How Would You Like 16,958 Landlords?!
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 requires 5 full time employees.
The yields for the company compared very favorably to yields in the US. For example, their wheat yields were as high as 80 bushels per acre in the Ukraine in 2008 and an impressive 120 plus bushels per acre on their Poland holdings in 2008. The lowest yield they had in the last three years in Poland (for 2008 to 2010) was still almost 100 bushels per acre.
Potatoes in the Ukraine averaged about 15 tons per acre and sugar beet yields were in the 20-25 ton per 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 over $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 amounts would be a very daunting task in the US. 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 US farmer.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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