Business concept

Black Earth Farming’s business concept is to acquire and cultivate agricultural land assets in Russia, primarily in the Black Earth Region and secondarily in other regions endowed with fertile agricultural land.

VISION

BEF seeks to leverage off its unique skill set and first-mover advantage to rapidly develop a critical land mass and generate robust profitability in one of the fastest growing agricultural markets in the world. And thus create substantial wealth for its shareholders over time.

STRATEGIES

Black Earth Farming seeks to maintain a balance between seizing upcoming land acquisition opportunities and cultivating land already under its control. To acquire and cultivate land require considerable capital and management resources but constitute the foundation in realising the vision of creating shareholder value. With a view to optimize the absorption of resources the Company applies the following strategies:

Control over land: The Company takes every measure to ensure that the acquisition processes of land are closely monitored and in compliance with all the relevant legislation. The Company prioritizes land which is geographically close to one of the existing production clusters. Additionally, Black Earth Farming examines the existence of elevators in proximity to the land area and assesses the infrastructure in general, e.g. regarding railroad and loading capabilities.

Economies of scale:  To create logistic efficiencies and other synergies the Company has formed ten production clusters on the controlled land, each being governed by professional management with support from the central organisation The central organisation coordinates investments and purchases of seed, fertilizers and other inputs. The coordination optimizes the utilisation of management resources since the production clusters consist of consolidated land areas.

Best practice/technology: An important part of the best practice approach is to perform soil analyses which will determine the selection of crops and the optimal amount of fertilizers needed for each farm. Black Earth Farming seeks to significantly increase productivity by introducing modern agricultural farming practices. Hence, to increase crop yields the Company hires internationally-experienced expertise and adopts efficient farming methods supported by western technology.

Vertical integration: To further improve margins, increase cash flow diversification and reduce exposure to commodity price volatility, Black Earth Farming evaluates selected processing such a production of rape and sunflower oils. For the purpose of increasing the profit margin it is part of the Company’s strategy to gain control over a larger part of the value chain through investments in elevators and in specific industrial processing capacity.