LDC Enterprises Australia Pty Limited

Abstract:

An agribusiness is commonly known as any agriculturally related business that deals with supplying its farm goods to the market then to consumers globally. Each and every agribusiness can be focused on one or more business productions, some of these productions can be seed and agrichemicals, farming, biofuels, fibre, food, and animal feeds (Blake et al. 2014, p. 79). Louis Dreyfus Company (LDC) Enterprises Australia Pty Limited is one of the most famous fibre focused operating business in Australia. This agricultural company has the highest market share in the ASX amongst all other cotton ginning companies, which is 25%.

Keywords: agribusiness, cotton ginning, fibre, business units, revenue, business level strategies, competitive reality, plan, evaluation strategy, future strategic direction.

Contents

LDC Enterprises Australia Pty Limited 3

Business Units and Products 4

Service Lines 4

Growth Rates of Operating Sectors in Australia 5

Cotton Ginning in Australia 5

References 8

Part 1

LDC Enterprises Australia Pty Limited

The history of Louis Dreyfus Company (LDC) goes back to when 16 year old Leopold Louis-Dreyfus travelled from France to Switzerland to start his business by selling his first grain in 1851. Leopold then recognized the fact that aiming for higher profitability required him to expand his commercial activities. This expansion was accomplished by buying grain from Hungary and Romania and selling them to Western Europe. Today, the headquarters of LDC are in the US, and LDC Enterprises Australia Pty Ltd became a subsidiary of US LDC headquarters after the former acquired it from Dunavant Enterprises in 2010. As mentioned earlier, this company was founded in 1851 and have been sourcing their agricultural products, mainly grain and cotton, for customers and consumers globally. This global sourcing helped the company establish many trusted partners ranging from smallholder farmers to international organizations. LDC have been working in the Australian lands for more than 100 years, making them the oldest operating company in grain trading. LDC is honored to be a unique company that has no equal in its degree of commitment towards the Australian agriculture (LDC Australia Pty Limited 2020). The company ranks number 581 out of the top 2000 companies in Australia. In addition to the fact that it has a revenue growth of 2.5% estimated to be $1.2 and a 25% market share in the ASX (IBIS-World 2019).

LDC is a cotton fibre industry operating in the agribusiness sector in Brisbane. The vision and objectives of this company are stated clearly on its website and all its annual reports. Their vision is mainly a promise to their customers and consumers to always provide safe and sustainable agricultural value chain, and to be transparent throughout their whole product journey. With sustainability as their main purpose, LDC also promises to take full responsibility of the environmental impacts that their activities might cause at all stages. In addition to trying to minimize this environmental impact as much as possible (LDC Australia Pty Limited 2020).

LDC Australia has two main business lines, cotton production and grain & oilseeds production. Focusing on the cotton production sector, LDC has three large-scale ginning plants located in Emerald, Dalby and Moree which are the main cotton growing areas in Australia. This corporation’s ginning operations are based in Queensland and New South Wales. LDC is a company that also handles marketing and transporting activities in addition to production. In 2013, LDC Australia and Namoi Cotton entered into a joint venture to collect their cotton products for trade purposes (Tom Youl 2019).

Business Units and Products

LDC Australia Pty Ltd is an agribusiness that’s involved in numerous operations: animal & pet food, bioenergy, food & beverages, proteins, pharmaceuticals & cosmetics, textiles & fibres, and transportation. However, the three main operations in LDC Australia are cotton, grains and oilseeds (LDC Australia Pty Limited 2020).

• Cotton: LDC handles cotton operations from farm to fabric. They create, harvest, gin, pack and transport cotton and cottonseed to international markets
• Grains: LDC creates and transports numerous types of grains like barley, wheat, sorghum and pulses both locally and internationally.
• Oilseeds: LDC is a leading supplier of protein meals for domestic customers via its own warehouses located on the east coast and South Australia. These protein meals are based from the poultry, meat and dairy products produced from the company.

Service Lines

A shallow view of the reason behind an institutions success would be its physical business products. However, the services that a company offers are as important as its physical products, if not more important. These services do not only attract customers, but most importantly they help retain the latter and having their full loyalty (Toporek 2015). Adding to the physical products provided by LDC Australia, the company also provides non-physical services mainly for the benefit of its customers and consumers. Along with originating, ginning and selling cotton, LDC also provides cotton seed and grain packaging services such as wheat, and sales services. Also in 2018, LDC added a DNA tracking system at their ginning areas to test the quality and sustainability of the cotton they produce. Community services are also provided by LDC in Australia, they regularly participate in charity events, such as Australia’s Biggest Morning Tea and Movember, in order to raise awareness of prostate cancer and raise money for Cancer Council Australia. Also they support youth sporting clubs by donating jerseys and inviting students from local schools to the facility to direct them towards a more bright and sustainable future (LDC Australia Pty Limited 2020).

