Building a business in spite, rather than because. That is right to say about the Agrain company, which just a year ago was a "dark horse" among Ukrainian latifundists. Today, this absolutely open holding cultivates 110 thousand hectares in Ukraine, owns 14 agricultural enterprises in 5 regions and successfully combines crop production, livestock farming, elevator business and logistics services. What principles support the agricultural holding to fulfill this "impossible" mission?

Over the past few years, the Agrain Agro Group was mentioned only in critical publications on litigations and property seizure. In 2017, the company even announced its intention to leave the Ukrainian market, and then went off the media grid for a long time. At the beginning of the year, Latifundist.com conducted a journalistic investigation and found out that the agro group managed to solve all judicial problems and was functioning normally.

Learn more: Invisible Latifundist: Agrain Coming Back

Today Agrain manages farms in the Zhytomyr, Kharkiv, Chernihiv, Odesa, and Cherkasy regions. In total, the company cultivates 110 thousand hectares of farmland. To better understand what the Agrain Agro Group is, let us give consideration to each direction separately.

10 of the 14 enterprises of the holding are engaged in crop production. The land bank of the company is concentrated in the Kyiv, Odesa, Chernihiv, Cherkasy, Zhytomyr and Kharkiv regions. One of the brightest representatives of this direction is Agroprime Holding headed by Larisa Ignat.

Agrain specializes in the production of winter rapeseed, wheat and barley; sunflower, corn and soybeans. The structure of the crop rotation is divided into 55/45 proportion — winter and spring crops, respectively. Winter rapeseed and sunflower are strategic crops for the agricultural holding. These oilseed crops provide the highest profitability. Formerly, the company's crop rotation structure comprised 16 crops, but over time it was decided to optimize the cultivation technology of the main crops and not to focus on niche crops that are less profitable.

Seven years ago, livestock farming in the holding was a lossmaking business supported, to some extent, by the crop production. However, things changed dramatically when the company hired a new livestock managing team headed by Yuri Gudz and was able to overcome the unprofitable livestock industry stereotype. The company closed lossmaking farms, adjusted the diet of the livestock, and replaced the staff.

Agroprime Holding in the Odesa region feeds 16 thousand head of pigs concurrently, and produce about 30 thousand head per year. Three production facilities keep animals of different age groups. The complex last year showed good production and financial results. In 2016, the company started a promising project: pigs weighing 25-30 kg are bought and fattened to the marketing weight of 100-110 kg. Under this scheme, the facility annually produces 6 thousand head.

In 2011, the pig complex of the farm acquired the status of a breeding farm. Only the French selection is bred here, supported by a constant updating of genetics. Two breeds are produced: Large White and Landrace. Vaccinated pigs weighing 70-80 kg are sold throughout Ukraine. In addition, about 1.5 thousand head of sheep is fed. This business is promising, but the number of livestock is limited by the pasture area.

Of course, the company's pig complexes have adjusted to working in extreme Ukrainian conditions when there numerous African swine fever (ASF) outbreaks around. The employment contract includes a ban on keeping pigs at home, instead, 5 kg of pork is given to employees per week. Employees switched to the shift method, every day before work they take a shower, have a change of clothes. The ramp for shipment is located outside the facility to restrict the entry of unauthorized vehicles within a radius of 300-500 m from the complex.

Agrain dairy cattle breeding is concentrated in two farms. The first 700 head farm, including 400 head of dairy herd, — Agroset — is located in the Kharkov region. The second farm — Agrovit — is located in the Cherkassy region with 2000 head of cattle, 700 of which are cows. All companies of the Group produce about 12 tons of milk daily. Agroset cooperates with Wimm-Bill-Dann (PepsiCo), and Agrovit — with Roshen.

15% of Ukraine's livestock is concentrated in Agrain. This is supported by the data of the State Statistical Service of Ukraine. As of January 1, 2018, there was 47.4 thou. head of meat cattle in Ukraine. According to Yuri Gudz, fact there are about 40 thou. head of meat breeds today in Ukraine. Given that Agrain has 6 thou. head, 15% of Ukraine's livestock is concentrated in the company. Meat cattle-breeding is concentrated in the Agricore Holding in the Chernihiv region.

