Our content

INTERVIEW: Growing Land O’Lakes Animal Nutrition Business Keeping an Eye on Disruptions

Source: Feedindo Logo Final

9 April 2021 - Land O’Lakes, Inc. recently reported that its full year earnings grew 28.5% to $266 million in 2020, despite the economic challenges and volatile market conditions due to impacts of the global COVID-19 pandemic.

Discussing the financial performance, Beth Ford, President and CEO of Land O’Lakes said that some of the main reasons the company was able to grow in an evolving and difficult landscape, were its ongoing focus on developing revenue options for farmers and actively working to offset significant market declines.

And, due to growth in all lifestyle species and improved performance noticed in premix, annual earnings for the company’s animal nutrition operations were also higher.

This business is described by the firm as “a portfolio of connected operations”, which includes the Purina-branded lifestyle and livestock businesses, the ingredient merchandising team, animal milk replacer businesses, its premix and micro distribution company, the PMI-branded feed additives company, as well as two companies that focus on the lab market and the zoo/exotic animal market. The business is made up of more than 2,800 employees across more than 70 facilities, including manufacturing plants, warehouses, and distribution centres. On a combined basis, its annual revenues exceed $4 billion.

Lisa Deverell
President, Purina Animal Nutrition
& EVP, Land O’Lakes

COVID-19 and the Winter Storm

“The pandemic continues to impact all aspects of our business as consumers and customers adjust to different modes of working, dining, travelling, shopping, and gathering with friends and family. Land O’Lakes has been able to adjust its operations and product mix to meet those changing demands, which helped to deliver solid results in 2020 and to carry momentum into 2021,” Lisa Deverell, President, Purina Animal Nutrition and EVP, Land O’Lakes, told Feedinfo in a recent interview.

“The animal nutrition business grew year over year as well and contributed roughly 25% of the total Land O’Lakes pretax earnings. Our Purina-branded lifestyle business performed very well, as did our premix business, but honestly, we were encouraged by strong volumes throughout our animal nutrition portfolio,” she added.

According to Deverell, the Land O’Lakes animal nutrition business was able to leverage its national network during the COVID-19 pandemic and continues to do so to meet the growing demand for its products.

“At this point, we’re encouraged by signs that the economy is starting to reopen, so we’re not materially adjusting our targets or plans,” she commented.

The same logic applies to how the company dealt with the US winter storm in February.

“The storm did temporarily slow a portion of our operations and our Texas facilities. Fortunately, our teams were watching the long-term weather forecasts, and were able to pre-build inventory and ship substantial volumes before the roads became too dangerous to safely navigate,” the Land O’Lakes EVP said.

“The supply chain remains a bit stressed as some ingredient suppliers were forced to shut down or slow down more than many anticipated,” she also warned.

Dealing with Supply Disruptions

Be it COVID-19 or other supply disruption causes, the firm will keep a sharp eye on inflationary pressures, particularly in ingredients, packaging, and logistics.

Asked how the disruptions in freight and the high rates recorded in recent months may be affecting the Land O’Lakes animal nutrition business, Deverell admitted that her company has not been immune to the current supply chain disruptions. In her view, they have added additional complexity to the operations, particularly in a rising demand environment.

“We’ve had to double down on our communication efforts with our suppliers and our customers to ensure alignment and understanding, and I’m happy to report that our industry has really risen to the occasion in that regard. Until the ports can catch their collective breath, we’ll spend a lot more time than normal tracking containers and working with customers on alternative product offerings,” she commented.

“In the near term, managing the supply chain and the commodity pricing environment will be two of our largest challenges,” Purina Animal Nutrition’s President went on to say. “And, despite the challenging commodity environment for 2020-2021, we’re seeing the momentum of 2020 carry into 2021.”

Longer term, Deverell sees the industry and the markets constantly evolving, with continued consolidation throughout the supply chain, and among customers and suppliers, as well as with the fundamentals like global population growth and the rise in protein demand, or people’s connection to animals which she believes has never been higher.

“Challenges present opportunities for us to lean in and get better. We need to maintain our focus on addressing hunger, nutritional issues of the animals and develop products and services that drive better outcomes and increased efficiencies,” she said. “We’ve also been very focused on introducing new, deeply-researched products into the market.”

“Overall, I’m optimistic.”

Expectations for Investment

Over the past several years, the Land O’Lakes animal nutrition business has made significant strategic investments in its facilities, in product development, and in partnerships; a recent example being the December 2020 functional feed additives global partnership between Land O’Lakes’ PMI Nutritional Additives business and Royal Agrifirm Group - a partnership which will the scale-up PMI’s monogastric additive products on a global level.

Today, Land O’Lakes is building on the early successes of the PMI Nutritional Additives and Royal Agrifirm partnership, along with other arrangements it has in Europe and Asia.

“We will continue to look for attractive international opportunities that leverage our technologies and other capabilities, but most of our near-term focus will remain on the domestic market,” Deverell said.

She added that the Land O’Lakes animal nutrition business has a series of facility upgrades and expansions planned in 2021/2022.

Although she did not disclose specifics, she said that she looks forward to sharing more about those plans in the coming months.