Stefan Duerr: EkoNiva as milk producer: is it possible and does it make sense to export milk...

www.ekosem-agrar.de www.ekoniva.com

Stefan Duerr, Hannover, 16th

November 2016

EkoNiva as milk producer: is it possible and does it make

sense to export milk products?

2

www.ekosem-agrar.de www.ekoniva.comwww.ekosem-agrar.de www.ekoniva.com

EkoNiva – APK

• The largest producer of raw milk in Russia

• 7 regional enterprises

• Farmland: approx. 200.000 ha

• Approx. 61.000 head of cattle, incl. 27.500 dairy cows

• Approx. 620 tonnes of milk per day


EkoNivaAgro, Voronezh


• Approx. 35.600 head of cattle, incl. 18.000 dairy cows

• 450 tonnes milk per day

• Sale of pedigree cattle


Stand: 30.09.16

Sibirskaya Niva, Novosibirsk


• 12.650 head of cattle, incl. 4.500 dairy cows

Stand: 30.09.16


Zaschitnoe, Kursk

• Farmland: 15.700 ha

• 1.100 head of cattle, incl. 600 dairy cows

• Focus on seed production


Stand: 30.09.16

Mezhduretshie, Tyumen




Stand: 30.09.16

Severnaya Niva, Orenburg

Stand: 30.09.16



• Specialization on crop production

• Approx. 1.000 head of beef cattle

• Specialization on lentil, durum wheat, chick-peas

Kaluzhskaya Niva, Kaluga



• Milking robots


Stand: 30.09.16

Savinskaya Niva, Kaluga

• Organic agriculture (Certified by European standards)

• 3.450 ha of farmland• 1.450 head of beef cattle

Stand: 30.09.16



Milk processing

Academy of milk sciences

Start with own milk processing in Voronezh region from June 2016

Our milk production


12

Housing systems

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• Simple reconstruction, milk pipeline, costs per stall – approx. 700 EUR

• Labour costs per kg milk 5 Eurocent

• Significant reconstruction, dairy parlour, costs per stall – approx. 1.700 EUR

• Labour costs per kg milk 3 Eurocent

• Modern dairies, rotary milking parlour, robots (in Kaluga), costs per stall approx. 5.000 EUR

• Labour costs per kg milk 1,5 Eurocent


14

Breeds


• Local cattle (red and white, black and white, Simmental)

• Simmental

• Brown Swiss

• Holstein Friesian

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Feeding

• Own feed production

• Total mixed ration, 3 lactating groups, dry cows, transit group

• Ration calculation in accordance with the content of fiber and starch in the forage (NDF is the primary parameter).

• Foragecorn silage, alfalfa haylage, clover, sainfoin, cereal grasses.

• Grass haylage

• Concentrated feedCorn for grain, barley, soy meal, rape meal, lupine, molasses, beet pulp


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Heifer Raising

• Open-air housing is a principle; cold housing in Siberia

• 2 months in individual hutches

• 2 months in group igloos

• Housing in large groups at open-air facilities; recently often at pastures


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Milking

• Milk pipeline

• Side-by-Side

• Rotary

• Milking robot

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Milk quality

• Average butter fat of the milk delivered to processing plants – 3,9 %, average protein content – 3,4 %

• Average somatic cell count – 200 thsd.

• Average bacterial count – 50 thsd.

• The majority of milk produced by the company is delivered as highest class milk, part of the milk is used for production of baby food and cheddar cheese.

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Is it possible to export milk products from Russia ?


Agricultural sector of Russian Federation

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Auxiliary farming

22


Traditional agricultural cooperatives

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Primitive Family Farms

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Modern Family Farms

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Large modern agricultural holdings

Large agricultural holdings in Russia


27

Could we export milk from Russia ?

Milk production in Russia


• Russian producers deliver approx. 13-14 mio. tonnes of milk per year to processing plants

• A dramatic decrease in production of milk by auxiliary farms

• A dramatic decrease in production of milk by traditional agricultural cooperatives

• Small development of family dairy farms

• Intensive development of dairy farming at modern holdings (approx. 3 mio. tonnes of milk per year)

• However, in total no increase in milk production

Could we export milk from Russia ?

Comparison of costs for milk production in Germany and Russia

Eurocent per 1 kg milk Weser Ems, modern farm(400-1000 dairy cows)

Russia, modern dairy farm in Central Black-Earth region (2000 dairy cows)

Feed 14,7 10,00

Labour costs 5,0 3,00

Other operating costs 3,0 2,80

Herd replacement 4,9 4,20

Depreciation, interest cost (including subsidies)

3,0 4,50

Overhead costs 0,8 2,50

Total per 1 kg milk sold 31,4 27,00


Milk: Cost comparison Russia and Germany


Advantage Russia Balanced Advantage Germany

Significant cheaper feed cost in Russia (rough and concentrate). Mainly due to cheaper land cost

Cheaper labor in Russia

Investment cost for building and equipment on same level

Financing cost on same level due to higher interest subsidies in Russia

Higher investment cost for cattle in Russia

Less widespread professional knowledge in Russia

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Is it possible to export milk products from Russia ?

• From cost side, Russian raw milk would be competitive costwise on the world market

• There is no surplus in milk in Russia un the next 5 years

• Low efficiency in processing capacity in Russia for commodity production

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Does it make sense to export milk from Russia?



Development of milk prices on the world market

36,5 36,4

40,8

43,9

40,7

35,834,4

30,631,9

37,740,0

36,6

33,631,5

34,3 33,8 32,9 32,1 32,2 32,9

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

50,0

Jan 15 Feb 15 Mrz 15 Apr 15 Mai 15 Jun 15 Jul 15 Aug 15 Sept 15 Okt 15 Nov 15 Dez 15 Jan 16 Feb 16 Mrz 16 Apr 16 Mai 16 Jun 16 Jul 16 Aug 16

Pri

ce, E

uro

cen

t/kg

wit

ho

ut

VAT

Granarolo (North) (Italy) Nordmilch/DMK (Germany) Danone (France)

USA (North Amerika) Fonterra (New Zeeland) EkoNiva

An average price for 1 kg milk without VAT, standard weight (fat 3,7%, protein 3,2%)

Comparison of costs for milk production in Germany and

Russia without subsidies

Eurocent per 1 kg milk Weser Ems, modern farm(400-1000 dairy cows)

Russia, modern dairy farm in Central Black-Earth region (2000 dairy cows)

Feed 14,7 10,00

Labour costs 5,0 3,00

Other operating costs 3,0 2,80

Herd replacement 4,9 4,20

Depreciation and interest rate, without subsidies in Russia

3,0 10,00

Overhead costs 0,8 2,50

Total per 1 kg milk sold 31,4 32,50


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Does it make sense to export milk from Russia?


• Without investment and interest rate-buy-down subsidies, milk production in Russia is not competitive on world market

• Is it worth to spend Government subsidies to support production, which goes to export ?

• Milk production for export creates working places and income to Russian countryside and hence may justify according subsidies

• Over the years interest rate in Russia may decrease and efficiency in Russian milk production will increase. Hence Russian milk production will be competitive on world market even without subsidies

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Which milk products could Russia export ?


• Commodities (milk powder, butter, cheddar)

• Branded products (cheese)

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Influence of embargo

• No influence on row milk prices due to opened world market

• Big advantage for processing

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Popularization of Dairy Farming

Academy of milk sciences


Thank you for your attention!

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Stefan Duerr: EkoNiva as milk producer: is it possible and does it make sense to export milk...

Presentations & Public Speaking