Strategy

Russian Agricultural Division :: About RAD :: Strategy

- RAD’s primary target is active expansion of the agricultural land portfolio through acquisition of high-quality, fertile land. Conducting farming operations on a bigger scale will be accompanied by an extensive investment programme and introduction of advanced technology to increase productivity of the soil.

- The Company focuses on purchasing contiguous plots of land, situated close to the centres of production. These large clusters will be managed with maximum optimization of resources and capital. The parent company will coordinate the use of machinery and purchase of inputs, benefiting from economies of scale.

- RAD considers acquisition of lands in different regions in order to minimize climatic, political and social risks.

- It is also essential that the acquired lands should be in close proximity to the elevators and processing plants of the parent company PAVA, as well as the transportation infrastructure. Effective logistics is the key factor for successful operations.

- RAD’s objective is to manage crop mix according to market demand, to establish a farm business that produces high-value, high margin crops. Through the crop rotation system, the Company can be flexible in terms of crop production; changes can be made to reduce exposure to price volatility or adverse weather conditions.

- In order to stay competitive in today’s market and increase overall efficiency, RAD has identified the core business processes and is working on their optimization. This is especially relevant, as Russian agriculture saw a severe decline during transformation of the country’s economic system due to dramatic reduction of capital investment. The central issues are: maximization of yields, training for the employees, efficient use of agricultural machinery.

- One of the main reasons for decrease of agricultural production in the regions and lower yields is obsolete farm machinery. RAD will replace it with modern equipment of both foreign and domestic manufacture, for efficient cultivation and harvesting.

- RAD will become the fundamental link in the vertically integrated structure governed by PAVA. The Management believes that with clear benefits provided by economies of scale and synergy effect, PAVA is well-placed to achieve the overall strategic aim of becoming the leading Russian agroindustrial holding company.