discover. innovate. grow. · 4 plant & food research annual report 2016 about us plant &...

DISCOVER.INNOVATE.GROW.™

G.42

ANNUAL REPORT 2016

OUR PURPOSE IS TO ENHANCE

THE VALUE AND PRODUCTIVITY OF THE

HORTICULTURAL, ARABLE, SEAFOOD AND

FOOD AND BEVERAGE INDUSTRIES

Our research into modular harvesting systems has contributed to a new premium seafood category and improved sustainability.

MORE ON PAGE 27

OUR SCIENCE IS GROWING FUTURES™

OUR MISSIONA sustainable business delivering science that maximises opportunities to enhance New Zealand’s economic, environmental and social prosperity.

Valued by our stakeholders and admired by our peers for the quality and impact of our science.

→ The creative application of our knowledge

→ Relationships based on honesty, mutual respect and trust

→ Achievement through leadership.

OUR VISION OUR VALUES

PLANT & FOOD RESEARCH ANNUAL REPORT 2016

This report presents Plant & Food Research’s operating results for the financial year ending 30 June 2016. It meets our reporting requirements for the Acts of Parliament under which we are governed. Unless otherwise stated, all figures are in New Zealand dollars ($).

This report also demonstrates how we are supporting our Core Purpose industries in meeting their targets for economic and environmental sustainability. It provides easy-to-read information outlining our performance and strategy, as well as case studies that demonstrate a cross-section of our research and outreach activities. This information is presented for the interest of our key stakeholders, including shareholders, staff, commercial partners, clients and research collaborators.

Presented to the House of Representatives pursuant to Section 39 of the Public Finance Act 1989

More information can be found on our company website and via our social media channels.

plantandfood.co.nz/growingfutures


CONTENTS4 About us6 Our locations7 Our performance8 Our highlights10 Celebrating our people

SECTION 1 OUR STRATEGY 12

14 Report from the Chair16 CEO’s review18 Our Strategy Roadmap

SECTION 2 OUR IMPACT 20

22 Better cultivars faster™

24 Premium foods and beverages26 Sustainable, premium seafood and

marine products28 Residue-free pest and disease control30 Sustainable and profitable production systems

SECTION 3 A HEALTHY BUSINESS 32

34 Sectors and customers35 Engagement35 Science for impact36 Organisational excellence 37 Ways of Working37 Financial performance

SECTION 4 OUR RELATIONSHIPS 38

40 Enhancing our customer focus42 Customer survey44 Māori engagement46 Business development and commercialisation

SECTION 5 OUR PEOPLE 50

52 Good employer responsibilities

SECTION 6 OUR SCIENCE 56

58 Science excellence62 Core funding

SECTION 7 OUR GOVERNANCE 68

70 Corporate governance72 Board of Directors73 Science Advisory Panel74 Senior Management Team75 Organisational chart

SECTION 8 FINANCIAL STATEMENTS 76

78 Our financial performance80 Directors’ report81 Independent auditors’ report82 Statement of comprehensive income83 Statement of changes in equity84 Balance sheet85 Cash flow statement86 Notes to the financial statements106 Performance indicators107 Statement of responsibility

108 Directory109 Index

4 PLANT & FOOD RESEARCH ANNUAL REPORT 2016

ABOUT US

PLANT & FOOD RESEARCH IS A NEW ZEALAND SCIENCE COMPANY DELIVERING RESEARCH AND DEVELOPMENT DESIGNED TO GROW COMPETITIVE ADVANTAGE FOR CUSTOMERS IN HORTICULTURE, SEAFOOD, FOOD AND BEVERAGE, WINE AND CROPPING.

COMMERCIAL

$50.2M

OTHER

$2.0M

CORE

$43.1M

ROYALTIES

$27.9M

CONTESTABLE

$16.6M

Our activities are funded through direct commercial research for our customers, the reinvestment of royalties and the New Zealand Government’s investment in science.

We have more than 870 staff based at 14 sites across New Zealand, as well as offices in Australia and the USA.

49% 51%

The Institute brings together more than 90 years of research supporting the primary industries.

