RBTH for the New York Times by Russia Beyond

Distributed with

The New York Times

www.rbth.ru

A Special Advertising Supplement to The New York Times

Politics & Society

Opinion

Culture

Pussy Riot moves from band to brand

Is Putin serious about welcoming new investors?

Director finds that Yiddish is alive in Russia’s Far East

P.02

P.06

P.07

This special advertising feature is sponsored and was written by Rossiyskaya Gazeta (Russia) and did not involve the reporting or editing staff of The New York Times.

WEDNESDAY, NOVEMBER 21, 2012

NEWS IN BRIEF

Airlines To the relief of travelers, Europe’s big-name budget airlines look set to enter the Russian market.

Taking to the Skies Without Being Taken for a Ride

Cyrillic Domains Grow Online Russia may not be the world champion in terms of computer use or Internet access, but when it comes to non-Latin domains, .рф is the name to beat. The .рф domain, which uses Cyrillic letters that translate as .rf and stand for Russian Federation, is the most successful of those that use non-Latin characters according to the 2012 World Report on Internationalised Domain Names Deployment, which was released in November. After two years of operation, there are more than 845,000 registered .рф addresses. The domain’s monthly growth rates are comparable to those of Russia’s Latin-script domain .ru.

House Cleaning Underway at Defense Ministry

KOMMERSANT

Two Russian budget airlines failed last year, but proposed changes in regulation look set to bring established outsiders to the market. OLEG KHOKHLOV KOMMERSANT DENGI

A year ago, Konstantin Teterin, the former C.E.O. of failed lowcost airline Avianova, declared that the Russian market was not ready for budget air travel.“Pure low-cost carriers are not viable in Russia because of infrastruc-

tural and legal restraints,”Teterin said. In mid-October, however, First Deputy Prime Minister Igor Shuvalov set out to prove Teterin wrong. Shuvalov’s commission on competition and small-to-medium enterprise development suddenly instructed the relevant government ministries to propose a model for creating conditions for low-cost air travel. A week later, low-cost British outfit EasyJet announced the launch of two daily flights from London to Moscow in the spring

of 2013. The minimum fare would be 6,500 rubles ($205). By comparison, tickets on other carriers in that same period range around 11,000 rubles ($350). Immediately following EasyJet’s announcement, Europe’s largest discount airline, Ryanair, applied for permission to operate flights to Russia from Ireland. Then Aeroflot suddenly announced plans to set up its own subsidiary discount airline within a year or so. Russia’s Ministry of Transport was quick to express its hope that

Thanks to changes in legislation and policy, Russian budget carrier SkyExpress will soon face competition from well-known imports such as EasyJet and Ryanair, as well as a low-cost offshoot of Aeroflot.

a bill on nonrefundable air tickets — crucial for the low-cost airline business — would be brought before the State Duma before the end of the year. Explaining the need for the move,Vnesheconombank Deputy Chairman Sergei Vasilyev said that Russia needs “more connectedness ... In the Soviet era, the country’s unity was ensured by low airfares.” Also, Vasilyev added, “No Western investment is going to come to any provincial towns if it’s impossible to get there by plane.”

Russian President Vladimir Putin began a wideranging reshuffle of military leadership in early November, beginning with Defense Minister Anatoly Serdyukov (pictured right) who was forced to step down after the exposure of extensive corruption at a Defense Minstry holding company. Serdyukov, who became defense minister in February 2007, had been praised for overseeing a largescale modernization of Russia’s armed forces. Sergei Shoigu (pictured left), a former Emergency Situations minister and governor of the Moscow Region, has replaced Serdyukov.

Cybersecurity Law in Process The Russian goverment continues to work at crafting cybersecurity laws aimed at protecting citizens from the disclosure of personal information online and attacks on digital infrastructure such as online banking. The Federation Council, the upper chamber of Russia’s parliament, is currently drafting a new cybersecurity strategy that will ensure the country’s “digital sovereignty,” in the words of Ruslan Gottarov, head of the Federation Council’s Information Policy Commission. Critics of the strategy warn that it may lead to violations of individual rights and censorship.

Wheat Poor harvests cause global price rise

Farm meets Farmville

Trying to Live on Bread Alone

The iOgorod project enables city-dwellers to watch their own organic produce grow and then eat it without ever leaving their apartments.

For the fifth consecutive season, Russian grain farmers face a smaller-than-predicted harvest. The shortfall will affect prices worldwide.

TSVETELINA MITEVA MOSKOVSKIE NOVOSTI

Gardening is no longer a necessary skill in Moscow for those who want farm-fresh produce. Instead, it is an elite service offered to wealthy enthusiasts of a healthy lifestyle. Outside the capital in the Moscow Region, a greenhouse complex in the village of Ostrovtsy is running a project called iOgorod. The project allows those with no space or time to grow food themselves to rent a vegetable patch and use a webcam to watch professional horticulturists take care of the crops of their choice, such as tomatoes, cucumbers, strawberries, arugula and basil. When the produce is harvested, a courier delivers it to the customers.

ALEXANDER VOSTROV RUSSIA BEYOND THE HEADLINES

The idea for this semi-interactive kitchen garden belongs to Vadim Lobov, head of the venture capital fund Synergy Innovation, which launched the project with a $1 million investment. CONTINUED ON PAGE 8

iOgorod cultivates a variety of crops at its greenhouses in the Moscow Region village of Ostrovtsy.

The United Nations Food and Agriculture Organization expects the worldwide grain harvest to fall 52 million tons short of target this year. As part of this global trend, Russian grain harvests are down significantly.The country will harvest only 70 million to 75 million tons of grain this year, off an original estimate of 94 million, according to the country’s Agriculture Ministry. Projections by the U.S. Department of Agriculture and the International Grains Council, which also keep tabs on Russia, are in the same ballpark. The United States, an even larg-

er global supplier not only of wheat but also corn, has this year suffered its worst drought since 1988. The U.S.D.A. expects a 12 percent drop in the U.S. corn crop, to about 13 billion bushels. Not that long ago, grain was so abundant that farmers almost could not get rid of the supply. In 2009, farmers in Russia’s Altai Territory, sometimes called the breadbasket of Siberia, threatened to burn their fields because of low prices. Around the same time, German farmers used grain as fuel to heat their homes because it was cheaper than oil.That year, a ton of Class 3 wheat sold for about $125, which did not even cover production costs. This year, however, grain growers in both the Russian and American breadbasket regions watched drought destroy their crops. CONTINUED ON PAGE 3

Experts debate the next four years of U.S.-Russia relations RBTH.RU/ELECTIONS_IN_USA

Farming No green thumb? No problem!

ONLY AT RBTH.RU

Burger King takes over Siberia RBTH.RU/19535

Politics & Society

RUSSIA BEYOND THE HEADLINES

MOST READ Opposition Movement Elects Coordinating Council rbth.ru/19463

SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

Parties Billionaire and former presidential candidate Mikhail Prokhorov establishes a new party, but will it be an influential force?

Ready to Go Another Round Despite losing last spring’s presidential election by a substantial margin, Mikhail Prokhorov shows he has not given up on politics.

THE NUMBERS

ROMAN VOROBYEV RUSSIA BEYOND THE HEADLINES

is the number Prokhorov holds in the Forbes 2012 rankings of Russia’s richest people. He is the 58th richest person worldwide, with a fortune estimated at $13.2 billion.

is how much of the national vote Prokhorov won in last March’s presidential election. Then-Prime Minister Vladimir Putin took 63.6 percent of the vote.

6'7''

is Prokhorov’s height. A sports addict, although not a player himself, Prokhorov says he devotes at least two hours every day to working out.

At the founding congress of his new Civic Platform Party in late October, Mikhail Prokhorov — billionaire, playboy and owner of the Brooklyn Nets — said that he considers himself a“third force in Russian politics” and that his party is unique. “ The era of autocratic parties is over,”Prokhorov said at the congress. “We’re at the crossroads again; that’s why we decided to offer a new format that no one has ever used before.” In Prokhorov’s view, what makes Civic Platform unique is that it won’t be lead by a single leader, but by a committee of 11 people, including nonpartisan civil society activists. The congress delegates voted unanimously for the proposed structure. Prokhorov stressed that his party is geared towards those who are dissatisfied with the status quo, but is not inclined towards supporting street protest leaders such as anticorruption lawyer and blogger Alexei Navalny. “We love dividing society into reds and whites: some are with the Kremlin, while the others are with the opposition’s Coordination Council, and there’s no third option. I want to have the third option. I want both the Kremlin and the Coordination Council to feel comfortable in our country. I’m therefore the third force, if you like,” said the businessman, noting that he is prepared to hold talks with all except the nationalists on the creation of alliances.

MIkhail Prokhorov, speaking to supporters during last spring’s presidential campaign, says he hopes to create a third way in Russian politics.

Prokhorov stressed that his party is geared towards those who are dissatisfied with the status quo. Political analysts and the expert community are divided over the prospects of Prokhorov’s new party.

