The board regards the financial result for 2013 as unsatisfactory.

The disappointing result for 2013 can primarily be attributed to two factors:

–          Generally low yields in plant production

–          Major sales problems in 2013 for maize from 2012

Sales problems for maize:

Sales of maize in 2013 were badly hit by the fact that batches of maize containing toxins were exported out of Constanta at the beginning of 2013, which led to a blacklisting of maize from the Black Sea region, in addition to which a stock situation on the domestic market made maize almost impossible to sell for considerable periods during 2013.

This situation alone resulted in write-downs of more than DKK 5 million on the 7,400 tonnes of maize from the 2012 harvest that were in stock at the beginning of 2013. Furthermore, market conditions meant that prices for the maize from the 2013 harvest were also under pressure. This was in spite of the fact that our tests demonstrated that our alpha toxin levels did not exceed the EU’s maximum permissible values. The difficult sales situation for maize also meant that we were forced to create extra storage space for the maize, since we had to find ways of “containing the disaster” in order to obtain an acceptable price, which meant that in conjunction with the maize harvest we were also forced to sell 3,500 tonnes of milling wheat at a low price in Oravita.

In overall terms the economic shortfall resulting from extremely poor sales conditions for maize is estimated to be DKK 6.6 million.

The above price and sales conditions are in all likelihood somewhat unusual, in that we were affected without having quality problems with the maize ourselves, but of course our focus is on handling the maize such that toxins can be avoided – both today and in the future.

Yields in plant production:

As a result of the above, the distribution of crops has been subject to revision. With regard to maize in particular, our opinion is that it is still an attractive crop with good potential yield that should be incorporated into our crop rotation, although to a reduced extent compared to earlier.

Our overall strategy concerning the distribution of crops is that:

– crops with good yield potential are chosen
– a sensible dispersion of workload is taken into account, which boosts the chances of punctuality
– the expected marketability of the crops is taken into account
– not least, there must be a spread of risk in the choice of yield
– furthermore, there are technical requirements concerning plant production that are imposed on crop rotation.

A strategy has therefore been chosen with:

– winter crops consisting of a large proportion of wheat, a lot of winter barley and winter rape
– spring crops make up approx. 30% of the areas, and consist of maize and sunflower
– oil crops – winter rape and sunflower – together make up 25% of the areas

Yields in 2013 were: wheat, average of 4.62 T/ha; maize, average of 4.26 T/ha; rape, average of 2.26 T/ha. These average values of course tend to mask great fluctuations between each field – which with regard to maize and wheat can swing between 2 and 7 tonnes per ha.

Sales prices:

Sales began in November at prices of DKK 86/hkg for maize from the 2012 harvest, with a deduction for freight in the case of approximately half of these sales.

Maize from the 2013 harvest was sold at the end of 2013 and beginning of 2014 at an average price of DKK 104/hkg.

Sales of wheat did not really begin in earnest until November and continued during subsequent months, where acceptable prices were obtained. The average price for wheat was DKK 121/hkg, ranging from DKK 97/hkg for the batch sold in conjunction with the maize harvest and DKK 133/hkg for milling wheat sold between December and March.

Focus areas for increased yields:

There have been major climatic challenges in 2013, which has had a great impact on both winter and spring crops.

The winter crops survived very well, but later suffered adverse conditions, firstly due to wet weather from January until March and then extreme heat in April.

The same weather conditions applied to the spring crops, where the establishment of these crops was made more difficult. This was followed by a lack of rain, which meant that the crops were exposed to drying out, before precipitation arrived during the late summer.

We have to recognise that plant production activities take place in conditions in which the weather can be more extreme than in Denmark. This has formed the basis of improvement efforts that are due to be implemented in 2013 and 2014. Similarly, we have now accumulated experience in terms of plant production in Romania which will make up the basis for other improvement measures.

The following areas of focus have been implemented:

Weather conditions and climate:

– Spraying capacity increased
– Fertilizer spreading capacity increased
– Joker harrow with ring roller packers
– Packers for Tiger harrow
– Increase of capacity for winter storage of fertilizer complying with legislation

Manning and know-how:

Improvement plans with focus areas on cultivation techniques, etc.

Production manuals

Training of tractor drivers

Strengthening of organisation in terms of management and capacity on largest site (Oravita)

New plant production consultant with references in RO and Ukraine

Agreement with Romanian maize specialist

Appointment of assistant to the manager in Mizil

With respect to individual items:

– an investment has been made in 36 m self-propelled spraying equipment in Oravita with 6,000 l tank, which of course increases spraying capacity and frees up a tractor for other tasks.

– an investment has been made in three large towed fertilizer spreaders ­– one for each site – based on considerations that large areas will be ready at the same time in the spring for spreading fertilizer.

– after a test concluded that this aggressive type of harrow – Horsch Joker with packers – is highly effective when a compact soil crust has to be loosened or maize stubble has to be pulverised and mixed into the topsoil, such an investment was made.

