Hyundai Heavy Industries is treading with remarkably light steps for a behemoth best known for flexing steel sheets and lugging girders. It's not the first South Korean giant to make the rather lateral move into farming. Daewoo Logistics, a survivor of the Daewoo Group, has already fluffed a move into Madagascan agriculture. But Hyundai's softly, softly entry into Russia has a far better chance of succeeding.
By going in small, Hyundai has cut the risk of treading on sensitive toes. Daewoo's plan failed in part because it was so massive – it wanted to take on 1.3m hectares, an area half the size of Belgium. That rattled a lot of cages, besides making it a complex deal. In acquiring an area less than 1% of that, a little over half the size of Brussels, Hyundai has shown greater nous of the sensitivities surrounding land.
And by showing the money, Hyundai has demonstrated that there is something in Russia for the deal. The company has pledged to invest an extra \$9bn expanding the project, beyond the \$6.5m initially spent. Daewoo wanted its tract for without spending a won up front.
The downside of Hyundai's restraint is that the group will take some time to make any worthwhile impact on South Korea's demand for animal feed. The group's somewhat unambitious output target of 60,000 tonnes of corn and beans by 2014, off 50,000 hectares, is a trifle compared with South Korea's imports of the crops estimated at a total of 20m by then.
But then, there is only a limited amount a listed company should be expected to do. South Korea's state-run National Pension Service owns 5.3% of Hyundai, not the whole show. It is difficult to see many other investors appreciating why the world's biggest shipbuilder should start pulling ploughs.
Hyundai may be wise to keep treading softly in agriculture if it wants to keep them aboard.