How Would You Like to Have 16,958 Landlords?

Published on: 20:52PM Sep 28, 2011

While perusing the Admission Document (similar to our initial public offering document and yes, CPAs do like to read these documents for fun) for Continental Farmers Group PLC, I noticed that the company farms about 52,000 acres (20,840 hectares) in Western Ukraine. These 52,000 acres are covered by almost 17,000 individual leases (about 3 acres per lease). In order to keep track of and document these leases, five full-time employees are required.

The yields for the company compare very favorably to yields in the U.S. For example, its wheat yields were as high as 80 bu./acre in the Ukraine in 2008 and an impressive 120-plus bu./acre on its Polish holdings in 2008. The lowest yield it had in the last three years in Poland (for 2008 to 2010) was still almost 100 bu./acre.

Potatoes in the Ukraine averaged about 15 tons/acre and sugar beet yields were in the 20 to 25 tons/acre range. Some of the best "black earth" is in the Ukraine and about 95% of the country is considered flat.

Revenues grew from about $10 million in 2008 to more than $30 million in 2010, with profits of almost $5 million in 2010.

I know of some farmers who have upwards of 25 landlords, but the idea of having almost 1,000 times that amount is daunting. I think we will continue to see more companies like Continental Farmers Group going into Ukraine and other countries to bring more up-to-date farming practices to bear. The efficiencies may have a dramatic effect on overall yields in these countries. The world is getting flatter, and they will continue to catch up to the U.S. farmer.