Under unstable conditions, it is important to have rough control of all business processes – ROSTOK-HOLDING

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APK-Inform

2999

 

Appropriate development strategy amid tough economic environment is one of the key success factors for Ukrainian companies. ROSTOK-HOLDING Group developed its strategy for 5 years and follows intended purposes: it produces new crops, develops elevator capacities, modernizes equipment. Executive director of ROSTOK-HOLDING, Dmitry Kupavtsev told about company’s priorities.

 

- Let’s start with finished planting campaign. What features can you point out?

This year saw long spring. We could not start field works as planned due to low temperatures. Precipitations in the mid-May are not typical for our region and made its adjustments to our plans, so the finishing of planting campaign was delayed.

Actually, we face following situation: everyone is planting and we are waiting, everyone is re-planting and we start to plant.

According to our estimates, precipitations and cold May negatively affected on corn, sunflower, soybean conditions. However, thanks to good rains we can have planned volumes of wheat and barley crops. Total company’s production can reach about 270 thsd tonnes this year.

 

- Tell us about acreages structure in 2016.

ROSTOK-HOLDING clusters produce 5 main crops: winter wheat, spring barley, sunflower, soybean and corn. Acreages structure this year is following: corn – 35%, sunflower – 25%, winter wheat – 19%, soybean – 10%, spring barley – 7%.

Our company put emphasis on both crop rotation based on production needs and crops profitability. We try to concentrate on crops with high margin providing returns, at the same time we follow necessary crop rotation. One of the key rules is to avoid excessive use of sunflower. Typically, sunflower areas reach up to 25% of total area. We try to sow sunflower on the same fields once in 4-5 years.

We consider soybean to be a perspective crop, we produce it during last 3 years. Last year soybean area reached 3.5 thsd ha, in 2016 we increased it to 5.1 thsd ha (9% of total area).

Last 2 years we tried several new crops. We added barley to crop rotation in 2015 and were pleased with results. We will keep work with barley this year and put 3.6 thsd ha (6%) under it. Main reason to add barley was that it is early crop. Barley let us to reduce load on equipment during planting and harvesting campaign and elevators during harvesting peak. Moreover, it is preceding crop for winter wheat. It is important for northern areas, other way we are not able to sow winter wheat on time that lead to number of production problems.

In addition, we tried to sow small volume of peas and millet. Why? Part of our fields is located in northern regions where soil is full of sand and it is difficult to produce corn or soybean. Production of spring crops is easier there. Moreover, early crops in rotation let us to plant winter crops on same fields on time and have good volumes.

- How can you estimate development of ROSTOK-HOLDING Group over last years taking to account tough economic environment in Ukraine?

Under unstable conditions, it is important to have rough control of all business processes. In 2015, we optimized company’s structure – moved to separate line our dairy milk processing plants. We optimized financial structure – tried to minimize production cost, improve technologies and by that increase company’s efficiency.

Currently crop production is our priority. We have 3 clusters – Glukhovskiy, Ichnyanskiy and Novgorod-Severskiy, cultivated land area reach about 60 thsd ha with emphasis on more profitable and needed crops – sunflower, spring barley, winter wheat, corn, soybeans.

Moreover, we keep on invest in technologies and agricultural equipment. Over the last 3 years, we invested about 9 mln USD in re-equipment. In 2015, we launched seeds line on base of Schaliginsloe LLC being the part of ROSTOK-HOLDING. Today it fully provides the Group with barley, soybean and wheat seeds. Last year elevator complex in Novgorod-Severskiy allotted to the Group. Thus, as of the end of 2015 total storage capacities reached 91 thsd tonnes.

As to the capital cost in future, we are ready to offer investment projects, however, today their realization needs financial support of international organizations, banks more than ever.

However, there are a number of negative factors limiting investments capital inflow. Country’s risk are too high. Loan value in the country is still high, banks have tough requirements as to mortgage security, so it is rather difficult to find long-term financing. There are low number of banks able to finance equipment purchase and infrastructural projects.

 

- Your strategy includes increase of land bank. How and for what purpose do plan to increase you land bank?

We plan to increase land bank to 100 thsd ha. It is optimal area for efficient management, innovation implementation, fast solving of problems appeared. We are interested in areas in our region, however, for risks diversification including weather one we also taking to account acquisition of lands in neighbor oblasts to create new cluster.

 

- Which new technologies are you going to implement in 2015/16 MY?

We use wide range of technologies. Annually we conduct careful analysis of soil. Results let us to improve technological map of plant cultivation and optimize structure of fertilizers and crop protection agents implementation. We are testing satellite monitoring of crop conditions. Also we implement precision agriculture.

This year we start to use foliar diagnosis that enlarges soil analysis and provides more detail data regarding level of plant nutrient supply. Moreover, we plan to launch field monitoring with unmanned aircrafts.

 

- Are you going to update fleet this year?

Today, we already have good fleet – more than 200 units of famous brands, all vehicles are modern, bought within last 4 years. However, fleet renovation is still of interest at this time for several farms.

Investment in modern technics let us to improve technological processes during tillage, economize fuel, provide timely harvest and minimize losses. Returns could be seen within the first year after investments.

 

- Your strategy also includes enlargement of elevator capacities. Which volume of simultaneous grain storage you would like to reach this year and in long-term prospect?

Over the last years we built 2 elevator complexes with simultaneous storage capacity at 81 thsd tonnes. In 2015, we bought one more elevator complex with 10 thsd tonnes capacity in Novgorod-Severskiy and now are examining possibility to increase it to 24 thsd tonnes. Modernization of this complex includes construction of the 2nd dump pit, grain dryer with capacity up to 1 thsd tonnes per day for corn, storage facilities with total capacity at 14.5 thsd tonnes and technological equipment productivity at 150 t/h. This will let us to accept up to 60-70 thsd tonnes of grain per year at this place.

If modernization of Novgorod-Severskiy will be successful our total storage capacity to reach 105 thsd tonnes, and total corn drying capacity – 6200 t/day (moisture reduction to 14%).

Reduction of energy consumption on elevator complexes are of interest at this time for us. We are studying options to use alternative fuel to minimize natural gas consumption.

 

- Are you going to develop export of agriculture?

Corn, wheat and soybean produced by ROSTOK-HOLDING are selling on CTP and DAP by international traders (in 2015 the Group supplied for exports 240.2 thsd tonnes of grain and oilseed crops, corn made up 80%). Sunflower and spring barley go for inner processing. In 2015, export profit reached 70% out of total returns.

Export is logical step of our strategy and source of additional profit. We have opportunity to export large volume of grain. All depend on market situation and sufficient resources from our part.

 

Interviewed by Maya Pletenets, APK-Inform Agency

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