LIC and Lely enter R&D partnership in farm sensor technology

Friday 17th April 2015

Livestock Improvement Corp, a farmer cooperative that sells bull semen and manages a dairy genetics database, has entered a research and development partnership with Dutch agricultural company Lely Group.

As part of the deal, the Hamilton based company has acquired Lely Sensortec, the Dutch company's Hamilton based development division, whose five staff design farm sensor technology to monitor animal health and production, for an undisclosed amount, the companies said in a joint statement. The deal will accelerate development of sensor technology used on farms and support wider global distribution of its inline milk sensors.

“Integrated and reliable automation and information technology solutions have the potential to revolutionise farming worldwide and sensor technology is an essential component of this,” said LIC chief executive Wayne McNee. “The big data the systems can deliver, while a cow is being milked, can deliver big gains in productivity and profitability for a farming business.”

LIC is targetting $1 billion in annual revenue by 2025, via acquisitions and joint ventures. Earlier this year, LIC entered into a deal with 'cow intelligence company' SCR Dairy to distribute its technology into new regions including Belarus, Israel, Russia and Turkey. Last December, LIC acquired a majority stake and exclusive supply to its Brazilian genetics distributor, where it is target growing demand for artificial insemination in the country's expanding dairy sector, with annual production to surpass 38 billion litres by 2020.

In February, LIC reported profit rose to $29.7 million in the six months ended Nov. 30, from $26.9 million a year earlier, as sales climbed 18 percent to $159 million, boosted by a record payout to farmers in the 2013/14 season. However, a drop in global dairy prices has led Fonterra Cooperative Group to halve its forecast payout to $4.70 per kilogram of milk solids. That drop combined with the company's own increased spending and the seasonal nature of its artificial breeding programme means profit will decline in the full year, LIC said in February.

Sensortec reported a 67 percent drop in profit to $45,684 in the year ended Dec. 31, 2013, financial statements lodged with the Companies Office show. Sales slipped to $990,356 from $1.19 million the previous year. Total liabilities exceeded $155,697, and the directors said the company could operate as a going concern for the next 12 months, as shareholders undertook to provide financial assistance if needed.

Meanwhile, Lely New Zealand, the local operations of the Dutch parent, reported a 33 percent drop in annual profit to $777,113 in the year ended Dec 2013, as sales edged up 1.5 percent to $13.2 million, while costs increased 35 percent to $2.6 million, statements to the Companies Office show.

Shares of LIC, which are only available for trading by its farmer shareholders, were last quoted on the NZX at $6.10 and are unchanged since the start of the year.

BusinessDesk.co.nz

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