Proposed Guarantee for Volga Farms in Russian Federation

The project involves the acquisition and/or leasing by Volga Farming Ltd. (VF), a Cyprus incorporated company, of up to 90,000 hectares of agricultural land in the black-earth region in central and southern Russia, and/or the acquisition, operation, modernization, and expansion of farms and related agribusiness in the region to produce, store, process, and sell grain and other crops such as barley, sunflower, and peas.

VF has applied for a MIGA guarantee of $75 million for a period of 15 years against the risks of expropriation, inconvertibility, and transfer restriction.

Environmental Categorization

The project is classified as a Category B under MIGA’s Policy on Social and Environmental Sustainability. The potential risks of the project are related to soil erosion, pesticide and agrochemical pollution of water courses and soils, farm machinery and crop storage pollution, depletion of water resources, dust creation, land acquisition, and worker health and safety.  Click here to view the Environmental and Social Review Summary.

Development Impact

The project is expected to have numerous developmental impacts. VF’s acquisition will expand the land area under cultivation, since part of the acquired land is currently fallow. The conversion of derelict agricultural land into modern production will increase soil fertility and result in an expansion of grain production.

The acquisition is also expected to have a stabilizing effect on local land prices.

The digital registration of land rights will help to further establish the acquisition process, increase transparency, and set an example for other market participants.

In addition, VF’s investments in management, equipment, storage, safety, technology, and infrastructure will establish a farming operation in line with international standards. In particular, the project is expected to transfer knowledge in the areas of agricultural technology, business processes, project management, organizational development, and land administration to employees. Dissemination of such knowledge and experience through local institutions of higher and professional education is also envisaged.

The project will impact regional development through the recruitment of local personnel, as well as the repair and maintenance of local road infrastructure. The project is also expected to support local processing industries, fodder industries for livestock and biotechnology, storage, logistics, and trade.

The project is also in line with the World Bank Group’s Country Partnership Strategy that notes a need to strengthen Russia’s global competitiveness in traditional economic sectors, including agriculture.