Early reformers in the post-Soviet era in Russia hoped to see the collective farms of the Soviet years broken up into family farms. However, agriculture in Russia has been slow to change. Now, a decade after the transformation of the Russian government, new forces are encouraging the rise of corporate mega-farms in the country.

The old collective farm model is finding itself transformed into a new corporate model without so much as a glance in the rear-view mirror at the opportunity lost by not transforming to a family farm system of agriculture.

One of the new forces at play is a new law in Russia allowing foreigners to own agricultural land. That, combined with rising food prices, has set off a flurry of land sales in rural Russia. Hedge fund managers, Russian oligarchs and Swedish investors are among the buyers.

One investor, Michel Orloff, a former manager for the Carlyle Group hedge fund, envisions consolidating former collective farms into even larger tracts. He calls his corporate farms “clusters.” Orloff has been a leader in the corporatization of Russian agriculture, and his model is catching on fast with an estimated 14 percent of agricultural land in the country having undergone consolidation in recent years.

The rural population in Russia is already in steep decline as young people move to the cities, and the industrialization of the country’s agricultural sector is likely to reinforce that trend.

Really, the situation is strikingly analogous to the challenges faced in the U.S. with outside and corporate investors consolidating farmland and the population of the countryside declining.

And in both cases the solutions are the same. Widespread ownership of agricultural assets by people who work them, bans on corporate investing, and real opportunities that allow young people to earn a living, raise a family and prosper in rural communities.

Russia is a different country, but similar problems call for similar solutions.

Contact: Brian Depew, briand@cfra.org, 402.687.2103 x 1015 for more information.