With today’s economic realities in Ukraine, agribusiness remains an industry, on which the development of rural communities depends to a large extent. Civilized conditions for the provision of educational and medical services, infrastructure development, support for culture and sports in the countryside are already traditional directions of assistance to agribusiness. That charitable aid must be effectively combined with the industrial discipline, the development of the enterprise, the introduction of innovations. It is in this synergy of effort that Baryshivka Grain Company LLC Grain Alliance has been operating in Ukraine for over 20 years. Read more about the company’s work, their latest approaches to governance and charity – in an interview with the general executive director of Baryshivka grain company Grain Alliance Evgeniy Radovenyuk.
Tell us more about the activity of the Baryshivka grain company Grain Alliance.
The history of this enterprise began in 1998. For the past 10 years, it has become part of the international holding Grain Alliance. Today the company has 100% Swedish investments, handles about 56 thousand hectares of land in four regions of Ukraine: Kyiv, Cherkassy, Poltava and Chernihiv. The company employs 5 elevators, which have a total capacity of 256 thousand tons of storage. We have more than 1200 heads of cattle in the field of animal husbandry. I would define the company’s main motto as follows: “We strive to be as efficient, stable, and socially responsible, as a large European agribusiness enterprise sensitive to the problems of the Ukrainian village.” Therefore, the main directions in the company determine the constant technical improvement, optimization of production processes. In addition, social responsibility plays an important role in our work. We provide for more than 1,100 employees. And it is extremely important that this is, first and foremost, work for the inhabitants of rural areas.
Do you plan to increase the number of elevators within the company?
Today, we place a great priority on the optimization of already created capacity. We are working on increasing the carrying capacity of elevators, first of all, Pyryatynsky and Nizhynsky, which were built “from scratch”, using modern grain storage technologies. We also focus our efforts on creating efficient logistic mechanisms, optimizing works in the “reception-storage-shipment” chain. Of course, looking forward to expand capacities. But this question depends directly on volumes of production, volumes of the land bank. The increase of these characteristics will result in the development and elevator economy.
In some of the previous years, grain sales were a major problem for agricultural producers. How Baryshivka Grain Company has met these problems?
The geography of our shipment is quite wide. For example, we have been cooperating with Japan in the direction of commodity soy for a long time. All our products in this cluster are grown for the highest quality criteria, we do not use any GMO components. The work of our gauge plant in Baryshivka, which is equipped with modern grain processing equipment of Japanese manufacture, contributes to the respect of our clients. While working through traders, shipments go through seaports. In today’s realities, the farmer has become an independent player in this market, which requires very large volumes of production. In general, agricultural production is a very promising industry and in terms of productivity and production results, it has a very high potential. And the industry will develop. But, at the same time, one cannot overlook certain restrictions in it. Last year was perhaps one of the greatest harvests in the history of the country. That logistics system was not ready for such volumes of transportation, it was very difficult to ship grain. Therefore, logistics is the infrastructure that will require the greatest investment in the near future.
To development issues. What innovations have you introduced in production and what are you planning to do?
In the industry, we were among the first to introduce information technology in the agro-industry. That progress is not in place, and we already see what directions again require investment. Over the past few years, we have come to the conclusion that significant changes are required in sowing technologies. Today we are implementing a program of precise agriculture in our fields. This is a complex challenge, which includes the latest technology, information systems and new approaches to the seeding process. If for the last 4-5 years we actively invested in the development of elevator infrastructure, then for the past one and a half years we have been seriously engaged in sowing. The new units we have purchased are more efficient at the expense of their technical characteristics. For example, we are already using seeders produced by the Swedish company Vaderstad, and we see that they confirm the reputation of seed systems that are among the best in the world. Also, we have all running synchronous driving systems, which enable to accelerate the rate of sowing, reduce the number of involved units. This system is already confidently working in one of our regions. Other innovations of ours are in the elevator industry. In 2014 there were expected problems with gas supply to Ukraine. Then we implemented a strategy of energy saving, which equipped our elevators with heat generators working on the waste of grain processing. And today, we have already 70% refused to use natural gas in elevators. Last year, when the prices of blue fuel from 9000 reached 14000-15000 during the “active season”, we practically did not feel it. We saw the effectiveness when in the season our grain drying costs decreased by 5-9 times compared with those periods when we used gas. This gave us the opportunity to save about a million dollars. Therefore, it will probably be fair to say that we are one of the most energy-efficient enterprises. There is also one innovation, an organizational one. This year we abandoned the position of the chief agronomist in making manufacturing decisions. We have created such a “team chief agronomist”. This is a group of specialists who work together, discuss proposals and make decisions together. Such is a group brain. What will happen from this, we will see, but the idea is interesting from different points of view. In this case, on the one hand, the multiplicity of decision-making increases, because it is the view of the team from different sides, on the other – it reduces the possibilities for abuses or one-sided decisions.
