Entrepreneurship is alive and well in Gradiska, a small town in Bosnia-Herzegovina on the Sava River, which forms a natural border with neighboring Croatia. A bridge across the river links the two countries.
In 1985, a local businessman, Mirko Sarajlic, started a family bakery in this town of 25,000. The bakery was soon producing and selling up to 1,500 loaves of bread and 700 bread rolls daily in the town and surrounding area.
In 1995, the company changed its name to Zlatno Zrno, or "the golden grain."
During the first 13 years of operation, the bakery obtained its flour supply from a mill in Belgrade, Yugoslavia. But there were several problems with this arrangement. Freight costs to truck flour from Belgrade, about 450 kilometers from Gradiska, were expensive. There also was an element of uncertainty about flour deliveries, especially during the mid-1990s at the height of the Bosnia-Croatia conflict because haulers were often unwilling to travel into the war zone. In addition, flour quality was inconsistent and often of poor quality.
Mr. Sarajlic decided the way to circumvent these problems was to produce his own flour. To do that, he needed a flour mill.
Local competition included an older mill that produced low-quality flour and was unable to produce different grades of flour. Much of the region was supplied by imported flour. Mr. Sarajlic's market research showed that several local retail outlets for his bakery products also were interested in selling his flour. Building his own flour mill would give Zlatno Zrno an advantage and opportunity to win over further sales in the region.
Because of increased bakery sales and the growing popularity of pasta in the region, Mr. Sarajlic also wanted to expand the bakery and add a pasta plant.
Needing financing for the project, Mr. Sarajlic approached the U.S. Agency for International Development in Bosnia-Herzegovina. After feasibility studies were completed, the USAID office in nearby Banja Luka agreed to loan Mr. Sarajlic 1.4 million deutschmarks (U.S.$950,000) for the project; of that, 700 million D.M. was used to build the flour mill; 250,000 D.M. for the pasta plant and 450,000 D.M. for the bakery.
The three plants were up and running by late autumn 1998.
The new bakery and pasta plants are housed in one building on the outskirts of Gradiska while the mill is located approximately five kilometers away, at the site of the old bakery.
The flour mill is a country mill in all respects, extremely picturesque, surrounded by farms, orchards, trees and fields — a rare combination in most new flour mills.
The mill is equipped with a pneumatic AGS6/1000 unit with a capacity of 1,200 kg per hour, or 28.8 tonnes per day, supplied and installed by Agrex, Padova, Italy. This is the equivalent of just over nine sacks per hour (one sack equaling 280 pounds).
The milling system is a short/low grinding system, consisting of three break passages, three reduction rolls, two purifiers (for cake flour and semolina production only) and seven sifters with nine to 10 sections (see the story on Page 26).
Hard and soft wheats are milled, with soft wheat obtained locally and hard wheat brought in from Croatia or Hungary. Three grades of flour can be produced, including 500, 850 and cake flour. The mill also produces semolina for pasta production and bran and fine bran for animal feed.
All products are packaged in 25-kg and 35-kg paper bags, the latter for some of the offals. There are no facilities for finished products in bulk.
The new bakery uses about 10% of the mill's total output. By building a new mill, the flour now being supplied to the bakery costs less, is more consistent and of better quality than the imported flour, and delivery uncertainties have been removed, Mr. Sarajlic said.
The bakery expansion included all new ovens, mixing and storage equipment.
The bakery also installed a small sugar grinding plant, which reduces coarse sugar to very fine sugar, packed in 250-gram cellophane bags.
Output at the bakery has doubled, to 3,000 loaves of bread and 1,000 bread rolls per day, and sales are expected to continue to rise. The bakery's output also increases during the school term.
In addition to bread and rolls, the bakery also produces a rye loaf, made of a 50-50 mixture of rye flour (purchased from another mill) and the mill's own 850 flour.
About 75 retail outlets within 50 kilometers of Gradiska carry the bakery's products. Zlatno Zrno also opened three retail shops in Gradiska to sell its bread, flour and pasta products.
The pasta plant, which is housed in the same building at the bakery, uses as its raw material semolina supplied by the mill. The plant produces nine different pasta products, packed in 250-gram and 500-gram cellophane bags.
Most pasta sales are in Banja Luka, but its popularity is growing throughout Bosnia-Herzegovina and Serbia.
