As of today, residents of Advanced Special Economic Zones, Free Port Vladivostok and Arctic Zone of the Russian Federation are implementing 100 agricultural projects. The largest chunk of projects is implemented at ASEZ (48), with FPV ranking 2nd (38) and AZRF ranking 3rd (13). 28 companies have started production and are ready to adapt to market demands. The new enterprises cultivate greenhouse vegetables and greenery, produce dairy and meat products, farm crops. The total investment portfolio of the projects underway exceeds 138 billion rubles; with business operations at full capacity about 11,000 locals will get a job. In fact, residents have already poured 56.6 billion rubles into the Far Eastern regions’ economy and employed 4,700 locals.
In the days ahead, agricultural complexes that cultivate grains, leguminous crops and oil seeds in Primorsky and Khabarovsk Krai, Jewish Autonomous Oblast, Amurskaya and Sakhalin Oblast will get to spring field work. Agricultural companies are finishing repairs of equipment, inventory and machinery for land cultivation, purchasing fuel, lubricant and seed materials, mineral fertilizers. A lot of them will rely upon new technologies allowing to significantly cut down the period of sowing and harvesting crops, curb natural risks and increase yields.
Primorsky Krai is a Top-10 Russian Region in Soybean Bulk Yield
The fields of Primorsky Krai are the first to see the new agricultural season to kick off which is due to start in late March. Far Eastern Investment Company Qiaoxing (FEIC Qiaoxing) has become one of the first residents of Free Port Vladivostok to launch an agricultural complex. The investor has been allocated land plots in the Pogranichny District with a total area of 5,000 hectares. The first soybean crop – 15.8 quintals per hectare — was harvested by the company in 2018. At first, the land was cultivated by making use of rented machinery, but then the company purchased its own tractors, combines and commissioned a new grain drying plant with a capacity of more than 24,000 tons a year that may be used by other agricultural organizations.
According to FEIC Qiaoxing, in 2021 an area of more than 1,300 ha saw cultivation not only of soybeans, but also corn which, along with soybeans, is one of the flagship crops in the Russian Far East. The total yield exceeded 2,000 tons which was sold to the Far Eastern food processors and companies fr om Central Russia. The FPV resident does not plan to scale back in 2022. Fuel and lubricant materials as well as corn seeds have been purchased fr om domestic producers while the company will use its own seeds for soybean production.
The grain is cultivated in the Ussuriysky Urban District and the Oktyabrsky District by the agricultural company SKIF. Pursuant to the credit contract, the FPV resident has purchased machinery and then secured another loan to refinance his lease. At the moment, the investor is making financial and leasing payments at its own expense while gearing up for the third sowing campaign.
“1,500 hectares have been devoted to corn while 2,500 hectares have been allocated to soybeans. We will use ten units of modern, high-performance and reliable machinery for sowing and state-of-the-art land cultivation. Besides combines and tractors, we have a large amount of towing gear and a telehandler”, said Andrey Delekh, the head of the Agricultural Company SKIF LLC, highlighting that tax breaks available for the FPV resident allowed to pay competitive salaries to the staff while the number of employees soared to 36 people.
Residents of advanced special economic zones are also girding for spring sowing. KhorolAgroHolding company has been cultivating soybeans at ASEZ Mikhaylovsky, an agricultural powerhouse of Primorsky Krai, since 2015. This household’s fields occupy 2,500 ha in Chernigovsky and Khorolsky districts. The soil for spring sowing will be prepared with the use of modern Russian Rostselmash grain harvesters and additional inventory. The agricultural producer expects to raise the average yield rate of soybeans to 20 quintals per ha in the new season.
“The main goal of our project was to set up an impeccable technological process for cultivating soybeans, a crop that has valuable biological and economic properties. Given Russia’s import substitution policies, the industry of cultivating and processing soybeans with the subsequent production of texturized proteins, dairy products, flour and animal feed is in high demand. The products comply with the requirements of all-Union State Standard (GOST), while the laboratory analysis did not find any GMO or other malign substances”, said Nikolai Yannin, CEO of KhorolAgroHolding LLC.
