A 3 Million Euro Dairy Farm Supported by Ethical Banking

Total Croatia News

The Simentalac Association and BIZ dairy farm are forming a cooperative to make them independent from resellers and traders

The family dairy farm BIZ from the Požega Golden Valley, the Kutjevo association Simentalac and Cooperative for Ethical Financing (ZEF) have joined their potential in a joint project called “I Make Milk”, presented on Thursday to residents of the Croatian capital with the slogan Brunch on Flower Square, Poslovni Dnevnik reports on June 25, 2016.

The goal of this trefoil is to divert attention of the public to the problem of the endangered dairy sector, especially small producers, while motivating citizens and business structures to donate through a campaign lasting until July 15 and support the dairy farm, boosting ten social programs and enabling dairy supply for several institutions and public kitchens in Zagreb that care for lower income population groups.

The aim is to collect 20,000 Euro which the BIZ dairy farm will invest in renovating part of the plant with a commitment to deliver in the following months their products to chosen social programs, while donations are accepted through the platform at www.zef.hr/radimomlijeko. The Croatian dairy sector is on its knees, evident in the data showing only 513,000 tonnes of milk bought off in 2015, around a 1,000 tonnes less than in 2002, during which period the number of dairy farms fell from 65,000 to only 9,948. The negative return to history was enhanced by long payment deadlines and low sale price of milk holding around 0.29 to 0.32 Euro cents per kilo with an estimate of further reduction considering last year production quotas were abolished at the EU level.

Joining forces and producing higher value products while organising their own retail sales, using the model successfully applied by Austrian farmers for decades, is a solution for Croatian small farms to succeed in this dairy trouble. The Simentalac association and BIZ dairy farm are in the final stages of this concept, planning to form a cooperative to complete the production cycle and become independent of the price pressure of resellers, milk industry and traders.

Simentalac currently gathers 16 milk producers with an annual production of around five million kilograms of fresh milk. “We have huge experience in producing milk, while BIZ has excellent results in processing so by joining forces we can be even better,” said Simentalac manager Miroslav Kovač. He has no doubts on the effects of the merger, but is unsatisfied with the sluggish state administration hindering their plans. The first phase of the investment needs around 266,000 Euro. They planned on taking a loan with the support of the Agriculture Ministry and HAMAG guarantee. However, neither the former nor the current ministers created a strategic frame for agriculturea so HAMAG has denied guarantees.

“We have no other choice than to pawn our own assets although that model will bring higher interest costs,” said Kovač about the problem for many agricultural farms. Božo Bošnjak, owner of the BIZ dairy farm, founded in 1994, employing 30 workers and processing up to 5,500 kilograms of milk daily, has large expectations from this project. Four years ago, he recalls, although he received funds through the IPARD programme for a new dairy farm, he gave up.

“The market situation was already dramatic at the time and I didn’t dare invest more although the paperwork was ready,” he details. He believes the new dairy farm, estimated value of 3 million Euro, will be built in the Pleternica business one as a joint project by BIZ and Simentalac. As BIZ already has seven stores, from Rijeka to Požega and Osijek, product placement will not be a problem. ZEF manager Goran Jeras hoped the donation campaign will be a successful opening for this initiative.

He expects a favourable public reaction. They will see how the efforts of small farmers struggling for survival will confirm the importance of producing local, healthy food as well as the value of associated social programs. “Connecting Simentalac and BIZ is a model soon to be recognised by other small farms, set to follow and secure their future,” Jeras believes. He explains the start up capital for the first Ethical Bank in Croatia has been found, with teh registration procedure complete by the end of the year. This bank, whose only stock holder will be ZEF, with over 600 cooperative members, will solve investment projects for small farms.


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