Party platform The delegates at the Civic Platform conference discussed some of the party’s specific positions. Unexpectedly, one of the key issues was the territorial division of Russia, currently divided into 83 separate entities. At the con-

immigrants should learn the Russian language and Russian culture. Prokhorov added there should be a transparent system for tracking immigrants. Experts are divided over the new party’s chances for success. According to political analyst Gleb Pavlovsky, Prokhorov has quite clearly outlined his party’s main idea.“This is clearly a party geared towards the cities, and judging by the rather scathing remarks made about the republics, the party is not looking to lure voters in the republics,” Pavlovsky said on Kommersant FM radio.“It has taken a very tough stance on irregular migration and even the current division of the ethnic republics.” Igor Yurgens, a member of the Civic Initiatives Committee, does not rule out the possibility of the Civic Platform party becoming

Who is Mikhail Prokhorov? Mikhail Prokhorov was born on May 3, 1965 in Moscow. He is a selfmade billionaire often described by the Russian press as a playboy. Prokhorov made his name in the financial sector but went on to become one of Russia’s leading industrialists in the precious metals industry, running such firms as Norilsk Nickel and Polyrus Gold. Prokhorov has supported a number

of cultural and sporting institutions in Russia, including the Moscowbased CSKA basketball, hockey and soccer clubs. In 2004 he founded the Cultural Initiatives Foundation, run by his sister Irina. In May 2010 he became the first non-American to own a National Basketball Association (N.B.A.) club, when he bought an 80 percent stake in the Brooklyn Nets.

gress, Prokhorov called for an end to the division. According to Prokhorov, the separation of the country into regions has created “ethnic ghettos, where the local corrupt authorities oppress and rob our people, with all ethnicities affected. It’s surely better to

be honest and say that the Stalinist-Leninist system is no longer effective in the 21st century.” He also touched on the issue of immigration. According to Prokhorov, Russia should encourate the immigration of highly skilled workers, but even these

a platform for consolidating democratic forces. “In recent years we’ve seen the democrats at loggerheads. Then Prokhorov appeared, and we’re putting a lot of hope in him,”saidYurgens. “I think that people like Prokhorov and [former finance minister and leader of the Civic Initiatives Committee Alexei] Kudrin can be instrumental in this matter.” Political strategist Konstantin Kalachev, however, believes that Civic Platform has no chance of becoming an influential party. “Prokhorov behaves inconsistently: one moment he’s creating a new type of party, the next he’s rejecting the idea,”Kalachev said. “This party is just a flash in the pan, a political game.” This article used reporting from RBC Daily and Kommersant.

Pussy Riot Preparing to go commercial

Residents Find a New Way to Tell Authorities “Not in My Backyard”

Pussy Riot: From Band to Brand

In order to protect the rights of small villages and neighborhoods, residents are using a little-known law to create local self-governing bodies. KIRILL SAMODUROV

The district of Pavshino is something of an anomaly in the bustling Moscow metropolis. Its narrow streets cut the area into neat squares of private households, and spreading apple trees block the horizon. But all this could soon change: The ongoing construction of modern high-rise apartment buildings casts an ever-worrying shadow over the Pavshino landscape. These residential units are the scourge of the Pavshino Territorial Public Self-Government (T.O.S.). the organization was founded in 2002 when local residents tried to get the local authorities to repave the streets. “At first, we received meaningless formal replies,” said the organization’s head, Nikolai Zuev. “But then it turned out that the streets of our village simply did not exist [officially], because not a single government body was responsible for them.” Under Russian law, citizens are entitled to create a T.O.S. to engage in commercial activities aimed at developing a local area and addressing the domestic problems of local residents. Legislation allows T.O.S. organizations to share the powers of the city and village administrations and use budget funds. However, municipal authorities are often

KOMMERSANT-VLAST

Residents protesting changes to a public park in Moscow.

Social Activism in Russia

SOURCE: THE PUBLIC OPINION FOUNDATION (FOM)

reluctant to cooperate. In practice, municipal authorities decide whether to allow the self-governing organizations to exist and determine how much influence they have.

In the case of Pavshino, in order to have roads built, the municipal administration suggested that a T.O.S. be established and applications for road repairs be filed on its behalf. But the harmoni-

ous relationship between the authorities and the people did not last long. “In 2004, we fought for our homes, not for roads,” Zuev said. “The local authorities had signed an investment contract to build high-rise apartment buildings on our land. The developer was trying to buy our land plots, saying that ‘everything has already been decided.’ But the residents rejected its offers, and it was through the T.O.S. that we had the contract nullified as unlawful.” The T.O.S. fills the gaps left by the authorities, Pavshino residents say. There is no independent municipal authority in the district, and Moscow authorities fail to take their interests into account. Said Zuev, “The authorities don’t hear us, and all of the campaigns of our T.O.S. are designed to have the authorities take the opinion of the local residents into consideration.” While creating a T.O.S. has become a popular way to fight for local rights in the current wave of grassroots activism in Russia, Peter Miloserdov, coordinator of the Council of Municipal Deputies of Moscow, believes T.O.S. organizations have no future. “Moscow used to have a nice law on territorial self-governance prior to 2006. T.O.S. organizations were entitled to supervise retail trade and the work of public utilities in their districts. But once the law was abolished,T.O.S. units lost many of their powers. Now, a T.O.S. is registered with the Justice Ministry as a regular company, rather than a local self-governing body.” Semyon Burd, advisor of the utilities department at the Federal Antitrust Service, indicated that T.O.S. organizations may also be discouraged by the general trend toward less self-government. Said Burd,“T.O.S. organizations will have more serious chances as soon as self-governance is adopted as a nationwide idea — not only on television, but in people’s minds.”

ITAR-TASS

Social Activism Self-governing bodies give activists something to do besides protest

Makers of T-shirts such as this one may soon have to pay royalties.

Lawyers for the band are going through the process of registering the group as a trademark to protect them against the illegal use of their name and image. SVETLANA POVORAZNYUK IZVESTIA

Pussy Riot’s lawyers have declared war on condoms and T-shirts bearing the name of the band. They intend to register Pussy Riot as a trademark, to safeguard the group against illegal commercial use of the brand they created. Pussy Riot’s lawyer, Mark Feigin, has taken steps to prevent the sale of alcohol, cosmetics and other products with the name of the band on them. Said Feigin: “Some pornographic materials featuring people wearing balaclavas have appeared on the Internet. Previously, an application was filed in Germany to produce alcohol to be sold under the Pussy Riot brand. In the U.K., a certain Dmitry Som has applied for the registration of Pussy Riot condoms.”

The lawyer claims that the number of those seeking to sponge off of the brand is growing. The leading segment is the production of T-shirts bearing the band’s logo.“Pussy Riot band members have not received a cent from the sales of these shirts,” Feigin said. Feigin is registering the brand through the company Web-Bio. It is not known how the band members are connected with WebBio, although another Pussy Riot lawyer, Nikolai Polozov, has also said that the company was connected to representatives of the band. “The decision to patent the brand was made in order to protect the arrested band members and those who were not arrested from the harmful consequences of plagiarism,” Polozov said. According to the music production center Sever Production, which promotes some of Russia’s most popular artists, the Pussy Riot brand is worth at least $1 million. However, it could be worth tens of millions if the right promoter were engaged.

SPECIAL SUPPLEMENTS AND SECTIONS ABOUT RUSSIA ARE PRODUCED AND PUBLISHED BY RUSSIA BEYOND THE HEADLINES, A DIVISION OF ROSSIYSKAYA GAZETA (RUSSIA), IN THE FOLLOWING NEWSPAPERS: THE DAILY TELEGRAPH, UNITED KINGDOM • THE NEW YORK TIMES, THE WASHINGTON POST, UNITED STATES • LE FIGARO, FRANCE • SÜDDEUTSCHE ZEITUNG, GERMANY • EL PAÍS, SPAIN • LA REPUBBLICA, ITALY • LE SOIR, BELGIUM • DUMA, BULGARIA • GEOPOLITICA, SERBIA • ELEFTHEROS TYPOS, GREECE • ECONOMIC TIMES, INDIA • MAINICHI SHIMBUN, JAPAN • CHINA BUSINESS NEWS, CHINA • SOUTH CHINA MORNING POST, CHINA (HONG KONG) • LA NACION, ARGENTINA • FOLHA DE SÃO PAULO, BRAZIL • EL OBSERVADOR, URUGUAY • JOONGANG ILBO (SOUTH KOREA). EMAIL INFO@RBTH.RU. MORE DETAILS AT RBTH.RU/ABOUT

MOST READ Russia Aims to Feed Asia rbth.ru/18017

Special Report

RUSSIA BEYOND THE HEADLINES SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

CONTINUED FROM PAGE 1

Class 4 wheat, which is inferior in quality to Class 3, sold for more than $270 in early September, just short of the record for grain prices set in 2008. In the U.S., prices for No. 1 Hard Red Winter wheat soared from $270 per bushel in May to $340 in early September. Even these steep price increases, however, have not been of much help to farmers. Crop failures mean grain is more expensive and that there is less of it to sell, but many production costs are fixed, and the lack of grain means that these costs have to be amortized over many fewer sales, said Pavel Skurikhin, chairman of Sakho, Siberia’s biggest agricultural holding company. “It’s clear, even now, that the crop will be much smaller than we had hoped for,” Skurikhin said. “At least we are not selling grain at a loss, as we have done on many occasions.” Lean years for Russia’s farmers started with the food crisis of 2008 and are continuing into their fifth consecutive season. Agricultural producers are mired in debt. Many of them have multiple mortgages. Several times in the last few years, fields in European Russia, where most of Russia’s grain is grown, did not see the first snowfall until close to the end of

the year; in normal weather conditions, it arrives in the first half of November. But it is not only the weather that is hurting the sector. Insufficient working capital, a direct result of the crisis, has forced many to cut the amount of productive land. The Altai Territory is among the hardest hit. According to the

In the U.S., prices for No. 1 Hard Red Winter wheat soared from $270 per bushel in May to $340 in September. Russia’s drought may account for a 25 percent hike in U.S. wheat prices, although the situation is not as bad as in 2008. National Union of Grain Producers, Siberia will harvest around 10 million tons of grain this year, 4.6 million less than last season. Even with last year’s balance transfers and reserves, Siberia will, at best, barely be self-sufficient. Russia’s southern regions are facing similar circumstances. And what happens in Russia affects farmers worldwide. SaidVladimir Petrichenko, gen-

eral director of consulting firm ProZerno,“The general global situation affects prices. Even if [Russia and America] are not linked through supplies, major exporters’ problems affect everybody.” Russia’s drought may account for a 25 percent hike in U.S. wheat prices, said Dmitry Rylko, general director of the Institute of Agricultural Market Studies. Conversely, the U.S. drought may have caused a 50 percent rise in prices in Russia. The situation is not nearly as bad as it was during the 2008 food crisis. The United Nations Food and Agriculture Organization (F.A.O.) estimates that global grain reserves now stand at 522 million tons — 100 million tons more than in the 2007–08 marketing year. But the balance is delicate. Boubaker Ben Belhassen, principal officer of the F.A.O.’s Trade and Markets Division, said:“With demand and supply more or less balanced, the market is hypersensitive to any bad news. Demand is growing slowly but production is lagging behind. That’s why tension can be felt on the markets — hence the rapid price growth.” Mikhail Orlov, president of the Ambika Group, a Russian agrifood company, said the grain in the marketplace is barely enough to cover supply, which makes

PHOTOXPRESS

Wheat Deficit Highlight Links in Global Food Chain

traders hypersensitive to a bad harvest. “Memories of the Russian embargo on grain exports in 2008, after which U.S. wheat prices shot up from $200 to $300 per ton, are very much alive,” he said.“That’s why traders are scrambling to get their hands on any available supplies and scooping up reserves.” When Russian officials confirmed in August that they would not impose an export embargo, prices stabilized. That’s as well, Orlov said, as raising the prices in Middle Eastern countries such as Egypt, which tends to buy from Russia at the last moment, could cause political turmoil there.

