The impact of FDI in the upstream and downstream sectors on investment in agriculture in the NIS

Foreign direct investment (FDI) in the agribusiness systems of the New Inde pendent States (NIS) has gone almost exclusively to the upstream and downst ream sectors, with only marginal direct investment targeted at the primary agricultural producer. Although much has been written to show the benefits of FDI for the immediate recipient, little has been discussed about the imp lications at the farm level. This paper cites the findings of several case studies conducted by the author. All of the examples show significant posit ive spillover effects to the producer, including I) provision of credits, 2 ) access to cash markets, 3) training in improved crop cultivation or anima l husbandry practices, 4) support with acquiring improved business and mana gement skills, 5) reliable access to quality inputs and 6) training in impr oved product storage and handling. As long as Russia's primary agricultural producers are generally unable to attract direct investment into their ope rations, nor able to qualify for or afford available commercial credits, FD I into the upstream and downstream sectors of the food chain may be one of the few means for farmers to acquire critically needed credits, inputs, mar kets and skills. In identifying the critical role FDI in agribusiness plays in providing support to primary agriculture, an overview of FDI in the reg ion's agribusiness sector is required.