Russia Crop Potential Seen by Deripaska Unit at 170 Million Tons

Russia, once the world’s biggest wheat importer, has the potential to as much as double its grain harvest, according to billionaire Oleg Deripaska’s Kuban Agricultural Holding.

Russia could reap 150 million to 170 million metric tons of grain, compared with 85 million to 90 million tons in recent seasons, if it puts into use 25 million hectares (61.8 million acres) of idle agricultural land and utilizes better technologies and fertilizers, said Andrey Oleynik, managing director of agribusiness at parent company Basic Element. The country has 115 million hectares of agricultural land, he said, an area bigger than Colombia.

“There is big potential for development and increasing profits in Russia’s agriculture,” Oleynik said. “Profitability in the sector may be easily raised to 15 percent from the current 6 to 10 percent by applying technologies and better management.”

Russia was the biggest wheat importer in the 1992-93 season following the collapse of the Soviet Union, according to the U.S. Department of Agriculture data. The country boosted private investment in grain production and became the world’s fifth biggest wheat exporter in the season that ended June 30, according to the USDA. Land availability and wages averaging 12,000 rubles ($360) a month in the sector make agriculture an attractive investment and allow room for further growth, according to Oleynik.

Basic Element manages assets owned by Deripaska including En+ Group, which controls a 48 percent stake in United Co. Rusal, the world’s biggest producer of aluminum.

To contact the reporter on this story: Marina Sysoyeva in Moscow at msysoyeva@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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