Dr Henry Rainford, managing director of the Jamaica Livestock Association.
A loss in excess of $120 million worth of animal feed from its warehouses, due to theft, has caused the Jamaica Livestock Association (JLA) a significant setback in its effort to turn around sales and recoup profitability and has forced the company take stock of how it tracks its inventory.
"We have suffered significantly with quite a bit from inventory losses," said Henry Rainford, managing director of the JLA.
"It stemmed from stealing, people not reporting and possible collusion."
The problem ran so deep that the company has now found itself without sufficient supplies to service its markets, notwithstanding that orders have not been as vibrant this year.
Indeed Rainford refused to discuss whether the company's declining business was due mainly to the general economic decline or was more a function of the illicit supplies that were likely getting on the market at cheaper prices.
Following discovery of the theft which occurred last year, the JLA has replaced five senior employees and hired a new security company to keep watch on the property at Newport West in Kingston.
Rainford chose not to name the people replaced, but the positions included were chief accountant, chief internal auditor, inventory clerk, warehouse manager and plant manager.
"We are now selling property to get working capital so as to stock our stores and rebuild inventory levels to adequately serve our customers," said the JLA boss, who is also principal shareholder of the company.
Negative working capital
At last report, the May 2009 quarter, the company had negative working capital of $51.5 million, with current asssets of $192.2 million underperforming current liabilities of $243.7 million.
The JLA, whose operation spans milling, manufacture and sale of animal feeds, as well as the production of day-old chicks, said the loss affected the feed segment of the business in particular.
According to the company, the loss in inventory was recorded for the first three quarters of last year and was disclosed to shareholders at the annual general meeting in September.
The company's financial year closes in November.
The equivalent tonnage to the value of loss in feedstock was not disclosed, but for the year 2008 earnings from feeds amounted to $567 million, down from the $679.7 million reported for the correspon-ding period in the previous year.
The segment also racked up pretax losses of $162 million; poultry lost $31 million and merchandise $16 million - for a total net loss of $209 million.
Total revenue was also depressed, moving to $1 billion from $1.2 billion.
For the six months up to May 2009, its most current earnings report, sales from feed accounted for approximately 50.6 per cent of the total revenue.
Current reporting period
And of the JLA's $493.7 million in sales for the current reporting period animal feed, which is sold under the Supreme Feeds brand, contributed approximately $250 million.
According to Rainford, the level of inventory carried by the company is normally worth about $350 million, but is now down to $150 million.
"It takes about $300 million to adequately service our customers with quick turnover," he said.
The JLA, whose preference shares are publicly traded and were last sold at $2.40, continues to have mixed fortunes but is more inclined to turn a loss than a profit.
The company is currently $189 million in deficit, nine times worse than its position a year ago.
Rainford is, however, in the process of reshaping the company and is selling off the feed mill and wharf, in a transaction worth US$6 million (J$534 million).
That deal should have closed September 30 but the JLA said last week in a stock market filing that the parties are now shooting for the end of October but would not guarantee the date.
The company has said that were negotiations to continue into November, the transaction would be wrapped up before November 30.
sabrina.gordon@gleanerjm.com
The Jamaica Lifestock Association building at Newport West, Kingston. - Rudolph Brown/Photographer