→ 1926 The Department of Scientific and Industrial Research (DSIR) formed

→ 1928 DSIR joined with the Department of Agriculture in establishing a Plant Research Station

→ 1936 Plant Research Station transferred entirely to the DSIR. The DSIR began doing its own research rather than coordinating those of other institutions

→ 1980 The Fish Research Unit established at DSIR

→ 1992 Ten Crown Research Institutes (CRIs) established out of former government departments

→ 2008 Plant & Food Research formed following the merger of former CRIs HortResearch and Crop & Food Research

Through our integrated structure, we deliver THE SCIENCE OF PREMIUM™ – helping industries to add value and to differentiate their product offerings, to move up the value chain from commodity products to consumer-targeted premium brands.

RESEARCH SUPPORT

79

GENERAL

140SENIOR LEADERSHIP

12RESEARCH

642

NZ HEAD COUNT

Core funding – Government investment allocated direct to each CRI Contestable – Government investment allocated through competitive bidding Royalties – Commercial return from plant varieties and IP Commercial – Direct investment by customers Other – All other income sources

5PLANT & FOOD RESEARCH ANNUAL REPORT 2016

HORTICULTURE

WINE

SEAFOOD

HORTICULTURE WINE SEAFOOD FOOD AND BEVERAGE

CROPPING

DOMESTIC MARKET VALUE ($NZB) 2015 2.51 0.74 0.35 17.6 1.5

EXPORT MARKET VALUE ($NZB) 2015 2.86 1.41 1.52 27.8 0.24

SECTOR TARGET $10BBY 2020

$2BEXPORTS BY 2020

$3BEXPORTS BY 2025

$60BEXPORTS BY 2025

$1.95BBY 2025

OUR SCIENCE PLAYS A VITAL ROLE IN THE SUCCESS OF OUR SECTORS.

$154million

$371million

$0.64million

$114million

$518million

$191.3 million

$826million

$349million

$221.7 million

$1,344million

$174.6million

$90million

$466million

$758.5 million

$176 million

$12.7million

$23 million

$17million

$68.3million

AFRICA

AUSTRALIA

ASIA

UNITED KINGDOM AND IRELAND

CONTINENTAL EUROPE NORTH

AMERICA

CENTRAL AND SOUTH AMERICA

NEW ZEALAND EXPORTS

Horticulture and wine – year to 30 June 2015 Seafood – year to 31 December 2015


18

15

16

17

1

23

4 5

67

910 11

12

1314

NEW ZEALAND

AUSTRALIA

USA

8

OUR LOCATIONS

KIWIFRUIT

CITRUS

AVOCADO

POTATO

ONION

BRASSICA

PIPFRUIT

BERRYFRUIT

HOP

WINE GRAPE

CEREAL

PEA

SUMMERFRUIT

SEAFOOD

KEY

3/ PUKEKOHE

SITE AREA Total Research farm (ha) 5 4RESEARCH PLANTINGS

STAFF Research General Total

6 - 6

4/ RUAKURA

SITE AREA Total Research farm (ha) 8 -


52 7 59

5/ TE PUKE



34 11 45

13/ CLYDE



6 3 9

14/ DUNEDIN

Co-located at University of Otago


5 - 5

15/ 16/ 17 AUSTRALIA

15. ADELAIDE 16. BRISBANE 17. MELBOURNE


1 3 4

18/ USA

18. DAVIS, CALIFORNIA


1 1 2

9/ NELSON

SITE AREA Total Research farm (ha) 1 -FINFISH FACILITY 324,700L


37 7 44

10/ MOTUEKA



22 10 32

11/ BLENHEIM

Co-located at Marlborough Research Centre. Includes 10ha of research farm

RESEARCH PLANTINGS


15 1 16

12/ LINCOLN



142 40 182

6/ HAWKE'S BAY



41 19 60

7/ PALMERSTON NORTH



102 18 120

8/ WELLINGTON

Co-located at Science New Zealand


- 1 1

1/ KERIKERI



10 6 16

2/ AUCKLAND



161 115 276


OUR PERFORMANCE

REVENUE ($000) Budgeted figure in brackets

PEER-REVIEWED PUBLICATIONSMILESTONES COMPLETED TO AGREED TIMELINES

ANNUAL REVENUE / SCIENCE FTE ($000)

