Ekoniva started with livestock and agriculture in the region of Voronezh, 600 kilometres under Moscow. Three new complexes are operational and one is currently under construction. The companies look fine, but there are a few striking things. For instance the fact that the cow manure contains a lot of undigested corn, and that one company shows a decrease in the number of calvings with one in four cows being dry mid-July. There is also insufficient straw to litter the boxes. Which is strange, since Ekoniva cultivates over 15,000 hectares of grain in this region. Most of the straw is chopped up during combining, however, and then ploughed into the ground. Too much undigested maize in the manure is due to insufficient control of the feed during silage.
Control and management are clearly of a lower level than on Sibirskaya Niva. Dürr: “The dairy branch in Voronezh grew extremely fast, from 2,000 cows in 2008 to 11,000 now. I leaned on a young management team, that unfortunately was not able to pull this off. I've learned that you need experienced people next to young managers. I have asked some of the retired people to come back. The company in Siberia is manageable with one layer of management in terms of scale, Voronezh needs an extra layer for the dairy, agriculture and feed production branches. Therefore, it will be split into three separate companies in 2014 under one holding company; 2013 is a transition year. The companies will function completely independent of each other, each with its own machines, cows, facilities and personnel. ”
The Swiss Schenk will manage the entire cattle sector. In the layer under him, some people will be responsible for one or more locations. In addition, even more benchmarking will occur between the companies and investments will be made with regard to courses, especially for management staff.
To reduce labour costs even further Ekoniva increases commercializsation. It sells 380 tonnes of milk daily, of which 60% goes to Danone by contract. The milk price is at least 5 cents higher than that in the Netherlands, according to Dürr. Still, that doesn't stop him from setting up a dairy factory with a processing capacity of 30 tonnes per day: “I don't want to depend on just Danone.”
High costs because of quick depreciation
The cost of milk is around the € 0.35 in this company, of which more than a third goes to housing. The Russian interest-rate subsidy on cattle barns has a maximum term of seven years. Because refinancing after that is uncertain, the loan is also repaid in those seven years. The first year is a start-up year, so that leaves six years to earn back the loan. At construction costs of € 5,000 per pen, that leads to about 13 cents per kilograms of milk for depreciation and maintenance. Barns built after 2012 get twelve years of interest-rate subsidy. Ekinova now owns 101,000 hectares. Land purchasing is a long-term process. In 1992, the employees in sovkhozes received land titles, often for lots of 5 hectares. The exact plots were not recorded, the region was. The average selling price of such a ticket is € 250 per hectare. Once Dürr has purchased 250 hectares in an area, he consults with the head of the region about which grounds it concerns. These grounds are then measured and registered at a cost of € 50 cadastral per ha, resulting in the total costs of around € 300 per hectare. Registered land yields about € 1,000 per hectare. A money printing machine is nothing compared to this. Lease of land is often in kind: 100 kilograms of wheat or barley per hectare per year. Lessors can also get this value in cash, but still often need the grain for feeding their pigs and chickens.
Company: Stefan Dürr (49) is the majority shareholder in Ekoniva-APK, which owns 16,900 dairy cows and cultivates 187,000 hectares of land in six regions in Russia. Approximately 70,000 ha is agriculture and 100,000 ha is intended for feed production. Ekoniva is largely (for € 110 million) financed through bonds, which are being traded at the stock exchange of Stuttgart. Dairy Global visited two offices of the dairy cattle conglomerate, under the Siberian Novosibirsk and near Voronezh, South of Moscow. Strategy: very fast growth through stock exchange financing.