Chairman's Review 2008
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As we celebrate the anniversary of our formation in 1958 I take immense pride in
the accomplishments of Genetics Australia Cooperative over the last 50 years.
The core of your Cooperative is livestock genetics, using advanced techniques to
select breeding stock for dairy farmers that will deliver improved
profitability, year-on-year. Genetic gain underpins productivity improvements in
the Australian dairy industry.
Increasingly the dairy industry and its leaders
understand that on-farm productivity is now central to dairy farmer viability,
meaning that input costs for a given level of output must be reduced in order
for farms to remain profitable. Genetic gains add up in a unique way. They are
never lost, but rather accumulate each year. They don’t get used up like
purchased feed. They continue to build each and every year because your
Australianowned Cooperative works tirelessly on your behalf.
The years since
2002 - 03 have been challenging ones for Genetics Australia as well as our
Farmer Shareholders. But I am happy to report that we have dramatically improved
our performance with a range of initiatives, and accordingly we are now really
well positioned to continue to go forward into the future providing our members
with the best livestock genetics.
In financial year 2007/08 we have moved the
business back into operating profitability and achieved Earnings before Interest
and Tax (EBIT) of $802,000 from an EBIT loss of $1,442,000 in 2006/07, an
effective turn-around in trading performance of $2.2 million (not including any
asset sales). This is a very good result at a time when the dairy industry has
only partially recovered from the severe drought conditions.
In addition I am
also pleased to report that our debt has been reduced from $4.1 million at June
30th 2007 to $3.1 million at June 30th 2008, an excellent result achieved by
increased attention to outstanding debt and also the sale of four small blocks
of land around our office at Bacchus Marsh which were redundant to our farming
requirements. This has reducing our Debt to Equity ratio from 51% to 37%.
The
net assets of your cooperative have increased from $7.9 million to $8.33
million.
Genetics Australia is proud of its contribution in this area for the
Australian dairy industry. Our mission is, and will remain, to improve the
profitability of farmers. We are a farmer-owned cooperative, one of very few
that exist in the dairy industry.
Genetics Australia continues to generate over
50% of all proven bulls to the dairy industry. We prove our bulls under the
industry-owned Australian Breeding Value (ABV) system, which is designed to
maximize profitability of milk production for Australian environmental
conditions and our unique payment schemes.
We have been through some tough times
as have many of our farmer members, in particular with the ongoing drought
conditions in particular since 2002/03. As you can see from our 2007/08
financial performance, we have weathered this storm and have made the necessary
changes, and are now firmly placed for the future.
And the future is an exciting
one. We have been working closely with both the DPIV and the Dairy CRC in the
development of gene markers for important genetic traits, and this work is
proving very successful. We have already used gene marker technology over the
past two years in assisting us with our bull selection process, the first such
application of this type of technology for increased profit in the world. Next
year we will be introducing gene tests where farmers will be able to determine
the genetic merit of their cows, or calves at birth. This will be yet another
way in which they will be able to drive herd productivity.
There will also be
other areas of technology that we are currently actively working on, such as
sexed semen. It is our intention to be at the forefront of new technology to
benefit our farmer members
At our 50-Year Anniversary celebrations in July 2008
we were able to acknowledge the outstanding contribution of the breeders and
progeny test collaborators who form the very foundation of Genetics Australia
Cooperative. We acknowledged outstanding breeders such as Roger and Helen
Perrett at Hill Valley Farm and Robert Noble, a long-term progeny test
collaborator, whose Father was on the original Board of the Victorian Artificial
Breeders (VAB), and many other dedicated members. We also acknowledged the great
contribution of all former Directors of the Cooperative with special
certificates of appreciation. It is through their efforts in guiding the
organisation that we can enjoy our ongoing success.
I thank my fellow directors
for their continued contribution to guiding the Cooperative. Their patience,
knowledge and wisdom, and the selfless manner in which they give their time, are
paramount to your Cooperative. In particular I would like to wholeheartedly
acknowledge the contribution of Les Collins, who is retiring from the Board
after 17 years as an independent director. During this period Les has chaired
our Finance and Risk Committee, and has made an outstanding contribution to the
well-being of Genetics Australia Cooperative. We wish him well in his
retirement.
And we welcome our new independent director in Frank Davis, who is
very experienced with a background at senior levels in the banking sector and
who has vast experience as a director including with a major dairy company.
Also, thank you to our Chief Executive Dr. Ray Johnson and his senior management
and all staff for the commitment and work on behalf of Genetics Australia and
our customers and shareholders.
Only by supporting your Genetics Australia
Cooperative to the maximum extent possible can we hope to survive and deliver in
the interests of farmers and the industry into the future.
We will stay true to
the objectives and vision shown by our founding fathers way back in 1958, as we
embark on the next 50 years of genetic improvement.
Colin Gardner
Chairman