Medvedev addresses food security Russian Prime Minister Dmitry Medvedev has called for a more serious attitude toward global problems, including food security. “Food is becoming more expensive, breeding social and political instability globally. We will participate in international programs to overcome this crisis,” Mevedev said, speaking at a recent Asia-Europe Meeting in Laos. ”It is necessary to make sure that an appropriate environmental protection program is put into practice.”

Medvedev added that the application of innovative know-how for the effective use of natural resources ranks among the most important concerns of the Russian government. “This is one of our national priorities and we are open for cooperation,” Medvedev said. “The formation of an Eastern grain corridor and the construction of major grain terminals in the Far East are key elements of importance.” Interfax

Rice Russian cereals expand beyond wheat

Soybeans Russian soybeans benefit from competitive prices on international exchanges

Although Russia came late to the soybean game, production of the plant is finally flourishing in the country’s Far Eastern and European sectors.

Soy processing plants in Russia

IVAN RUBANOV EXPERT

The soybean came to Russia quite late, but its cultivation has taken off quickly. In the past few years, a whole new business based on cultivating the plant has taken off in Russia and opportunities for investors are plentiful. According to the Interagency Agricultural Projections Committee, the demand for Russian soybeans will grow more than 20 percent in the next decade, and soybeans will eventually outsell wheat. Although at the moment Russian consumers perceive soybeans only as a cheap substitute for animal protein, in many East Asian countries, soy milk, soy cheese, tofu and soy meat cubes are elements of the national cuisine. Nevertheless, the bulk of soybean harvests are used in the animal feed industry. Some 80-85 percent of soy is processed to make animal feed. During the Soviet era, soybeans were cultivated in the Far East on a small scale, but in the 1990s, local soybean farming almost disappeared. A specialist with the Abercade Consulting Agency said: “In the mid-2000s, soy feed was hardly produced at all in Russia.” But then animal breeding in Russia began to expand and with it, the need to produce more feed. Russia turned into a major exporter of soybean meal in the

SOURCE: ROSSTAT

Increase in soybean cultivation

SOURCE: INTERAGENCY AGRICULTURAL PROJECTIONS COMMITTEE

middle of the 2000s. Despite their poorer quality, Russian soybeans were sold at competitive rates on the international mercantile exchanges. Said Irina Kuguchina, a lead-

SOURCE: ROSSTAT

ing expert at the Institute for Agricultural Market Studies, “The profitability of soybean cultivation in Russia largely depends on the price in international markets, but it is normally more ex-

pensive than grains or oilproducing crops. For instance, based on our estimates, in 2011– 2012, the profit margin of soybean cultivation in the Central Federal District turned out to be 30 percent above that of sunflower cultivation.” Since 2004, areas under soybeans have been growing rapidly, and by 2011, the amount of them being harvested in Russia had tripled. The Far East is the leading producer of soybeans in Russia, with the Amur Region alone accounting for about half of the country’s harvest. Most of the beans undergo primary processing locally, at two fat-and-oil enterprises — Blagoveshchensk-based Amuragrotsentr and the Irkutsk fat-and-oil factory. Some raw soybeans and soybean meal are supplied from this region to the European part of Russia. Soybeans were not processed in European Russia during the Soviet era, but five years ago, an oil-extraction plant was built in the Kaliningrad Region, Russia’s exclave in Europe, by the transnational company Sodruzhestvo. The plant’s location near a port on the Baltic Sea has given the firm a major logistical advantage over other Russian firms, and it has also benefitted from its location in a special economic zone. The Sodruzhestvo plant is capable of processing up to 1 million tons of beans annually, and by combining the processing of Russian beans together with imported beans, the company meets about 75 percent of the market requirement in European Russia.

Oil Russia is increasing exports of oil — and not the kind that comes from under the ground

A New Source of Russian Oil Last year Russia exported 4.2 million tons of seed oil, setting a new record. But for the industry to continue to grow, it will have to invest in marketing. ALEXEI KUZMENKO

ITAR-TASS

RBC DAILY

Last year’s bumper sunflower seed crop helped Russia’s oil extraction industry increase vegetable oil production by a third and beat a three-year old export record. However, given the lack of increase in domestic demand and the lack of knowledge about Russian seed oil globally, a serious investment in marketing is required for the industry to expand further.

Russian sunflower oil undergoes a quality check.

In 2011, Russian farmers harvested record high crops of rapeseed (1.1 million tons), soybeans (1.8 million tons) and sunflower seeds (9.7 million tons). As a result, domestic oil extraction plants produced 4.2 million tons of vegetable oil during the season that ended on Sept. 30 — 1 million tons more than the previous record set during the 2008– 09 season, according to SovEcon analytical center Executive Director Andrei Sizov, Jr. Although this year’s estimates for sunflower production are somewhat lower, at 7.6 million tons, it is still more than enough to supply domestic demand. As a result, Russian seed oil compa-

nies have been looking to become more active internationally, Sizov said. Oil exports reached 1.8 million tons last season, compared to the previous record of 1.1 million tons set three years ago. According to an industry trader, key export markets for Russian vegetable oil include the C.I.S., the Middle East and some European countries. Russia also has room for expanding the product line with new kinds of oil, such as cameline or linseed. But for production of oils to increase, crops of the relevant plants must increase too, which requires serious breeding work, a processing industry representative noted.

ALAMY/LEGION MEDIA

Russia Discovers the Joy of Soy

Expanding Production One Grain at a Time Russian raw rice is enjoying unprecedented demand from exporters; export supplies this year are already 60 percent above the 2011 level. ALEXEI KUZMENKO RBC-DAILY

Exporters have boosted their demand for Russian raw rice, according to Irina Glazunova, deputy general director of the Institute for Agricultural Market Studies.“Big companies have already contracted exports of about 100,000 tons, with Turkey as the main buyer,” Glazunova said. Other big importers of Russian rice are Tajikistan and Turkmenistan, and this year Russia has begun supplying rice directly to Egypt and Libya. Said Mikhail Radchenko, Executive Director of the Southern Rice Union: “If this trend continues until the end of the year, rice exports from the Krasnodar region will reach an all-time high.”According to Glazunova, Russia may export up to 20 percent of its raw rice during the 2012–2013 season. According to Southern Rice Union, Russia imported 81,900 tons of rice from January through August of 2012, which represents a decline of 23.4 percent year-onyear, while exports soared by 58.7 percent during the same period, to reach 151,400 tons. Rice production has reached 631,000 tons so far in 2012, according to data from the Agriculture Ministry. Last year, rice production had reached 429,000 tons by the same date. Radchenko attributes the growing demand from foreign buyers to several factors: improvement in quality, a lower harvest in

Egypt, which cultivates rice that is similar to that grown in Russia, and the depreciation of the ruble vis-à-vis the U.S. dollar, which has made deliveries from Russia more attractive to foreign partners. Egypt also made the decision to limit exports of its rice this year due to the unstable internal political environment, which strengthened the global demand for Russian rice, said Oksana Linnik, Commercial Director at Angstrem. “We expect Egypt to resume active exports,”Linnik said. “However, if restrictions remain in place there, export supplies of Russian rice will be huge.” Because of the high demand from exporters, domestic stocks of raw rice are now at an all-time low, Radchenko said. Last year, carry-over stocks were around 62,000 tons in early September, when Russia starts harvesting rice, but this year, stocks were as low as 3,000–4,000 tons. There will be no deficit, though, since Russia grows more rice than it can consume, according to Linnik. Last year’s harvest amounted to 1.05 million tons and this year the rice harvest is projected at 1 million tons. Said Radchenko:“The growing exports prevent a drop in domestic prices and shore up the profitability of rice growing, which remains positive.” Glazunova does not rule out the possibility that, because of the strong demand from exporters, the traditional autumn reduction in prices will be shortlived and market prices will start growing soon. According to the Southern Rice Union, raw rice is currently available at 9.5–10.2 rubles per kilo, VAT included.

Business

RUSSIA BEYOND THE HEADLINES

MOST READ Russia’s Large Oil Deposits Drying Up rbth.ru/19655

SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

INTERVIEW JIM ROGERS

Chocolate Market set for dramatic growth

Looking Forward to a Sweet Future KPMG predicts explosive growth in Russia’s domestic chocolate market, particularly in the handcrafted segment. Local producers, however, aren’t so sure. ALEXEI KUZMENKO RBC DAILY

REUTERS/VOSTOCK-PHOTO

“When Things Change, You Have to Alter Your Opinion” ONE OF THE WORLD’S BEST-KNOWN INVESTORS TALKS ABOUT HIS SUDDEN LOVE FOR RUSSIA AND HIS NEW ROLE WITH THE COUNTRY’S V.T.B. GROUP On Sept. 21, V.T.B. Group announced that it had hired Jim Rogers as an advisor to the agricultural division of its Capital Investment Division. Mark Zavadsky, contributor to Expert magazine and RBTH’s Asia Bureau Chief, spoke with Rogers to find out what made the investor, a long-time critic of Russia, accept that offer. How did you come to join V.T.B.? I’ve been to Russia several times; my first visit was in 1966, and people know that I have been always very skeptical about the country. But people atV.T.B. asked me whether I wanted to work for them — they said they knew that my views could change. We first met in June or July when I was in Moscow, and then we met at the APEC summit inVladivostok. The thing is that I do think the situation is changing for the better in Russia. People wonder whether your enthusiasm for Russia is part of the contract with V.T.B. If you think that you can buy me for a couple thousand rubles or dollars, you’re wrong. I might have a price, but it is too high. I don’t really know how much I have to be paid to say what I don’t really think is true. I heard an interview with Putin and realized that I agree with almost everything that he had to say. Nearly everything that he said was quite

interesting and made me think. This had never happened to me before, at least not when I listened to a politician speak.

