February 1999

by Joan Morgan

U.S. agribusiness companies interested in doing business in Russia's regions should know about the U.S. Agency for International Development's (USAID) Program to Revitalize Agriculture through Regional Investment (PRARI). The program's mission is to (1) promote policy and institutional changes, and (2) facilitate agribusiness trade and investment between prospective U.S. and Russian partners. According to Christian Foster, an agribusiness adviser at USAID, PRARI is now focusing on bringing U.S. and Russian agribusiness companies together through two agribusiness investment missions to Russia in 1999 as a part of its continuing work in the regions.

PRARI
PRARI is funded by USAID and the U.S. Department of Agriculture (USDA), in collaboration with the U.S. Department of Commerce and the Ministry of Agriculture and Food of the Russian Federation. It emerged from the work of the U.S.-Russia Commission on Economic and Technological Cooperation (also known as the Gore-Primakov Commission), under the Agribusiness Committee Working Group on Agricultural Reform and Privatization. PRARI works with the following 10 Russian oblasts: Chuvashia, Krasnodar, Lipetsk, Omsk, Rostov, Samara, Saratov, Tomsk, Vologda, and Voronezh.

According to Foster, now may be a good time to investigate investing in agriculture in Russia's regions. In the midst of the financial crises in Russia, the agribusiness sector is receiving increasing attention from investors seeking to invest in the real economy, as investment in stocks and government bonds is no longer a viable option. Moreover, since imported food products are more expensive in Russia as a result of devaluation of the ruble, locally produced Russian products are more competitive in the food market.

PRARI's work with Russian regions has laid the foundation for its 1999 investment missions. For example, in July 1997, more than 150 U.S. business representatives participated in a workshop in Chicago to learn of agribusiness opportunities in the PRARI oblasts and to identify major obstacles faced by U.S. investors in Russia. Some of the U.S. businesses participating in the conference included farm machinery producers such as Caterpillar Inc., Case Corp., Deere and Co., and FMC Corp.; agrochemical producers such as American Cyanamid Co., Inc., Monsanto Co., and DuPont Co.; food processors such as H.J. Heinz Co., Land O' Lakes, and ConAgra, Inc.; and seed producers such as Dekalb.

PRARI also hosted a workshop in January 1998 in Samara, Russia. Executive and legislative officials from the 10 PRARI oblasts came together to understand the benefits of investment; to identify specific constraints to it; and to prioritize and assist with the drafting of policies to promote agribusiness investment. According to Foster, as of the end of 1998, over US$10 million in U.S. agribusiness investment in Russia can be attributed directly or indirectly to assistance by PRARI.

The Next Step Business Missions
The two investment missions planned by PRARI for 1999 will be partly funded by USDA; the U.S. companies on the mission will be expected to cover the other half of the cost of their trip. USAID will work closely with USDA to organize and implement the missions through the USAID mission office and USDA attache offices in Moscow. The first mission is planned for late spring 1999. While the trip is still in the preliminary planning stages, the current plan is to bring about 10 U.S. companies, for 10 or more days, for each mission. The missions will begin in Moscow and progress to two or more of the PRARI oblasts. One mission will focus on the livestock and meat processing industries, and the other will focus on crop processing, such as milling, extraction, baking, etc.

The trip schedule will be driven by the companies participating in the mission. Meetings and travel destinations will be determined after the companies are selected and the interests of the companies are known. All meetings with government and private officials and with financing and investment resources will be arranged in advance. Not all companies will attend the same meetings. PRARI will be seeking medium-sized companies with familiarity and ready knowledge of the regions. These companies should be either currently or planning to be investing in projects in a PRARI region in the range of US$1-5 million in the food processing or agricultural input sectors.

Upon completion of the mission and return to the United States, the companies on the mission will be able to continue utilizing PRARI's resources, such as its English-speaking, Western-educated specialists in Moscow and the oblasts, to continue to develop their business relationships in the oblasts.

Joan Morgan covers agribusiness for BISNIS in Washington, D.C.

• U.S. companies interested in participating in a mission should look for official announcements in the near future from BISNIS, the U.S.-Russia Business Council, and the American Chamber of Commerce in Moscow for full details on how to apply to be a member of a mission.

• Any company that is doing business or planning to do business in a PRARI oblast and would like support from PRARI in the United States or Russia should contact the agriculture office of the USAID mission in Moscow, or Christian Foster at USAID in Washington, D.C. at (202) 712-5073.

• U.S. agribusiness companies may also want to check out the Russian Government's Agriculture Ministry web site at: www.aris.ru.

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)