Chief Executive's report

AgResearch CEO (until 30 July 2010)
Dr Andrew West

I thank all the staff of AgResearch and its subsidiaries and joint ventures for their contribution to the New Zealand pastoral sector and to AgResearch.

It was a difficult financial year – our second in a row – during which 51 staff left through redundancy and voluntary severance in order to position the Institute to be profitable in the coming financial year. Conversely, we committed $11.4 million of Capability Funding which included creating 7.5 new scientific positions in high growth areas. At year‟s end we made a surplus before tax of $2 million but because of an $11 million hit from "Budget 2010" removing depreciation on buildings we reported a net loss after tax of $9 million. We budgeted revenue growth of 3.6% yet only achieved 0.4%. This was largely due to considerably lower revenue from the Primary Growth Partnership (PGP) than we expected, the failure of the wool industry's proposal to Government for off-farm R&D to win support, and the decision by farmers not to renew the wool levy. Our response went beyond reducing scientific and support staff capability; we also made a significant effort to systematically improve internal processes and simplify costing and budgeting models. We also budgeted for a substantial pay rise to scientists in FY2010/11.

Commercialisation highlights included the scientific progress made for our subsidiary Paraco Technology Ltd in identifying several new classes of compounds to control internal parasites in sheep and cattle; introducing a traceability technology to the wool industry through Verifi TT (a consortium of New Zealand investors) and licensing this to Elders Primary Wool; and the expansion of our relationship with PGG Wrightson through a joint venture with our subsidiary Grasslanz Technology Ltd. AgResearch also deepened its relationships with a range of multinational companies, a particular highlight being the establishment of Protein Innovation New Zealand with the Mars Petcare New Zealand and Massey University.

Relationships with clients continued to improve, with an independent survey recording a further improvement in client satisfaction, with service delivery now rated “very good” or “excellent” by 76% of customers – up from 52% in 2008. This is quite some achievement for a Government research institute. Certainly our dialogue with firms as important as Fonterra and Silver Fern Farms continued to intensify throughout the year. We also began to implement our new strategy to improve the performance of Māori-owned farms with the appointment of the highly-respected Dr Tanira Kingi to our staff.

The Institute continued to invest for the long-term. One highlight was completion of a negotiation with Tainui Group Holdings for a new lease at our Ruakura Campus. Another was the conversion of our dry stock research farm at Tokanui, just south of Te Awamutu in the Waikato to a 200ha research dairy farm, with 140ha in support. This conversion included commissioning a sophisticated Milfos milking platform allowing specialty milks to be collected. Towards year end the Government approved $3 million of capital towards the creation of a Food Innovation Network at our Ruakura Campus, specialising in livestock-derived foods (principally dairy and red-meat). This hub is to be formed by Innovation Waikato Ltd with scientific support from AgResearch. We also assisted development of a proposal from Lincoln University and the Canterbury Development Corporation for a second hub, located at Lincoln.

Perhaps the single most important achievement for the year was our being awarded the responsibility to host the new New Zealand Agricultural Greenhouse Gas Research Centre with what will become $5 million of new baseline funding from the PGP. This Centre involves eight other participating research organisations in collaborative research that aims to mitigate nitrous oxide and enteric methane emissions from dairy, sheep and beef farms, and to increase carbon sinks or reduce carbon losses in agricultural soils. Under its Centre Director, Dr Harry Clark, the Centre supported the Government in hosting members of the international Global Research Alliance (into agricultural GHGs) at the Alliance‟s Inaugural Conference, held in Wellington. AgResearch was also a main participant in the Biennial Joint S&T Conference between New Zealand and the United States of America, and was privileged to host at Ruakura a senior delegation led by the Science and Technology Adviser to the United States' Secretary of State, Professor Nina Fedoroff. Other significant collaborations included a successful and most enjoyable joint internet conference on community change in agriculture with our long-term partner, the Scottish Agricultural College and the creation of New Zealand Genomics Ltd, a Government-funded research partnership between AgResearch and Otago, Auckland and Massey Universities.

Dr Andrew West
Chief Executive (until 30 June 2010)