Indian Council of World Affairs

Abstract

The Russian Far East has emerged as a national priority in recent times. Given its geographical location and economic potentials, the FAR is predictably one of the most crucial regions for regional connectivity and economic integration. The region is home to rich oil and natural gas, iron ore and copper, diamonds and gold, timber and fresh fish stocks. The agricultural sector in particular has emerged as a major focus area for Russia. The introduction of the Russian Homestead Act comes in the wake of encouraging local residents and foreign nationals alike to explore the potentials of the agriculture, development of agro-industries and agro-processing complexes in the Far East. In the context of the ‘Russian Homestead Act’ in 2016 and India being host to one of the largest agricultural farmers’ immigration in the world, the need for both India and Russia to tap the potentials of agricultural sector is crucial.

Key Words: Far East, Homestead Act, Regional connectivity, Economic Integration, Indian Farmers Immigration

India has stepped into the 21^st century with noteworthy economic progress. It is a key destination for major global players due to its large market potentials, infrastructural development, appetite for energy resources, diversified trade basket, production structure and an increasing share of investment and exports. India’s top trading partners in terms of countries that “imported the most Indian shipments by dollar value during 2018 are the United States (US$51.6 billion), United Arab Emirates ($29 billion), and China ($16.4) billion”.¹ India’s bilateral trading partners and multilateral economic engagements such as BRICS have added further impetus to its economic progress. 

India’s longstanding traditional partnership with countries such as Russia, however, has largely failed to magnify the economic sphere of cooperation. Economic engagement continues to remain the weakest link in the relations despite Russia’s revival of its economic growth performance since the year 2000 through energy markets and India’s own economic growth story in 21^st century. 

There is a growing realisation between the two countries to strengthen the economic engagement. To revamp the economic relations, India and Russia have set a target of $30 billion worth trade turnover and $30 billion investment by the year 2025. Russia and India through successful conduct of annual bilateral summits, establishment of various institutions and mechanisms such as the “Strategic Economic Dialogue, India-Russia Business Council, India-Russia Trade, Investment and Technology Promotion Council, India-Russia Business Dialogue, India-Russia Chamber of Commerce, St. Petersburg International Economic Forum” and multi-modal network such as the INSTC aim towards reorientation in economic cooperation.  

Such initiatives only indicate the fact that India and Russia are together critically monitoring feasible ways to reorient economic engagements. In this direction, the two countries have identified new areas of cooperation such as the Arctic region and the Far Eastern Region (FAR). 

The Russian Far East is predictably one of the most crucial regions for connectivity and economic integration due to its geographical location, rich oil and natural gas, iron ore and copper, diamonds and gold, timber and fish stocks. The Far East is “home to rich regions such as the gold-rich Magadan Region and the diamond-mining Sakha-Yakutiya republic, as well as important seaports and salmon-rich rivers”², apart from agricultural sector and fisheries. President Vladimir Putin in 2013 declared the Far East as a national priority and ‘nationwide task’³. The idea behind the introduction of the Far East as a national priority is to encourage resettlement to start agriculture, forestry, fishery including (private) business.

While the Far East has emerged as a crucial region of focus for Russia in recent times, it is however yet to be capitalised by ‘friendly’ partners such as India. “Although India desires to gain from this region through active participation in development projects, it is yet to bring concrete outcomes. Given the growing importance that Russia attaches to the Far East, the region needs due attention by India as it acts as a conduit for connectivity and gain access to the Arctic region and also to expand India’s economic scope in the Indo-Pacific region. The Far East is therefore the much-needed leverage point for India to expand its geo-economic outlook both in the Arctic and in Indo-Pacific region”.⁴Cooperationbetween India and Russia in the Far East is nevertheless in the larger context of the important developments in the bilateral relations mainly through regional connectivity, participation in economic organisations, and merger of domestic policies. 

While defence, energy and nuclear cooperation contribute a major part to India-Russia economic engagement, sectors such as agriculture remain limited in scope. Therefore, the need for both India and Russia to tap the potentials of agricultural sector is the need of the hour especially in the context of the ‘Russian Homestead Act’ in 2016 and India being host to one of the largest agricultural farmers’ immigration in the world. Hence, this article evaluates the possible mechanisms through which the agricultural relations can be enhanced by both the countries alongside a proposal for a pilot project in the Far East that may be considered to assist in strengthening the economic relations between India and Russia.  

