Tuesday, March 5, 2024

LIC defends response to semen failure

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LIC says it has been fair and reasonable in its dealing with farmers affected by the issue.
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LIC chief executive David Chin has defended the co-operative’s response to quality issues with semen sent out to farms in October, saying it acted fairly while being as transparent as possible.

At a Q&A webinar for LIC shareholders, Chin was asked if the co-operative had responded in an appropriate fashion to meet its obligations under the Fair Trading Act.

Chin said it had gone over and above the terms and conditions within its service rules.

“We do believe we have been acting fair and reasonable, we have tried to put together a support and recovery package that is meeting everyone more than halfway,” he said. 

“With best endeavours we have tried to act quickly and transparently, we have tried to own this issue and really concentrate on that recovery.”

Chin said the package that has been created will go well along the way to getting farmers back on track.

The hour-long webinar saw Chin along with general manager for NZ Markets Malcolm Ellis, chair Corrigan Sowman and chief scientist Richard Spellman front its farmer shareholders to answer questions regarding issues with the faulty semen and LIC’s response so far.

LIC has offered a package that includes a product credit to affected farmers’ accounts for the affected straws used. Depending on the herd impact, goodwill payments will also be credited to support recovery.

These include $30 per insemination for all CIDR inseminations across all six days. All affected inseminations on October 18, 19, 24 and 25 will be credited a goodwill payment of an additional $30 per insemination.

Any herd where 10% or more were inseminated on October 18, 19, 24 and 25, will be credited with a further $30 credit per insemination.

Chin said the decision around the goodwill payments was made to show LIC is listening to farmers and to recognise the extent of the impact.

He said the cost to LIC was just over $2 million.

The package gave certainty to farmers that there would be finances in their accounts when they looked at recovery options.

Chin also gave an update to the investigation, saying LIC has yet to identify the exact cause of the failure.

“We are trying to look at all parts of the process.”

However, he did confirm it was not related to an individual bull or breed, had not impacted LIC’s Sire Proven or sexed semen service, and that no further issues have been found so far.

Chin also confirmed the co-operative’s liability limiting clause in its terms and conditions is being reviewed as part of the investigation.

He said the clauses are there for everyone in the co-operative.

LIC discovered quality control issues with its fresh premium sire semen straws that were inseminated on farms on October 17-19 and 23-25. It has impacted 1127 herds across the country, varying from as low as 2.5% of a herd to more than 20%. 

Ellis said the approach to date has been to contact farmers that had the largest portion of their herd affected.

“Some 500 farms have been contacted as we work through aspects of this.”

Two farmers contacted LIC on the webinar stating that it had impacted one-third of their respective herds.

Ellis apologised to both and urged other farmers who have been similarly impacted to contact LIC as soon as possible.

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