MEMORANDUM

Large-scale sustainable agriculture project in North-West European Russia

Keywords: organic, labor intensive, bio-diverse, community-focus, CSA, micro-finance, wired,
open-source.
Summary: An opportunity to bring in excess of 1 million acres of prime European farmland into
sustainable, organic production using labor intensive methods and building close-knit, socially
healthy rural communities.
The main goal of the project would be to demonstrate the economic and social viability of
sustainable agriculture in a real, large-scale, working option superior to chemical agriculture as
currently practiced elsewhere in the world.

The project would be in the form of a private, non-profit development agency which would enable
small and medium-size farmers to practice bio-diverse, economically and ecologically sustainable
farming over a large geographic area which would be almost exclusively farmed in this way. The
agency would provide and promote:

individual ownership
affordable lending, micro-finance
CSAs
professional services: legal, insurance, accounting
marketing and sales cooperatives
packing and storage
processing (food and industrial)
technical expertise
promotion of bio-diversity
equipment sharing
access to infrastructure: electricity, gas, internet, etc.
access to agricultural subsidy programs
community services: schools, health care, etc.
community planning
organic certification
political advocacy and lobbying removal of bureaucratic barriers for farmers.
Facilitate eco-tourism



The more important aspects of the project are listed in the section below. The section after that
lists other relevant issues.


1.

Concept origin: This concept was developed by a group of senior specialists in Russia
working in private and non-profit sector, academia, active in promoting bio-diversity,

This map shows where the proposed area is located rela1ve to major markets (Moscow, St. Petersburg, and Europe)

This map shows where the proposed area is located rela1ve to la1tude of European countries

financing and operating large-scale agricultural projects, and promoting reform in Russian
agriculture.
2.

Where? There are large areas of high quality farmland all over Russia (in excess of 50 million
hectares (125 million acres)), which have experienced little if any chemical agriculture
(fertilizer, herbicides, and pesticides.) For the purposes of this project, the areas in North-
west European Russia (Tverskaya, Pskovskaya, Novgorodskaya, and Leningradskaya Regions)
have certain advantages. (See attached map)

3.

Availability of funding: This project can access special subsidized loan programs provided
by the federal government, which would provide 80% of the necessary investment capital on
highly favorable terms. In non-financial language, this funding essentially amounts to a gift to
investors at a ratio of 2:1. In other words, for every $1 put in by investors, $2 is put in by the
government, while 100% of the ownership of the project remains with the investor.
The loans have a term of 10 years and are extendable, at subsidized interest rates of about 1%
per annum in $US. The size of these loans could reach $US 1 billion, however could start as
low as $1 million. A condition for receiving the loans is an investment of the remaining 20%.

4.

Support from senior government officials: In addition to financial support, this project
would enjoy moral and logistical support at a very high level, due to the organizers strong
working relationships with senior government officials, and significant interest in such
initiatives on the part of the government. This includes the minister of agriculture, who has a
serious personal interest in sustainable farming, the governors of the regions concerned, and
other top-level government officials.

5.

Sources of funding at start: a plausible breakdown of funding sources at the beginning of

the project would be as follows. Over time, perhaps 10-20 years, once the system has
demonstrated its economic viability, the government subsidized loans and philanthropy
would be phased out, to be replaced by commercial debt and investment, and self-financing of
expansion from ongoing operations.
a.
b.
c.
d.

Heavily subsidized government loans: 80%

International philanthropy: 10%
Russian philanthropy: 7%
Individual farmers own capital: 3% (at start eventually to grow to majority of
funding, together with points e. and f.)
e. Commercial finance (debt and investment capital): 0%
f. Funding from profitability of ongoing operations: 0% (at start)
6.

