LIC turns loss into profit

Livestock genetics company LIC has turned a $4 million loss last year into an after-tax profit of $20.8m for 2016-17, thanks to cost cutting, a greater use of its better value services by dairy farmers and a higher revaluation of its biological bull team.

Underlying net earnings were $3m, but the overall profit was boosted by the $17.7m annual revaluation of the biological bull team, compared with a write down of $3.7m the year before.

Chairman Murray King said LIC reduced expenses and made the best use of existing resources, including focusing capital IT investments on key areas only, and extending the working life of assets.

The 10,500 farmer shareholders of the co-operative were more aware of the need to invest in products and services that improved efficiency, productivity and profitability.

King said genetic gain was important both to individual farmers and the country. DairyNZ has calculated it is worth more than $250,000 to an average sized herd over 10 years, and delivers about $300m annually to the national economy.

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 cooperative. MINDA is owned by the co-operative but operated by the subsidiary.

Sales from core products including artificial breeding (AB) and herd testing were up on the previous year, with 5 million AB straws sold and 9.2 million milk samples processed for analysis.