The recent announcements at AgResearch are disappointing for our city and region. However, they are neither unexpected nor something that could have been avoided entirely.
There are some key factors at play in these decisions. First, a decade ago there needed to be investment in the AgResearch campus main office block and associated buildings. This didn't occur and lead to run-down office buildings that were not going to survive for a modern day enterprise. The failure to invest has led to management making the decisions they have now.
Second, the decisions of Fonterra to locate a lot of its research, especially food-based research, at Palmerston North and Melbourne created a hub of activity in Palmerston North. This hub of Massey University, Fonterra and existing AgResearch operations has set up a strong base which the recent announcements are building upon.
Third, the dairy industry itself has shifted. A decade ago the main dairy regions were Waikato and Taranaki. The formation of Fonterra reflected this history with the co-operative being formed between the merger of Kiwi Diaries (Taranaki) and New Zealand Dairy Group (Waikato). Today, more than 40 per cent of New Zealand cows are based in the South Island. The Waikato's share of milk production has slipped even though South Waikato is the second fastest growing dairy production after the South Island.
Fourth, Christchurch is developing itself as a niche research and production centre. Recent creations of hubs around Lincoln with Dairy Insight and AgReseach are evidence of this changing dynamic. Therefore, the move to Christchurch is in line with a changing productive base of NZ.
Fifth, AgResearch management has been considering their options for some time as to how to gain maximum efficiency for their research dollars. So, the recent announcements reflect a changing scope of the dairy industry, a lack of investment in the Ruakura campus going back many years and the creation of hubs of research.
These changes have many implications for our city. Unfortunately, the loss of jobs is the immediate impact. But there are far-reaching implications in the nature of research and development in the city. We need to respond by looking at the opportunities that present themselves to Hamilton and the Waikato. First, AgResearch has indicated it intends to create an environmental science hub at Ruakura - great news for Hamilton.
Agriculture has changed over the past 50 years. This is important because in the past, New Zealand dairying has had a competitive advantage based on our low-cost system of converting pasture into milk. Other lower costs producers can now beat us on price. Therefore, we have to adjust and that means our production process must be seen as the most environmentally advanced for us to remain competitive.
The investment in an environmental science hub at Ruakura comprising a revamped AgResearch, University of Waikato, Livestock Improvement Corporation, Innovation Park and Diary Insight is a positive step as it represents the future of New Zealand agriculture.
We also need to encourage other institutions and businesses in the city to align and develop with AgReasearch to provide a strong future in Hamilton. For example, in Genomic's Livestock Improvement Corporation is a dominant player and we need to create a hub around this capability.
As a region we are developing into a light industrial hub city with a strong service base for services for the greater Waikato, Bay of Plenty, Taranaki and East Coast regions. This will mean many opportunities for projects such as the inland port at Ruakura which build on our strategic proximity to Auckland. We need to readily take those opportunities.
The changes at AgResearch are a demonstration of the need to be nimble and reactive to changing markets and circumstances. The plans being formulated for the environmental science hub at Ruakura are important for our city. In this way we can maintain a research capability that focuses on the future of agriculture in a modern world.