Chief Executive's report

AgResearch Chief Executiuve Dr Tom Richardson

This year, the eve of the 20th anniversary of CRIs, was a pivotal year for AgResearch. The government’s adoption of the highly regarded CRI Taskforce recommendations created the
opportunity for CRIs, their owners (government) and the sectors we support to re-examine how we
all work together to deliver the greatest possible returns to New Zealand from the investments
made in us.

At AgResearch, we grabbed that opportunity. Through over 100 meetings and workshops with our sector, and even more within our organisation, we re-examined the environment within which we all operate and the existing or emerging strategies of many of our end users. Against this backdrop we created an aspirational value proposition that AgResearch would work towards, to deliver our best for New Zealand. We then tested various business and operational models and organisational design options that would align with and put the wheels under a new strategic plan.

The culmination of all this work was that, at year’s end, we had a clear strategy (expressed in our Statement of Corporate Intent, available from the AgResearch website) that linked our scientific thought leadership with the short, medium and longer term needs of our sector, and a radically different, partnership-based structure that we feel is the route to deliver on our value proposition as One AgResearch: To partner with the pastoral sector to identify the innovation that is needed and deliver our collective expertise to create value for New Zealand. And we had a new organisational structure that aligned with our new strategy.

All this work, coming together as it did, was a highlight for the organisation this year and for me personally. I would like to acknowledge and thank those who have made it possible. Many sector leaders gave their time generously and shared their thinking, which enabled us to re-shape ours. Our 2010/11 Executive Management Committee and wider staff honestly re-examined how we work with
our sector and how we work with each other at AgResearch, and then described a “to be” scenario of how we want to work. And finally our Board. It’s one thing to espouse brave, new thinking and the need for fundamental changes, but it is another to have the moxie to stay true to that mantra when hard and risky decisions need to be made along the way. AgResearch Board members have been unwavering in their commitment to re-position the company. The journey to deliver on this potential is really just beginning and our staff and sector partners are committed to that journey.

The dark note in our year came with the Canterbury earthquakes – a stark reminder that some events cannot be planned for. Our staff, like so many people in the region, continue to be affected by the ongoing impact of the quakes and they can count on AgResearch’s continued support as they get their lives back in order.

Of course, we had to grapple with all these challenges while we simultaneously delivered on the commitments we had to those who rely on our work. The great joy of leading an organisation like AgResearch is the daily examples of how our talented staff make a difference. In that regard, our staff had an exceptional year. This document highlights a very small number of our accomplishments, ranging from individual recognition for scientific excellence right though to the culmination
of many years’ work by large teams contributing to outcomes of national importance. The perceptive reader will note a recurring theme through this document – the power of collaboration and partnership in delivering value to the sector.

Financially, it has been a good year too. AgResearch produced a net profit after tax of $6.2 million, a significant improvement on last year’s result. This represented a return on equity of 3.3%, a figure that rises to 9.1% when adjusted for restructuring costs and asset revaluations. This result is a reflection not only of actions taken this year, but also bold decisions made by my predecessor, Dr Andy West, and his team.

All of this means that AgResearch is well-positioned to make an ever greater contribution to New Zealand, as we have described in our new strategy. And we must. Agriculture contributes 45% of New Zealand’s merchandise exports,
accounting for $20.9 billion of merchandise exports in the year to June 2011. This is not simply the result of abundant natural resources – in fact, New Zealand is a small country with finite resources. It is a function of work done by hundreds of people over many decades in AgResearch and other organisations dedicated to growing our wealth through the agricultural sector.

Here’s a fact some find startling. Since the late 1970s, productivity in the farming sector has increased at twice the rate of all New Zealand’s sectors combined. That’s what good science linked through to those that deploy it can do for you. And there is much more to gain from the science that we and our partners are now undertaking.

In closing, as well as the successes described in the stories that follow, I would like to mention some other highlights from the past year that
we haven’t the space to cover more fully. In no particular order:

• Our sheep genomics researchers led by John McEwan were part
  of the International Sheep Genomics Consortium that publicly
  released the first two versions of the sheep genome, thanks to
  investment by Ovita, Pfizer and Beef + Lamb New Zealand.
• A new dyeing process that allows vibrant colouring of wool
  fabrics, developed by our Textile Science and Technology team
  and launched at New Zealand Fashion Week, is now being
  commercialised by BGI Developments Limited under the brand
  name Lanaquin.
• PestWebNZ was released at the 2011 Fieldays. This website
  enables key pasture weeds and pests to be identified and provides
  information on their biology, impact, management and control,
  thanks to work by a team comprising AgResearch, farmers, Beef +
  Lamb New Zealand, DairyNZ, AbacusBio, regional councils, farmer
  consultants, Otago Polytechnic, New Zealand Plant Protection
  Society and other commercial companies, with investment by the
  MAF Sustainable Farming Fund.
• Grasslands Relish, a red clover variety that provides a 60%
  increase in plant survival after four years grazing compared to the
  best other variety in the market, entered the seed multiplication
  phase and will be available on farm in two to three years, thanks to
  work by the Forage Breeding Innovation team and investment by
  Grasslands Innovation Limited.
• Our site services team, in collaboration with the scientists
  involved, successfully relocated our Food Microbiology & Safety
  research team to the Hopkirk Institute in Palmerston North, where
  the work the research team has done for many years to support the
  New Zealand meat industry’s excellent food safety performance is
  now strengthened by links to animal health, rumen microbiology
  and food science researchers at our Grasslands campus and
  Massey University.

These outstanding results, and many others like them, are continuing to unfold as you read this and are why we are so positive about the contribution AgResearch will make to our sector in the years to come. My thanks go to our staff and stakeholders who have made 2010/11 such a successful year for AgResearch and I look forward to even more progress in 2011/12.

Dr Tom Richardson
Chief Executive