KTG Agrar builds third branch in Lithuania
"Land of Rain" offers ideal conditions for cultivating agricultural resources
Hamburg, May 19, 2008 – KTG Agrar AG, a leading European agricultural enterprise, continues to expand its cultivable land and is building up a new branch in Lithuania to support this growth. Besides Raseini and Mazeikiai, the Pauliai branch is the third regional site of the Hamburg-based company in the Eastern European EU member state. KTG Agrar thus continues its strategy of establishing and growing branches in favourable locations so as to take advantage of the benefits of large-scale farming. Since 2004, the company has been active in Lithuania, where it now manages some 3,700 hectares. By acquiring new land, KTG Agrar wants to push ahead its growth. For the harvest year 2008, the company has some 19,800 hectares in Germany and Lithuania for the cultivation of organic and conventional market crops such as grain, corn and rape.
Most of the land in Lithuania is purchased by KTG Agrar, while most of the land in Germany is leased under long-term contracts. "Lithuania offers ideal conditions for farming," says Siegfried Hofreiter, CEO of KTG Agrar. "It is not without reason that it is called the 'Land of Rain'. We expect the cultivable land to gain significantly in value in the medium term and therefore acquire it." Since the company bought the first fields three years ago, land prices have about tripled. Compared to other European countries, Lithuania offers compelling locational advantages. The favourable climate, which is characterised by mild winters and high precipitation, guarantees reliable harvests in the long term also in times of climate change. Moreover, the high level of legal certainty ? e.g. in the form of an electronic land register ? and the geographic location make Lithuania an ideal production site. After the harvest in Germany, important machines such as combine harvesters and grain dryers can be shipped by ferry to Lithuania within 24 hours. "Our large land areas allow us to use the largest and most efficient agricultural machines," explains Wolfgang Bläsi, CFO of KTG Agrar. "And by using them in different regions, we increase their annual utilisation rates by over 50 percent." The Baltic country is also well suited for marketing the agricultural resources. Lithuania has an ice-free port, Klaipeda, which allows KTG Agrar to ship its products to its key markets of Germany, the UK, the Netherlands and Denmark all year round.
KTG Agrar will continue to expand its cultivable land and plans to grow its portfolio to at least 22,500 hectares by the end of 2008. The company aims to increase the share of own land from the current level of approx. 15 percent to about 20 percent in the medium term.