Kernel lost control of 15% of its farmland over russian invasion
Kernel estimates the drop in grains and oilseeds production in Ukraine at 35-40% as a result of russia's invasion of Ukraine, Forbes writes.
The company notes in its interim report that the invasion of russian troops into the territory of Ukraine reduced areas available for spring sowing by 39% to 4.7 mln ha. An additional risk for the sowing campaign is buried in a lack of seeds, mineral fertilizers and others needed for crops’ growing, which further may affect future yield decline. Consequently, reduced volumes of future harvest may lead to changes in future prices and food availability on a global level, as in last year’s Ukraine had a 14% global market share of corn, sunflower oil and other food products.
"The war has significantly changed business processes at Kernel. Of the 11 regions where the agroholding's land bank is located, 4 are partially temporarily occupied by the russian military (Kharkiv, Mykolaiv, Chernihiv and Sumy). The Group insured certain of its critical fixed assets against the risk of war but of approximately 28% of their book value," the report reads.
72,000 ha of farmland leased by Kernel is occupied or is in the front-line zone (14.5% of the company's total land bank).
"The situation is constantly changing. Some areas are being freed, some are not," the company says.
None of the Group’s critical facilities or infrastructure has suffered any significant damage. Kernel’s assets with a carrying value of USD 0.6 mln were destroyed and two oil extraction plants in Vovchansk and Prykolotne, and silos of USD 49 mln are currently located in non-controlled territories. Commodities owned by the company are in a safe condition and properly stored, but approximately 15% of commodities (based on value) are stored in regions fully or partially controlled by russia. Inventory of USD 182 mln is located on temporary occupied areas.
Kernel expects to plant spring crops on 422,000 ha out of its total land bank of 494,000 ha. Fieldwork is already underway on 88,000 ha. The agricultural holding is supplied with fuel, seeds and fertilizers.
The company's management projects the company's performance "given the uncertainties prevalent in Ukraine caused by the russian invasion."
