Russia Open to More Asian Food Companies Using Land in Far East

As Russia looks to open up new export markets, the country is offering Asian food companies more farmland to use in its Far East, Bloomberg writes.

The government is now considering requests from Asian firms to farm another 1 million hectares (2.5 million acres) – an area roughly the size of Jamaica, according to Leonid Petukhov, CEO at Russia’s Far East Investment and Export Agency.

The agency has already helped to attract companies including Chinese conglomerate Legend Holdings and China Mengniu Dairy to invest in the vast but largely undeveloped Far East region.

For China, sourcing more food from Russia would aid its import needs, while providing another source of supplies in the wake of a trade war with the U.S. that has shaken up agricultural markets.

“A lot of markets are closed for Russian farm products” in Asia, Petukhov said in an interview with Bloomberg in Vladivostok. “One way to open them is to create incentives or attract investors from, say, China so they produce here, in partnership with Russians.”

A Russian joint venture set up by China’s Legend Holdings is about to collect its first crop of soybeans, corn and rice in the Far East, and plans to eventually run as much as 50,000 hectares. South Korean food company Lotte plans to boost its land area in the region to 150,000 hectares, Petukhov said.

China last year opened up its dairy market to Russia, which allowed Zhongding Dairy Farming to make the first shipment of Russian liquid milk to China this month, Mr Petukhov said. Separately, China Mengniu Dairy has agreed to set up a joint venture that may invest as much as 45 billion Russian rubles (S$960 million) to build dairy farms in Russia’s Far East.

While some Chinese companies had rented Russian farmland since the Soviet Union broke up in 1991, they were mostly relatively small and sometimes neglected to maintain soil fertility and observe crop rotation practices, Petukhov said.

“We are now going a different path,” he said. “We are looking for large players both on the Chinese and the Russian sides.”