Henry Rainford

Shareholders yesterday gave the Jamaica Livestock Association Limited (JLA), provider of agricultural support and services to farmers, the green light to off-load its feed mill, wharf and grain-off loading facilities to Agro Industries Holdings for a sum of US$6 million (J$534 million).

"We were short of working capital for the last three years, which has accelerated because of the overall economic conditions," Henry Rainford, managing director of the JLA, told the Financial Gleaner after the yes vote at the association's annual general meeting yesterday afternoon.

"We were not able to fund the purchase of required stocks for sale because of the increase in the cost of raw materials such as corn and wheat and some suppliers had actually withdrawn credit or significantly reduced it," he added.

Original intention

Rainford said the original intention was to have a rights offering to raise the needed cash, but adverse market conditions scuttled that plan.

"The position in the market now is that you can't get money, so you just have to offload assets. People prefer to put their money in government paper, where they can get sure returns, rather than in companies, which they are not sure will return a profit," said Rainford of the market.

But the rights offering idea has not been shelved, and the JLA still plans to go to market at a later date to get cheaper cash than is available from high-interest rate loans.

The JLA constructed the wharf and feed mill complex some 15 years ago in a move to integrate and diversify its operations.

"The capital will be used to enhance our ability to service customers and buy the stocks required to sell, which will increase sales and eventually improve our bottom line," Rainford told the Financial Gleaner in an interview.

In fact, the JLA has racked up losses over the past year, with its latest unaudited results for the quarter ending May this year showing the entity $10.8 million in the red on gross operating revenue of $261 million.

The group operates in three business segments - animal feeds, which involves milling, manufacture and sale; the sale of day-old chicks; as well as animal-health products, hardware, lumber and cement.

Rainford said that the deal with Agro Industries Holding Limited is set to be completed by the end of this month. Agro Industries already manufactures the JLA feed brand, Supreme Feeds.

sabrina.gordon@gleanerjm.com