Farming Operations

Crop Production

Growing and selling crops, mainly wheat, rapeseed, barley, sunflower seed and corn is the Company’s main line of business. 

Technological and Industry Collaboration

The Company closely collaborates with Lembke (Germany), a company with over 100 years of history of selecting and producing new high-yield varieties of rapeseeds, beans and feed crops, on technological issues. For seed material, the Company applies hybrid forms from Lembke in the Company‘s demo fields. In turn, Lembke‘s specialists provide consulting support, conduct training on growing technologies, monitor rapeseed fields and offer recommendations regarding crop care. In addition to Lembke, the Company conducts joint scientific research with companies such as GbR (Germany), Pioneer (United States), Monsanto (United States) and Euralis (France).
In new variety development, the Company collaborates with the Selection and Genetics Institute (Odesa), the Mironov Institute of Selection and Seed Breeding of Wheat, the Institute of the Physiology of Plants and Genetics of the National Academy of Sciences of Ukraine, and with the Poltava Institute of Wheat.

Sales and Customer Management

The crops produced by the Group are sold to both domestic and international third-party customers. The export trading is carried out by the main revenue-generating company of the Group, Ukrzernoprom Agro LLC, which buys crops from the Ukrainian Subsidiaries for further sale. Other Ukrainian Subsidiaries are only engaged in domestic sales.

The Group normally enters into short-term supply contracts, which is a generally adopted business practice. Domestic sales usually provide for 50% to 100% prepayment and EXW or FCA (from Group‘s elevators) delivery basis. Generally, the Group does not sell its yield during or immediately after the harvest due to its ability to store crops until the Group can achieve better price offers. The Group concludes contracts for the trade of barley and rapeseed during February and March that provide for supply from July to September. Most of the crop (such as wheat, rye, sunflower seeds and corn) is traded from autumn to the end of the winter season of the following year.

In the past two years, the Group‘s largest customers in Ukraine were: Zerno-Trade LLC, PII Serna, FA Intertrading-Ukraina LLC, Agrokhimresurs LLC, Poltavskoie HPP LLC, Kernel-Trade LLC, OJSC Krymkhleb, Poultry Farm ― Podolie― LLC, CJSC Ramburs and Agropartner LLC, Ekvitas LLC. However, despite continuous relations with some of the above-mentioned customers the higher price offer is a key factor in selecting customers for the Group‘s domestic transactions.

In export crop sales, the Group deals with international partners, among which are global traders of agricultural commodities, such as Alfred C Toepfer International GmbH and Viterra. The main crops purchased by international customers are rapeseed, barley and wheat. The Group‘s major forward contracts are concluded in accordance with international crop trading rules (FOSFA and GAFTA). Deliveries under the Group‘s export contracts are performed by the Group‘s forwarding agents by railway or trucks on CPT delivery terms. The Group consistently performs its contractual obligations and has an impeccable reputation as a reliable supplier. Therefore, reputable companies such as Viterra and Alfred C Toepfer International GmbH are willing to pay in advance.

Most sales are at the local level, with low levels of exports. The diversity of domestic and foreign customers means that the Group is less vulnerable to various unpredictable external factors; political and economic instability or changes to the legislation: such as the possibility that the significant increase of duties on grain export would still allow the Group to target either local or global market players. Hence, the loss of one or more existing foreign customers should not have a substantial material effect on the Group.

Crop Production Process

The harvesting season usually starts in June with the harvesting of winter barley, followed by winter wheat and winter rapeseed and ends in September/October with the harvest of soybeans and corn. It is important to note that due to annual and seasonal variations in weather patterns, the commencement and duration of various crop phases are not static and may differ from year to year and vary across the farmed regions.