Let’s talk about the staff of the company. How do you motivate your employees?
Today our team has over 1100 employees. It’s a lot. This is due to the fact that the company is socially responsible. For many rural communities where the company operates, we can be the largest employers. And this imposes a responsibility both on the issues of workplaces and on the issue of decent pay. Everyone knows that over the past three years, wages in Ukraine have increased significantly and increased in real value. Baryshivka grain company has always paid and pays the market “net” wages, unlike companies that can pay the work of employees “through the envelope.” Salary is transparent, we pay taxes, people are socially protected. Many well-known experts already appreciate this advantage – let it be a little lower salary, but guaranteed pension deductions, “hospital”, the rest of social guarantees. Of course, there are also separate mechanisms of awards for the quality of work performed, for personal accomplishments. This is something related to the financial side. There are also moments of non-financial incentives. For example, English language learning groups work at the company. By business, training is counted as working time. Sometimes we are asked: Why is this for the village? But we want to look further at the present. Domestic agro-industry is increasingly integrated into the world economy, and our people can travel more and more without a visa.
We are interested in developing our employees so that they, in the first place, can communicate with the world, have access to international communication. We want it so that they can feel free and have been people of world society. Separately, during the last one and a half years we have started to organize business trips to the hearts of leading European manufacturers of machinery, seeds, agro-chemistry of Europe and America. It would be desirable for people to see German, Austrian, Swedish culture, so that they “do not cook in their own juice”, see the best practices, understand that they could improve themselves.
To the market of land. How much does it affect the company?
We work in realities. There is nothing, and you will not do anything. It is necessary to work, to grow bread – and we work. The main thing for the industry is to have certainty, clear rules of the game. There is no land market, but you can work. There are many countries where land is not in circulation and the agro branch works efficiently. There are countries where the land is privately owned, and they are also actively working. Of course, I believe that the land market will come to be. But the important thing is that it’s the market itself, and not specific usage patterns. Because if the schemes are the same, it will have a very negative impact on the industry. The market is a competition, it’s always good. The sector will win, because the best technologies, best approaches and investments will be introduced.
If enterprises become owners of the land on which they work, they will be interested in long-term investments. Nobody is drunk enough to cut a cow for even ten buckets of milk, right? Competition always gives you choice, opportunities for improvement. On the other hand, the land will be the subject of collateral for bank capital, which will enable agribusiness to better lend. Owners of the land, ordinary people, also benefit from the market. Because the land will be a high price, for it will compete agro enterprises.
This is a gain for the state – additional revenues to the budget, which will allow to be calculated on the basis of international obligations. If there are schemes of the earth, only those who have access to these schemes will win. The same agro-branch will slowly degenerate.
What risks does the company face when working in Ukraine and how do you minimize them?
The greatest risk is some kind of chronic uncertainty, instability. These factors can be minimized only by focusing on long-term relationships with business partners. We work on this principle. If the relationship with our shareholders is a long-term one. If with banks – also stable and long-term. We bring our partners to base our cooperation on integrity and honesty. For 12 years, we have been working with three banks, and every now and then cooperation becomes closer.
We also have long-term relationships with buyers, which include trust, certain moments of integration of plans, thinking, and culture. In conditions of total uncertainty, long relationships are the thread that helps keep up. One supports another and it is always in the favor. As for other risks, this is the weather. Yet agricultural production is very method-dependent. Geographic diversification, timeliness of technological operations, their speed, stable financial partners, and globalization make it possible to work efficiently.
You said that one of the characteristic of the company is its social responsibility.
This is one of the cornerstones of our work with rural communities. In 2013, we created a charitable foundation, which today is called “Baryshivka Grain Company”. This is part of the strategy for the formation of a large, active, stable, but at the same time, a socially responsible agrarian enterprise. The Fund financed various programs in the areas of education, health care, infrastructure development, namely rural areas. If schools are energy efficient, new heating systems, material support of educational processes, provision of connection to the Internet. If rural FAPs or outpatient clinics are repairs of premises, provision of on-site visits by specialists from regional or district health care facilities with appropriate technical equipment. We also support the development of rural sports, we build children’s playgrounds for the smallest villagers.
To sum up, tell us about the company’s plans for the coming years.
First, we always improve what we create. And increasing efficiency and innovation is a guarantee of development of our enterprise and the welfare of our employees. Secondly, improving the performance of the elevator group. We want to increase the capacity of these facilities, improve the quality of the passage, improve the logistics. This direction is also very important for us. The third is active and reasonable growth of the land bank. We want to work on a larger scale. Fourth – we are studying new directions of vertical integration, processing. And although some projects have not yet come, we are actively studying this topic.