94%

of our 52 critical steps for achieving impact

targets complete*(TARGET = 85%)

315 307 286 303350

2011/12 2012/13 2013/14 2014/15 2015/16

2011/12 2012/13 2013/14 2014/15 2015/16

86% 90% 86% 88% 89%85%

2011/12 2012/13 2013/14 2014/15 2015/16

250

200

150

2011/12

2012/13

2013/14

2014/15

2015/16

CORE

CONTESTABLE

COMMERCIAL

ROYALTIES

OTHER

121,375 (113,240)

119,051 (117,792)

119,588 (119,659)

128,879 (125,950)

139,748 (136,175)

* Critical steps provide a detailed evaluation of our progress toward achieving sector impact targets as listed in our Statement of Corporate Intent http://www.plantandfood.co.nz/file/SCI-2015-16.pdf


RECOGNISED AS A KEY INTERNATIONAL SCIENCE PARTNER BY THE CHINESE ACADEMY OF AGRICULTURAL SCIENCES

→ Launched four new major kiwifruit cultivar development projects involving Zespri and Plant & Food Research. Totalling $9.9 million, these projects will involve seedling screening and evaluation, clonal evaluation and pre-commercial trials, and include research into kiwiberry.

MAJOR INVESTMENT

IN KIWIFRUIT CULTIVAR

DEVELOPMENT

P27

OUR HIGHLIGHTS

AWARD-WINNING

HARVESTING TECHNOLOGY

→ Supported work with Zespri examining the role of kiwifruit in glucose intolerance. The research is funded through the High Value Nutrition National Science Challenge contestable fund, and focuses on people in Asia and the role of kiwifruit in influencing blood glucose concentrations.

→ Signed a Memorandum of Understanding with Zespri and the Shaanxi government in China. Working with Plant & Food Research as a technical support partner, Zespri will research the viability for establishing a premium quality commercial operation in China.

→ Opened a Food Safety Science and Research Centre at Massey University in Palmerston North. The virtual centre promotes, coordinates and delivers food safety science and research, and is a partnership between Government, and key industry and research organisations. FOR MORE GO TO PAGE 61

→ Achieved Marsden Fund support for four new projects as part of the latest funding round. The projects include understanding the evolution of olfactory receptor genes in insects; exploring the genetics behind flower colour in snapdragons to better understand plant evolution; the development of an ultrasensitive electronic nose which mimics insect olfactory systems; and a project with Victoria University of Wellington to understand salt tolerance in plants.

→ Appointed the programme leader for research into consumer trends in key Asian export markets. The research is part of the High Value Nutrition National Science Challenge and will study key drivers of consumer behaviour in relation to food purchases, and health and wellbeing.

→ Recognised as a strategic partner in China. Plant & Food Research signed an agreement with the Chinese Academy of Agricultural Sciences, recognising the company as a key international science partner in the prestigious Agricultural Science and Technology Innovation Program (ASTIP).

→ Recognised for innovative seafood science. Our research into modular harvesting systems was acknowledged when Precision Seafood Harvesting received the inaugural Māori Innovation prize at the Hi-Tech Awards.


UNCOVERED THE GENETIC BLUEPRINT OF ONE OF NEW ZEALAND’S MOST IMPORTANT INDIGENOUS PLANTS

RECOGNISED FOR EXCELLENCE

IN BUSINESS SUPPORT

→ Recognised at the 2015 AUT Excellence in Business Support Awards. The awards recognise the best providers of business support in New Zealand, with Plant & Food Research being highly commended in the Government category.

→ Hosted a delegation of primary industry Ministers and representatives from New Zealand and Australia at the Mt Albert campus. The visit was part of the Agriculture Ministers’ Forum (AGMIN). The group heard presentations on key research and commercialisation initiatives, participated in sensory evaluations at the Sensory & Consumer Science laboratory, and visited the postharvest research facility.