HIS STORY NATIONALITY: AMERICAN

You really did use to have an extremely negative attitude towards Russia in your speeches and interviews. Has the country changed or were you too critical of the country? My attitude was fair; it’s the country that is changing. The people in government are changing. When things change, people have to alter their opinion. However, many remain skeptical, which is good, because skepticism makes assets cheaper. When most people are wrong and you turn out to be right, you can make a lot of money. What exactly did you like about that interview with Putin? He said that foreigners should be able to make adequate incomes in Russia while having their investments secured. Capital needs only two things: security and yield — the higher, the better. He admitted that investors weren’t entirely safe in Russia before, that Russia needs to ensure the rule of law. But even if, in your opinion, what he said was correct, at the end of the day they are only words. You’ve got a point; Russia has been saying the right things for 95 years.We love you, just get your money here, we want to help you.

AGE: 70 STUDIED: PHILOSOPHY

James Rogers, Jr. is a successful international investor, financial commentator and author. After attending Yale University and Oxford University, Rogers co-founded the Quantum Fund, a global

And then they take your money and send you to prison. But I believe now that both actions and words will be positive, although it doesn’t necessarily mean that things will go smoothly. What do you think about the situation in the United States? America is the largest debtor in the history of mankind; not a single country has ever run up debts of this size. This might be the beginning of the end. The economic situation in a country can change very fast. In 1918, Great Britain was the world’s most prosperous nation. Two generations later, it went bankrupt. The same holds true for the U.S.; it is on its way to bankruptcy. So we are pretty much doomed then? If people wake up tomorrow and

investment partnership. Over the next 10 years, its portfolio gained 4,200 percent while the S&P rose less than 50 percent. Rogers then decided to retire — at age 37. While continuing to manage his own portfolio, Rogers kept busy serving as a professor of finance at the Columbia University Graduate School of Business. He is currently based in Singapore and is the chairman of Rogers Holdings.

decide that something needs to be done, we can salvage the situation. We lived in debt for 50 years, but it’s better to lose your arm than wait for cancer to finish you off. The Japanese had similar problems in the 1990s, but they didn’t allow their companies and people to go bust, and lost two decades. Scandinavian countries did the opposite; they let their companies and people go bankrupt. It was terrible for three years, but then they started growing. This is a realistic way. Russia made this choice in the 1990s, when the ruble collapsed, and everyone who deserved to go bust did so, but then you had a favorable economic situation. We should opt for short-term pain. Mark Zavadsky Expert magazine

Global accounting firm KPMG is forecasting rapid growth for the Russian chocolate market — 45 percent over the next three years. In contrast, growth in the world market for chocolate will remain very stable, growing at a rate of only about 2 percent annually. The predictions appeared in a recent KPMG study entitled “The Chocolate of Tomorrow: What Today’s Market Can Tell Us About the Future.” The study shows that Russia is one of the most promising emerging markets for chocolatiers, particularly specialty food manufacturers. The study indicated Russians will likely move away from mass-produced chocolate products into handmade confections. The Russian market is already worth about $8 billion per year. “The degree to which consumers are moving up to products with higher price tags is motivating producers to increase their output of handmade chocolates,” said Georgy Pataraya, head of the consumer markets division at KPMG Russia. By comparison, U.S. consumers display an unwavering demand for high-quality products at affordable prices, as well as an increasing interest in nontraditional flavors such as bacon or wasabi. The overall drive toward healthy eating has yet to become a factor for chocolate consumption in the United States. Meanwhile, in Western Euro p e — which is still the largest chocolate market in the world — chocolatiers are increasingly concerned with appealing to consumers who identify as vegetarian or prefer organically grown and produced foods. In 2011, 10 percent of the new chocolate products launched in Western Europe were marketed as vegetarian, 7 percent as free from additives and 7 percent as satisfying organic food regulations. Psychological research indi-

cates that chocolate consumers consider the confection to be an unhealthy treat — it is most frequently an impulse buy. Chocolate consumption in Russia is expected to increase over the next one to two years and be driven by rising disposable incomes and expanding consumer lending, said Andrei Korkunov, founder of the Odintsovskaya Confectionery. “I believe in the Russian market. Russians are being spooked with a crisis all the time, but life goes on — we still go to visit friends and bring gifts for our hosts. People want to live today and not worry about tomorrow. It’s an attitude that encourages spending cash on high-quality items, and I’d class high-quality chocolate in that category,” Korkunov said. At the same time, Korkunov questions the KPMG study forecasts; he expects growth rates of between 5 to 7 percent annually for the chocolate market. He also thinks that while the consumption of handmade chocolates will grow, it will be at a slower pace than other types of chocolate.“Even the tiniest town in France, Belgium or Italy will have a chocolatier,” said Korkunov.“In Russia, such shops have only been opening in large cities; but they will spread to smaller towns too, because Russians love their chocolate. Then again, this won’t happen within two or three years. It is going to take longer than that.”

ALAMY/LEGION MEDIA

MOST READ How to Bring Capital Back to Russia rbth.ru/19967

RUSSIA BEYOND THE HEADLINES SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

Money & Markets

Ratings Fed up with the performance of big Western ranking firms, emerging economies have decided to take matters into their own hands

Russia, China to challenge Moody’s, Fitch Brics member states hope a new credit rating group founded by China’s Dagong in partnership with RusRating and Egan-Jones will rival the market leaders.

ONLY AT RBTH.RU

Opinion

EVGENY BASMANOV, MARINA MAKSIMOVA RBC DAILY

SERGEY YOLKIN

China’s largest credit rating agency, Dagong Global Credit Rating, has officially announced plans to join forces with Russia’s RusRating agency and Egan-Jones Ratings from the United States to create a new international credit rating agency. The firm will be called Universal Credit Rating Group. Dagong has stated that the new organization will be an independent credit rating agency and will not represent the interest of any particular country or group. In a press statement, the Chinese agency said: “The current system of international credit ratings doesn’t work, so a new economic institution is needed to rehabilitate the situation.” Bill Hassiepen, managing director of Egan-Jones Ratings, said that the three credit rating agencies will form a strategic alliance, but there will be no merger of the three companies. “The three companies will work separately, while marketing their services together.We will offer our customers the services of the other members of the alliance,” Hassiepen said.“We chose China and Russia because these are developing markets and many people are poorly informed about them.” RusRating C.E.O. Richard Hainsworth declined to comment. Dagong is the largest credit rating agency in Southeast Asia. It

Emerging markets hope creating a non-Western rating agency will give investors more serious options for assessing the finances of a country.

Why do rankings matter? Investors put a lot of stock in rankings compiled by leading agencies and news outlets. A spot at the top of a list can bring both economic success and prestige. In the modern economy, the attitudes of potential investors, partners and consumers

toward a business or a market can change dramatically based on credit ratings. For example, Europe found itself on the brink of a new financial crisis prompted in no small measure by the ratings downgrade of Greece, Portugal and Spain.

has been following an aggressive expansion policy in recent years, opening offices in different countries based on franchising agreements. Dagong hopes to eventually challenge the American Big Three credit rating agencies — Moody’s, Fitch and Standard & Poor’s — which have faced a barrage of criticism in the aftermath of the 2008 credit crunch.The new alliance hopes to become the chief

supplier of rating services to Brics member states, but not everyone is convinced of the motives behind the move. The general director of Russia’s National Rating Agency, Viktor Chetverikov, has not ruled out the possibility that the Chinese company’s aim is to gain a Russian subsidiary that will give it a stronger footing in the Brics markets. Pavel Samiyev, deputy general

VEDOMOSTI.RU

Experts at Goldman Sachs are betting on the Russian ruble to strengthen, perhaps as far as 28.2 rubles to the dollar. Experts assert that, in the short term, the ruble could prop up oil prices and lend weight to developments in the global economy.The latest easing of monetary policy by the European Central Bank (E.C.B.) and the U.S. Federal Reserve, which are also maintaining interest rates at close to zero, is making Russian government bonds a more

TECHCRUNCH MOSCOW CONFERENCE DEC. 9–10, 2012, MOSCOW, DIGITAL OCTOBER

ening of the ruble. In September, JPMorgan Chase also recommended opening long positions on the ruble and ING Bank is

SHUTTERSTOCK/LEGION-MEDIA

ALEXEI ROZHKOV, GALINA KAMNEVA

Read more at rbth.ru/18777

GLOBAL RUSSIA BUSINESS CALENDAR

Foreign Investment Banks Bet on the Ruble attractive investment than their foreign counterparts. However, Natalia Orlova, chief economist at Alfa Bank, said the forecast is only credible at an oil price of $130 per barrel. Goldman Sachs forecasts anticipate $125 per barrel. Looking further ahead, however, the ruble could be assisted by Russia’s current account surplus: Goldman Sachs predicts that by the last quarter of 2013, the surplus could grow to $32 billion. Although recent data point to a slowdown in investment growth and consumption, the bank said that this will not become a trend, since real wages are growing almost twice as fast as outlays. Goldman Sachs is not the first foreign bank to predict a strength-

Mario E. Burkún is an economist at the National University of La Matanza in Argentine.

director at Expert-RA, shares these concerns. “I don’t see a merger in this deal, but rather an acquisition by the Chinese agency of its two partners,” Samiyev said.“It’s very unlikely that each of the three parties enjoys equal rights in this tripartite alliance.” Dagong is a prominent international player, whereas RusRating is Russia’s smallest credit rating agency.

