Nut production in Russia is attracting international investors

It looks like a nut gardening business in former Soviet republics becomes an interesting opportunity for the multinational investment community. Investors have discovered that the southern regions of the former USSR have a sunny and warm climate and rich soils. Besides, these in many cases abandoned places are usually well irrigated (thanks to soviet melioration programs) and currently enjoy great quantity of inexpensive labor force due to wide-spread structural crisis and local currencies inflation.  

At the end of 2018 and several high-profile international companies announced their solid intentions to establish production facilities in the area. One of the most noticeable deal so far was a project of V. Besana, San Gennaro, Italy, in Kazakhstan and Ukraine. Besana has set a goal to enhance cultivation of walnuts, hazelnuts, and almonds and then to create a supply chain project with producers in Eastern Europe, Central Europe, and Central Asia.

In its official press release, the company stressed that it has been focusing in these countries on partnerships with locals aiming for creation of intensive nut plantations and modern distribution networks. The projects include a total investment of some two million euros. And it saw its kick-off strategy already several years ago. A big pilot garden in Kazakhstan has been already planted in a town called Turgen, some 65 kilometers from Almaty, the most populated city of Kazakhstan (about two million citizens). The nut garden contains sixty two varieties of walnut, hazelnut, almond, and pistachio planting stock, extending to late-blooming pistachio trees. The company also created its own micro-cloning and seedling growing operation for sale to farmers who joined this agricultural project, according to Besana Group press release. The group also launched a so-called “Pincode” project to create four growing seedlings, located in warm-houses.

The average annual temperature in this part of Kazakhstan is about plus 10 degrees Celsius, which is still a bit warmer than in the rest of the country, but quite chilly for many types of young nut trees. Prior to delivery to Kazakhstan many young plants of hazelnut, almond and walnut trees are multiplied by micro-propagation or grafting in Italian and Spanish nurseries. The plants are then sent to three centers specialized in hardening, from which they are distributed to the European and Asian producers who participate in the project.

Additionally, the company has also launched a series of seminars to educate local farmers and dealers about nut agribusiness and distribution. The group plans to increase the production of nuts in Kazakhstan in response to ever-increasing demand both local and from neighboring China. Such an approach indicates the intentions of multinational players to use former Soviet republics as a foothold for further expansion in Asia. Igor Mukhanin, president of the Russian Gardeners Association, believes that gardens in southern borders of Russia target local and Russian markets, not Chinese one.

“They go there because of sanctions measures against Russia, it’s the main reason”, he said. Russia itself launched an ambitious program to revive its own gardens and plant new ones. Northern Caucuses, Voronezh, Kuban and Adygeya at Caucasus foothills announced planting of new gardens. As Mukhanin said, these projects rely not on foreign investors, but rather state grants and subsidies, which currently stay at about US$1,000 per hectare of a walnut plantation.

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