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Annual Report 2018

AGRI-BUSINESS DIVISION

SÉBASTIEN LÉVEILLÉ, agr., MBA
Executive Vice-President Agri-business

 

AFTER A YEAR FULL OF ACHIEVEMENTS, WE ARE MORE DEDICATED THAN EVER TO OUR OBJECTIVE- FARMING COMMON SENSE- FOR THE PROSPERITY OF FARMING FAMILIES.

 

 

 

Sales of the Agri-business Division for fiscal 2018 amounted to $2.125 billion compared with $1.933 billion last year. This increase of nearly $192 million stemmed mainly from the acquisitions made by the Agri-business Division in 2018.

Earnings before income taxes for the fiscal year decreased compared with the previous year owing to certain extraordinary items. However, results of current operations were up by more than $2 million, driven by the impressive performance of animal feed operations and crop production sector, when shares of investments are taken into account.

The political and economic climate was marked by pressures on supply management, free-trade agreements as well as trade wars.

The Livestock Production Sector benefited from growth and increased market share in the ruminant and dairy segment. The dairy sector was up 3.8% in fiscal 2018, bolstered by conditions in the dairy products market and more favourable dairy policies until mid-year. This growth was achieved amid continuous improvement in animal feed conversion rates. However, quota cuts, lower milk prices and uncertainty over the future of the supply management system, triggered by the negotiation of the Canada-United-States-Mexico Agreement, in turn slowed the pace of growth from mid-year onwards. Technical performance of hog production was satisfactory during the year, but financial performance did not follow suit owing to lower average prices. Growth in La Coop certified pork and higher sales volumes were positive factors in fiscal 2018.

In crop production, fertilizer sales were up significantly since Spring 2017. Sales grew strongly in 2018, driven by higher volumes in Québec, including industrial clients, and the performance of our subsidiaries Agrico and Agronomy Company of Canada (ACC).
 

“The political and economic climate was marked by pressures on supply management, free-trade agreements as well as trade wars.”
 

In the seed sector, market conditions last Winter favoured increased planting of corn at the expense of soya. Market conditions conducive to wheat growing led to more planting in Québec, for both Spring and Fall wheat. These conditions caused fluctuations that affected our sales of corn and wheat. A significant decline in the surface area under soya planting in the prairies also impacted our royalty sales. The low returns obtained by soya producers in 2017 influenced their seeding plans for 2018. Last, the Maizex Seeds acquisition was undoubtedly the highlight of 2018 for the Seed Department.

For crop protection, regulatory changes created disruption starting in Winter 2018 as they required products containing atrazine to be replaced by other products, which led to stable volumes.

Agronomy Company of Canada and the Agromart network continued to make significant contributions to results. This network was heavily involved in planning and completing the transaction with Cargill whose crop production operations will be integrated in 2019.

Grains Sector sales were up, mainly following the increase in prices in early Summer. Lower corn trading volumes resulting from unfavourable market conditions for margins were offset by a price increase of over 10%. Soya bean volumes were also below fiscal 2017 levels.
 

“The Vision 2020 project was our primary focus. With the support of all, everything was ready for the launch of Sollio & Vivaco Agriculture coopérative.”
 

Achievements of the year included the efforts made to complete the transaction with Cargill and ensure full integration from day one. The Grains Sector also launched construction of its maritime export terminal in Québec City.

The Vision 2020 project was our primary focus. With the support of all, everything was ready for the launch of Sollio & Vivaco Agriculture coopérative.

Following a successful first year, the digital program gathered steam and expanded, particularly with the addition of new functionalities to the AgConnexion platform, the enrollment of 34 new member cooperatives and retailers, and the receipt of a Mercure award.

At the end of an achievement-filled year and ahead of its transition to Sollio Agriculture, the team is more motivated than ever to develop agriculture as it should be, to ensure prosperity of farming families. We now make up a thousand employees ready to take on our new identity.

Those are the challenges awaiting Sollio Agriculture, challenges that cannot be met without all our collaborators across the country, our colleagues on the agriculture management committees and in the parent company, the Chief Executive Officer and the Board of Directors who support us in the achievement of our objectives.
 

Sébastien Léveillé, agr., MBA

Executive Vice-President Agri-business