Sergey Viter
Open Agribusiness Project Manager
The world-class agricultural company Kernel, Ukraine’s largest producer and exporter of sunflower oil, is expanding its services and affiliate programs. More than 5,000 agricultural producers as strategic partners in all regions of the country use unique Kernel services. The Open Agribusiness project aims to deepen this cooperation and make it even more profitable for all participants.
In his interview, Open Agribusiness Project Manager, SerhiyViter told us about the ways the partnership program stimulates the development of Ukrainian farmers, modernizes production and increases yields.
How did the idea to organize an affiliate program Open Agribusiness by Kernel come about?
— The idea of creating Open Agribusiness arose a long time ago. At first it was simple lending, but later we realized that we have no competition in agribusiness. We take a position in relationship with other agricultural holdings which stays on exchange of experience, not competition. We believe in the potential of Ukrainian grain in the amount of 100 million tons per year. In 2021, the volume of harvested grain is already approaching 80 million tons.
The main goal of the partnership is not just to improve yields, but to guarantee increased profitability and stable growth of each agricultural partner-enterprise. We try to help small and medium farmers in clear and planned work to increase the amount of harvest. This indicator is influenced by insufficient experience, untimely purchase and sowing of crops. Experience, technology and good planning this is what Kernel shares with farmers, which is why we created the Open Agribusiness project, which focuses exclusively on the grain market. We have infrastructure: ports, cars, etc. As part of Open Agribusiness, partners are committed to supplying us with grain. It is important for us to build trust with suppliers, so both agronomists and the technologies we fund are involved in the fields of program participants.
We also buy grain and goods and materials together with the project participants at the same price within our services, which is beneficial for the partners.
The most motivated employee is the owner,and we want to help them grow crops, buy grain from them at market price and show positive dynamics. We don’t want to be just distributors and make money on goods and materials: buy, make markups, sell. Each hectare belonging to our partner is part of Kernel,and the company grows with us.
We already have examples of fruitful cooperation. Yes, there are several subprojects with a partner from Zaporizhia region in which we sponsored an irrigation system. We also financed the construction of elevators in Dubna and are the general contractor for the partner; we give participants money to buy agricultural enterprises, because our project grows with them. We had partners who came to us from 3-4 thousand hectares, and today one of the partners has 8.2 thousand hectares, another one — 9.2 thousand hectares. They have doubled in a year thanks to our support.
What are the rules for joining your project and is there a temporary participation period?
— We consider that the project has no timeframe. Admission to Open Agribusiness requires 1,500 hectares of land. This is checked by our security service, because the company-partner should not bear any financial risks.
We also support the growing companies. Previously, we cooperated on the terms of redemption of 10% stake. For example, one partner, with whom we already have a long-term working relationship under these conditions, received $ 1 million for the sale of his share, plus funding from us. Now they have an elevator near Nizhyn with a capacity of 91 thousand tons of simultaneous storage. For us, 10% was a kind of trust, no more. We do not run companies anyway, and if there were 10%, we would not do that either. All the conditions are stipulated in corporate agreements.
At the moment Open Agribusiness starts working with a company and starts financing it, we pledge crops, check that the land is officially registered, pay taxes, and so on.
How can the Open Agribusiness Partner Program be useful for companies that do not yet work with you? And do you plan any expansions within the project?
— 1. Cost savings. Open Agribusiness partners are already receiving the results in the form of a significant reduction in costs.
For the first half of 2021, we supplied to our partners:
• 14.7 thousand tons of fertilizers;
• 192 thousand liters of plant protection products;
• 6.3 thousand p.o. seed.
2. Professional expertise. We help agronomists, based on our experience, provide comprehensive technological support. Twice a week, our technologists go to the fields of partners, because there are many nuances that are worth knowing: timely sowing, selection of seeds, how to use it and care for the harvest.
3. Working capital financing. Over time, all partners come to the conclusion that they want to grow and buy new land. When a company that cooperates with us feels a powerful partner behind it (because we will buy the farm, provide working capital, etc.), understands that it will always be supported (because we are also not interested in the result).
4. Experience in financing and implementing irrigation systems. Proper elevators are a problematic issue for every farmer, but we allocate funds to address the purchase of materials, construction work and more.
The program expands daily. Currently, the audit with a group of companies from Zaporizhia is at the stage of completion — it is 36 thousand hectares of land. Another company from Kharkiv will bring about 20 thousand hectares. Some partners with 3,000 hectares of land want to join the project and in the future to buy additional land to get 9,000 hectares. According to the marketing plan, by June 30, 2022 Open Agribusiness should reach 160,000 hectares of land. Today we have 105,000 hectares in 22 regions throughout Ukraine.
Participation in the Open Agribusiness project is a unique chance for agribusiness. Never do tomorrow what you can do today, especially when it comes to your business development strategy.
How many partner companies are working with you today and why did they choose your project?
— As of today 39 companies –juridical bodies are partners within the Open Agribusiness by Kernel project. They have their motivation to work with us: some want to boost their business, some want to learn the Kernel experience, others consider us as a strong partner and want to be part of it, some need to cut costs or build an elevator, and so on.
We are constantly in touch with our partners. We hold meetings if there are disputes or it is necessary to study the situation from different points of view, to eliminate risks. It is important for us that our partners move steadily forward and we develop together with them, increasing our profit ratios.
Interview conducted by Marina Samsonova
