On Friday Farmers Weekly carries its latest Global Assignment
feature. In it Charles Abel explains how one British-based business
is turning Ukraine’s former bread-basket to truly low-cost arable
farming. Here’s a preview.
Ukraine has huge farming potential, but is clogged with small
farms, growing patch-work quilts of near-subsistence cropping,
between thousands of hectares of land abandoned twelve years.
This is bizarre, since the soil is superb black loam, the rainfall
in western Ukraine at least is a very adequate 700mm, and long hot
summer days ensure 6t/ha of milling wheat and 4t/ha of oilseed rape
can be harvested under clear blue skies.
The trouble is there’s virtually no investment. Nobody will back
what this former breadbasket of the Soviet Union. Nobody, that is,
apart from British entrepreneur Richard Spinks and his
colleagues.
Operating as Landkom, and with multi-million pound backing from
four international hedge funds, they have already secured
over 56,000ha of prime arable land. As I left the
country they were heading off to assess a further 180,000ha. Their
goal is 500,000ha in five years time.
It’s mind boggling. But its not pie in the sky. A blend of
commercial skills, political footwork and clear routes into the
global financial markets means Landkom is growing very fast indeed.
It is already the third largest farmer in Ukraine, after Cargill
and ADM. Soon it will be the largest.
Just two years ago prime mover Richard Spinks started, having
sold a multi-million pound fish processing firm in Poland and
relocated to western Ukraine, his wife’s homeland. Expertise gained
while dealing with Russian fishermen has proven useful.
“I’m not a farmer and never have been,” he admits. But getting
the most from assets and securing more is his forte. Now in his
third season of cropping, he is personally supervising the
preparation of 10,000ha of ground for oilseed rape drilling in four
weeks.
For the first two seasons Mr Spinks and his colleagues financed the
farming themselves. Three months ago their backers came
on board, injecting an initial £7m. SAC agronomy
advice complements local agronomists.
Due diligence was conducted by Credit Suisse and three UK law
firms structured the lease agreement. Since then 16,000ha of arable
land has been formally registered, drivers have been hired and
machines bought.
Crop marketing is co-ordinated from Landkom’s headquarters in
Stevenage, Herts. Supplying biofuel processors in the EU is one
option, 64t railway wagons being easy to load within 11km of the
main farm premises.
Securing land has been a major exercise, involving careful
relationship building with key political influencers and local
government officials. “It is where we have secured the business,”
stresses Mr Spinks.
Fortuitously western Ukraine offers ideal growing conditions.
“Three hundred kilometres further east the soil is still as good,
but rainfall is half what it is here, slashing 7million t from
expected output through drought this year, for example,” he
notes.
The business is booming. “Prices are way ahead of budget and
costs are lower than we estimated.” Enough crop is sold forward to
cover operating costs and the rest is traded from Landkom’s
Stevenage office in the UK.
So will Landkom hit its 500,000ha land acquisition
target? Securing land agreements is a full-time task, employing a
team of twenty at one time. Few would bet against Landkom’s
success. Listing on London’s AIM market for smaller growing
companies in November will indicate ITS true potential.
Gallery pages 1
Gallery pages 2
Gallery pages 3
Ukraine links
Wikipedia/Ukraine
The
Economist/Ukraine
Scottish Agricultural College/Ukraine Bio Fuels
Scottish
Agricultural Colleg/Ukraine
London Stock
Exchange