Currencies The Russian ruble is strengthening against the dollar, which is increasing the appeal of investing in Russia

High oil prices, the easing of monetary policy in Europe and the U.S., and a slowdown in capital flight make the Russian ruble the currency to watch.

An international Brics risk assessment agency could offer a unique opinion that is more firmly grounded in reality than the big Western agencies. The agency would strive to encourage productive investing and regulated risk in order to avoid sudden changes in opinion in financial markets and the resultant recessions and endless crises.

In the short term, the ruble could prop up oil prices and lend weight to developments in the global economy.

Investment banks are taking a closer look at the Russian ruble.

also positive on the Russian currency. Stanislav Yarushevichyus, head of transactions at ING, said: “The Russian economy really does look in good shape — low debt plus return on capital — and investment is only just beginning.” However, Goldman Sachs’ forecast is, in his view, still too ag-

gressive, with a more realistic level being 29-30 rubles to the dollar in 2013. For its part, the Russian Central Bank is also more hesitant, although it predicts a slowdown in capital outflows. Net outflows in the first nine months of 2012 came to $57.9 billion according

to data from the bank — $13.6 billion in the third quarter. Orlova believes there may even be periods of capital influx but this is not a long-term trend as Russia lacks investment opportunities, and money flows are largely determined by the mood of global investors.

For its third annual conference in Moscow, TechCrunch promises an aggressive, exciting agenda devoted to the hottest Russian start-ups. TechCrunch Moscow, which grew out of TechCrunch Europe in 2010, aims to be a must-attend event for Russian venture funds. The theme of this year’s conference is “War and Peace.” Attendees will discuss how conflict affects the technology and venture markets through juxtaposing competing business models, analyzing strategies and assessing new technologies. There will also be plenty of conversation about new markets, new companies and industry leaders. TechCrunch organizers have planned two days packed with insightful interviews and stimulating discussions. › http://tc.digitaloctober.com/

Payments Russian Internet powerhouse Yandex joins the trend of putting point-of-sale terminals on smartphones

Yandex.Money Joins Russia’s Pay-By-App Revolution Smartphone apps that allow users to make credit card payments on the go are exploding in Russia. Could it be the end of the cash economy?

THE NUMBERS

Moscow taxis have joined a pilot project to use the the Yandex.Kassa app to accept payments. The company hopes to expand to 300 taxis by the end of next year.

ANASTASIA GOLITSYNA VEDOMOSTI.RU

ALAMY/LEGION MEDIA

The online payment system Yandex.Money is now ready to accept payments from cardholders. It has developed an app called Yandex.Kassa that is similar to the popular U.S. service Square — a special device, essentially a miniature point-of-sale (P.O.S.) terminal attached to the user’s smartphone, allows the phone to read MasterCard and Visa cards.

Is it a phone, or a cash register?

is the average commission taken by U.S. point-of-sale app Square. Yandex.Money has not announced what commission it will take on Yandex.Kassa payments.

According to Asya Melkumova of Yandex.Money, the encrypted data is then fed into the app, which performs the transaction. Melkumova said the service is convenient for practically any situation in which people use cash to pay for purchases, which is still the preferred method of payment in Russia. For each transaction, Yandex will charge a commission fee, though Melkumova declined to state the exact percentage. Square takes 2.7–3.5 percent of each payment. Yandex’s partner in the project, SellbyCell, has ordered the card readers from China, but plans to open a production facil-

ity in Russia as the project gains momentum, said company spokesman Eduard Irinovsky. Yandex is not the only company expanding into this market. Moskomprivatbank has also been extending the availability of P.O.S. terminals since May 2012: It has developed an app called iPay for iPhone and Android. Meanwhile, Russian venture fund Inventure Partners has invested $1.6 million in the company Smartfin. The company has developed a similar service under the name 2Can, which is intended for use with Visa and Promsvyazbank. Said Viktor Dostov, chairman of Russia’s Electronic Money Association,“The market is very easy to enter — start-up costs are low, so competition will be high.” Artem Petsyukha, development manager for e-commerce at MasterCard Russia concurred. “The technology has had a dry run in the West,” Petsyukha said, “and the market is bubbling.”

6TH ANNUAL RUSSIA & EURASIA TRADE & EXPORT FINANCE CONFERENCE FEB. 5, 2013 MOSCOW, BALTSCHUG KEMPINSKI

This conference is the primary industry event for the trade and export finance community across Russia and the wider Eurasian region. Key issues to be covered at this year’s meeting include the current risk appetite for Russian trade, contemporary deal structures, trends in pricing and foreign currency settlement, changing corporate funding priorities, and key export sectors. Attendees will benefit from an agenda featuring a host of expert speakers from across the industry spectrum. The program will drill down into the latest issues and opportunities surrounding the financing of the region’s international trade. › www.exportagroup.com

FIND MORE IN THE GLOBAL CALENDAR

at rbth.ru

Opinion

RUSSIA BEYOND THE HEADLINES

MOST READ In Russia, Economic Uncertainty is Quadrupled rbth.ru/19603

SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

GOING AGAINST THE GRAIN RUSSIA CAN DO BETTER IN GRAIN PRODUCTION Alexander Chetverikov SPECIAL TO RBTH

t has been a lean year for wheat supplies not only in the United States and Canada, but in Russia as well. This year’s harvest was originally forecast at 94 million tons, but the country only harvested about 70 million tons. And, since the domestic wheat requirement stands at 75–77 million tons, Russia may even need to import some grain to meet demand at home. Unfortunately, Russia doesn’t have a very strong footing in the global grain markets, and the ongoing food crisis will further aggravate its positions. While the United States is deeply concerned about droughts, treating them almost as national disasters, Russia hardly ever speaks about crop failures — and this is despite the fact that the U.S. has a stockpile of 50 million tons of grain supplies and will not face a domestic shortage, whereas Russia has no such luxury. The country has been trying to stock up on grain, but carryover stocks currently amount to only 5 million tons. Given the level of domestic production, Russia will obviously be short about 4–5 million tons. This amount can easily be found in the global market, although buying grain isn’t cheap and the costs will be passed on to already suffering consumers. This poor season will naturally result in a redistribution of the international grain market. Unfortunately for Russia, the changes will be negative: the country’s status as a grain producer will fall, while the United States and Canada will improve their rankings, despite climate challenges. The main reason is that they have grain in stock, while Russia does not. But there is no good reason for this. Russia has everything it needs to dominate the market; the only thing that can prevent Russia from becoming a global leader in the grain market is the human factor — that is, a lack of professionalism and an overall reluctance to work. Russia has almost 300 million acres of arable land, about 50 million acres of which require time to recover after being out of service for some time. The minimum yield is about 1 ton per acre, which by European standards is

next to nothing. Therefore, even assuming minimum yields on all of the 300 million acres of arable lands, Russian land can produce 300 million tons of crops annually, with cereals accounting for two-thirds of the total.This means that Russia is capable of producing 200 million tons of grain annually. With domestic consumption at around 80 million tons a year, Russia would have more than 100 million tons of spare grain that could be exported. To com-

The only thing that can prevent Russia from becoming a leader in the grain market is the human factor. pare: last season, the United States — the global leader in grain exports — exported 73 million tons of grain, with Argentina ranking second at 32 million tons. Australia and Ukraine each exported 24 million tons of grain, while Russia and Canada sold 20 million tons.

There is a lot of work to be done for Russia to get closer to this 100-million-ton export target.The country has not used some of its arable lands since the collapse of the Soviet Union, for reasons both objective and subjective. The country was for a number of years burdened with a weak minister of agriculture. Former Minister Yelena Skrynnik came to agribusiness from the pharmaceutical sector and never turned into a farmer. Further, agriculture has never been a priority for the government. But things look set to change. Current Minister of Agriculture Nikolai Fyodorov was president of the Republic of Chuvashia, whose economy is focused on agriculture. His appointment suggests that the government is finally ready to pay more attention to agriculture. Yet the potential export profit will not make a significant contribution to Russia’s G.D.P. At today’s prices, 200 million tons of grain is worth about $60 billion, which is about 1.5 percent of Russia’s G.D.P. On the other hand, the impact can be more significant, given the development of related sectors, including logistics, machinery production and maintenance, fertilizer production that will benefit from developments in the agricultural sector. Alexander Chetverikov is a member of the State Duma’s economic policy committee and is the founder of the agribusiness firm Agroholding.

