February 25, 2010

Moderator’s Report
Levi Huffman, Damon Spight, Craig Spray

Morning Farm Visit: PD Dobra Niva

This site, a farming cooperative directed by Mr. Petrus Dadko, incorporates crop production,
Holstein cattle (dairy), cattle (meat), and sheep (dairy). The farm sits on 1,700 hectare acres
arable crop land and 2,800 hectare acres of pasture land. It has seven divisions, two farm
properties, and is owned by 15 farmers. They raise all of their feed; they also raise oil seed, rape
and barley plus run about 1000 sheep on their 2000 hectare acres of pasture land. They keep
their sheep as a way to use their pasture land efficiently. They lamb and wean the lambs at 6
weeks old then milk the sheep for five months by hand and sell the sheep milk to make cheese.
They milk 600 head of cows. Dairy prices in 1969 were 0.36E; the prices are now .22E. Local
vet inspect the cows periodically. Soil tests are conducted every five years. No more than 170
kg/hectare of manure is allowed.

Before 1990 the farms were government state owned co-ops. After 1990, when the farm/lands
were privatized, they started to become private business. From 1990 to 2004 farming in Slovak
was financially good. When in 2004 Slovak became a member of the European Union (EU).
There are two levels of membership in the EU: E15 (old established members) and E12 (new
members). Slovak being a new member had to go by the new rules. One example of the new
rules was new members get $145 per hectare acre and the old member played by a different rule
and got $555 per hectare acre of government payment. With that kind of rules they cannot
compete with the other members and still get the same price for their product. The E15 members
want the E12 farmers to be smaller, making it easy for them to buy their products. But the Slovak
farmer feels he needs to be bigger to compete with the older members.

They have accepted the new tech knowledge as they can afford it. In the dairy herd all cows are
kept track of by computer. Each cow wears an electronic collar. Ten years ago the cows were
hooked up to a chain all the time, now they are free to roam in a free stall barn. They use John
Deere equipment on their farm and do all of their own repairing in their shop. They did raise
swine but found it not profitable. They do buy some feeder pigs from Netherlands to feed out
from time to time when they see a profit in it.

From 1990 to 2004 agriculture was very profitable, but since joining the EU in 2004 times have
been bad and they are just trying to hang on hoping times will get better. Some of the new E12
rules will drop off by 2017 and that should be a plus.

Afternoon Feeding Company Visit: Horna Zdana: Presenter, Peter Tomas (son of owners)
This site is a private company that began in 1991. During the communist era Horna Zdana use to
be a wheat mill. Today it still contains an old section made by his grandfather, and it provides
feed to large consumers for cattle, swine, horses, rabbits, and poultry. The feed consists of wheat,
maize, corn, barley, weed waste, sun flower seeds, and mineral mixture. The average feed mix
contains seven to twelve different ingredients.
Remaining competitive has been difficult since imported feed can be bought at a lower price.
One strategy has been to buy ingredients from local farmers and then convert those ingredients
into ready mix. At its peak, approximately four to five years ago, the company had 15
employees, 500,000 broilers, produced 4,000 tons of grain per month, and covered two shifts.
Competition and compliance with European Union regulations have resulted in Horna Zdana
now only having one corporate vehicle, seven employees, and produces only 2,000 tons of grain
per month. If the company wanted to expand, credit is available from the banks. The company
just does not have sufficient customer base to expand.

Horna Zdana’s nearest farthest customer and nearest local competitor is 80 kilometers to the
north and south of this 9001 ISO compliant company. Its average customer owns 200 livestock.
Customers first ask about price: then, they might ask about quality. Hence, in this economically
strapped country, Horna Zdana cannot at this time leverage product quality as a competitive
advantage. Quality control and safety checks, in fact, are handled by Horna Zdorna, whose
operational guidelines when solely under Slovakia were more stringent than the current
guidelines imposed by the European Union. (Outside safety and quality checks also are
conducted by appropriate agencies.)

The company currently pays 19% value-added tax to the state. Its hope is that a current
legislative proposal will eventually reduce that tax to six percent. In Slovakia, company’s like
Tomas’, pay at least 40% to the government for their employees. When news came about the
opportunity for Slovakia to join the European Union, Tomas was hopeful of many positive
changes. Indeed, funding for tourism and highway improvements, for example were positive. In
addition, benefits such as people being able to move freely across European countries, adoption
of the Euro, and entrance into the global market were derived. However, the small business
owner has suffered more than benefited. Small business owners and small cooperatives have
little influence on policy change. For example, France has a $4 million market voice compared to
Slovakia’s $80 thousand market voice. Subsidies to farmers in original countries of the European
Union (EU-15), again such as France, are as high as 555 Euros per hectare compared to only 145
Euros per hectare for Slovakian farmers.

It will not be until 2013 before the next Common European Policy change is likely. By then,
Horna Zdorna, according to Peter Tomas, can only hope it will still be viable. He believes if it is
still operational, then these difficult times and the innovations he and other small businesses and
cooperatives are forced to move toward, will make them and Slovakia stronger for the future.

post@agriinstitute.posterous.com