Ekosem flags 'huge potential' in Russian dairy

Agrimoney.com | 13 September 2013
Ekosem-Agrar GmbH is the German holding company of the Ekoniva Group, one of the largest agricultural companies in Russia. With a herd of 19,000 cows, the company says it holds 1% of Russia's dairy market.

Ekosem flags 'huge potential' in Russian dairy

Ekosem-Agrar, the top milk producer in Russia, lowered its target for expansion in its herd this year, but maintained its faith in the country's dairy market, saying it "offers huge potential for growth".

The German-based business, the holding company for Russia's Ekoniva Group, revealed that it had reduced to 19.000 cows its target for its dairy herd at the close of the year - up from 15,500 head at the end of 2012 but down from a previous goal of more than 20,000.

However, the reduction reflected funding delays rather than any loss of faith in the Russian dairy market, in which it is already the largest producer, with output of 345 tonnes a day as of the end of June.

A financing effort had taken "a bit longer than expected", an Ekosem spokesman told Agrimoney.com, adding that the group had moved into 2014 some cow imports which had been scheduled for this year.

'Huge potential'

Indeed, Stefan Durr, the Ekosem-Agrar managing director and majority shareholder, said that "Russia's agricultural sector, and the undersupplied milk market, in particular, continue to offer excellent opportunities.

"We are the country's largest milk producer and still hold only 1% of the market. This shows that the market is extremely fragmented and offers huge potential for growth."

Many other companies have seized upon the market has a growth opportunity, with Singapore-based Olam International buying into the market last year, and the likes of France's Danone and US-based PepsiCo also expanding in Russian dairy.

Arla Foods, the Nordic dairy co-operative, revealed last month it had achieved organic growth of more than 25% in Russia in the first half of the year.

'High investments'

Ekosem-Agrar said that its dairy revenues rose by 41% to E22.8m in the first half of 2013, thanks to higher milk prices and growing output per cow, besides herd expansion.

Milk output averaged 324 tonnes per day over the half, up from 227 tonnes a day in the first six months of 2012, growth the group said reflected "high investments in heifers, sheds and animal fodder".

Overall revenues, including arable and beef operations, reached E34.3m, a rise of 16.3%, with earnings for the half coming in at E7.1m, or E3.1m excluding one-offs, compared with E4.0m a year before.

The group also said it had acquired 10,000 hectares of land during the half year, taking its total portfolio to 186,000 hectares, of which it owns 101,000 hectares.
Original source: Agrimoney

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