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KazBeef expands, introduces new technology and new business model

09 april 2014, 11:46
2

The government corporation that is spearheading Kazakhstan's quest to become a global beef powerhouse has not only introduced new cattle-raising technology here but also a new business model.

The man behind the pioneering, KazBeef Director Beibit Yerubayev, gained his insight firsthand: He got a close look at the world-leading American beef industry as a North Dakota state trade-office representative.

In fact, the contacts he made with North Dakota ranchers, government officials and others have led to close ties between the state and Kazakhstan's fledgling premium-beef industry.

For example, North Dakota ranchers Bill and Dan Price supplied most of the 2,000 Angus and Hereford cattle used to start KazBeef's operation three years ago.

With imports of additional cattle and the calves that KazBeef's cows have produced, the herd has quadrupled to 8,000 head. The ultimate goal is 27,000 cattle.

In addition to KazBeef's 8,000 cattle, 15 privately owned ranches in Kazakhstan are raising 17,000 imported cattle. That makes the country's total premium-beef herd 25,000 cattle.

Photo courtesy of KazBeef.

Photo courtesy of KazBeef.

Although a government corporation, KazBeef has private partners, including the Price brothers and Kazakh investors.
Beibit developed an almost perfect resume for becoming KazBeef's director as a student and then national and state trade-office representative in the United States.

In 2005 he added a master's in international business at Waynesburg University in Pennsylvania to the bachelors in agriculture he'd earned at the Agrarian University in Almaty in 2003.Then he became the U.S. Commerce Department's country manager for Kazakhstan for three years, a job that involved facilitating trade between the two nations.

In 2008 Beibit became the North Dakota state trade office's country manager for Kazakhstan.

The big break in his career came in January of 2010. That's when Berik Beisengaliyev, deputy head of the government's KazAgro corporation, and Alexander Solyulev, chairman of the KazAgro subsidiary KazAgroProduct, led an agricultural trade mission to North Dakota.

After getting a glimpse of North Dakota's cattle industry, the two officials decided it would be a good idea to start a premium-beef operation in Kazakhstan, with Beibit as its head.

The first 340 Angus and Hereford cattle from North Dakota arrived in Astana on a Boeing 747just 10 months later – in October of 2010. They were immediately whisked to the ranch that KazBeef had started 2 ? hours north of Astana near the village of Mamai.

KazBeef’s operation consists of both Black Angus and Hereford cattle from the United States.

KazBeef’s operation consists of both Black Angus and Hereford cattle from the United States.

KazBeef’s operation consists of both Black Angus and Hereford cattle from the United States. Photo courtesy of KazBeef.

Two of the operation's major challenges have been lack of premium-beef-industry expertise and lack of state-of-the-art cattle-raising and processing infrastructure.

Beibit decided the way to get around these shortcomings was to form a vertically integrated company that could perform all steps in the cattle-raising and processing chain.

Those steps are growing grain to feed the cattle once they've left pastureland, keeping cows healthy and producing calves on grass, fattening cattle with grain in a feedlot, slaughtering and processing the cattle, and marketing the beef.

The bottom rung in KazBeef's vertical-integration pyramid is growing quality feed for fattening cattle. KazBeef formed a subsidiary to do that – KazGrain.

Once cattle reach a certain weight from eating grass on the open range, they are taken to a feedlot for fattening. The rich feed they receive there quickly increases their weight, getting them ready for processing in a few weeks.

KazBeef initially contracted out production of the crops needed to fatten the cattle, Beibit said – but the contract farmers were unable to produce the quality needed.

“They had no experience growing food for highly productive cattle,” he said.

So last year KazBeef started growing its own barley, Sudan grass, oats, peas and millet.
“We've done a great job so far,” Beibit beamed.

Beibit asked Canadian cattle-nutrition expert Brian Duane to help KazBeef make the fattening process as efficient as possible.

If a feedlot operation fails to determine the proper amount and mix of feed, it can spend too much on fattening without obtaining results, he said.