Source: http://www.maff.go.jp/j/kokusai/kokkyo/attach/pdf/haifu_6nd-5.pdf

Russia’s Agricultural Ambitions

There is a need to evaluate the relevance of the FAR and explore the possible opportunities especially in tapping the agricultural sector given Russia’s growing focus in this sector and India as one of the leading countries in agricultural production and farmers’ immigration across the world. Since the imposition of economic sanctions by the West on Russia post re-claiming of Crimea in 2014, Russia has pledged to diversify its economic revenue apart from its reliance on energy markets. Interestingly, the sanctions have come as a boon to Russia’s agricultural sector as Russia has imposed embargo on imported agricultural products from Western countries in retaliation for sanctions. This has opened a window of opportunity for local farmers as Russia is eyeing for self-sufficiency and import substitution from domestic producers. 

Russia’s agricultural sector today has turned into a potential area as its agricultural exports are in par with defence exports. Export revenues from agriculture—which reached over $20bn in 2017.⁵Today, “Russia is the world’s leading exporter of wheat shipping approximately 23.5 million tons worldwide in 2016. Russia aims to increase agriculture production by 24.8% by 2020.”⁶ 

Source: http://www.maff.go.jp/j/kokusai/kokkyo/attach/pdf/haifu_6nd-5.pdf

The agricultural sector also requires the undivided attention of both India and Russia as a key area of cooperation to strengthen the economic engagement in the FAR. 

Russia’s Homestead Act

As mentioned earlier, Russia on its part is making efforts to attract international players including its bilateral partners to explore the potentials that the Far East offers. One such effort is the introduction of the ‘Russian Homestead Act’ in 2016. According to this Act, Russia offers its citizens, and also foreign nationals, a free hectare of land (2.5 acres) in the Far East for lawful purpose. The condition, however, is that the owner of the land cannot rent, sell, or give the land away for five years. Foreigners too can join the program, but cannot own the land until 5 years after they have gained naturalised Russian citizenship.7

The scope and evaluation of the Act is administered by the Ministry for the Development of the Far East (MDFE) which has been renamed as Ministry for the Development of the Russian Far East and Arctic (2019) and the Far East Human Capital Development Agency. The role of the MDFE is to coordinate state policies for eco­nomic and socio-demographic development of the Far Eastern Federal District.⁸

The suggested key focus of the India-Russia engagement in the Far East may likely be in attracting agricultural workforce in the region given India’s huge potential record in agricultural sector and farmers’ immigration in the world. The introduction of the ‘Russian Homestead Act’ in 2016 can therefore be a major focus in widening India-Russia agricultural engagement which may likely boost Indian farmers’ presence in the Far East.

Source: http://www.maff.go.jp/j/kokusai/kokkyo/attach/pdf/haifu_6nd-5.pdf

How can India Engage in Russia’s Agricultural Ambitions in the Far East?

India is committed in its focus in enhancing its geo-economic interests with Russia’s FAR. In this direction, “India has been host to one of the largest immigration of farmers who are largely specialised as livestock workers, horticulturalists and agro-based service to countries such as Canada, which too has a bleak climate such as the Russian Far East. Given the fact that the Homestead Act provides similar benefits to foreign nationals too, India and Russia may initiate a pilot project that assists in attracting Indian farmers to explore the potentials of the Far East”9 for agricultural production and related services.

Source: http://www.maff.go.jp/j/kokusai/kokkyo/attach/pdf/haifu_6nd-5.pdf

Indian farmers can act as a substitute in production of some of Russia’s import demands such as soybean production, fruits, vegetables and other agro-based products in the Far East. “Soybean, for instance, contributes significantly to the Indian edible oil pool as it contributes 43% to the total oilseeds and 25% to the total oil production in the country. Currently, India ranks fourth in respect to production of soybean in the world. Maharashtra and Madhya Pradesh are the leading producers of soy, which contribute to 89% of the total soybean production in country.”10

It is a well-known that today countries such as Canada and Australia are popular destinations for immigration of Indian farmers. Let us take the case of Canada for instance, Indian farmers have for long chartered a course to Canada in search of “greener pastures”. It is said that the Ludhiana-based Punjab Agricultural University (PAU) helps prepare prospective immigrant Indian farmers in Canadian farm practices. The short term course teaches prospective Indian farmers the similarities and differences between Indian and Canadian farming methos, climate conditions, vegetable and cut flower cultivation, managements of pests, approaches to food marketing in the West, practical training in modern farm machinery and basic computer skills to equip the farmers.11

Similarly, such initiatives can be the focus in the India-Russia business dialogues that takes place on a regular basis.

