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Our industry needs fresh personnel, and for this it is necessary to raise a personal brand - Daniyar Abitaev

Kazakhstan 13.05.2024
Source: DairyNews.today
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A large-scale event, the Dairy Olympiad, will take place in Ankara, Turkey, from May 26 to May 30, 2024. Daniyar Abitaev, Deputy General Director of Experimental Oilseed Farming LLP (OHMC), became the speaker of this event. Today, the OHMK dairy company demonstrates successful results and high performance. What is the secret of the company's success, what is the situation in the dairy market of Kazakhstan, Daniyar said in an interview for Dairynews.today. In addition, we talked with the expert about the topic of his speech at the Dairy Olympiad.
Our industry needs fresh personnel, and for this it is necessary to raise a personal brand - Daniyar Abitaev

Daniyar, can you tell us a bit about your company? How long has the enterprise been on the market?

The enterprise itself has been on the market since 1967. We purchased it as owners in 2013 and built our modern complex in 2015. My father is the owner, and I am the deputy for livestock, specifically in charge of dairy production. It's worth noting that just last year, we produced 12,860 kg of milk per cow. This is in account weight. Thus, as of today, our enterprise has a profitability of 25%. And this is considering the drop in milk prices and the lack of government support.

What is the secret to your enterprise's success?

First and foremost, it is to provide the cow with everything it needs and, what is even more important, perhaps even more important, is to provide people with all the conditions for work so that their attitude towards livestock is the same as towards their own livestock, which brings them profit. We have our own motivation system and a social package for employees. In addition, we create all conditions for livestock, that is, a comfortable stall space, a balanced diet, and a well-calculated economy regarding things that should not be economized on. We have a clear understanding of where it is advisable to save and where it should not be done at all. Such classification of different things, different technological processes leads to the farm having good economic indicators.

As far as we know, you want to talk more about this in your speech at the Dairy Olympics?

Yes, my speech will be on the topic of "Effective farm management to achieve economic indicators." I will share our methods and technologies that we use to ensure the farm's economic efficiency. I will definitely tell you everything that needs to be economized on the farm. Additionally, I will provide many examples of what a farmer needs to know before he starts running a farm, or if he already has a farm. What information you need to get about your region, your livestock, soil, climate. This is something that needs to be considered, but unfortunately, it is rarely discussed. There will be a lot of useful information especially for newcomers and future farmers. Everyone who wants to enter this industry, those who want to open their farm, will benefit fr om listening to my speech.

What competitive advantages would you highlight in the market compared to your competitors in Kazakhstan?

Let's start with the fact that there is no competition in our milk market, it does not exist because milk is currently a scarce product in Kazakhstan. I would say that the only competitor is the processor on the shelf. The competitor is bringing in products fr om some northern countries, for example, from Russia. They are our competitors, but in Kazakhstan, we do not compete with anyone. We simply collaborate with processors. And our task is for the processor to want to buy our product, for this, it is enough to maintain quality standards. And that's it. And the product will be sold. Why? Because we do not need to negotiate with a large number of people for our product to be wanted to buy. And today we have quality raw materials. If we compare us with processors, then the processor has to work very hard with marketing, do a lot of work with the population. The processor cannot make the customer want to buy their product. And we have such an opportunity: we have a huge advantage over manufacturers because raw materials today are a scarce product in our country. Accordingly, competitors will not appear to us very soon.

How do you address the issue of a large amount of low-priced milk raw material imports from Russia?

This is a question of quality. They came to us last to talk about lowering the price because even in Russia, not everyone maintains the quality standards necessary for, say, cooking elite cheeses. As the company President does, they cook elite cheese. Also, the company Lactel, their head enterprise produces UHT milk, requiring very high-quality milk. By maintaining quality indicators, we can have no competitors, as not everyone can achieve such quality indicators.

What problems would you note in the Kazakhstani market in general today? What hinders the growth and development of the dairy industry in our country?

Let's start with the fact that today we do not know how to make low-cost milk, unlike Russia. If we compare Kazakhstan, Russia, and Belarus, then with Belarus it is clearer, there is completely state production, they do not count their economy a bit. It is more correct to say that since everything in Belarus is built at the expense of the state, they do not expect a return on their projects, but breed more and more dairy projects. In Russia - a similar story, only it is all in private hands, and they had huge funds allocated for the construction of farms. If I am not mistaken, then about 400 billion rubles were allocated annually to launch new projects over the last eight years. There the state provided loans at a low-interest rate for everyone who wanted to run a farm. And here is this huge difference. It is clear that Kazakhstan has smaller scales, but not as many times as Russia and Belarus are now ahead of us in terms of milk production volumes. Unfortunately, we have only just started doing similar things, and on a much smaller scale. We have allocated 100 billion tenge, and even that money has not been received by anyone yet. We all sit waiting, when they will be issued, the second year has already gone, as this money should come.

