Investing in breeding the best cows, faster

OPINION: Key highlights for us this year are the farmer uptake of premium genetics and the results they are delivering on farm, the growth of animal health and DNA testing and our continued focus on R&D and technology investment to help our farmers tackle the growing environmental challenges facing the dairy sector.

Our 2022-23 result was fuelled by an increased farmer uptake in premium genetics and herd improvement services to breed highly efficient cows, with a lower emissions footprint.

Farmer shareholders know that all cows aren’t created equal, and they are investing in solutions to breed the best cows, faster. Farmers consistently using LIC genetics have almost doubled the rate of genetic gain in their herds over the last 10 years – achieving 18 gBW per annum.

LIC’s premium genetics range accounted for 79% of the co-op’s total artificial breeding (AB) inseminations, up from 71% the year prior. This shows more farmers are opting for LIC’s premium bull teams to breed high genetic merit cows, which goes hand in hand with the higher rates of increased genetic gain we are seeing in farmers’ herds.

Orders for sexed semen also increased, as more farmers factor this important tool into their breeding plans to accelerate the rate of genetic gain on farm.

We acknowledge that the non-return rate for sexed semen last season was below what we would usually expect and several enhancements and changes to processes have been made as a result. We have continued to monitor sexed semen NRR performance throughout the winter mating period, and the result is within the expected range.

It’s also pleasing to see that farmers have increased their investment in DNA testing services and animal health testing, particularly Johne’s disease testing. Johne’s disease testing remains one of our most popular diagnostic services, reaching a milestone of over 1.1 million test samples processed, an increase of 16% from last year. Overall animal health tests were up 13.2% accounting for $10.2m.

Over the next 12 months we will continue to focus on investing in the right R&D initiatives with an aim to deliver profitable and sustainable outcomes for our dairy sector.

We expect underlying earnings in 2023-24 to be in the range of $17-22 million.

Delivering on our commitments to farmer shareholders remains a key focus for 2023/24. Our strategy is focused on building a strong sustainable co-operative, leading the world in our field and delivering outstanding value for our customers, shareholders and industry.

We create value through a focus on four key areas: our farmers, animal, data & digital and innovation. I would like to cover a few examples from the past year that show our strategy in action.

Sitting in the data & digital area, we have partnered with eight leading cow wearable technology suppliers to integrate our MINDA herd management system. This year we saw 426,000 wearables integrated with MINDA and it’s great to see farmers utilising this integration to unlock even more value from their wearables investment.

Genomics remains a key focus which will enable us to continue delivering value on farm. The board remains strongly committed to genomics and this is reflected in our investment in the technology over the past 12 months. Our genetics offering has continued to go from strength to strength, with an increased focus on dairy beef genetics.

Committed To Dairy

Herd improvement is what we do and central to that is achieving faster rates of genetic improvement.

We are committed to helping the New Zealand dairy sector meet the environmental challenges we face, in particular animal efficiency, and methane mitigation.

One of the measurements of this commitment is to achieve a 15 BW increase per annum for our Premier Sires bull team on the previous year. Last year we achieved a gain of 22 BW points.

We strive to be operationally excellent, and we are committed to getting the basics right and delivering for you, on time, every time. One of the measurements of this commitment was to provide a herd testing result for 99.9% of all cows within 72 hours. We are pleased to report that we have fully achieved this target.

Another measurement of this commitment was to achieve a 5-week turnaround time for GeneMark tests. We have achieved 95% of this goal which is great to see as we have invested heavily in this area of the business. The turnaround time has reduced from 6 weeks to 5 weeks 95% of the time, and we are on track this year to reduce that even further.

Lastly, I’d like to acknowledge that the performance of our sexed semen product wasn’t where we wanted it to be, but after thoroughly investigating the issue, we’re pleased to report that the winter inseminations show that the product is performing back in line with expectations.

For software performance and reliability, we committed to being better at delivering our software to our farmers and renewed our commitment to continuous improvement and transparency around delivery of new features.

One of the measurements of this commitment is to ensure our MINDA software is available to farmers 99% of the time, which we exceeded this year with MINDA availability sitting at 99.5%.

That is just a snapshot of the progress we have made this year. While these metrics have been recognised as important to farmers and where we believe we can improve and make a difference, we know that the needs of farmers can evolve each year.

Based on how we’re tracking and the needs of our farmer shareholders, the measurements and targets will be reviewed and updated in the future.