KEY POINTS:
AgResearch's hopes of making a financial killing from new technology to detect concealed explosives raises many inter-related issues around agricultural research and its funding.
Several senior research figures have suggested that pressure for agricultural research to be focused on quantifiable, shorter-term results can discourage more speculative "pure" research
that may produce unexpected breakthroughs.
The AgResearch explosives detection "find" is in some ways an illustration of how giving scientists a bit of freedom to think outside the square can produce the goods.
Three of the Crown research institute's scientists discovered that x-ray technology used to determine different compounds in cheese could also screen check-in and carry-on aircraft baggage for concealed explosives and their liquid components.
AgResearch is now in talks with a local venture capital firm and plans to start a company to commercialise the research. The returns could be "substantial".
Chief executive Andy West suggested returns from a successful explosives detection venture could be ploughed back into science.
This shows that by not just focusing on the task at hand the scientists may end up generating a significant financial gain for AgResearch and improving global security.
So managing effectively the tension between agricultural scientists providing a quick bang for farmers' or taxpayers' bucks, and giving them some longer-term intellectual "freedom", is clearly an important task.
Meanwhile, farmers keen to see the organisation use profits from the new project on their behalf might be hoping any gains don't go the way of the extra $3 million that AgResearch voluntarily handed over to the Government last year.
The increased dividend was made possible by greater than expected gains from the sale of the AgVax vaccines business.
Ironically, West said the detector project needed about $2 million to $3 million of further investment. But, then, spreading the risk involved in developing new technology by bringing in venture capitalists is also possibly a wise move.
Canesis unconditional
AgResearch's $6.5 million purchase of loss-making textile research company Canesis from Wool Equities and the Wool Research Organisation went unconditional late last week. The deal is due to be completed next month.
Also, Karios Holdings - acting on behalf of the AgResearch and Direct Capital private equity-owned BioPacific Ventures - announced it had achieved its goal of getting a further 8 per cent of Wool Equities' shares, with acceptances taking it to nearly 12 per cent. Karios involves former Wool Equities CEO Mark O'Grady.
Karios' offer at 90c a share is not due to close till Wednesday, meaning there may be more acceptances. BioPacific has said it may go as high as taking a 19.9 per cent holding.
Karios director Bill Kermode said discussions on what level of "extra" shares to accept are due this week.
Kermode said BioPacific was mostly interested in Wool Equities' Keratec business, which aims to commercialise wool proteins with cosmetic and health product applications.
The Canesis and Karios developments are a setback for a group of disaffected Wool Equities shareholders whose spokesman John Shirtcliff had urged stock holders not to sell to Karios and to support a special meeting to try to oust the Wool Equities board.
Shirtcliff had also questioned whether AgResearch being connected with the Karios and the Canesis deals was a cause for concern, but AgResearch said it only learned about the connection between BioPacific and Karios after it had concluded negotiations with Wool Equities over Canesis.
AgResearch chairman Rick Christie said buying Canesis would allow the integration of all R&D associated with wool, and make AgResearch an important R&D partner with Keratec.
Christie acknowledged the "disquiet" about recent Wool Equities transactions among some shareholders. But he also indicated that AgResearch buying Canesis would help ensure its key assets and staff remained available to NZ Inc.
Buying South America
The PGG Wrightson-promoted NZ Farming Systems Uruguay (NZFSU) has announced it has agreed to buy a fourth farm in Uruguay - a property of about 3000ha in the east of the country.
The cattle property - costing just over $9 million - will be developed into a predominantly dairying operation.
The company's offer of up to $150 million worth of shares closes tomorrow and is pitched at dairy farmers..
Meanwhile, a group of Waikato dairy farmers is reported to have bought 2600ha of forestry land in Chile to convert to dairying.
Kiwi farmers' capital heading overseas is unlikely to thrill Fonterra and other dairy co-ops seeking greater locally produced supplies.
But, as Fonterra's manager of sustainable milk growth has noted, more than 90 new dairy farms this season has pushed the co-op's New Zealand milk flows ahead of last year, despite a wet, cold spring.
Kiwifruit spend-up
Kiwifruit post-harvest operator Satara has joined fellow listed sector company Seeka in announcing significant new spending plans after a season which has seen heavier than usual fruit spoiling.
Seeka recently announced it was spending $4 million on equipment which will help it speed up processing - that's part of its response to the spoiling.
Now Satara says it will spend $12 million on a capital expenditure programme for next season, including a $7 million upgrade of processing technology at its key Te Puke facility.
Once completed, the expanded facilities will have the latest technology for handling both gold and green kiwifruit, Satara said.
A "photograder" would improve consistency in grading, leading to greater yields for growers. Other additions would include the latest equipment for packing much more fragile gold kiwifruit.
Satara general manager Murray Gough said other investments would include a refit of an existing grader in Katikati and a new Northland coolstore.
Gough said dealing with difficult seasons from time to time was the nature of horticulture.
"Despite a number of very successful seasons prior to this one we have to improve our capability to deal with these situations, through better systems, better equipment and strong management of our processes."
Honey money
Waikato University is continuing to reap the flow of financial sweetness stemming from ground-breaking research on manuka honey by Professor Peter Molan.
Health products company Comvita has announced it will pay the university up to $4 million for patents and intellectual property rights associated with manuka honey, which has antibacterial and other properties.
The company has also gained exclusive intellectual property rights for future product development related to the processing, extraction and application of manuka honey's active compound for use in the wound care and skin care fields.
The purchase price was a minimum of $3.5 million and a maximum of $4 million, plus ongoing royalties. University researchers are currently drilling down to the molecular activity of manuka honey's unique wound-healing properties to demonstrate exactly how it works.
