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Sunday Telegraph (UK)
June 22, 2003
British farmers off to reap rewards from Russia's black earth
By Tom Parfitt in Penza

British farmers entangled in the European Union's red tape are aiming to break free by moving to Russia to cultivate land being offered to foreigners in a fertile region.

Almost a million acres of prime arable land are lying idle in the Penza region, 400 miles south-east of Moscow, because local farmers cannot raise sufficient money to buy the machinery, fertiliser and seeds needed to work it.

Last week, Moscow changed the law to allow foreigners to establish private farms and acquire land on 49-year leases. Six groups of farmers from Britain and Ireland have expressed an interest in answering the Russian call to get the land back into production.

They hope to make a better profit than they can at home. Russian officials estimate that they could enjoy a positive return on an initial 350,000 investment within three years by cutting overheads and taking advantage of the country's need for grain.

"Russia is spending almost 9 billion a year importing basic foodstuffs while only 47 per cent of arable land is being farmed," said Richard Willows, who is marketing the scheme through Heartland Farms, a company he runs with a partner, Colin Hinchley. "There is a huge demand that is not being met domestically and that's a major opportunity for us."

Mr Willows said the prices in Russia's grain market can match and sometimes beat Western figures, while the costs of labour, seeds, fuel and fertiliser are much lower.

His company, which has set up an office in Penza, has started buying leases from shareholders of collective farms that were privatised after the Soviet collapse. It will sub-let land to foreign consortia or individual farmers for 10 per acre, about a tenth of the average rent for farmland in this country.

At first, the British farmers will grow cereal crops on tracts of land of between 7,500 and 25,000 acres. They will pool their produce and sell it collectively in Russia.

George Green, 41, who farms 1,000 acres in Aberdeenshire, is planning to leave for Russia before Christmas.

"It's the scale that appeals to me, and the chance to get outside the European Union," he told The Telegraph. "I'm convinced that almost all the problems facing UK farming today stem from EU bureaucracy and restrictions. In Russia, you can just get on with it. It's up to you."

Mr Green is unperturbed by stories of corruption in Russian business. "I visited the region to check it out and I didn't come across any gangsterism," he said.

Other farmers are expected to follow him next spring. Penza, which lies at the northern tip of a seam of nutrient-rich, black earth stretching from Ukraine into central Russia, is renowned for its agricultural land. "People back home would kill for dirt like this," said Mr Willows.

Heartland Farms said that a farmer's initial investment of 350,000 would include the first year's rent and downpayments on machinery and other starting-up costs. The company will provide legal help, accommodation, interpreters and cropping advice to the farmers, while cultivating some land itself.

"We're going to lead people by the hand for the first few years," said Mr Hinchley, a former agricultural contractor from Nottingham who now lives in Penza.

Sergei Papshev, the head of Penza's Belinsky district, admitted that about a third of the land in his area was out of use. "It's a great shame to see it covered in weeds," he said. "We are positive about foreigners coming here and getting the land back into production. Otherwise all that fertile soil is just going to waste."

He said early suspicion about Heartland Farms renting plots of land had been allayed by the changes in the law that made leasing more secure. The reforms were opposed by some Communist Party politicians and Cossack peasants but were backed by the government, which hoped that foreign investment would rekindle Russian farming after a decade of decline.

The agricultural economy has been sluggish since many collective farms were hastily broken up in the early 1990s. In Penza, farm workers were given production rights to about 20 acres, but were not allocated specific plots. Few people who work the land have enough capital to buy tractors and combine harvesters.

Maria Arkhangelskaya, a pensioner tending her goats by the roadside near the village of Kamenka in Penza, said she had no objections to foreigners farming land near her home. "If they're offering work and improving things, let them come."

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