Aleksei Beskletko 26.02.2018
Svarog West Group:
Business Card of the Corporation
In the beginning there was sugar; later there came an idea to develop agricultural business and focus on horticulture. Those were the first steps to creating a powerful and fast evolving agricultural holding Svarog West Group in 2003. Today its land bank amounts to 80 thousand hectares. studied the history of the corporation and looked into its future together with its management. Read the chronicle of Svarog West Group with us.
Svarog West Group Chronicle
Svarog West Group Corporation started out at TH Shepetivka sugar agricultural division which supplied the company with raw materials. The corporation's initial land bank comprised 4 thousand ha but it was steadily growing as the company introduced new branches, improved its management strategies and production processes.
An agricultural division of sugar beet production was formed at TH Shepetivka sugar.
The land bank increased from 4 thousand ha to 13 thousand ha. The company opened a beef and dairy cattle breeding branch and formed machine and tractors stations (MTS).
On December 27, the corporation was officially registered under the name Svarog-2006 with 21 thousand ha of land and six farms in Khmelnytsky region. The company began vegetable cultivation.
The corporation spread into Chernivtsi region and increased its land bank to 42 thousand ha. Fruit farming became its new business branch. A modern dairy farm was set in operation in the village of Medvedivka (Shepetivka district, Khmelnytsky region).
The company rebranded and got a new name – Svarog West Group. Its land bank increased to 51 thousand ha.
The land bank increased to 55 thousand ha. The corporation began exporting its products and set two modern fruit storages in operation. Legal restructuring, an international audit, and transition to IFRS (Deloitte) followed.
As several more farms in Khmelnytsky region joined the corporation, its land bank reached 70 thousand ha. Another dairy farm was set in operation in the village of Savertsi (Shepetivka district, Khmelnytsky region). The legal restructuring was complete.
The corporation's land bank reached its current size of 80 thousand ha. Svarog West Group built the most powerful seed plant in Western Ukraine and set in operation a modern fruit storage and a line of juice production processing its very own raw materials.
The company started cultivating the land in Zhytomyr region, set in operation another fruit storage, and increased its silo capacities.
Svarog West Group launched a program of growing and processing niche crops (bean, gymnospermous pumpkin, flax, mustard) on an industrial scale and developed a real-time automated management system.
The corporation was certified for exporting to China and set in operation a new processing line for pumpkin seed.
Svarog West Group Corporation started investing in IT and biotechnology innovations.
On March 2, the corporation underwent restructuring. The company won a prestigious award
The Leader of the Year 2017.
Apart from that, Svarog West Group has been maintaining its leading positions in the rating of the most efficient agricultural companies in Ukraine over the last three years.
"We have been generating a fairly stable EBITDA of USD 450-500 per hectare over the last 3 years which is a very high figure."

Chief Financial Officer
Corporation's Top Management
As noted earlier, Svarog West Group changed its management structure in 2017. The corporation made a decision to select a Board of Directors and restructure the management system. Today shareholders appoint the chairman and members of the Board of Directors. The latter governing body includes executive and non-executive directors.
Chairman of the Board of Directors
Member of the Board of Directors, Chief Financial Officer
Member of the Board of Directors, Chief Commercial Officer
Member of the Board of Directors, Chief Legal Officer
Member of the Board of Directors, CEO of the "Crop Production" Project
Member of the Board of Directors, CEO of the "Livestock Farming" Project
Member of the Board of Directors, Non-Executive Director
Thus, the Board of Directors of Svarog West Group consists of directors with executive functions and an independent director who performs the audit of the company. Besides, there are two committees on the Board: a compensation committee and an audit and nomination committee. Each member of the Board is in charge of his office.
"Changes in the company's management structure depend on the needs of the market. We optimized the structure itself and merged similar branches. There was a personnel optimization which did not affect the functionality of the corporation as a whole. Nevertheless, it helped to transform the structure and increased efficiency while maintaining the usual pace of work."

Oleksandr Vodzinskyi
Chief Legal Officer
Crop Production
According to Chief Agronomist Fylymon Antoniuk, the company relies on the classical technology of crop cultivation. The agroholding produces not only traditional crops (sunflower, sugar beet, corn, winter wheat, soybeans) but also niche ones (flax, gymnosperm pumpkin, beans, brewing barley, medicinal camomile, etc.). Apart from that, Svarog also plans to develop organic agriculture.
"In the next two years, we want to focus on organic farming. It will cover 2.5 thousand ha. If we go into this business, we will need to purchase machinery that meets the requirements for organic production. It will also entail building storages and processing facilities for organic products."

