Joanna Perry: Comments that the PGP is "corporate welfare" are simply not accurate, and show a fundamental misunderstanding of what is at the heart of the PGP. The PGP is aimed at initiatives that drive real innovation and grapple with the hard issues - it's not about funding "business as usual" activities. It will enable long-term economic growth and sustainability across the primary sector by partnering with industry, investing time and money into innovation and research, working with talented people and investing collective energy in industry initiatives that will keep new ideas flowing.
The partnership aspect is what makes the PGP unique; the government and primary sector working together to innovate, fund and deliver in true partnership-style. Industry must match or better the government investment and share the risks.
Other "spillover" benefits will also stem from the PGP, including more jobs, access to new and better food and other products, and more vibrant rural communities, with increased local infrastructure and investment.
For industry, it means more connected people across the primary industries and other related groups so they can share information and technology, improve their processes and boost their productivity and sustainability. For New Zealand as a whole, PGP is enabling the development of new, world-first technologies and boosting our reputation and image as a producer of trusted, high quality products.
How do you make sure the PGP fund is not captured by the Agribusiness industry's 'big guns'?
Joanna Perry: PGP programmes range in size, both in terms of investment and in terms of the entities involved. There are some larger players involved, such as Fonterra and Silver Fern Farms, but there are also smaller, innovative and equally important organisations. Examples include the Manuka Research Partnership Limited (a group of landowners and beekeepers), Miraka and Firstlight Foods. There are also a significant number of industry bodies, leading programmes on behalf of their farmer or grower members, such as Beef and Lamb, Dairy NZ, the Avocado Industry Council, and NZ Winegrowers.
The PGP was always designed to have programmes of sufficient size and scale to make a big difference. There already exist other funds for smaller or community-led initiatives, such as the Sustainable Farming Fund. PGP is designed as a potential next step for those smaller programmes to take, which is evidenced by the Lifestyle Wines and New Zealand Avocados Go Global PGP programmes that were recently contracted and are now under way.
How do you audit the results of the taxpayers' investment in the Primary Growth Partnerships?
Justine Gilliland: To be considered for investment, programme proposals are assessed against criteria including economic benefits, spill over benefits, sustainability benefits, and strategic fit with the direction of the sector. MPI is assisted in this process by an independent Investment Advisory Panel (IAP). The IAP uses its expertise and judgment to advise on decisions about the allocation of PGP co-investments, to help ensure PGP investments are able to achieve the aims of economic growth and sustainability.
The IAP and MPI apply a rigorous assessment process for applications. The bar is set high for applications to be successful, which is necessary given the investment amounts involved.
PGP programmes have arguably one of the heaviest monitoring regimes of any government fund. Programmes are required to have programme steering groups with MPI representation, develop outcome logic models and comprehensive evaluation mechanisms, and submit quarterly reports.
Each PGP programme is also subject to a financial audit, alongside the co-investor
organisation's own external audits. Financial audits have been conducted for seven programmes to date with no major issues identified. Each programme is also required to submit annual plans and quarterly reports to MPI, which are assessed and considered by MPI and the independent IAP.
In addition, PGP programmes are required to have progress reviews approximately mid-way through each programme. One such review has been completed to date (for the New Zealand Sheep Industry Transformation programme), and a comprehensive summary report is available on MPI's website. The review found that NZSTX is a worthwhile programme that has potential to substantially transform the New Zealand sheep industry and improve economic outcomes in the sector.
The first PGP programme started in September 2010. How will you measure the success of the PGP Fund five years out?
Justine Gilliland: MPI has an outcomes logic model for the whole PGP and is actively working to track the benefits towards those outcomes at the portfolio or "whole-of-PGP" level. Individual programmes are also required to have outcome logic models, with associated measures and indicators, to enable an assessment of benefits at the programme's end (through a required formal evaluation) and over the longer-term (once the formal programme has ended). Many of the benefits from PGP will truly be felt over the long term, i.e. in five to 10 years' time from a programme's end.
