Paul Larmer – the retirement interview

Paul Larmer retired as chief executive officer of the Semex Alliance on Dec. 31, after growing a farmer-owned Canadian company into a leading global player.

Over 17 years as CEO, Larmer led the organization to become one of the top five dairy genetics companies in the world, and saw it through dramatic change driven by the advent of genomic testing. The company now supplies bull semen, but also software, technology and advanced genetics laboratory services.

Larmer says leaning on mentors and being able to “bring people along with you” during change contributed to his ability to lead the company to success.

Shortly after he was named Semex’s CEO, “we had some really good discussions with our board of directors at the time in terms what do we want to be when we grow up.

“Do we want to be an export company? Sort of a boutique export company that really focused on the purebred, breeder side of the business? Or do we want to take some strategies and move to become a global genetics company?”

The board decided the future lay in genetics solutions as a global player. That positioned Semex to become one of a few leaders in dairy genetics in the world, with its values and focus still tied to the farmers who own it.

Semex is owned by three farmer-owned dairy cooperatives, WestGen in the west, CIAQ in Quebec and EastGen in Ontario and the eastern provinces.

Fifteen years ago, Canadian genetics were revered around the world, but with a reputation for a focus on conformation and less on longevity. Semex had recently lost Braedale Goldwyn, one of the world’s most popular bulls, and sire of winners at the Royal Agricultural Winter Fair and the World Dairy Expo shows.

Larmer says loss of that bull, which was contributing $4 million per year to the bottom line, also pushed the board to think about becoming a broader genetic services company instead of being tied to the boom and bust of individual bulls.

That decision initiated a period of growth and change that continues to shape the Guelph-based company.

It has grown to employ about 350 people in Canada and close to 1,000 around the world. There are another 1,000 people working in its distribution network “who rely on Semex to feed their families”, says Larmer. The company has had 13 consecutive years of record revenues.

Starting in 2012, the company made investments in infrastructure in other parts of the world, including Hungary, where it maintains a bull collection centre for Europe, the United States and China. It no longer has infrastructure in China due to demand for its property and changes in the Chinese dairy market.

The company recently integrated Brazilian operations, including bull collection and embryo facilities as a subsidiary of the company, joining 10 other country-based Semex subsidiaries around the world.

Lessons to be learned

Semex started from a strong base. Dairy farms in Canada have been stable because of supply management, which means the farmer-owned dairy genetics cooperatives that own Semex have been financially solid. Canada has a reputation for high quality dairy genetics.

The question was how to grow the company into a global player.

One of the most important factors is partnerships, says Larmer, as the company focused not just on procuring and breeding great bulls, but also on services.

An example is Immunity+, the ability to select for higher immunity animals, which was developed by Dr. Bonnie Mallard at the University of Guelph and has been licenced by Semex. Immunity+ bulls now make up more than 30 per cent of Semex’s semen sales.

It also has other technology partnerships, such as those with ai24 for heat detection and recently the Milc Group in California, which provides software for dairy farm management.

“Rather than us develop and spend millions of dollars developing something like that, we’ve been able to partner with some of those companies, to give them a different approach to the farm gate and really build some successful partnerships,” says Larmer.

Genomics revolution

The arrival of genomic testing also forced significant changes to Semex’s business and delivery model.

Genetic testing at a young age gives a dependable indication of which animals will be of high genetic merit as adults. That has accelerated the pace of genetic improvement in dairy cattle around the world.

It also meant a lot of change for Semex and its customers.

The company has undergone significant renovation and built new facilities to enable collection from bulls as soon as they are producing semen. Before, bulls were collected as young sires and then a couple of years passed before seeing how their daughters turned out. Now, any bull can be used as soon as it starts producing semen, based on its genetic testing.

“As I reflect back on it, it has totally changed our approach to a genetic program over time, and has totally changed our production model,” says Larmer.

That amount of change required engagement with employees and customers.

“I think the biggest thing was you needed to bring people along with you. That was both from a staffing perspective and from a customer perspective,” says Larmer. “Genomics was here to stay. But it takes a different timeline for different people to accept that.

“I always say people support what they help create. And so involving our teams in that process, and in those strategies, was a really, really important part of that change.”

The speed of genetic progress and the movement of competitors to acquire females required Semex to change as well. It created its Progenesis division to control the rate of
genetic progress of heifers and bulls.

That was controversial, given the Canadian dairy farm history of small-scale breeders supplying bulls to artificial insemination units. About 50 per cent of the bulls in Semex’s lineup now come from Progenesis, but farmer-breeders continue to play a role, although that often involves partnerships and planned matings.

“We also felt very strongly that to keep our diversity and true to our roots of being ultimately owned by farmers and working on behalf of farmers, that we wanted to continue to work with breeders.”

The rapid increase in dairy farms breeding a portion of their herds to beef as sexed semen has allowed greater focus on higher merit cows for breeding. It also required different management.

At first, farmers wanted high fertility, calving ease bulls from beef breeds for their dairy cattle. Now, Larmer says, beef packers are pushing the need for product quality, so meat quality traits will become more important. It’s a whole new language for Semex’s dairy experts to speak. About a quarter of Semex’s sales now come from beef genetics.

Managing growth

Larmer has spent almost his entire career in the dairy genetics business, from the time he finished his agriculture science degree at the University of Guelph. But he outside the sector for further advice and education.

He took courses in executive management and finance from Queen’s University and Western University and an international business course from Harvard University.

“In talking with and meeting with people who were outside of our business, it really allowed me to look at our business in a bit of a different light,” he said.

Beyond formal education, the advice and experience of others has proved valuable in Larmer’s career.

“First and foremost, I relied on people. I’m a strong believer in mentorship. And I’ve had some great people that I’ve learned a great deal from.”

He says he tells young people they don’t have to take all advice, but there’s value in hearing it.

Semex now employs people around the world. Growth and employee turnover required it to hire more than 80 people in the past year.

“We’ve traditionally had a very, very strong retention factor. But as we grow in that space, it changes your culture, it changes your needs. Today we’re a much more diverse organization, both in terms of jobs and skill sets needed, but also diversity of our employees. We’ve had to really adapt to that.”

Larmer might not know the first name of everyone in a company lunch room anymore, but company values are critical.

“You have to continue to ensure that you continue to live your core values. It’s important today to some of those newer staff. You do have to be transparent about what does the company stand for and what’s our goal, what’s our mission? That’s really important to the newer group of employees.”

Semex will continue to rely on new technology, including its Boviteq embryo laboratory division, says Larmer.

“It’s my personal belief that embryos and embryo technology, with some things that are in the research pipeline, that embryos will be a larger part of a genetic strategy going forward.”

That could include large farms with their own invitro fertilization programs and their own custom genetic indices. The size of farms is also pushing change, especially outside Canada.

Trade for a global company is also a challenge in a world less willing to keep markets open.

“We’ve been significantly affected by that in terms of the Canada-China relationship right now. We still don’t have production licenses for Canada to be able to move product into China. So we’re having to produce that in the U.S.A. to be able to access China,” says Larmer.

He is being replaced by Matt McCready, Semex’s chief commercial officer.

“I’m very, very pleased that our board has promoted internally,” says Larmer.

In the near future, he will support Semex in the transition to new management, but he’ll also be finding more time to set his own agenda, travel less and support his family.

“It’s an opportunity now for me to spend a bit more time helping them get to their next chapter in life too.”