→ Published research showing non-bee insects are as effective as honey bees for pollination. The findings revealed that insects such as flies, wasps, beetles, butterflies and moths may carry less pollen, but visit flowers more frequently, and seem more adaptable to changes in environment.

→ Supported by investment from the MBIE-administered The Catalyst Fund to research kiwifruit pests and diseases. The funding will support the Integrated Kiwifruit Industry Security Technology project, enabling research organisations in both New Zealand and China to improve orchard management systems and breeding programmes.

→ Signed a Memorandum of Understanding with the Kunming Institute of Botany in Yunnan in China. The scope of the agreement includes research and development of cultivars and plant-derived products with high economic value, as well as the establishment of a joint research laboratory.

→ Sequenced one of New Zealand’s most important indigenous plants. Plant & Food Research scientists were involved in uncovering the genetic blueprint of mānuka. The findings, which are being shared with tāngata whenua, will help researchers to understand the genetic diversity of mānuka with cultural, conservation and commercial interests in mind.

GRANTED PLANT

VARIETY RIGHTS FOR

PURPLE DAWN

→ Granted Plant Variety Rights by the New Zealand Intellectual Property Office for the sweet potato cultivar ‘SPFR1’, marketed as Purple Dawn. A cross between two earlier cultivars, Purple Dawn is proving an economically viable cultivar with a novel purple flesh containing carotene and anthocyanin.


EXTERNAL AWARDS

CELEBRATING OUR PEOPLE

RECOGNITION OF CONTRIBUTION TO GROWING THE NEW ZEALAND WINE INDUSTRY

→ Dr Paul Blatchford was awarded an Emerging Researcher Grant by the Health Research Council of New Zealand to examine how gut microbiota diversity may be improved using enteral nutrition and curcumin.

→ Associate Professor Nigel Perry and Elaine Burgess won the Otago Innovation’s Proof of Concept competition for their work with scientists at the University of Otago developing a new nutraceutical to help regulate blood glucose concentrations to support the treatment of type II diabetes.

→ Dr Stuart Tustin was the recipient of the 2016 Joe Bell Trophy by the Hawke’s Bay Fruitgrowers’ Association. The award recognises Dr Tustin’s service to the industry and contribution to orchard production systems across multiple sectors.

→ Dr Colm Carraher was awarded a Rutherford Foundation Postdoctoral Fellowship, as well as a prestigious Marsden Fund grant, to further his research into the development of an electronic nose using the highly sensitive odour receptors of insects, which will help identify volatile organic compounds.

→ Dr Jill Stanley was elected Secretary to the Board of the International Society for Horticultural Science.

→ Dr Andrew Kralicek was announced as the first recipient of the KiwiNet Emerging Innovator Fund. The fund helps the research aspirations of early career scientists who have unique ideas with strong commercialisation potential. Andrew is working on biosensors that could provide a monitoring solution for air quality, emissions and industrial gas leaks.

→ Mike Trought was made a Fellow of New Zealand Winegrowers at the Air New Zealand Wine Awards, acknowledging his lifetime of achievements in wine science and his contribution to growing the New Zealand wine industry.

SERVICE TO THE

FRUIT GROWING INDUSTRY


EXTERNAL AWARDS

Sue Muggleston receives her award from Plant & Food Research Chairman Michael Ahie.

INTERNAL AWARDS

→ Chairman’s Awards recognising outstanding contribution to Plant & Food Research were presented to:

→ Nicolas Babot, Ann Blackburne, Peter Alspach and Dr Matthew Laurenson for the successful introduction of the commercial plant breeding application, E-Brida

→ Dr Hamish Brown, Ellen Hume and Dr Roger Williams for the design and delivery of the Matrix of Good Management programme

→ Dr Susan Marshall for her perseverance and leadership in the research and development of new marine products

→ Dr Bruce Smallfield, Dr John van Klink and Catherine Sansom for their success in building a research and development collaboration with Ngāi Tahu for taramea

→ Sue Muggleston for her leadership establishing the company’s Core Business Skills programme.

