Investors plow money into Russian farming, but problems remain

When Murat Shamshinurov toasted this year's harvest with a glass of vodka, he did so with confidence.

A fleet of new Dutch combine harvesters, better seeds and a mild winter promise a bumper crop at the farms he runs in Russia's fertile black-earth region. This prosperity is the result of a $175 million investment by Nastyusha, the grain-trading company that bought the land in 2006.

Shamshinurov's situation is not unique. Investors are plowing money into Russia's open lands to resuscitate the long-neglected farm sector and supply a world in ever greater need of food. The Russian wheat crop this year promises to be the best in 30 years.

"The opportunity for agriculture in Russia is remarkable," said Sid Bardwell, general manager in Russia for Deere, the U.S. agricultural equipment supplier. "It has the potential to be one of the truly key sectors of the economy."

Russian agriculture, crippled by the legacy of Josef Stalin's collectivization, is one of four sectors given priority status by the Kremlin as it seeks to reverse more than a decade of decline after the Soviet Union's collapse.

Russia, the world's fifth-largest grain grower and exporter, expects a grain crop of at least 85 million tons this year, up 4 percent from 2007. Agriculture contributed 5 percent of Russia's gross domestic product in 2007. But Russia has yet to surpass Soviet-era production levels on a sustained basis.