The secret of Israel's milky way
A series of inventions by a talented member of Afikim made the kibbutz a major player in the global dairy industry. Today, their computerized milking systems can be found in over 50 countries and will soon supply some 40 percent of Vietnam’s milk consumption.
It’s a fairly trivial sort of love,” she says as she sinks down onto a faded sofa. It’s afternoon, outside the dairy, which is surrounded by endless groves of green banana trees, and Chen Weiss, freshly discharged from the army, is taking a little break.
“I arrived for the first milking at six in the morning,” she says, holding a raspberry drink in one hand and a pack of cigarettes in the other. “Cows are a very trivial thing to kibbutzniks,” she adds casually, pulling her hair back. “It’s a nice animal, very kind. It may look big but it’s really very gentle. We have almost 400 dairy cows here. In terms of size, our dairy is a little above average. Some kibbutzim have smaller dairies than we do, but there are also some that have 1,500-2,000 cows.”
In front of her, on a table made out of a broad tree trunk, lies a women’s magazine and an empty cookie box that serves as an ashtray. Leaning against the wall is a red bicycle with an Israeli flag attached to it.
Weiss, born on Kibbutz Afikim, stresses that the warm relationship she’s developed with the big animals is not particularly unusual around here.
“I love what I do − the physical work, the cows, but I’m not special that way,” she goes on, as the radio plays in the background. “Right now I’m working alongside three former classmates; in high school there were five of us here. This love is practically a tradition in my family. My parents didn’t work in the dairy barn, but my sister goes all over the world teaching people how to operate the milking systems manufactured by the kibbutz. My brother is currently working at the dairy that Afikim built in Vietnam.”
The Weiss family, like dozens of other members of Kibbutz Afikim, which is located in the Jordan Valley, is very closely tied to the AfiMilk plant, which specializes in the manufacture of computerized milking systems. In recent years, the plant, considered one of the key players in its field and in the local dairy market, has become the kibbutz’s main source of financial “oxygen.”
“About a decade ago, we were on the verge of financial and social collapse,” says Gil Katz, a kibbutz member and director of a research group at AfiMilk. “We were a community that was going bankrupt, in every sense of the word. The mood was bleak. Faith in socialist values and cooperative living was hard hit in those days. There was no money. The plant’s success enabled us to pay off the debts to the banks and above all to rebuild a communal life that preserves the ideals of mutual responsibility − even though the kibbutz has undergone privatization. This year, for example, the kibbutz took in 100 new members.”
A visit to the kibbutz on the southern end of Lake Kinneret reveals a scene painted in white. The dairy industry that began here with the kibbutz’s founding in 1932 has changed dramatically over the years, but is still a dominant part of the members’ identity. For many years, it was just another kibbutz dairy − until the big turning point occurred in 1979.
Just when the kibbutz movement was beginning to feel its impending economic crisis, Afikim invented the first milk meter − an electronic device showing how many liters of milk have been produced by a cow. Surprisingly, no one had thought of it before. Developed in a small workshop in which agricultural inventions were dreamed up, the meter opened a new horizon for Afikim, which was going the way of all the kibbutzim at the time: Gradually, as its flagship Kalat Afikim plant − which made plywood boards − sunk into decline, the members decided to focus their economic sights on an industrialized dairy operation. Their new pioneering goal was to supply dairies worldwide with the perfect management tool: a computerized system based on their own dairy experts’ vast experience. “There was an evolution here,” says Katz.
In 1984, five years after the invention of the milk meter, the kibbutz was producing a comprehensive computerized system for running a dairy barn. Farmers are conservative by nature, Katz notes, “but in Israel, an accelerated process of change was made possible by a new breed of people working the land who, because of the Zionist enterprise, decided to upend the pyramid by being farmers. They may have had ingrained prejudices on other matters, but not when it came to agriculture. They tried everything; they were never set in their ways.”
As on other kibbutzim during the early years, Afikim quickly developed a large dairy barn unlike the conventional family-run operations found elsewhere.
“The uniqueness of dairy production in this country, which today has a worldwide reputation, involves management of a large herd of dairy cows, in which individual oversight of each cow was once practically impossible,” says Katz. “The situation in Israel in this realm led to the development here of this type of management, with the optimization of each cow’s output.”
