Kintal Islamov Discusses Construction of New Large-Scale Dairy Farm

'Atameken Agro' is preparing a project for a new dairy farm for 3100 milking cows and is considering further scaling of this format. In the future, the group aims to bring the herd size in modern complexes to 18,000 cows, and if projects are implemented in all nine farms, up to 27,000. Simultaneously, the company is exploring options for deep milk processing and the construction of a plant with a capacity of 400–500 tons per day.

— Kintal, you mentioned that 'Atameken Agro' plans to build a new dairy farm for 3100 cows. At what stage is the project?

— We are already designing the farm and selecting equipment. The previous project generally yielded positive results. It was costly, but we consider the achieved metrics to be quite good.

We essentially launched the first farm from scratch. Now it's already in its third year of operation, and the average yield last year was 10,713 liters per cow. This is a good result for the starting period.

— You currently have 1400 milking cows on the first farm?

— Yes, 1400 milking cows. The total herd size, including young stock, is 2,900 head. The new farm is planned for 3100 milking head.

— Do you see the 3100-cow format as a model that can be replicated?

— Yes. We first want to test this model. For a farm of this size, the approach should already be more industrial and technological. The existing complex will probably retain only the basic principle: the cow needs to be properly housed, fed, and milked. The technology itself will differ significantly.

For example, our current farm does not have a centralized stationary feed kitchen. In the new complex, we plan to build a large feed kitchen, where the preparation of rations will be monitored and accounted for. This should significantly improve feed preparation levels.

— What else will change in structure and technology?

— We currently use an ordinary ventilation system. In the new farm, we want to switch to tunnel ventilation. The project envisions a large barn accommodating 3100 milking cows. This number of livestock needs to be fully provided with fresh air and a comfortable microclimate maintained.

Preliminarily, the project provides for four feeding tables. However, the final configuration is still being specified.

— What milking system are you considering?

— We are looking at proposals from several suppliers, including DeLaval and Afimilk. We plan to install a milking carousel for 100 places.

— A hundred places is a very large carousel. Why choose this size?

— We realize we currently lack experience operating a farm of this scale. A 100-place carousel will give staff more time to work with each cow and allows for a calmer organization of the milking process.

We have seen carousels with 80 places on farms with similar livestock. They also cope with the load, and they have spare time. But for a first project of this scale, we want to provide some reserve.

— There is an opinion that intensive milking on large carousels shortens the productive life of cows. Does this concern you?

— We visited quite a few farms and haven't encountered instances where animal injury was specifically attributed to the carousel. The other issue is productivity levels.

When a cow produces 48–50 liters of milk per day, her productive life does indeed shorten and may be 2–2.5 lactations. At a productivity of up to 39 liters, a cow, according to specialists, can calmly endure 3–3.5 lactations. Therefore, I wouldn't directly link an animal's lifespan with the type of milking equipment.

— Why did you choose exactly 3100 cows? Why not two or, for example, five thousand?

— It's a question of economies of scale. In our estimation, it becomes most apparent with about 2,500 to 4,000 cows. In this range, significant reductions in specific capital costs can be achieved.

When a farm becomes significantly larger than 4,000 head, the additional effect of scale begins to diminish. Moreover, this is our first project of such size. Construction and the available feed base must both be considered. We are not yet ready to convert all arable land solely for ensuring milk production.

— Did the first complex convince you that dairy farming can be a profitable business?

— Yes, we are receiving good income and seeing decent production results. Hence, the decision to move on to the next project was made deliberately.

— But you also say that the first complex turned out to be expensive. When can it pay itself off?

— We invested about 13.4 billion tenge in it. Disregarding the cost of money, the payback period under current conditions can be roughly nine years. If the milk price rises, it will shorten. If cash flows are discounted and capital cost taken into account, the period will be longer.

— Nine years is a long period. Why is business still willing to invest in such projects?

— Government support plays a significant role. If cheap financial resources are available, the project's economics become more attractive. We consider a model where the investor invests about 30% of their funds and receives 70% through a government program as acceptable.

This way, the cost of money and depreciation can be properly accounted for, and the project appears quite effective. We will see how the construction of the second farm goes. If it also produces good results, we'll make decisions on further scaling.

— How much might the new complex for 3100 milking cows cost?

— We are currently estimating around 25 billion tenge, including the acquisition of cows. But it's hard to name the final amount: building materials are constantly rising in price, construction costs are high, and the geopolitical situation remains unstable.

A significant portion of the costs is directly linked to animal purchase. Livestock has significantly increased in price over the years.

— What mistakes from the first project are you aiming not to repeat?

— The main problem was the lack of personal experience. We didn't always know the real market cost of certain solutions and didn't completely understand which technologies were truly necessary.

As a result, some components turned out to be excessive - we could have done without them. Simultaneously, some solutions were lacking. For instance, the complete feed kitchen.

I wouldn't call these global mistakes. Rather, some things could have been done better, more carefully, and more cheaply.

— But you worked with consultants during the first project?

— Yes, and the issue was that we listened to them. We worked with GEA Kazakhstan and expected that the company had sufficient experience to propose the correct technology.

But in my view, this is not just one company's problem. Many suppliers primarily aim to sell equipment rather than pass on the technology to the client. Equipment and the technology for its effective use are far from the same thing.

— Can you provide a specific example of a solution you would revisit today?

— On our first farm, we installed mats for the cows. Suppliers probably find it more profitable to sell them precisely. Later, studying the experience of other farms, we found that keeping cows on deep bedding might be more comfortable and hygienic.

Recycled manure can be used as bedding. This allows a part of the organic material to be reused and reduces costs. Of course, this system requires regular control and maintenance, so each option has its pros and cons.

