Russia backs sale of farmland but bars foreign buyers

Russia's lower house of parliament passed a bill yesterday that would allow the sale of Russian farmland for the first time since the days of the tsars, but bar foreigners from buying it.

The bill will now be sent from the state Duma to the upper house, where it is expected to be approved and passed to President Vladimir Putin for signing. Mr Putin has supported the bill, describing its proposals as crucial to Russia's economic development.

Farmland in the world's largest country is estimated to be worth $80-100,000bn (£52-66,000bn), a large share of Russia's collective wealth.

Much of it is now controlled by struggling, debt-laden collective farms, where the structure and production technology have changed little since the Soviet era.

The debate over foreign buyers has been an obstacle in a decade of post-Soviet efforts to redistribute land nationalised after the 1917 Revolution.

Vladimir Pekhtin, leader of the pro-government Unity party in parliament, said: "Private ownership of farmland is the most important condition for increasing the participation of several layers of society in the economy. Without this, no country in the world can make market reforms successful."

The Communist Party and Agrarian Party opposed the bill, insisting the state should retain control. They voiced fears that free land sales would allow foreigners to snap up Russia's best agricultural land from impoverished farmers.

Before passing the bill, the Duma approved an amendment banning the sale of all agricultural land to foreigners. The amendment would allow foreigners and foreign-owned companies to lease farmland but not buy it.

Boris Nadezhdin, of the pro-reform Union of Right Forces party, said foreign companies could still buy Russian land through subsidiaries that were majority Russian-owned. He also warned that the bill might have less than the expected impact on the economy because demand for farmland among Russians was minimal.

Before the amendment, the original version of the bill, which was passed last month, left local authorities to decide whether foreigners could buy land.