Ivica Pivac: We invest in companies that we consider to be high-quality and promising, including Podravka

Recently, despite media coverage of the scandal at INA and ownership restructuring at Fortenova, news broke that the Pivac Group purchased a small package of shares in Podravka, which reminded us of what we have seen in the case of Kraš. This Vrgorac company, owned by Ivica and Neven Pivac and their nephew Miljenko, has long been very liquid and invests in various businesses, including owning the tourism company Sol Tourism, which has two hotels in Makarska and a hotel and hostel in Dubrovnik.

The Pivac Group continued to invest in production in 2022, despite unfavorable and, even worse, uncertain economic trends, and its CEO Ivica Pivac announced investments for this year as well. Since the results from the last quarter are still being compiled, Pivac did not disclose how the Group’s members performed in 2022 during an interview with Lider, except to say that he believes the ‘result will be proportional to the effort and care‘ invested, as it is every year.

This is his style; he is reserved like other members of this family company, and since he is not overly interested in the media, it is not easy for a journalist to arrange an interview with him. However, he agreed to an interview with Lider, where we touched on various topics.

Regarding business performance, according to the results from 2021, MI Braća Pivac achieved a revenue of 1.7 billion kuna and a profit of 54.4 million kuna. The other two members of the Group achieved: Vajda 552.4 million kuna in revenue and 22.4 million kuna in profit, and PPK Karlovačka mesna industrija 1.3 billion kuna in revenue and 16 million kuna in profit. Despite all the adversities, in the recently concluded year full of challenges for the Pivac Group, strategically nothing has changed – a complete business cycle was created and maintained. ‘We stick to that goal, and the previous business results have shown that our decisions were good,’ Pivac began the conversation.

The revenues and profits of the Group’s members are very good. How much of that do you export and where?

– The share of exports in total sales revenue in the first nine months of 2022 was almost 12 percent. In addition to the markets of Serbia, Slovenia, Bosnia and Herzegovina, and North Macedonia, we are present on the shelves of retail chains in most EU countries: Bulgaria, Slovakia, Germany, Austria, Italy, Sweden, Romania, Finland, and Denmark are just some of the countries where we regularly place our products.

We are strengthening our position in the German market, so last year we established a wholesale and retail company, Pivac Group GmbH, in cooperation with a partner from Germany. This year, we are expecting the launch of a new facility in Ljubuški, which will increase our presence in the BiH market.

The Pivac Group has significant investments. What are you preparing?

– In addition to an investment worth eight million euros in a meat processing facility in Ljubuški, which will increase production volume, we will continue to invest in existing production facilities in Čakovec and Karlovac. In Karlovac, we are finalizing the construction of a new warehouse-logistics center covering 4,500 square meters, in which we have invested seven million euros.

This year, we also plan to complete and launch the Ravča 2 project, or the second phase of building a large facility for processing meat and meat products. This facility, worth 30 million euros, will enable the complete integration of production processes at one location and increase production capacities. For the Pivac Group, investments are essential fuel for business development. Times are changing, and investments are the way to keep pace with them.

They are even more than that; they are proof of responsibility towards business. Only through investment can we maintain and improve the quality of our products, and guaranteed quality ensures competitiveness. In any case, we are satisfied because we have managed to achieve all planned investments.

How much of your products consist of domestic meat, and how much is imported?

– It is interesting that we are often asked this question. There is clearly an awareness of the importance of this topic. The Pivac Group recognized the importance of domestic raw materials for its production long ago, so it is our strategic priority to secure as much quality domestic raw material as possible.

Our own production and cooperation currently satisfy about 70 percent of our total needs for beef, while self-sufficiency in pork is about 50 percent. Considering the escalation of raw material and energy prices, our short-term goal is to get through this period while maintaining current numbers. We hope that the situation will stabilize because we do not intend to give up on our ultimate goal, which is self-sufficiency in raw materials for our production needs.

The complete cycle, from farming and livestock breeding to our own retail, has enabled us to be more resilient to market shocks at all stages, from input raw materials to product placement. In the Pivac Group, despite all the challenges in the last two years, the continuity of raw material supply, production, and distribution has not been questioned.

You often say that one of your goals is the revitalization of livestock farming in Croatia and achieving self-sufficiency in domestic breeding. How satisfied are you with the Government’s agricultural policy in the livestock sector?

– The revitalization of livestock farming is a prerequisite for achieving self-sufficiency. In fact, it is the only sustainable concept. And I do not mean sustainable concept only in terms of the Pivac Group’s business. I am talking about a topic that has economic, social, and demographic components. Agricultural policy should primarily be based on treating food production as a strategic determinant of the Republic of Croatia that needs to be approached comprehensively.

When we know that we have all the natural prerequisites, it is logical to ask ourselves what we have missed to lag behind comparable countries. It is problematic when, after more than 30 years of functioning of a free market, we are still setting key things on their feet and talking about strategies and concepts. Croatian livestock farming has been talked about for too long as a sector with potential. And therein lies the catch – we cannot be just potential for 30 years.

There is potential, but it needs to be developed. Self-sufficiency rests on agriculture and livestock development; everything else is superstructure. The market is crying out for domestic raw materials. The Pivac Group has shown readiness to encourage domestic primary production with its own efforts and resources because we are determined that our production is supplied from domestic breeding.

However, it was recently reported in the weekly Nacional that the Pivac Group received 33.5 million kuna from Measure 14 of Rural Development for 2021, which caused a small part of Vajda’s cooperators to protest, claiming that the funds for the raised pigs should have been paid to them, not to the companies within the Pivac Group.

– The cooperation model within the Group is organized in such a way that we enter into a service fattening contract with cooperators, whereby the Pivac Group remains the owner of the animals. According to the signed contracts, we pay farmers for the fattening service, i.e., the agreed fixed price per kilogram of weight gain.

We buy animals and deliver them to the farms of the cooperators. As the organizer of the fattening and owner of the animals, we procure the highest quality fattening material possible. Furthermore, throughout the entire fattening period, we purchase and deliver feed for these animals to the farms. We ensure that it is exclusively health-compliant feed from verified suppliers, which we regularly control and send for analysis to ensure maximum quality nutrition with positive effects not only on production results but also on the health of the animals.

Our expert service, which includes veterinarians and other professional staff, visits all our cooperators daily or weekly and monitors the conditions of animal husbandry, their nutrition, and treatment. We are available to farmers 24 hours a day for anything they need. Through all these activities, we create a framework for implementing the measure. Therefore, we see nothing controversial in the paid funds.

More in the new issue of digital and printed edition of Lider.