Expertise

Agricultural Sector

The agricultural sector is one of the most dynamically developing segments of Ukraine’s economy. In recent years, prominent transformations have been tracked in this branch. Particularly, the nature of attracting investments has suffered profound changes. Interest for Initial Public offerings at the stock market has decreased, which can be tied to the lingering debt crisis in Europe that has noticeably influenced liquidity of investors. No Ukrainian agricultural companies were represented in IPOs in 2012, and none of the companies provided a Secondary Public offering; while according to expert estimations in 2011 this source brought about US $100 million of investments.

The tendency of listing an IPO has been replaced by the significant growth of mergers and acquisitions of agricultural companies, which was mostly connected with the expectation of a cancellation of a land sale suspension. In 2012, the most active player on the M&A market was Ukrlandfarming. The acquisition of several large agricultural companies at once made it the biggest by quantity of cultivated land in Eastern Europe with the holding’s land bank amounting to 500 thousand hectares. NCH Capital cultivates about 450 thousand hectares. Kernel has more than doubled its land bank, so now it constitutes about 330 thousand hectares.

Over the past three years, agricultural holdings expanded the amount of controlled land bank from 8% to 11%, increased capacities for grain storage by 1 ml. tons, and invested into chicken production as well as construction of feed plants and other components of the production chain. All the above-mentioned changes caused risk diversification for large agricultural companies, which noticeably increased the level of their competitive advantage, while small and middle-sized farms had much less opportunities in such conditions.

The main problem of small farms is financing deficit, while large market players are in much more beneficial situations. By means of volume, larger farms produce much cheaper and better quality yields, have access to export, and receive profit in foreign currency thus facing fewer currency risks. One could presuppose that in the near future middle-sized and small business in the agricultural sector will either cooperate together or will be acquired by holdings, which are constantly building up their power.

Against the background of structural changes in all areas of the agricultural sector, there has been a lack of qualified managers of operating units and system senior managers, who could efficiently build up and structure business processes. Therefore, agricultural practices take a significant part of industrial expertise from Alex Polin We effectively cooperate with large, vertically integrated holdings, helping companies attract highly skilled professionals for their key managerial positions. Due to their collected experience, our consultants efficiently perform the most complicated international and regional searches for different functional and industrial specializations in almost all agricultural sectors.
 

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