Oikocredit’s support for the Ezoxs organic milk farm in Slavyanovo near Popovo in north-western Bulgaria has helped transform it from an agricultural business rejected by banks into a successful company. Local banks now come knocking at Ezoxs’ door, whereas just a couple of years ago they refused to even extend loans.
Four selected business journalists (print and radio) travelled with me from Austria to Bulgaria last week to report on this shining example of successful development financing.
The establishment of Ezoxs 13 years ago was anything but simple. In 1945 the socialist regime dispossessed all private landowners; smallholding structures were converted into large agricultural collectives.
Post 1989, the land was gradually returned to its heirs. The land plots allocated were mostly too small to generate a profit; their owners were either too old, or long since living in cities and having lost all interest in agriculture.
Bulgaria’s agriculture was in disarray after the fall of communism. The land was no longer cultivated, and farming was declared unprofitable. The state farms were abandoned and wound up. The many small-scale landowners had no income.
The banker, the vet and the cow
No bank believed that agricultural activities could be conducted at a profit. But two geniuses had a vision: the banker Ogniyan Ogniyanov and his childhood friend Dobromir Dobrev, a vet. In 2003 the two men established the private partnership Ezoxs.
The agricultural company aligns with the cattle and dairy farming which is in keeping with the region’s long-standing tradition. Today, the farm cultivates 3,281 hectares of land from the surrounding ten villages. Some 1,500 landowners let their small plots of land to Ezoxs and thereby top up their meagre pensions, in the main only about € 80 a month. The business voluntarily pays more than the standard local rent.
In 2003 banker Ogniyanov entered into initial negotiations with Oikocredit. Today he waxes lyrical: “After all banks had refused to finance us, meeting Oikocredit was like a ray of sunshine in our hearts. We had no collateral to offer, but our business model was not only profitable, it also envisioned social responsibility for the employees and improving the living conditions of all people linked to our business from the very outset.”
Start with 37 cows
In 2004 the first loan (paid back a long time ago) totalling € 270,000 was granted by Oikocredit for the purchase of a tractor and other agricultural equipment. “We made a very modest start with 37 dairy cows,” remembers vet Dobrev. “Today we have more than 800 exemplarily kept animals on the farm and our expansion plans foresee a stock of 1,000 for the coming years.”
Dobrev worked for the state farm operation as far back as 1985. “I disliked the quality of farming and the centrally planned concept of the socialist era. I also felt sorry for the animals. I swore at the time that I would do everything I could to do it better in the future. After the old system collapsed, there was a shortage of everything. That’s when I knew my time had come.”
To date, 120 full-time jobs have been created by Ezoxs. Very welcome with the region’s unemployment rate in excess of 20%. Economist Ogniyanov proudly points to a balanced budget.
Ezoxs has not only managed to establish a successful agricultural business, the company also plays a key role in the community and is enhancing its models. More in the second part.
This blog was originally posted to the Oikocredit Germany website.