Livestock Improvement Corp (LIC)

Livestock Improvement Corp (LIC)

Starting out

As a farmer owned co-operative it is LIC’s vision to improve the prosperity and productivity of our farmers. The co-op has pioneered some of the biggest innovations that provide today’s dairy farmers with their competitive edge on the world stage - including the systematic testing of milk quality, semen diluent which allows widespread use of top artificial breeding sires, genomic technology to identify elite sires, and more recently, a short gestation bull team bred to deliver offspring an average 10 days early.

LIC is one of the oldest farming co-operatives in New Zealand, with origins dating back to the early 1900s.  Today, as  New Zealand’s biggest supplier of dairy genetics, around three out of four inseminated dairy cows are sired by an LIC bull. More than 90 per cent of farmers also utilise its MINDA information software to manage their farm and herd records. LIC’s work in R&D and new product development also continues, as one of the agriculture sector’s largest private investors.

At its core, LIC’s focus is on improvement. Helping its farmers improve their prosperity and productivity. This was reaffirmed in 2013 with the implementation of a new strategy to grow the business in New Zealand and overseas, and deliver more value on-farm for its farmer shareholders.

The strategy, Toward 2025, includes a goal to deliver services and solutions which enable LIC to become a $1billion revenue co-operative by 2025. This goal requires revenue growth of 15 per cent each year, on average, and it will only be achieved if its farmers see value and choose to invest in its services and solutions.

LIC’s challenge is to develop innovative solutions to ensure that our farmers continue to enjoy a competitive edge.

Benchmarks of Success

  • Putting farmers at the centre:
    Once the strategy was confirmed, a number of changes were made to the way LIC works to make it fit for purpose for the new strategy and to put its farmers at the centre of the business. A re-organisation of LIC’s internal structure shifted business decision-making power closer to farmers, providing more authority to staff that work closest with them, particularly for new product development, solutions delivery and pricing. More front-line roles were also added across the country, so farmers have more opportunities to talk with their co-operative and give feedback, discuss the challenges they are facing and what solutions they need now and into the future. Design thinking and rapid prototyping are used as part of all new product development, to help bring new ideas to life, involve farmers and ensure innovations of the future are developed with them at top of mind. It is not unusual to see a small LIC team with a group of farmers in the dairy shed, with coloured stickers identifying farmers’ needs.

  • Taking our technology to the world:
    New Zealand dairy farmers are highly regarded around the world for their ability to efficiently turn pasture into high quantities of high quality milk, and the technology and systems they use to achieve this are highly sought after. In response to global demand from farmers, a new subsidiary business, LIC Automation, was formed. It is responsible for supplying LIC’s unique automation and sensor technology systems to farmers worldwide, from its manufacturing site in Hamilton. This includes in-shed milking Integrated Cow Management System for international farmers has been developed, from the popular automation system used in New Zealand, to suit their specific compliance requirements. Two prototype systems were installed on farms in Ireland and the United Kingdom in early 2015 for trial and further development. Once the trial is complete, and the prototype is fully developed, the system will be made available to all farmers in these countries from LIC Automation. LIC is also looking to commercially introduce its information and automation solutions to South America early next year (there is already some use in Brazil but on a small scale).

  • Collaboration and integration:
    To support LIC’s work to internationalise its farm technology, and in line with its growth strategy, the co-op has been looking at how it can work more closely with other businesses that fit its co-op focus - to combine resources, undertake joint R&D, provide new technical advances and create better results for its farmers. As part of this, LIC has partnered with Netherlands-based robotic milking supplier, Lely, to undertake joint R&D work into sensing technology, accelerate new developments and increase utilisation on farms around the world. This agreement also includes the acquisition of the New Zealand-based Lely Sensortec, to form part of LIC Automation, and allows wider international distribution of LIC’s milk sensor systems. This is in addition to an exclusive agreement with the world-leading provider of dairy cattle management and monitoring systems, SCR Dairy, to distribute the co-op’s milk meters to four key international markets where LIC is not currently present. LIC is also working with other agri-business companies in New Zealand to develop a new web-based system to provide dairy farmers with a real time view of their entire operation – animals, land, feed, people and financials – in one place.

Next Steps

LIC will continue to aim toward its Toward2025 goal: to deliver service and solutions which enable LIC to become a $1 billion co-operative by 2025. Further growth is expected to come from a combination of:

  • Domestic growth (business as usual)
    • New product launches
    • Domestic acquisitions
       
  • International growth (distribution of technology systems)
    • International acquisitions.

The capital structure is also being reviewed, aimed at supporting growth and raising capital beyond borrowing capability. A recent LIC roadshow (June 2015) by the LIC Board, Shareholder Council and senior management visited nine towns across New Zealand to discuss with shareholders how new debt facilities are being put in place to support growth and allow for sufficient capital investment to deliver new products and services for farmers.

One thing is certain, LIC will continue to be a co-operative. Farmers will remain in control.

 

Key Objective

Vision:

To improve the prosperity and productivity of our farmers

Goal:

Delivering service and solutions for farmers which enable LIC to be a $1 billion revenue co-operative by 2025

“Basically we talked to farmers about the growth strategy and the fact that at some stage it will need some additional funding to deliver it. There is no urgency with that, and we are absolutely committed to remaining a co-operative, but there are some options with the co-op that could allow us to raise some capital at some point."

Wayne McNee, Chief Executive