Sabrina Gordon, Business Reporter

High-angle view of a cup of milk. Seprod Group says its acquisition of Belvedere Limited is expected to boost production of milk from five million litres to 10 million. Last year, its milk segment was valued at $127.5 million.

Seprod's new acquisition Belvedere Limited, a farm that is meant to complement its dairy business Serge Island, is listed as dormant, but the company this week said the situation was temporary.

Seprod is investing $50 million to $60 million in new dairy units at Belvedere, one of which is 70 per cent complete and due to be finished by yearend, said Seprod executives.

The entire project is to be finalised by the end of 2008, said Phillip Webster, general manager of both Serge Island and the adjacent farmlands of Belvedere.

The acquisition of Belvedere was wrapped up on September 30, with Seprod reporting that it paid US$2 million for the farm.

However, the company, in the notes to its annual accounts, said due to timing, Belvedere became a drag on the group's performance in 2006.

While the new farm added $459,000 to the company's revenue of $4.9 billion, Belvedere also recorded net losses of $2.7 million in the first three months of its acquisition.

Seprod's profits were also significantly depressed, plunging from $750.18 million in 2005 to $460.99 in the review period. But, a near one-third of profit in 2005 flowed from a one-off gain of $247 million on Seprod's acquisition of Serge Island Farms.

Belvedere, in comparison only gave Seprod's accounts a $1.26 million boost.

Two other Seprod subsidiaries, CBM Limited and Productive Business Solutions Limited, also experienced steep drops in net income from $43 million and $71 million, respectively, to just over $10 and $15 million in the review period for year ending December 2006.

The Seprod group, however, has redeemed itself somewhat with a strong first quarter performance to March 2007, growing profits by $47 million to $178 million.

Group Financial Controller Carl Domville told the Financial Gleaner that Belvedere is now being populated with herds to expand dairy production.

"The expectation is to bring the population to about 1,600 milking cows within the next three to four years," Domville said.

Upgrading works

The dairy operation, which accounts for about 25 per cent of group revenue, has about 3,100 heads of livestock on its farms.

Work at Belvedere is now centred on upgrading the water system, clearing and ploughing of lands, and the planting of grass.

Four hundred heads of heifers have also been transferred from the Serge Island farm, to one of Belvedere's pastures for grazing, said Webster, marking the start of the integration.

"The farm will also seek to double the production of milk on the Serge Island farm, which is presently producing at five million litres per year," said Webster.

"The growth in technology in terms of the milking equipment now available which allows for a faster turn of the animals, will assure the increase in production."

sabrina.gordon@gleanerjm.com