September 29, 2014 / 1:15 PM / 4 years ago

Germany's KTG to expand soy crop, citing European demand for GMOs

* Sees potential to grow GMO-free soybeans

* Soy grown in Germany, Romania, Lithuania

By Michael Hogan

HAMBURG, Sept 29 (Reuters) - Leading German farming company KTG Agrar AG plans to expand soybean cultivation in expectation of major demand for crops free of genetically modified organisms (GMOs), its chief executive said on Monday.

The European Union produces only about 1.5 million tonnes of soybeans annually. Farmers prefer the oilseeds rapeseed and sunflower seed.

KTG, one of Europe’s handful of listed farming operations, sees great potential for GMO-free soybeans for products such as soyoil, soy-milk and tofu, CEO Siegfried Hofreiter told Reuters.

“With meat consumption in Europe at best stagnating, I think soybeans will be in demand as an alternative,” he said. “I think soybeans will be the meat of the future and that the market in Europe will be massive.”

Soybeans are cultivated on its farms in eastern Germany, Romania and Lithuania.

“We started three years ago with 2,000 hectares of soybeans,” Hofreiter said. “This rose to 7,000 hectares harvested this year, and next year we plan to expand this to 10,000 to 12,000 hectares.”

As for production, he said, “This year we hope to harvest about 20,000 tonnes, and next year we want to harvest considerably more than 25,000 tonnes.”

The company has bought seeds from regions including Serbia, and there had been no climatic problems with cultivating in Germany, although yields are lower in the cooler Baltic State of Lithuania, he said.

“As soybeans are such a rare crop in Europe, there was less of a problem with the type of insect pests that are more common in areas where soybeans are extensively farmed,” he said.

“I think the key point is that we are focusing on GMO-free soybeans. I do not think Europe would have much success competing against GMO soybeans from larger producers such as Brazil.”

KTG’s soybean yields have been almost 3 tonnes a hectare against about 2 tonnes in extensive farming regions, he said.

The company will largely process its soybean harvest itself in its oil mill and other processing units.

KTG expects to harvest about 200,000 to 250,000 tonnes of grain this year, largely wheat, maize, rapeseed, barley and rye. The harvesting of some crops is still under way.

“About half the harvest was sold in advance earlier in the year when prices were higher,” Hofreiter said. “After deducting what we use ourselves in our own food processing factories, about 20 percent remains to be sold.”

He added, “We will not seek more sales in the current low market but will instead put grain into storage as we hope prices will rise again in the winter.”

Grain prices fell to their lowest in around four years in September largely because of expectations of bumper corn and soybean harvests in the United States.

Hofreiter said he remained optimistic about KTG’s full year 2014 performance despite low grain prices, with turnover set to rise to “significantly over” 200 million euros from 164.9 million in 2013.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are set to rise to around 50 million euros from 34.6 million in 2013 as the company benefits from the results of a major investment programme, he said. (editing by Jane Baird)

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