Volga Farming

On October 13, 2011, MIGA issued a guarantee of $49.5 million to FG Volga Farming Ltd. (VF), a Cyprus incorporated company for its agriculture investment in central and southern Russia. The coverage is for a period of 15 years against the risks of expropriation, inconvertibility, and transfer restriction.

The project involves an investment by VF in agribusiness operations in Russia.  VF plans to lease up to 90,000 hectares of agricultural land in the black-earth region in central and southern Russia, and purchase up to 50 hectares of non-agricultural land with buildings and/or facilities to be used for the farming business.  VF also plans to operate, modernize, and expand farms and related agribusiness operations on this land in order to  produce, store, process, and sell grain and other crops such as barley, sunflower, and peas. 

The project is expected to have numerous developmental impacts. VF’s investment will expand the land area under cultivation, since part of the leased 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.

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.