Lipetsk Oblast: a new target for agro-investments

Agroinvestor, an influential specialized magazine for investors in the agro-industrial complex and managers of agricultural enterprises, published a comprehensive analytical article devoted to Lipetsk Oblast. It reviews the region in terms of investment attractiveness and prospects for agricultural development. Among the experts spoken to by the authors of the article was Yuri Voronov, the Head of the Investment Department of ECO-Culture holding.

Despite its relatively small area, Lipetsk Oblast ranks among the major agricultural regions of the country. Year by year, it attracts new investments in the agricultural sector. The advantages of this Russian region include its favorable geographical location, extensive infrastructure, and fertile land combined with a smooth climate.

A part of the Central Federal District, Lipetsk Oblast occupies only 0.14% of the total area of Russia. At the same time, about 80% of the region’s territory is used for agricultural purposes, which is about 1.9 million hectares. Local enterprises produce grains and oilseeds, vegetables, fruits, eggs, dairy, and meat. Once the largest greenhouse complex Ovoschi Chernozemya was launched in the Central Federal District by ECO-Culture holding, the region became the country’s leader in the production of indoor vegetables.

Yuri Voronov, the Head of the company’s Investment Department, believes an important advantage of Lipetsk Oblast to be its proximity to Moscow, a large and solvent consumer market. Today, ECO-Culture’s products are marketed both in local stores and in retail chains in the capital and Moscow Oblast, and in other regions as well. This success, however, is not without drawbacks, such as staff shortages and the significant energy costs associated with the cold climate and the lack of sunlight requiring to provide additional lighting in greenhouse facilities. Apart from that, lending rates are increasing, with the state subsidies for greenhouse vegetable production decreasing, which negatively affects the investment potential of the sector. Many things in this regard, however, still depend on each particular project’s specifics.

Among the four major greenhouse facilities in the region, Ovoschi Chernozemya is the largest. The area of more than 86 hectares is mainly used for growing tomatoes. Local state authorities greatly supported the entrance and development of greenhouse enterprises in the region. It was them who helped investors to create an engineering infrastructure and offered them a complex set of measures and privileges. In 2022, for example, partial compensation of expenses for electric power during the off-season – the period of the maximum consumption of energy resources – will be introduced as a support measure for local producers. This is expected to significantly reduce the burden on greenhouse enterprises.

Yuri Voronov notes that the share of energy costs in the cost of indoor-grown vegetables is very high. For this reason, higher power tariffs are one of the main risks of greenhouse production. With the aim of protecting against such risks, the agricultural holding now switches over to its own gas piston units and builds its own power center.

Since 2016, ECO-Culture has implemented three investment projects in Lipetsk Oblast, which were the construction and commissioning of the 1st, 2nd, and 3rd stages of Ovoschi Chernozemya greenhouse complex. With a total amount of investment reaching 22.8 billion rubles, another 7.8 billion are to be invested in production development by the end of 2023.

Ovoschi Chernozemya is one of the most ambitious projects not only in the region but in the whole Russia as well. It employs about 2,000 people and has a design capacity of 45.6 thousand tons of vegetables per year. Not only does the complex provide consumers with fresh vegetables all year round, but it also makes a significant contribution to the implementation of the Russian Food Security Doctrine and import substitution program.

To read more about other investment projects in Lipetsk Oblast and the region’s prospects in the agricultural sector, please see the article on Agroinvestor’s website.