Brian Kuns, Oane Visser and Anders Wästfelt
University of Stockholm; Institute of Social Studies (ISS)
Super large-scale Nordic owned and run farms in Russia and Ukraine began operations in 2006-2007 with much fanfare. Their goal – other than to earn high returns of course – was to “revolutionize agriculture”. The Nordic companies were part of a vanguard of well-financed and hyped foreign investors in the region, as well as globally as about half of all listed agricultural companies are located in Russia and Ukraine. While these companies brought about a clear modernization of the farms in terms of technology, their results, both in terms of the achievement of consistent and optimal agricultural performance and profitability, continue to disappoint.
The main question to be addressed in this paper is: why have these investments, begun with much optimism, not been successful? We will locate the reasons for this current lack of success in (1) the mixed role that finance has played in the development of these companies, and (2) an initial failure on the part of investors to appreciate the unique climatic and other local challenges presented by agriculture (compared to other economic endeavours). Access to finance is usually seen as one of the primary advantages for large-scale agriculture, but we will detail how the preferences and pressures emanating from investors have resulted in a number of unintended consequences that have had mixed impacts on both corporate and agricultural performance. Finally, we will look at the further prospects for these farm companies, and to what extent the experiences studied give insight in the functioning of investor-led listed farm corporations elsewhere. The paper draws on company documents, stock exchange data and interviews with managers of the companies, as well as the investors in these companies.
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