Growth Rates of Operating Sectors in Australia

As mentioned earlier LDC Australia has several operating divisions that fall within its line of work. Some sectors have experienced a decline in their growth while others experienced a positive rate of growth. For example:

• Cereal Grain Wholesaling

The historical growth rate between 2014 & 2019 was down by 0.6%, however the future growth rate between 2019 & 2024 is positive with an increase of 2.1% (James Thomson 2019)

• Cotton Ginning

Annual growth between 2015 & 2020 was 4.2%, and it is expected to have an annual growth of 11.4% between 2020 & 2025 (Tom Youl 2019)

• Seed Production

This sector had a negative growth rate of -1.1% between 2014 & 2019 but is expected to have a positive rate of growth of 3% between 2019-2024 (Tom Youl 2019).

• Pet Food Production

The growth rate between 2014-2019 and 2019-2024 was quite similar with a positive increase of 3.2% and 3.3% respectively (Bao Vuong 2019).

Concluding from the above growth rates in different operating divisions in Australia, the most revenue-producing sector for LDC Australia is the cotton ginning one. Therefore, this report will handle all the details related to this sector in particular.

Cotton Ginning in Australia

The main two business operations related to cotton in LDC are (LDC Australia Pty Limited 2020):

• Ginned Cotton

This process is mainly about separating the lint cotton from its cottonseed (lint cotton represents around 50% of seed cotton’s overall weight) and removing all excess materials that may still be attached to it. A conversion process is needed after the separation process to convert the separated cotton to bale form. The last step is classifying samples taken from each bale according to several factors: Fibre length, strength, uniformity, color, excess non-fibre materials and purity.

• Raw or Seed Cotton

Cotton consists of two crops, fibre and seed, and is produced from the cotton plant. Seed is the more dominant crop since for every 100 pounds of fibre produced by the plant, 162 pounds of seed are produced. Seed cotton is put in modules after being harvested. A raw or seed cotton placed in its module can have a weight of approximately 11.3kg.

LDC has three large-scale ginning plants located in the main cotton growing areas in Australia; Emerald, Dalby and Moree. In LDC, the cotton ginning supply line is integrated across the four steps of their value chain (LDC Australia Pty Limited 2020):

1. Originate & Produce

In the process of having a sustainable supply line of ginned cotton from farmer to consumer, LDC shares its expertise not only within the company itself, but also with business associates and expert companies.

1. Process & Refine

After the cotton is harvested, crops of these cotton are then sent to LDC’s assets for further sustainability processing and refinery.

1. Store & Transport

Products are stored in warehouses and ports located in globally strategic locations allowing LDC to access local farmers market internationally and also give them the advantage to control the costs of their products.

1. Research & Merchandise

LDC’s marketing and merchandising experience made them the world leader in cotton merchandizing, which is their greatest strength. This made them active worldwide, sourcing cotton to Africa, Brazil, China, India, Pakistan and the US.

Part 2

References

Bao Vuong 2019, Pet Food Production in Australia, IBIS-World, viewed on 13 April 2020, < https://my-ibisworld-com.ez.library.latrobe.edu.au/au/en/industry-specialized/od5476/industry-at-a-glance>

Blake J., Lee K., Stabler & Lerner 2014. ‘Agribusiness’, The Gale Encyclopaedia of Science, vol. 1, no.4, pp. 79–80.

IBIS-World 2019, LDC Enterprises Australia Pty Limited Company Profile, IBIS-World, viewed on 11 April 2020, < https://my-ibisworld-com.ez.library.latrobe.edu.au/au/en/company-reports/5089/company-details>

James Thomson 2019, Cereal Grain Wholesaling in Australia, IBIS-World, viewed on 13 April 2020, < https://my-ibisworld-com.ez.library.latrobe.edu.au/au/en/industry/f3312/industry-at-a-glance#key-statistics-snapshot>

LDC Australia Pty Limited 2020, About Us, LDC Australia Pty Limited, viewed 10 April 2020, < https://www.ldc.com/au/en/about-us/>.

LDC Australia Pty Limited 2020, A Bright Future Born from a Single Grain, LDC Australia Pty Limited, viewed 4 April 2020, < https://www.ldc.com/who-we-are/about-us/heritage/>.

LDC Australia Pty Limited 2020, Cotton, viewed 14 April 2020, < https://www.ldc.com/au/en/business-lines/cotton/>.

LDC Australia Pty Limited 2020, LDC in Australia, LDC Australia Pty Limited, viewed 10 April 2020, < https://www.ldc.com/au/en/ldc-in-australia/>.

LDC Australia Pty Limited 2020, Sustainability, LDC Australia Pty Limited, viewed 10 April 2020, < https://www.ldc.com/au/en/sustainability/>.

LDC Australia Pty Limited 2020, Textiles & Fibers, LDC Australia Pty Limited, viewed 10 April 2020, < https://www.ldc.com/au/en/product/textiles-fibers/>.

Tom Youl 2019, Cotton Ginning in Australia, IBIS-World, viewed 10 April 2020, < https://my-ibisworld-com.ez.library.latrobe.edu.au/au/en/industry/a0521/major-companies#5089>.

Tom Youl 2019, Seed Production in Australia, IBIS-World, viewed on 13 April 2020, < https://my-ibisworld-com.ez.library.latrobe.edu.au/au/en/industry-specialized/od4209/industry-at-a-glance>.

Toporek, A 2015, Be Your Customer’s Hero Real-World Tips & Techniques for the Service Front Lines, Saranac Lake: AMACOM.

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