Tuesday, 06 November 2018 10:59

Pastoral focus keeps LIC on track

Written by  Sudesh Kissun
LIC chief executive Wayne McNee. LIC chief executive Wayne McNee.

LIC chief executive Wayne McNee says the co-op remains well placed in the face of mergers of global dairy genetics and herd improvement companies.

He notes that the dairy genetics and herd improvement sector saw two significant mergers in the last 12 months.

“We expect there will be more mergers… This means our global competitors are getting larger,” he told Rural News.

LIC, the world’s fifth-largest animal genetics company, has an advantage over other global players in its focus on pastoral dairy. Most others focus on high input farms in the US, Canada and Europe and have only a small presence in NZ. 

Apart from selling frozen semen straws, LIC also provides integrated dairy systems to farmers in South America, UK, Ireland, Australia and South Africa.

McNee says LIC has partnerships with breeding companies overseas; in Australia it distributes CRV’s products. Dutch co-op CRV Ambreed is LIC’s biggest competitor in NZ.

Addressing LIC’s annual meeting last month, chairman Murray King noted that the future growth and sustainability of the NZ dairy industry will be underpinned by innovation and investment in R&D, on which LIC spends at least 5% of its revenue ($13.2 million in the 2017-18 year), well above the NZ primary sector average of about 1%.

King says LIC has always spent heavily on R&D on behalf of its shareholders and the industry.

“For some time we have been talking about our work to transform the business and deliver a more sustainable and agile cooperative. 

“We are now more match-fit than ever and better positioned to deliver great outcomes for our farmers.

“We are taking what we learned from our transformation programme, the methods we have adopted and efficiencies we have gained to unlock new opportunities and deliver even more benefits for our shareholders. A sustainable and prolonged industry-leading focus on innovation and R&D is critical to that.”

Over the last year, LIC separated into two businesses -- a herd improvement company (LIC) and an agritechnology subsidiary (LIC Agritechnology Company). LIC’s core products Minda, AB and herd testing remain with the co-op. Minda is owned by the co-op but operated by the subsidiary.

It has also sold its Deer Improvement subsidiary in Otago and its herd testing and diagnostics laboratory facilities in Riverlea, Hamilton which included a leaseback arrangement to allow continued operation of LIC services at the site. 

In July, LIC simplified its share structure, bringing together its existing two classes of shares into a single class.

LIC recorded its first-ever loss in 2015-16 and then began cutting its R&D spending.

Money well spent

Farmer-owned co-op LIC says the $20 million cost to transform the business has been money well spent.

LIC chief executive Wayne McNee says the revamp is contributing to the co-op’s success: it posted record total revenue of $236m in 2017-18 -- up 16% on the previous year.

McNee, a former director-general of the Ministry of Primary Industries, says new processes adopted during its transformation are working well.

The LIC annual meeting in Hamilton last month heard that the transformation delivered a one-off benefit of $30m and recurring benefits of $60m annually.

In his report to shareholders, LIC shareholders council chairman Mark Meyer questioned the $20m bill. He asked if the same results could have been achieved at lower cost.

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.

Extra funding for methane inhibitor

A methane inhibiting bolus specifically suited to New Zealand's pastoral farming system is awaiting regulatory approval for a launch late next year.

Featured

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.

Better animal genetic gain system

A governance group has been formed, following extensive sector consultation, to implement the recommendations from the Industry Working Group's (IWG) final report and is said to be forming a 'road map' for improving New Zealand's animal genetic gain system.

SIDE 2025's new schedule, venue

Annual farmer gathering, the South Island Dairy Event (SIDE), is set to make history as it heads to Timaru for the first time.

Taranaki piggery goes solar

Installing 400 solar panels at their Taranaki piggery and cropping operation will have significant environmental, financial and animal welfare benefits for the Stanley family.

National

The show is on!

It was bringing in a new Canterbury A&P Association (CAPA) show board, more in tune with the CAPA general committee,…

Food charity to hold online auction

Meat the Need, New Zealand’s dedicated charity delivering locally sourced protein meals to food-insecure communities, is launching an online National…

Machinery & Products

An ideal solution for larger farms

Designed specifically for large farms that want to drill with maximum flexibility, efficiency and power, the new Lemken Solitair ST…

Landpower increases its offering

Landpower and the Claas Harvest Centre network will launch the Claas Scorpion and Torion material handling solutions to the market…

» Latest Print Issues Online

The Hound

Leaky waka

OPINION: Was the ASB Economic Weekly throwing shade on Reserve Bank governor Adrian Orr when reporting on his speech in…

Know-it-alls

OPINION: A reader recently had a shot at the various armchair critics that she judged to be more than a…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter