Dalgety plc

Frederick Dalgety

In December 1842 Canadian Frederick Gonnerman Dalgety arrived in Melbourne, first settled in August 1835, as manager of a new firm which he soon bought. By 1848 Dalgety was an independent and well-to-do merchant concentrating on the settlers' trade providing merchandise for the squatters and buying their produce. He visited England in 1849 to strengthen his facilities for both credit and the disposal of colonial produce and returned to Victoria in 1851. In the 1851 gold rush Dalgety continued with general business, enlarged his pastoral trade, sold merchandise to the diggers and bought much gold from them. In 1851-55 he made about £150,000 from his gold speculations alone.

Dalgety & Company

In 1854 Dalgety moved to London to establish the headquarters of his metropolitan-colonial enterprise though at that time it dealt mainly with the Victorian pastoral industry. He took with him as London partner Frederick Du Croz and left Charles Ibbotson as a colonial manager-partner in Geelong. He came back to Victoria in 1857 to establish James Blackwood as another manager-partner in Melbourne but after 1859 he lived permanently in England and his business headquarters remained there to the end of the 20th century.

By 1884 Frederick Dalgety had ten partners including managing partners and they had operations in London, Melbourne, Geelong, Launceston, Dunedin, Christchurch and Sydney.

Dalgety & Company Limited

Dalgety, Du Croz and Co and their various partnerships were forced into incorporation as a joint-stock company by their clients' increasing demand for capital and the competition from other joint-stock companies and banks. Dalgety and Company Limited was registered in London on 29 April 1884. The new incorporation was listed on the London Stock Exchange.

Over the next three years Dalgety branches opened in Queensland and Western Australia and the properties and other assets of the company increased by 50 per cent. Dalgety continued in active management as largest shareholder and chairman of directors until his death in 1894. He left at least seven stations in New Zealand but his Australian properties had been sold in the 1880s. Dalgety and Company Limited continued to grow after its founder died. In July 1898 an agreement was reached with the Russian consul in Melbourne for the use of Russian ships to transport wool from Australia to Europe.

By 1909 there were branches at Melbourne and Geelong; Sydney and Newcastle; Brisbane, Rockhampton and Townsville; Adelaide; Perth, Fremantle, Kalgoorlie, Albany, Geraldton and Carnarvon; and in Auckland, Christchurch, Dunedin, Napier and Wellington.

In 1927 operations were broadened to include East Africa and then in 1959, by exchange of shares, the majority shareholding in African Mercantile Company was bought. African Mercantile Company was like the Australian business but in East Africa with eleven branches in Kenya, Tanganyika, Uganda and Zanzibar.

In the late 1950s Dalgety's business sector began to decline. The battle with synthetic fabrics had been lost.

By 1961 Dalgety's 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.

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.

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.

Dalgety & New Zealand Loan Limited

Dalgety and Company Limited merged in November 1961 with one of its principal competitors in Australia's eastern states and New Zealand, New Zealand Loan and Mercantile Agency Company Limited and Dalgety and Company Limited changed its name to Dalgety and New Zealand Loan Limited. With assets of £44 million in 1963 the merged entity was the largest pastoral combine operating in Australasia.

Dalgety plc

Dalgety expanded into North America in 1966 acquiring Balfour Guthrie, a lumber and poultry business, and in 1970 it acquired the UK-based Pig Improvement Company.

In 1979 it diversified into foods acquiring Rank Hovis McDougall, a flour milling and pet food business, following a hostile take-over battle and in 1987 it bought Golden Wonder, potato crisp manufacturers. Then in 1995 it bought Felix Pet Foods.

Divestment

In the late 1990s, following a BSE crisis in the UK, it entered into a series of disposals and sold Golden Wonder to the management in 1995, its food ingredients and Spillers flour milling operations to Kerry Group plc in 1997 and its pet foods business to Nestlé in 1997.

Genus plc

The company was renamed PIC International Group plc in 1998 and then Sygen International plc in 2001. By that time the main asset left in the company was its investment in Pig Improvement Company. Genus plc bought what was left of the company in 2005.

Dalgety Farmers Limited

Bennetts Farmers and Farmers Grazco Co-operative merged with the Australian activities of Dalgety plc owned by Dalgety Australia in 1983 forming Dalgety Farmers, the second (to Elders) largest pastoral house in Australia, owned 65 per cent by Dalgety plc, 20 per cent by Farmers shareholders and 15 per cent by by Bennetts shareholders. At this time ANZ Bank acquired a pre-emptive right to buy Dalgety Farmers shares from Dalgety plc. During 1985 Dalgety UK reduced its holding in Dalgety Farmers to 49 per cent. ANZ reached 25 per cent in 1989 and 95 per cent in 1992 in a debt-for-equity swap. Ownership passed to Wesfarmers Limited in 1993 which was renamed Wesfarmers Dalgety in 2000 when the two businesses were rolled into one but the Dalgety name was dropped the following year.@@

Dalgety and 'riding on the sheep's back'

The major portion of Dalgety's Australasian business was always the wool trade and wool exports. Dalgety depended on the woolgrowers.

Soon (1860) 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.

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.

"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." Australian Bureau of Statistics, Year Book 2003, The Wool Industry looking back and looking forward

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