Agribusinesses decide on wheat acreage: who plans to cut plantings
Most agricultural holdings do not plan to reduce their winter wheat acreage despite the difficult situation in the grain market. For some companies, wheat remains an important part of crop rotation and the key preceding crop for rapeseed. At the same time, some companies plan to give up part of their grain acreage in favour of more profitable oilseeds, company representatives told at the LFM international conference held by UCAB.
TAS Agro does not plan to reduce its wheat acreage. According to the company’s CEO Oleg Zapletniuk, it would be incorrect to assess the economics of wheat separately from rapeseed, as wheat is its main predecessor crop.
“We will not reduce it because it is the main predecessor for rapeseed. Accordingly, to calculate the profitability of wheat, you need to calculate it together with rapeseed over a two-year period. And the numbers work out quite well,” he said.
According to Zapletniuk, rapeseed currently generates a significant share of the company’s revenue and liquidity. TAS Agro has already planted the planned 15,000 ha of rapeseed, while wheat sowing is ongoing.
IMC is following a similar strategy. The company’s CEO Oleksandr Verzhykhovskyi said it would not reduce its wheat acreage and plans to plant 2,700 ha of the crop.
IMC said the decision is driven by the need to maintain crop rotation and avoid making sharp changes to its crop structure in response to short-term market conditions.
“As practice and our experience show, this is a justified strategy in the medium and long term,” Verzhykhovskyi said.
Eridon also does not plan to reduce its wheat acreage. According to the company’s owner Serhii Krolevets, wheat will be planted at roughly last year’s level. At the same time, due to drought, the company has almost abandoned rapeseed sowing, while wheat is effectively being planted into dry soil in anticipation of rainfall.
However, not all companies are prepared to maintain their current crop structure. HarvEast CEO Dmytro Skorniakov said the company plans to reduce wheat and corn acreage in favour of sunflower and soybeans.
In his view, under current conditions, the economics of the coming season are more important for the business, while oilseeds currently look more attractive than grains.
“You need to calculate it over two years, but I don’t see those two years ahead of us right now. We need to get through one year without going bankrupt. So oilseeds make much more sense economically now, and we will increase sunflower and soybeans while reducing corn and wheat,” Skorniakov said.
Maria Osyka, director of strategic development at Agroprosperis Group, said the company will plant only 10,000 ha of seed wheat. At the same time, 55,000 ha have been allocated to rapeseed this season.