In your opinion, are the problems only in insufficient state support?

The unwillingness of farmers to grow according to their quality indicator also very strongly pulls the Kazakh market down. That is, it is enough for a farmer to milk a certain number of heads in order to get 0% profitability without state support and 25% profitability with state support. This is enough for them. And actually, the money earned with state support should be directed towards the growth and development of the farm. Not all farmers conscientiously distribute state support. Thus, the unwillingness of farmers to improve the quality of milk production leads to a shortage of raw materials and a lack of competition - this is a minus for the entire industry. But there is another problem: we do not have enough capacity for processing. If we now get together and start producing a huge amount of milk in the country, there will be nowhere to process it. This is another problem. Therefore, at events like the Dairy Olympics, in my opinion, processors should also come. Some world players like Lactel, Danone. They need to be invited to our dairy events, because without them I do not need so much milk. If I produce 100 tons per day, I do not need it, the processor needs it in the future. In our country - not enough large processors.

So, you believe that we have great potential specifically in milk production, but because there is no demand for it, no processors, our farmers are forced to restrain themselves?

Yes, because there are no operational resources for its implementation. It's not enough just to produce milk; we must also sell it. For our business system to work somehow, we must turn milk into money. Since there are currently no queues for milk because raw materials from Russia are starting to pressure, and in general, we do not have many large processors in the country. Moreover, there is also price monopolization in our region. That is, in one region - one or two large processors. It is clear that price collusion is not a frequent policy in our country because they are also competitors among themselves. Nevertheless, they do not really want to raise the price for the farmer. I understand them because they also do not earn as much as everyone thinks...

The dairy industry is currently being severely shaken. Such a storm, first, due to dumping (artificial price reduction to eliminate competitors) from Russia, secondly, the problem of insufficient processing capacity, thirdly, ready Russian products also come, competitive products. I understand that it is not entirely profitable for the Russian farmer to sell milk cheaply, even in Kazakhstan. Therefore, Russian farmers also experience economic problems. They bring their milk to our market out of desperation because the state subsidizes logistics. Accordingly, it becomes profitable for them to carry it to Kazakhstan, wh ere the price is higher than in Russia. That is, it is export-oriented, plus dumping fr om the neighboring market.

In your opinion, how can this situation affect the future of the dairy industry in Kazakhstan?

I see that in the near future, most medium and not very productive or economically unprofitable farms will simply cease to exist. This is inevitable, as in Russia, by the way. This Russian dumping leads to the fact that Russian farmers, including, stop functioning. This means that in the near future, both in our country and in Russia, this product will become even more scarce, and accordingly, its price will be even more increased. Accordingly, weak players, farms that produce milk on the scarce Kazakh market, will become even fewer. Tomorrow the price of milk will go up, and it will be a market for them to sell at a higher price. Enterprises that withstand the competitive environment will eventually receive a very high price for milk for sale and will have profitability even higher than today. And processing enterprises, accordingly, will raise the price of their products on the shelves.

What measures can the state take to solve this issue?

As I roughly see it, the countermeasures that our state can take concerning Russian milk are to lower the exchange rate of our currency. This is the simplest solution. With the lowering of the tenge exchange rate and the increase of the ruble, Russian milk will become more expensive relative to ours. With such simple methods, our state will most likely regulate our market. This is not only the dairy industry but also the entire industrial and agricultural industry of Kazakhstan.

We are now absolutely non-competitive with Russia. Absolutely everything that our country produces is now non-competitive with Russia. I think it will be real, in the near future to produce something similar. Our government is possibly waiting a bit for a moment when we have other problems, to which our people do not react very joyfully.

In your opinion, what should the dairy industry in Kazakhstan look like considering the country's potential?

Firstly, a 2.5% SPK program should be issued for farms. How did they make this program? They issue private individuals up to 2.5 million tenge to purchase a couple of cows to engage in their subsidiary farm. And since it is tied to one program, farmers cannot accept and implement the money. If 100 families are distributed some 2.5 billion tenge, for example, you have to take on huge responsibility. Who will return this tomorrow from 100 village families? Not one official from the SPK wants to take this responsibility upon themselves.

In our region, it turned out like this. Money came for large-scale farms and for private individuals, including. But they came in one tranche under one order, and no one wants to sign this order because tomorrow they will have to answer for 100 subsidiary farms - why there is no return of the issued funds. Accordingly, this order was simply not signed, the money went back to the state budget, and no one received the money for building new farms. Out of the 100 billion tenge allocated, if I am not mistaken, 17 billion were supposed to come to our region. The money came, lay in the local budget. And since no one signed the order for issuance, they went back to the state budget as unspent. I understand, of course, why no one wants to take responsibility for distributing funds to private courtyards. The money was supposed to come through two different programs.

What important modern solutions and innovations in the dairy industry would you note that significantly improve the sector?

