Landkom is putting its Ukrainian offensive into reverse, blaming the downturn in agricultural markets for a decision to cut about one third of its staff and land.

The farm operator, which operates mainly in the west of Ukraine, is to get shot of 40,000 hectares from a land bank of 115,000 hectares, most of which was acquired on leases last year.

Landkom said the retreat would retain its most fertile land closest to its five farm bases, which the group owns freehold.

"The company is focusing its resources on its most contiguous and by definition profitable land," the group said in a trading update.

'Realigning strategy'

Landkom, which is based and listed in the UK, has cut half its headquarters and expatriate staff and 30% of its 1,200 Ukrainian workforce to cut costs.

It also revealed talks over the sale of majority stakes in some undisclosed assets.

The group blamed the cutbacks on the downturn in agricultural markets, where demand for agricultural land had stopped growing and access to credit had "dried up".

Richard Spinks, Landkom chief executive, said: "We are realigning our strategy to reflect a sharply changed global economic environment."

'Fundamentals sound'

However, he defended that the group's plan to profit from utilising Western farming techniques on fertile Ukrainian land.

"The world's population continues to grow and the fundamentals of our strategy remain sound," Mr Spinks said.

Landkom has tripled to 31,000 hectares its area dedicated to winter crops, comprising 16,750 hectares of oil seed rape and 14,250 hectares of winter wheat.

All of last year's rape harvest has been sold, and 50% of harvested wheat, with the rest to be sold "shortly", the group said.

Landkom shares, which hit 103p in April last year, stood unchanged at 11.5p in lunchtime trade in London.