KTG Agrar to manage 7,000 hectares of Romanian farmland
Investors keen to secure expertise in large-scale farm management
Hamburg, 29 October 2009 – Recent years have seen partly strong rises in the prices of farmland around the globe. One factor in this trend has been the fact that the amount of arable land is finite against the background of growth in world population pushing up demand for agricultural commodities. As a result, farmland has increasingly attracted attention from investors looking for safe asset classes, although many investors lack expertise in large-scale farm management. Siegfried Hofreiter sees attractive business opportunities here. The CEO of KTG Agrar AG says: “Efficient farming techniques are key to producing an optimum return on farmland investment.” Non-industry investors are gradually waking up to this fact.
KTG Agrar has a 15-year track record in large-scale farming. The Hamburg-based company currently grows organic and conventional produce on 30,000 hectares of farmland in eastern Germany and Lithuania. “Others can draw on our expertise, too,” says Siegfried Hofreiter. This is what the company’s Farm Management arm is all about. The Romanian venture is the latest addition to its portfolio. Two German investors have retained the firm to manage two agricultural operations comprising a total of some 7,000 hectares of farmland near the town of Iasi. Over the next five years KTG Agrar will be in charge of the complete farm management including all activities from crop planning to consumables purchasing to the marketing of the harvested produce. KTG Agrar will receive a fixed compensation and a share in the profits. In addition, the Hamburg company may exercise an option to become a co-investor in these agricultural operations during the next two years.
Siegfried Hofreiter says: “This is a contract of strategic importance for us in that it not only expands our farmland management portfolio but also gives us a low-risk foothold in this interesting region.“ Demand for services related to the production of agricultural commodities is particularly high in eastern Europe. “The large-scale structures of the region’s agricultural sector offers excellent conditions for efficient and sustainable farming but there is often a lack of modern production methods,” says the CEO of KTG Agrar who is confident of being able to expand the company’s Farm Management arm in the coming years.