WAUNAKEE - For about 75 days Janet Keller has been working with a team of staff members, board members and consultants to steer Accelerated Genetics, the Baraboo-based cattle genetics cooperative, into smoother waters.
Initiatives are underway to increase gross profits and sales while reducing expenses and making the cooperative more member-focused. Changes were needed when the company posted a $2.6 million net loss last year.
Keller was chosen by the board to serve as President and CEO several months ago after a four-month search. “We decided that we wanted somebody with Janet’s skills in communication and familiarity with the company,” said Scott Dahlk, Verona, chairman of the board.
At a customer appreciation meeting April 17 in Waunakee which was also a chance for farmers to meet Keller, she said it was her fourth time working with Accelerated Genetics, a cooperative that was born in 1941. It has home offices in Baraboo and a bull stud in Westby. The company also owns a beef bull station in Nebraska.
Her roles in the company have been many. In the 1980s she gave tours of the bull barns in Westby – when that was still possible, before biosecurity restrictions. During another tour of duty she worked as a cow analyst and later served as a field technician in southwest Wisconsin.
In 2001 Keller became the vice president of communications, advertising and public relations for the company – a job she held until 2010. She and her husband have a passion for dairy cattle, she told the group. While they have others milking their cows for now, they put their efforts into raising a select group of Holstein heifers – emphasizing polled genetics - on his family’s farm, which they now own.
Keller told the Waunakee group of dairy farmers that she and her staff and board members wanted to pass information to customers and get feedback from them.
“In the last 75 days all of our systems have been tightened up. I think we’re getting closer on a lot of things,” Keller said. “But I’m not going to lie, it’s been tough.
“Our board strategies are to make the cooperative more member-focused and more profitable,” she added.
Board chairman Dahlk said the board implemented several strategies to improve the bottom line of the co-op. In late 2016, before Keller was on board, the breeding co-op liquidated about half of its bull population and is now down to about 350 bulls. “With genomics, most genetics companies are keeping fewer bulls,” he added.
The lower bull population means that their facilities are available to do custom collection for other bull owners. “We have been working on reducing the number of bulls for a couple of years,” he said.
Another cost-saving measure that the company undertook was trucking Wisconsin-produced feed out to the Nebraska bull station rather than buying feed there to save money. Dahlk said the company also gave up about 200 rented acres of cropland.
Also before Keller took the helm, they reduced personnel and changed some sales people from commission to salary to cut costs, he said. Employee travel expenses were reduced and the company began working with Winston Mar, a consultant who was recommended to them by their lender Co-Bank. “Hiring that strategist helped tremendously,” the board chairman said.
In addition, they hired an in-house specialist to collect accounts receivable. “This is our money that’s out there that needs to come back to the company,” Dahlk said.
Tom Mack, Accelerated Genetics’ vice president of operations and finance, told the group that 2016 was “a trying year” as the company experienced a net loss of $2.65 million on top of a 2015 net loss of $459,214.
Part of that picture was an 11 percent drop in sales worth about $6 million and accounts receivable that topped out over $8 million. The company would have had an even worse financial picture if not for the sale of the wholly owned Genetic Visions, which netted $1.1 million from a willing buyer.
Genetic Visions had been started by Accelerated Genetics a number of years ago to do genetic testing – for things like recessive genes, coat color and freemartins -- but had not advanced as fast as others in the field. Company officials said it would have taken a great deal of new research and development money to make it competitive with others in genomics.
Mack said the company has now replaced a 40-year-old accounting system and will move to electronically entered sales records by field staff. Now, thousands of paper tickets are written in the field and then must be entered by staff in the office. Electronic invoices will save much of that effort.
“This will reduce our costs and make it much more streamlined.”
Mar, the consultant, said that many of the things the board has done have been tactical efforts to get the company’s “head above water” and then they will strategically look at how to move forward and remain competitive in the future. “We are going to find out what we have to do that makes us better than the other guy,” Mar said
Keller agreed. “We have to be visionary and think about how things are going to change and evolve.”
The financial picture was not improved by Accelerated Genetics’ half ownership of World Wide Sires, which had its “worst year ever,” Mack said. “The Latin American market has been very challenging.”
Globally, trade agreements and the strong dollar have hurt dairy exports and the Russian embargo of dairy products from Europe has hurt that market.
The company lost a number of its sales people in Texas, Arizona, California and Idaho and with them went a significant amount of sales, Mack said, but all those spots have now been filled and large orders are once again “rolling through the system.”
Keller is optimistic about the “stellar front-line people in this company” and she emphasized the many employees who have worked for Accelerated Genetics for decades. “They care about their customers.”
Industry changes profound
Keller said the advent of sex-sorted semen and genomics have profoundly changed the cattle genetics business. Accelerated Genetics’ customers want sorted semen and because of patents, it all must come through one outside company that they have a contract with.
Consultant Winston Mar told the farmers that because the company is paying so much for sorting semen, it is not making any money on it. “We know we need that product and we are trying to figure out how to deal with that. Everybody with a Jersey program wants sorted semen,” he said.
Keller adds that many beef producers want sorted semen too – they want male-biased semen to assure they get steers.
Genomics has meant that the broad availability of bulls there once was in the industry is no longer there. Some genetics companies are now in the business of investing in top females to produce their bulls. “These things have drastically changed the AI industry,” she said.
Accelerated Genetics doesn’t own any females and has no plans to do so, she told the group.
Genomics has speeded up the process of proving animals to an extreme. By the time you figure out genomically what bull will sell well the genomics may have passed him by, she added.
Ryan Weigel, the company’s vice president of dairy sire procurement, agreed. “The data I show you today will be different tomorrow. In the era of genomics, things move very fast.”
Top bulls purchased these days can run from $500,000 to $1 million, he told the farmers.
One of the ways Accelerated Genetics has worked out to continue to get top bulls is to partner with a company in the Netherlands to “draft” bulls like a sports team. Each partner gets a chance to “draft” the bulls that they are interested in on a rotating basis as the bulls become available.