Forward steppe

Russian land, Chinese cabbages

Zhang Hongbin’s progress in Russia is best measured by the machinery parked in his backyard. When he first arrived to grow soya beans in 2005, Zhang rented a small tractor. The next year, he bought it. The year after that, Zhang’s earnings were enough to buy a harvester, and in his fourth year he purchased a transporter for his crop. Last year Zhang had his wallet out again, this time for a larger tractor to help him cultivate a wider area, says the Economic Observer.

Zhang runs what is known colloquially as a “family farm” in the Russian Far East, an arrangement which has seen many Chinese farmers cross the border to plant new crops, mostly soya beans but also corn.

Two regions have attracted most of the Chinese settlers, the Primorsky Krai north of Vladivostok, and the Jewish Autonomous Oblast to the west of Khabarovsk. Both areas border on China’s northerly Heilongjiang province.

Sino-Russian agricultural cooperation first began in the 1950s, when the Soviets paid for the You Yi farm (“Friendship Farm”) in Heilongjiang. The Russians also sent experts, teaching thousands of Chinese soldiers about mechanised farming techniques. Today You Yi still employs 120,000 people but the impetus behind the new era of agricultural cooperation is now being reversed, as Chinese farmers migrate to Russian territory.

The move comes as the supply of farmland in China is squeezed by trends including urbanisation (see WiC90) and water scarcity (WiC59), and at a time when demand for grain is rising, in part because China’s dietary shift towards greater meat consumption requires more feedstock for cattle.

Russia, in contrast, has the world’s largest reserve of idle agricultural land, according to the World Food Programme, following the collapse of its collective farm system and a steady depopulation of many rural areas.

That means that the Kremlin now sees the sector as a commercial opportunity, with Russia’s president, Vladimir Putin, highlighting agricultural cooperation as an agenda item at APEC’s September meeting in Vladivostok.

Step forward one of the more successful Chinese pioneers, Liu Jianping, who now farms 16,000 hectares in Primorsky Krai and expects a 20,000-tonne grain harvest this year. This is a vastly bigger venture than the small, densely packed plots available to most farmers at home, says the China Daily.

Liu agrees: “Primorsky is a miraculous land. It offers bountiful harvests at low costs,” he told the newspaper. Other Chinese migrants think so too, attracted by the opportunity to cultivate soil similar to Heilongjiang’s but at a much lower cost. At Rmb200-500 ($31 to $80) per acre, land is as little as a quarter of the price of comparable plots in China, says the Economic Observer. Accordingly, Chinese farmers are renting smallholdings in Russia, and many have signed contracts with Chinese firms like Baoquanling Far East Agricultural Development and the Dongning Huaxin Group, which specialise in leasing land to migrants.

Still, life in the Russian Far East is not without its challenges. Finding employees is one problem, with local workers in short supply and the Russians limiting the number of Chinese arrivals by quota. Currently, one solution is to bring in more workers from Uzbekistan, whose citizens can work visa-free.

Huaxin’s Zhang Yingshan also wants more support from the central government, saying that Beijing is advocating a ‘going out and bring it back’ policy for agricultural imports but has done little to help the pioneers who have responded. Farmers in China often get subsidies when buying agricultural machinery or seeds, but those overseas miss out, Zhang complains. He would also like to see reductions in tariffs for crops coming into the country from Chinese-run farms in Russia. “For agricultural cooperation, the shipping back of grain produced in Russia should enjoy special policies, including being seen as a resource import,” Zhang told the Economic Observer.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.