Crisis became the test of strength, and stimulus to improve the efficiency - ASTARTA

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APK-Inform

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It is very important for Ukrainian agrarians to enter the global markets in order to get currency receipts and hedge the risks. Astarta Company is following the strategy of development and increases the rates in the major segments of its activity. We interviewed Victor Ivanchik who is the General Director of Astarta Company on how does the company plan to reach positive results and to develop business in the future.

 

- There is a harvesting campaign in Ukraine to date. What harvest does Astarta expect and what is the planting areas structure?

In 2015 weather conditions have been the same as in previous years: limited precipitations in the vegetation period and rather hot summer. And it is not in Ukraine only: this year El Nino caused the climatic balance destroy in the world bringing extremely high temperatures. We change our technologies for the mentioned tendency. Optimize crop rotation, use varieties mostly enduring for shortage of precipitations and high temperatures.

In 2015 planted areas totaled 210 thsd ha and 30 thsd ha are feed crops. Thus wheat share increased to 22% as opposed to 19% in 2014, sunflower – to 11 (3)%, soybean share remained at 30%, and sugar beet share decreased to 16 (23)%. In particular soybean planted areas totaled 62 thsd ha, corn – 42 thsd ha, sunflower – 23 thsd ha, sugar beet – 34 thsd ha.

In 2015 Astarta produced nearly 270 thsd tonnes of early grains, including wheat, barley, rye. Harvested areas totaled 50 thsd ha. Winter wheat average yield totaled 5.5 t/ha.

 

- What quality are harvested grains and oilseeds?

Quality rate is good. Thus we harvested 270 thsd tonnes of wheat and nearly 30% of them is milling grain. Poltava oblast soybeans are in very good condition. I need to underline we do not use GM in any of our crops. So, we started supplies of soybean oil to China for food proposes. Soybean meal parameters are regulated under the personal demand.

 

- How do you estimate the prospects of soybean processing volumes increase in Ukraine? Does Astarta plan to extend the business segment?

Soybean production and processing is rather prospective. In the recent years soybean has been the main crop in the crop rotation in Astarta because we are willing to supply our processing plant with high-qualitative raw-material.

 

- How do you see the condition of the cattle-breeding industry of Ukraine? What factors are limiting its development?

To date there are unfavorable conditions for the cattle-breeding industry in the country: they face difficulties with financing, purchasing power fall, and milk production costs increase. The mentioned factors cause milk production volumes decline, including the large-scale producers.

The processors also face difficulties: the domestic demand is low, the Customs Union countries exports is limited, global prices are at their bottom. Unfortunately the government by initiation of the VAT cancellation for the producers of agrarian products is worsening the complicated situation instead of the supporting the industry.

 

- What products does Astarta export and what does the company sell on the domestic market? Do you plan to extend the sales markets and to what direction?

In the first half of 2015 we increased the share of exports in monetary terms to 38% compared to 20% in the same period of 2014.

The share of exports in volume terms is the following: grains and oilseeds – nearly 90% (exports to the EU countries, Middle East and Asia), soybean by-products – nearly 50% (CIS countries, EU and Asia), sugar and following products – up to 10%, and milk is sold on the domestic market.

The prospects of new markets opening is in Asia and China, showing the active demand rise for products we produce.

 

- Currency market volatility in Ukraine in particular is negatively influencing the agricultural production development. How does your company structure allow to escape the appearing problems and risks?

Of course Astarta the same as other companies used to show loss caused by currency market devaluation, but it is not as bad as it seems it is. Because the loss is lowering especially if you have exports. We set a task to increase the share of exports income in order to manage the currency risks and service the foreign exchange-denominated debt service obligations and we are reaching the aim. Despite the complicated situation in a year and a half we decrease the clear bank debt of the company by 80 mln USD.

 

- What agrarian policy should be provided by the government? What problems of agriculture should be solved in the first line in order to provide its development in such complicated situation?

First of all the policy should be consistent and aimed at the administrative impact recution on the agricultural business. We need a balanced approach to taxation.

Today in Ukraine loans are very short term and cost 20-25% per annum, while in Europe - an average of 2-3%. Also, developed countries are investing for the farmers support. Even in Argentina, which has been in a state of technical default for a while, the companies like Astartsa borrow money at 6%. Thus, despite the difficult economic conditions, Ukrainian companies continue to invest in the development and construction of new enterprises.

 

- What are the company's plans for future?

We believe in the success and approaches by all means a time when we can enable our investment program which was "slowed down" two years ago. But still we were prepared for extreme situations both in terms of loan portfolio, and for incomplete assets. Two years ago, we completed the construction of the three enterprises and conducted a major modernization of sugar factories.

To date, everyone is waiting for the tipping point when the worst is over and we are on the path of recovery including socio-political situation.

Among the priorities we see the potential in the segment of organic farming and are planning to promote it in Ukraine, because our country has a historical experience is an invaluable and unique climatic conditions. Thus 150 years ago in what is now Poltava region there was formed the progressive agricultural community, whose members - landowners, scientists, agronomists - have managed to achieve a breakthrough in breeding, crop rotation technology. We want to continue this work and recreate "Poltava Association of Agriculture" in order to unite there the manufacturers who follow the principles of preservation of soil fertility and environmentally friendly production and organic farming to the economic incentive.

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