Dairy industry upstart and carbon plantation manger Alterra (formally Carbon Conscious) have wasted no time in clearing the decks of all debt after the sale of their New Zealand forestry assets for approximately $3.2m.
The company has repaid all debt that was owing to the Commonwealth Bank 3 years ahead of schedule and it now has $2.4m in cash and equivalents at its disposal to pursue a new opportunity in the dairy industry.
Non-Executive Chairman Trevor Stoney said “it is a credit to our management team that they have been able to turn the Company around from over $7 million of debt and liabilities in 2013 to zero debt with surplus funds in 2016, a $9.5 million turnaround. This has been done without the major dilution of existing shareholders and the Company will continue to apply the same disciplined approach to its current dairy expansion opportunities.”
Alterra are looking to bring a new system of dairy farming to Western Australia known as “System 5” that works on the theory that cows produce considerably more milk when they are made comfortable and not exposed to the elements.
The System 5 method of dairy farming involves making the cows comfortable by providing climate controlled barns to give them some respite from the heat and cold and it does not require them to be walked long distances every day to be milked.
Alterra say that a cow made comfortable via the System 5 method of dairy farming will produce over 50% more milk per year than a cow that is subject to the traditional method taking the average milk production per cow from 6500 litres to around 10 000 litres per year per cow.
System 5 dairy farming is the norm in the USA and has started to take hold in the east coast of Australia but it is yet to find its way into W.A. potentially providing a market leading advantage for Alterra.
With $2.4m in cash and cash equivalents, annual revenues of $2.8m a year from its existing carbon forestry plantation business, and a good understanding of the agri-business industry, Alterra are actually quite well placed to get this new concept off the ground in W.A.