A little nostalgia
Thus, Afikim, which now has about 1,500 members, was able to exploit the knowledge gained by its own sweat and toil to achieve a success that goes beyond what anyone imagined at first.
Outside the window of the office where Katz is sitting, the parking lot next to the old dairy building is filled with a fleet of dozens of cars, all emblazoned with the logo of AfiMilk. Like other kibbutzim, Afikim understood that in order to survive, alongside cultivation of its fields, it had to come up with a smart technology-based industry − one that would require a change in the traditional kibbutz model.
Despite the maze of air-conditioned offices, it becomes apparent that the old dairy on Kibbutz Afikim serves as a sought-after site for clients seeking a bit of nostalgia. Although it does function and the milk still produced there is sold, the facility serves mainly as an experimentation site for inspecting and developing different products that could earn the kibbutz fame in the international dairy market − software and other devices that enable a dairyman to run his operation more efficiently.
“Before and while we are developing a product, we conduct research on it in the dairy barn,” says Katz, who goes on to describe one of the products which he helped develop and which is helping put Afikim in a key position in the global dairy market.
“We developed a milk spectrometer − a device attached to the tube that is connected to the cow’s udders, which enables the dairy farmer to see not only how much milk has come out, but also gives a breakdown of its components: fat, protein, lactose, blood and also the level of somatic cells, which indicate whether the cow has had an infection. It’s the first such analytic device to be sold in the world, and it conducts its measurements in real time.”
More specifically, this electro-optic device illuminates the milk and analyzes its components based on the light refracted from it. It was developed over a six-year period together with scientists from the Volcani Institute. The first models were manufactured in 2006 and two years ago the product was officially launched. Today, says Katz, 30 percent of the cows in Israel are milked using this device.
AfiMilk is not the only such company involved in this area, on the international market; it is the oldest and largest in Israel, but there are other big players, both European and American. However, Afikim’s innovations, and its global reach from South America to the Far East, have made it very competitive internationally and its milk spectrometer should give it yet another boost.
Katz, who returned to the kibbutz after doing a post-doctorate in physical chemistry in Chicago, says that the device helps ensure the quality of the milk.
“The monitoring of the milk enables the farmer to supply a quality product, to identify problems immediately,” he explains. “We’re investing effort in multidisciplinary research combining physics, chemistry, biology, immunology and food technology, in order to improve the quality of the milk. In the past we studied the cow mostly via external parameters of behavior, but now we also do this through the milk it produces. It’s like a blood test that’s taken three times a day, at each milking. The goal is to figure out as many parameters as possible that will help us measure when things are good and when things are bad for the cow, to understand the factors that influence the quantity and quality of the milk that it produces.”
How do these daily examinations help the dairyman?
Katz: “Before the device came on the market, information about the solids found in the milk was only collected once a month or analyzed in an outside lab. The spectrometer taught us that the percentage of solids can change from day to day, even from one milking to another, sometimes dramatically: for example, when the cow is sick or in heat. You have to remember that the farmer gets money on the basis of the solids that are in the milk − that is, for the percentage of fat and protein it contains, not because of the number of liters produced ... So it’s critical for the dairy farmer to maximize the output of solids, for example, through the food supply or by studying how many hours the cow is lying down. The farmer can also genetically enhance the herd and bring in cows that produce richer milk.”
Conducive to freedom
Roaming the paths of the kibbutz, we come upon Bjarne Rune, who came to this humid valley from Copenhagen, the Danish capital, married a woman from the kibbutz and settled here.
“I came to the kibbutz to volunteer in 1975,” he says with a slight Danish accent, blue eyes squinting in the dazzling sun. “I was a socialist and I wanted to see if the kibbutz idea suited me. Without ever making a formal decision about it, I stayed here for many years because the place enchanted me. My first jobs here involved very hard work, in agriculture. But I was young and didn’t mind. There were dozens of volunteers here and we had an exciting social life. As someone coming from a very homogeneous society that hasn’t changed in centuries, I felt like I’d fallen into a pot of all kinds of different cultures.”
One of the assignments given to Rune, who is now deputy sales director at the AfiMilk, was to work with Eli Peles, the moving spirit behind the development of the computerized system for dairy herd management.
