Big guns get lion's share

By Nigel Stirling

Minister looks for results from recipients of PGP scheme funding

PGP projects include those dairy farming, shelfish and merino.
PGP projects include those dairy farming, shelfish and merino.

The Government minister in charge of a scheme spending hundreds of millions of taxpayer dollars to boost primary sector innovation has told officials he wants "greater visibility" on the outcomes of the projects it is funding.

The edict from the Minister of Primary Industries, Nathan Guy, comes amid accusations from the Government's political opponents that its Primary Growth Partnership is bankrolling "business as usual" projects for a select few and doing little to stimulate genuine innovation across the whole of the primary sector.

Since the scheme kicked off three years ago the Ministry for Primary Industries has allocated more than $300 million to 15 projects.

That has been matched by co-investments from primary sector companies and industry good bodies of $350 million.

MPI estimates the projects currently on its books have the potential to generate economic benefits of $7 billion per year by 2025.

The ministry's website gives fulsome detail about these projects' aims and the money spent so far.

But until late last week, information about the benefits generated so far was nowhere to be seen.

And silent on what the projects have delivered so far is a glossy 20-page pamphlet celebrating the first three years of the scheme, published by MPI earlier this month.

The Labour Party's spokesman for primary industries, Damien O'Connor, has asked for the same information through written parliamentary questions and the Official Information Act for the past 18 months, without success.

"I don't think I would have seen in my time in government such an allocation of money from the taxpayer that has so little accountability attached to it," O'Connor says.

Guy says he is satisfied so far with the return on the investments made by his ministry.

He points to a $6.5 million joint project with the NZ Forest Owners Association to develop machinery to safely harvest trees on steep slopes as an example of the gains made.

Several prototype machines are currently being tested on a variety of terrains.

Economic benefits of $100 million by 2016 had been predicted but three years into the project other than confirming its "ginormous" potential Guy struggles to provide any detail about the dollars of economic benefit seen so far.

"I have said to my officials that we want greater visibility on the runs on the board for these projects... not just about the detail of the investments made but also the returns that are being gained," he says.

According to criteria on MPI's website recipients must demonstrate they are using taxpayer dollars to carry out research they would not have undertaken in the normal course of their businesses.

Benefits to the economy wider than the recipient's own bottom line are also assessed by a panel of independent business people which makes a recommendation to MPI, which then decides whether projects should be funded.

O'Connor says the fact established pastoral industries have taken the lion's share of the money dished out by MPI so far makes him sceptical about how wide the innovation net is being cast.

Sir Graeme Harrison is executive chairman and shareholder of one of the country's largest meat companies, Anzco, a beneficiary of the scheme.

His company will invest $43.5 million over seven years to come up with new uses for lower-value parts of the beef carcase. MPI will match that funding.

Harrison concedes his company (which is part-owned by Japan's Itoham) has spent money on similar research before and probably would have continued to do so.

But the funding it is receiving will speed up that research, hopefully delivering better returns to NZ beef farmers through higher prices more quickly. "This is the type of frontier activity that you might put off for some years," Harrison says.

He says returns to farmers need to rise quickly if the industry is going to stave off the renewed challenge for land from dairying.

"The reality is that $10 or $20 a head is not going to make a difference... it is a whole lot of factors that will get it across the line and this is part of that."

But farmers not supplying Anzco will have to wait for the lifeline of higher prices for their animals.

That's because Anzco will enjoy a period of exclusive use of any intellectual property arising from the project.

"We were not going to put up quite a lump of money in a particular area if we don't get a reasonable run before others can," Harrison says.

Notable by their absence from the list of projects funded so far are any from the pipfruit, viticulture, kiwifruit and vegetable industries.

The manager responsible for Pipfruit NZ's R&D programme, Mike Butcher, says the scheme hasn't been designed with the pipfruit industry in mind.

Butcher says the maximum length of projects of seven years is too short for example to develop a new apple variety which can take up to 25 years to get to the stage where it has been proven for commercial release.

He says the $500,000 minimum co-investment is also pretty steep for smaller industries.

"You can see why the dairy industry and the red meat industries are the predominant players.

"They are significantly bigger industries with significantly bigger cash reserves to generate those partnerships."

Though the pipfruit industry hadn't lobbied to have the criteria changed, Butcher said, "it would have been nice if the Government actually consulted with the horticulture sector to see what would have been a more appropriate set of requirements".

Guy said he expected some of the second-tier industries not in the scheme already to make applications in the next funding round in October.

However, he said the Government had no intention of making it easier for them by lowering the minimum co-investment or lengthening the time it would fund projects.

"There are other funding mechanisms for smaller players outside PGP. We are looking to get some big runs on the board and we are currently doing that," Guy said.


PGPs

• Primary Growth Partnerships a key plank of the Government's plan to double primary exports by 2025.

• 15 projects funded since 2009; five directly benefit the sheep and beef sector, one each for the forestry, dairy, seafood, manuka honey, fertiliser, grass seed, and aquaculture sectors. Another to find an alternative to methyl bromide to fumigate logs, timber and some food exports.

• $170 million over seven years to raise education levels across the dairy industry is the single largest project.

• Five sheep and beef sector projects totalling $363 million, or 55 per cent of the total size of PGP.

• Meat Industry Association chairman Bill Falconer was until recently the chair of the independent assessment panel which decides which projects go forward for consideration by the director-general of MPI who makes the final funding decision. Joanna Perry is the new chair.

Current programmes

• Clearview Innovations

• FarmIQ - Demand-driven value chain for red meat

• High-performance Manuka Plantations

• FoodPlus - Generating more value from the beef carcase

• Marbled Grass-fed Beef

• Merino - More than wool

• Precision Seafood Harvesting

• Seed and Nutritional Technology Development

• SPATnz - Selectively bred, high-value shellfish

• Steepland Harvesting

• STIMBR - Stakeholders in methyl bromide reduction

• Transforming the Dairy Value Chain

• A project led by the Whai Hua group to develop new probiotic dairy health products.

• A project by Ravensdown and research partners Massey University's Precision Agriculture Group and AgResearch to improve how fertiliser is applied to hill country. PGP projects include those dairy farming, shellfish and merino.

- NZ Herald

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