Investment to increase in Russian farms

Chinese investment in Russian agriculture has great potential, experts told the Global Times, after Russia announced it is opening vast swathes of farmland in the Russian Far East to foreign investment.

Russia will open 1 million hectares of land to foreign investors, said a spokesman for the Far East Investment and Export Agency, according to a report last week by Russian news agency Sputnik News. Chinese investors are expected to invest in new agricultural projects in the area, as they are already well established there.

“Chinese farmers have been working in the Russian Far East for some time now, but as the China-US trade war has escalated and retaliatory tariffs are levied on US soybeans, movements to expand in Russia have been growing,” Jiao Shanwei, editorin-chief of cngrain.com, told the Global Times on Sunday.

Russian soybean cultivation is concentrated in the Amur oblast, just north of Northeast China’s Heilongjiang Province, and Primorsky Krai, the coastal region to its east.

“China has been encouraging domestic agricultural companies to expand abroad, but often there have been some challenges. Russia taking policies to encourage foreign investment will bring great results for cooperation in agricultural development,” Li Guoxiang, a research fellow at the Chinese Academy of Social Sciences‘ Rural Development Institute, told the Global Times on Sunday.

“Land productivity in the Russian Far East is lower than China’s, but there is plentiful land, and access to Heilongjiang is fairly convenient,” said Jiao.

Harbin-based Dongjin group obtained in 2017 a 49-year lease for 1 million mu (66,667 hectares) of land in the Russian Far East, where the company grows soybeans for export to China, according to a report by the Harbin Daily.

The company is investing to establish a supply chain between China and the Russian Far East, which could improve with more land available for production.

China bought 850,000 tons of soybeans from Russia in the year from July 2017 to May 2018, more than double its imports in 2016, according to Russian agency Rosselkhoznadzor.

Russian soybean production is expected to increase 8.2 percent this year to 3.87 million tons, according to a report by the US Department of Agriculture.

“Chinese agricultural companies are world-class in technology as well as seed variety. Chinese companies can use their technological advantage in Russia to help develop soybean production,” said Li.