Today, in the context of Russia’s fast-paced growth of economy and trade, there are significant opportunities emerging for the national agricultural sector. Russia has great natural and human resources, vast spaces of arable land suitable for cultivation, and substantial market capacity. Moreover, fertility of soils and the world’s largest raw materials stock for production of pesticides contribute to the potential of agricultural production. In terms of exporting, such factors should be noted as geographical proximity to potential markets, relative cheapness of machinery and level of wages which allow to set competitive prices. Besides, Russian companies do not widely apply methods of genetic engineering using traditional technology instead, which creates additional competitive advantage for Russian agricultural products. Unused lands in Russia are not constrained by any government policy or major sustainability concern. This unique combination of factors together with worldwide situation on food and feed markets offer substantial investment opportunities in the Russian agriculture.

 

The Soviet system of agricultural management which consisted of collective farms was inefficient, although the country possesses some of the richest soils in the world. And afterwards, as CIS agriculture underwent transition following the breakup of the Soviet Union, millions of hectares of arable land were excluded from production, almost 90% of which had been used to produce grain. But now the prospects are brightening up. If traditionally, agriculture in Russia and the CIS wasn’t the primary area for state financing, at present the government targets it as a key sector and allocates significant subsidies for its development.
However, in order to stay competitive in the global markets and face the challenges posed by globalization, local agricultural business requires considerable technological advancements and innovation activities. This may be possible only with the financial resources of large companies such as vertically integrated holdings. These companies are bigger market players giving a lot of benefits. They minimize risks and costs due to the economy of scale, provide access to markets of capital, reduce the chain of intermediaries, increase transparency and efficiency of the agricultural management. The emerging agricultural holdings follow the agronomic technology of crop cultivation and maintain high yields, which are well above the national average.

 

One of the companies following the strategy of vertical integration is OJSC PAVA, situated in the Altay Region. PAVA is conducting an active policy of land acquisition in order to enlarge the company’s own division for agricultural production named RAD (Russian Agricultural Division). Advantageous geographical location enables the company to develop into neighbouring regions
and expand the already significant acreage. By becoming an agro-industrial holding through implementing its RAD project and the project for deep grain processing which has no analogues in Russia yet, PAVA will be in a position to promote the economic development of the region and the national agricultural sector on the whole.
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OJSC "PAVA"