Farmlands, or agricultural landscapes, captures the interest of a number of researchers based at the Department of Human Geography, Stockholm University. On this blog we share information about research findings, activities, events and comments related to our work.

Our interest in farmlands has three roots: farming, landscape and society.
Farming as a practice, including farmers knowledge and labour investments
Landscape as society-nature relations, congealed history, and as space and place
Society as a short form for institutions, gender relations, political economy and scientific relevance

Most Welcome to FarmLandS!

Monday, February 20, 2017

Swedish agrobusiness abroad fails - SEKAB and Black Earth Farming

In the last week we have been reached by the final confirming news that two Swedish agro-business ventures abroad have failed totally.

Black Earth Farming, a Swedish owned company that have been operating in the chernozeme black earth region in Russia recently  announced that they are selling the company to a Russian oligarch.
  The Swedish owner Kinnevik will lose about 400 million SEK when they sell the company. I have been following Black Earth Farming since at least 9 years (see my blogpost in Swedish Svartjord på börsen from February 2008) .  Through modest 10 shares which I bought for 800 SEK when they were close to their peak I have been able to follow the general assemblies here in Stockholm. Successively I have got a more and more clear picture of their operations, how they bought the the shares of former kolchos workers, accumulating a "land bank" and more lately trying to make some profits from the agricultural operations. Throughout these meetings the company has tried to convince us shareholders 1) that the shares and the land values were undervalued and 2) that profits from successful farming operations were just around the corner, if not last years weather would have created unforeseen problems... Brian Kuns and co-authors have followed shareholders meetings more systematically and also interviewed key actors. They analyse in detail the performance of different Swedish owned agrobusiness companies in the paper The stock market and the steppe: The challenges faced by stock-market financed, Nordic farming ventures in Russia and Ukraine  . They point to the contradictions between the expectations and the actual operations. In short: far too high expectations from returns to scale, partly fueled by the expectation from the stock market  + a totally unrealistic understanding of the vagaries of farming the steppe seems to explain the failures. My 800 Swedish crowns have boiled down to some 60 or 70 Swedish crowns when I will finally be reached by the offer from Volgo-DonSelkhozInvest to buy my ten shares..... That is a small loss compared to the former kolkhos workers who have once and for all sold their shares of the land to the foreign companies and whose lands will now be in the ownership of a Russian oligarch.

Parallel to this development the Swedish company Agro-Eco-Energy in Bagamoyo, Tanzania, have now finally declared their closing down. They have been criticized for  almost the same time  - at least 9 years now, by Swedish and Norwegian researchers, by Action Aid, scrutinised by Swedish investigative TV Uppdrag granskning etc etc and their grandiose plans for a large sugar cane plantations have not materialised in spite of a decade of planning and misuse of money from Swedish publicly owned energy companies and from Swedish aid through Sida. The land which the Swedish company claimed to have leased has now been confiscated by the Tanzania state -- see my blogpost from November  . Now this has finally also been confirmed from the owner see Sugar project: Swedish investor calls it quits .

It is of course just a mere coincidence that these two total failures of Swedish agro-busíness plans have reached news media the same week. But there is some logic to it. Both projects started druing the financial crisis in 2007-2009 with surging food crop prices in 2007. The expectations for investments in farmlands and for agricultural production were at a peak. It has taken almost ten years for investors and in the case of Agro-Eco-Energy donors to realise that this was an exceptional situation and that realities on the ground were more complicated. Far too high expectations to returns to scale have also played a role. In the case of Tanzania the political realities of the contentious land issues and protest from villagers losing their land have also played a role. .