Agribusiness company Landmark has strongly denied claims that recent structural changes have relegated the company’s livestock division to ‘second tier’ status in company operations.
Victoria’s Weekly Times newspaper on Tuesday reported that new managing director Tommy Warner had removed the livestock general manager's position from Landmark’s executive leadership team, in what it claimed was a “major shake-up of the company structure.”
The livestock general manager position and other business units now report to Landmark's three regional managers. Previously, livestock general manager Mark Barton sat on the company’s executive leadership team, but now reports to southeastern regional manager Rob Clayton.
The Weekly Times also suggested that the move reflected “Landmark's focus on crops and merchandise, in line with the business model of its Canadian owner, Agrium.”
Responding in the absence of MD Tommy Warner, who is the US on leave, National livestock Director Mark Barton said while the basic structural/reporting changes outlined in the article were correct, any interpretation that livestock’s importance to the company was somehow diminished was a long way from the truth.
“There’s a lot of rhetoric out there, as the company has made recent structural and staff adjustments,” Mr Barton said.
“The key message is that Landmark has, and continues to make, a huge investment in livestock industries, and to suggest it is now taking a back seat to other divisions is wildly inaccurate. If anything, it’s the opposite,” he said.
Mr Barton said his direct access to Mr Warner was now closer than ever.
“With some of these recent changes, Landmark has adopted a much leaner, flatter senior management profile. I have more day-to-day dialogue with Tommy Warner now than ever before – partly because his own expertise is more in the retail field, rather than livestock.”
Mr Barton said the company made its business decisions with a strong customer focus, and the priority for the livestock operations was to be in front of clients. None of the recent personnel or structural changes would have any impact whatsoever at the ‘coalface’, where the company interacted with its customers.
He said the company had transacted more than $2 billion worth of livestock last financial year, and was on track to repeat that again next year.
“Back in 2011, livestock was the strongest performing part of Landmark’s business. In 2013, for obvious reasons, it hasn’t been able to replicate that result this year, however this has been the case for most agency businesses, pastoral companies and others, this year.”
“Having said that, livestock will still deliver a strong profit for the Landmark business this year, but some of the changes being implemented will help improve on that.”
Using just one regional example, he said the company would handle more than 120,000 head of cattle through Roma, alone, this year.
Management this week will sign-off on an investment worth more than $1 million in software development for livestock administration. “We are totally revamping the back-end of our livestock business, with new software,” Mr Barton said.
“That’s been approved as part of a 2014 initiative to drive further efficiency through the system, and deliver more productivity in our agency function. That’s hardly something that a company which is ‘demoting’ its livestock business would do,” he said.
Landmark’s livestock business was now significantly different and more diverse from the ‘traditional’ agency role that existed a decade ago, however. A range of developments had taken the operations in new directions.
“We are probably now the biggest supplier of stock to the live export industry, across Australia. With that comes a lot of responsibility in managing logistics and related issues, and we have strong traction there,” he said.
When it comes to livestock agency, all of the associated investments in which Landmark is involved, including Regional Infrastructure Pty Ltd (RIPL), Integrated Traceability Solutions (ITS), and AuctionsPlus, will now be managed more directly by Mr Barton. “I will be taking a front-line role in strategies to deliver synergies from these businesses to the company in that area,” he said.
New meat & livestock division performing well
Mr Barton said Landmark’s meat & livestock trading division, which had been launched as a new business model this year, was expected to deliver somewhere towards 20pc of Landmark Livestock’s total 2014 EBIT (earnings before income tax).
“Our meat trading business is something that has developed in a low-key way, but is progressing well,” he said.
It currently had a strong domestic market focus, including cooperating with some large-scale customers in providing backgrounding roles for feeder cattle.
“Rather than traditional agency, this is about having some skin in the game, using Landmark’s procurement, marketing and balance sheet to background thousands of cattle at any one time.”
Unlike the equivalent Elders model which includes feedlot ownership at Killara and Charlton, Landmark prefers to have the flexibility to shift the feeding emphasis north or south, depending on circumstances. It currently has cattle on feed at a number of different feedlots offering custom-feeding services.
“Because of grain price, this is very much a southern business at the moment, but that could change, depending on seasonal circumstances. It’s one of the benefits in not owning feedlot infrastructure in one specific location,” he said.
“In the tough times in the north this year, we managed to transfer a lot of Central and Southern Queensland cattle south to the Riverina, southwest slopes and northern Victoria, to background and feed. Some are going into short and mid-fed programs for the first quarter next year. Well-handled, well-grown CQ cattle with no condition on them have put on 2kg/day in the Riverina this year.”
“Now that we have a shortage of supply, we have about 4000 steers that will go into the system in southern Australia, and the difference in grain price, on an as-fed basis, could still be as much as $70-$80/tonne compared with Queensland at present.”
Focus on market end-points
Mr Barton said if he was to try to define where Landmark’s 2014 agency, meat & livestock and live export businesses were headed, he would say it’s about focussing on market end-points.
“The industry generally is becoming very program-focussed: a lot of processors and feedlots today do not want to touch an animal until they have an end-point clearly defined for it. Spot cattle are becoming fewer in number,” he said.
“A lot of the things we are doing as a business are geared towards that. For example we’re using a backgrounding property which currently has 3000 calves on it, that were bought off one place, repeating a transaction that has happened for the past three years. The bulk of those backgrounder cattle are earmarked for grass fed supply during winter next year. Others will go into 100-130 day grainfed programs for Landmark’s own markets.”
Mr Barton said as a ‘start-up’ business this year, profitability was not the key focus for the meat & livestock division, so much as getting the business on its feet. But the company had strong expectations for the division for 2014.
As part of the development of the new meat & livestock trading business, Landmark had invested ‘a lot of money’ in software development, integrating StockIt, an Integrated Traceability Solutions (ITS) animal management program, to manage the back-end of the trading business. That program will provide full traceability RFID reporting, from a compliance point of view.
“The big change in the livestock space since the Dalgety days is that we are no longer just livestock marketing agents, but becoming integrated through the supply chain, looking at the end-point and working backwards.
“We have traction, also, in the regional infrastructure area, software, Auctions Plus, and other platforms touching a lot of points along the supply chain. It’s a long way from simply dealing with surplus stock and trying to find a home for them,” Mr Barton said.
HAVE YOUR SAY