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Milk Farms. Development Programme for Danone Milk Providers — Practical Recommendations That Yield Results

Inna Iliyenko: With the first issue of our magazine for Danone milk providers we are launching a series of interviews with officials of households that have joined to our Providers Development Programme. You and your household are an example of responsible cooperation. You believed in the opportunity and actively engaged yourself in the project with your whole team. To start our conversation, I would like to ask you how did you get involved in agriculture at the first place?


Oleksandr Korzh: I was born and grew up in a village 9km away from the household I now run. I graduated from Dnipropetrovsk Agricultural University with a Mechanical Engineer's Degree. In 1995, I started work at Haidamatske LLC as a Senior Engineer, only then the household was operating under the name of Mayak CAE. In 1996, I was elected as the Chairman of the enterprise, and since 2000, I have been the Head of Haidamatske LLC. 


Tell me about your household.

Mayak CAE, on the basis of which the Haidamatske LLC has been set up, was formed by means of reorganisation of a Collective Agricultural Enterprise named after Suvorov. The household now has 3,000 ha of land under cultivation and 320 milking cows. We plan to soon increase that number to 400 cows.


What challenges do you come across developing your household?

We have a quite challenging region in terms of livestock, especially of dairy cattle breeding. To make you see what I mean I will point out that we have 28 households in our region, and only two of them, ours included, have got livestock. I mean, we could have gone the easy way as well abandoning livestock, and economically, it could have been more efficient, for this sphere demands labour and capital. You could find a million reasons not to have livestock or produce milk. But I believe a true agricultural household cannot exist without livestock. I believe that even the amount of land a household gets must coincide with its livestock production. It is also very important for the villagers.


And anyway, everyone drinks milk, but everyone hopes that someone else might produce it! As for our household, since 1990s all the livestock has been kept in one room, all that was left of the farm were the walls. But slowly, we began to rebuild. And when three years ago we decided not to abandon livestock in order to develop crop production, but to move on, our colleagues from Danone have been a lot of help, and still are.


How do you picture the further development of your household?

Naturally, further development is only possible with stabilisation and increase of production through new technology, and not in extensive way. It is crucial to maintain financial income in spite of all the challenges of agricultural sector, such as privatisation, lack of protection of agricultural producers, numerous inspections, uneven conditions for different producer groups. For example, Haidamatske processes only 50% of our village's land, while local budget is 90% formed by our farm. The rest is paid by small producers who use the remaining 50% of the land.


Of course, if we are talking about developing livestock in general, we cannot leave out pricing policies on the milk markets. We would certainly like the price to be more attractive, for this year, for instance, it is 20% lower than last. The profitability is virtually non-existent.


What do you think important for Haidamatske's further development? What part of this development might be for Danone to play?

Everything is important; people, employees, appropriate resource, managing conditions. But I suppose that we can only develop being on good terms with our partners.


We have been working with Danone since 2007. Before that, we have been working with other processing enterprises, and have had good relations with them, too. But what I particularly like in Danone is a transparent scheme of cooperation, relations based on trust, and high standards applied to raw material and products. The price, being reasonably high and attractive, meets these standards as well


As I have said previously, Danone has supported our decision to develop livestock three years ago, and now is our reliable partner in milk production. We have installed cooling equipment at all three of our farms, reconstructed the premises, purchased milking machines. And this year, we joined Providers Development Programme – to intensify the manufacture.


What can you say of the collaboration under the framework of Providers Development Programme? I guess it was pretty strange to hear from a processing enterprise that they can teach you how to produce milk more effectively, and that you ought to pay for it!

Honestly, we were very sceptical about Danone's proposal at first. We believe that every little counts, and the programme is not cheap. But when we actually started work, we agreed that the impact significantly overlapped our expenses. The team engaged by Danone helped us increase milk yields and balance a great deal of milk production issues. Compared with 2011, we show much better results in spite of a great drought – we have had virtually no rain for 14 months since last summer.


Our own fodder base this year is only 40% of what we have had last year. Danone consultants have optimised our resource usage, we have purchased a fodder mixer under their advice. And this is only a small part of the issues we get to discuss with them. Still, this year's goal is clear to us: to maintain our livestock and survive through this difficult year.


So now we take Providers Development Programme seriously, for the team involved is absolutely superb. All their advice is real and helpful, they notice a lot of things we don't, and give us practical recommendations on how to increase our production.

Here is my advice to any enterprise that is offered to take part in Providers Development Programme: take it seriously, a just follow the recommendations, for they will help you without you having to make any drastic changes.


I should also say that my specialists' attitudes have changed, they are interested now, for there is some planning and organisation work going on and everyone is increasing their own professional level. And everyone sees result, from a milkmaid to a senior specialist.

And what does the programme lack, what I would say should be improved? I guess there is enough of everything for the time being. Perhaps we would like some extended possibilities in financing, for example, by advance payments for the intended use..


I would also like to add that we have witnessed great teamwork, openness and straightforwardness in discussion in your household. I believe it was one of the key factors that, summed up with a desire for changes for the best, made the increase of milk production possible. I am sure that we are now at the very beginning of our fascinating journey to highly efficient milk production.

And what can you say of Danone products? Do you consume it?

Everyone buys dairy products, there's no way around that. And when you are a producer, you buy those products for the production of which you have provided the raw material. So I buy Danone products only, for I know how the company treats milk, and the products are very tasty!


And lastly, what would you wish your colleagues – other milk producers?

I would wish them improved market conditions, for profitability is now very low. Naturally, it's not a question to processing companies alone, but for higher levels of management as well, and it's also a question of producers' unity in defending their rights.


Conversation between: Oleksandr Korzh, Haidamatske LLC Director, and Inna Iliyenko, Danone Ukraine Providers Development Manager