Recommendations: The Need for a Pilot Project

In a comparable model, India and Russia can undertake a pilot project for a period of five years that may involve a small group of farmers from Himachal Pradesh as agriculture accounts a large part of Himachal Pradesh state’s economy and has more than 45%contribution to the state’s domestic product, as it is the chief occupation of people in the state.

This pilot project may involve collaboration between Indian agricultural university such as the G.B. Pant University of Agriculture and Technology (GBPUA&T) (http://gbpuat.ac.in/)CSK Himachal Pradesh Agricultural University(http://www.hillagric.ac.in/) and Russia’s Moscow Timiryazev Agricultural Academy(https://www.timacad.ru/), Federal State Educational Institution of Higher Education ‘Novosibirsk State Agrarian University’(https://nsau.edu.ru/)in which Indian farmers who can undergo a short term course to get accustomed on the use of modern day technology and other required know-how based on the climatic conditions to produce agricultural products in the Far Eastern region.

More importantly, the farmers of Himachal Pradesh are accustomed to similar weather conditions of the Far East more or less. That is, the Indian state of Himachal Pradesh apart from summer and rainy season, experiences heavy snow fall during the winter months. The temperature varies from 0 degrees to 15 degrees Celsius. Despite comprising huge rural populations, a key aspect of the Himachal region is the literacy rate which according to the 2011 population Census stands at 82.80 percent of that, male literacy stands at 89.53 percent while female literacy is at 75.93 percent.12

The chief food crops cultivated in Himachal Pradesh agriculture are similar to the agricultural and fruits cultivation demands of the Far Eastern region and Russia at large. “Some of the main crops produced by the Himachal Pradesh region include wheat, maize, rice, barley, seed-potato, ginger, vegetables, vegetable seeds, mushrooms, chicory seeds, hops, olives, and figs. The state is also popularly known as the ‘apple state of India’ for its large-scale production of fruits. Farmers have engaged themselves highly in the fruit cultivation. According to the data provided by Himachal Pradesh government, the farming community of the state holds an area of 9.99 lakh hectares, which is run by 8.63 lakh farmers out of the total geographical area of 55.673 lakh hectares.”13 

Apart from high dependence on agricultural production, the state government has encouraged modern means of farming that includes organic farming through the introduction of domestic schemes such as the Zero Budget Natural Farming programme. Under this programme, “farmers are encouraged to produce agricultural products through natural farming without adding any fertilisers and pesticides or any other foreign elements.”14 This has also encouraged women farmers to switch to organic farming of crops such as tomatoes, cauliflower, cabbage and turmeric. Given the growing climatic changes experienced in the region, the farmers today have also explored the option setting up hi-tech greenhouse for vegetable nursery production. “With precision irrigation and controlled conditions inside the greenhouse, farmers in the Dhamoon and neighbouring villages in Shimla district have become skilled at growing crops under restricted conditions.”15

The role and collaborative efforts of the Ministry of Labour Migration, Himachal Pradesh, Department of Agriculture and Department of Environment, Scientific and Technology alongside the Indian government and the domestic government agencies of Russian Far East such as Ministry for the Development of the Russian Far East and Arctic and Far East Human Capital Development Agency is, therefore, crucial. 

For India and Russia to successfully collaborate on the Homestead Act, it is important to understand the business culture, agricultural trends and demands at the domestic level. In this regard, the role of the federal states along with respective governments becomes crucial that can further assist in executing the agricultural potentials and opportunities in both India and Russia respectively. There is also a need for uninterrupted long-term economic commitments and regular assessment of the progress of the engagements in the agricultural sector. Given the trends in the 21^st century geo-economics, both India and Russia at the bilateral level need to revise the economic mechanism to suit the current needs and interests. The Far Eastern Region in this regard is, therefore, a crucial aspect for enhancing not just the bleak economic relations between the two countries, but to also augment and diversify the agricultural basket between the two countries.  

Along with the benefits of the Homestead Act policy, some of the incentives that may be considered to attract Indian farmers to Russian Far East are:

1. a) State subsidies and receiving of funds shall be extended to Indian start up farms.
2. b) Similar to the ‘Beginner Farmer” programme; both India and Russia may establish a joint mechanism that allows start up farms to receive a grant for developing their own agro-business.
3. c) Hurdles such as receiving of state subsidies to foreigners only if the company is registered in the name of Russian entity shall be made ‘exceptional’ to Indian farmers and agro-business start up companies.
4. d) Devaluation of Rouble and language barrier is a cause of concern that needs to be addressed in order to insulate the Indian farmers from these impacts.
5. e) Given the special nature of bilateral relations between India and Russia, the two countries may also work in tandem to provide personal security, resources, health and other facilities to encourage and attract the flow of Indian farmers to the Far East.

