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Is agribusiness worth investing in 2021: the report by Banki Segodnya

Banki Segodnya information and analytical portal issued an article devoted to the prospects of development for private agricultural enterprises in Russia. The magazine invited representatives of major investment and agribusiness companies to discuss the pros and cons of starting an agricultural business in 2021, and what sectors are worth paying special attention to.

One of the invited experts was Yuri Voronov, the Head of the Investment Department at ECO-Culture holding.

The article begins with a summary of Russia’s food doctrine, which states that our country must seek to ensure full self-sufficiency in foodstuffs. Last year, the domestic agricultural industry managed to come as close as possible to achieving this goal – for the first time in 30 years, its exports have exceeded imports. This was facilitated not only by the import substitution policy announced in 2014 but also by considerable support offered to agrarians by federal and municipal authorities, as well as the banking sector.

Today, according to financial and investment analysts, the agrarian business in the Russian Federation appears to be among the most promising. Hardly affected by the pandemic, it now shows all the signs of ongoing development. However, before proceeding to invest in agriculture, it might be worth listening to the opinion of experts on the subject.

There are some general trends one should take into account. In this case, it’s better to make your investments large and long-term – in this business, you shouldn’t expect any quick profits. The average payback period for capital enterprises amounts to 7-8 years. In addition, over the past few years, competition in this sector has increased significantly, which means that we have to pay attention not only to the quantity of production volume but also to the quality of the product.

Speaking of specific ideas, each expert turned out to have his own investment priorities. Yuri Voronov believes that the development of organic production is the right direction to pay attention to. This sector can be entered with a relatively small investment. You can find steady demand for berries or microgreens production from the restaurant or hotel businesses. At the same time, these are the crops that don’t require too much space to be grown.

The right choice of location is also important for future profits. According to the Head of the Investment Department at the holding, right now the Far East looks like the most promising direction in the country. Here, large businesses don’t yet have a presence in this area because of the high cost of energy and competition from the PRC. Meanwhile, the region is considered a state priority, meaning that it offers much more favorable conditions than elsewhere in Russia. In particular, the Far Eastern Hectare program launched in 2016 allows anyone who wants to acquire land in Primorsky and Khabarovsk Krais, Amur Oblast, and neighboring regions to do so for free.

For the full text of the article, please visit Banki Segodnya’s official website.