As much as there were high expectations for this year’s harvest after last year’s historic drought, not only in Hungary, but also in most European countries, similar quality problems have arisen with the harvest, Péter Horváth, CEO of the Hungarian UBM Group, told hvg.hu. As he said, „the quality of the cereals has been at least one class lower this year compared to the previous average. Roughly 35 to 40 per cent of the commodity produced is feed wheat, 30 to 35 per cent is so-called euro, and the remaining 25 to 30 per cent is milling or improving wheat.” It is, however, good news that the quantity of milling output is sufficient to meet the needs of the domestic milling industry, and there is also enough for export. Moreover, there is even some leftover from the 2022 crop: unlike in previous years, there is a relatively large stock of 600-700 thousand tonnes – mainly of mill quality – left over from last year, he added.

Founded in 1996, the UBM Group started as a soybean meal trader, and later added the production of animal feed to its portfolio, in addition to grain trading: is by now the largest trader of feed materials in Hungary, and with an annual production volume of 575 thousand tonnes, the company is also a leading feed producer.

They operate the largest feed factory in Romania

The company, which employs more than 400 people, operates 6 feed factories in Hungary, Slovakia and Romania, producing a total of 450 different products. UBM’s feed factory in Romania is by far the largest in the country.

„The idea for the greenfield investment came from the fact that previously – over a decade – UBM used to transport the finished feed from Hungary to Romania, which meant a 4-500 km journey, while in Western Europe, for instance, the feed usually travels only 150-200 km,” said Dénes Laczkó, Executive Director of UBM Feed Romania. And it means a lot to livestock farmers if they can save on transport costs, as 60-70% of their costs are made up of feed.

In the past, tens of thousands of tonnes of feed were imported from Hungarian farms to Romania, and this was triggered by the establishment of the plant in Kerelőszentpál, near Târgu Mures:

by processing the cereals locally, they can save EUR 20-25 per tonne in logistics costs, which represents 10-15% of the price of the goods.

The idea of the investment came up around 2015, when it was calculated that they could find customers for the products of a factory with a capacity of 200 thousand tonnes at lower transport costs. The investment was completed by 2019, with an annual capacity of 200-220 thousand tonnes, and will pay for itself in 15 years. „The nominal capacity is 30 tonnes per hour, however, 60 per cent of this is currently being used,” said Dénes Laczkó, who added that the feed produced here serves Romania, which is a very serious cereal-producing country: it is the European leader in maize production, the first in sunflower seeds and the fourth in wheat.

Feed is the biggest cost item for livestock farmers

The factory produces feed for 3 main animal breeds:

• for poultry – chickens for meat, laying hens, turkeys
• pig breeds – all breeds from sows to pigs for fattening
• ruminants – sheep and cattle

Feed is prepared according to different recipes for the animals according to their age: small chicks require different feed than adult chicks weighing 2 kg, in addition the texture of the feed is different, as chicks can only eat crumbs, while adult chickens can eat larger granules. Two-thirds of the feed is cereals, the protein is mainly provided by soya meal, but there are also other agricultural products and the own produced premix, which is the heart and soul of the feed, full of vitamins and minerals.

At UBM’s plant in Kerelőszentpál, Dénes Laczkó told us about the operation of the plant, which has an annual capacity of 220 thousand tonnes. At the plant, located not far from Târgu Mures airport, the monumental machines mix more than 60 types of feed materials.

The plant in Transylvania does not require a large workforce, as it is fully automated, with employees working in three shifts: each shift is run by 3 people, with the shift supervisor sitting in front of a computer to control production and two colleagues to help with receiving raw materials, among other things.

The feed factory consists of three main parts: a raw material hall and a finished product storage hall, with a technological tower in the middle, which is as tall as a 15-storey prefab building. “Since we work with bulk goods, we also make use of gravity, with the 9-storey, 45-metre-high building moving materials in free-fall between each production process.” The vertical arrangement is also important to prevent the materials from sticking together and sorting.

We started the factory visit in the raw materials warehouse. „From the silos next to the factory, 500 to 600 tonnes of cereals arrive at the factory daily via an assembly line.” Additional raw materials, including the heart of the feed, a premix produced in Környe near Tatabánya, as well as vegetable oil and amino acids, are stored in the micro-component warehouse. They can add ingredients such as the aforementioned premix, amino acids, vitamins and salt to the cereals with a margin of error of 20 grams per tonne.

On the automated production line, a machine unique in Romania, the hygienising screw, performs the heat treatment of the semi-finished product: it adds steam to the mixture, ensuring that the feed is completely hygienic, e.g. free of salmonella. And at the end of the process, an expander machine makes the ingredients in the feed more digestible for the animals.

Feed prices are expected to moderate further

This summer, the purchase price of cereals and oilseeds has fallen significantly. „Right now everyone is focusing on the start of the maize harvest and the expected yields, as this will finalise Hungarian commodity prices for the season ahead. The majority of domestic feed producers are still processing the last batches of last year’s stocks, which were more expensive than the first batches of the new crop after the harvest.”

The gap between the domestic procurement tariffs and the benchmark Paris commodity exchange (Matif) cereal prices has widened significantly and is expected to remain so for the rest of the season, due to the large harvests and increased logistics costs in the region. If, however, wheat prices continue to fall on Matif, it is possible that this could moderate, added Péter Horváth.