The grand strategy involving India’s economic engagement with Russia and EEF fits well with India’s focus on expansion of its geo-economic interests in the Far East. “Notably, India has largely been at ease in participating in projects that are initiated by Russia, given the confidence and trust that exists in the partnership. Moreover, India’s non-participation in the Belt and Road Initiative by China and its participation in the EEF only signals that India has its own alternative options to widen its national interests and scope for economic engagements that bypasses China led lucrative economic projects.”16 The Far Eastern Region would nevertheless be the key to promote India’s geo-economic interests in the Indo-Pacific region including the Arctic as it has every chance to become one of the nodal points of business, trade and innovation to further enhance its geo-economic interests. 

*****

* The Authoress, Research Fellow, Indian Council of World Affairs, New Delhi.

Disclaimer: The views expressed are that of the Researcher and not of the Council.

EndNotes

1Daniel Workman, “India’s Top Trading Partners”, 12 April 2019.http://www.worldstopexports.com/indias-top-import-partners/ accessed on 05 January 2019

2Homestead Act for Russian Far East – Putin supports free land handout, Russia Today, https://www.rt.com/russia/224099-russia-land-free-east/

3Konstantin Belchenko, “Far East renewed nationwide”, 25 February 2019, https://www.eastrussia.ru/material/dalnemu-vostoku-obnovili-obshchenatsionalnost/

4Chandra Rekha, “RELEVANCE OF RUSSIA’S FAR EAST IN INDIA’S GEO-ECONOMIC INTERESTS”, Expert View, CAPS, 01 December 2017. http://capsindia.org/files/documents/CAPS_ExpertView_CR_04.pdf

5 “Russia has emerged as an agricultural powerhouse”, The Economist, 29 November 2018. https://www.economist.com/business/2018/11/29/russia-has-emerged-as-an-agricultural-powerhouseaccessed on 04 March 2018

6“Russian agriculture output explosion means big machinery opportunities”, ITE Food&Drink, 22 February 2017.  http://www.food-exhibitions.com/Market-Insights/Russia/Russian-agriculture-output-explosion-means-big-macaccessed on 27 January 2019

7“Putin backs extending free land give away all across Russia”, Russia Today, 15 June 2017.https://www.rt.com/business/392450-russia-free-land-putin/ accessed on 04 March 2018

8 Helge Blakkisrud, “Russia's turn to the East: The Ministry for the Development of the Far East, and the domestic dimension”, Norwegian Institute of International Affairs, Policy Brief, 08 2017. Pg.3 accessed on 16 April 2018

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10“Evaluation of the PPPIAD Project on SOYBEAN”, Documentation of the project on Improving productivity of Soybean in Maharashtra by Archer Daniels Midland Company (ADM) and Department of Agriculture, Government of Maharashtra Supported by Public Private Partnership for Integrated Agriculture Development Programme, Agriculture Division Federation of Indian Chamber of Commerce and Industry, 2014, pp. 8-14.

11 Chander Suta Dogra, “Rising input costs, low returns is pushing Punjab tillers Westward”, Outlook, 19 June 2006. https://www.outlookindia.com/magazine/story/a-piece-of-canada/231610

12“Himachal Pradesh Population 2011-2018 Census, https://www.census2011.co.in/census/state/himachal+pradesh.html accessed on 12 March 2019

13Himachal Pradesh Agriculture, 07^th July 2011

https://business.mapsofindia.com/state-agriculture/himachal-pradesh-agriculture.html accessed on 12 March 2019

14“HP Governor launches Zero Budget Natural Farming to promote organic farming: All about it”, India Today, 01 February 2018. https://www.indiatoday.in/education-today/gk-current-affairs/story/to-promote-organic-farming-hp-governor-launches-zero-budget-natural-farming-1159421-2018-02-01accessed on 12 March 2019

15 Gagandeep Singh, “This Himachal Community Not Only Tackled Crop Failure, but Raised a Bumper Crop!”https://www.thebetterindia.com/125839/agriculture-farming-innovation-cultivation-climate-control-himachal-pradesh/ accessed on 05 June 2019

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