A Rural Innovation Lab will be set up in Palmerston North with a $400,000 boost from the Government's Provincial Growth Fund.

It was announced this morning the lab would be based at Massey University.

The lab would work with farmers and growers across Manawatu and Whanganui to drive new thinking in the primary sector - particularly around digital farm opportunities.

Regional Economic Development under-secretary Fletcher Tabuteau said the initiative would improve land use, and unlock economic opportunities.

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"This project will help to unlock new economic opportunities across the region," Tabuteau said.

"This initiative will help to develop and potentially support the commercialisation of new ideas and technologies which will improve land use in the primary sector.

"For Manawatū-Whanganui in particular, land use optimisation is a central plank in the region's economic action plan."

The Rural Innovation Lab was being supported by many organisations, including the Palmerston North City Council, Microsoft New Zealand, Massey University and local economic development agencies.

"The Rural Innovation Lab is a model example of local people, businesses and the community, progressing a project that aligns with their economic aspirations. The Government is proud to support this work," Tabuteau said.

Minister of Agriculture Damien O'Connor also welcomed the Provincial Growth Fund support for the project.

"It reflects the appreciation we have of our provinces and what they do for our economy.

"Sustainable value growth is the objective of our Government, and so is ensuring that that value flows right through our economy," O'Connor said.

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