Russia and China launch $10bn agribusiness fund

Russia and China are creating a $10bn Russian-Chinese Far East Agribusiness Development Fund to invest in agribusiness.

Russia and China have launched a $10 billion agribusiness fund to invest in projects in eastern Russia, the latest in a string of joint initiatives between the two countries designed to boost investment in Russian agriculture.

The fund, backed by financial institutions including Russia’s government-owned Sberbank, will aim to “stimulate the production of 10 million tons of grain and agricultural products annually from 2020,” according to Russian’s foreign language news agency.

Investment will be used to boost projects focused on grain growing, processing, storage and logistics as well as the construction and operation of agribusiness infrastructure.

More announcements concerning agribusiness investment are expected, according to the news agency, as Russia focuses on boosting agri investment and food self-sufficiency in the wake of the Ukraine crisis and import ban on Western food products.

Last month Chinese company Zoje Resources signed an agreement to lease 115,000 hectares of farmland in the east of the country for 49 years, paying 250 rubles per hectare per year. This is well above the average 182 rubles per hectare and led some investors to suggest that Chinese investment would push up land prices in Russia.

And in May Russia’s Direct Investment Fund (RDIF) and the Russia-China Investment Fund (RCIF), a private equity fund created by RDIF and China’s sovereign wealth fund, China Investment Corporation, launched a new $2 billion agricultural investment fund. An RDIF spokesman told Agri Investor the fund would focus on projects producing cereal crops, namely rice and corn, along the borders of China and Russia.

Last year RDIF intensified its focus on agribusiness and is aiming to improve harvest yields in the country through technology and better farming practices, according to Sean Glodek, director at RDIF.