Desired funding: A project like this could be initiated with a minimal amount, for example, a
few hundred thousand dollars, which would be enough to fund 1 or 2 demonstration farms.
Even smaller amounts of would allow a sustained fundraising campaign. However, in order to
get the attention of the federal and local governments and introduce parts of the program in
sufficient scale, a $5-$10 million would be a desirable minimum amount. At a loan to invested
capital ratio of 4:1, this would allow for $25 to $50 million to be put to work.
Since the government loans could eventually reach the sum of $1 billion, and half of the
invested capital support could come from Russian philanthropy, the upper estimate of desired
capital support at start is about $100 million.

7.

Organic land: That so much Russian land is de facto organic is a major financial advantage
because it precludes the expensive step typical in the US and Europe of taking land out of
chemical production, which can last several years, at high cost .

8.

Large areas where only sustainable, organic farming is practiced: Land availability in
the areas mentioned allows for acquisition of large, unified tracts, in which sustainable,
organic farming could be implemented, with no, or very few exceptions. This has significant
implications for raising productivity and efficiency through shared human experience,
resources, knowledge and practice, and for building communities sharing sustainable values.
It also precludes contamination issues, which are an issue in European and US organic
farming. Also, in contrast particularly to Europe, but also to the US, this prime land is largely
depopulated.

9.

Labor costs: Salaries in the rural regions in question are approximately $300/month. This is
for good quality employees, experienced in small-plot, organic, farming, motivated,
resourceful, and glad to be employed in this activity.

10.

Labor intensive: The agency would promote labor-intensive methods with the goal of
achieving population density necessary to sustain healthy communities of about 100 people
each, or about 20 families. The relatively low wages make this economically viable.

11.

Land costs: High quality land is available in these regions as property or lease at extremely
low prices, relative to Europe and the US. On average comparable land is available in virtually
unlimited quantities at about $400/ha ($160/acre), compared to $30,000/ha ($12,000/acre)
in Europe and the US. This is a factor of 75:1! This differential in price is a large part of why
the impact of such a project can be so much larger in Russia than in Europe or the US.

12.

Additional government subsidies: In addition to subsidized interest rates on loans, the

Russian government offers a large variety of subsidy programs. The agency would guarantee
that small farmers receive these benefits. They include:
a.
b.
c.
d.
e.
f.

co-investment in new equipment.

per-liter subsidies on milk production
per-kg subsidies on meat production
subsidies on genetic improvements in livestock
energy subsidies
0% profit tax through 2020.

13.

1st world food prices / 3rd world land and labor costs. Russia has a unique economic
situation in the world, because despite high food prices, they have very low land and labor
costs. Many 3rd world countries have similarly low land and labor costs, but they lack the
access to high-margin markets that Russia enjoys both domestically, and in Europe.

14.

Impact: When thinking about what will really make a difference in how world agriculture is
practiced, one realizes that how agriculture develops in Russia is vitally important to how it
will be practiced around the world.
There are only a few regions and countries that produce most of the food in the world,
besides Russia + Ukraine. They are: The US + Canada, Brazil, China, India, Australia and New
Zealand, and Europe. All of these practice predominantly chemical, ecologically harmful
agriculture. Russia and the Ukraine remain in a kind of time warp, a result of historical

accident. They are currently undergoing a gradual transition to the kind of agriculture that is
practiced everywhere else.
Agricultural practice has a self-reproducing nature. Once capital is invested, farmers get used
to techniques, agronomic institutes teach industrial technique, large industries with vested
interests grow up to support a certain method, and government officials support these
methods, then it becomes very difficult and expensive to change things. This is the case with
most of the world.
In this sense, Russia is still a blank canvas. If one could demonstrate that sustainable
agriculture can work and survive economically, and if one could measure the benefits and
positive externalities in real life, on a very large scale, then this could decisively impact the
choices made further in Russia and by other countries and communities around the world. It
is estimated that Russia is only producing 20% of the food it could produce. It could serve as
an incomparable source of inspiration, conviction, know-how, training, and real-life
experience when confronted with the barriers and costs of switching to sustainable farming.
15.

