Russian arable land nearly sold out: Razgulay

MOSCOW (Reuters) - Western firms will soon have to buy Russian companies to gain access to good-quality land in the world's fifth-largest grain-growing country, the general director of agricultural firm Razgulay (GRAZ.MM) said on Monday.

"By the end of 2009, all the main agricultural land in Russia will be taken," Alexander Soldatov said in an interview at the second Reuters Russia Investment Summit.

"There will still be some land in the mountains, but there's not much land left for production with elevators or sugar refineries," Soldatov said at the event, held at the Reuters office in Moscow.

"Any Western business will be required to buy an agricultural holding, and that's a good thing. Perhaps there's some sense in this."

Investors, Russian and foreign, are ploughing millions of dollars into Russian land to help resuscitate the long-neglected farm sector amid a boom in agricultural commodity prices. This year's Russian grain crop promises to be the best in 15 years.

Razgulay, which became the first major Russian agricultural firm to float shares in a 2006 initial public offering, plans to invest about $690 million this and next year, tripling its land area and developing its processing plants.

For foreign investors, however, good-quality arable land that is affordable and accessible is running out, Soldatov said.

"There exist some territories, like Tatarstan, with land, but you must have extraordinary talents to buy land there. In other regions you must seek access to local administrations," he said.

"In Kursk region, for example, the count is by the hectares, as all land there has been taken. The competition is dramatic.

"It's the same in Krasnodar. Consolidation of the land, at what you would call a normal price, has already taken place there. Either that, or talk is of reselling the land at exorbitant prices."

Soldatov said good agricultural land in Krasnodar, a fertile region in southern Russia that has a coastline on the Black Sea, would not produce returns were it to sell at 80,000 roubles ($3,143) a hectare.

"Currently, it is sold at 40,000 to 50,000 roubles per hectare, which means the prices are approaching a critical level."

(Additional reporting by Maria Plis and Melissa Akin; editing by Jim Marshall)