The Primary Growth Partnership (PGP) is a government-industry initiative which is investing in significant programmes of research and innovation to boost the economic growth and sustainability of New Zealand's primary, forestry and food sectors. It's getting behind some exciting ventures to develop NZ's agribusiness sector. But it's also attracted some criticism along the way. We put some questions to PGP chairman Joanna Perry and programme director Justine Gilliland from the Ministry for Primary Industries.

The Ministry for Primary Industries has gone to considerable lengths to ensure the media and industry understand the upside from the PGP investment. What is the issue you have been trying to fix?

Joanna Perry:

The PGP is driving real innovation that will enable long-term economic growth and sustainability across the primary sector, and economic benefits for wider New Zealand. It will provide a range of benefits, including creating jobs, keeping people safe, protecting the environment and developing new world-first technologies. In the past there has been some level of misunderstanding about the PGP and what it has set out to do.

It's important that people understand all of the great work being undertaken by PGP programmes, as there is enormous value from PGP programmes to New Zealand's economy, potentially to the tune of more than $11 billion. The PGP is about using smart ideas and smart action to deliver smart results.

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What's your answer to the critics who say the PGP Fund is just "corporate welfare"?
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