Saša Simić: Aggressive exports during the ‘lockdown’ increased both turnover and wages

Constant investments, focus on exports, quick adaptation of business and management of new market conditions, modern digitized operations, financial capacities, and experience have resulted in Agro Simpa navigating completely unscathed during the peak of the global economic crisis caused by the coronavirus pandemic. Director Saša Simić emphasizes that, although they are a small company from Sisak with forty employees in retail and wholesale of agricultural supplies and production of bee food and day-old chicks, they continuously improve their operations and seek the best solutions to become even more competitive.

During the quarantine, production did not stop and stores were not closed as they are part of the food supply chain, and it also turned out that customers in a crisis do not prefer large shopping centers, but choose smaller stores where they can quickly shop in an environment with fewer people. During the greatest crises in Italy, Agro Simpa exported bee food to areas most affected by the COVID-19 disease, so despite everything, their turnover increased this spring, they maintained full employment, and even raised wages. With 15 retail stores and one wholesale outlet, it is the largest chain of agricultural stores in the Sisak-Moslavina County.

Turning to domestic production

In addition to its own production of bee food and day-old chicks, the company sells agricultural supplies: animal feed, seed products, artificial fertilizers, protective agents, garden tools, pet food, and day-old chicks, beekeeping equipment, and other household products. They are constantly investing. Just this year, Simić says, they purchased a new hall of 1400 square meters and plan to renovate and modernize it. He adds that they are working on establishing a laboratory and plan to invest a large amount of money in research and development of bee food. The European Union is co-financing them for the next three years. It has secured 2.4 million kuna out of a total of 3.6 million kuna needed for the project in which they partner with the Faculty of Agrobiotechnical Sciences in Osijek.

– By applying internal measures that we make daily in the conditions of the corona crisis, we do everything to protect our workers and customers as much as possible, even distributing free masks to every customer who does not have one. We plan to increase chicken production as customers are turning more towards domestic products and their own production, which shortens the supply chain. Namely, there were significant supply problems in March and April while international transport had not stabilized. Although we are not directly affected like tourism, hospitality, or the automotive industry, the continuation of the crisis, which will manifest in reduced consumption due to increased unemployment, will certainly affect our revenues – expects Saša Simić, who founded the company with his father Dragom in 1992.

They opened their first store in 1996 in Sisak, and when his father retired in 2012 and moved to the Supervisory Board, Saša Simić became the sole member of the Management Board. The business strategy of the company, which does not maintain a strict hierarchy but rather a team relationship, has always been agreed upon together, often with the participation of his mother Verica.

The most important move

By 2009, they had twelve stores, but then the crisis hit and revenues fell, which many trading companies did not survive. Simić emphasizes that they then decided it was time to take even better positions, so they aggressively approached by taking over struggling companies. Thus, in 2011, they took over four stores and introduced their way of doing business: they optimized inventory, modernized the ordering system, improved marketing, hired new workers, trained people, and adjusted product prices to the market. Simić considers this the most important move in their business so far because it ensured further growth and initiated the production of bee food and exports, in which they are also very aggressive.

– By 2017, we already had 17 stores, and we are leaders in supplying agricultural materials in the region. Today we have two fewer stores because the owner of the space did not extend the lease. Concurrently, we were engaged in the sale of day-old chicks, and when that part of the business grew, we opened an automated chick hatchery. We acquired the most modern equipment from Belgium and launched a facility in Petrinja with breeding eggs only from Croatia. The weekly capacity is 15 thousand chicks exclusively for the needs of our stores because we value quality over quantity. If we were to engage in wholesale as well, it would mean additional logistics and transport engagement and possible payment issues, which was not an acceptable risk for us. We also started dealing with the sale of beekeeping equipment and in 2014 realized that there was room in the market for the production of bee food, especially for export. In that case, our market became all of Europe, perhaps even beyond. We decided on the most modern technology, find consultants, contact well-known beekeepers and the Faculty of Agriculture in Osijek, and together we develop the product. We started selling in our stores and then wholesale throughout Croatia – describes Simić.

The first foreign partner was an Italian company that needed to lease Agro Simpa’s then-year-round production capacities. Simić promised to meet the requested quantities and conditions and began looking for ways to increase capacity to deliver products to the domestic market and for the needs of the new foreign customer.

Lucrative bees and customers

When Agro Simpa started producing bee food, it produced 800 kilograms a day, and today even 9000 kilograms is sometimes insufficient. They export bee food to 15 countries, mostly European. Recently, after two years of negotiations, a German company also became a customer, which Simić considers particularly important because it is an excellent reference for further sales and growth. Currently, Agro Simpa is negotiating with an international company from India about producing bee food under its brand. Special requirements, Simić notes, are often posed by foreign customers. This usually relates to production under private labels, so they design packaging and recipes according to their requirements.

– There was a terrible bee die-off that occurred in mid-June in Međimurje. Someone must be held accountable for such a die-off. As far as I know, they are analyzing why this happened. I hope the cause will be found and that beekeepers will receive appropriate compensation. There is a problem of colony collapse disorder (CCD) worldwide, and the exact cause has not yet been determined. It is believed that this happens due to multiple factors, such as the increasing number of bee diseases, changes in climatic conditions, excessive use of pesticides, inadequate bee nutrition, intensive agriculture, primarily monoculture cultivation, especially in America. However, I believe that the die-off in Međimurje is not related to CCD but is of a local nature – Simić is convinced.

Last year, the company’s exports significantly increased, and they gained new customers. He is satisfied with the business this year, expecting an increase in revenues in retail and exports. Quick market adaptation in the conditions of corona, intensive communication with suppliers, and the previously orderly way of doing business with partners, in Simić’s opinion, ensured Agro Simpa good supply and distribution of goods to its stores and foreign partners.

Always a step ahead

Finding quality labor is one of the bigger problems for Agro Simpa, especially since laws have imposed that they must employ agronomists if they want to sell protective agents in stores, and there are no such experts in our market and surroundings. Simić provides employees with regular salaries, pays Christmas bonuses, Easter bonuses, food allowances, travel expenses, and work incentives; he believes they are ahead of the competition in this regard. He says he treats workers as partners, not as subordinates. Hiring and retaining the best workers is the company’s greatest advantage. State bureaucracy is also a significant problem. Simić particularly highlights obtaining building permits with a procedure that ‘those who have not gone through it do not know what they are missing’.

– Every day I wake up and ask: ‘Why would a customer buy specifically in our stores and why specifically our products?’ When the challenge is posed this way and you focus on the customer, then the strategic steps of the business align quickly as market conditions and customer needs change. We must always be a step ahead of the competition, which does not necessarily mean direct competition with it. Sometimes it simply means closing a location or giving up the fight for a customer who demands a very low price and focusing on revenues that are more important, i.e., those that bring the company a greater price difference with lower costs. In all of this, it is important for Agro Simpa that Croatia’s membership in the European Union has significantly facilitated exports, with no customs duties and additional costs – Simić states.

Agro Simpa collaborates with over a hundred suppliers. Among the larger ones are the Animal Feed Factory from Čakovec, the Zagreb Bc Institute for Plant Breeding and Production, and Petrokemija, with whom they have successfully operated for over twenty years.

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