LIC is helping reduce dairy's impact on the environment while increasing production, writes Bill Bennett.
For 23 years New Zealand added around 100,000 dairy cows a year to the national herd. The growth stopped about four years ago. In fact, there has been a small reduction in the number of cows since then.
Yet, production continues to rise because, thanks to the work of the Livestock Improvement Corporation (LIC), the cows are getting better. Corporation chief executive Wayne McNee says: "They need to be more profitable and they need to be more efficient. This has always been our job. Now we also need our cows to have a reduced environmental impact."
This is a new dimension to LIC's work.
The organisation is a farmer-owned co-operative focused on improving herd quality. McNee says LIC is working with the Ministry of Primary Industries, Dairy NZ and the Ministry of Business, Innovation and Employment on programmes to breed cows that can mitigate the effects of dairy farming on the environment. There is a specific focus on reducing nitrate use and methane emissions. One project is Resilient Dairy: Innovative Breeding for a Sustainable Future.
"We recently joined the Sustainable Business Council and the Climate Leaders Coalition. We see ourselves as a big part of the solution for the challenges facing the dairy industry," says McNee.
"The only downside of this is that our genetics research takes a while. Once you've done the research, it takes time to get the results out into the field. It helps that we inseminate 80 per cent of the cows.
That means once we develop something, we can get it out there reasonably quickly."
The goal is to continue this work, get more genetic gain and further increase production and efficiency. McNee says after 40 years of this work there is still room for improvement, in fact he says thanks to the new genomic tools the rate of improvement is accelerating. The challenge is to keep this momentum while reducing environmental impact at the same time.
McNee has powerful tools on hand to help accelerate genetic development in dairy costs. He says LIC has collected production information on every dairy cow for the last 30 to 40 years. The database contains around a billion pieces of cow data.
"We retain all that information and we use it to breed the next generation. The rate of gain is increasing using new technologies like genomics. We are working with Amazon Web Services (AWS) on a new genomics model. We're using Amazon's cloud capability and data load capability to accelerate the way we do that genomics work."
AWS has recognised LIC as an agritech world leader. McNee says LIC has provided speakers for AWS summits in Las Vegas and Sydney. He will be travelling with some of LIC's technology specialists to Amazon in Seattle to meet customers who are using cloud services for human genomics.
"We're going to see if there is anything we can learn from people working in human genomics and if the people working in that area can learn anything from us", he says. While the focus of LIC's work is producing more productive cows, human genomics is more concerned with improving health. This is helpful for LIC: healthier cows mean better animal welfare, key to better production.
Cloud computing also holds promise for LIC because of its ability to scale fast and to deliver results in real time.
Software is an increasing part of LIC's business. The co-operative has a $35 million software-as-a-service business called Minda. This is a cloud-based herd management system used by over 90 per cent of New Zealand dairy farmers.
"Farmers record all the information about cows, some is manual, some is automatic. When we test or inseminate a cow that information is automatically recorded. When a calf is born, that is recorded," McNee explains.
Another technology project LIC is involved in is a joint project with Fonterra where data sets are linked together.
"Aggregate is a platform that brings together data from various systems, this includes our data, Fonterra data, fertilizer company data and financials. We're starting to get some information about staff on there as well. We can add weather data."
There are two benefits from this approach.
The first is that a farmer can see everything in a single place. The second is that bringing data together in this way means that farmers can start to get insights into matters such as what they should be doing based on the information they have about this business.
McNee says it allows farmers to ask complex questions such as; "Are you getting the most efficient use of your feeds, not just pasture, but other feed as well?" You might also discover if your nitrogen application is appropriate. The software lets farmers measure the production of individual animals, then combine this with the collective production information and grass growth information and so on.
The goal here is to give farmers the information they need to make better decisions".
LIC is two years into this project and it still isn't fully integrated but is making progress.
Collecting this data is powerful. The difference between a good cow and a poor cow is huge. McNee says the top 25 per cent of dairy cows produce on average 150kg more milk solids than the bottom 25 per cent. Over time farmers can shuffle their herds so there are more cows like the top performers and fewer like the less productive ones.
Farmers are busy. They spend their days milking cows, managing cows, looking after pastures and so on. McNee says they don't fancy sitting down at nights going through screeds of complex reports.
He says the software is designed to give them insights based on the data.
Farming is a seasonal business, so the software starts from considering what kind of decisions are best made at the current time of year. It shows which are the best cows, which are the poor performers. "We tell farmers how they can make immediate gains by breeding from the best ones, not the poor ones."
LIC on the NZSX
• Herd improvement and agritech co-operative LIC moved on to to the main board of the NZX (NZSX) on July 1, transferring from the Alternative Board.
• Of the companies migrating, LIC was the largest by market capitalisation, at $108.6 million.
• There are 14 agritech companies featured on the NZX main board and only one other farmer-owned co-operative (Fonterra).
• LIC chief executive Wayne McNee says the company is excited to be featured alongside some of New Zealand's best-known brands and companies.
• "The presence of LIC on the main board is an opportunity to further strengthen the profile of the primary sector on the NZSX."
• McNee says the migration will not impact its 10,300 farmer shareholders.
• LIC debuted on the alternative board in 2004 and employs 750 full time staff.
• In the past four years, LIC has undergone a significant transformation programme, including separating its genetics and agritech businesses, completing a capital restructure and strategy refresh.
• The results of this work are flowing through into its results. Performance highlights for 2018/19 - NPAT: $22.2m, up 139 per cent; Underlying earnings: $19.5m, up 541 per cent; Total revenue: $246.5m, up 4 per cent.