AGRICULTURE UKRAINE : FARMGATE
After providing its business services from many years in Ukraine, EUNITE had the ambition to realise an own investment project also. Taken Ukraine’s fertile soil and the personal interest of EUNITE’s management in agriculture, the decision was made to establish an own farm called Farmgate Ukraine.
Its utter size would consist of about 20,000 hectares of land. For Dutch understandings this means a very large farm, however according to Ukrainian’s standards it would be a nice medium sized farming operation.
FUND RAISING : WORST TIMING POSSIBLE
From the beginning, the idea has been to establish a group of Dutch investors, EUNITE being one of these. In order to persuade potential investors, first a investor’s prospectus was being established by us from the beginning of 2008. From September 2008 on EUNITE would start its fund raising efforts. In retro-perspective our timing could not have been any worse, since precisely in our fund raising kick off moment, the global financial crisis burst. As a result, all investment projects were strongly hit. As one can imagine, our investment project in an emerging market with a high risk profile was effected also.
Hence we decided to wait until the investment environment was again somewhat re-vitalised. Although later than expected, we succeeded in attracting various Dutch investors in the joint venture. Various investments in hardware (mainly agricultural machinery) was needed. In addition a significant amount of working capital was also required. The total funding consisted of equity provided by the various shareholders and a loan from a Dutch bank. Grants were not included in this project, hence we realised a 100% commercially funded investment project.
SUCCESSFUL AGRICULTURE UKRAINE
EUNITE has been the driving force in realising this agricultural enterprise in Ukraine. Many hurdles have been encountered and taken, however for the past years the operation has been running successfully.
The first hurdle we had to encounter was Ukrainian legislation. Since farm land is still protected in Ukraine for foreign investors, we decided to establish long lasting lease agreements with numerous land owners in the Western part of Ukraine. Over the years the farm has grown to a total of 7,000 hectares currently. Our main crops are wheat, barley, corn, soybeans and rapeseed and we also have a small dairy and pork divisions.
Our ambition remains to grow to 20,000 hectares while being in the Ukrainian top 10% in terms of technical results such as yields per hectare and profitability per ton produced. Farmgate’s strategy is to implement global best practices to achieve superior yields out of Ukraine’s famous fertile black earth at competitive costs.
Next to being a shareholder in the joint venture, EUNITE has been responsible for the overall and financial management of the farm from its very beginning.