Rondônia: Union of Milk and Dairy Products & Laticínios Rolim de Moura

Interview with Pedro José Bertelli, Director of Laticínios Rolim de Moura and President of Sindileite (Union of Milk and Dairy Products)

Let’s begin by discussing the dairy sector in Rondônia in general. We know it is an important sector for the economy here. Can you give us a brief overview of this sector?

The dairy sector is relatively new in this state, I arrived here 25 years ago and at that time the dairy sector was really only beginning. To give you an idea: the milk being processed in the factories back then didn’t reach even 100,000 litres per day. Now we are producing about 3 million litres of milk per day. So it has taken 25 years, but back in those days we didn’t have electricity in the countryside and the roads were rather precarious, so over those 25 years we have seen a huge change in our milk production.

The dairy production today represents a large part of the state’s economy because it has allowed for what we call internal exports. Here in Rondônia we consume only 20% of our dairy production so the remaining 80% is sent to other states. Therefore it really represents quite a lot of our economy here. I have to be honest I’m not sure of the exact percentage that it contributes but I know that in previous meetings with the secretary of the state, we have talked about the dairy sector representing between 6 and 8% of the state’s economy. This would have been about 5 years ago and so I believe that now the number has probably grown a bit.

What are the prospects for the development of this sector for 2013?

Today we don’t have the same capacity for growth as we have had in the previous period. This is because we used to have very few properties producing our raw materials and over time we gained property. Today we aren’t able to expand any further, for a variety of reasons including environmental legislation which won’t allow for further expansion.

The tendency today is to have the smallest area possible for production but to invest in having the best quality livestock in order to increase productivity. Our productivity is very low even though on a national scale it is comparable to other producers. To give you an idea we only are able to produce 3 litres per capita per day. This really is quite a low production. Therefore today, our perspective for expansion lies with investing in the improvement of our livestock.

What are the greatest challenges for this sector?

In reality the greatest challenge for us is still the fact that this country imports dairy products. We are new in this market; we are still growing so this really affects us. Our production costs, not just in this state but in the country as a whole are expensive. So we are a long way away from being competitive with the large international producers that have much lower production costs and can compete with the national production.

Can you tell us about your company, about how it began, your products, employees, etc.?

Our company is a small to medium sized company. It is basically a family run business. I arrived in Rondônia in 1987; I was invited by my brother who was already establishing himself here within the dairy industry. I was in a joint partnership with him for a while and then we sold the company to the Parmalat Group.

Before selling that company I had opened another business with another partner, but still within the family. Now I run the production side of this business with my two sons. I have a partner in São Paulo who deals with the commercial side of the business. Our main product is mozzarella, which is the most consumed dairy product in Brazil. We also make other products such as cream cheese, queijo prato which is a soft cheese, doce de leite which is a kind of toffee sauce, provolone, etc. In spite of being a medium-sized company, we have the greatest diversity of products manufactured in the state of Rondônia.

Our consumers are mainly in the south and for the most part in São Paulo. We also sell to the northern states- Rondônia and Acre and the north eastern states – Pernambuco, Ceará, Paraíba, and some to Bahia.

We process about 100 thousand litres a day, and have about 120 to 130 employees. This activity is predominantly in the production of cheeses. We are in the final phase of setting up a new unit for the utilisation of whey. We have the capacity to dry and powder up to 400.000 litres of whey per day. We also have the capacity to dry milk to make powdered milk. We hope that by the middle of the year, this will be up and running well.

Do you have plans to expand outside of Brazil?

No, we do not at the moment. We do have a proposed project for the future to be able to sell the products from this new plant, our powdered milk and whey products to external markets. The factory has been designed to be able to attend this kind of demand, following national and international legislation regarding exports. The cheese factory doesn’t have the structure necessary to support this kind of expansion, so the proposed plans are not for that factory.

I would like to register our powdered whey factory for economic interests. However we set up the factory to attend the environmental problems caused by disposing whey waste. So through drying the whey from the milk we are able to solve this environmental issue that is very important today. There is no demand for consuming unprocessed whey, and because of its high protein content there is no way of treating it so that you can dispose of it without causing damage to the environment.

What are the greatest challenges for your company?

Our greatest challenge concerns the need for raw materials. Not just our company but all companies in this sector in Rondônia. We all have the capacity in our factories to produce so much more than what we do produce on average every year. During harvest time the factories are working at almost full capacity but during the other periods of the year, this almost halves, and so we have a large part of our production line that is empty. So our challenge, as I mentioned earlier, is to find the way to improve the livestock to have a more stable production. There are obviously also a lot of external factors that we have to take into account, we need incentives from the government to improve our cattle and be able to have a more stable production.

What is your vision of the future of your company, firstly over the next 2 or 3 years, and also for the long term?

Over the next 2 or 3 years our focus is going to be on our new factory. It is ready to function we just need to finish some of the legal paperwork. We would like to open it for production and national distribution and soon create partnerships and become accredited in order to export our produce and widen our market.

In a more general view, we have high expectations despite the difficulties of resolving our issues to do with raw materials. The problem with our raw materials is that they obviously require a large area, and we have a limitation on how far we can search for such areas. Obviously if you can increase the production of your raw materials you will increase your company’s production and growth too.

You are the president of Sindileite. Could you tell us about this union, its role etc.?

This union is relatively new, just as this sector itself is new in this state. We have played a stronger role in terms of searching for new technology than say in holding speeches or lectures. We have 2 large companies, one of which also has branches outside of Rondônia, and I believe it is one of the 4 largest companies in the country.

With the introduction of the ‘Norma 51’ regulation which deals with the quality control of milk, we held conferences to offer information about this new regulation to the companies in this sector.

We also deal with the interests of this sector, for example there is a program that started here in Rondônia called Pro Leite. It was a program that arose from a partnership between the government and the dairy companies via the union. It meant that the factories worked with the government to invest in improving the quality and productivity of milk production in this state. This is the kind of partnerships that we must look for.

We have a lot of competition, there is a fiscal war going on in Brazil. Some states are offering more benefits than ours. So this union is always representing our producers and companies in these cases and negotiations.

What would be your message to a foreign investor interested in coming to Brazil but who does not know Rondônia? Can you tell us what the state has to offer, and why they should come to Rondônia rather than any other state?

Rondônia is a young state; there is so much to be done here. This state is positioned in the west of Brazil, so to begin with we were considered the back of Brazil, when the Atlantic used to be the main exit point for all sectors exporting their produce. Nowadays we are able to boast being positioned in between the Atlantic and the Pacific coasts, both of which are our gateways to the export markets. We are actually closer to the Pacific Ocean which is excellent for exporting to India, Japan or China for example. So the state of Rondônia is really going to grow along with this development.

In the dairy sector, as I have said earlier, we are really only beginning in this sector here in Rondônia, there is so much potential for growth in this sector. I can’t say exactly whether there are companies that are actively looking for investors but I am sure most people here are very open to any investment that is good for both parties.