TRADERS BENEFIT FROM HIGHER GRAIN PRICES Sergei Minaev KOMMERSANT VLAST

n the current financial situation, wheat, corn and soybeans are likely to be the last best hope for a trader facing the second wave of the global crisis. Today, traders face the following situation: Investing in U.S. and European securities looks unattractive due to the ongoing European debt crisis coupled with the slowdown in economic growth cessation in the industrialized world. Then, taking into account the economic growth problems, investments in oil futures also seem highly doubtful, as no growth of oil demand is predicted and these futures tend not to grow but drop in price. Meanwhile, the world is once again observing an extremely rapid growth of food prices: since mid-June, world wheat prices have increased by over 50 percent and corn prices have risen by over 45 percent. Soybean prices grew by 30 percent in July and August alone and by almost 60 percent since the beginning of

the year. Players on the world food market buying wheat, corn and soybean futures have once again pointed out the objective facts behind the rise: the grain harvest in the U.S. will be down due to drought; drought has also affected the harvest in Russia, Kazakhstan and Ukraine. The grain harvest in Europe, in contrast, was reduced due to unusually wet weather, and in India, it is down due to the late start of the mon-

Wheat, corn and soybeans are likely to be the best hope for a trader facing the second wave of the global crisis. soon season. The Russian domestic market has also experienced a dramatic increase in prices. The price for Class 3 wheat increased from 7,500 rubles per ton as of July 13, 2012. to 8,060 rubles per ton as of Aug. 3, 2012. The price for Class 4 wheat rose from 7,280 rubles

per ton to 7,820 rubles per ton during the same period. Corn prices grew from 7,280 rubles per ton to 7,500 rubles per ton, feed wheat prices rose from 6,800 rubles per ton to 7,340 rubles per ton and barley prices increased from 6,380 rubles per ton to 7,040 rubles per ton. The situation is reminiscent of 2007, which in retrospect was extremely successful for the global food market, if not for consumers, who faced higher food prices. In particular, soybean prices increased more than 60 percent, the price of cacao increased by 18 percent and the price of coffee went up by 20 percent. And in the European market, wheat prices rose by 68 percent. At that time, participants in the market for food futures anticipated problems with wheat production, and their insight proved correct. According to outlooks from the U.S. Department of Agriculture, world wheat supplies hit a 30-year low in May 2008 — mainly due to a drought that affected wheat production in Australia and unfavorable weather conditions in Europe. Meanwhile, the demand for wheat from developing countries, primarily China and India, continued to grow. In 2007, Russian authorities were forced to take administrative measures after noticing that food prices had been growing not only globally, but also in the Russian domestic market. In October 2007, then-Economic Development and Trade Minister Elvira Nabiullina announced:“To curb price rises, the government is planning measures related to foreign trade regulation and the fight against local monopolies in the regional markets as the price rises vary in different regions. Also, incentives will be provided to stimulate Russian agricultural producers. A draft resolution on raising the duties on wheat and barley has been introduced and the issue of the duties on milk and milk products is under discussion. We consider that these measures will bring a certain effect and enable us to curb the price rise in the domestic market.” On Nov. 12, 2007, a 10 percent export duty on wheat and wheat/rye mix and a 30 percent export duty on barley came into force. Given the discrepency between Russian domestic wheat production and demand this year, such administrative measures could again be used. Should the situation continue as predicted, global food traders may find that investing in grain futures is a much safer bet than any of the other options currently available. Sergei Minaev is a columnist for KommersantVlast magazine.

RUSSIA READY TO GET IN THE INVESTMENT GAME Alexei Zabotkin SPECIAL TO RBTH

ince Vladimir Putin returned to the Russian presidency, the improvement of the business climate has been firmly established as one of the central issues for his current term in office. In February, then-Prime Minister Putin presented his goal of moving Russia from 120th to 20th in the World Bank’s Doing Business survey. Since then, the improvement of the business climate has played an ever-increasing role in his policy agenda. There is more than one reason that this policy has commanded so much attention. First, the broader economic policy vector has shifted the emphasis to investment demand and productivity growth as the essential elements for improving Russia’s economic health. For Russia’s investment-to-G.D.P. ratio to expand from 20 percent to 25 per-

cent by 2015 and 27 percent by 2018 as suggested by the president in May, a radical improvement in the ease of doing business is a critical precondition. Second, the tighter budget constraints on the Russian govern-

da that, if implemented as planned, would amount to many tens of billions of dollars over 2011–1016. The 10 percent V.T.B. stake sale in February 2011 and recent 7.58 percent Sberbank sale are the most prominent highlights

For Russia’s investmentto-G.D.P. ratio to expand, improving the ease of doing business is a critical precondition.

The government has more skin in the game than ever and is increasingly confident in its role as a player.

ment makes the authorities more directly interested in increasing the depth of Russia’s financial markets and securing higher prices for Russian financial assets. The government is now a regular net borrower in the debt market; hence, the liberalization of foreign investors’ access to the local bond market can no longer be postponed. The government also shows signs of moving ahead with a grand privatization agen-

of this program so far. In a nutshell, the government has greater skin in the game than ever and is becoming increasingly confident in its role as a player. Third, even though many items on the investment climate checklist are yet in a fairly early stage of detailing and policy design, several pieces, including the market infrastructure enhancement, are already falling into place. The creation of the Central Deposi-

LETTERS FROM READERS, GUEST COLUMNS AND CARTOONS LABELED “COMMENTS” OR “VIEWPOINT,” OR APPEARING ON THE “OPINION” PAGE OF THIS SUPPLEMENT, ARE SELECTED TO REPRESENT A BROAD RANGE OF VIEWS AND DO NOT NECESSARILY REPRESENT THOSE OF THE EDITORS OF RUSSIA BEYOND THE HEADLINES OR ROSSIYSKAYA GAZETA. PLEASE SEND LETTERS TO THE EDITOR TO US@RBTH.RU

tory is in the final stages of implementation, and this will open the door for such crucial steps as Euroclear ability of Russia’s local securities, the introduction of T+n settlement procedures for equities, and the eventual abolishment of limits on the size of depository receipts programs by Russian issuers. The progress along that path will have tangible results for the scale of foreign investors’ participation in the Russian capital markets, enhancing their depth, reducing volatility and ultimately lowering cost of capital for the Russian corporations. Enhancing Russia’s investment climate is no longer just talk; it reflects the need to support the shift towards a more investmentintensive growth model. As this need is already quite urgent, the progress along the path may be more rapid than that perceived by the pragmatic skeptics. Alexei Zabotkin is head of investment strategy atV.T.B. Capital.

THIS SPECIAL ADVERTISING FEATURE IS SPONSORED AND WAS PRODUCED BY ROSSIYSKAYA GAZETA (RUSSIA) AND DID NOT INVOLVE THE REPORTING OR EDITING STAFF OF THE NEW YORK TIMES. WEB ADDRESS HTTP://RBTH.RU E-MAIL US@RBTH.RU TEL. +7 (495) 775 3114 FAX +7 (495) 988 9213 ADDRESS 24 PRAVDY STR., BLDG. 4, FLOOR 7, MOSCOW, RUSSIA, 125 993. EVGENY ABOV EDITOR & PUBLISHER ARTEM ZAGORODNOV EXECUTIVE EDITOR EKATERINA ZABROVSKAYA ASSISTANT EDITOR LARA MCCOY MANAGING EDITOR OLGA GUITCHOUNTS REPRESENTATIVE (U.S.A.) ANDREY SHIMARSKIY ART DIRECTOR ANDREY ZAITSEV HEAD OF PHOTO DEPT MILLA DOMOGATSKAYA HEAD OF PRE-PRINT DEPT MARIA OSHEPKOVA LAYOUT AN E-PAPER VERSION OF THIS SUPPLEMENT IS AVAILABLE AT HTTP://RBTH.RU.

NIYAZ KARIM/NIKOLAY KOROLEV

TO ADVERTISE IN THIS SUPPLEMENT, CONTACT SALES@RBTH.RU. © COPYRIGHT 2012, FSFI ROSSIYSKAYA GAZETA. ALL RIGHTS RESERVED. ALEXANDER GORBENKO CHAIRMAN OF THE BOARD. PAVEL NEGOITSA GENERAL DIRECTOR VLADISLAV FRONIN CHIEF EDITOR ANY COPYING, REDISTRIBUTION OR RETRANSMISSION OF THE CONTENTS OF THIS PUBLICATION, OTHER THAN FOR PERSONAL USE, WITHOUT THE WRITTEN CONSENT OF ROSSIYSKAYA GAZETA IS PROHIBITED. TO OBTAIN PERMISSION TO REPRINT OR COPY AN ARTICLE OR PHOTO, PLEASE PHONE +7 (495) 775 3114 OR E-MAIL US@RBTH.RU WITH YOUR REQUEST. RUSSIA BEYOND THE HEADLINES IS NOT RESPONSIBLE FOR UNSOLICITED MANUSCRIPTS AND PHOTOS.

MOST READ Living the Bohemian Theater Life in Moscow rbth.ru/19709

Culture

RUSSIA BEYOND THE HEADLINES SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

THEATER PLUS

INTERVIEW MAREK HALTER

Eugene O’Neill Returns to Moscow in New Production

A Yiddish Homeland in Russia’s Far East

John Freedman THE MOSCOW TIMES

HELP KEEP ALIVE A LANGUAGE IDENTIFIED WITH EUROPEAN JEWISH CULTURE

THIERRY ESCH/PARIS MATCH

At the train station, “Birobidzhan” appears in Russian and Yiddish.

HIS STORY

Marek Halter War II, his family was sent to Uzbekistan, although they later settled in France. Halter’s Jewish identity has featured heavily in his work. His novels include The Wind of the Khazars (2003) — a piece of historical fiction about the Khazars, a nomadic kingdom of Turkic people in the Caucasus who converted to Judaism.

AGE: 76 NATIONALITY: FRENCH STUDIED: ACTING, PAINTING

AFP/EASTNEWS

Why do people learn Yiddish in Birobidzhan? Who are these people going to speak Yiddish with? They’ll talk to each other. I was in one school in Birobidzhan where many of the pupils are Chinese and Korean, and I talked to a Chinese mother waiting for her

son by the school gate. I asked her why she thought her son needed to learn Yiddish. Her answer was simple: “You can never tell what will come in useful later in life”. I thought: There are 1.4 billion Chinese people on the planet, and 14 million Jews at the most, and of them, only about 150,000 speak Yiddish. And this Chinese lady thinks that 20-30 years down the line her son might need Yiddish. But she’s a clever woman. For example, there are no longer any Yiddish-speaking Jews in France, butYiddish words often crop up in French jokes. Over the years Yiddish has been artificially kept alive by the state in the Jewish Autonomous Region. It is thanks to government support that thelanguagehasavoidedextinction. You are right. It is quite a strange situation.When the film was aired in Russia, a piece about Jewish theater was not included, and for

Marek Halter, a French Jewish writer and human rights activist, was born in Poland to a mother who was a Yiddish poet. During World

me this was quite an important part of the film. In Europe people generally build a church first, and then a town or a city. Along with Manaus in Brazil, Birobidzhan in Russia is one of just two cities in the world that were built up around theaters. People lived here in huts, but the first proper building was a national Jewish theater. Lazar Kaganovich, Stalin’s Minister of Railways and the principal Jewish figure in the Soviet political elite, came to Birobidzhan in 1936 to officially open this theater, and he spoke Yiddish. The theater is still in operation although today the plays are performed in Russian.

in such harsh conditions was a form of anti-Semitism? You are right. Jewish people wanted the Autonomous Region to be built somewhere they were already settled. It was wrong to send Jewish people so far away. But still, for me, Stalin and Hitler are very different. I was born in Warsaw. My first memories are of the Warsaw ghetto.We managed to escape the ghetto and get to a part of Poland controlled by the Red Army. I am alive today only because the Soviet Union helped us. I never set out to make a political film. I just wanted to share some of my memories.When I was born, 11 million people spokeYiddish. And then I come to Siberia, where signs on the houses are all written in two languages and children are taughtYiddish at school. I saw Jews, the likes of which I hadn’t seen in 50 years. The very same. With the same accent. With the same songs.

