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Boosting world food supply depends on action by CIS states to promote private investment

By Richard Wallis

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Leading grain market players meeting at the initiative of the EBRD called on the governments of the former Soviet Union to stimulate the private investments needed to unlock the region’s huge agricultural potential through stable long-term policies and making it possible to use land in order to raise finance.

At a meeting of private sector operators attending the World Grain Forum in St. Petersburg a consensus emerged that the key to increasing global food supplies lay in creating the conditions that would allow Russia, Ukraine, Kazakhstan and other countries of the Commonwealth of Independent States (CIS) to realise their full potential.

The EBRD and the UN Food and Agriculture Organisation (FAO) believe that at least 13 million hectares of former farmland could be returned to production at no major environmental cost in Russia, Ukraine and Kazakhstan.

Of these, 6 million hectares are in Russia alone. Russia is already the world’s third largest grain exporter and fifth largest producer.

The grain sector’s major local and international participants, meeting at a special event organised by the EBRD on the sidelines of the Forum, discussed ways of realising this potential and agreed this could only be done through increased investments by a private sector fully involved in the process.

The following are the group’s main conclusions:

· For the region’s potential to be fulfilled, governments must adopt clear and stable policies focused both on the long-term and a free market so as to create a sustainable regulatory and institutional environment. This is vital to underpinning the massive investment which the private sector will need to make so as to develop badly-needed infrastructure.

· Increasing food production will also demand investment in agricultural technologies. These can only be introduced if the sector has access to the right financial instruments. This is why legislation is, for instance, needed allowing farm land to be pledged as security by borrowers in order to raise credit.

· Making sure that the sector can draw on the qualified labour needed to realise this huge potential requires investments in education to school a new generation in the necessary agricultural skills.

All this requires action by the states involved. The EBRD for its part is ready to provide funding along the whole length of the food chain as well as for the vital infrastructure projects which are key to boosting the region’s farm output.

Speaking separately at the opening ceremony of the World Grain Forum, EBRD President Thomas Mirow expressed the Bank’s readiness to participate in funding the modernisation of Russia’s transportation systems and the construction grain elevators and storage silos, all of which will be needed to handle any major increase in crop production.

Echoing the views of the private sector participants, Mr. Mirow also urged Russia and other CIS states to clear up the legal issues regarding land tenure and other uncertainties which represent a major constraint for producers.

He also called for action to combat the deficit in skilled agricultural labour, another of the bottlenecks blocking the region’s ability to help boost world food supplies.

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