Download Restoring The Bread Basket of Europe

Restoring The Bread Basket of Europe
Introduction by the President
Much had changed when I started out in the Ukrainian agricultural sector. Still I recognized
the true potential of the rich and
fertile Ukrainian soils. Ukraine
has historically been the bread
basket of Europe and we want to
be apart of the process in restoring the country to this status. I am convinced that with
the right competence, strive, courage, technology and
control great riches could be collected from the vast
Ukrainian fields. People tend to maybe over emphasize
the Ukrainian soils, I would instead also like to remember the Ukrainian people and the talent and competence
that lies there. During my years we have managed to
attract and create a strong management team.
I am proud when I say that the core of our company has
already 11 years history of successful farming. During
the last years the company has developed rapidly and
we are today one of the most modern agricultural com-
panies in Ukraine, where innovative IT-solutions play an
important part. We have also during the last years, even
during the crisis, expanded rapidly, still maintaining our
margins and the strict control. Our goal is to expand
further in the regions where we are active and continue
developing and improving the company into one of the
leading agricultural companies in Ukraine and the CIS.
We will continue to invest into more modern machinery,
drying and storage facilities and into good competent
co-workers.
I am confident in the development of our company, as
well as the Ukrainian agricultural sector as a whole and
I look forward to the challenges in the years to come.
Alex Oronov
CEO
About Grain Alliance
Grain Alliance is modern farm operator in Ukraine,
which controls approximately 40 000 hectares, of
which 35,000 hectares are cultivated, in four regions;
Kyiv, Cherkassy, Poltava and Chernigiv, the operations
concentrated to an area within a radius of approximately 80 kilometers. The business is well-integrated
with short distances to the fields and storage facilities.
Grain Alliance has five grain elevators, three of which
have rail road access.
The core of Grain Alliance has over 10 years of successful farming, achieving yields in important crops
like corn, sunflower and wheat above the Ukrainian
average. In 2008, the Ukrainian/American management
team joined forces with a Swedish team of entrepreneurs as a result of this a Swedish holding company
was formed into which capital was added enabling a
more rapid development of the company. In conjunction
with this reorganization strong financial and organizational expertise was added to the company and many
parts of the existing organization were restructured
and new modern financial management practices and
more efficient agricultural practices were introduced.
In addition, new agricultural equipment was added to
the production process.
Today Grain Alliance operates on the basis of western European standards of accounting and corporate
governance, e.g. accountability, transparency, fairness
and simplicity with the goal of maximizing shareholder value while simultaneously adding value for all
other stakeholders. These principles are followed to
ensure that laws, regulations and ethical values are in
compliance with internationally adopted principles and
standards.
Business concept and strategy
Grain Alliance’s business concept is to generate returns by increasing productivity and efficiency in the
Ukrainian agriculture by implementing best agricultural practices, modern equipment and strict financial
control.
Since launch Grain Alliance has created a solid organization, which efficiently and sustainably can run a large
scale agriculture operation. The long term goal is to
increase the cultivated area and outperform western
producers in terms of productivity. In order to reach
these goals we focus on the following:
•• Sustainable agriculture – our production is oriented towards a long term perspective, therefore a
balanced mix of crops are grown with an emphasis
on crop alteration and soil recovery.
•• A limited geographical area - Grain Alliance’s strategy is to cultivate and operate in a concentrated
geographical area. The radius between the farms
is approximately 80 km. By having farms in close
proximity to each; machinery and equipment can be
used more efficiently and the cost of transporting
tractors, harvesters, between fields is lower. The
drying and storage facilities can also efficiently
service the existing farms.
•• Financial management and internal control – Grain
Alliance has developed a unique integrated financial management information system, which is
especially developed and adapted to the conditions
of the agriculture sector in the Ukraine and CIS.
•• Expansion, but not on the expense of productivity,
efficiency and control – Despite the fact that Grain
Alliance is expanding rapidly we expand only when
we are sure that we can maintain or increase profitability from the start.