“Eli needed a helper,” Rune recalls with a smile. “Because he was a very smart fellow, but also very difficult, none of the kibbutzniks wanted to work with him. He was among the first children who were born here, and he was considered a wild kid. He didn’t get along in the academic framework and so he was sent to a vocational school. What set him apart was that even though he didn’t study, he was an autodidact who sought a mechanical solution to every problem. He was curious about everything. In fact, it was only when he got fed up because he didn’t get official credit or recognition for his inventions, due to a lack of formal education that, at age 45, he went to study engineering at the Technion” − the Israel Institute of Technology in Haifa.
Rune agreed to take on the job that nobody else on the kibbutz wanted and became Peles’ apprentice. “We had a very special chemistry,” he explains. “Eli developed unique farming tools, such as machines that inserted oxygen into the fish pools, irrigation equipment and a device that pollinates the flowers on date palms. But since the dairy industry was developing more, we decided to focus on that. Eli was the man who developed the electronic milk meter, which is where everything started. Before that, we measured the output according to marks on glass containers. It was impossible to measure the milk as it was flowing; the output was calculated and reported in notebooks. It might not look like such a big deal today, but Eli’s invention was a real revolution.”
The development of the meter spurred Peles to continue developing more technology to help the kibbutz run its dairy operations more efficiently.
“The milk meter created a challenge of how to collect the information and handle it,” Rune continues. “Fortunately, at the time the first personal computers had just come on the market, so we connected the milk meter to a computer. We also developed an electronic ID tag for each cow, and a system that identifies each cow that comes into the milking center, and the time and date of its milking. Meanwhile, Eli also added a pedometer to the system, another innovative and very important device: He discovered that when the cow is in heat, its [milk-production] activity is doubled or even tripled.”
But this creative momentum ended in 1994, when Peles was killed in a car accident near Kibbutz Gesher.
Besides his technological know-how, Peles seems to have had an innate understanding of the needs of the market.
Rune: “Yes, because the moment you can tell that the cow is in heat, the window of opportunity to inseminate it opens up. Most of the cow’s milk comes after calving, when there’s a flow of milk that lasts about 340 days. Missing the insemination time means delaying the rich milking days, and then we have to wait for the next cycle 21 days later.
“The math is simple: A good cow yields 50 liters of milk a day. If we miss out on 21 of those days, we’ve lost about 1,000 liters. The beautiful thing is that not only were Peles’ creative ideas not blocked, they were adopted. There’s something about the kibbutz framework that gives people freedom. A lot of people have managed to come up with things in this framework that they couldn’t have done anywhere else ... On the kibbutz there are no limits, for better or worse.”
Were the products an immediate success?
“Not at all. We had a hard road. At first, we could barely give out our products as holiday gifts to the kibbutzim in the area. But looking back on it, something pretty amazing happened here.”
Cows and coups
Another breakthrough occured on the kibbutz in the early 1980s, when it signed a distribution agreement with a British company called Fullwood that manufactures milking equipment.
Peles was behind the move, which opened Afikim up to the world market. Nowadays, anyone on the kibbutz will tell you that the thousands of milking systems manufactured here have been installed in more than 50 countries. Someone in Dubai asked Afikim to adapt the Israeli milking system for cows to camels. A firm in New Zealand asked for assistance in building a sheep dairy. An Italian corporation bought two computerized systems from Afikim for a half-million dollars. Even China is in the picture: 20 dairy herd management systems were sold there to the country’s largest dairy to help it meet the growing need for fresh milk.
One of AfiMilk’s biggest coups happened a year and a half ago, when the kibbutz won a huge tender for a project in Vietnam, which, upon completion, is expected to supply half a million liters of milk a day − 40 percent of the country’s milk consumption. The giant project south of the capital Hanoi will run the gamut of milk production, from growing the cows’ feed to distributing the output, and it will comprise 12 huge dairies and a herd of 30,000 cows.
AfiMilk will manage the construction and operation of the dairies and anticipates a direct annual income of $50 million. By comparison, the company’s entire sales for 2009 came to $20 million.
“This massive project came to fruition thanks to a senior Vietnamese woman banker, sort of a local Shari Arison, a woman with great resources and political influence,” says director Ronen Zexer, whose previous post was deputy director of Aeronautics, one of the largest security companies in Israel.
