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Projects

Project Brief

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
Volga Farming
Project ID
9224
Fiscal year
2012
Status
Active
Guarantee holder
FG Volga Farming Ltd.
Investor country
Cyprus
Host country
Russian Federation
Environmental category
B
Sector
Agribusiness
Date SPG disclosed
October 28, 2010
Project Board date
October 05, 2011
Gross exposure
 $49.5 million
Project type
Non-SIP
ESRS
ESRS for Volga Farming Ltd. (VF)
EIA
Social and Environmental Assessment Report

View Summary of Proposed Guarantee


On October 13, 2011, MIGA issued a guarantee of $49.5 million to FG Volga Farming Ltd. (VF), a Cyprus incorporated company for its agriculture investment in central and southern Russia. The coverage is for a period of 15 years against the risks of expropriation, inconvertibility, and transfer restriction.

The project involves an investment by VF in agribusiness operations in Russia.  VF plans to lease up to 90,000 hectares of agricultural land in the black-earth region in central and southern Russia, and purchase up to 50 hectares of non-agricultural land with buildings and/or facilities to be used for the farming business.  VF also plans to operate, modernize, and expand farms and related agribusiness operations on this land in order to  produce, store, process, and sell grain and other crops such as barley, sunflower, and peas. 

The project is expected to have numerous developmental impacts. VF’s investment will expand the land area under cultivation, since part of the leased land is currently fallow. The conversion of derelict agricultural land into modern production will increase soil fertility and result in an expansion of grain production.

In addition, VF’s investments in management, equipment, storage, safety, technology, and infrastructure will establish a farming operation in line with international standards. In particular, the project is expected to transfer knowledge in the areas of agricultural technology, business processes, project management, organizational development, and land administration to employees. Dissemination of such knowledge and experience through local institutions of higher and professional education is also envisaged.

The project will impact regional development through the recruitment of local personnel, as well as the repair and maintenance of local road infrastructure. The project is also expected to support local processing industries, fodder industries for livestock and biotechnology, storage, logistics, and trade.

The project is also in line with the World Bank Group’s Country Partnership Strategy that notes a need to strengthen Russia’s global competitiveness in traditional economic sectors, including agriculture.

 
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