Human resource: Luckily, excellent quality human resources are available to power such a
project.
a. Russian urban dwellers. The traditional farming populations on the land are not a
deep resource for providing farmers, because they have been severely degraded
over the past decades, and indeed, the regions being considered are seriously
depopulated. However, there exists a large resource of individuals and families
interested in farming in major cities who would be an excellent talent pool. These
are often highly educated professionals, mostly with children, often with strong
scientific backgrounds and knowledge of English, who are dissatisfied with urban
life where they are locked into high costs, limited salaries, poor ecological
conditions, and cramped living spaces. The group who conceived of this project
know of so many individual examples of people who would gladly enlist in such a
project, that we have little doubt that nation-wide a substantial back-to-the-land
movement would provide top-quality personnel for such a project.
b. Foreign specialists. Knowledge and interest in sustainable farming is very highly
developed in Europe, particularly among young people, however opportunities for it
are very limited due to exorbitant land costs and entrenched practice. This group
could be a substantial resource for such a project. In particular, the opportunity to
buy land very affordably would be a huge attraction to this group. While most of
such specialists would come from Europe, due to geographic proximity, substantial
input is also likely from North America, Australia, and New Zealand. This human
contribution would be extremely important, because it would bring with it technical
expertise and know-how.
c. European student training programs. Many of the leading agricultural economies
in Europe have well-funded programs to send recent agronomy graduates abroad to
gain experience. This includes France, Germany, Holland, Denmark, and the
Scandinavian countries. This could also be a substantial source of expertise and
some of these students might well decide to stay on after the funded programs.

d. Russian small plot farmers. Despite the degradation of the Russian rural
population, one should take into account that there exists an enormous resource
among existing Russian rural farmers, because they have been practicing this kind
of agriculture for decades, and simply know how to do it, and possess invaluable
local experience and knowledge. If provided access to funding and other support
services envisioned by the agency, then a nation-wide recruitment campaign would
provide a large number of worthy individuals who could farm these territories.

16.

Markets:
a. EU: This represents a large, high-income market with substantial consumption of
premium-priced organic and sustainable products.
b. Self-feeding: Due to the substantial population it is possible to put on the land, it
represents in and of itself a large market for food.
c.

Moscow and St. Petersburg: Both of these cities have a strong demand for healthy,
non-industrially produced food and pay a large premium for it. It is a large, existing
demand, represented in existing farmers markets and internet stores. Population of
St. Petersburg is 4.8 mil and Moscow is 11.8.

d. Local cities and regions: In addition to the more prosperous markets of Moscow
and St. Petersburg, the regions which the farms would be in or near to also amount
to substantial market: Pskov, Novgorod, Tver, Leningradskii region, and the
northern half of Moscow region have a combined population of 7.5 mil.
e. CSAs: This is proving to be a popular distribution model in Moscow, however it
remains very expensive, beyond the reach of all but the very wealthy. The scale of
the envisioned project is such that CSAs could compete with food stores. This is a
highly desirable business model because is far cheaper than the retail markup,
which is quite high in Russia, and could be implemented on a large scale through the
agency. It would differ from typical CSAs in the US in that items would be selected
from a group of farms, providing a greater variety of produce. In addition, video
conferencing between account managers at packing stations and consumers could
further enhance the viability of this model. There is no question that this model
could compete very effectively with retail food distribution.
f.

17.

Large branded roadside and railway stores: These regions all have major highways
and rail lines feeding to Moscow and St. Petersburg, and the heavily traveled
highway and rail line between the two cities goes through this area. Roadside stores
serving travelers on these routes would provide a substantial outlet for these
products.

Vavilov Institute: The institute would be an important partner and beneficiary of such a
project.
Partner: In addition to playing a key role in conceiving the project, the institute is interested
in contributing farms, of which it has about 10, amounting to about 7000 hectares, which are
currently under-funded. It also has an excellent staff of 120 highly qualified, extremely
dedicated agronomists who are specialists in growing the many diverse food crops the
institute preserves. These agronomists can play a crucial role in recommending which crops
to grow, and how, in which crop rotations, etc.

