DAIRY FARMING

     In addition to its crop farming operations, the Group has a livestock breeding division which produces and sells milk and beef.

     Raw milk and meat production provide higher returns per hectare of farm land compared to major grain and oilseed crops and act as a natural hedge against volatile soft commodities prices. Unlike agricultural produce sales, which have a clear seasonal character, raw milk sales procure stable cash inflows throughout the year that enables the Group to cover general and administrative expenses as well as other operational expenses during the low season when cash proceeds from sale of agricultural produce are minimal.

     Currently, the Group has 5,602 heads of dairy cattle, including 3,155 heads of milk producing cows, with three dairy farms in the Chernihiv cluster and five dairy farms in the Poltava cluster. In 2010, the Group’s raw milk yields averaged 5.2 tonnes per cow and the Group sold 16.0 thousand tonnes of milk and 1.1 thousand tonnes of beef, making it one of the largest milk producers in Ukraine by volume

   Prompted by market conditions, in 2008 the Group expanded its milk production business. The majority of the milk produced by the Group is categorized as Extra Grade milk with the remainder categorized as First Grade milk. The Group is few of the industrialized milk producers, which has Operational Permit for Baby Food Products allowing to sell milk to baby-food processing plants. This is an evidence of superior quality of the produced milk by the Group.

 ANNUAL MILK PRODUCTION 2008-2010

ANNUAL MILK YIELDS 2008-2010