Socio-economic Impact of Chinese Agribusiness Entrepreneurs in Russian Far East on Local Farmers

Abstract

Since the liberalization of the Sino-Soviet border in 1990's, Chinese farmers have been actively engaged in the economy of Russian Far East. Literature suggests that Chinese workers fill a labour shortage, contribute positively to local food security, with negative impacts being more socially normative and political, than economic. So far no economic empirical research exists about Chinese farmers' presence in Russian Far East. On the basis of a panel data, an econometric model was used to analyse socio-economic impact of Chinese agribusiness entrepreneurs in Russian Far East on local households. Regression models show that presence of Chinese farmers in Russian Far East increases the probability of higher well-being, farm income, food costs and share of Chinese food purchased among Russian Far East households. These results suggest that benefits of cooperation with Chinese farmers and retailers should not be ignored when designing policies towards sustainable development of rural areas in Russian Far East. Possible environmental, social and economic externalities of further soybean production in Russian Far East are also discussed.Our analysis is focused on two broad questions. First, what is the impact of Chinese farms cultivating soybean in RFE on local rural household income, well-being and costs of living (spending)? Second, what farming, legal, entrepreneurship and contextual factors influence the magnitude and relative importance impact? We investigated effects of number of Chinese farm in 20 km range (no.), selling to Chinese (0-1), share of production sold to Chinese (%) and distance to Chinese farm (km) on well-being, farm income, food cost and share of Chinese food purchased among Russian Far East households.Our hypothesis was that more farms in 20 km range and/or selling to Chinese and/or selling more to Chinese and/or closer distance to the Chinese farm will increase probability of lower well-being, lower farm income, lower food costs and greater share of Chinese food purchased among Russian Far East households. Our findings