We studied farms in Europe, the USA, and China. Many farms use deep bedding - sand, recycled manure, sometimes sawdust. Mats were much less common. Therefore, the question again arises for us: do suppliers always give producers complete and objective information?

— Where will the new farm be located?

— The distance between the existing and new complexes will be about 120 kilometers. The site was chosen considering the availability of construction materials.

Crushed stone, sand, and gravel are expensive today, especially if they have to be transported 200–300 kilometers. Besides, there are road constraints. Proximity to materials should help us reduce capital investment volumes somewhat.

— What genetics do you use on the first farm?

— We purchased Danish and German cattle. Judging by productivity, the genetics showed themselves well. The first calves, raised on our farm, have already appeared, and we are now starting to introduce them into the replacement herd. The first results also look good.

— What are the average milk quality indicators?

— The latest numbers I remember are about 4.3% fat and about 3.5% protein.

— Who are your milk buyers?

— The main buyers are Eurasian Milk and Milk Project. The base price per year is approximately 250 tenge per liter.

— How important is the subsidy for each liter of milk produced? Can a large modern farm operate without it?

— If there are no subsidies, milk will become more expensive. This is a direct dependency. Nobody will produce milk at a loss.

Yes, milk is expensive in Kazakhstan, but it is still cheaper than, for example, in Europe. The subsidy allows keeping the raw material price at a certain level. If removed, the costs would still have to be offset through the selling price.

— The state declares reimbursement for part of capital costs. How does the actual support compare to the stated level?

— Formally, it's said to be 25%, but we didn't receive that much in practice. The current standard is, as far as I recall, about 2.9 million tenge per head. Modern projects do not fit into this standard anymore.

If you compare the received compensation with the actual capital costs for constructing the first farm and equipment, state support was about 8%. This is significantly less than the stated 25%.

— How pressing is the staffing issue for you?

— Like everywhere, there's certain staff turnover. The main tools are salary and working conditions. At the new farm, modern equipment is used, there are no situations where a person is forced to work waist-deep in dirt or manure. Everything is quite clean and neat, and waste is disposed of.

There is no absolute cleanliness on a livestock enterprise, of course. For example, there are 'bioreactors' to maintain, some waste arises. But overall, conditions are much more comfortable than people usually imagine when they think of working on a farm.

The village of Korneevka is nearby, so the enterprise is not remote from a populated area.

— Do you also find managers and technologists in the local market?

— When we launched the first farm, we invited specialists from Belarus. We had Belarusian managers and a zootechnician working. Now the complex is fully managed by our specialists.

— How do you assess Kazakhstan's dairy market geography? The main industrial production develops in the north, while a significant portion of consumers live in the south.

— This is one of the market's peculiarities. The main opportunities for milk production are concentrated in the north - in the North Kazakhstan and Akmola regions. At the same time, a significant part of the population lives in Almaty, Shymkent, the Zhambyl region, and other southern regions.

That's why we strive to develop several large farms and gradually increase production volume.

— What milk production volume would you like to achieve in the long term?

— In the long term, we are considering producing between 600 and 700 tons per day. The maximum target is roughly 800 to 900 tons.

Once we reach at least 200 tons per day, deep milk processing will already be necessary.

— Are we talking about building a dairy plant?

— Yes, we are already studying this issue. Traditional production like cheese exists, and there's more profound milk processing. Technologies are emerging that allow for obtaining more valuable components from milk, which are used in medicine and infant nutrition.

After launching the second farm, we will likely expand the first complex and then start building the third farm. Around this time, a processing plant with a capacity of 400–500 tons of milk per day will need to be established.

— What total herd size does your strategy foresee?

— In the foreseeable future, we can speak of about 18,000 cows. The group has nine farms. If a farm for around 3000 milking heads is built in each of them, the total livestock can reach 27,000.

Of course, we won't build all nine farms in five years. But if during this period we implement at least half the program - for example, launch four complexes - it would already be a good result.

In the following five years, when we've accumulated experience and formed the necessary resources, we can build two farms simultaneously per year.

— Whose experience do you rely on when forming such a strategy? For instance, did you study Russia's 'EkoNiva'?

— Yes, we visited 'EkoNiva' enterprises and observed how they organized their production. If other people can manage such scales, why can't we?

Here a certain competitive interest arises: why are we any worse?

— Should one look more towards Russian or Chinese producers for inspiration today?

— I would currently look to the Americans. It relates to animal care quality, barn microclimate organization, and approaches to feeding and breeding young animals. These systems are well developed in the USA.

— How serious a threat do epizootic risks, including foot-and-mouth disease, pose to large dairy complexes today?

— This must be approached with great caution. It's a big problem, and everyone needs to strictly adhere to veterinary and sanitary requirements.

Personal subsidiary farms present a certain threat. A small outbreak can spread and cause enormous damage to a large farm. With small herds, the level of control and responsibility is often lower: potential losses seem insignificant, so biosecurity is often simpler.

In general, veterinary safety culture is still underdeveloped here. COVID-19 taught people to take infection spread more responsibly, but livestock producers haven't fully transferred this lesson to production. So far, as they say, Allah has spared us. I hope it continues, but it's better to learn from the mistakes of others.

I believe that systematic attention to veterinary safety should be a state matter.

— You plan to participate in the Central Asian Dairy Congress AqAltyn. What do you expect from the event?

— To be honest, to hang out with you. And, of course, to hear something interesting.

At such events, networking and establishing closer cooperation is possible. It was at AqAltyn that we once met Dutch specialists and continued relationships with them later. Therefore, such meetings are beneficial not only for speeches but also for the contacts developed among participants.