The Ministry for Primary Industries backed the six-year programme because it could produce game-changing technology for one of the pastoral industry’s key drivers – growing pasture and supplementary crops – which could boost on-farm productivity. Pastoral farming – dairy, sheep and beef – comprises more than two-thirds of New Zealand’s gross agricultural revenue
“We really liked the technical stretch. There’s a lot of technical challenge in this but the potential returns are really high,” says MPI’s PGP manager Steve Penno.
Led by New Zealand’s largest seed company PGG Wrightson Seeds and its subsidiary, plant technology provider Grasslanz Technology, the programme’s original estimates of economic benefits were $200 million per year by 2025.
Four years on, progress has been positive though one of the five projects, involving Lincoln University developing biological seed additives that reduce pasture establishment failures, was canned last year. That has pegged back estimated returns to between $190 million and $195 million.
PGG Wrightson Seeds research and development manager Derek Woodfield says that caused a lot of scrutiny from MPI but was still a good rate of return on the government’s $7 million investment. “If I get could a 70 to 80% strike rate from every investment I do, I’d be very happy.” The point of the PGP projects is to do more high-risk science than business as usual.
Seven products are being developed from the remaining four projects, with one already on the market this year, some in the pipeline, and a couple likely to be technically proven but not yet commercialised when the PGP ends in 2018.
A May 2015 programme review by independent consultants Nimmo Bell & Company said the drivers for the PGP were strong given low investment in the pastoral sector of well under 1% of industry revenues. But it had concerns over a lack of baseline and target metrics to quantify and qualify the state of existing problems to measure progress against.
There were teething problems in the programme’s first year with the industry partners out of sync with MPI’s expectations on reporting and monitoring, which Woodfield says have been far higher than for other government grant programmes. All but two of the report’s recommendations, which mainly cover reporting, have been fully implemented or are being worked on. The next review, due in 2017, will look to nail down economic benefits.
Woodfield says the seeds company didn’t want to say much about the technologies too early because of the high risks involved. “The more you tell people, the more expectations go up and we’re not in that game until we have a product.”
Resolving commercialisation terms, the report’s only governance concern, has been completed. MPI’s Penno says intellectual property for PGPs sits with the industry funders but contracts include an exclusivity period to commercialise any new technologies before they are licenced at reasonable commercial rates for wider industry use within New Zealand. Woodfield says there’s also a two-year embargo before any new seeds developed in the PGP can be sold to Australian farmers.
Facts:
Programme start: February 2013
Length: six years
Government funding: $7.15 million
Industry funding: $7.48 million
Commercial partners: PGG Wrightson Seeds, Grasslanz Technology.
Estimated potential benefits: $190 million – $195 million per year by 2025.
