The banking system may collapse but people always need to eat.

When the most of the world financial markets are falling apart, the investors don’t know what to do and demand for luxury and even non-luxury goods is falling down, an agriculture industry is holding up extremely well.

Agriculture is the one of few branches which doesn’t suffer from financial crisis as strongly as others, it’s true. Grain still remains a priority direction of all CIS’ agriculture. The second priority direction is an animal fodders for the further development of animal husbandry industry.

The consumption of grain products, meat and milk is rising up. According to the researches in China as a vivid world example (because of its enormous economic progress and huge population) “Caiani & Company”, an investment-advisory firm based in Melbourne, milk consumption has grown seven-fold, olive oil six-fold. China is consuming more meat: 60% more poultry, 30% more beef and 25% more wheat. But in that very moment people started to drink more alcohol. For example, Chinese are drinking four times as much wine. But even taking into account this growth, people in China consume only one-third as much milk and meat as people in more “wealthy” countries such as EU countries and Australia. It is a result of little progress, because even in poor countries more people are better nourished thanks to a bit more grain, a lot more meat, and much more milk.

As to the Europeans, protein intake in EU countries “is unlikely to expand much, but a combination of rising incomes and population in developing countries could increase demand by more than 5% annually for years to come”, writes The Economist.

So, people started to eat more and more healthy food (than fast food, for example). But the problem is that an expanding supply at the necessary level will be difficult. Because the arable land under cultivation is limited. As an example, in India and China there the consumption is growing fast, many of the most fertile areas are being developed for the roads and factories.

In response to local concerns about the loss of critical food supplies, several governments have imposed taxes or limited quotas on exports: on a key ingredient of fertilizer in China, on grain in Argentina, on rice in India.

Russia and CIS’ countries will feed Europe and Asia

The fertile land is becoming more valuable. According to this fact Russian and the CIS’ agricultural goods are becoming more attractive for the world market. Russia has exported 14.1 million tonnes of grain for this agricultural year (from July 1, 2008 to July 1, 2009), the press service of the Russian Agriculture Ministry said. Grain market experts believe that Russia is able to export about 18 million tonnes of grain in the aforesaid period.

President of the Russian Grain Union A. Zlochevsky said, “Russia plans to export at least 18 million tonnes of grain this season, thus beating the record of 2002-2003.” In the above-mentioned years, Russia exported 17 million tonnes of grain. “If there are no additional programs to encourage grain export, we plan to sell at least 18 million tonnes of grain to foreign partners, adding that additional incentives may increase grain export to 20 million tones”, he added.

Prices for grains and meat are down from the peaks of mid-2008, but are 30-50% above their averages over the past decade. But Russian grain export prices are stable. In the European part of Russia on 19th of March, average price for 3rd class wheat currently amounts to 5,620 rubles per tonne (1 Euro = 45.7 Rub), for 4th class wheat – 4,640 rubles per tonne and for 5th class wheat – 3,481 rubles per tonne.

Grain prices, however, are not the only advantage. Grain and other agricultural products “made in Russia” and “in the CIS” are organic food. The quality of these products is high: no pesticides, chemicals and gene modified substances. As many as 1,815 agricultural producers from 38 Russian regions are accredited for export under condition of ecological requirements.

For the both business participants there are some advantages from this kind of cooperation. An exporter can receive new commodity markets, an importer will receive good quality products for competitive prices. The CIS’ export can save the consumer prices form “agflation”, new crisis term.

The CIS’ export system is large, diverse, and evolving industry. It has to constantly develop and find new ways of doing business in order to sustain the high competitions. As much as one third of all grain produced in Russia, Belarus and Ukraine moves into export. The biggest part of this volume is exported from b2b electronic marketplaces. It is expected that all agricultural manufacturers will carry out transactions through the Internet next year.

The advantages of the Internet marketplace are completely feasible:

About investment

Interest in agricultural industry is still growing. A lot of companies are prospering on this market. As an example, when the shares of world giants, such as General Motors, had fall down, the share prices of Agrium, CF Industries, Bunge and Syngenta stabilized.

Deals are also being done. Nowadays, China is opened up to private agricultural investment, in part because new laws allow farmers to lease land. There is a lot of acquisition rumours around China’s COFCO, state-controlled food conglomerate, who bought 5% of Smithfield, the world’s largest pork producer. Al Qudra, an Abu Dhabi-based investment company, said it had bought big tracts of farmland in Morocco and Algeria, and was closing in on purchases in Pakistan, Syria, Vietnam, Thailand, Sudan and India.

In November 2007 China Agri-Industries, a subsidiary of COFCO, established a partnership with Wilmar, the world’s largest trader in palm oil. Chinese investors go further, they are buying about 50,000 hectares of farmland in Argentina, and considering other investments in Argentina and Brazil. However, Europeans are closer to the CIS. Landkom, (London’s AIM market), and Black Earth Farming (Stockholm), have each made big investments in farming in Ukraine.

Doing business with Russia and the CIS becomes more and more easy and favorable. At least for the crisis time, agriculture can be an extremely high-margin business.