Ukraine’s Largest Agricultural GroupUnveils Sector’s Potential for Growth and Investment Success

The vertical integration enables the group to embrace entire industries. The best example of how that works is ULF’s egg segment operated by Avangardco IPL.

Avangardco IPL effectively covers the whole value chain of the egg-farming industry, from layer breeding to egg processing and feed production.

Each link in the chain is a profit centre contributing its earnings to Avangardco IPL’s consolidated bottom line, which represents a profit margin earned off an entire industry.

‘‘Our success,’’ further explains Oleg Bakhmatyuk, ‘‘also builds on extensive complementarities that exist between individual business segments,generating powerful synergies.’’

While the synergetic effects of ULF’s unique horizontal integration may not always be captured by standard metrics, their impact is crucial to the performance of contributing segments.

For example, the profit margin earned by the Crops segment strongly depends on the cost at which it receives inputs from Agricultural Services (AS), which, in its turn, reflects the large discounts secured by AS from input vendors as a big buyer. Another powerful synergy binds Crops and Cattle. Any grain waste and inferior-quality grain,discarded to meet customers’ stringent specifications, is used as fodder by the Cattle segment instead of being wasted. Sugar beets grown by ULF to make sugar serve as the best partner of corn in crop rotation boosting corn yields by up to 25%.

‘‘ULF’s business model,’’ continues OlegBakhmatyuk, ‘‘includes several critical assets that dramatically enhance our ability to control the supply chain.’’

ULF owns 1.7 million metric tonnes of modern grain-storage space, which enables the group to preserve the crop once harvested, store it until shipment and deliver to customers while meeting their strict quality standards.

As part of the group’s successful efforts to gain access to the vast grain market of China, ULF has upgraded to US quality standards for corn recognised as the world’s most stringent and required by China of all eligible corn importers. Ukrlandfarming is the only privately held Ukrainian company certified to sell corn to China.

‘‘Innovation is another critical component of our success,’’ continues Oleg Bakhmatyuk,‘‘we use state-of-the art cultivation techniques and practice precision farming.’’

Precision farming is a modern farming concept that only highly-advanced agribusinesses can practice to the extent that it requires the use of satellite imagery and geospatial technologies.

‘‘And last but not least,’’ concludes OlegBakhmatyuk, ‘our success builds on our most valuable asset, which is our people.’

Ukrlandfarming PLC employs 22,000 permanent staff andduring sowing and harvesting campaigns, the group hires temporary workers bringing the total headcount to 30,000.

Ukrlandfarming PLC continues to grow. In the next 2 years, the group intends to reach 8.6 billion eggs in annual output while doubling its production of core crops from 2 million metric tonnes per year as of 2012 to nearly 4 million tons in the next five years.

Apart from that, ULF pursues plans of becoming a global grain trader by building grain pipelines from Ukraine to its key markets in the Middle East, North Africa, the EU and China. Ukraine will continue to leverage its unique geographical situation at the crossroads of major trade routes with broad sea access, and ULF will continue to grow along with Ukraine’s agriculture sector.