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Fields of plenty: Asian interest in Russian agriculture on the rise

2016 has seen a rise in foreign interest in Russia’s vital agriculture sector. Investors from a variety of countries have identified potentially bountiful market opportunities in Russian agriculture across a range of industries. 
 
One of the most intriguing developments is the announcement that Vietnam’s TH Group will be investing in a huge milk production and processing facility in the Kaluga region. Antaoly Artamanov, the region’s governor, signed an agreement with TH True Milk to construct the complex.
 
The TH Group is investing some $220 million into this project. 40,000 hectares of land will be required before the facility becomes operational in 2019. In 2017, TH True Milk will acquire their first plots in the Ulyanovsky and Mosalsky districts. 
 
This initial $220 million investment is just a small drop in the oceans of money the TH Group is planning on investing in Russia. Some $2 billion total investment is planned by the Vietnamese corporation including development of cattle husbandry. Should these plans come to fruition, then TH True Milk would become the largest foreign investor in the Russian milk cattle husbandry sector.
 
Strong ties have already been made between the TH Group and Russia. Earlier in 2016, the Vietnamese group formed TH- Rus Milk Food Ltd and began renting 13,000 hectares of land in the Moscow region for dairy farming.
 
Of course, Vietnam is not the only Asian country talking with its wallet with regards to agricultural investment in Russia. China is quickly becoming a big, and lucrative, partner. In early March, 2016, representatives from the Russian Ministry of Agriculture held talks with a delegation of high-flying Chinese businessmen on the development of numerous agricultural projects. 
 
Greenhouse facilities and the creation of new irrigation systems were the focus of the talks. These projects will take place on Russian soil. In addition, Chinese companies are also showing greater interest in foodstuffs produced in the Omsk region. 
 
$10 million dollars’ worth of contracts have been signed between the respective states. As a result, producers in Omsk have pledged to step up shipments of grain, cattle feedstuffs, oils, oil crops and  other foodstuffs to China. Manchurian companies have also expressed a growing appetite for other products sourced in Omsk including rapeseed, corn, mustard and confectionary with a particular sweet tooth for biscuits and sweets. 
 
The Chinese are also ready to buy wheat, barley and oats from Russia. However, the main supplies of grain will begin once the neighboring state sets special delivery quotas for the raw crops – a process which is still ongoing. 
 
Economic co-operation between Omsk and China has existed since at least 2014. Omsk’s authorities are currently considering the idea of a joint Omsk/Chinese Centre of Entrepreneurs’ Communication which would further strengthen trade links.

 

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