All posts tagged 'Agriculture'


First published 2016 on

How Russia could better manage it's agricultural treasure ("Super Kolkhoz")

Why invest in agriculture?
Russia is the country with most arable land, but  historically has not bothered to develop an advanced agriculture. Why should it do now? The are various security, economic, social and spiritual reasons.
First, as part of sovereignty, Russia must ensure food security to it's almost 150 million people, as in the current context as possible Western imposed blockade could severely hurt the country and it's citizen. Second, agriculture (and relative food industry) offers employment for many people. Third, in current political and economic context, agriculture can be an excellent investment opportunity, especially for small investors if done in conjunction to the Homestead act currently becoming executive. In light of current countersanctions on US led western world, the investment possibility is particularly interesting, but should be extended to private individual. For social reasons, it gives rural communities the possibility to recover and develop both as population and economically. There is another reason, which is more philosophic and spiritual - I am sure Mr Dugin could conceptualize it much  better - : agriculture is a hard honest labour for people who love their land, which rewards them with the harvests, it is work in daily contact to nature therefor it also has a spiritual side. Moreover, rural communities honour traditions, both civil and religious, and give the country a soul and an identity.

The model proposed is a system in form of a multilayered cooperative, similar to what has been done in defence industry and in some areas of Europe.

First thing would be to create a "Super Kolkhoz" at the Oblast/Republic/Krai/Okrug level and some perhaps special for Artic(fur/wool animals), Far East (fishing), that would work out at around 100 entities, eventually smaller one could be aggregated. Each "Super Kolkhoz" should include existing farmers and include all unused land in local "Super Kolkhoz". Unused land would be managed by Kolkhoz till a new owner takes over. "Super Kolkhoz" should have following functions such as marketing, packaging, logistics(storage), financing, equipment rental, seeds, fertilizer, academic/scientific research, crop/animal care, cattle import/market, support(bureaucratic, certification, quality) and more. Each "Super Kolkhoz" should become both a food producer, to add value to locally grown raw materials (e.g. milk->cheese), but also develop products beyond food. There should be a cooperative process inter kolkhoz, with help of local or even partnerships with foreign companies. "Super Kolkhoz" should use inmates as free/cheap labour source, perhaps in conjunction to a rehabilitation program run by church or other Russian NGO.

The financing should be mainly as follows:
a)allow people to buy 1 ha of land to be managed by kolkhoz (people can pay extra for licence to build dacha/house, or for picking different type of plants farmed e.g. apple orchard). As of 2017 the Russian "Homestead" act gives away 1 ha of free land, but it is too little land for a self sustaining farm or family. Therefore the land shall be sold, restricted to 1 ha per person for an affordable amount like 700K to 1 M rubles, and managed by the Kolkhoz, so that many people could own a piece of land AND the land would be made productive.  The state could also give away 1ha plots to less privileged members of society (pensioners, large families).
b)allow (small) pure shareholders in kolkhoz offering investments in form of shares or bonds either in individual Kolkhoz or a federal Agricultural fund
c)state can contribute with extra funds
d)crowdfunding could be used for special projects
e)strategic firms (e.g. agricultural, machinery and others) could be allowed to swap their products for equity
f) health certificates for imports

Above the "Super Kolkhoz" there should be a holding company, "Federal Kolkhoz" - subordinated to the Ministry of Agriculture -, to manage all these "Super Kolkhoz", setting policy(import substitution priorities), quality, and others, driving export and more. The holding company should include:
a) Federal Kolkhoz logistics company with train, air, naval and road transport (including local transport companies for local deliveries)
b) Kolkhoz TV channel, websites, and other online resources for training, knowledge management and promotion of agriculture
c) Federal Kolkhoz Agro seeds/plants company to research best of class plants for Russia
d) E-commerce facilities for direct sales to direct consumers or small businesses (restaurants/kiosks)

Value added
Agriculture is a low  value industry, suffering from competitive prices of raw materials, seasonality and mostly is supported by governments and it not easily sustainable to create profit for reinvestment.
"Super Kolkhoz" should act like a "business incubator(nursery)" in which members are encouraged and supported to create higher value from their crops, by transforming it into food or other products e.g. get permit for production of alcoholic drinks(beer, vine, liquors, distillates), natural cosmetics/medicines to be managed/distributed by the Kolkhoz.
Just as an example let's take the blackcurrant berry (черная смородина):besides jam, juice, syrup, sweets, ice cream, tea, but also processed into oil(contains omega 3/6 for skin allergies/care) for both people and pets, can be used as anti-histaminic or cortisone-like medicine for allergies(asthma) and inflammations, and can be used in cosmetics/perfumes.

There should be a program to seed/plant many (tens) million trees/plants each year (as a benchmark, Italy e.g. has 250 million olive trees ). For Russia fruit trees (e.g. apples) should be a priority, for colder regions berries.

GMO and health certificates
Besides the total prohibition of GMO the state needs to push for high quality food without GMO or dangerous chemicals such as Glyphosate and push for organic/biodynamic agriculture, with development of relevant seeds/fertilizers/practices. To penalize "tainted" food imports and to protect the clean food producers, the state should introduce import health certificates for GMO "tainted" countries in percentages above 100% for:
a)  GMO growing countries (
b) countries allowing GMO import/sales//food processing/export (in EU sales of GMO cannot be prohibited by single states)
c)  countries allowing GMO cattle feeding

Similar "health certificates" could be applied also to GMO cotton. The proceeds from health certificates should be used to fund clean, organic agriculture in Russia.

I wanted to try to suggest and advocate a better way in which Russia could grow it's agriculture, to secure food security, provide healthy products to consumer, enable a wide land ownership for private citizen and also financial rewards for investors.