Speaking of the fact that Ukraine is an agrarian country was “out of fashion” still not long ago. The situation has changed. Global food and energy crises, Ukraine’s joining the World Trade Organization and the cancellation of export restrictions on agricultural products – all this opens best avenues for Ukraine. According to forecasts, Ukrainian farmers can earn more than USD 4.5 billion on the 2008 crop yield alone. It is no surprise that Ukrainian and foreign investors are increasingly showing interest in the agro-industrial sector. However, how can a profit be gained in agribusiness? What is needed for doing so? Vitaliy Skotsyk, director general of AMACO, the company that has been operating on the Ukrainian market for 15 years now and is the leader in the segment of up-to-date comprehensive technologies for agribusiness, tells about that.

There is an opinion that a farm possessing up-to-date equipment is the main factor of success in agribusiness. Is it true?

Up-to-date equipment is definitely needed. It is impossible to do a profitable farming business using an outdated technical base, the more so as technologies have progressed much since the Soviet times, from which agricultural producers inherited tractors and harvesters. Outdated equipment means crop losses (30-45% of the crop is left in the field), excessive fuel consumption and repair expenses due to equipment breakdown. That is why agricultural enterprises pay much attention to technical modernization. However, I am convinced that the intellectual component is the main factor of success in modern agribusiness. In regard to this, it is very important to realize the difference between “agriculture” and “agribusiness.” What used to be important for an agronomist or collective farm head? To raise a fair crop.

For a businessperson, it is important to gain the maximum possible profit from invested capital. In other words, an “agricultural producer” usually thinks of how to plow, sow and harvest; fertility rate is the foremost for him or her. A businessperson thinks in broader terms; profitability is the foremost for him or her. For example, the biggest crop yield may turn non-profitable, if there are no opportunities to store and process agricultural raw materials. Part of products simply gets out of order, others sell cheap, at the prices offered by middlemen, because there is nowhere to store them.

However, one can “stake” on profitable crops, which are now much in demand…

Today’s record-holders are rape, sunflower, corn and wheat crops. Yet again, it does not make sense to sow them simply for this reason, while disregarding other factors. One should take account of soil peculiarities, total crop areas, tilling techniques, and many other things. If the right approach is applied, one can sow other crops and on a smaller area, and eventually achieve a higher level of profitability.

AMACO specialists start to work on a project with analyzing soil and topographic features, developing crop rotation and flow sheets for all the crops. The final “phases” are transportation, drying and storage, processing and sale. Only taking account of the whole marketing chain and all the market conditions will a farmer turn into a businessperson.

What financial mechanisms are now really effective in the agro-industrial sector? Purchasing machinery, seeds, grain storage facilities or dairy factories requires much money…

Budgeting and cash flow balance are necessary components of a successful agribusiness. It is for this reason that our financial department takes active part in both developing and implementing projects. There are two most favorable mechanisms for agriculture. These are lending and leasing. They are implemented with the assistance of AMACO’s financial partners: Prominvestbank, Nadra bank, Raiffeisen Leasing Aval, and also foreign banks and export agencies of such countries as the USA, Canada, Italy, France, etc. One of the mechanisms is to finance purchasing machinery under international finance programs. That is why drawing financial resources is not a problem.

Almost all major Ukrainian agricultural enterprises cooperate with your company. Do you have anything to offer to an ordinary farmer?

Indeed, among our clients are Nibulon, Agro-Region, Nafcom, Ukrainian Agrarian Investments, Shakhtar Agricultural Company and many others. However, small farms also find optimal solutions to their tasks, they can intensely grow and develop using our techniques. During Field Days, which AMACO conducts in various Ukrainian regions every year, we demonstrate that farms of any size and start-up level can build an effective agribusiness. The foremost is to apply a comprehensive approach, take all possible risks into account and find a professional partner.

Source – Kontrakty, 2008