Fylymon Antoniuk
Chief Agronomist
The corporation has established a separate company Lotivka Organic for the development of the organic branch which deals with production and exports.
Crop production in Svarog West Group is also remarkable for the use of the most up-to-date high-tech machinery. Nevertheless, the specialists of the agricultural holding work on improving different machinery, in particular, sowing complexes.
"It does not mean we have constructed a sowing complex by ourselves. We used the sowing machine VALKIRIA, put it on a frame, and took a container that can be filled up for 10 hectares. And we adjusted the sprayer so that, if necessary, the fertilizer is applied directly to the row and gets directly to the seeds. We made a roller to minimize unnecessary rolling. Such a design is used exclusively by Svarog. It was customized to our needs."

Fylymon Antoniuk
Chief Agronomist
At the moment, the company's machinery includes around 600 vehicles. The corporation primarily invests into brands that stood the test of time: Case IH, John Deere, Fendt, New Holland, Claas, Horsch, A3 Tech.

The company considers precision agriculture its main advantage.
Precision agriculture in Svarog West Group
For the harvest of 2018, Svarog planted 14.3 thou. ha of winter wheat (primarily of the Strube selection) and 3 675 ha of Lembke winter rapeseed. The company's agronomic service reports that all the crops are now in good and satisfactory condition. In addition to that, the holding also planted winter rye of the most popular KWS breeding hybrids yielding 7.7 t/ha under the contract with the Vasilkovsky bakery plant.
The organic branch of the production currently covers 2.5 thou. ha. The company primarily uses the local selection of grain, for instance wheat, because Ukrainian varieties are more resistant to pests.
Seed production
In 2012, Svarog West Group set a new plant Lotivka Elite into operation. The plant specializes in a closed cycle seed production: field – plant – field.
Demo areas of Svarog West Group
The specialists at the plant begin their work with the seed in the field. They study the varieties and select the most yielding and weather tolerant ones. Then, they decide on the best dates for planting, seeding rates, and the system of fertilizer and plant-protection application and finally, they plant the elite varieties. After harvesting, the crop is delivered to the plant for further treatment.
The seed plant in Lotivka village, Shepetivka district, Khmelnytsky region with the production capacity of 15 tons of seed per hour specializes in processing, calibration, treatment, and packing of grain, cereal, and legume seed. It was built based on the American Benelux drier. The plant is equipped with high-tech Cimbria machinery (Denmark).
The production processes and the machinery are being constantly modernized at the plant. It takes only five people per shift to control the production since all the main processes are automatized.
The seed plant in Lotivka village
Svarog West Group grows and treats seed in partnership with such seed companies as Saatbau, Syngenta, Prograin, KWS, Saaten Union, Limagrain, and Probstdorfer.

According to the latest data, the plant produced 5.6 thousand tons of winter grain seed in 2017.
Elevator capacities
To date, the corporation has 9 grain receiving enterprises capable of providing a simultaneous storage of about 400 thousand tons of cereals and legumes in Chernivtsi and Khmelnytsky regions.
"Technically speaking, our company has great capacities. Our 9 elevators can provide storage for about 400 thousand tons of crop. This is a considerable amount. However due to the increased yield of a number of crops, we will have to significantly upgrade the elevator base and enhance the capacity of our elevators in the near future."

Serhii Filiuk
CEO of the "Crop Production" Project
Apart from that, Svarog makes effective use of the Argentinean silobag technology of grain storage. It has helped to increase the storage capacity of the company to 500 thousand tons.
Fruit farming
Over the last ten years, Svarog has been actively developing fruit farming alongside crop production. From 2011 to 2015, the company increased the garden areas from 400 to 505 hectares.
84% of the garden is given to apple trees of Idared, Jonagold, Champion, Gloucester, Golden Delicious, Reinette Simirenko and others. Pears in the Svarog garden are of the two types: Noyabrska and Yablunivska.