The company has also commissioned a grain drying plant and expects to add corn to soybeans, which will increase crop rotation and generate at least 50 jobs with a competitive salaries.
Another agricultural complex in ASEZ Mikhaylovsky has been established by Legendagro Primorye (a part of Russian-Chinese group Legendagro involved in crop production, transportation and processing of oilseeds and grains, construction of elevators, sea and railway terminals, trading operations). In 2022, more than 3,500 ha will be prepared for cultivating soybeans, corn and rice. Harvest shipments (in volumes exceeding 10,000 tons a year) will be meant both for the domestic market and export.
Besides, a Legendagro Terminal M project is now underway which envisages the construction of grain storage facilities with a capacity of 15,000 tons and a grain drying plant. The project is being implemented together with Tate Group in ASEZ Mikhaylovsky.
In December 2021, Legendagro Logistics LLC, a grain transportation company with the status of FPV resident, was established. The project provides comprehensive services for the transportation and transshipment of grain and oilseeds in the ports of Zarubino and Vladivostok. The company has 30 long-haul grain trucks and about 100 railway carriages as well as 2 ship loaders. The idea is to ship about 380,000 tons of cargo a year and load more than 200,000 tons into sea-faring vessels.
Another logistics project is now underway in ASEZ Priamurskaya (Amurskaya Oblast). Legendagro Logistics Amur will purchase the necessary machinery and equipment: auto-loaders, semitrailers, grain carriers, tow cars, grain cleaning device for truck hauling in the amount of 100,000 tons per year. The project envisages grain treatment in the amount of 50,000 tons per year, load handling and storage. To this end, a warehouse tent with an area of 4,000 sq. m. has been put in place. Special pipes made of unique fabric will allow to maintain the required level of humidity and temperature. The leadership of Legendagro Logistics Amur also plans to prepare the paperwork for crossing the Chinese border while expecting to make more than 3,000 trips abroad per year.
Eco-products without GMO
According to the Ministry of Agriculture’s forecast, Russia’s soybean production is expected to increase by 75% to 7.2 million tons by 2024. The figure incorporates the rise in the bulk yield in Amurskaya Oblast, oft-touted as the Far Eastern granary, which is expected to increase twofold to about 2.2 million tons. In 2015, given the region’s need in advanced processing of the cultivated beans, the anchor resident of ASEZ Belogorsk, Masloekstraktsionniy Zavod Amurskiy LLC, has started to implement the investment projects acting upon the agreement with FEDC. Two years later, the company launched its first stage of production: facilities for producing refined oil and feeding and food-grade grist, one of the most valuable protein concentrated animal feeds. The project’s second phase (a facility for producing isolated soy proteins (soybean isolate) was launched in 2020.
As of today, the plant is able to process 800 tons of soybeans per day, or 240,000 tons a year and produce 190,000 tons of feeding grist, 10,000 tons of isolate, 6,500 tons of fiber, 40,000 tons of high-grade soy bean oil without GMO which is now being sold under the brands “Znatnoye Semeystvo”, “Laditsa” and “Filevskoe” marked with the trademark “Made in ASEZ FPV in the Far East”.
The enterprise has become the first and only in Russia that substitutes the import of isolated soy proteins (soybean isolate), thus covering about 25% of the nation’s demand in soybean isolate. The products are supplied to the leading livestock breeding complexes and compound feed mills throughout Russia and abroad. The enterprise also produces lecithin, soy fiber and flour. Eco-friendly, selected and non-GMO refined soybeans grown in Amurskaya Oblast serve as raw materials for processing. In order to accept them, embark on initial processing, drying and storing, an elevator has been recently launched in the village of Seryshevo, the modernization and technical re-equipment of which has increased the capacity to 72,000 tons of raw materials. To implement this project, the boundaries of ASEZ Belogorsk have been expanded pursuant to the decision of the Government of the Russian Federation.