President Nursultan Nazarbayev called in his recent State of the Nation Address for Kazakhstan's agricultural establishment to go high-tech to increase productivity.

He'd be happy with KazBeef's fattening operation. It's centered around a Near-Infrared or NIR machine, which generates a detailed analysis of feed content.

President Nursultan Nazarbayev.

President Nursultan Nazarbayev greets Mike Slattery, a Nebraska cowboy who helped KazBeef start its operation near Mamai. Photo courtesy of KazBeef.

“It shows things like the protein level of the feed, the energy level it can produce, the total digestible material in the feed, the moisture level, and so on,” Beibit said.

Beibit communicates with Duane by Internet weekly.

In addition to a near-infrared feed-content analysis, Beibit gives the Calgary-based nutritionist information on the weight and body condition of the feedlot cattle. He even sends Duane photos of the animals by Internet.

Duane responds with a recommendation on the amount of feed and the mix to give the cattle.

Most of the advanced cattle-raising technology that Beibit is introducing at KazBeef is American, however. This includes vaccination and other health-care technology.

Beibit said he's delighted that Almaty-based veterinarian Viktor Go has joined KazBeef.

Although Go's 40 years of veterinary experience mean his roots are in the Soviet system, “he's eager to learn” international approaches, Beibit said. “He and I speak the same language.”

“We don't have these specialists” in cutting-edge cattle nutrition and veterinary services in Kazakhstan, Beibit said, “but we're training people in how to do this.”

Beibit's overarching philosophy for introducing advanced animal husbandry is simple. “We're taking this ranch to the technology in the U.S.,” he said.

Using the American model “means we don't have to re-invent the wheel,” Beibit said.

In addition, American agricultural scholars, government experts and the beef industry continually generate research that KazBeef can access by Internet. “New research pops up there every day,” Beibit said.

If KazBeef can benefit from the cutting-edge technology it learns about in a research article, it adopts it.
Once cattle are fattened, they're slaughtered and processed.

Unless this is done in a facility that meets international standards, premium cattle like KazBeef's will be unable to be exported. And a major reason for modernizing and expanding Kazakhstan's cattle industry is to capture a major share of the world export market.

The problem is that Kazakhstan has few modern slaughtering and processing facilities.

“Right now few slaughterhouses meet international food-safety requirements,” Beibit said. “We need to insure that our product is high-quality and safe.”

KazBeef decided to address the problem by creating a slaughtering and processing facility of its own – the third rung in its five-rung vertical-integration scheme. It has already taken several steps to realize that goal.

Beibit believes Kazakhstan will reach its goal of becoming one of the world's largest producers of premium beef in two to three decades.

“Land is the Number 1 resource that everyone needs,” he said – and Kazakhstan has 180 million hectares of pasture.

KazBeef Director Beibit Yerubayev, right, with Head of Production Yermek Umurzakov, center, and a KazBeef owner, Serikbay Sadykov. Photo courtesy of Beibit Yerubayev.

KazBeef Director Beibit Yerubayev, right, with Head of Production Yermek Umurzakov, center, and a KazBeef owner, Serikbay Sadykov. Photo courtesy of Beibit Yerubayev.

The key to the country becoming a beef-exporting powerhouse is productivity, he said. Kazakhstan's ranches must be able to compete with such low-cost producers as the United States, Canada and Australia.

Start-up infrastructure and equipment – such as electricity, water pipelines, tractors, barns and ranch-hand quarters – has made the cost of raising a head of beef higher than KazBeef would like, Beibit said.

KazBeef will address that issue with economy of scale: Increasing the size of the herd from 8,000 to 27,000 will reduce the cost per head to a fifth of the current figure, he said.

If KazBeef and other Kazakhstan cattle operations are productive, they have an excellent chance of success, Beibit said, because there's growing demand for beef in this part of the world.

“More Kazakhs want good steaks,” he said. “The Chinese are going to start consuming a lot more beef, and there's also a growing opportunity in the Middle East.”


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