Leaving the Russian Countryside

Location: Rostov-on-Don, Russia
Local Time: 9:21 AM
Madison Time: 12:21 AM

It's corn-harvest time!

Today is my last day in southern Russia. I will be taking an overnight train back up to Moscow tonight where I will have additional meetings with government officials and grain commodity experts. Whereas most of the interviews that Sasha and I conducted last week were with medium- to large-scale private farm directors (operations ranging from about 1500 to 5000 hectares, or 3500 to 12000 acres), I spoke with several individuals managing large agriholding companies this week - the largest one encompassing more than 170,000 acres - more than half the size of Rhode Island!

One of the companies had significantly higher yields, nearly twice the levels of some of the other farms. However, this enterprise was located in a region that did not experience drought as the others had. The director also seemed to feel that they had sufficient rain even in previous years, which was in contrast to other directors who felt that in non-drought years, moisture deficiency is still a major problem. (Side note - it hasn't rained once since I arrived here nearly 3 weeks ago.) However, no one seemed to have the financial resources available through either private funds or government subsidies to invest in irrigation infrastructure.

The Azov Sea nearby the high-yielding enterprise.

A country house near the Azov Sea.

In many senses, though, it seemed that a lot of the problems faced by the medium-to-large private enterprises scaled up and were problems for the large agriholding companies as well. On average the yields seemed to be roughly comparable, and the agriholding companies had the same difficulties acquiring capital to make investments in better equipment and technologies.  Sasha and I spoke with one agricultural economist who mentioned that a lot of agriholding companies regard the land that they cultivate as a safety net. Some of the larger companies are involved with large-scale grain export and buy a majority of the grain from other producers. They rely on the grain that they produce to cushion the years in which grain prices are high, and therefore do not necessarily invest heavily into that portion of the company. So while increasing yields on their existing lands might be a goal for them, it might not be the biggest priority.

Something that I found very interesting throughout this trip was learning about the land tenure system in Russia's breadbasket. During Soviet times, much of the land was farmed through massive state or collective enterprises. When the Soviet Union collapsed, a lot of this land was redistributed to shareholders - many of whom now lease their land to these medium-to-large private and agriholding enterprises. Most of the directors I spoke with pay rent to the shareholders through barter rather than with money, providing them with certain portions of the grain output.

It will be interesting to return back to Moscow and speak with individuals who can provide a broad overview of the agricultural sector, and compare how this overview fits with my experience on the ground. Until next time!

Last morning in Rostov-on-Don.