Chapter 338 - 167: Layout and Stalemate (Middle)

Chapter 338: Chapter 167: Layout and Stalemate (Middle)

June 6th.

After spending the night at a local hotel in Luling, Jiang Miao and his entourage quietly made their way to the Gannan Branch’s office, located in Phoenix Town, south of the Luling City District.

As they passed the Shixi Head cargo terminal at Luling Port, he saw numerous large trucks loaded with big, square bales of hay, waiting to be transferred onto transport ships at the docks.

Soon, their temporarily rented convoy arrived in Phoenix Town.

Instead of going directly to the branch office building, he found a nearby breakfast stall and struck up a casual conversation with the owner while he ate.

Over a bowl of wonton soup, a fried dough stick, and a cup of soy milk, he found the owner’s wife to be very talkative. After a bit of subtle probing, Jiang Miao learned some information about the Gannan Branch.

Combining this with the information he had gathered online and the reports from the inspection department’s team, he felt slightly more at ease.

After breakfast, Jiang Miao went straight to their door.

Liu Changqing, who was in his office looking over reports, heard the receptionist’s announcement and immediately shot up from his chair, rushing downstairs to greet him.

The moment he reached the first-floor lobby, Liu Changqing saw Jiang Miao. Though he felt a little apprehensive, he immediately put on a smile and greeted him, "Boss, welcome to the Gannan Branch."

"Changqing, where’s Old Kong?"

"Manager Kong went to Gannan City to handle some matters. He’ll be back the day after tomorrow. I’ll notify him right away—"

Jiang Miao waved his hand dismissively. "No need. I’m just passing through. Don’t tell anyone I’m here; I don’t want the staff putting on a show for me."

"Very well, then! Boss, this way to the third floor, please."

Led by Liu Changqing, the group arrived at the reception meeting room next to the branch manager’s office.

Liu Changqing’s assistant had already prepared tea.

"Changqing, I just saw a lot of trucks at Luling Port transporting bales of hay. I assume those are our company’s products?"

Pouring tea for Jiang Miao, Liu Changqing nodded and replied, "Yes, Boss. Those hay bales are our products. Starting in May, we began harvesting the Purple Alfalfa and white clover after they flowered, processing them into hay bales. Aside from a small portion sold to Hero Dairy, the rest is sold to large-scale dairy farms along the Yangtze River."

Jiang Miao leaned back on the sofa. "How many tons of hay can you currently produce per month, and what’s the pricing?"

Setting down the teapot, Liu Changqing rattled off the details as if he knew them by heart. "Currently, within the Gannan Branch’s 214,000 mu of camellia oil plantations, we’re using the undergrowth space to cultivate about 164,000 mu of various forage grasses. We can harvest roughly 80,000 tons of fresh grass per month, which produces 26,000 tons of hay."

"In terms of price, white clover hay is 1,800 yuan per ton; corn grass hay and ryegrass hay are both 1,400 yuan per ton. The best price is for Purple Alfalfa. Our company’s first-cut Purple Alfalfa has a protein content of about 24.3%, and it currently sells for around 2,200 yuan per ton. None of these prices include shipping."

Jiang Miao gently tapped his fingers on the tabletop. "Oh? And what’s our internal consumption?"

"Our internal consumption is mainly the 12,000 tons of hay we supply to Hero Dairy each month. As for fresh grass, Hero Dairy has its own forage production bases and can supply part of its own needs. However, their two new large-scale dairy farms nearby need to purchase 12,000 tons of fresh grass from the Gannan Branch every month."

Jiang Miao picked up his teacup, blew on the steam, and took a small sip. "So, you’re saying we sell over nine thousand tons of hay to external buyers each month?"

Liu Changqing smiled and nodded. "That’s right. Just a few days ago, Yangtze Ecological Pasture bought 2,000 tons of hay from us for their dairy cows. Last month, we sold about 9,600 tons externally, generating over 17 million yuan in revenue."

As for the hay and fresh grass sold to Hero Dairy, the costs were also calculated; it was not just given to them for free.

Even though they were sister companies, accounts had to be settled clearly, even between brothers. This was to facilitate cost accounting down the line.

Based on the current situation, Hero Dairy’s 42,000 dairy cows consumed 12,000 tons of hay and 16,000 tons of fresh grass each month, in addition to 12,000 tons of concentrated feed like corn and soybean meal.

On average, each cow ate 32 kilograms of feed per day, costing 47 yuan. Currently, each cow at Hero Dairy produced an average of 31 kilograms of raw milk per day, which put the feed cost at about 1.5 yuan per kilogram of raw milk.

So, what did that cost level mean in the grand scheme of things?

It was pretty much the lowest cost in the country.

It was nearly on par with the feed costs for raw milk in the Monan Pasture region.

The feed cost for raw milk in the Yangtze River Basin was typically around 1.8 to 2 yuan.

Of course, this calculated cost for Hero Dairy still included a profit margin for the Gannan Branch’s forage cultivation. In reality, that profit was still profit for Hailufeng Company.

"Changqing, what is the Gannan Branch’s current production cost for forage grass?"

Liu Changqing stood up, retrieved a file from the cabinet, and after flipping through it for a moment, replied, "Currently, the comprehensive cost for fresh forage is about 157 yuan per ton, and for hay, it’s about 518 yuan per ton."

"Large-scale, mechanized production is the way to go," Jiang Miao remarked with a sigh.

"Indeed." Liu Changqing deeply agreed.

After working in agriculture at the Gannan Branch for so long, he had come to realize that the economies of scale achieved through large-scale, mechanized production could effectively drive down many costs, which in turn created a powerful competitive advantage.

If the Gannan Branch were to supply forage to Hero Dairy at a non-profit, at-cost price, the feed cost per kilogram of raw milk would drop to 0.98 yuan.