Land O’Lakes achieved solid operational and financial performance in 2000, while also completing significant strategic growth initiatives, Land O’Lakes President and Chief Executive Officer (CEO) Jack Gherty today told delegates at Land O’Lakes 80th Annual Meeting.
“This past year, Land O’Lakes combined positive performance, strategic growth and a commitment to our cooperative mission to deliver increased value to members and customers,” Gherty said. “We produced increased volumes in nearly all major product lines, improved our net earnings, strengthened our balance sheet and returned $54 million in cash to members. We also maintained our focus on achieving the size, scale and level of performance necessary for our farmer-owned enterprise to compete and win on into the 21st century.”
Land O’Lakes sales for 2000 were $5.8 billion, up 3 percent from 1999. Net earnings totaled $103 million, up from $21 million one year ago. In addition, the $54 million in cash returned to members was up more than $5 million from 1999.
Land O’Lakes achieved these results despite facing continued market volatility, depressed butter and cheese prices and an ongoing downcycle in the crop nutrients industry.
Gherty indicated Land O’Lakes also achieved important strategic growth through the establishment of significant joint ventures in Agronomy (Agriliance) and Feed (Land O’Lakes Farmland Feed). Additional growth initiatives included the purchase of Madison Dairy Produce (a leading private label butter manufacturer) and key seed industry acquisitions.
Gherty went on to outline four major forces shaping the agricultural and agribusiness marketplace: continued consolidation and concentration; the growing importance of food safety issues; advancing technology and biotechnology; and intense economic pressure on producers.
“The number-one force shaping the economic environment is ongoing consolidation and concentration,” Gherty said, adding that agriculture and agribusiness have been no exception to the trend toward mergers, acquisitions and alliances.
Commenting on the increasing focus on food safety issues, Gherty said, “Being part of a cooperative system that links the food chain and provides producer-owners the ability to identify, preserve and segregate ag inputs, production and end-products gives us an opportunity to build competitive advantage in the marketplace.”
The effects of advancing technology cut across agriculture and agribusiness, he continued.
“Advances in crop genetics, new production technology, improvements in information systems and the rapid growth of e-business are dramatically changing the way we farm and the way we do business,” Gherty said.
The cooperative CEO said the economic pressures facing producers also have significant implications for cooperatives.
“In this environment, the line between profit and loss for producers will remain razor thin,” he said. “The value our system delivers to producer-owners is absolutely critical. I believe this means Land O’Lakes must focus intensely on our mission of optimizing the value of our members’ dairy, crop and livestock production.”
LAND O’LAKES BASIC BELIEFS
Land O’Lakes Board and Senior Strategy Team spent considerable time evaluating the economic environment, focusing on what the organization would have to do to succeed in that environment, Gherty said, adding that agreement was reached on five basic organizational beliefs.
“Number-one is that we must continue to grow to have the size and scale necessary to compete on behalf of our owners,” he said. “In each of our core businesses, our competitors and customers continue to drive toward increased size, scale and market shares. If our farmer-owned system is to remain competitive, we must continue to pursue appropriate, strategic growth.”
The second Land O’Lakes basic belief is that “Resources are finite and our growth must be consistent with proactive management of our portfolio.”
Gherty said this means Land O’Lakes will demand accountability from each of its businesses and will measure each investment against potential return, level of risk and impact on Land O’Lakes ability to deliver value to members and customers.
The third basic belief is that “Generating industry-competitive results is critical to success.”
“As our businesses continue to grow, we have an absolute responsibility to ensure we are attaining maximum performance from our expanding asset base,” Gherty told delegates. “Growth is meaningless unless we translate it into enhanced performance and the delivery of increased value to members.”
The fourth Land O’Lakes basic belief is that “Exceptional people will be essential to success,” Gherty said, adding that the company will remain dedicated to attracting, retaining and developing the very best employees.
The fifth organizational belief outlined bv Gherty was that “The breadth of the Land O’Lakes system must be leveraged where it creates competitive advantage.”
Land O’Lakes business units will focus on ways to work together to deliver additional value, Gherty said, adding that Land O’Lakes will also leverage the strength of its relationships with local cooperatives and farmer-owners.
Land O’Lakes (http://www.landolakesinc.com) is a national, farmer-owned food and agricultural cooperative, with sales approaching $6 billion. Land O’Lakes does business in all fifty states and more than fifty countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the U.S.; services its international customers with a variety of food and animal feed ingredients; and provides farmers and local cooperatives with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services.