Market under control: How Agro-Region stays ahead of risks in procurement
30. 01. 25
The Agro-Region Group of Companies is constantly searching for optimal solutions for procuring essential material and technical resources (MTR).
This is highlighted by Dmytro Tarasiuk, Procurement Director.
What defines your procurement strategy?
Dmytro Tarasiuk: We adhere to the principle of “smart procurement.” This means our decisions are based on in-depth market analysis, risk distribution, and supplier selection that considers not only price but also their reputation.
For example, this year, we contracted most of our fertilizers in June—at the “price bottom.” This allowed us to avoid the phosphorus fertilizer shortage that occurred in July–August and prevent additional costs, as nitrogen fertilizer prices increased by 25% by January. We also split nitrogen fertilizer purchases into two parts to reduce financial pressure and distribute risks.
As for suppliers, we prioritize working with reliable partners who demonstrate transparency and timely contract fulfillment. Price is just one part of the equation—delays in delivery or low-quality products can cause more harm than cost savings.
What can you say about seed and crop protection procurement?
Dmytro Tarasiuk: We purchase seeds in advance. By November, we had contracted 90% of our needs, leveraging the maximum early booking discounts. The remaining 10% consists of test hybrids that we trial for future harvests.
We also procure crop protection products (CPP) as early as possible, especially seed treatments, soil herbicides, and growth regulators. Additionally, we maintain an “emergency stock” of herbicides and insecticides to mitigate potential force majeure situations, such as unexpected pest outbreaks. This ensures flexibility in production processes.
What is the fuel situation? Has your procurement approach changed after the full-scale invasion?
Dmytro Tarasiuk: Before 2022, we relied on just-in-time fuel deliveries, maintaining only a small reserve. However, after the war began, we expanded our storage capacity, ensuring that we could continue seasonal operations even in crisis conditions.
Currently, we have about 20% of the fuel needed for the spring planting season. Unfortunately, oil prices remain at $80 per barrel, so we decided to delay major purchases. We are monitoring the market and may switch to spot purchases in smaller batches this year, as later procurement might be cheaper.
Are there any issues with fertilizer or seed shortages?
Dmytro Tarasiuk: When purchases are made in advance, as we do, shortages are generally not an issue. However, there are times when certain seed hybrids or specific fertilizers experience high demand. By following our contracting strategy in November–December, we avoid these risks.
How do MTR expenses fit into your cost structure?
Dmytro Tarasiuk: Fertilizers always make up the largest expense share—this year, they are twice as expensive as seeds, fuel, or CPP (individually). However, thanks to early procurement, we have significantly reduced fertilizer costs.
Do you expect higher expenses for the 2025 planting season?
Dmytro Tarasiuk: Our overall MTR budget will increase by 15% in 2025, but this is due to crop rotation changes—we are increasing corn acreage, which is a more resource-intensive crop.
If we look at costs per crop, the increase will be around 5%, but this is not due to price hikes. Instead, it stems from adopting more advanced technology, including higher fertilizer use and more expensive CPP.
What is the key principle of Agro-Region’s procurement strategy?
Dmytro Tarasiuk: Our success is built on three key pillars:
- Strategic market analysis
- Product quality
- Trust in suppliers
We always balance competitive pricing with supplier stability, as this allows us to minimize risks and confidently plan for the future.
We truly hope that 2025 will bring not only strong harvests but also victory for our country.