News

August 06, 2008

Food Security Becomes Of Major Importance In Russia

By Sally White

How to understand the story behind Russian news is becoming an extremely important art. The country is so commodity rich – not just in minerals but also potentially in agriculture. Black Earth Farming is the latest example of the conundrums facing investors. The soil of the steppes can help solve world grain shortages, which was the story that Black Earth Farming told when it made its US$300 million Swedish IPO in December last year. Yet, just because it was so successful with foreign investors, demand for the shares bringing heavy oversubscription as Swedish funds waded in, it took a sharp tumble last month. Black Earth shares declined 18 percent after Agriculture Minister Alexei Gordeyev said on July 14 that his ministry would "look into foreign capital buying up farmland."

Next step took them up again. Why? The board appointed on July 31an associate of Prime Minister Vladimir Putin. Black Earth hired Vasily Shestakov, co-author of a judo book with Putin, as an adviser. The shares closed up 2.6 per cent in Stockholm, their first gain in five days. Yet they are still down getting on for 40 per cent from their peak on a combination of this fright and lower grain prices. Now the market is waiting to see what happens to its major investors, which are two Swedish...