In a
recently announced deal, Interros will invest $100 million in
cultivating a whopping million acres. Additionally, Russia is much less
dependent on food imports than common myths have it - it imports only
20% of its total food consumption.
Despite this astounding turnaround - foreign investors are still shy.
The complex tariff and customs regulations, the erratic tax
administration, the poor storage and transport infrastructure, the vast
distances to markets, the endemic lawlessness, the venal bureaucracy,
and, above all, the questionable legal status of the ownership of
agricultural land - all serve to keep them at bay.
Moreover, the agricultural sector is puny and disastrously inefficient.
Having fallen by close to half since 1991 (as state subsidies dropped),
it contributes only c. 8% to GDP and employs c. 11% of the active
labour force (compared to 30% in industry and 59% in services).
Agricultural exports (c. $3 billion annually) are one fourth Russia's
agricultural imports - despite a fall of 40% in the latter after the
1998 meltdown.
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