As the Company develops and its land bank grows, it becomes more and more important that acquired land assets are cultivated and cropped in accordance with western best practice. To ensure this is achieved the Company has developed a methodology to restore mismanaged farmland and has established routines for how the land should be cultivated thereafter.
RESTORATION OF MISMANAGED FARMLAND
The farmland which Black Earth Farming acquires is, in general, in such a state that it cannot be cultivated immediately. The Company must therefore take extensive actions to restore and improve the condition of the land, which is important partly because restored land generates higher yields and partly since an appreciation of the land value is expected as a result. The methodology which is extensive and resource consuming includes steps such as: Chemical analysis, Disk tilling, Deep tilling, and Levelling.
The process of restoring land to excellent condition requires access to modern machinery which the Company acquires from internationally well-established producers.
The Company continuously performs market analyses with a view to decide what crops to produce. Currently, there is a shortage of high quality agricultural produce in Russia which has driven the prices to a historically high level The Company is presently producing milling wheat and malting barley to benefit from high price levels for these crops. However, Black Earth Farming cannot only grow the crops with the highest margins, it must also consider operational limitations such as crop rotation needs, usage of machinery, weather and climatic conditions and harvest and drilling periods.
The Company composes a crop rotation scheme with the purpose to boost productivity and achieve long-term operational efficiency. Each field should be cultivated with different crops in a fixed rotation plan, which is terminated with a fallow period to allow the soil to recover. Through this rotation scheme the fields are cropped without exhausting the soil and the use of chemical fertilizers and pesticides are minimized.
CROPS MANAGEMENT
Black Earth Farming currently focuses on seven crops, namely
(1) winter wheat,
(2) winter rape,
(3) barley,
(4) spring rape,
(5) sunflower, and
(6) corn maize.
(7) triticale
1) WINTER WHEAT
is used for food and livestock feed. Black Earth Farming uses a combination of different winter wheat varieties to produce good quality milling wheat. Winter wheat is like other winter crops, higher yielding compared to the corresponding spring crop since winter crops have more well-established root systems. Winter wheat can be drilled during a relatively long period (approximately 20 days) which enables the Company to cultivate large land areas with this crop. Winter wheat is seeded and starts to grow in the autumn, lies dormant during the winter and is usually harvested at the end of July.
2) WINTER RAPE
is primarily used for producing vegetable oil and biodiesel. Winter rape generates a higher yield than spring rape due to a more well-established root system. However, Black Earth Farming cannot grow only the winter type of rape since there is a danger that a certain percentage of the crops can be lost during adverse winter weather. Winter rape is commonly harvested in the beginning or middle of July, thus balancing the consumption of resources. Furthermore, winter rape characteristics enable a crop rotation system which ensures that winter wheat can be sown the following Agricultural year.
3) BARLEY
is a grain mainly used for food and livestock feed. Barley is considered a profitable crop provided that Black Earth Farming can achieve a good malting quality. Barley is harvested at the end of August and can be sown in spring as soon as the snow has melted and thus spreads the work load for drilling.
4) SPRING RAPE
is grown for two reasons. The first reason is that it has the same advantageous crop rotation characteristics as winter rape and the second is that the current demand is high which ensures a favourable price level. Moreover, spring rape is drilled and harvested after barley but before sunflower, thus providing optimal utilisation of Black Earth Farming’s machinery.
5) SUNFLOWERS
are primarily used in food products and livestock feed. Due to the sunflower’s drought resistant characteristics, it fills an important role in the overall crop mix. Sunflower is normally reaped a week or so after spring rape and just requires a simple addition to the combine header for harvesting, thus reducing additional capital expenditures. The sunflower plant is seeded around the turn of the month April/May.
6) CORN MAIZE
is a major food grain grown throughout the world in temperate and warm climates. The Company cultivates this grain primarily in the southern regions where rainfall is more limited and the summer temperature is higher. Corn is seeded in spring and the harvest starts in the middle of September.
7) TRITICALE
Triticale is a hybrid of wheat (Triticum) and rye (Secale). As a rule, Triticale combines the high yield potential and good grain quality of wheat with the disease and environmental tolerance of rye.
HARVESTING MANAGEMENT
The harvesting season usually starts in July in the southern parts of the Black Earth Region with the harvesting of winter wheat, winter rape and barely and ends in the northern parts when sunflowers are harvested during October.
After the crop has been harvested, it is transported to storage facilities. The access to elevators is very important since grain can only be left in the fields for a short time. Furthermore, grain prices fluctuate with weather conditions and they tend to be at their lowest during the harvest season since farmers without access to storage facilities must sell their grain immediately thereby substantially increase the supply.
For the purpose of capitalizing on the existing deficit in efficient storage facilities, it is part of the Company’s strategies to build its own elevators and even sell drying and storage capacity to other farmers in the Black Earth Region.