– when the heavy-duty harrow – Horsch Tiger – is used, it is crucial in certain situations to be able to crush lumps of soil and pack the soil in order to create a good surface on the field and avoid evaporation. It has been decided to invest in three Horsch Optipack 8 SDs – one on each site – for this purpose.

– completion of further silo capacity in Oravita and in Mizil in 2014 frees up further capacity for the storage of fertilizer. In Videle a permit exists for storage of fertilizer in one building. An application is being made for an increase to this permit. The storage of fertilizer is unusual in that it may only take place in certain approved warehouses that may not be used for other purposes, and fertilizer may not be stored outside, thus eliminating the uncertainty in connection with the storage of fertilizer during the winter.

– reporting of cultivation data for 2013 has been carried out, which – along with acquired experience – has formed the basis for the decision on focusing on a number of optimisation measures in terms of cultivation. This work has taken place in a broad collaboration between managers, consultants and management in general. Areas of focus include selection of species with regard to all crops, the suitability of different fields for particular crops, optimisation of sowing times and depths, soil treatment in different weather conditions, spraying strategy in different weather conditions, targeted efforts concerning maintenance and establishment of surface irrigation, etc.

– production manuals (cultivation guidelines) have been drawn up for all crops. These will be updated on an ongoing basis.

– the first training module for tractor drivers has been carried out based on the above. Tractor driver training will be followed up on an ongoing basis, both with regard to day-to-day work and on extra course days.

– a qualified Danish assistant to the manager has been appointed in Oravita to assist with quality control, in addition to which the assistant will take part in fieldwork and in the instruction of Romanian personnel. Two new young employees have also been taken on: a tractor driver and a site/logistics employee. These new employees have been recruited due to the fact that they are expected to possess development potential.

– one of our plant production consultants, who was responsible for consulting services in Oravita, was unable to devote enough time to the task, which has opened up the possibility of entering into an agreement with a new plant production consultant who has references to a major foreign-owned, Danish-managed plant production enterprise in western Romania and a large enterprise in Ukraine.

– a meeting has been held with Monsanto’s Romanian specialist in maize cultivation. This specialist has a PhD in maize cultivation and has carried out tests and trials involving maize cultivation at Monsanto and out at farms. We have reached agreement concerning further consultation.

– Due to the fact that the Mizil site now also covers more than 2,500 ha and covers quite a large geographical area, it has been decided to recruit an assistant to the manager at Mizil to assist with quality control and instruction, as well as taking part in operations.

Project/site status

“Site Racasdia”
Our largest site now covers a cultivated area of approx. 4000 ha. A number of activities aimed at consolidation of land have been carried out, including the purchase of land. We still have a few challenges with one of our slightly larger neighbours with regard to the distribution of land, but otherwise the site as a whole is now fully consolidated with a reasonable distribution of area and field sizes.

With regard to the EU project for this site, activities such as new electricity supply (1600 Amp), updated software for grain treatment plant and completed negotiations concerning the start-up of two “6014” silos with a capacity of approx. 7200 tonnes have been completed. The erection of these silos will commence in spring 2014, and will thus be ready in time for the next harvest.

“Site Videle”
Our major challenge at this site is still consolidation of land. The expected harvest area in 2014 is 1,705 ha, and today we have approx. 63% in operation or leased out. In order to boost the land consolidation process we have decided to run the process with our own people. We have thus allocated one of our two permanently employed solicitors to carry out investigative/performance work alongside the site manager. This has been a success. The cultivated area between harvest 2013 and the expected harvest area in 2014 has increased by 417 ha.

“Site Amaru”
The cultivated area has increased by 142 ha from harvest 2013 to expected harvest area 2014 to stand at a total of approx. 2,500 ha. We have also allocated one of our solicitors to assist with land consolidation work.

A number of “draining activities” have been carried out in the form of channels on areas in which we have drainage problems.

With regard to the EU project for this site, negotiations have been completed concerning the erection of two “6014” silos with a capacity of approx. 7200 tonnes in spring 2014.

In addition, two hopper silos will be constructed with a capacity of 400 tonnes each in connection with our seed corn production plant.

Other areas
Buzau North – approx. 850 ha – and “Pietrosani” – 192 ha – have now been sold at prices that have given us a reasonable return.

Organisation
To fill the position of financial controller we have appointed Daniela Donoiu, who is Romanian and is qualified within administration. Daniela has been employed at the firm since 2009 and has now thus advanced to the position of head of administration.

As at the end of 2013 our production management in Romania consists of:

• Jan Kærvang Nielsen, “Site-manager”, Racasdia
• Allan Burmeister, “Site-manager”, Videle
• Kjeld Flemming Jensen,  “Site-manager”, Amaru
• Daniela Donoiu,  “Controller”,  Bucharest
• In addition, 22 tractor drivers, 12 guards, 3 farm secretaries and 3 administrative secretaries were employed as at the end of the year.

Following the end of the fiscal year, an assistant to the manager has been appointed in Oravita, in addition to which the process of recruitment of an assistant to the manager in Mizil is underway.