→ Lab Manager Safety Awards were presented to Chris Dunlop, Heather McBrydie, Hussam Razzaq, Jonathan Rees-George, Shirley Dobson, Lee-Anne Manning, Dawn Harvey and Patricia Davis for displaying and contributing to good health and safety laboratory practices.

→ Julie Ryan is the Health and Safety Champion for 2015 in recognition for her many achievements in this area, including reorganising and managing greenhouse health and safety documentation, staff inductions, safety training, and ensuring the functionality of processes and accessibility of equipment.

30 YEARS OF OUTSTANDING

CONTRIBUTION TO

APICULTURE SCIENCE

FOUNDATION FOR

ARABLE RESEARCH,

RESEARCHER OF THE YEAR

→ Soil scientist Dr Trish Fraser was named the 2015 Researcher of the Year by the Foundation for Arable Research, recognising her research contribution to a range of science projects benefiting the cropping industry.

→ Dr Mark Goodwin received the inaugural Peter Molan Award in recognition of nearly 30 years of outstanding scientific contribution to apiculture science.

→ Research paper co-authors Dr Gareth Hill and Dr Rob Beresford received an Australian Society for Viticulture and Oenology award for best viticulture paper of the year. The award recognises research which, if applied, is deemed to have a significant impact for the industry.


OUR

STRATEGY

PLANT & FOOD RESEARCH ANNUAL REPORT 2016 13

SECTION1

OUR STRATEGY ENSURES OUR RESEARCH AND BUSINESS ACTIVITIES ACHIEVE OUR CORE PURPOSE OF DELIVERING BENEFIT TO NEW ZEALAND.


REPORT

FROM THE CHAIR

Impact is at the heart of everything we do

Our vision is to be valued by our stakeholders and admired by our peers for the quality and impact of our science. Impact represents the role our science plays in the success of our clients and in the economic, social and environmental benefits it delivers. The past 12 months have seen a wide array of successful results based on our science. Scientific breakthroughs seldom happen overnight. The impact of much of our work is based on many years of hard work and experimentation; it is the new ideas we have today that will ensure we continue down the pathway to impact for years to come.

As a collective, the Crown Research Institutes are the largest dedicated providers of science research in New Zealand. Their work is often transformative to the sectors they support, and Plant & Food Research is well placed to continue this in partnership with established and emerging businesses and industry sectors, which are growing rapidly.

Partnering with industry

The past year saw increased exports come from many of our key customers, including record volumes and values of kiwifruit, pipfruit, summerfruit and avocados. Yet New Zealand’s horticulture, viticulture, arable and seafood industries face the continued challenge of doing more with less — producing more and better food with less water, fewer chemical and energy inputs, and reduced costs. Plant & Food Research is committed to supporting our industry sectors to meet these challenges as well as discovering new opportunities to add value to their products and brands.

OUR STRATEGY

The operating environment for New Zealand’s publicly funded science has continued to change over the past year, and we expect that this dynamism will continue over the years to come. What has not changed is the Government’s desire to see R&D providers like ourselves delivering impact — developing commercial advantage, enhancing environmental management and creating improved societal outcomes — for New Zealand.

As a Crown Research Institute, Plant & Food Research is proud to be involved in a wide range of major scientific collaborations within New Zealand, including the Lincoln Hub, FoodHQ, and several of the National Science Challenges. Working together with the best minds in research is vital to achieving high impact outcomes and to delivering on our core purpose.

Engaging with Māori

Māori have a strong and active presence in New Zealand’s primary industries, and the New Zealand Government has identified key actions for realising the potential of Māori land and water assets through its ‘He kai kei aku ringa’ strategy and action plan. Plant & Food Research is committed to this strategy and to doing our part to support the sustainable growth and development of Māori assets through mutual understanding and exchange of knowledge.

Aligning our strategies

The Government’s strategic direction for science investment over the next decade was outlined in the National Statement of Science Investment (NSSI). The document states the Government’s desire for a better-performing science system that is larger, more agile and more responsive, investing effectively for long-term impact on our health, economy, environment and society.