Apart from that, the agroholding has started raspberry cultivation on 1.6 hectares in the last few years.
Svarog West Group gardens
The corporation uses intensive technology of trellis and drip irrigation for garden growing and applies company-produced biohumus for fertilization. The holding built its own modern fruit storages with a total capacity of 8.7 thousand tons. The controlled atmosphere of the storages allows keeping the fruit fresh and unblemished for almost a year.
Svarog West Group fruit storage
Thus, the company supplies the market with fresh apples and premium segment pears all year round. The whole process of fruit production from sowing to harvesting is certified according to the highest international standards. The top quality of the final product is ensured by an optical sorting line with a capacity of 4-5 tons per hour that sorts apples and pears by size and color.
Podilskyi Gospodar (Shepetivka and Krasylivka districts, Khmelnytsky region) and ATZT Myrne (Sokyryansk and Kytsman districts, Chernivtsi region) represent the animal husbandry branch of Svarog West Group. The two companies collectively own 10 dairy farms and have a status of breeding reproducers.
The most powerful dairy complexes of the corporation — Medvedivka and Lotivka — are located in Shepetivka district, Khmelnytsky region. There are around 1000 dairy cows in each complex. The total livestock of Svarog West Group consists of 9 thousand head of cattle with 4.3 thousand being dairy cows.
"Our main focus is dairy production, so we try to increase milk yields. Now we produce 65 tons of extra class milk a day and deliver it to Molokija, Roshen, KOMO."

Nataliia Shmatlai
CEO of the "Livestock Farming" Project
The CEO of the "Livestock Farming" Project adds that the situation in the dairy business is looking up. She explains that the current price for a liter of milk is UAH 2-3 higher than the last year.
According to Nataliia Shmatlai, dairy farms aim to increase milk yields from forage fed cows to 6.5 thousand kg per cow a year.
"When we started out in the livestock industry, it was more of a social project for us. Now our objective is to turn it into a profitable business. Based on the figures we got in 2017, it has become one."

Nataliia Shmatlai,
CEO of the "Livestock Farming" Project
Svarog West Group has been getting profit from the livestock branch since 2015 due to economic factors (a rise in the milk price), optimization of production processes, and weather conditions that allowed the company to harvest better feeds. According to Nataliia Shmatlai, the potential of a "pure" genetic herd is 35% higher than of other cattle. Therefore, the company focuses on genetics.
Corporate social responsibility
The company's motto is "With people and for people." In accord with the motto, the holding started an eponymous program of social investment in 2006. From 2010 to 2017, the company was working on a joint project with a charity "Strengthening Communities."

Currently, the holding supports educational and sports initiatives in the communities where it operates within its corporate social responsibility (CSR) programs. For example, owing to the programs "My career in Svarog" and "A conscious choice," schoolchildren of the villages can get a good idea of agribusiness and decide on a future career. The company also offers internships for students of agricultural universities of different levels of accreditation.
"Over the last 10 years, the company invested dozen millions UAH in CSR. I should mention that the amount of money allocated to the program used to correlate with the hectares but the company's CSR financing policy has changed. Now it is defined by a yearly business plan."

Olena Shershnova
Director of Corporate Communications and Public Relations Department
Like any other successful holding, Svarog West Group has become a starting platform for various projects over the years, including business, social, economic, educational, and investment projects. Some of them have lost their relevance; others have eventually evolved into independent branches of the company, production lines or even separate enterprises.

At the rise of the cooperative movement revival in Khmelnytsky region in 2015-2016, Svarog West Group supported the creation of the First National Agricultural Cooperative (FNAC) and provided the project with ideas and financial support. Later, the companies parted ways.
Most importantly, Svarog West Group provides Ukrainian villages with jobs. The corporation now employs about 3.5 thousand people which makes it one of the biggest employers in the regions of its presence. Moreover, according to the international company Korn Ferry Hay Group, the corporation is one of the seven best employers in Ukraine among agroholdings.
With future in mind
According to the preliminary results of 2017, Svarog West Group fulfilled its business plan for the year. Serhii Zuiev expects the company to reach a high EBITDA of more than 450 USD per ha. It is feasible due to the good yield indicators of the main crops despite unfavorable weather and climate conditions in the regions.
"We have greatly reduced our expenses and it helped us to reach the desired level of profitability."

Serhii Zuiev
Chief Financial Officer
Serhii Zuiev believes that in the future Svarog needs to focus on improving operational efficiency.
"The main competitive advantage in commodity business lies in attaining cost leadership. This means being the most efficient in terms of both expenses and productivity."

Serhii Zuiev
Chief Financial Officer
Therefore, the investment priority of Svarog West Group will shift from expanding the land bank, production, and elevator capacities to innovative technologies and organic farming.
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