“She decided she wanted to bring about a revolution in milk consumption in Vietnam, which is just 11 and a half liters per capita annually, compared to 130 liters in Israel. She felt that a good product, with a healthy image and aggressive marketing, would change local consumption habits. She allocated $1.2 billion to the project. So far we’ve transported 10,000 cows there from New Zealand. We’ve built 3 of the 12 dairies so far. About 20 Israelis are working there. The real success will be if we’re able to transfer the project to Vietnamese management, when they don’t need us any longer.”
Zexer, who was born two kilometers south of Afikim, on Kibbutz Ashdot Yaacov, appears quite thrilled with the big numbers. In his office, sitting in front of a large map of the world, he enthuses about the great economic opportunities that await.
“Milk consumption in the world has been constantly increasing, especially in the developing countries,” he explains. “Tens of millions of people are now moving from poverty into the middle class: in India, China and Indonesia, for instance. An improvement in the standard of living leads to an increase in the variety of food consumed − especially dairy and meat products. In these developing countries there is a huge and growing demand for milk products, but because of land, water and environmental limitations, without technology there is no chance of meeting this demand. In the developing countries, average milk production per cow is something like 3,000-4,000 liters per year. In Israel, because of technology and know-how, we’re at almost 12,000 liters − No. 1 in the world.”
Unintentionally, Zexer touches on the recent, fraught debate that has occupied Afikim despite all its success.
“Here we have capabilities and a business outlook that were created by the people of the kibbutz 30 years ago − a technologically based vision and a deep understanding of dairy operations,” he says. “But this doesn’t mean that the company is run as a [traditional] kibbutz plant. It’s a business in every sense of the word that is run according to the criteria of any public company. Kibbutz members do make up a majority of the board, but there are also board members from Fortissimo Capital [an Israeli private equity investment group], which recently invested NIS 40 million in us. We function like any company in Herzliya, in terms of goals and business considerations. In the company’s management, three of the seven deputy directors are kibbutz members. Out of the 190 company employees, 55 are kibbutz members. Just being a member of the kibbutz is not a sufficient criterion for you to work here. It’s not enough. You have to be talented.”
A number of kibbutz-based industries have managed to achieve the dream of worldwide success and become international corporations − such as the Plasan Sasa vehicle-armor company from Kibbutz Sasa, that made more than $870 million last year, and the Netafim company from Kibbutz Hatzerim that makes irrigation systems and whose value is estimated at $900 million. Is that the goal − to join them?
“I think it’s pretty incredible that some kibbutz companies have become leaders in the world market in certain areas. Plasan Sasa and Netafim are good examples, although there are differences in size between them and us. But who knows? Maybe.”
A separate identity
Nira Kaldanitzky, a 71-year-old member of Afikim, doesn’t hide the anxiety that she and some of her friends feel. She has been working at AfiMilk since the early 1990s, served as a member of its administration, and is currently in charge of the pricing of its products in Israel.
“A significant change has taken place here,” she explains. “Twenty years ago, the plant was a lot smaller, both in terms of the number of workers and in terms of how much money it took in and the number of products. When I came here, it was a real family atmosphere, there was no distance between people. Every morning I got up and said to myself: ‘Now I’m going to be seeing the people I love the most.’ The proportion of Afikim members at the plant was very high. The electronics department was staffed by kibbutz members − boys and girls who soldered the products by hand. Nowadays such a scene would be inconceivable. Once, if we finished making 1,000 ID tags there was a celebration. Today it’s practically a daily occurrence. The products are assembled in China and return to us for inspection.”
She describes the widening gap between the older generation and the younger high-tech workers in the kibbutz plant, and is concerned about the price that the people of Afikim might pay for the success of their factory.
Kaldanitzky: “It used to be that if you had a problem, you would go straight to Eli Peles, the legendary director of the plant, not to some team leader or division head. Today we look upon this plant with tremendous pride, as we created something extraordinary here − but also with some trepidation ... Something like this binds us together, it makes us feel proud of this very special place to which we’ve come.”
And the fear?
Kaldanitzky: “Not long ago partners (Fortissimo Capital) came into the plant, which used to be wholly owned by us. In the past, the director may have been hired from outside, but the plant was ours. Today there are very few kibbutz members in the administration. There are partners, there are outside investors, so there’s a feeling that the complete overlap between the plant and the kibbutz could be torn apart. There’s a fear that we could lose our crown jewel.”