Chief Rabbi of Russia Berel Lazar says in the film that the project for building Birobidzhan was wrong, and that a person should live somewhere comfortable. Does it not seem to you that creating the Jewish region so far away from Moscow and

ugene O’Neill. The name has a ring like Chekhov. It sounds like a rock on which you could found something. Like a national tradition of drama. Modern American drama began with O’Neill in the early decades of the 20th century and his influence spread fast and wide. His plays were already making waves in Moscow by the mid-1920s, even before such important plays as “Lazarus Laughs”and the trilogy“Mourning Becomes Electra,”“A Moon for the Misbegotten”and“Long Day’s Journey Into Night” had been written. Recently O’Neill has slipped into that dubious category of great playwrights who are so great that you don’t have to stage them to know they are great. I’m exaggerating a tad. The Et Cetera Theater mounted “Beyond the Horizon” in the mid-1990s. Pavel Safonov staged “Long Day’s Journey Into Night”a few years ago at the Mossoviet Theater. But until Alexei Borodin unveiled “Mourning Becomes Electra” at the National Youth Theater Oct. 26, one could say that O’Neill’s plays have been ignored here in recent decades. “I had never seen O’Neill on stage,” the director said. “The first of his plays that I read was ‘A Moon for the Misbegotten,’ and it was a shock for me. Then there was ‘Desire Under the Elms,’ of which I saw photographs from [Alexander] Tairov’s production. I once analyzed scenes from ‘Anna Christie’ with

IN RUSSIA’S JEWISH AUTONOMOUS REGION, CHINESE AND KOREAN STUDENTS

Yiddish may be dying out in Europe, but it is still very much alive in Russia’s Far East. In the Jewish Autonomous Region, a territory along the Russian-Chinese border created by Stalin as a Jewish homeland, all schoolchildren learn Yiddish as part of the curriculum, even though students of Chinese and Korean descent often outnumber Jewish ones. In an interview withYulia Larina of Ogoniok magazine, Marek Halter, writer-director of the film“Birobidzhan, Birobidzhan!,”filmed in and named for the regional capital, discusses this incongruous situation.

Phoebe Taplin SPECIAL TO RBTH

PUBLISHER: GLAS

Composing His Own Path Leonard Lehrman, a New Yorker with Russian roots, introduces Russia-themed works in the Russian Opera Mini-Festival, taking place now on Long Island. AYANO HODOUCHI SPECIAL TO RBTH

PRESS PHOTO

Leonard Lehrman, center, with participants in the mini-festival.

ly describes the use of affectionate diminutives in the Russian language. “Mary had a little ovechka,” starts the song, and other familiar words are Russified throughout the nursery rhyme. The concerts also feature “The Wooing,” a one-act opera based on Anton Chekhov’s short story “The Boor.” In the tale, a boorish man comes to the home of a widow to demand payment of a debt by her late husband; the two start arguing and end up falling in love. Lehrman says he came across a libretto of the piece by Abel Meeropol’s (a.k.a. Lewis Allan), originally written for Elie Siegmeister, Lehrman’s mentor and teacher in composition. Said Lehrman, “after [Siegmeister’s] death, there was this treasure

The themes of Russia and politics have always been reflected in Leonard Lehrman’s compositions. trove of works he had left behind. Eight versions of “The Wooing” were found, each more elaborate than the last, but I chose the first one, which was the most simple and direct.” The themes of Russia and politics have always featured in Lerhman’s compositions, from his first musical, “The Comic Tragedy of San Po Jo,”which is about atomic testing, to“A Musical Portrait of Emma Goldman,” to the piece he is currently composing, on Alger Hiss.

Said Lehrman, “There have been political motives in many of my works, for example, A Musical Portrait of Emma Goldman. She was very much for free speech and freedom from war, a woman very much ahead of her time.” The Russian angle is also omnipresent – “There’s a whole scene in Russian, with simultaneous English translation, in which the Russian-American anarchist argues about human rights with Lenin,” Lehrman said. Voluble, enthusiastic and tireless, Lehrman’s face lights up when he talks about his favorite Russian operas — of which there seem to be dozens. Despite his apparent passion for Russian music and literature, he has not visited the country since the fall of the Soviet Union. He would like to go back to explore his roots, he said, visiting not only Moscow but more remote corners in Belarus, where part of his family is from. Always optimistic, Lehrman even hopes one day to get his opera based on Chekhov’s “The Jubilee” staged in Russia. He insists the language would not be a problem: “I composed it to Chekhov’s original Russian text, then went back and wrote an English translation, so I have both versions.” The last performance of the Russian Opera Mini-Festival will take place Sun., Dec. 2, at 2:00 pm at the Bethpage Public Library, 47 Powell Ave., Bethpage, N.Y. Admission is free. For more information, visit › www.rach-c.org/bodyevents/299.htm

“O’Neill wrote about the strength that is necessary to hold your own road,” said director Alexei Borodin. were [Edward] Albee.’ Albee is one of my favorite writers. He has a similar method of turning things inside out. Only he does it triply. Chekhov turned things inside out. O’Neill gave them a second twist and Albee a third. I wouldn’t call it influence so much as expansion on what Chekhov did. It’s not a matter of the influence of one person on another; it is a matter of similarities in the perception of environment and time.” Of the play’s themes, Borodin said: “O’Neill wrote about the strength that is necessary to hold your own road, about how human freedom can be crushed by the pressure of forces that oppose a person on that road.”

Still Looking for Something to Believe In

AUTHOR: ARSLAN KHASAVOV

Opera Composer combines passion for Russia and music into a local festival

my students. I can’t say I had any particular knowledge of his drama, but I had no doubt that this was a world unto itself. One that requires you to immerse yourself in it fully.” I asked Borodin whether Chekhov’s acknowledged influence on O’Neill meant there was something Russian at the root of the American writer’s work. “I don’t know whether there are any Russian roots,” Borodin replied,“but I definitely perceive him as a post-Chekhov author who takes things further. I have my own personal chain — Chekhov-O’Neill-Albee. I often find myself saying during rehearsals, ‘You’ve got to play this as if it

BIBLIOPHILE

TITLE: SENSE

A prolific composer, director, chorus master, writer, conductor, pianist and translator of operas, Leonard Lehrman seemingly has an endless stock of music and reminiscences for every occasion. His first full-time job was as an assistant chorus master at the Metropolitan Opera, where he coached the choir in Russian pronunciation for its first performance of Tchaikovsky’s opera “Evgeny Onegin.” He has also translated Mikhail Glinka’s “A Life for the Tsar,”Alexander Dargomyzhsky’s“Rusalka”and Modest Mussorgsky’s unfinished “Zhenitba.” Lehrman’s mother was a native of the central Russian city of Samara, and the themes of Russia and politics have always been reflected in his own compositions. Lehrman’s latest endeavor is the Russian Opera Mini-Festival on Long Island, taking place in late November and early December. It features many of Lehrman’s own compositions and Russianthemed works by others. The songs are performed by soloists from the Metropolitan and Bronx Operas. Each concert in the festival begins with a song from American composer Marc Blitzstein’s musical on U.S.-Russian friendship, “Goloopchik.” Called “The Russian Language Song,” it playful-

rslan Khasavov’s novel, “Sense,” explores the dangerous power of youthful narcissism in a society in which money has replaced morality. Searching for a life with meaning and purpose, 20-yearold Artur Kara visits a series of political groups in Moscow, encountering former prisoners from Guantanamo at the headquarters of the Islamic Committee or literary dreamers among the National Bolsheviks. Unable to find a group he wants to join, he plans his own revolution. The comic element in Khasavov’s writing rescues it from drowning in adolescent self-absorption. It is unlikely that young writers emerging from Western schools of creative writing would dare to make their hero a wannabe-author, but Kara’s opening lines are a fantasy about his future fame as “the writer of brilliant books;” his pseudo-autobiographical admissions are intimate and awkwardly funny.

Prolific translator Arch Tait brilliantly conveys the hero’s stylistic pretentions, alongside other registers from ideological jargon to celebrity LiveJournal blogs. Ta i t h a s c o m m e n t e d o n Khasavov’s “sense of irony and humor” and his ability to “distance himself from his hero’s social preoccupations and hyperbole.”In many ways, the alienation young Kara feels is the classic confusion of any misfit teenager, quoting Nietzsche and Dostoevsky, struggling to find a place in an uncaring society. The gap between Kara’s ambition and his life provides both comedy and pathos. A poor Muslim boy with a limp, he sees himself as a glamorous revolutionary leader. Sitting in a suburban Moscow park, he reflects on the difficulty of his chosen path,“the path of a Samurai, of an infinitely lonely man who has chosen to be lonely.” In its satirical conviction, “Sense” is reminiscent of Vladimir Sorokin’s “Ice Trilogy.” Khasavov may not yet have Sorokin’s epic scope or linguistic virtuosity, but the mixture of messianic energy and absurdity has similar political targets and reaches similarly nihilistic conclusions about modern Russia. His dissection of what motivates young people provides a disturbing glimpse of a violent future as well as a raw but entertaining satire on the present.

