Ann: S/HOLDER: LIC: LIC Chairman's letter to

• Release Date: 05/10/12 18:40
• Summary: S/HOLDER: LIC: LIC Chairman's letter to all shareholders
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LIC
05/10/2012 15:40
S/HOLDER

REL: 1540 HRS Livestock Improvement Corporation Limited (NS)

S/HOLDER: LIC: LIC Chairman's letter to all shareholders

Murray King, the Chairman of LIC, has written the following letter to all
shareholders -

Dear LIC shareholder

I am the Chairman of LIC, a loyal LIC shareholder, dairy farmer and the owner
of heifer calves sired by a bull called Matrix which has subsequently been
identified as having a previously unknown genetic defect.

This naturally occurring genetic defect, which results in some heifers that
do not milk, has been widely reported in the media in recent weeks.  During
this period we have continued to develop our understanding of the defect at
an individual farmer level and discuss this with the people affected.

As a farmer owned cooperative, the LIC Board and Shareholder Council
recognise our responsibility to ensure that our shareholders understand the
thinking behind the policy not to pay compensation for animals affected by a
genetic defect which was unknown at the time the semen was sold.  That is the
purpose of this letter.

In the discussions we have had with farmers, we have heard several key themes
 :

'This is all about the money. LIC is a farmer owned cooperative and should
just compensate farmers for the value of the heifers'.
No genetics company in the world can guarantee or provide assurance against
previously unknown genetic defects.  This particular defect had never been
seen before anywhere in the world, we were unaware of it when the semen was
sold, and the problem did not become apparent until heifer progeny calved but
did not produce milk.  Your Directors do not believe that exposing the
cooperative to claims of this nature is a step that should be taken.

 'LIC took too long to communicate with farmers'
The first indication of an issue came in spring 2011 when we got reports of
some heifers not milking.  We immediately began an investigation which, in
March 2012, revealed a previously unknown genetic defect.  Once we knew what
the problem was, we immediately wrote to all farmers who had used the bull so
they could avoid further unnecessary investment in any affected heifers.
Yes, some offspring of Matrix were hairy but farmers know that coat variation
occurs with all breeds.

The frustration with this issue is that, as farmers, we know that in any year
we may have calves born which do not survive. These losses could be due to
a genetic defect but the fact that they are immediately apparent, and avoid
any rearing costs, minimises their impact and makes the incidence a fact of
life/farming. The difference in this case is that the condition was not
revealed until the animals had been reared.

'LIC didn't do enough for farmers'
Compensation was not offered because, like genetics companies around the
world, we cannot guarantee what we cannot control. What we did was - we
investigated the reports received, identified the mode of transmission,
discovered the cause of the defect, developed a DNA genotyping test, notified
farmers, collected tissue samples and DNA tested large numbers of samples (at
no cost to farmers), advised farmers to remove affected stock, and returned
every cent earned from the bull to the farmers who used it (through a credit
for all Matrix semen and insemination fees).  We continue to work with
farmers to ensure that affected animals are removed from their herds.

It's worth noting that even a few years ago, discovering this genetic defect
and developing a test would have taken years, instead of months.

In summary
I speak for the entire LIC team - the Board, the Shareholder Council,
management and staff - when I say that we understand, share and regret the
frustration this issue has caused our farmer shareholders and customers.  As
a cooperative we have spent more than 60 years leading some of the most
evolutionary changes to the dairy industry and delivering a breeding service
to our farmers.  We take immense pride in the role our genetics have played,
and will continue to play, in the national herd.

I hope this letter explains why we cannot provide what some are asking for,
but if not I extend an open invitation to contact me, one of our Farmer
Directors or your local Shareholder Councillor at any time. Their contact
details are available on the LIC website www.lic.co.nz.  If you would like to
know more about the defect - how it happened and what we've done about it -
there is also an extensive set of answers to farmer questions on the homepage
of the website.

Best wishes for a productive season

Murray King
Chairman
End CA:00228170 For:LIC    Type:S/HOLDER   Time:2012-10-05 15:40:30