“Over the past month, the situation in the country and at our enterprise has changed dramatically. The markets where we sell our products, conditions of financing, lending and maintaining the production process are evolving. Technological support will also change due to both sanctions and shifts in the domestic logistics. But I’m still sure: whatever happens, we will pass through these turbulent times and everything will be fine — we will live, work and go forward. People’s employment, attitude to the personnel should not take a hit at any circumstances. Our staff is a lynchpin for further development and industrial progress”, said Aleksandr Sarapkin, CEO of Amuragrocenter Group who is in charge of the oil extraction plant project.
The land bank proposes 140,000 hectares of unoccupied lands to farmers.
One hundred agricultural investment projects that are underway in the preferential regimes are only a start. Vacant land plots suitable for agricultural use are now being identified. According to Evgenia Romashko, Director of the Department of Property and Land Relations with the Russian Far East and Arctic Development Corporation (FEDC), cataloguing of agricultural land is being carried out on the territory of two Far Eastern regions — Jewish Autonomous Oblast and Amurskaya Oblast.
“The cataloguing resulted in the establishment of a land bank. As of today, we are ready to propose to potential investors more than 140,000 hectares of land for the implementation of agricultural projects. In cooperation with authorities, more than 49,000 and 45,000 hectares of free and usable land have been identified in the territories of the Jewish Autonomous Oblast and Amurskaya Oblast respectively. Also, more than 46,000 ha that are owned by the federal authorities and suitable for the implementation of agricultural projects, are located in Zabaikalsky Krai. Those plots will be examined shortly in order to identify the most suitable areas for crop production, animal husbandry as well as to understand wh ere amelioration investments are required. After that, the municipalities of these regions are due to approve the layout of land plots in the territory’s cadastral plan wh ere they will be included into the ASEZ boundaries and then may be handed over to potential investors”, said Evgenia Romashko, adding that all agricultural projects that are being implemented by ASEZ residents have been provided with land in full. “The basic needs of such companies as TH RUS Primorsky, Kangrow (on the territory of Primorsky Krai) and Kolos (Zabaikalsky Krai) that intend to grow cereals and leguminous crops, including rapeseed, oats and buckwheat, have been met”.
Measures of state support for agricultural producers are not limited to preferential regimes. Indeed, according to Yury Trutnev, Deputy Prime Minister of the Russian Federation and Presidential Plenipotentiary Envoy to the Far Eastern Federal District, it is planned to ramp up purchases and supplies of agricultural products, raw materials and food for government needs.
“As of today, the volume of fertilizer and fuel production allows us to satisfy the needs of the agricultural sector in full and keep prices at the prescribed level while in some cases it is even feasible to slash them. As far as food production is concerned, the basic goal is to prepare for the sowing campaign and support affordable fuel and fertilizer prices”, Deputy Prime Minister said.
Besides, farmers may benefit from preferential loans, with the state allocating 25 billion rubles from its Reserve Fund. 32 banks partake in the state program for preferential lending in the agricultural sector. Loans are provided at a preferential rate varying from 1% to 5% per annum. It is presumed that such financing will ensure that a total of no less than 158 billion rubles in new short-term preferential loans will be granted.
“We have built a flow-through system for supporting businesses given that the resident may rely on a comprehensive support at all stages of implementing the project on ”a one window“ principle. For now, we are actively forming a land bank for agricultural projects. We give investors a helping hand in organizing the amelioration activities to transfer the land to the agricultural use to boost the production of agricultural products, including for the development of processing of oilseeds. Residents that create greenhouse complexes are entitled to a 20% compensation of costs that are covered by the Ministry for the Development of the Russian Far East and Arctic. We are also bolstering the export of agricultural products. To cut down on investors’ operating costs, we give them an opportunity to connect to the Federal Grid Company networks to take the use of wholesale electricity rates. Preferential credit lines are also available to our entrepreneurs when the partner banks, with the participation of FEDC, allocate funds for project implementation. As a result, residents launch new enterprises as planned, while the macroregion may benefit from an increase in tax revenue with the locals getting job opportunities”, said Acting Director General of the FEDC Nikolay Zapryagaev.