A fascinating aspect of the Vavilov seed collection which differentiates it from other global
seed banks is that an enormous amount of scientific research has been done on the biological
traits, productivity, and desirable growing conditions of the plants in the collection, data
which has been collected for decades, since the 1930s. The knowledge is focused on food
plants suitable to the Russian climate : potatoes, grains, beans, root vegetables, ground
vegetables, and fruits. This store of knowledge and human know-how is an invaluable
resource which doesnt exist anywhere else in the world. In addition, the institute has the
seeds available, and can provide them to farmers. Finally, the institute has enormous prestige
in Russia and globally, and by lending its name to the project would give it great authority,
while in turn raising the profile and appreciation of the institute. This would be particularly
important in receiving government agricultural loans. The expertise of the institute, and
related institutions, also extends to livestock.
Benefits The institute would benefit greatly from such a project because it would provide an
important source of income to its agronomists, who are under-paid and in risk of being
phased out. In addition, the land the institute owns would become more valuable and
productive, becoming a valuable asset. The growing of heirloom plants from seeds is a large
part of the institutes work, as it has to reproduce them periodically when the germination life
of the seeds expire. The institute would also benefit to the extent that this work could be
transferred to the farms, something that could be done on a large scale. Not only could farms
grow many of the key plants as part of their regular production, they could also help in the
replanting needs of the institute as a service in return for support from the agency.
Legacy The involvement of the institute would fit the vision of its founder, in a modern
context. Healthy food production is again being threatened, although in our age from a
different threat than Vavilov foresaw. It is eminently fitting that his lifes work: the collection,
and the institution he built, could play an important role in addressing these threats.
Further reading Two excellent books have appeared in English over the past years which
explain the invaluable contribution that Vavilov made. The murder of Nikolai Vavilov by
Peter Pringle, and Where our food comes from by Gary Nabham.
18.

Enormous undeveloped agricultural potential of Russia. It is estimated that only 20% of

Russias food production potential is currently realized.

19.

History of small-plot, labor-intensive, de-facto organic, family farming in Russia. Due to

its unusual economic history, Russia has a broad tradition of small plot farming which
continues to this day. In communist days, private individuals were legally allowed to sell
produce at farmers markets for free prices. These markets were enormously popular, and
farmers enthusiastically grew produce for them, as it was a valuable source of income.
Productivity was enormous, and quality outstanding, because plots were legally limited in
size (about 1 hectare), and tended to with loving care. At the height of communism, fully 50%
of all produce excluding grains was produced in this way in Russia, a remarkable statistic.
The tradition continues to this day with farmers markets in every town and city. They
continue to be an important part of Russian food supply, and the quality continues to be
excellent. Most of this food was and remains de-facto organic as small farmers had practically
no access to chemicals. Paradoxically, this experience has given most Russians across all
classes a good education in the difference between real food, and industrial food, and they

appreciate the difference more than in many western countries. Finally, this experience has
created a large domestic demand for high quality, healthy food.
20.

The pro-organic, sustainable farming, slow food movement in Russia It might come as a
pleasant surprise to people in the west interested in these issues that these ideas enjoy
substantial popular support among Russians across social and economic groups, including in
the government.
Concerns about healthy food have given rise to a vibrant community of internet stores which
deliver fresh, locally grown, often organic food in Moscow and St. Petersburg. Currently the
prices are rather high and cater to upscale customers, but the market is constantly growing
and prices are coming down. The best-known of these is called Lavka-Lavka, which has a very
good website profiling the farmers they buy produce from. Lavkalavka.com (in English too)
These ideas have support among small plot farmers, many Russian scientists in the biological
sciences, intellectual classes in cities, and progressive, educated consumers. There are a
number of excellent Russian authors who write on the subject, and have a popular following.
The movie Food Inc. has been professionally dubbed into Russian and is widely known
among people interested in the subject. Russian movie download sites indicate that has been
viewed a few hundred thousand times in Russia.

21.

Some advantages of doing this in Russia over other countries and regions:

a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.

