Kernel to Lease up to 250 ths ha of Land

Kernel Group (KER PW: N/R) has announced that it has concluded a preliminary agreement with an international investor to finance a new farming development. Jointly owned, Jerste B.V (Netherlands), shall lease, manage and farm up to 250,000 ha of land in Ukraine. Kernel will manage and control farming operations. Olha Pankiv: Growing worldwide demand for agricultural commodities and expectations of upcoming land market development in Ukraine are stimulating agri-related companies to seek out opportunities to capitalize on future land ownership. A similar strategy is already employed by Ukraine’s major sugar makers. Kernel’s forward-looking P/Land of 3,200 $/ha would be higher than Dakor’s 1,000 and Ukrros’ 2,100. So far, it is not clear to which extent the multiple is applicable to Kernel (the land will be operated by the JV). Apart from the land-bank story, the expansion of Kernel’s agricultural business will obviously allow Kernel to lower its production costs.