BZK Grain Alliance AB is a modern agricultural producer with fields in the central parts of Ukraine. The company is founded based on the analysis that the global population is growing rapidly and is estimated to rise from current 7.8 bln people to over 9 bln in 2050. At the same time the arable area is limited, thus each available hectare of agricultural land has to feed more and more people.
To make things more precarious global consumer patterns are also changing due to the economic growth and improving standards of living in developing economies. People with an improved standard of living want to consume more meat and dairy products, which also drive the global food consumption. The development has created new opportunities within the agriculture sector, especially in countries with low cost of land and labor with developed road, railroad and port infrastructure. These are the main assumptions behind the investments into Grain Alliance. Ukraine meets all criteria; it has the most fertile soils, the so called black earth, in the world. In addition to this Ukraine has a well developed infrastructure with over 23,000 km of railroad and 18 sea ports along the black sea and the sea of Azov coast line. The geographical location of Ukraine is also favorable, with a close proximity to the major importer markets of the world; Africa, Asia and the Middle East.
Currently the company controls some 58,000 hectares, of which 56,000 hectares are cultivated, in five regions; Kyiv, Cherkassy, north and south Poltava and Chernigiv. Each region is cultivating approximately 8,000-18,000 ha. The business is well-integrated with short distances to fields and storage facilities. Grain Alliance has six grain elevators, four of which have rail road access, with a total capacity of 260,000 tons. The storage, elevators, gives the company the opportunity to sell when prices are favorable.
The core of Grain Alliance has over 20 years of successful large scale farming, achieving yields well above the Ukrainian average. In May 2008 CA and some other minor shareholders entered into the company via a new share issue. The new constellation bought out one of the two existing partners and under CA’s active ownership the company was restructured and enhanced, thus creating a solid platform for further growth, expansion and development. Since then the company land bank has grown in average 5 % per year and the profitability has increased substantially.
Because of the Grain Alliance´s strong financial performance, the company has been able to cultivate a more complex set of grains, such as corn, soybean and sunflower, which require more working capital but renders higher margins. The investments into storage have enabled the company to store and time sales better.
Despite the fact that the last years has been difficult for Ukraine, Grain Alliance managed to generate healthy profits and the financial position of the Company is still very strong. The outlook for Grain Alliance is positive and the Company aims to further expand the cultivated area and improve the production methods.
CA group ownership interest in BZK Grain Alliance is 99.9 % in 2022.
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