IT IS THE NEW IDEAS WE HAVE TODAY THAT WILL ENSURE WE CONTINUE DOWN THE PATHWAY TO IMPACT FOR YEARS TO COME.“


Our strategy closely matches the Government’s strategic direction for science investment. Our focus on high quality, high impact science and strong customer and research partnerships has resulted in steady growth in our research activities. As a larger organisation with close customer relationships, we have been able to respond to some of the most significant issues affecting our sectors, while also targeting ambitious longer-term goals for our future success together.

Delivering excellence

Excellence encompasses the quality of the science, the people involved in it and the outcomes it generates. We understand excellence to mean the best people, taking a rigorous approach, leading to optimum results.

Our focus on delivering excellence has seen a number of internal and external reviews conducted over the past year designed to evaluate factors associated with our company performance and our customer perceptions. The results of such evaluations support a process of ongoing improvement within the company and in how we engage with clients and stakeholders. As Chair I am pleased to see people committed to enhancing performance and achieving more and better results for our industries.

It is also very pleasing to see the wealth of external recognition accorded to Plant & Food Research and our staff over the past year for the work we do, and how we do it. This has included company-wide recognition for business performance, acknowledgement of innovation in both our science research and commercial dealings, and individual accolades for our research staff by our industries and their research peers. These results attest to the quality of the organisation and the value others place on the science we deliver.

Investing for the future

Supported by our strong financial and operating performance, the Institute is actively investing for the future – in our people, new fields of research, and science equipment and facilities. This will continue to be a key focus for the Board and management for the coming period.

My thanks to allNgā mihi maioha

The Board continues to deliver strong robust governance and oversight of the Institute. I wish to thank and congratulate my fellow directors on a successful year, one that positions the Institute well for the future.

On behalf of the Board I would like to thank CEO Peter Landon-Lane, the Senior Management Team and all staff who make Plant & Food Research the impactful organisation that it is. I have every confidence in the high quality, high impact research and development produced by our science teams, its innovative commercialisation by our business teams, and the high quality support services that make it possible.

Plant & Food Research is charged by Government with supporting a range of sectors and industries. It is the people of Plant & Food Research, and their passion for these industries, that are at the heart of the impact we deliver.

MICHAEL AHIEChairman

THE INSTITUTE HAS DELIVERED STRONG FINANCIAL PERFORMANCE THIS YEAR. TOTAL REVENUE WAS $139.7 MILLION, $3.6 MILLION ABOVE BUDGET AND $10.9 MILLION UP COMPARED WITH THE PREVIOUS YEAR.

OUR STRATEGY


As a Crown Research Institute, Plant & Food Research exists for the benefit of New Zealand and to help the country’s horticulture, arable, wine, seafood and food & beverage sectors address challenges and capture new opportunities. To meet the wants and needs of each of these sectors, it is vital that we leverage both a broad understanding of their business and our deep knowledge of the science that underpins it. We have achieved this by taking an interdisciplinary approach and bringing together different science and business disciplines to deliver research that both addresses current needs and anticipates future trends.

It’s about close partnerships

To deliver the best possible outcomes for our stakeholders, it is vital that we partner well with our customers and collaborate well with other leading research organisations and universities. Working together with research collaborators and in partnership with commercial customers achieves synergies and delivers greater gains to our customers and to New Zealand than would otherwise be achieved.

Plant & Food Research is an active collaborator domestically and internationally. We are a partner in several of the National Science Challenges, as well as FoodHQ and the Lincoln Hub in New Zealand, and other international research collaborations. These, and the scientific networking they support, are important means of ensuring our science remains amongst the best in the world in the areas on which we focus.

Our success lies in our customers’ success

Plant & Food Research is closely linked with the success of our customers and the industry sectors we support.

The past year has seen significant revenue growth come from our existing customers on the back of strengthening

relationships and strong export growth across many of the economic sectors we support. As a result, Plant & Food Research has experienced growth in research and royalty income from our commercial customers, indicating their confidence in a return on their investments in R&D with us.

Over recent years our reputation has grown as a research partner that understands the context in which our clients operate, with feedback from the MBIE Client Survey reinforcing the value of our work as perceived by industry. Our commercial capabilities, and consumer and market knowledge, are important aspects of our ability to translate R&D into commercial value for our customers.

