Dalgety plc

Dalgety plc—as Dalgety and Company—was for more than a century a major pastoral and agricultural company or stock and station agency in Australia and New Zealand. Controlled from London it was listed on the London Stock Exchange and Australasian exchanges.

With the mid-20th century decline of the pastoral sector, particularly where Dalgety held the leading position in the synthetics bedevilled slumping wool trade, new investment was made in different sectors in other countries and Australasian investments sold down until it became a foods and agricultural business of the northern hemisphere.

A successful conglomerate, its core businesses were badly damaged by the wholesale slaughter of British beef animals following the discovery mad cow disease did, as suspected, move from cattle to humans. In 1996 and 1997 Dalgety sold 75 per cent of its whole business leaving its principal investment in animal (porcine) biotechnology. Renamed PIC International after its own biotech subsidiary it merged in 2005 with a matching (bovine) business Genus plc for a market valuation in the same league as Dalgety had attained in the 1990s.

History

Until the second half of the 20th century when it moved operations to the Northern Hemisphere and transformed itself into a conglomerate the major portion of Dalgety's business was the Australasian wool trade pioneered by John Macarthur in New South Wales. Dalgety depended on the woolgrowers. Soon after F G Dalgety went into business on his own account Australia's sheep numbers had reached around 20 million. Thirty years later there were more than 100 million but by 1903 by prolonged drought flocks had almost halved and numbers did not come back to 100 million until 1926. By that time UK took about 50 per cent of Australia's total wool exports. UK demand rose during the Second World War but as the war ended it was found the UK government held 10.4 million bales. In conjunction with officials from Australia New Zealand and South Africa a joint arrangement was made in 1945 to ensure its orderly sale and the sale was completed in 1951. Later the same year American demand generated by the outbreak of the Korean War pulled wool prices up to nine times the UK contract price of five years earlier but the following year Australia's returns from wool were halved.[1] Wool prices continued to fall but bottomed in 1971 when there were a record 180 million sheep, the sheep numbers to some extent compensating for low wool prices. Price stabilisation schemes were organised with Australian government support. That support was withdrawn in 1999.[1]

"It was during the 1990s that the Australian wool industry came to fully realise that wool is merely one of a number of fibres which apparel makers can choose to use in their garments, and that demand for wool depends significantly on the relative prices of substitute fibres, particularly the high quality but cheap synthetic fibres being produced today."[2]

In 1998 synthetics provided 49 per cent of apparel fibres, cotton 42 per cent, cellulosic 5 per cent and wool only 3 per cent.[1]

1960s

By 1961 Dalgety's core business was the operation of wool stores in the state capital cities along with wool broking in which it had built its position and become the world's largest wool-selling house. As stock and station agents Dalgety arranged the sale of livestock and maintained a strong merchandise operation. It also operated freight and passenger agencies for leading air and shipping lines. There was a substantial business as insurance agents.[8]

Business was carried on at 446 centres; Australia 275, New Zealand 154, Kenya 7, Tanganyika 6, Uganda 3, Zanzibar 1 together with numerous subsidiaries. A United Kingdom subsidiary was developing the group's agricultural and trading interests within the UK.[8] To shore up declining profit margins various decisions were made. Multi-storey wool stores on valuable sites were sold off and replaced with single storey buildings on city outskirts. The single storey stores allowed the operation of modern more efficient handling machinery but the sale of old stores did not pay for new wool stores and Dalgety raised more capital by issuing debentures to investors in London.[8]

1970s

In which Dalgety begins to switch investment and operations from agribusiness to northern hemisphere food.

1980s

1990s

Poleaxed by BSE

BSE was a known disease of cattle but there had been no cases in British humans until 1993. They were farmers with infected dairy herds but it was unclear where the disease originated. Between 1992 and 1993 BSE cases in animals exceeded 100,000 then the incidence began to fall. The first known human victim of variant CJD died 21 May 1995 and 10 months later in March 1996 the British government acknowledged there is a link between the human disease and the cattle disease. The European Commission announced a worldwide ban on British beef exports and by April 1996 the British government responded with a plan to slaughter all cattle over the age of 30 months. In 2000 there seemed to be no more cases in humans.[83]

This BSE or mad cow disease outbreak was blamed for collapse of Spillers sales of stock food because so many cattle had been slaughtered. For Dalgety an EU ban on export of beef products was the most expensive result and there was also a contamination scare in their Dutch pet food factory.[84] Dealing with BSE distracted managers so that Quaker Oats integration costs turned out to be higher than expected. The integration programme was two years behind schedule and the value of sterling fell. When the full year profits were announced in September 1996 they were half those expected by the market.[85] BSE was still blamed in the next half year profits.[86]

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