Tag Archives: farming

The yield risks of farming in Russia may actually be less than those of Romania, SovEcon said, amid a widespread debate over the two countries’ merits sparked by Velcourt claims over “dishonesty” and climatic volatility.   Velcourt, the UK-based agricultural consultancy and investor, sparked a heated reaction in Russia’s agriculture sector by claiming that the “endemic” dishonesty was “a major issue” in the industry, whose fortunes were also rendered “volatile” by a difficult climate.    Velcourt, which manages more than 50,000 hectares in the UK, has opted for Romania as a target for a move into eastern European farm investment, terming it “one of the world’s foremost agricultural investment opportunities”. However, yields in Romania are actually more variable than those in Russia, Moscow-based SovEcon said, using wheat, a widespread crop in both countries, as the comparator.      ‘Significantly more volatile in Romania’ In Russia, the average wheat yield, between 2008 and 2012, varied between 1.84 tonnes per hectare and 2.39 tonnes per hectare, on World Bank figures, with the data giving a so-called standard deviation, a much-used measure of volatility, of 0.26. For Romania, the wheat yield varied between 2.36 tonnes per hectare and 3.99 tonnes per hectare, giving a standard deviation more than twice as big, at 0.61. “If you included data from this year, when it looks like Romania achieved a very good yield, the volatility would likely look even higher,” SovEcon managing director Andrey Sizov said.    “It looks like wheat yields are significantly more volatile in Romania than Russia.”    Spring vs winter This may be down, at least in part, to two agricultural advantages of investing in Russia, the first being the more even spread of winter and spring crops in farms’ growing schedules.       “If we have a poor winter crop, this can be partly offset by the spring crop. In Romania, they mainly plant winter crop,” Mr Sizov told Agrimoney.com. Furthermore, Russia allows more easily the purchase of huge areas which enable more efficient farming, and at prices of some $500-600 per hectare for black earth land, compared with $3,000-4,000 per hectare for comparable farmland in Romania. “In Romania, it is hard to control much land. A large farm will be one of more than 5,000 hectares.    “In Russia, a big farm would be more than 50,000 hectares, with the largest at 500,000 hectares.      “If you want to invest in large-scale farming in Europe or the Black Sea countries, of 50,000-100,000 hectares or more, the only options are Russia & Ukraine.”   Soviet hangover Not that having a large farm is all upside, with Mr Sizov acknowledging that having a huge enterprise made it “harder to control” theft, which was “an issue” for the country, as elsewhere in Eastern Europe.   “Partly, we can blame our Soviet past,” and collectivised farms, owned and run by the state under the communist regime in operation until 1990. “Then, there was an attitude that ‘everything belongs to collective farms. So everything belongs to me’. That still remains the case for some people.” However, “that will not be such a big issue in the future, because the mentality of people is changing”, with the retirement of workers remaining from the Soviet era.    ‘Trusted partners’ Velcourt, which has flagged Romania’s place within the European Union as a reason to invest, has acknowledged the risks of the country’s variable weather, and said it has included results from 30 years of climatic information in its modelling. “Working with trusted partners, allied with farm soil selection, will mitigate risk to some degree,” Richard Williamson, the group’s farms director, told Global Trader. Continue reading →