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Rusagro is one of the largest Russian agricultural holdings, operating in four lines of business at once: sugar, vegetable oil, meat and agriculture. Such a combination is rare even within the industry. Its depositary receipts trade on the Moscow Exchange under the ticker RAGR.
The point of being diversified lies in the different nature of the risks. The sugar business depends on the beet harvest and world sugar prices; the oil and fats business on sunflower prices and export duties; the meat business on the cost of feed and the animal disease situation. It is rare for all four lines of business to slump at the same time.
The agricultural segment, meanwhile, supplies the others: the group's own beet goes to its sugar plants, and its grain goes into feed for pig farming. This is the same principle of vertical integration as in the steel industry, except that the raw material grows in a field.
Land here is not only a means of production but also an asset: the holding's land bank has value in its own right, and that value rises along with the price of farmland.
Processing of sugar beet into sugar and by-products.
Processing of sunflower seeds into oil, mayonnaise and margarine.
Full-cycle pig farming — from feed to processing.
Growing beet, grain and oilseed crops on the company's own land bank.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
The holding produces sugar, vegetable oil and products made from it, pork and processed meat products, and also grows sugar beet, grain and oilseed crops on its own land.
They carry different risks: sugar depends on the beet harvest, oil on sunflower and duties, meat on feed and animal diseases. It is rare for all four to slump at the same time, and this smooths out the group's results.
It is both a means of production and an asset in its own right. The company's own fields provide raw materials for processing without buying them on the market, while the land bank itself gains in value along with the price of farmland.