North Korea in talks to farm large area of Russia

North Korea, regarded as a pariah state by many nations, is in talks over leasing "several hundred thousand" hectares of Russian farmland, the week after the two countries struck a deal over a gas pipeline.

A North Korean delegation held talks with officials in Russia’s eastern Amur region, which borders with China, over a deal for leasing abandoned agricultural land for an annual rent of 50 roubles ($1.70) per hectare, RIA Novosti said.

"The North Korean authorities are planning an unprecedented agricultural project – to create a farm in [Russia’s] far east to grow soybeans, potatoes, corn and other crops," a Russian official told the state-run news agency.

The Korean delegation is due next week to consider the terms of the deal, which could offer the country a means to ease its perennial food shortages, on some of the vast tracts of Russian land abandoned since the break up of the Soviet Union, and its generous agricultural subsidies.

Russian benefits

The area of Russian land in crops has slumped by more than one-third to less than 80m hectares, according to SovEcon, the Moscow-based analysis group, which estimates acquisition cost of land in the high-quality Black Earth region at about $500 a hectare.

A deal would require North Korean investment being channelled through a local company, "which means tax and revenue for the [regional] budget", the official said, adding that "we are also interested in investment in farm machinery and equipment".

Russia’s agricultural potential has attracted investment from many of the Western farm equipment giants, such as Deere & Co, besides encouraging local operators.

The talks also follow an agreement last week between Dmitry Medvedev, the Russian president, and Kim Jong-Il, his North Korean counterpart, over exploring a pipeline to take gas to South Korea.

The pipeline would, in passing through North Korea, provide a ready energy source besides transit revenues of $100m a year.

Hungry country

North Korea is regarded by the United Nations as having among the world’s highest rates of food insecurity, estimating that a "dramatic" one-third the country’s 24m population is undernourished.

Little of the country’s mountainous countryside is suited to arable farming, with only 17-18% of its area, or a little over 2m hectares, cultivated, of which some 1.4m hectares is deemed suitable for grains.

And yields on what is farmed have fallen dramatically, with the country’s isolation denying it the foreign currency it needs to purchase fertilizers and lime.

Total cereals output has averaged about 4.5m tonnes a year over the last decade, half the level of an early-1990s peak.

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