The pasta plant runs six days a week, eight hours a day. Semolina usage is 700 to 800 kg every eight hours. Output can be increased to two or three shifts per day, if required.
Pasta quality is excellent, with good color and texture and free of specks.
Zlatno Zrno also has been a boon to the local economy in terms of employment. The mill runs two shifts a day, morning and evening, with eight persons per shift. The bakery staff doubled from five to 10 persons, with seven more involved in sales and deliveries. The pasta plant employs six people in the plant and two in sales.
Despite the expansion, Zlatno Zrno remains a family-owned company. Mr. Sarajlic manages the flour mill while his son, Darko Sarajlic, and son-in-law, Kesic Dusan, oversee the bakery and pasta plant, respectively.
To learn pasta-making techniques and principles, Mr. Sarajlic sent his son-in-law and several other members of the pasta staff to Italy for training by the plant's equipment supplier, Italplast, Fedenza, Italy.
For help with the flour mill, Mr. Sarajlic contacted British Executive Services Overseas, London, an international charity organization that sends experienced volunteers overseas to provide advice and training in the developing world and emerging economies. Because of my background in flour milling and grain storage, I was asked to go to Gradiska to visit the mill, train the staff and assist with flour production.
Overall, the mill is satisfactory and responsive, and produces good flours. The synergy of the three related products — flour, baked goods and pasta — is robust. Mirko Sarajlic is a brave and adventurous businessman with a keen business perception. He is well-known and popular in the region.
It is heartening that the entrepreneurship of one individual, coupled with the business expertise and finance supplied by USAID, can have such a positive effect in this war-ravaged region.
The Zlatno Zrno mill in Gradiska, Bosnia-Herzegovina, grinds hard and soft wheat, obtained locally or from Croatia or Hungary.
The intake section consists of four concrete bins, each with a capacity of 150 tonnes. These bins hold the hard and soft wheats and feed the screen room via a screw conveyor. Blenders under each of the bins are used to mix the wheat as it leaves the bins.
The blended wheat passes over a magnetic separator into a screener/aspirator, followed by scouring and weighing. The wheat then enters the damping system, where controlled damping takes place; from there it goes to the tempering bins. This section consists of four steel bins, each with 7 tonnes capacity. The damped wheat is allowed to sit in these bins for between eight and 16 hours. It then passes over another magnetic separator before going to the first break (B1).
Break releases are set at 50% for B1 and 45% for B2. B3 has a clean-up function. The feeds from B1, B2 and B3 go to scalpers; in the case of B1 and B2, the break flours pass through sifters that produce the 500 flour. The reduction rolls, C1 and C2, also produce 500 flour.
The purifiers, P1 and P2, are not used in the production of 500 or 850 flours, only when semolina or cake flour is required. This is done by tapping off some feed from SP-C1 and sending it to P1. There is a bagging off point under P1. When cake flour is required, feed is taken off the overtails of SP-SC1 and sent to P2. In both instances, there is a reduction in the quality of the 500 flour. This may last for several hours; an alternative system is being devised.
On the operations and quality control side, mill staff have received some training in milling techniques and operation, moisture testing of wheat and finished products, test weighing of wheat at intake, checking finished flour against a standard flour and general troubleshooting. Test baking is done every day by the company's bakery, and samples of flour are periodically sent to a Hungarian laboratory for a full analysis.
Some adjustments and modifications are planned for the mill. Blending will be done after damping and tempering of the individual wheats. Two precision blenders are to be installed at the bottom of the four tempering bins.
Each type of wheat — hard and soft — will leave the large holding bins in the screen room and pass through the screening/damping process, unblended with any other wheat. In this way, the wheats will be given a tempering time more suitable to its characteristics. This also will allow the grist to be adjusted to take advantage of any change in quality of hard wheat, to allow the miller to reduce its inclusion percentage in the grist, thus reducing costs.
The mill also plans to have the purifiers in use at all times. Semolina and cake flour will be produced continuously, but with a lower output.
The head covers of the purifiers will be used to send the semolina or cake flour for packing, and the tail covers will send a purified feed for C1 and C2 rolls. There will still be feed going to C1 and C2 rolls that will not have been to the purifiers, but overall feeds to C1 and C2 will be cleaner.
Surface restrictions on the purifiers do not allow them to take the full feeds presently feeding C1 and C2. This can be remedied, to a large extent, by installing more purifiers. Ample space is available.
The use of various kinds of improvers also is being considered.