Tuesday, 31 October 2017 09:55

Industry not immune to disruption

Written by 
LIC chairman Murray King. LIC chairman Murray King.

LIC chairman Murray King says New Zealand dairy farmers must remain ambitious about maintaining their global edge in productivity and profitability.

Speaking at LIC’s annual meeting in Invercargill, King said NZ’s dairy industry is vulnerable to the same disruption other industries have experienced in recent years from new technology and innovation.

“There are also clear disruptive threats to the dairy industry and LIC from environmental challenges, to regulation, to alternative milk products.

“We have to be constantly improving and adapting the way we do business,” he says.

“Standing still is not an option. In this age of disruption and radical change if we don’t continue to evolve we put at risk what you value most about your co-op and the industry.”

It was the first time the farmer owned cooperative held its annual meeting in Southland, attended by local farmers, LIC directors, shareholder councillors and staff from the area and Waikato head office.

King outlined plans to protect and grow the co-op, and the roadmap for adapting to disruption. This included the separation of LIC into two businesses which was completed in 2016, the transformation programme now underway and defining the co-op’s core purpose.

“LIC is in a process of change and transformation. This is about protecting the fundamentals of the co-operative while making sufficient profits to enable LIC to reinvest for the future.

“The cost efficiencies and business growth delivered in the transformation programme have been key contributors toward a better result in the 2016-2017 financial year.

“As a result of the transformation we are also expecting a significant improvement in earnings in future years.”

The next step is share simplification. In response to concerns raised by shareholders, LIC began a comprehensive review of its share structure two years ago. This review found that the current two-share structure is not best for meeting the current and future needs of the cooperative and farmers.

“We believe that simplifying LIC’s share structure by moving to a single class of shares is an important step in better positioning LIC for the future and ensuring a resilient and adaptable co-op,” says King.

“The threat of disruption in the future means that we have to be able to respond in an agile way to changes and challenges that may lie ahead. 

“Moving towards a simpler share structure will help in this process by addressing the growing disparity between LIC’s two classes of shares and making it easier in future to access capital if needed.”

The LIC board will update farmers next year; no final decision has been made.

More like this

LIC ready for challenges ahead

Herd improvement company LIC says it's well-positioned for the challenges ahead and remains focused on its core purpose - delivering value for farmer shareholders.

Breeding heat-tolerant cows for Africa

LIC is embarking on a ground-breaking project aimed at breeding heat tolerant and disease resistant dairy cows for Sub-Saharan Africa, in collaboration with the global leader in precision breeding, Acceligen, and the Bill & Melinda Gates Foundation.

Scheme to pick high potential 'underdog' bulls

Holstein Friesian NZ, and herd improvement co-operative LIC have launched a joint sire proving scheme that aims to select and prove Holstein Friesian bulls for New Zealand dairy farmers.

Featured

Massey Research Field Day attracts huge interest

More than 200 people turned out on Thursday, November 21 to see what progress has been made on one of NZ's biggest and most comprehensive agriculture research programmes on regenerative agriculture.

Expo set to wow again

Stellar speakers, top-notch trade sites, innovation, technology and connections are all on offer at the 2025 East Coast Farming Expo being once again hosted in Wairoa in February.

A year of global challenges

As a guest of the Italian Trade Association, Rural News Group Machinery Editor Mark Daniel took the opportunity to make an early November dash to Bologna to the 46th EIMA exhibition.

Boost for hort exports

The horticulture sector is a big winner from recent free trade deals sealed with the Gulf states, says Associate Agriculture Minister Nicola Grigg.

National

OSPRI's costly software upgrade

Animal disease management agency OSPRI has announced sweeping governance changes as it seeks to recover from the expensive failure of…

Machinery & Products

BA Pumps expand

Cambridge based BA Pumps & Sprayers, specialists in New Zealand-made spraying equipment, has acquired Tokoroa Engineering’s product range, including the…

Entries open for innovation award

Fieldays and its renowned Innovation Awards are celebrating their 57th year, marking a longstanding tradition in the agricultural calendar, with…

» Latest Print Issues Online

Milking It

Chinese strategy

OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.

Not fair

OPINION: The Listener's latest piece on winter grazing among Southland dairy farmers leaves much to be desired.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter