A few months ago, as grain prices soared, the Wall Street Journal wondered if we were reaching a Malthusian moment, where the world’s ability to feed itself would be challenged. I certainly felt like the ability of the U.S. agriculture economy was severely stressed. But this morning the New York Times ran an article on Russian agriculture that was a real eye opener.
Russia occupies an unusual niche in the global food chain. Before the Russian Revolution and the subsequent forced collectivization of farming under Stalin, it was the largest grain exporting nation in the world.
Today, roughly 7 percent of the planet’s arable land is either owned by the Russian state or by collective farms, but about a sixth of all that agricultural land — some 35 million hectares — lies fallow. By comparison, all of Britain has 6 million hectares of cultivatable land.
What is happening is that global capital (including the infamous Carlyle Group) is flooding into the Russian agriculture sector, buying up huge collective farms and providing modern technology–much of it made by John Deere–to increase the productivity of the land. If this works, it will be one more huge export commodity for the Russian economy, which already controls more oil and gas reserves than any other country.