Oligarchs, megafarms and land reserves: understanding land grabbing in Russia

Abstract

This paper seeks to unravel the political economy of large-scale land acquisitions in post-Soviet Russia. Russia falls neither in the normal category of ‘investor’ countries, nor in the category of ‘target’ countries. Russia has large ‘land reserves’, since in the 1990s much fertile land was abandoned. We analyse how particular Russia is with regards to the common argument in favour of land acquisitions, namely that land is available, unused or even unpopulated. With rapid economic growth, capital of Russian oligarchs in search of new frontiers, and the 2002 land code allowing land sales, land began to attract investment. Land grabbing expands at a rapid pace and in some cases, it results in dispossession and little or no compensation. This paper describes different land acquisitions strategies and argues that the share-based land rights distribution during the 1990s did not provide security of land tenure to rural dwellers. Emerging rural social movements try to form countervailing powers but with limited success. Rich land owners easily escape the implementation of new laws on controlling underutilized land, while there is a danger that they enable eviction with legal measures of rural dwellers. In this sense Russia appears to be a ‘normal’ case in the land grab debate.

Keywords:

• land grabbing
• Russia
• agroholdings
• dispossession
• land reserves
• land reform

Notes

¹We thank Ruth Hall and three anonymous reviewers for their valuable comments. The assistance in language editing by Martha Jane Robbins is also acknowledged here. Part of the research for this article was made possible by a Land Deal Politics Initiative (LDPI) research grant.

²Russia's population peaked in the early 1990s (at the time of the end of the Soviet Union) with about 148 million people in the country. Today, it is approximately 143 million. The United States Census Bureau estimates that Russia's population will decline from the current size to a mere 111 million by 2050, a loss of more than 30 million people and a decrease of more than 20 percent (Rosenberg 2012).

³The financial crisis led to temporary problems with access to finance in Russia; however, more fundamentally it stimulated, globally as well as in Russia, a major shift of capital towards the agri-food sector, and the primary sector more broadly.

⁴Most of the interviews were conducted by Mamonova and Visser in the autumn of 2010 and winter and spring of 2011 in the Moscow region. Most of the agroholdings which were included in the research have (or formerly had) foreign investment, and operate in multiple Russian regions. The paper also benefited from interviews with foreign investors conducted by Steggerda and Visser in the autumn of 2011 and winter of 2012. Michelle Steggerda is an honours student in the department of Anthropology and Development Studies, Radboud University Nijmegen. Finally, the paper uses data from interviews with domestic and foreign investors in agriculture conducted earlier by Visser in the Moscow, Rostov, Pskov and Saint Petersburg regions. Among the rural movements, Krestyansky Front (Peasant Front) is the largest. This movement fights for the protection of peasants' rights, in the face of land dispossession by large-scale investors.

⁵The Russian Soviet Federative Socialist Republic (RSFSR) is the republic of the former Soviet Union, which after the collapse of the Soviet Union in December 1991 was renamed the Russian Federation.

⁶This large gap between the number of unregistered and registered land shares/plots indicates that there is still widespread tenure insecurity.

⁷Also, individual entrepreneurs account for about 1.5 percent of agricultural land. A small part of the land used by large-scale farm enterprises is still owned by the state.

⁸In 2010 the upward trend was temporary affected by the financial crisis. According to some estimates, the registered transactions in 2010 were almost a third less than during the same period before the crisis of 2008, due to problems of investors with financing land deals in context of the global financial crisis, which hit Russia hard.

⁹The Russian Far East concerns the easternmost parts of Russia, between Lake Baikal in Eastern Siberia and the Pacific Ocean. In Russia, the region is usually referred to as just the ‘Far East’.

¹⁰Disentangling the food, fodder and biofuel functions of agricultural production is sometimes difficult, as it consists in part of ‘flex crops’ which can be used for multiple purposes.

¹¹In addition, a probably unexpected motivation for biofuel production is the following: in Ukraine biofuel production is used as a means to generate value from the Northern area around Chernobyl, which due to the radioactive contamination can no longer be used for food and/or fodder production.

¹²However, it should be noted that by the mid-2000s the national budget for the first time since the mid-1990s set aside a substantial amount of subsidies for household plots and private farms (Wegren 2007).

¹³In addition to an indication of aging in the countryside, it is also an indication of the difficulties of registering land for rural dwellers.

¹⁴The mayor did not agree with starting a new investment site further away from the village, and as a result the investor continued to search elsewhere. The investor could understand the position of the local authorities and mentioned their care for the rural inhabitants with some appreciation. The word ‘mayor’ is used here following the terminology of the interviewee.

¹⁵It should be noted that these strategies are mainly used by domestic agroholdings or ones that are offshore investment funds of Russian oligarchs.

¹⁶Also some deals which are within the framework of the law, such as a deal involving a farm director selling his land shares to an outsider, may have been preceded by a fraud in obtaining these shares from the rural population but with the legal period for filing a complaint on the early fraud expired.

¹⁷Based on interview with Tamara Semenova, vice-president of the peasant movement Krestyansky Front, discussing the case of the farm enterprise Matveyevskoye. Interview was conducted 29 September 2010 in Moscow, Russia.

¹⁸Report of Arbitration Court of Bashkortostan Republic 2008.

¹⁹ Dacha is a Russian word for seasonal or year-round second homes often located in the exurbs of the country. It is estimated that about 50 percent of Russian families living in large cities have dachas.

²⁰The name ‘Rublevka’ is derived from the name of Rublyovo-Uspenskoe highway. It is an unofficial name of a prestigious residential area west of Moscow, Russia.

²¹Examples of food policy as a political weapon in Russian international relations have been the wine ban for Georgia and the ‘milk war’ with Belarus (Wegren 2009a, b, 2010).

²²This is based on observations by Visser during a seminar on investment opportunities in the Agribusiness of Russia and Ukraine, held in Wassenaar, The Netherlands, November 2010.

²³For instance, Visser had various conversations with Dutch businessmen who told him that they were offered agricultural land to start a farm by various regional authorities, on visits for business in other sectors.

²⁴Observations by Visser at the FAO Voluntary Guidelines regional consultation for the CIS in Moscow.

²⁵According to article 284 of the Federal Law N 136-FZ ‘Land Code; see: www.souzsad.ru/index.php/gl/39-sgt/60-2011-01-26-19-51-51 of Russian Federation’ (2001).

²⁶ Otkati (in English, kickbacks) – a kind of bribe (money or gift) to authorities.

²⁷For more on the Soviet and post-Soviet mechanisms leading to ‘virtual production’ see Visser and Kalb (2010) and Kalb and Visser (forthcoming), and see Lindner (2008, 133–139) for a discussion of virtual accounting within agriculture.

²⁸Interview with school director, Moscow region, 14 February 2011.

²⁹Whereas in Moscow region farm directors often did so with the perspective of selling it on to outsiders, in most other regions in the 1990s rising land prices were not (yet) anticipated and control over the LFE seemed to be the main motivation.