Sustainable agriculture
In order to maintain long term profitability Grain Alliance runs a sustainable agriculture. The Company’s
production is oriented towards a long term perspective,
therefore a balanced mix of crops are grown with an
emphasis on crop alteration and soil recovery.
Grain Alliance is also unique in Ukraine by having an
in house laboratory, which monitors and measures the
quality of the lands. In Ukraine there are only a handful
of such laboratories.
By continuously analyzing the soil the agronomists
scientifically know what kind of fertilizer to use and in
which quantities. Grain Alliance can also in time react
to problems such as increased acidity of the soil. This
information is used in the long term production planning process thus securing a long term sound usage of
the soil and avoiding exhaustion.
Moreover, producing crops usually involves regular
plowing, tilling, that stirs up the. Plowing, tilling, is
used to remove weeds, mix in soil amendments like
fertilizers, shape the soil into rows and prepare the
soil for seeding, yet this can make the soil too compact, loss of organic substances, loss of soil microbes,
arthropods, and earthworms, and increased erosion.
To avoid these unfavorable effects Grain Alliance uses
the so called “no-till” method. The No-till approach
reduces or excludes the use of conventional tillage.
Regular tilling degrades the fertility of soils, causes air
and water pollution, intensifies drought stress, leads to
an increased fuel consumption and even contributes to
global warming.
Geography of operations
In order to maintain long term profitability Grain Alliance runs a sustainable agriculture. The Company’s
production is oriented towards a long term perspective,
therefore a balanced mix of crops are grown with an
emphasis on crop alteration and soil recovery.
Grain Alliance is also unique in Ukraine by having an
in house laboratory, which monitors and measures the
quality of the lands. In Ukraine there are only a handful
of such laboratories.
By continuously analyzing the soil the agronomists
scientifically know what kind of fertilizer to use and in
which quantities. Grain Alliance can also in time react
to problems such as increased acidity of the soil. Moreover, this information is used in the long term production planning process thus securing a long term sound
usage of the soil and avoiding exhaustion.
Drying, storage and equipment
One central component in running an agriculture business is the ability to store the grain produced. Grain
Alliance has five grain elevators in three regions. Three
of the grain elevators have railroad access and Grain
Alliance will continue to invest into storage facilities.
The railroad access facilitates efficient logistics for the
Company’s products.
Grain Alliance uses modern equipment, from producers as John Deere, Claas, etcetera, directly imported
from the U.S. and Europe. We also have several inhouse service and repair shops. Grain Alliance is continuously investing into new machinery and equipment.
By adding modern technology and competence we are
gradually increasing the productivity and the quality of
the work performed.
Crops
Grain Alliance’s mix of crops is determined by an overall framework strategy developed by the Company’s
agronomists based on scientific measured data. The
allocation of crops is slightly altered from the framework strategy based on forecasted outputs and
developments on the international commodities markets. The overall goal is to have a production mix that
maximizes returns in a long term perspective and do
not exhaust the land. Therefore Grain Alliance, in the
crop planning, strives to retain the superior fertility
of the Ukrainian soil and at the same time cultivate
crops for which one could estimate the best prices.
The strategy is to reduce sunflower and move more
towards a rotation of corn, soybean, barley and milling
wheat. Sunflower as a crop renders high prices, but at
the same time wear out the soil. Soybean on the other
hand, restores and enriches the soil. Land rotated
from soybean demands less fertilizer. Demand for
soybean is also increasing globally and price of soybean has, during the last decade gradually increased.
Yet, soybean demands more precision in the cultiva-
tion process and thus requires investments into new
more modern equipment. International experience also
points towards the benefits of a crop rotation between
soybean, corn and wheat/barley.
Grain Alliance - BZK
Vasagatan 38
111 20 Stockholm
Sweden
Grain Alliance - BZK
Torfyana street 11
Kiev region
Ukraine
www.grainalliance.com