Feature

RUSSIA BEYOND THE HEADLINES SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

MOST READ “Russia’s Tibet” Opens to the World rbth.ru/19915

Energy International team to launch fast atomic reactor

Ridding the World of Nuclear Waste, One Reactor at a Time SPECIAL TO RBTH

At the Central European Nuclear Industry Forum (ATOMEX) in Prague last month, Russia’s Rosatom nuclear agency signed an unprecedented deal to build a fast nuclear reactor on Russian territory in cooperation with 13 Czech companies. It has been dubbed the SVBR-100 project. The advantage of such technology — previously considered financially unfeasible — over traditional nuclear power plants is that it utilizes highly enriched nuclear fuel in the process of generating energy. Otherwise, the fuel is left over as a dangerous byproduct to be stored and monitored, since nuclear weapons use highly enriched uranium. Local and international experience All of the fast reactors tested in the world have thus far been experimental, with Russia’s BN600 reactor, which was operational from 1980 until 2005 in the Ural Mountains, serving as the most advanced testing ground for the technology. BN-600 was also the world’s most powerful fast nuclear reactor with a sodium coolant; sodium in a fast reactor does not dissolve amid high levels of radiation. Thus the sodium coolant does not require regular drainage and removal of the dissolved absorber while being refueled. Sodium also connects radioactive iodine during nonvolatile chemical reactions, which basically excludes its release from a normal power plant through ventilation systems. Therefore the reactor produces a small amount

SVBR-100 may become the first commercially viable high-powered fast neutron reactor in the world, said Bolshov. The United States is a key partner for developing new types of reactors for Rosatom, according to Kiriyenko. The technology has been so successful that Rosatom’s Afrikantov Insitute developed the China Experimental Fast Reactor outside of Beijing. It was launched two years ago. During a recent visit to China by President Vladimir Putin, Rosatom head Sergei Kiriyenko announced that the firm was in active discussions with Chinese partners on the construction of a fully functional, nonexperimental fast reactor in China, similar to the one being constructed in Russia, by Rosatom in the near future. Commercially viable? Said Leonid Bolshov, a professor

American Origins of Fast Reactors The history of bringing fast neutrons under control can be traced back to the Italian physicist Enrico Fermi, who in 1939 speculated that fast neutrons are released during the uranium fission process. He went on to suggest that if the number of neutrons emitted exceeds the number of neutrons absorbed, then a chain reaction could begin. Experimentation proved this theory to be correct. The first serious attempts to develop fast-reactor technology were made in the United States with the the Clinch River Breeder Reactor in 1970. it was closed in 1983 for financial reasons. The Soviet Union started developing fastreactor technology as early as the 1950s, successfully testing a number of prototypes until the sodiumcooled BN-600 FBR was put into operation at the Beloyarsk Nuclear Power Station in April 1980. Russia is currently developing its nuclear reactor technology, with the BN800 and BN-1200 models currently under construction. The ultimate goal is to produce a commercially successful fast reactor.

ANDREI REZNICHENKO

of nuclear waste, which has a relatively minor effect on the surrounding environment when compared to traditional atomic reactors. The BN-600 reactor holds the world record for safely operating fast nuclear reactors that operate with sodium. Meanwhile the nearby BN-800 reactor, based on more advanced development of the same technology, is nearing completion. In 2004, the reactor’s developer, Fedor Mitenkov, was awarded the international Global Energy award for his contribution to the project.

The BN-800 reactor is under construction at the Beloyarsk Nuclear Power Plant.

of energy for centuries to come,” Bolshov said.

The coming years

Russia is attempting to eliminate nuclear waste through an unprecedented international partnership based on fast-reactor technology.

A welder works on the BN-800 nuclear reactor.

Huge amounts of spent and irradiated fuel from conventional nuclear power plants have been accumulated over the years. The problem of what to do with all this spent fuel is a problem for any country that uses atomic energy, as well as the global community as a whole. According to Bolshov, the development of fast nuclear reactors is essential for closing the nuclear fuel cycle, which involves processing the irradiated nuclear fuel that has been discharged from the reactor to extract uranium and plu-

at the Institute for the Safe Development of Nuclear Energy of the Russian Academy of Sciences,“We have learned a great deal from our experience with the BN600. Russian nuclear scientists spent years perfecting the design of the reactor, and have learned how to use sodium as a coolant. If, after all the discussions and licensing is taken care of, the next project is given the green light, then it has the potential to become the first commercially viable high-powered fast-neutron reactor in the world.”

tonium and remanufacture nuclear fuel. “Fast reactors will help us solve one of the most pressing problems connected with atomic energy, and that is what to do with the atomic waste of nuclear power stations that are currently operational. Russia, the United States and France have considerable experience working with fast-neutron reactors — that is, not only in building, but also in the experimental operation of reactors that have the potential to be reliable sources

Research and design work on the new reactor will continue until the end of 2014, while operations proper are set to begin in 2017. The SVBR-100 could become the world’s first fourth-generation commercial medium-powered reactor that uses a coolant for heavy metals. It has the potential to take 10–15 percent of the global nuclear energy market for smalland medium-sized power stations. “Fast reactors are the basis of our [global] competitiveness,”said Kiriyenko. “These include the fast-neutron reactors that already exist at Beloyarsk, lead-bismuthic reactors, lead reactors and other liquid metal coolants. All of these technologies will allow us to utilize the U-238 [highly enriched] isotope in the fuel cycle, which is abundantly available in nature but is currently almost unused.” According to Kiriyenko, the United States is a key partner for developing new types of reactors for the company. “We can conduct joint R&D to develop a new generation of nuclear reactors; such cooperation should go on between our two countries on a national level and not be restricted to just one company,” he said.

Between Farmville and Down on the Farm The founders of the iOgorod project believe that everyone should be able to eat fresh and ecologically pure fruits and vegetables even if they don’t have space for a garden or time to care for one. iOgorod products are grown following strict organic principles. The horticulturists apply no chemical herbicides and pesticides, use artesian water and apply only nonchemical fertilizers. Making these choices, however, means that the produce they grow is far from cheap. The project charges its customers a monthly fee of 6,000 rubles ($190) per 64.5-square-foot bed, and members have to wait about six months before they can eat their own tomatoes and cucumbers. Said Gennady Medetsky, executive director of Synergy Innovation,“Our customers are wellto-do people who care about what they eat.You need to understand that the vegetables they offer you in stores are not ‘fair’ foodstuffs; I would call them ‘Frankenstein foods.’ We offer our services to those who want — and can afford — to eat naturally.”

This summer, more than 50 iOgorod garden beds were rented. Now that the main growing season is over, however, the number has fallen below 10.“The season has finished, and many of the crops, such as strawberries, peppers, cucumbers and tomatoes, can’t be cultivated at this time of year. But cucumbers and tomatoes are believed to be the staple vegetables in Russia. This is part of the national mindset — people can’t do without them,” Medetsky said, adding that Moscow has an estimated 30,000 potential iOgorod customers. Medetsky has two displays in his office that stream videos from the greenhouse. On a recent afternoon, a customer arrived with her son. She wanted to plant the seeds in her plot herself. According to Medetsky, this is how wealthy families get“back to their roots” these days. Families with children are iOgorod’s largest client base. “A well-off father once called us and complained that his son only ate chips and chocolate bars,” said Medetsky.“I asked the boy whether he would eat food that he had grown himself. He plays the

Fact and Figures

THE QUOTE

Larisa Yugai

iOgorod customers pay a monthly fee of 1,000 rubles ($32) per 10 square feet; a single bed is normally 64.5 square feet. Specialists harvest 44–55 pounds of tomatoes, 33– 44 pounds of cucumbers and 2.2 pounds of parsley per season (six months). The owner therefore pays 120–150 rubles ($4-$5) per pound of tomatoes, 150–200 rubles ($5$7) per pound of cucumbers and 500 rubles ($15) per pound of parsley. In Moscow markets, tomatoes are available at 15–50 rubles ($.50$1.75) per pound and parsley at 3550 rubles ($1-$1.75).

CHIEF HORTICULTURIST AT IOGOROD

Our garden beds are never empty; we harvest the crops and immediately plant something new, so people can enjoy fresh produce all year round. We cultivate cucumbers, tomatoes, many varieties of lettuce, herbs and greens. I also like to experiment: right now I’m growing mushroom spawn to have Agaricus and Pleurotus mushroom varieties. We don’t have any ambitious volume targets — quality is our priority. It would be great if healthy eco-foods were grown by large agricultural facilities. This could be the future of agribusiness."

iOgorod products are grown following strict organic principles using no chemical pesticides and artesian water.

PRESS PHOTO

CONTINUED FROM PAGE 1

Radishes are among the most popular options for iOgorod customers.

Happy Farmer application on [Russian social network] Vkontakte and he naturally said ‘yes.’ We gave him a garden bed; he planted carrots, which grow wide rather than deep in loose greenhouse soil. And the kid ate them with great pleasure.” Medetsky admits that iOgorod is not a real business scheme for Synergy Innovation — it is more of a hobby. “You know, no one

does organic farming in Russia for real, and there are few such farms in the world, because this business is extremely unprofitable” he said. “We won’t ever be able to compete with mass producers of vegetables that use industrial cultivation methods.” Medetsky stated that start-up investments have been disbursed, but the project will only break even in five to seven years.

Nevertheless, the fund is thinking about inviting new investors to iOgorod.“We need another $5 million to rent additional greenhouses, expand our production and maybe open new greenhouses in Vladimir Region, where everything is much cheaper, albeit with higher logistics costs,” Medetsky said. He is confident that eco-foods have great potential in Russia.

DOWNLOAD FREE Duma drafts tough new amendments on weapons law in Russia

Find news from Russia in your inbox!

Scan with your iPad®

Share your opinion!

rbth.ru

Scan with your ANDROID®

facebook.com/russianow

twitter.com/russiabeyond

SUBSCRIBE to top weekly news

Special Report — Competition in the Arctic December 19 C O N TA C T U S : F o r e d i t o r i a l i n q u i r i e s , p l e a s e , c o n t a c t u s @ r b t h . r u

For partnership or advertising contact sales@rbth.ru

ph. +7 (495) 775 31 14