Status 4 March 2015

Weather, crops and the work situation
Winter began relatively mild, but very wet in continuation of the otherwise wet autumn, and around New Year the temperature dropped dramatically, particularly in the east where it was as low as minus 28 degrees, but luckily the winter crops were covered with snow by this time. These severe winter conditions lasted for about three weeks, and in February the weather was somewhat milder, and temperature fluctuations over the day were limited.

The situation with winter crops is: on all three sites the wheat fields are in excellent shape with uniform germinated wheat, as well as nice strong rapeseed plants with low growth point, adjusted for growth inhibition. In Oravita, the rapeseed was somewhat impacted earlier by the excessive rainfall, but it has now recovered. In Videle, there are small wet spots in the one rapeseed field. This field has not been subsoiled and it is included in the future action plan for subsoiling and digging channels.

Overall, there is currently a very good survival rate of winter crops, just as they are judged to be in good shape, even though we were challenged by very heavy rainfall in the autumn.

This rainfall also impacted on the work to prepare the fields for the spring crops, which is in fact a total of 3000 HA. There has been great and costly work in the autumn subsoiling the fields for the spring crops, and of course harrowing of these. We have good expectations for the outcome of this work.

It is very early to say this, but we dare to believe that we are already seeing the positive effects of the work, both in the fields to be sown in the spring and in some places in the winter seed fields.

We had an Earthquake conventional lift suspension subsoiler, as well as an ER-MO deep subsoiler, with a “torpedo” to form pipes in the lower layers of soil. The subsoiler had been driven so much that it was worn out, so we upgraded it in 2014 with two conventional subsoilers, as well as a Great Plain Subsoiler, which has the excellent feature that it can loosen in depth without opening the soil surface to evaporation, so we have used a combination of these machines on the three sites and subsoiled a total of almost 4000 HA in this season.

Here is the Great Plain subsoiler at work behind the big tractor.

The work situation is that we are good on all fronts: we are really far along with fertilizing the winter crops, and preparation of the fields for the spring planting is well advanced, and of course we have all the equipment ready for the work in the spring.

Crop sales
At the end of 2014, we entered into contracts for the sale of wheat. Wheat prices are in the range of DKK 102 to 131/Hkg. The lowest price was in Oravita, where the hectolitre weight was low due to a very high proportion of lodged crops, and where, in certain situations like the current one, reduces the price of goods to be transported on the Danube to Constanta.The barley was contracted on about 1 February and the price is DKK 108-111/Hkg.These prices are slightly higher than the expectations we had at the beginning of November 2014.

FEADR subsidy
At the end of 2014, we received DKK 2,254,000 and at the start of 2015, DKK 2,195,000 in EU investment subsidies. This is the third time we have received subsidies for farm facilities, so we have now received a total of DKK 14,933,000 in subsidies for silos and buildings.

Other matters
Recently there have been articles in the trade press, Efficient Agriculture, about the sale of agriculture in Romania under headings describing the sale of agriculture in Romania as being complicated, messy and very protracted.The contents of the articles is primarily based on the fact that this is due to the overwhelming documentation requirements placed on buyers, as well as the country’s level of development in relation to the registration of land, with very inaccessible Romanian documentation, which is further complicated by the fact that the land is divided into small plots.Furthermore, there is a new law in Romania that places an advertising and tender obligation on the seller of plots of land in relation to any tenants, neighbouring farmers, etc. – a little in line with the obligations of the former agriculture law in Denmark.

In the earlier stages of Agri Invest A/S history we have tried to protect ourselves optimally in relation to the above issues, given that we have also been forced to purchase, as described in the articles, but throughout the process we have made the purchases with lawyer assistance, in that we have had a lawyer to review the documentation before the land was paid for, so we had an overview of the documentation situation through the course of the process.Subsequently, we have obtained most of the documentation, so today we have a situation where the quality of our documentation is top notch.A number of the above issues are also solved by knowing that we do not think we will be selling plots of land, but rather selling companies that are equivalent to limited liability companies that own assets: land, farms and buildings.

Yours sincerely,

Richardt Duus
CEO