Agrichain Plan is a universal designer for creating scenarios for the annual production program of an agribusiness

Since 2011, there has been a downward trend in food prices in the world due to overproduction and temporary surpluses. Despite this, the cost of manufacturing products in Ukraine is increasing. The catalyst of this process was the war, which already intensified the trend that had been in place for the past 5-7 years.

Today, the Ukrainian producer is not competitive on the international market and cannot influence the price of products.

And force majeure risks have become so high that counterparties prescribe additional penalties due to the possibility of non-fulfillment of contracts. If war and climate change cannot be influenced for objective reasons, then the boundaries of business decision-making are narrowed to the management of the structure of crop rotation, production technology, and responsiveness to changes in external factors that affect the cost of products.

In the current conditions, the agricultural enterprise is able to influence only the cost price of the manufactured product – the expendable part. And in order to obtain a marginal profit and protect the business from the influence of the above-mentioned factors, farmers must reach a new level of management and risk management, when decisions are based on accurate calculations, financial and economic literacy.

The AgriChain company has developed a new web application – AgriChain Plan, the main task of which is to manage the planning and execution of the agricultural company’s annual production program.

The key feature of the system is the scenario approach. Flexibility and variability are what business always needs, especially in today’s conditions of force majeure and risks. That is why the AgriChain Plan IT solution is a system that allows you to apply:

1) budgetary parameters – such as exchange rates, prices of seeds, fertilizers, AZR, energy carriers, services for crop processing, transportation of products, prices for finishing, prices for finished products depending on the period of the production season. This helps to clearly track the impact of the exchange rate and the price situation on the indicators of economic efficiency;

2) templates of technologies for crops taking into account the predecessor, type of crop rotation, intensity of technology, which can be used to quickly create technological maps in the production program scenario;

3) different scenarios of the production program, from which to choose the most optimal one for execution in the company, namely:
  • form options for crop rotation based on a three-factor model – the structure of crop rotation in terms of crops, optimal / permissible / critical predecessor, territorial grouping of arrays of fields, two crops or form a crop rotation according to one’s own vision;
  • determine the planned volume of production, forecasting the yield of crops for each field, taking into account its potential due to historical yield and a number of other factors, losses of valzalik / dead waste, forecast structure of distribution of products by quality, yield of by-products, number of slopes, two crops in one season;
  • to build a plan for the placement, processing and storage of products at toques, elevators, sugar factories, based on the optimal transportation distance from each field, as well as to build transportation routes from each field;
  • create technological maps based on templates for culture in general or for individual groups of fields / experimental field local technology (excellent power supply system, protection, application rates, etc.), determine for each field the scope of this or that technological operation;
  • form a production plan by work performance periods, automatically calculate performance dates depending on the number of own and hired equipment, its production, the number of production shifts, form a plan in terms of mechanized, manual, auxiliary, transport work;
  • to calculate the optimal logistics of transportation of goods to the fields from internal warehouses;
  • apply different cost calculation algorithms for each technological operation, using the formula designer;
   • to form a plan of the main variable costs with the possibility of their quick calculation in various options of technologies;
   • calculate the costs of transportation of products, using the distances from the fields to the unloading points;
   • form a flexible plan of costs for finishing, storage and shipment of products from elevators;
   • build a product sales plan depending on sales channels (CPT, EXW, shares, fodder, seeds) in terms of quality, sales periods, sales volumes / contracting in the period, forecast sales price depending on the sales period, which makes it possible to model any sales strategy options ;
   • analyze at the level of the enterprise, culture, and each field indicators of technological efficiency, variable costs in terms of groups and articles, fixed costs, revenue part, EBITDA.

AgriChain Plan makes it possible to simulate variably “optimistic”, “realistic” and “pessimistic” scenarios. For example, if the market prices for fertilizers are high, it may be worth laying down a technological map with a lower fertilizer application rate for a specific crop. If corn quotes reach $120 per ton with a cost of cultivation of $140 per ton, then perhaps it is worth doing a crop rotation with an emphasis to other crops that can be processed within the country. Consider options for niche crops that have a high margin. If finishing grain is expensive at elevators, it may be more cost-effective to invest in your own current farms, finishing and storage.

AgriChain Plan’s scenario-based approach to planning makes it possible to calculate an infinite number of models. And as a result, with a conditionally unchanged income part, see how the EBITDA indicator changes in dollars per hectare. The main goal is to track the difference between the income and expense part. After that, you can make a balanced management decision regarding the planning of crop rotation, TMC, application rates, logistics, involvement of third-party equipment, finishing and storage of products, sales channels, etc. – this is the main prerogative of AgriChain Plan.

Also, an equally important task of the system is to manage the execution of the production program during the season. It is possible to quickly make current adjustments of certain variables and analyze how this affects performance indicators, on a daily basis analyze the plan fact of the execution of technological maps by crops.

Today, the world more than ever requires flexibility and quick adaptation to changes, making balanced management decisions taking into account all the details. Therefore, the architects of AgriChain IT solutions created a web application as a universal designer, where the change of each indicator affects the final economic result. It is this approach that will help the management of agricultural companies to easily carry out systematic control and management of the production program even at the micro level.