Cherkizovo Group entered the grain farming segment in 2012. Today, the Company cultivates over 90,000 hectares in the Central Russian regions of Lipetsk, Orel, Tambov and Voronezh and has high crop yields that are well above the national average.
Russia is one of five countries with the world’s largest land areas suitable for agriculture. Grain production in Russia dropped dramatically after the collapse of the USSR but began to recover in 2000 with government support. Russia is now a net grain exporter. Grain is the basic ingredient of poultry and livestock feed, and Cherkizovo Group uses over one million tonnes of grain annually to manufacture feed.
The Company started growing its own grain in 2011 after deepening its level of vertical integration. Cherkizovo has a land bank of more than 287,000 hectares, of which the Company owns nearly 60%. Approximately 90,000 hectares in the most fertile Central Black Earth regions —Lipetsk, Orel, Tambov and Voronezh — were actively cultivated during 2015.
Cherkizovo Group is increasing its crop area and yield every year. When the Grain Division was formed in 2012, yield was around 116,000 tonnes from 35,000 hectares; by 2014, the grain harvest doubled to 242,000 tonnes from 60,000 hectares. In 2016 over 465,000 of grain were harvested on 95,000 hectares.
Crops grown by the Company include winter and spring wheat, corn, sunflowers, barley, peas, soybeans and rapeseed. Cherkizovo’s harvests are considerably higher than the Russian average. For instance, gross yield of winter wheat at the end of the 2014 harvest was over 60 cwt per hectare (in bunker weight), compared to the national average of around 23 cwt per hectare (according to data from Russia’s Ministry of Agriculture).
The Company is continuing to invest in the Grain Division to improve efficiency. Cherkizovo Group allocates over RUB 200 million per year for purchasing modern, high-tech machinery, including imported tractors, combines, bunker loaders and haulers. We are also currently building new grain drying facilities. In addition, we work closely with higher and vocational educational institutions to recruit the best young specialists for our fields to ensure we maintain our competitive advantage.
Cherkizovo not only raises good crops, but also stores them successfully. The overall storage capacity of the Company’s grain storage facilities located in the key Central Black Earth and Volga regions reached a record of one million tonnes in 2015. Having our own grain storage facilities allows us to buy grain at the most favourable price and manage our stock effectively. It also promotes the expansion of the agro-industrial sector in Russia’s regions, since local private farms can supply grain to the Company’s storage facilities.