With food demand leaping in China and India, Russia has the potential to emerge as a new world food power. But first, Russian farmers need to overcome years of decline.
One hundred years ago, Czarist Russia was the breadbasket of Europe, and the American John Deere company was selling horse-drawn plows to Russian farmers.
Fast forward a century, and John Deere is back in Russia. This time, selling $250,000 harvest combines complete with air-conditioned cabs.
Tremendous potential
Alexey Berlin supervises the assembly of tractors and combines at John Deere’s new factory south of Moscow. He said given Russia’s vast territory, agriculture has huge potential.
Russia has 10 percent of the world’s fresh water and arable land, and only two percent of the world’s population. But in the 20 years since the collapse of the Soviet Union, the amount of land being farmed in Russia has shrunk by one third.
Russia, the world’s-largest nation by territory, survives on food imports.
Increasing wheat yields
Today, Russian wheat yields are at the level American farm yields were in the 1930s. But gradually, Russian farmers are adopting better seeds, better fertilizers, and more efficient machinery. The John Deere factory patio has more than 100 new combines awaiting shipment to Russian farmers.
John Deere manager for Russia, Joe Barrett, believes the country will play a key role in meeting world food needs.
“We have got an expected increase in world population that will be upon us in 2050 with an increase to 9 billion people," he said. "All of them will be fed. All of them deserve to be fed. That means agriculture productivity is going to have to increase dramatically. We think Russia has a terrific opportunity to help fill that void.”
Last year, when a drought pushed Russia to suspend grain exports, food prices spiked to record highs around the world, fueling food riots in poor countries and some say the street revolts of the Arab Spring.
Raising production
This year, however, Russian farmers planted for a bumper crop on a land area larger than the U.S. state of California.
Prime Minister Vladimir Putin has ordered the resumption of Russian grain exports on July 1. This is expected to ease bread prices around the world.
The head of agricultural research at Renaissance Capital investment bank in Moscow, Natalia Zagvozdina, said Russia could expand its harvests to meet world demand.
"If we only had the capital to put all the previously cultivated land back to work, we could have increased the output by 50 percent, easily," said Zagvozdina. "That is easier said than done.”
Trends are looking up, though. During the Soviet days, Russia was a wheat importer. This year, it is targeted to become the world’s third-largest wheat exporter, after Canada and the United States.