Põlva dairy plant, opened at the end of the 1960s, quickly became the flagship for industrial development in Estonia, which, in turn, led to development of Põlva town and the surrounding areas. Led by a young director, Tiit Kõuhkna, the company started production of cottage cheese.

Decades later, the milk powder towers of the Põlva dairy industry still stand tall not far from the town. Even today, 250,000 kg of milk per day is stored here. Milk trucks start their rounds at 3 o’clock in the morning, the factory working non-stop in several shifts. Every day, more than 150 people come to work here. And the workers do not only come from Põlva, but also from further afield. Some of them are even from the neighbouring Pskov region in Russia.

A strong business community

According to folklore, the Southeast Estonian entrepreneurship-mindidness and ingenuity stemmed from the Setu blood. Successful business people originating from the Southeast Estonia are sometimes even referred to as the ‘Setu mafia’ or the ‘Põlva mafia’. And there is absolutely nothing to do with criminal activity here! The term ‘mafia’ is used in Estonia like a pet name to describe a generation of successful business people in the fields of industry, banking and production.

Loyal employees are the cornerstones of the company

Today’s Põlva dairy industry has been part of the Tere Group for 13 years. Its official name is now Nordic Milk. While milk powder production is still the main focus, whole milk products have also been further developed alongside it.

Ülo Kivine, Chairman of the Management Board of Nordic Milk, says that he is especially satisfied with the commitment of the employees of Southeast Estonia. The number of people leaving the company at their own request has remained around 1% annually in recent years! A lot of people have been working for the company for several decades. It is no wonder because in addition to the above-average salary for the region, they also receive various benefits from the company. From childbirth benefit to supported learning (in cooperation with Olustvere School of Service and Rural Economics).

Production is sold to 25 countries

Ülo Kivine admits that milk storage volumes have increased in recent years and milk yields on farms are also growing. Although only one of the company’s three powder towers currently operates, this is only due to current world market prices. However, as powder prices have risen again by 70% in the last year, it is planned to increase stockpiling and production soon.

Various dairy products from Põlva industry find their way to 25 foreign countries. The powder is sold all over the world. Even to such far-off countries as Japan and Vietnam. Yoghurts and other whole milk products are mainly exported to Finland and the Baltics. In order to increase the volume of high-value products, 100% handmade cottage cheeses have been made in the Põlva industry for some time now, with real mushrooms from the forests of Setomaa inside. These products offer great competition to another local and popular small dairy producer, Nopri.

The local authorities of Põlva County know how to maintain companies in the region, as well as help them thrive. The concerns of every investor and employer are important to them. “We have enjoyed exceptionally pleasant cooperation with Põlva rural municipality authority,” says Kivine. “They have been very understanding and accommodating. For example, when the main bridge was being repaired in the summer and cars were diverted from the town, we were made an exception, so that our 20 milk trucks would not have to make big loops around the town each day.”

The dairy industry is reducing its ecological footprint

In recent years, a vigorous green transition has begun in Põlva region. The Nordic Milk Põlva dairy industry has also joined the movement. “Estonia’s chief export in the world can still only be clean air and clean food, which is becoming less and less everywhere,” says Kivine, a note of pride softening his voice. “We are among the founders of the Green Tiger in Estonia, actively measuring and reducing our footprint.” Green Tiger is a collaboration platform that is designed to boost environmental awareness and create a basis for a green economy in Estonia.

In order to export to certain markets, the existence of a green certificate will soon become critical for all food producers. This means that the ecological footprint must be reduced on farms, in packaging and even in the jams put inside the yoghurt. There are no exceptions. “We have already made smaller plastic caps for milk packages, abandoned the foil packaging in curds and switched from the “use by” date to the “best before” label to prevent waste,” Kivine lists the instances of reduced footprints he remembers first.

Needless to say, the Nordic Milk Group continues to invest in the Põlva dairy industry. Every year, the industry invests around 3–4 million euros to replace the equipment with newer and more efficient models. Recently, the first packing robot was procured.

Estonia has been affected by the green revolution

Lennar Liba, head of the Põlva County Development Centre, says that in reality, the Põlva dairy industry is only one good example alongside many others in the region. Räpina Paper Mill, Arcwood and several smaller companies are diligently monitoring and minimising their footprint. Some do it more consciously, some instinctively.

In reality, green transition, ecological footprint reduction and circular economy are the leading ideas for the whole county. These areas are so important that in the near future, it is planned to hire a full-time specialist who will focus solely on issues of the green and circular economies. Põlva County’s motto ‘Greener life’ also does not provide an opportunity to doubt the earnestness of these intentions.

Increasing funding

But there is another plus to all of this. Perhaps, even the biggest. Namely, supporting the green economy is one of the top priorities of the European Structural Funds. And with the help of these subsidies, the leaders of southeast Estonia want to develop their county to a whole new level. It seems their next trick of the trade is to be one step ahead of others and reap more benefits. Benefits that affect the whole region, its businesses and its inhabitants.

Why bring your company to Southeast Estonia? Why establish your startup in Põlva, Valga or Võru?

One of the reasons can be state funding. In addition to state support specifically intended for Southeast Estonia to promote innovation and creation of more diverse job opportunities here, according to Kaido Palu, head of the Võrumaa Development Centre’s business area, there is another particularly topical and useful support measure. It is the housing support measure for specialists in Southeast Estonia. It is paid once a year by municipalities to professionals that are highly valuable to companies, with the aim that professionals can move to the area, acquire a home and renovate it. The support measure in the amount of 10,000 euros is so seeked-after that the entire amount is usually distributed within a few days.

“Our region is characterised by excellent cooperation between entrepreneurs and the public sector,” says Palu. According to Palu, entrepreneurs also come to the aid of each other as soon as someone has a problem finding a technique, device or a specialist.

And, of course, the development centres are of great help. They help food, timber and tourism companies in terms of both joint marketing and knowledge transfer.

Estonia’s best residential and business area in 2030?

“Here in Southeast Estonia, we have everything that can only be dreamed of in many regions of the world,” Lennart Liba, head of the Põlva County Development Centre, believes. “We are not affected by stormy winds, a scorching sun or floods. Instead, it is peaceful and safe here, with clean nature and the necessary infrastructure for raising children. If anybody does get bored, they can always drive to Tartu, which is just half an hour away.” And the distance to Riga is the same as it is to Tallinn.

Top production investments in Southeast Estonia in recent years

• UPM-Kymmene €40M in plywood production
• Toftan €32M in sawn timber production
• Peetri Puit €9.4M in manufacturing of laminated timber constructions
• Rauameister €3M in manufacturing of metal structures
• Atria Eesti €8.9M in food industry
• Cristella VT €7.7M in food industry
• Räpina Paper Mill €4.1M in paper and paperboard production

Interested in investing in Estonia? Discover more about Southeast Estonia here, find out more about the Estonian timber industry or send us a request for e-Consulting to speak with one of our advisors.

The publication of the article is financed by funds from the Southeast Estonia Programme