Agrimoney.com | 23 November 2012
Black Earth Farming lauded the Russian government's decision to keep grain export markets open, despite a poor national harvest, crediting it for helping the group achieve its best quarterly results as a listed company.
The Russian farm operator, whose landbank extends to 310,000 hectares, achieving earnings of 358.8m roubles ($11.6m) for the July-to-September quarter, compared with a loss of 487.4m roubles a year before, and by far its best results since listing in 2007.
The improvement reflected in part the Russian government's decision to eschew curbs on grain exports, of which it has a rich history, despite a poor national harvest, which Black Earth pegged at 70m tonnes, a drop of one-quarter year on year.
'Key factor'
"Clearly, we have significantly benefited from higher prices so far," the group said, saying the freedom over thin exportable supplies had allowed prices to rise to a level where Russian shipments "are now uncompetitive internationally".
"The Russian government's decision not to impose any trade restrictions for grain so far has been a key factor in closing the price gap to international markets."
Russia's decision to maintain exports surprised many commentators, given the full export ban after the drought-hit harvest in 2010.
But it has kept grain farmers' returns exposed to high international prices, besides improving the market standing of the country, which has huge ambitions in grain shipments.
Soil improvements
Black Earth also credited agronomic improvements for its better results, with strong spring crop volumes also a factor in a doubling to 1.45bn roubles ($46.9m) in revenues for the quarter.
The company is undertaking a mass programme of correcting soil acidity and improving soil structure, while spraying off weeds on 110,000 hectares this year, one factor in a rise of 21% in average spring crop yields, after a "disappointing" winter wheat harvest.
However, weather was also a big influence on the company's performance.
"Winter wheat was badly affected by a late spring, immediately followed by a sharp increase in temperatures and consecutive weeks of dry weather in May," Richard Warburton, the Black Earth Farming chief executive, said.
"Conditions were more favourable from June onwards."
Kursk vs Siberia
Indeed, the data, coupled with comments from dairy-to-arable group Ekosem-Agrar, which has some farms nearby, signal that the black earth region around Kursk and Voronezh may have fared relatively well this year while drought hit much of the rest of the country.
Ekosem-Agrar, which on Monday opens subscription of a E60m bond issue to raise funds for expansion, on Tuesday reported "high crop yields" for its black earth operations, with a winter wheat result of nearly 4 tonnes per hectare, an improvement of 1 tonnes per hectare year on year.
Stefan Dürr, the Ekosem managing director and main shareholder, said that the group had "more than offset the lower harvest in Siberia, which suffered from a severe drought, with higher crop yields in the important black soil region".
"This once again proves the benefits of the climatic diversification of our farmland at various locations throughout Russia."
Black Earth's results were well received by investors, who sent the group's shares up 3.5% to SEK 10.40 in morning deals in Stockholm.
Black Earth Farming, whose main shareholders include the family backed Swedish investment companies Vostok Nafta and Kinnevik, controls 318,000 ha in Russia.
Black Earth Farming lauded the Russian government's decision to keep grain export markets open, despite a poor national harvest, crediting it for helping the group achieve its best quarterly results as a listed company.
The Russian farm operator, whose landbank extends to 310,000 hectares, achieving earnings of 358.8m roubles ($11.6m) for the July-to-September quarter, compared with a loss of 487.4m roubles a year before, and by far its best results since listing in 2007.
The improvement reflected in part the Russian government's decision to eschew curbs on grain exports, of which it has a rich history, despite a poor national harvest, which Black Earth pegged at 70m tonnes, a drop of one-quarter year on year.
'Key factor'
"Clearly, we have significantly benefited from higher prices so far," the group said, saying the freedom over thin exportable supplies had allowed prices to rise to a level where Russian shipments "are now uncompetitive internationally".
"The Russian government's decision not to impose any trade restrictions for grain so far has been a key factor in closing the price gap to international markets."
Russia's decision to maintain exports surprised many commentators, given the full export ban after the drought-hit harvest in 2010.
But it has kept grain farmers' returns exposed to high international prices, besides improving the market standing of the country, which has huge ambitions in grain shipments.
Soil improvements
Black Earth also credited agronomic improvements for its better results, with strong spring crop volumes also a factor in a doubling to 1.45bn roubles ($46.9m) in revenues for the quarter.
The company is undertaking a mass programme of correcting soil acidity and improving soil structure, while spraying off weeds on 110,000 hectares this year, one factor in a rise of 21% in average spring crop yields, after a "disappointing" winter wheat harvest.
However, weather was also a big influence on the company's performance.
"Winter wheat was badly affected by a late spring, immediately followed by a sharp increase in temperatures and consecutive weeks of dry weather in May," Richard Warburton, the Black Earth Farming chief executive, said.
"Conditions were more favourable from June onwards."
Kursk vs Siberia
Indeed, the data, coupled with comments from dairy-to-arable group Ekosem-Agrar, which has some farms nearby, signal that the black earth region around Kursk and Voronezh may have fared relatively well this year while drought hit much of the rest of the country.
Ekosem-Agrar, which on Monday opens subscription of a E60m bond issue to raise funds for expansion, on Tuesday reported "high crop yields" for its black earth operations, with a winter wheat result of nearly 4 tonnes per hectare, an improvement of 1 tonnes per hectare year on year.
Stefan Dürr, the Ekosem managing director and main shareholder, said that the group had "more than offset the lower harvest in Siberia, which suffered from a severe drought, with higher crop yields in the important black soil region".
"This once again proves the benefits of the climatic diversification of our farmland at various locations throughout Russia."
Black Earth's results were well received by investors, who sent the group's shares up 3.5% to SEK 10.40 in morning deals in Stockholm.
