Land grabbing in post-Soviet Eurasia: the world’s largest agricultural land reserves at stake

Abstract

‘Land grabbing’ in Africa by China, and other populous, high-income Asian countries such as South Korea, has received considerable attention, while land grabbing in post-Soviet Eurasia has gone largely unnoticed. However, as this article shows, foreign state and private companies are also acquiring vast areas of farmland in this region. The article first discusses the factors that make post-Soviet Eurasia such an attractive region for international investment, arguably encompassing much greater agricultural land reserves than most regions of sub-Saharan Africa or Asia. Second, in view of the use of media and web-based data in this article, the methodological limitations of researching land investments are discussed. Third, an overview is given of the processes of land accumulation and farm acquisition. Both domestic and international accumulation of land are dealt with in the domestic context of agricultural development and institutions. Furthermore, the main actors (investors) involved in land grabbing are distinguished (according to their country of origin and legal or institutional form). Fourth, the article outlines the main obstacles (and points of contention) concerning the emergence (and effectiveness/performance) of domestic, and especially international, agroholdings in the region. Some preliminary findings are presented on the possible effects of land grabbing on local populations in this region.

Keywords:

• land grabbing
• post-Soviet countries
• agroholdings
• economic inequality

Notes

¹A prominent example is the World Bank's World Development Report 2008 which was dedicated to agriculture, putting it back on the policy agenda for the first time in decades (World Bank 2007).

²UNCTAD (2009) contains the comprehensive World Investment Report on Transnational Corporations, Agricultural Production and Development.

³Borras and Franco (2010) rightly criticize the notion that Sub-Saharan Africa contains large ‘land reserves’, and the implied suggestion that when land is not in agricultural use there are no property rights attached to it and no local claims on it.

⁴According to the World Bank's calculations, only Brazil and Sudan as individual countries have more potential land available in terms of non-forested, non-cultivated land suitable for rainfed production. Of course, Russia has much more fertile farmland with more precipitation than a country like Sudan, thus representing a much larger potential increase in production. Furthermore, Russia together with Ukraine and Kazakhstan took almost 23 million hectares of arable land out of production in the 1990s, representing the largest reduction worldwide in recent history (FAO/EBRD 2008). Of this area at least 11 to 13 million hectares consists of non-marginal lands which could be brought into production without major ecological constraints (2008, 2).

⁵Land availability is defined in a rather awkward manner, namely as farmland in regions where the density of the population is less than 25 persons per square km and that are less than six hours to major markets.

⁶There are also instances of international land accumulation in the other post-Soviet countries. The Abu Dhabi Development Fund, for instance, announced in 2008 that it was considering agricultural investments in Uzbekistan, in addition to obtaining land in Sudan (and with plans for Senegal) (Smith 2008), just as the Miro Pharos group announced an interest in wheat production in Uzbekistan as well as in Kazakhstan and Moldova (Khan 2009). Qatar recently made a deal with Georgia to grow corn in that country and to import as many as 70,000 sheep a year (Bedwell 2010).

⁷BBC, 1 August 2008. Daniel Fischer, reporting on Russia only, stated that 100 million acres of fertile agricultural land was lying fallow (about 40 million hectares). Other lower estimates speak of about roughly 20 million hectares. A FAO/EBRD (2008) report estimated that 23 million ha of arable land had been taken out of production by 2003–2005 (compared with 1990–1992) in Kazakhstan, Russia, and Ukraine.

⁸There were, however, various constructions for foreign land acquisition (apart from illegal ones), namely the ability to purchase the ‘right to produce’, with even the possibility of including a clause to purchase the land once the moratorium was lifted. For the moment, however, the moratorium continues, since in December 2009 it was decided to renew it until 2012.

⁹Between 2001 and 2007 the average wheat harvest was around 45–50 million metric tons, with the exception of 2003. This level was substantially higher than that of the 1990s, although fluctuations were also higher then. The increase in production (and consequently the export of grain) was mainly caused by an overall recovery of the economy, but also increased investments in Large Farm Enterprises (LFEs) in the Putin era.

¹⁰In 2007, Russia exported 13.6 million tons of grain (Popova 2008).

¹¹In addition, one can assume that Chinese investors and media often do not report in the English language, which further adds to potential underreporting of Chinese investments in land.

