Wednesday, 16 June 2021 11:55

LIC offloads struggling business

Written by  Sudesh Kissun
Chair Murray King concedes that despite significant efforts by LIC its automation business has seldom been profitable. Chair Murray King concedes that despite significant efforts by LIC its automation business has seldom been profitable.

Farmer Co-operative LIC is offloading its automation business that it has struggled to make a money earner.

MSD Animal Health, a division of listed US multinational Merck & Co., is paying over $30 million for the business. The deal includes LIC's new generation Protrack systems for customers with legacy technology, as well as associated software development.

LIC says it will continue providing service and support to customers through the transition. Under the deal, Protrack operating systems will work with LIC's herd management system, MINDA.

The farmer co-op will be able to access data generated by the automation technology for its research and development activities.

MSD will merge its latest acquisition with its Allflex Livestock Intelligence unit, which has manufacturing facilities at Palmerston North.

Chairman Murray King says the divestment of the automation business is in line with LIC's refined strategy and will allow the co-op to sharpen its focus and play to its strengths.

"We are confident this is the best way forward - for the technology, for our farmers who have invested in these systems and for the wider co-op shareholder base," he says.

"MSD Animal Health has extensive scientific and technological capabilities that can take this technology to the next phase and deliver more value to farmers."

LIC has a long-standing relationship with MSD Animal Health, through its Allflex business unit and the companies will work together to support farmer customers through the transition.

King says in making the decision to sell, it was important to LIC that the buyer would continue to support its existing farmer customers in New Zealand. He says the sale concludes a longstanding concerted effort by the co-op to attempt to grow the automation business and make it profitable, with moderate success.

Last year, LIC shareholders voted down a board proposal to purchase a stake in Israeli agritech company Afimilk, which had included a potential subsequent transaction for Afimilk to purchase LIC Automation.

Following this, the board agreed to reintegrate automation into LIC to try to enable the business to become cashflow positive and break even.

"We know automation delivers a lot of value on-farm, but despite significant efforts by our people, the automation business itself has seldom been profitable, partly due to the stabilisation of cow numbers in NZ dairy and limited traction in international markets," King concedes. "This divestment will allow us to focus on delivering value for our farmer shareholders."

More like this

Next generation of DNA testing

Herd improvement co-operative LIC is combining its DNA parentage testing and genomic evaluation services into one convenient service to help farmers identify their highest genetic merit animals.

New dam could signal end of dairying on the plains

Waimea Irrigators chairman Murray King has welcomed the effective completion of a major dam, which is expected to give irrigators and other users on the Waimea Plains reliability of supply for decades to come.

All in the family

Taking over the chairmanship of LIC feels like a generational responsibility for Tākaka farmer Corrigan Sowman.

Featured

Govt urged to reduce ETS units

The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as possible.

Dairy sheep, goat woes mount

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Alliance's Pure South cuts win gold

Meat co-operative Alliance Group has bagged four gold medals at the Outstanding NZ Food Producer Awards, achieving top honours for every cut entered.

Dairy demand on the rise

There is increasing evidence that dairy demand is on the upswing, according to Rabobank senior agricultural analyst Emma Higgins.

Fert use tumbles as prices spike

Fertiliser use in New Zealand over the 18 months is about 25% down from what it consistently was for the previous decade or more, says Ravensdown chief operating officer Mike Whitty.

National

Machinery & Products

JD unveils its latest beast

John Deere has unveiled its most powerful tractor ever, with the launch of the all new 9RX Series Tractor line-up…

Biggest Quadtrac coming to NZ!

In the biggest announcement that Case IH Australia/New Zealand has made around its tractor range, its biggest tractor is about…

A different shade of blue for Norwood

Norwood and ARGO Tractors, the Italian manufacturer of Landini and McCormick tractors, have announced an agreement that gives Norwood exclusive…

Kubota tests diesel engines

Kubota last month used the UK LAMMA Show to test the water with its new 200hp, four-cylinder 09-series diesel engines.

Claas rings up some big numbers

The Claas Group finished fiscal year 2023 with a substantial leap in sales that reflected the high demand for agricultural…

» Latest Print Issues Online

The Hound

Too late?

OPINION: Your canine crusader reckons moves by the new government to try and breathe new life into the country's ailing…

Going rogue!

OPINION: This old mutt suggests the new government is going to have to move fast to rein in a number…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter