Johnson's Russia List
2016-#24
3 February 2016
[log in to unmask]
A project sponsored through the Institute for European, Russian, and
Eurasian Studies (IERES) at The George Washington University's Elliott
School of International Affairs*
www.ieres.org
JRL homepage: www.russialist.org

 #6
Christian Science Monitor
February 2, 2016
Could sanctions spur Russia's ascent to agricultural superpower?
Since the end of the Soviet era, Russia's agricultural industry has
languished. But with sanctions now keeping European goods out of the Russian
market, small domestic farmers are stepping up.
By Fred Weir, Correspondent 

MOSALSK, RUSSIA - The very first thing Alexander Sayapin has to say to a
Western journalist who's made a long trek out to his start-up dairy some 150
miles from Moscow? "Thank you for the sanctions."

The sanctions Mr. Sayapin is referring to, a near-complete ban on food
products imported from the European Union, were actually imposed by the
Kremlin. They came in retaliation for Western sanctions leveled against
Russia almost two years ago over its role in Ukraine's crisis. But never
mind.

His point is that the sudden disappearance of cheap EU dairy goods from the
Russian market created an opportunity. With financing from a major
Moscow-based supermarket chain, Azbuka V'Kusa, he built in this deeply rural
region a small dairy that now processes local milk into a variety of
products, and sells as much as it can make under the supermarket's in-house
brand name and his own "Farmer Sayapin" label.

Small farmers like Sayapin, long ignored by Russian customers and investors
alike, are breathing new life into Russia's agricultural markets, allowing
the country to feed itself without imports - and even to become an exporter
itself.

"We've tripled our production in the past year, and we've carved out a place
in the market," he says. "Even if they lift the sanctions tomorrow, we're
already here. We've learned a lot, reduced our costs, and we're ready to
compete."

A farming boom

Russia is in the throes of recession, and things look to get tougher this
year. But agriculture appears to be rebounding briskly. Officials insist
that's not just because of sanctions, or the plunging ruble - which favors
domestic production and makes imports more expensive - but the result of
much more fundamental long-term factors.

More than a decade of confusion over how to decollectivize giant Soviet
farms left the agricultural sector in ruins and made Russia dependent on
foreign food imports. A new land code introduced in 2001 made it possible to
create Western-style private farms, but development was slow. In 2012 the
government introduced a sweeping program of subsidies to promote private
farming, including low-cost loans, controlled prices for fertilizers,
support for producers of domestic farm machinery, and state financing for
other vital elements of agricultural infrastructure.

It's clearly had an impact. For instance, Russia was until recently a major
importer of chicken and pork from North America. Now it is self-sufficient
in fowl and last year became a net exporter of pork for the first time in
history. Russian agricultural exports were $20 billion last year, more than
the country's arms sales, and are expected to grow this year.

The current crisis, perhaps amplified by a patriotic backlash against
Western things, has also spurred a revival of traditional Russian cuisine.
Producers of old ingredients like beets, cabbage, buckwheat, tvorog
(Russian-style cottage cheese), and kefir (a yogurt drink) are reportedly
booming.

"Farmers are in a very favorable position these days. They can get grants
and subsidized loans from federal and local government, and the current
economic situation works for them," says Alexander Tsigankov, an official
with the Kaluga regional ministry of agriculture. "People are coming back
from the cities, because there are finally decent-paying jobs in farming,
and that's easing our chronic labor shortages. In our region, Kaluga, the
farming sector has grown by 17 percent in the past two years."

Mr. Tsigankov scoffs at the much-discussed possibility that Western
sanctions may soon be eased and all the products of vastly superior European
agribusiness will flood back into the market, perhaps knocking local farmers
back on their heels.

"So what?" he says. "If all those products come back, there will be price
wars. And our farmers, who count their costs in rubles, will win most of the
battles against goods that are priced in euros. Of course there will always
be niche markets for French cheeses and Italian cured meats and such. But
we're well on our way to producing enough of most foodstuffs to feed our own
population."

However, he adds, "I hope our government has had enough time to think over
the problem of food security and will protect our own farming" so as not to
leave Russia vulnerable to sanctions in future.

'Doing well'

The hard road back from Soviet-style farming is on display in the village of
Plotskaya, where a few modern homes sprout amid decaying former collective
farm buildings. Former members of the collective farm, Sergei Fetisov and
his family, have gradually amalgamated much of the old farm's former lands
by buying out some former members, convincing others to join together and
pool their efforts. They have several hundred head of cattle, produce their
own feed. They also harvested about 3,000 tons of potatoes last year.

"I never thought this transition from socialism to capitalism was going to
take so long or be so complicated," Mr. Fetisov says. He and many of his
neighbors are Old Believers, a branch of Russian Orthodoxy that was
persecuted in the past. This shared religious bond has spurred them to
cooperate.

But he says they rely on their own efforts, not government assistance.
"Things are going fine now, but I worry about future stability. Whatever
happens, we're self-sufficient here. We've rebuilt this village, and we will
stay. For us, farming is a way of life, not a business," he says.

Farming is a business for Andrei Davidov. The former Soviet military officer
started his cattle farm on unused land 25 years ago, so he didn't face any
of the legal problems of transitioning from the collective farm system. A
sojourn with friendly cattle ranchers in the US in the 1990s was a big help
in showing him the ropes, he says. He now has about 150 Hereford cattle,
which he butchers himself, and he makes a comfortable living supplying a
supermarket chain and a couple of restaurants in the nearby city of Kaluga.

"It's all good for me. I'm doing well," he says.

Most of the beef served in the former Soviet Union was old dairy cows sent
to slaughter, and so raising beef cattle is a relatively new industry for
Russia. By many accounts, it's one that is expanding fast.  But unlike pigs
or chickens, beef has a long production cycle, and Russia is still far from
being self-sufficient.

"What this country needs is 800,000 private farms raising cattle, like in
the US, and then maybe we'll be an agricultural superpower," Mr. Davidov
says.
 [return to Contents]