Choosing the Right Genetics
OPINION: While some international systems reward milk volume and encourage breeding for larger-framed, high-output cows, New Zealand farmers operate under a very different set of incentives.
Reporting a 15.3% increase in underlying earnings, the farmer-owned co-operative will return $26.2 million in dividend to shareholders. This equates to 18.43 cents per share with a 18.5% gross yield on the current share price. It will be paid on 19 August.
LIC board chair Murray King says the board is pleased to present the result, especially considering the financial year was hampered by numerous factors including the Covid-19 pandemic, inflationary pressures, and supply challenges.
“I want to thank our farmer shareholders for their ongoing support, many of whom faced similar challenges as us. Delivering value for our farmers is at the centre of everything we do and it’s results like this that enable us to do just that – through our herd improvement products and services, a solid dividend, and, importantly, the right R&D investment to keep their herds profitable and sustainable into the future.”
King says the result was driven by more farmers opting to use the co-op’s premium bull teams to breed high genetic merit cows which produce more milk, more efficiently – resulting in a lower environmental footprint per kilogram of milk solids produced.
“The dairy industry needs to keep evolving to meet the challenges posed by climate change. Consumers expect a more sustainable approach to farming and this result reaffirms our farmers are well dialled into this.
“The production efficiency of every cow in our national dairy herd has never been more important; farmers know that all cows aren’t created equal and they are investing in solutions to breed the best cows, faster.
“These breeding decisions will serve them well into the future to build a more profitable and sustainable dairy sector and meet climate goals.”
During the 2021-22 financial year, 71% of fresh semen straws used for breeding replacements were from LIC’s premium bull teams (2.1 million straws), up from 60% in the 2020-21 year (1.8 million straws).
King says the co-op invested heavily in genomics over the past three decades and new research has confirmed farmers are reaping the rewards.
“Long term users of LIC genetics have almost doubled the speed of improvement in their herds over the last decade. They are not only breeding genetically superior cows which are more emissions efficient, they’re also breeding them at a much faster rate and genomics is the key contributor to this.
“We don’t need to milk more cows, we just need to milk the best cows and we’re really pleased that our farmers are making solid progress in this space.”
Summary of financials
- Total Revenue from Continuing Operations: $263.2 million (up 5.7%)
- Net Profit After Tax (NPAT): $26.7 million (up 16.5%)
- Underlying Earnings: $25.7 million (up 15.3%)
- Strong balance sheet, no debt at year-end and total assets $385.6 million (up 1.2%)
- Dividend: $26.2 million, or 18.43 cents per share
- R&D investment: $18.2 million or 6.9% of revenue (up 6.2% from $17.1 million)
