Hyundai Heavy, South Korean based and world’s largest ship builder, is acquiring Russian farmland according to a Reuter’s article titled, “S. Korea’s Hyundai Heavy in Russian farm deal.” Hyundai Heavy agreed to buy a 67.6% stake in the Russian-based farming firm, Khorol Zerno LLC, to grow grains for the import-dependent South Korea.

By 2012, Hyundai Heavy hopes to be involved in 50,000 hectares of Russian farmland and by 2014, growing over 66,000 tons of corn and soybeans annually.

Hyundai claimed the move was made to, “help Korean livestock farms by freeing them up from sudden price changes and supply shortages of provender.” Hyundai also added this decision helps their company diversify its business into both food and renewable energy.

Last year, South Korea imported 9.5 million tons of corn for animal feed production. This move by Hyundai Heavy will now ease the nerves on South Korean importers of grain.

Hyundai clearly understands how important of an issue food security is becoming. This latest purchase was for $6.5 million and Hyundai announced they intend on investing an additional $9 million by 2012.

Food security is crucial for small, emerging, countries especially with evolving social classes. A middle class is beginning to develop in South East Asia, which causes diets to change from grain based to protein based. It takes 7-15 pounds of grain to feed one pound of beef, thus resulting in an exponential need to import grain to feed cattle.


Source: Saint Paul Legal Ledger Capitol Report

What does this mean for global farmland?

Hyundai Heavy is just one of many new acquirers of global farmland. The demand is high for farmland, especially when it can help solve a country’s food security issues. We expect farmland to continue to rise in value because of the global demand.

- Colvin