Russian commodities: Giving investors food for thought
A plentiful supply of cheap, high-quality farmland means Russia may become key in the drive to solve global food shortages.
Given a plentiful supply of cheap, high-quality farmland, is Russia poised to become a key player in the drive to solve looming global food shortages? Guy Norton reports from Moscow.
THE SOCIO-ECONOMIC dislocation of the 1990s wrought widespread havoc in the Russian countryside and relegated agriculture to a bit part role in the country’s unfolding financial drama. Before the break-up of the USSR in 1991, agriculture in Russia was a big industry, accounting for 15.3% of GDP. As of last year that figure had slumped to just 4.4%.
But given surging soft commodity prices across the globe and recent political upheaval in countries such as Haiti and Egypt as a result of soaring food prices, Russian agriculture could enjoy a dramatic reversal of fortune.
"Food security is now as big an issue as energy security," says Richard Ferguson, soft commodities analyst at Nomura in London. Given the growing supply-demand mismatch in the global food chain, he believes that agriculture is set for one of the periodic revolutions that as a rule of thumb occur every 50 years or so.