The introduction of modern feeding systems, modern systems for tracking estrus, modern systems for determining lameness. There is a special camera that detects the lameness of an animal. It is installed wh ere the cows return fr om milking, wh ere all the livestock passes. The degree of lameness is assessed by the manner of walking. In the early stage of the disease, using a camera plus artificial intelligence, lameness can be determined. This cow needs to be marked to treat her at a very early stage when it will be easy to fight the disease. Or, say, electronic boluses for tracking PH or temperature in the rumen, to understand when the cow drinks, when she walks, how her rumination occurs correctly, and what the acidity in the rumen is. Plus a system for weighing the cow at the drinking trough. This is used on young stock, mainly it is the technology of a meat enterprise. Butchers put a platform under the drinking trough that can weigh the cow every time it comes to drink, to understand how much dry feed it consumes, how much it drinks, etc. Such systems should be applied in farms wh ere basic things have already been done.

How do you think, is Kazakhstan ready for such innovations?

I believe that in Kazakhstan, we first need to implement basic things and explain them to people. Those who perform basic tasks will have the economic ability to implement innovations tomorrow because they achieve good profitability. Our current task is not necessarily to be among the top most modern farms in the world. First, we need to enter the top 50% of producers, reaching the average American statistical indicator. On average, America milks 12,000 kg per head per year. Once we reach this indicator, there will be scope for innovation and economic indicator growth.

So, you think our country is not yet ready for such technologies and innovations?

There are farms that are ready for this, probably only about five in our country. Or farms that already have a certain number of specialists to cover the basics. These are market newcomers who have experience in crop farming, like in the Akmola region, for example. Right now, in northern Kazakhstan, they are building a modern farm. There, artificial intelligence will determine the internal climate in the cowshed and control it via sensors, so all modern systems are applied there. And this farm can be among the top in terms of production technology in our country. We also have cool robotic farms in the Almaty region. These are all private enterprises.

What innovations are applied at your enterprise?

Currently, we use modern standard technologies to about 80%. There are innovative modern technologies, know-how, which we currently apply minimally. Naturally, in the future, we plan to build a farm that will be maximally technological and innovative. We have such a plan. It will all be robotic, fully automated with minimal human intervention. Our plan is to operate a dairy farm with 2,400 milking heads manned by just 6-8 people.

In one of your interviews, you mentioned that there is a significant labor shortage in Kazakhstan's agricultural sector. Will new technologies help solve this problem?

Yes, technological automation of processes helps address the issue of workforce qualifications. We can afford to train 6 highly qualified people and pay for their training under a contract for their future work at our enterprise for, say, 5-10 years. If, for instance, we are not making the most modern farm but one like ours, it would need at least 50 people. This is the absolute minimum. Our problem primarily lies with unskilled workers. A person coming to work as a stockman does so, usually, not from a good life situation – herding cows, cleaning manure, etc. They come because they likely cannot find other work. There are, of course, certain individuals who simply want to work with animals, but due to age, they cannot learn a more modern approach. They are forced to engage in less skilled labor.

Daniyar, we are delighted that you are a speaker at our Dairy Olympics. What do you expect from this event?

I hope that there will be a large number of people with questions, with specific expectations. And if I can meet some needs, answer questions, fulfill expectations of the participants, then I can help contribute to the growth and development of the dairy industry. This is my main motivation for participating in the Dairy Olympics.

Why do you think the Dairy Olympics is worth attending? What valuable insights can participants gain?

First, I attended presentations by Mikhail Mishchenko, he invited me, and I was very impressed by his speech. Secondly, I follow the portal The DairyNews. Thirdly, I have gathered reviews about the event itself from other farmers, those who attended previously, and almost all the reviews were positive. The Dairy Olympics is a grand and large-scale event. This is the first time I have been invited to such an event as a speaker, for which I am grateful to Mikhail; for me, it is some recognition of my achievements. I have a desire to share as much knowledge as possible to develop the industry. I also run a page on Instagram with the same goal. Our industry needs fresh talent, and for this, it is necessary to elevate one’s own reputation, because today's youth respect a personal brand more than some companies. For example, the company "Olzha Agro" is unknown to schoolchildren in Kostanay, although this enterprise is a "mastodon" in our business. Currently, the director of "Olzha Agro" runs an Instagram page, and those who are subscribed to him immediately understand who is being discussed. To swing and form a personal brand, you need to communicate with such outstanding personalities as Pavel Nosalenko, Mikhail Mishchenko, and other experts who will be speaking at this event. It is a large-scale event, there will be representatives of our industry from different countries of the world, among them, you also need to have a certain authority!
Daniyar, thank you very much for the interview! We look forward to your presentation at the Dairy Olympics.

The Dairy Olympics will take place from May 26th to May 30th in Ankara, Türkiye. The aim of the Dairy Olympics is to assess the prospects of the global dairy market, evaluate existing industry issues, forecast trends, establish new connections, and initiate new ambitious projects.
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