Non GMO
Huge amounts of de-facto organic land.
Wide popularity of sustainable farming ideas.
Domestic financing for 80% of capital needs.
High produce prices / low labor and land costs
Strong academic base in sustainable agronomy and agriculture in general.
Proximity to markets in Russia and Europe.
Strong governmental support.
Global example and significance.
Size.
Excellent human resources, both in Russia and from nearby Europe.



The following section lists additional relevant aspects of the project.

22.

Interest from Russian philanthropy: The organizers have relationships with some of the
largest philanthropies in Russia who could be approached about supporting such an effort.
There exists a particular interest in promoting healthy social development of rural
communities.

23.

Inexpensive energy: Similar to the US and in contrast to Europe, these regions enjoy
relatively low rates for natural gas, fuel, and electricity. Rates are 30-50% of what they are
in the EU. This is a big factor in making this economically competitive.

24.

Abundant water supplies: These regions enjoy unusually abundant water supplies. In
addition to significant and steady precipitation, the region has a large amount of streams,
rivers, and lakes.

25.

Reduced threat from global warming: Due to its relatively northern latitude, long term
temperature increases due to global warming is likely to lengthen growing seasons, thereby
increasing yields.

26.

Pro-community: A cornerstone of the agencys activity would be to foster healthy

communities, primarily by striving to achieve geographical proximity and population density
which would allow communities to exist, and planning farm size and location to allow for
planned communities of approximately 20 families each. Efforts would be made to provide
institutions for these communities to function: i.e., schools, communications, health services.

27.

Technology and connectivity: The agency would emphasize making available the latest
technological methods and know-how. A key part of this would be to provide high-quality
internet connectivity to communities, capable of sustaining video communication good
enough to demonstrate agricultural technique, diagnosing problems, remote veterinary
services, etc. Good quality mobile phone connectivity already exists in these regions.

28.

Large territory: The availability and cost of land allows for creating very large territories
which would come under sustainable farming techniques. In the four regions listed above,
this could easily amount to 1-2 million acres in relatively compact blocs.

29.

Average farm size, number of farms and communities: (These are total guesses need
some guidance here, but suffice to say some kind of calculation of this sort should be made.)
Average farm size would be about 10 acres, with an average of 1 worker per acre. Assuming
75% of average communities were working on the farms, and average communities of 100
individuals, then average farmland per community would be 75 acres. At this rate, 1 million
acres could support 13,000 communities, or a total population of 1.3 million.

30.

High-profile, high quality potential board of advisors The personal relationships of the
small group who conceived of this project extend to leading personalities in Russian
agriculture from all areas: business, government, and academia. We could quickly activate
an top-quality advisory board for such a project.

31.

Products:
1)
2)
3)
4)
5)
6)
7)
8)

Garden vegetables
Potatoes
Root vegetables carrots, garlic,
Apples
Cherries
Berries
Juices
Mushrooms

32.

9) Jams
10) Artisanal grains, cereals, and bread
11) Canned and pickled foods
12) Baked goods, pastries, etc.
13) Fermented beverages
14) Arts and crafts, souvenirs
15) Herbs, fresh and dried
16) Medicinal plants
17) Dairy products from cow and goat
18) Sheep
19) Meat, poultry
20) Eggs
21) Fish (cultivated)
22) Flax oil
23) Honey

A knowledge center for global benefit: It is well demonstrated that productivity in
agriculture increases when farmers can share information, experience and know-how. A big
benefit to sustainable agriculture world-wide from such a project would be the emergence of
large numbers of trained specialists with real experience, who could then share their know-
how in other countries, particularly in similar climates in the US, Canada, and Europe. By far
the largest sustainable, organic farming example in the world, this project would provide
ample opportunity for education and inspiration of sustainable farmers world-wide.

33.

Large scientific resource in Russia.

34.

Information and knowledge sharing among farmers in the project.

35.

Bio-diversity: The greater variety of food available from this kind of small-plot farming
would be part of its commercial appeal. Input from the Vavilov Institute would ensure
rational and scientific maximization of bio-diversity in a highly productive manner.