¹²Some of the early investments in agriculture by the end of the 1990s and early 2000s were rather experimental and ad hoc (see, for example, Rylko et al. 2005, Visser 2008). Reasons for investments in this period include diversification of risk and government pressure on companies to invest in rural areas. Sometimes farm enterprises ended up owned by energy companies when they were unable to pay their energy bills. Some of these investors, large energy companies and industrial monopolies, are currently diminishing their operations in agriculture. Gazprom, the largest state-owned gas company in Russia, has reduced its number of LFEs from 91 in 2001 to 55 in 2006 (Uzun et al. 2009, 140).

¹³According to the Institute of Agricultural Market Studies this share was as high as 10 percent (Bush 2008).

¹⁴Furthermore, the share in output of some of the largest individual agroholdings is significant even at the domestic level. By 2003, ‘Agroholding’, for instance, already had a market share of 3.5 percent in Russia's total agricultural output and it controls more than 10 percent of the poultry industry (Zimmermann, n.d.).

¹⁵‘China earmarks US$5 billion for food production in the continent’, 23 April 2008, allAfrica.com. Available from: https://allafrica.com [accessed 7 July 2010].

¹⁶The Kazakh embassy websites mention investments in agriculture by Swiss Glencore and US-based Cargill, but websites of these companies do not mention investment in Kazakhstan, and no other sources were found confirming the investment by these companies.

¹⁷Furthermore, the country, with less than 16 million inhabitants, lacks a significant domestic food consumption market.

¹⁸The ‘Landgrab Eurasia Database’, on which the Table 1 is based, was composed by the authors. It draws on official information provided by websites of the companies involved, investment brokers, and regional authorities in the host countries. Furthermore, the Grain (2008b) land grab list and the related website (www.farmlandgrab.org), the overview of foreign investors in agriculture registered in Russia (Uzun et al. 2009), as well as various newspapers and news agency websites have been used—of which articles by Simonova et al. (2009) and Fomicheva and Seregin (2009) were particularly useful.

¹⁹Some of these agroholdings registered in Cyprus are in the process of issuing (or have already issued) some share emissions for foreign investors.

²⁰J.P. Morgan controlled this land only for a short period. The bank curtailed its agricultural operations in Ukraine after the financial crisis set in.

²¹Most sources mention 100,000 ha. However, earlier Libya announced an interest in acquiring 300,000 ha in Ukraine to grow 1.5 million tons of wheat. On 20–21 July 2009, delegations of both countries met again to work on this deal (Reuters 2009). Bokhari (2009) gives a figure of 247,000 ha.

²²See www.landkom.net.

²³ www.1888pressrelease.com, ‘Pava conducted talks with Japanese Partners’, posted 27 October 2009.

²⁴Fieldnotes, Visser, made during a research visit in 2001 to the Pskov region.

²⁵Source: www.farmlandgrab.org/7738 [Accessed 5 October 2010] and the company's website: www.landkom.net

²⁶Source: website Agroinvest: http://www.agroinvest.com/upload/presentations/Presentation11.11.09.pdf [Accessed 5 October 2010].

²⁷Whereas the average size of private family farms in Russia is much lower, at 81 hectares in 2006 (www.gks.ru) [Accessed 1 December 2008].

²⁸Statement by the director of the Russian Agroholding ‘Russian Farms’ at the 102^nd EAAE seminar ‘Super-large Farming Companies in Eastern Europe’, Moscow, 16–17 May 2007.

²⁹ http://www.youtube.com/watch?v=sfxoPUPfOtE&feature=related [Accessed April 1 2010].

³⁰‘If property rights are secure, markets function well, and areas with high social or environmental value are protected effectively (possibly using market mechanisms, such as payments for environmental services) the public sector's role is mainly regulatory. The public sector takes care of environmental externalities and allows markets, including those for land, to function smoothly and to encourage expansion into low grade pastures and degraded forest rather than into areas already occupied or with high biodiversity value. But if land rights are insecure or ill-defined, large-scale land acquisition may threaten forest or lead to conflict with existing land users. Good institutions and land governance will thus be critical to ensure that the technical potential is realized sustainable’ (World Bank 2010, 62).

Additional information

Notes on contributors

Oane Visser

This article benefited from the research assistance of Natasha Mamonova. We thank the three anonymous referees of JPS which contributed, with their remarks, to improving the final version of this article.