Alico, Inc

Alico, Inc.

640 S. Main Street LaBelle, Florida 33935 U.S.A. Telephone: (863) 675-2966 Fax: (863) 675-6928 Web site: http://www.alico.com

Public Company Incorporated: 1960 as Alico Land Development Company Employees: 143 Sales: $48.3 million (2003) Stock Exchanges: NASDAQ Ticker Symbol: ALCO NAIC: 111998 All Other Miscellaneous Crop Farming

Alico, Inc., based in LaBelle, Florida, is primarily an agribusiness company involved in the production of citrus fruit, sugarcane, cattle, sod, and forest products, as well as crop insurance through wholly owned subsidiary Agri-Insurance Company, Ltd. In addition, the company rents land for farming, cattle grazing, oil exploration, the mining of materials for the construction industry, and recreational and other uses. Through subsidiary Saddlebag Lake Resorts, Inc., Alico also is involved in retail land sales and development. All told, Alico owns approximately 140,000 acres of Florida land. With more than 11,000 acres in production, it ranks among the top 15 citrus producers in Florida.

Tracing Roots to 1800s Railroad

Alico grew out of the land holdings of The Atlantic Coastline Railroad, which was originally known as the Wilmington & Weldon Railroad. The line was chartered in 1933 to connect the towns of Wilmington and Weldon, North Carolina. When completed in 1840, its length of 161.5 miles made it the longest continuous railroad in the world. During the Civil War, 20 years later, the line was critically important to the Confederacy as the major carrier of supplies from the deep South to the capital in Richmond, Virginia. After the war, the line became The Atlantic Coastline Railroad. Because the company accumulated a great deal of land in connection to its road building, in 1898 it incorporated a subsidiary to manage the holdings, named The Atlantic Land and Improvement Company (the initials of which led to the Alico acronym). It was not until 1948 that the subsidiary opened its LaBelle, Florida, office, located 40 miles east of Fort Meyers. The company, owning more than 250,000 acres, became heavily involved in agribusiness during the 1950s. It began developing citrus groves as well as a cattle ranch, and also began managing its forest holdings. Later in the decade, the company started to lease some of its land for mining and oil exploration. While more and more acres were devoted to citrus growing and the raising of cattle, Atlantic Land sold several thousands of acres to real estate developers to take advantage of the rising demand for new housing following World War II, when the Baby Boom generation and their parents fled the cities in favor of the new suburbs.

In February 1960, The Atlantic Coast Railroad spun off some of the Florida real estate holdings of Atlantic Land and Improvement Company, forming Alico Land Development Company, based in LaBelle, Florida. According to its first annual report, Alico had assets of $2.8 million. Of its $247,000 in revenues, most resulted from the sale of forest products, followed by cattle sales. Citrus was third. Over the course of the 1960s, the business mix would undergo a complete reversal. The company took a number of steps to build up its citrus and cattle operations, investing in infrastructure—building roads and irrigation systems and improving pastures—so that by the close of the decade Alico's fruit sales was the biggest contributor to the balance sheet. Cattle sales came next, followed by oil leases, land rentals, and forest products. According to the 1970 annual report, Alico posted revenues of $2.5 million and net income of $157,000.

Ben Hill Griffin, Jr.—Gaining Control, Fostering Growth: 1960s–80s

It was also early in the 1960s that the man most responsible for the growth of Alico in the 1970s and 1980s would become associated with the company: Ben Hill Griffin, Jr. In 1961 he was named to Alico's board, and over the next dozen years quietly accumulated a controlling interest in the company. According to Florida Trend magazine, Atlantic Coast Line Railroad officials "asked Griffin Jr. to serve on the board of the new company to help it break into citrus, cattle and timber. In 1972, [he] traveled to New York City and bought concentrated control of Alico for $15.9 million in a private, hidden bid."

Griffin was already a successful citrus grower and wealthy man. Born in 1910, he grew up on a farm and then attended the University of Florida, studying economics and agriculture before going to work for his father. As a wedding gift from his father in 1933, Griffin received a ten-acre orange grove. Throughout the Depression of the 1930s, while others were selling, he was buying up their land at bargain prices, just $2 to $3 an acre. In 1938 he picked up 16,000 at once when he acquired his first ranch, the Peace River Ranch. He later added a 55,000-acre spread. During the 1940s he took several key steps that would make his fortune. In 1945 Florida Department of Citrus researchers made a breakthrough in the development of orange juice using the "cutback" process. As a result, an increasing number of citrus growers began to focus on frozen concentrate rather than fresh fruit. Griffin anticipated, as a consequence of this switch, the price of fresh fruit would rise. This was a major assumption in 1948, given that the price of oranges had fallen from $1.50 per box to just 35 cents. Nevertheless, he bought a packing plant in 1948, launching Bill Hill Griffin Inc. Griffin also proved lucky because, that same winter, the California orange crop was devastated by a major freeze, which drove up the price of Florida oranges even higher. These events laid the foundation for Griffin's personal fortune. Moreover, while other growers began selling out to corporate farming interests, he remained independent, and by working hard and keeping his operations lean, he prospered.