Learn more: Profitable Livestock Business: Who Owns 15% of All Livestock in Ukraine

The company does not deny that during the unprofitable period there were intentions to slaughter a herd and completely abandon meat cattle breeding. But the owner of the company decided to save the business and, as time proved, it was the right choice. The modern technologies, the right local management contributed to the end result. In addition, for the third year almost 90% of beef cattle goes to foreign markets, almost nothing is sold inside the country.

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Last year, almost 80% of cattle was exported to Lebanon. There were limited exports to Georgia and Azerbaijan. "We are selling a Mercedes at the price of Zaporozhets," said the owner five years ago. Back then, the Ukrainian market did not take into account the difference between a bull of a meat breed and a bull of a milk breed. All livestock fetched the same price at the market. Today, the prices significantly differ in domestic and foreign markets. In Ukraine, the bulls of dairy breeds (Holstein, red-brown, black-brown, etc.) cost 45-46 UAH/kg, the specialized meat breeds (Charolais, limousine, Aberdeen, Polissya, etc.) — 60-65 UAH/kg. The difference is c.40-50 per one kilo.

To date, the holding is set to improve sales in live weight. Besides, the task is to further increase the livestock for fattening. Thus, due to the purchase of livestock from third parties, Agricore Holding recently launched a farm designed for 1.5 thousand head of cattle. It is planned to load one ship per month with 500 tons of cattle. Recalculated as a head of cattle, this makes up 1-1.2 thousand head. To achieve this number, Agricore Holding should keep 10-12 thousand bull-calves for fattening. It is expected to take the company 2-3 years.

Agrain's park of agricultural machinery is mainly represented by well-known international brands: John Deere tractors, John Deere and Claas combine harvesters, Horsch crop seeders, Horsch and Kinze forage machines, Berthoud and Amazone sprayers (self-propelled and trailed).

Certainly, good old machines like MTZ and KhTZ tractors are indispensable as well. According to Mikhail Shkatula, chief engineer of the agro group Agrain, such machines are mainly used with trailed sprayers and spreaders of mineral fertilizers. KhTZ machines are also involved in the transportation of water, trailers etc.

Learn more: Engineering Service of Agro Holding "From Scratch": Nuances of Development

An update of the agricultural machinery park is essential if a holding wants to complete work efficiently and on time. Agrain constantly updates its technical park with new models.

In its structure, the agroholding has two elevators, which are listed in the TOP-10 largest grain storages of Ukraine in terms of capacity. Last season, Elevator Agro transshipped 280 thousand tons of grain and 20 thousand tons of sunflower. Every year the company is increasing grain receiving from third parties. For example, since the start of harvesting in 2017/18, more than 130 thousand tons of grain from third-party agricultural producers was received vs. 80-90 thousand tons last season.

At the enterprise, parts of the grain storage are used for different purposes. Silos by KMZ Industries and less powerful grain dryers by Petkus work mainly with wheat, soybeans and sunflower. KMZ Industries silos have different storage capacity, so crops can be sorted by class, grade, presence or absence of GMO, and by oil content for sunflower.

Apart from small farmers, large companies having their own granaries in other regions are delivering products to the elevator. Among those are Kernel, IMC, Ukrainian Dairy Company and others.

Learn more: Elevator Agro: High-Capacity Elevators Have More Advantages

Vertical integration includes the delivery of produce to its destination. Therefore, since 2012, the holding has a logistics company Agrain Trans in its structure. The company has its own grain trucks and provides transportations services for grains and oilseeds. The company operates almost throughout the territory of Ukraine. The base of Agrain Trans is located in Odesa. Aleksandr Morozov is the head of this business direction.

Agrain Trans operates 42 Scania P400, P420, G400 trucks with Schwarzmüller SK-430, Velton and Schmitz Cargobull SKI-24 grain semitrailers, which enable loading up to 25 tons of sunflower seeds in one trailer due to its large capacity.

