Thomas P.M. Barnett :: Weblog

EMERGING MARKET REPORT: "The Business Boom Unfolding Down on the Russian Farm: Investors are pouring billions into agribusiness—and trying to reverse decades of Soviet mismanagement," by Jason Bush, BusinessWeek, 20 October 2008.

One sector looking up long term for Russia is ag. Lots of arable land not being used, and Russia is already a big global source (one of four) for net grain exports. Plus, yields in Russia stand about 30% of that in the advanced West—hence the investment payoff opportunity.

The UN says Russia has 480,000 square miles of arable land. That's twice the size of France and 8% of the world total.

And we're talking truly Black Earth, which most people in the world have never seen.

I, however, grew up 40 miles from a town called Black Earth. No kidding. And yeah, the earth there was like something most people can only buy in a bag at a lawn store.

Obviously, a lot of local and external big ag companies look to take advantage. Already, Russia's grain harvest is up 50m tons over the last five years, growing from 75 to 125.

This is why John Deere's doing nicely.

Amazingly enough, with all that potential, Russian ag land costs about 10% of that in France and 20% of that in Brazil.