“We are waiting to receive all approvals for a 10,000-ton silo and for a biogas installation. After we get the green light, we will finalize the construction within eight months. Time is tight, but I think we will start production by the end of next year,” says Catalin Grigoriu, general manager of Comfert.
Comfert wants to compete in the near future with both major cattle farmers and crop farmers that grow wheat and corn on thousands of hectares of land.
Although the number of cattle in Romania has been on a decline for several years, down to 1.9 million from 2.7 million in just the last three years, the businessman is not afraid to go against the tide. Grigoriu intends to invest around EUR700,000 in the coming period to buy 250 milk cows from the Netherlands.
“I expect to invest between EUR2,500 and EUR3,000 per head. I will buy the cattle from the Netherlands. I don’t want to invest in cheap cows with low yields.”
The businessman believes such an investment is low-risk because big milk processors on the local market prefer to sign firm contracts with raw material suppliers who are able to deliver large quantities on a steady basis.
While the investment in the cow farm is a project started from scratch, Confert is in advanced negotiations for the acquisition of a farming producer in Bacau, which exploits 4,000 hectares of land. When completed, the takeover would expand the land exploited by the Bacau-based company. At present the pesticides distributor already exploits 1,500 hectares of farmland in Vrancea county.
“We will be exploiting this land by the end of the year. It is a company facing financial trouble,” says Grigoriu, without providing more details on the transaction.
This purchase would see Comfert pay around EUR0.7 million, but the deal also includes the possibility of the pesticides distributor taking over an additional EUR4,000 hectares, currently held by several lessees.
As part of this deal, Grigoriu says he will take over each of these 4,000 hectares of land for around EUR200, ten times less than the market price of a hectare of farmland.
Whereas the acquisitions plan for this year has already been made, the snow that paralyzed the economy for several weeks has caused Comfert’s distribution business to stagnate for a good few weeks.
“We already have EUR22.7 million worth of orders for the company’s IT system, but we have not been able to make deliveries because of the snow. There is a blockage all across the country, we only work in the west, where access is easy.”
But the snow is “gold” for the company’s business because the bad weather reduces a good part of farmers’ losses caused by the drought of the last few months of 2011.
Although this year’s agricultural production is expected to be lower than last year’s, the Comfert official estimates the company will end the year with higher sales than last year.
The company has budgeted a EUR100 million turnover for this year, up 12% on last year. The growth targeted for this year is much more moderate than the 2011 rise, with the company doubling its revenues last year.
“We ended last year with a EUR89 million turnover and a net profit of EUR2.27 million. The results were the best in the company’s history.”
Comfert Bacau competes on some segments with players such as Alcedo and Interagro, while on others it competes with traders such as Cargill and Alfred Toepfer.
(English version by Daniela Stoican)