A one-time rise per trip is 950 tons. Reliability is the company's main criterion for choosing vehicles since the Ukrainian roads impassibility does not allow being frivolous in this matter. Agrain Trans works with many traders, large and small farmers, as well as intermediaries. Internal and external orders are divided in the ratio of 50/50, but the holding's needs are the first priority. Over the year, Agrain Trans transports about 300 thousand tons by its vehicles.

Related story: Aleksandr Morozov: Bad Roads Set the Terms

The price depends on the distance. It is based on the number of routes, the cargo, its cost, etc.

There are two drivers per vehicle. They work in shifts. A shift lasts 15 days. The company's engineering service allows to quickly fix all problems. There are two Volkswagen Transporter minibuses at its disposal. If something happens, specialists load the buses with all the relevant tools and go where they are needed. This saves time spent on fixing the problem.

Nowadays, cargo theft on the route is the number one problem. Therefore, the first thing that was done in Agrain Trans was the development of the structure of its own security service.

Besides, there is strong cooperation in security matters with other companies of Agrain is a common practice. Since the enterprises are "scattered" practically throughout Ukraine, the global control of transportation along the routes is carried out. In addition, there operate special crews monitoring compliance with the established norms for the transport of products. Agrain uses GPS navigation services thus tracking every grain truck.

In daily work GPS navigation is indispensable. Thanks to it, kilometrage is calculated, petrol stations are found, refuelling, speed levels and much more is checked. The specialized Scania program sends daily reports with data on how hard the truck slows down and how much the engine runs idle, whether there was speeding, how much fuel was consumed and a lot of other information. On each machine, speed limitation devices are installed allowing not more than 75 km/h. Indeed, as Aleksandr Morozov noted, there are no roads in Ukraine that can be driven faster.

Learn more: Fury Road: How to Keep Your Grain Shipments out of Harm’s Way

The Agrain agro group adheres in its work to the principle of defending the shareholder interests and does everything so that they are satisfied with both the policy and the amount of grain per share. Aleksandr Panasiuk is in charge of this direction in the holding. He holds the position of the chief specialist of the land department of the agroholding and knows all the nuances of relations with shareholders.

Learn more: Aleksandr Panasiuk: We Aim to Be a Close Friend and Helper to Our Lessors

The agroholding aims at creating job opportunities, paying a competitive salary so that employees defend and protect the interests of the company. Sometimes a person works in the enterprise and at the same time is a shareholder. He receives a good income, the company provides vouchers to a sanatorium for himself and children, his requests are not ignored, but it is also very important for him how much grain he will be given for a share. This is the psychology of the villager.

Related story: Larisa Ignat about the Competition for Farmlands in the South and the Golden Mean in the Privity with Shareholders

Today, Agroprime Holding is a major budget revenue generating company for many districts of Odessa region. Last year, the tax bill, which was remitted by the company to the budgets of all levels, came to about UAH 40 million. According to the data of the tax office, the share of the income tax duty on the leasehold land of the company in the Izmail district is 40%. The same pattern is in other districts. For example, in Bolgrad district, the company cultivates 10% of the land, and the share of the income tax duty on the leasehold land of the company in the district is 27%.

There are additional terms described in the land lease agreements. Those include plowing, cultivation, harvesting, free supply of straw, and if need be — financial assistance for burial and at birth.

There is a number of social projects that are designed to improve the living conditions of villagers. One of such is a large-scale project for the construction of a water supply system in the village of the Cherkasy region. Among other projects are the repair of churches and roads, the reconstruction of wards in the Prilutsk Central Regional Hospital accompanied by the purchase of equipment, furniture and TVs. Investors also support education and culture sectors.

The amount of social assistance contributions is calculated from the expenditure per hectare. On average, it stands at 100-150 UAH/ha. This figure is higher than the common in the market. A hotline was established in Agrain to maintain feedback from shareholders. The need for such an instrument arose from the large region of presence. After all, to preserve the land bank, one needs to be well informed about the situation in places.

Summing up all the above, one may come to the conclusion that Agrain knows its business in overcoming the crisis, in making profitable whatever is not, in breeding pigs in times of the ASF epidemic, in investing with no state support and in standing firmly on its feet. Unfortunately, this is the today for many Ukrainian agricultural holdings. However, more often than not such challenging conditions help companies grow stronger and develop.