Cherkizovo Group (LSE: CHE; MICEX: GCHE), Russia’s largest meat and fodder manufacturer, completed its 2014 sowing campaign.

This year, Cherkizovo Group increased its crop area by 48%, in particular, by adding 17 thousand hectares in Lipetsk Region to the Group’s land bank. The company expects the yield to increase by 45% compared to the previous year, up to 250 thousand tonnes bunker weight, if weather conditions are favourable. The Company’s agricultural experts report that the winter crops are in a good condition, which allows predicting that the output targets will be reached.

The crops structure has not been significantly changed compared to 2013. The main crops, as before, are wheat and corn. The sown areas have reached about 17 thousand hectares for winter wheat, about 10 thousand hectares for corn, about 8 thousand hectares for sunflower and soy each, about 7 thousand hectares for peas, and about 4 thousand hectares for spring wheat and barley each. For the first time in the Grain Division history, an area of 200 hectares has been experimentally sown with white lupine, which can be used for making balanced, high-quality fodder. This plant typically has high nutritional value and can be used as an excellent precursor for winter crops.

Grain farming is a new business line for Cherkizovo Group; it was established as a separate segment in 2012. Today, it shows high yields which exceed average Russian indicators by 1.5–2 times, as well as sustained financial performance. Cherkizovo Group plans to invest about 300 million roubles in purchasing state-of-the-art farm machinery and equipment in 2014. This will help to improve sowing operations efficiency and to increase the quality of the crop land cultivation.

According to the Company’s agriculturalist Vasily Semenikhin (Voronezh Region), soil cultivation and grain sowing were performed according to the schedule, and all crop production methods were scrupulously adhered to. “Sowing was carried out with new farm machinery, and combined, high-performance tillage and sowing equipment was used on the fields, allowing us to perform several operations in one pass. The Black Earth Region weather conditions are favourable now, so we are planning to start harvesting the winter crops as early as in the first decade of July.”

According to Cherkizovo CEO Sergei Mikhailov, the company will cover about 15-18% of its annual fodder grain consumption with its own crop production. The total annual demand for grains is about 900 thousand tonnes, as per CEO’s assessment. However, during the annual conference of Аgroinvestor magazine, Mr. Mikhailov noted that Cherkizovo Group does not plan to be fully self-sufficient with grain production in the medium term, because this market is highly volatile. As before, the Group’s strategy will imply flexible approach to grain purchase and the formation of stocks.