Accelerated Genetics

makes improvement

in core business profits

Accelerated Genetics had a few more bumps in the road in its last fiscal year, but showed big improvements in its core business.

Stronger dairy prices and dairy futures, solid exports and good beef prices have all propelled the farmer-owned cooperative into a better financial position. But loss of a lawsuit and related legal expenses cost the business nearly $2.4 million last year.

If it weren't for legal fees, court costs and a payout from the co-op as the result of that lawsuit, the co-op would have ended the fiscal year in the black.

Director of Business Development Dr. Ole Meland talked with members about the fiscal year at a district member meeting in Middleton on Jan. 12.

Meland said the company sold 3.95 million units of dairy semen last year, which translated to sales of $29 million, which is up 17.8 from a year earlier.

In beef semen, the company sold 408,829 units, up 91 percent from the previous year, translating to $2.8 million in sales.

Meland reported that Accelerated Genetics sold over $9 million in animal health products, up 27 percent from a year earlier.

"There are lots of bright spots," Meland said.

Total revenue for the business was $44.9 million, up 21.3 percent from last year.

The business had $1.5 million in income for the year, said Meland, which marks an improvement of $3.1 million from last year. "To have this kind of turnaround from our core business is extremely gratifying."

But, once the nearly $2.4 million in legal expenses and the settlement for the court case they lost was figured into the balance sheet, the Baraboo-based co-op ended the year with a loss of $762,525 - meaning there would be no patronage refund for members.

Curt Larson, vice president of finance for the business, explained to members that a court case had been brought against Accelerated Genetics by a company with which it had done some research trials in 2000 and 2001.

That company made accusations that Accelerated Genetics had subsequently used information that the two had developed together, Larson said. In a jury trial, which took place in Boston, it boiled down to an interpretation of a business agreement.

The jury ruled against Accelerated Genetics in the breach-of-contract suit and the co-op made payments in the last year in January, June and December, after negotiating a lower settlement amount than what the jury awarded.

Larson said the decision was made to get the entire settlement completed in one fiscal year.

Still, 2011's financial performance compared favorably with a $1.5 million loss in 2010, when there was no legal case to pay.

Meland said the cattle breeding cooperative last year celebrated 70 years in business and spent a little time looking back while planning for the "next 70 years.

"We are proud to be under the same cooperative ownership," he said.

The co-op began a "re-branding initiative," changed its logo, "created a new corporate culture" and identified areas of potential growth for the business, as part of its 70th birthday celebration, he said.

"We have become a more customer-focused organization and have placed more emphasis on employee training."

The re-branding and re-design of the company logo, Meland said, is intended to link the company to its past, but also to relay the message that Accelerated Genetics is not just a small, regional breeding cooperative, but a worldwide business.

Meland said that through its affiliate, World Wide Sires, Accelerated Genetics does business in 100 countries.

Brian Brown, a Belleville farmer who is chairman of the co-op's board of directors, said the board fully supported the new branding initiative and corporate identity.

"This will help the cooperative set the stage for the future," he told members gathered for the district meeting in Middleton.

The strategic alliances in dairy genetics and a growing beef semen business have gotten the co-op through some rough financial times in recent years, Brown said. "The board had some tough decisions to make. But the emphasis has been on member involvement and education."

Meland told members that it is a good year to be in dairy and in the beef business. The U.S. beef herd is the smallest it's been in decades, he said.

The Certified Angus beef program is concerned that it will be short to meet the demand for its product, Meland added.