Three years ago, the cooperative based in Dubovo found a new owner, thanks to which it avoided bankruptcy. Today it is headed by Peter Ujmiak from SANAGRO and the cooperative is beginning to prosper.
He has both a technical and management background from The Open University Business School in the UK and a passion for working with people. He enjoys a challenge and fate has arranged for him to eventually profile himself as a crisis manager. Downsizing is always unpleasant, but so far I have not encountered any negative feedback. If we had not proceeded, PD Turiec would probably no longer be in business.
The management of companies, some of which were close to bankruptcy, has accompanied him during the last two decades of his professional life. And he never imagined, and in truth never dreamed, that he would one day work in agriculture. This is Peter Ujmiak, the crisis manager who today heads the Turiec Agricultural Cooperative based in Dubovo (PD Turiec - ed. note). A year and a half ago, the cooperative's owner, the Slovak Sanagro Group, presented him with a difficult challenge: to turn the heavily indebted cooperative into a profit. He accepted it. And he succeeded.
Fascinating agriculture
Crisis managers are better known for turning around larger industrial companies struggling with financial problems. However, they are not often seen on Slovak farms. PD Turiec in Dubovo is an exception.
When Peter Ujmiak came to Turiec, a former potato-growing area, he had no experience with agriculture. "The principles of good corporate governance cut across sectors. However, agriculture is particularly fascinating in that, while in other sectors you can see in a relatively short time whether a change that has been introduced is working well or not, here you only know the result after a relatively long period of time. It is about nature, where conditions change. The weather, which is different every year, has a significant impact on decision-making and results," says Peter Ujmiak, who is Sanagro's Managing Director for the Turiec region.
The farm lacked a firm hand
Sanagro, a company dedicated to the renovation of farms in Slovakia, joined the Turiec Agricultural Cooperative in Dubovo in 2016. The cooperative was in a very poor state. It had no money to pay wages, it was accumulating debts with most of its suppliers, and it had no funds to repair its equipment, buy fertilisers or seeds. Its accumulated debts amounted to more than EUR 2.5 million.
However, the most precious thing was neglected - the land. It had not been invested in for many years and was therefore not fertile enough. At the same time, because of the problems, the cooperative did not work with a proper seeding plan, which is not a good sign for the soil. "The Sanagro group started to adjust the soil's PH to improve nutrient use, as well as the soil itself, even before I arrived. By the time I started managing the cooperative, two-thirds of the soil had been amended. We have completed the process and today I can say that all the land, owned or rented, is of good quality again and we will achieve above-average hectare yields in 2019," says Peter Ujmiak, adding that to date SANAGRO has invested more than a million euros in the revitalisation of the cooperative, which has been mainly directed towards replacing outdated equipment, renewing the land and paying off old debts. Before the arrival of the crisis manager, however, the cooperative was still lacking something.
People are the most important
A year and a half ago, Peter Ujmiak came to Turiec, who considers his most important steps to be increasing the efficiency of work, which in turn leads to financial savings. "I consider people to be the company's most valuable asset. Running it is mainly about choosing the right people, or replacing the wrong ones and motivating them. Employees are the best ones to tell how to set up and use the technology effectively, while the management has to get people into the right activities and enable them to do them... I was lucky to find educated, experienced and, above all, honest people in Turiec. They are the ones to thank for the improved management."
Employees: the company's entry was a rescue
However, the healing process has brought with it some thorny aspects. One of these was the reduction in the number of staff. The cooperative Turiec in Dubovo did not avoid it either. "We found out how many people we really need in production by the area on which the farm is farmed. Along with other steps aimed at stabilising the cooperative and reducing costs, we had to take this step as well," admits Peter Ujmiak.
While before the company arrived, about 65 people worked at the cooperative, today there are just over 32. "This is a realistic number of people that is sufficient to run the cooperative as it is. Reducing employment is always unpleasant, but so far I have not encountered any negative feedback. If we did not proceed, PD Turiec would probably no longer function. The people who work here have assessed that the arrival and purchase of the cooperative by the company was a good step that saved employment in the area," adds Peter Ujmiak.
PD Turiec is in positive figures
Thanks to the implemented recovery measures, the Turiec PD in Dubovo is in a stable condition today. For the first time in seven years, it reported a positive EBITDA result at the end of 2018, i.e. profit before interest, taxes and depreciation and amortisation of more than EUR 124 thousand. At the same time, the cooperative's sales have grown continuously over the past three years, while the loss has been steadily decreasing.
Agricultural cooperative in Dubovo in short
PD Turiec was established by merging JRD Vyšehrad Rudo and JRD Turiec Dubové in 1976. It farms in the foothills, in the Turčianska basin. Before joining the European Union, it was one of the major producers of seed potatoes and flax. Nowadays, it is mainly engaged in cereal, oilseed rape and maize cultivation. Past livestock production was mainly focused on milk production, pig and sheep breeding and fattening. Today it is devoted to their rearing without milk production. Most of the production remains in Slovakia.
Peter Ujmiak: We expect to significantly increase sales this year
SANAGRO's Managing Director for the Turiec region, Peter Ujmiak, talks about the plans of the cooperative in Dubovo.
The last time the agricultural cooperative Turiec in Dubovo was in positive figures was in 2012. For 2018, it reported a positive EBITDA operating profit. Is the cooperative out of the woods?
He is in stable condition. All the most important old debts that dragged the cooperative down economically have been settled. The cooperative is invested in regularly and its efficient operation is ensured.
For the first time in seven years, the company reported a positive EBITDA, i.e. earnings before interest, taxes, depreciation and amortisation, of EUR 124 thousand at the end of 2018. At the same time, the cooperative's sales have been growing continuously over the last three years, reaching EUR 1.2 million last year.
What will be the result for this year?
A lot depends on the weather, how it will allow us to carry out the harvest. That is taking place these days. The efforts of our people, the reconditioned soil and good sowing practices are also beginning to yield better results. At this point, all the indications are that we will reap a good harvest. If this is indeed the case, we expect to significantly exceed sales for the year and EBITDA to double compared to 2018.
What actions have caused such a significant increase in operating profit?
It was a series of steps - from land improvement, to investments in technology, to adjustments in relations with suppliers and customers, to streamlining repairs and production, to better use of time - that relate to the cooperative itself, to the benefits of being part of a larger entity, the Sanagro Group, such as economies of scale.
What does it mean?
The SANAGRO Group, as the owner of the Turiec Agricultural Cooperative in Dubovo, owns 10 other farms that are able to cooperate with each other. Sanagro itself benefits from economies of size, both in terms of purchasing and sales. Put simply, you can negotiate different terms when you buy one machine than when you buy ten. It's similar with co-ops. Machines can be loaned between co-ops, keeping their output within the group. Co-operatives did not have, and many independent ones still do not have, so-called benchmarking - but we can compare inputs, outputs, performance and so on, thanks to the financial management of the whole group, which is centralised. As I mentioned earlier, the success or failure of companies is dependent on people. I consider the most valuable, alongside all the other advantages, to be the possibility of transferring education, knowledge and experience. Our people at all levels can exchange information with each other about what works and what does not work.
How do you intend to attract young people into agriculture, which is a serious problem at the moment?
The young generation is slowly leaving the Turiec area and we are struggling to get quality people. However, we believe that the attitude of students and the young generation, as well as the whole society, towards the agro-sector will change. Farms work differently today than they did in the past. In the future, people will have to have computer skills to drive a tractor, for example. Modern agricultural machinery today can be compared with technologies from other sectors, such as the automotive industry. The Sanagro Group's farms work with the latest technology.
