Land o' Lakes Sells Off Swine, Refocuses on Dairy

Feb. 23, 2005

Land O'Lakes is poised to transform itself into a farmer-owned organization that is more focused, financially stronger and positioned to deliver on the strategic and financial potential of its recent growth initiatives, Land O'Lakes President and Chief Executive Officer Jack Gherty today told delegates and visitors at the national food and agricultural cooperative's 84th annual meeting.

In a forward-looking address, Gherty told the approximately 2,000 delegates and visitors gathered at the Minneapolis Convention Center that Land O'Lakes will focus on three key strategies in driving this transformation:

  • Building on a foundation of excellent people;
  • Accomplishing the company's key portfolio initiatives;
  • Delivering industry-competitive results in its core businesses.

"Our first strategy is intensifying our focus on attracting, developing and retaining exceptional people," Gherty said. "With the challenge we face in each of our businesses, we must have the right people in the right positions throughout the organization. "Very simply, organizations don't transform people," Gherty added. "People, the right people, transform organizations."

Land O'Lakes is dedicated to maintaining an organizational culture that is based on strong values, promotes teamwork and performance and generates the growth and opportunity necessary to attract the best people, he said.

"Our second strategy is to accomplish the portfolio initiatives we have been working on over the last few years," Gherty said, adding that completing those initiatives will enable Land O'Lakes to focus more intensely on, and dedicate additional resources to, the growth of its core businesses.

Gherty indicated the company's strategic portfolio initiatives relate to its involvement or investment in swine, eggs, fertilizer manufacturing and dairy foods manufacturing. He went on to

"Over the past few years, we have reduced invested capital and exposure to market risk in swine," he said. "Last week, we set the stage for completing action on this portfolio initiative by signing an agreement to sell substantially all of our remaining swine production assets to one of the industry's most experienced and successful independent, family swine production companies."

Gherty explained that Land O'Lakes is involved in the eggs business through its MoArk joint venture, a top-three participant in the shell and processed eggs market. He added that, although MoArk has achieved significant growth in recent years, Land O'Lakes does not consider eggs a core business.

"Our strategy going into 2005 will be to continue our positive growth momentum, optimize cash flow back to Land O'Lakes and aggressively pursue joint ventures and other repositioning opportunities," Gherty said, adding that an underlying goal is to enable this business to grow, while minimizing
capital use and reducing risk.

The cooperative CEO said Land O'Lakes sees the dairy industry in three segments: milk procurement and marketing; dairy foods manufacturing; and value-added marketing.

With the power of its brand, launched 80 years ago, and its proven experience and expertise in value-added marketing, Land O'Lakes believes it can optimize the value it delivers to owners and customers by focusing even more intensely on its Value Added businesses and exploring new ways to pursue member interests. "As we go into 2005, we will continue to aggressively look for ways to work with other cooperatives, on a regional basis, to minimize our needed investment in manufacturing," Gherty said, "and also to look for other, more transforming, ways to free up Industrial assets to facilitate growth in our Dairy Foods Value Added business."

A key focus of the efforts to work with others in manufacturing will be to improve the overall dairy foods manufacturing infrastructure and generate member value in this segment, Gherty said.

Industry Competitive Results in Core Businesses

"Our third strategy deals with a commitment to delivering industry-competitive results and financial returns," Gherty said.   

He added that, in each of its core businesses, Land O'Lakes will focus on:

     -- Intensifying its focus on customers and customer segmentation;
     -- Leveraging Land O'Lakes strength as a branded company;
     -- Reducing costs, optimizing supply chain efficiency and implementing
        best practices in risk management; and
     -- Accepting accountability for delivering improved financial results.

Gherty said he believes the company is positioned to deliver on all three of its strategies for the future: people, portfolio and performance. "Together, these strategies and initiatives will truly transform Land O'Lakes as a farmer-owned organization," he said. "We will be more focused, have a stronger balance sheet and be positioned to drive improved performance and pursue further, very-focused, strategic growth in our core businesses.

"Given the growth of the company over the past few years, this should result in targeted returns on invested capital in the thirteen- to fifteen-percent range," he said.  "When that becomes a reality, the resulting level of earnings should be in the range of $150 million to $200 million per year."

Land O'Lakes, Inc. ( ) is a national farmer-owned food and agricultural cooperative with annual sales of more than $7 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 United States; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and ranchers with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services.

Sponsored Recommendations

Troubleshoot: Grittiness in gluten free cookies

Learn how to adjust gluten free cookie recipes for a softer texture.

Clabber Girl: Rising Success

Uncover how Clabber Girl Corporation achieved a remarkable 7% growth and improved manufacturing efficiency by seamlessly integrating Vicinity's batch manufacturing solution with...

Intelligent Blends: Taking Technology to the Next Level

Find out how our friends at Intelligent Blends use VicinityFood and Microsoft Dynamics GP to produce the best coffee around.

Key ingredient: Mother Murphy's Laboratories

Flavorings manufacturer Mother Murphy’s Laboratories integrates front office with production facility — improving operations from initial order to final invoice.