments are exploring alternatives to secure food supplies over the long term given that the demographic and environmental pressures in Asia could lead to structural food shortages in the years to come,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. “In fact, it’s already showing up in greater inflation pressures in the agricultural sectors in the region.”

Stable Supplies

Asian nations are seeking stable food supplies after data compiled by the United Nations Food and Agriculture Organization showed global prices surged to a record this year. India’s food inflation accelerated to a three-month high, a report showed yesterday.

Indonesia, the world’s third-largest rice consumer, may seek to negotiate an agreement with India and Pakistan to secure rice supplies, the Southeast Asian nation’s Trade Minister Mari Pangestu said in a separate interview yesterday.

Russian farmers are leaving about a quarter of the nation’s 165.9 million hectares (409.9 million acres) of agricultural land unused, Federal State Statistics Service data show. A further 20.7 million hectares of land lies fallow, Alexander Korbut, vice president of the Grain Union, said by phone today.

Russia has about 24 million hectares of undistributed arable land that should be sold at below-market prices to people already working there as the government seeks to boost production, Prime Minister Vladimir Putin said in March.

The government plans to annul ownership rights to farmland that has been left uncultivated for at least three years.

Japan, the world’s largest grain importer, said in April it will help local companies invest in purchases and leasing of farmlands overseas to ensure stable food supply as the country lacks arable land. South Korea, the world’s third-biggest corn buyer, plans to acquire a total of 380,000 hectares of overseas farmland by 2018 to grow crops.

Food prices will remain higher in the next decade than in the past 10 years as agricultural production slows and demand increases, the OECD and the United Nations said in a joint report in June.

Russia, the world’s largest energy exporter, is exploring possible investments with Southeast Asian nations in power generation, alternative energy and natural-resources exploration as it seeks to boost demand for the commodities it produces, Slepnev said.

“The center of world development is shifting to the Asian region,” he said. “Of course, the region will become an even bigger energy consumer.”

Russia’s economy, which grew at an average of 7 percent annually from 2000 to 2008, expanded 3.4 percent from a year earlier in the second quarter, missing economists’ forecasts, a report showed yesterday.


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