Trouble, toil and truffles

Crop & Food Research is taking over a joint truffle venture it co-owned with property developer Tim Archibald, who has gone bankrupt.

Archibald, who created truffieres, or truffle plantations, in Ohoka and Mangawhai, north of Auckland, allegedly owes eight creditors $256,000. He has been removed as director from Ohoka Park Truffiere and the Mangawhai truffiere has been taken over by new owners.

Crop & Food, the Government research institute, formed a joint venture with one of Archibald's companies in 2001.

Truffle Investment New Zealand (TRINZ) aimed to co-ordinate the development of commercial truffieres and provide management and support.

Crop & Food had a 20 per cent stake in the company and the rest was owned by Archibald's Fruits of the Earth.

TRINZ was intending to invest in future stages of the 192ha Mangawhai development, but had no equity in either of Archibald's parks.

The institute sank $184,000 into a prospectus last year marketing a public float of the Mangawhai park, which did not go ahead.

"But that's pretty small beer," said Crop & Food chief executive Paul Tocker.

No other losses were sustained as a result of Archibald's financial nose-dive and Crop & Food remained confident in the truffle industry's future.

"To my mind this is an unfortunate glitch in the development of a very, very exciting primary industry," said Tocker, who is also a TRINZ director.

"I still anticipate seeing a $50 million-plus industry out of black truffles in New Zealand. It is a very important industry."

With Archibald's change of fortunes, Crop & Food exercised its first-option right to buy his shares in TRINZ.

"This sort of venture is an entrepreneurial start-up venture. They are high risk, so we always structure them as such that if they fail, for whatever reason, then we don't have major issues to handle," Tocker said. "TRINZ is still a viable operation and now that we have 100 per cent ownership of it, we will continue to trade that company in its original intent."

Truffle fungus grows on the roots of oak and hazelnut trees. They are considered a delicacy and can fetch $3500 a kilogram.

The country has six producing truffieres, including ones in North Canterbury and Nelson.

The industry was established in New Zealand on the basis of pioneering work by Crop and Food scientist Dr Ian Hall.

Hall first developed a way to grow truffles in New Zealand - by infecting trees with the appropriate fungus - in the 1980s.

He has since developed ways to farm other expensive fungi such as saffron milk cap, which is popular in Japan. The mushrooms - which have pale orange spots and pale green blemishes - are now growing on pine trees in Otago.

Truffle industry

* Black truffles can fetch up to $3500 a kilogram.

* Truffles were first grown in New Zealand by Crop & Food Research in the 1980s.

* There are now six commercial truffle plantations.

* Crop & Food estimates it could become a $50 million export earner.

- NZPA