Programmes are also required to set out and meet milestones. These also enable assessment of progress towards the intended benefits, as well as the more short-term benefit achieved from the delivery of those milestones.
MPI recently commissioned the New Zealand Institute of Economic Research (NZIER) to carry out an independent investigation into the potential benefits of the PGP and provide a robust analysis of potential export growth, GDP growth, and other economic measures.
NZIER estimates that the PGP will add $6.4 billion per annum to New Zealand's economy by 2025. This comprises $2.2 billion of projected GDP growth from the government's investment, and $4.2 billion GDP growth from the industry investment.
The NZIER report further concluded that the PGP has the potential to achieve an additional $4.7 billion per annum by 2025 if all the R&D is successful, the aspirational stretch of PGP programmes is achieved, and the innovations are taken up widely.
The findings provide clear evidence that PGP is working and is a solid investment in New Zealand's future. It confirms that the current PGP programmes will all make positive contributions to the primary sector and New Zealand's economy, but goes further by considering the potential impact of future PGP programmes.
NZIER's findings are now being built into MPI's outcome logic model and benefits tracking processes.
PGP Schemes:
Wool
Programme:
NZ Sheep Industry transformation
Co-investor:
NZ Merino
Total investment:
$37 million
Estimated benefits:
$250 million
Dairy
Programme:
Transforming the Dairy Value Chain
Co-investor:
DairyNZ/Fonterra
Total investment:
$170 million
Estimated benefits:
$2700 million
Programme: New Dairy Products and Value Chains
Co-investor: Whai Hua partnership
Total investment: $3 million
Estimated benefits: $8.6 million
Fishing / Aquaculture
Programme:
Shellfish the next generation
Co-investor:
Shellfish Production and TechnologyNZ
Total investment:
$26 million
Estimated benefits:
$81 million
Programme: Precision Seafood Harvesting
Co-investor: Shellfish Production and TechnologyNZ
Total investment: $53 million
Estimated benefits: $43.6 million
Meat
Programme:
Redefining Meat Horizons
Co-investor:
ANZCO
Total investment:
$87 million
Estimated benefits:
$630 million
Programme: Marbled Grass-fed Beef
Co-investor: Grass-fed Wagyu Ltd
Total investment: $23 million
Estimated benefits: $80 million
Programme: Red Meat Profit Partnership
Co-investor: Red Meat Profit Partnership
Total investment: $64 million
Estimated benefits: $194 million
Programme: Integrated Value Chain for Red Meat
Co-investor: FarmIQ
Total investment: $151 million
Estimated benefits: $1100 million
Pastoral
Programme:
New Vision for Pastoral Agriculture
Co-investor:
PG Wrightson Seeds
Total investment:
$15 million
Estimated benefits:
$200 million
Programme: Clearview Innovations
Co-investor: Ballance Agrinutrients
Total investment: $20 million
Estimated benefits: $348 million
Programme: Precision Application of Fertiliser
Co-investor: Ravensdown Co-op
Total investment: $10 million
Estimated benefits: $120 million
Beekeeping
Programme: High Performance Manuka Plantations
Co-investor:
Manuka Research Partnership
Total investment:
$2 million
Estimated benefits:
$925 million
Forestry
Programme: Innovative Steep Land Tree Harvesting
Co-investor:
Future Forests Research
Total investment:
$7 million
Estimated benefits:
$100 million
Programme: Use of Fumigants for Log and Wood Exports
Co-investor: Stakeholders in Methyl Bromide Reduction
Total investment: $3 million
Programme: From Stump to Pump Phase 1
Co-investor: Norske Skog Tasman/Z Energy
Total investment: $14 million
Viticulture
Programme: Lifestyle Wines New Zealand Winegrowers
Total investment:
$17 million
Estimated benefits:
$285 million
Horticulture
Programme:
NZ Avocados Go Global
Co-investor:
Avocado Industry Council
Total investment:
$8 million
Estimated benefits:
$110 million