To maximise the uptake and impact of our science, we use a range of partnership and business models, from our core business of contract research to models with different degrees of risk and reward sharing. Where it is appropriate to have more ‘skin in the game’ we share more of both the risks and the rewards of our science investments. This means we shared the impact of the Psa incursion with the kiwifruit industry, and we share in the success of the years of hard work that went into developing Gold3 (Zespri® SunGold Kiwifruit).

We are seeing growth in the number of new clients we are working with, another indicator that we are delivering impact and ROI to our clients. Our engagement with emerging businesses and sectors within and along the horticulture and seafood value chains has exciting growth potential for New Zealand and for our Institute. Our growing relationships with Māori businesses are opening up new opportunities for long-term partnerships to deliver economic, social and environmental impacts.

We are also experiencing growth in our work overseas on international aid and development projects, mainly in the Asia-Pacific region.

CEO’S

REVIEW

“WHERE IT IS APPROPRIATE TO HAVE MORE ‘SKIN IN THE GAME’ WE SHARE MORE OF BOTH THE RISKS AND THE REWARDS OF OUR SCIENCE INVESTMENTS.

OUR STRATEGY


OVER RECENT YEARS OUR REPUTATION HAS GROWN AS A RESEARCH PARTNER THAT UNDERSTANDS THE CONTEXT IN WHICH OUR CLIENTS OPERATE.

Transforming our ways of working

The past year has been a time of major change within Plant & Food Research, with significant investments in new buildings, new technologies and new workstyles across our sites.

These changes are directed by our ‘Ways of Working’ (WoW) strategy. The vision for WoW is that ‘our inspiring workplaces, technology and workstyles enable us to deliver high impact science’. The objectives are for our workplaces and work practices to be collaborative, effective, enabled, flexible and inspiring.

Our largest investment currently underway is the redevelopment of our Mt Albert campus. Over the past year several key milestones have been achieved, including the re-opening of the Cunningham Building — the new ‘Heart of the Campus’ — and the first new floor of laboratory and science facilities within the Hamilton Building.

New building works are also underway in a joint project with Port Nelson. This involves the construction of a modern, fit-for-purpose research facility that will enable us, as the cornerstone tenant, to accommodate the growth of our seafood research capability, and allow us to deliver more high impact seafood research for New Zealand.

Reporting

This year also marks the first year that Plant & Food Research has specifically reported against our achievements in our new ‘Healthy Business’ outcome area. As this Annual Report shows, the Institute has had a successful year, with strong indicators pointing to this continuing for the foreseeable future. Company performance against our six strategic focus areas: Sectors and customers, Engagement, Science for impact, Organisational excellence, Ways of Working, and Financial

performance; are outlined, along with key targets. I am pleased to be able to report that we are meeting or exceeding the vast majority of the targets we set out to achieve.

It’s an exciting time

With many of our industry sectors and customers experiencing strong growth, and with a continuation of our own financial and operating performance, we are well placed to invest in our future.

As we look for new opportunities to create value for our customers, it is important also to prepare for the potential challenges — both known and unknown — that our sectors may face. As an Institute we are ready to respond to these needs, to create new opportunities and build resilience to potential threats.

I would like to thank all our staff for contributing to a strong performance by the Institute over the past year, and the high quality, high impact science that delivers on our core purpose, for our customers and for New Zealand.

PETER LANDON-LANEChief Executive Officer

OUR STRATEGY


Sustainable, premium seafood

and marine products

Better cultivars faster™

Residue-free pest and disease

control

Sustainable and profitable

production systems

Premiumfoods and beverages

Valued by our stakeholders and admired by our peers for the quality and impact of our science

A sustainable business delivering science that maximises opportunities to enhance New Zealand’s

economic, environmental and social prosperity

INCREASE VALUE

PROTECT & ENHANCE

SUSTAIN GROWTH

Growth in export value and volume from production of

Plant & Food Research-bred

cultivars

New cultivars Consumer insights

Seafood production

Biological control agents

Production technologies

Genomic selection tools

Food technologies

Premium seafood products

Disinfestation technologies

Systems modelling

Wellness foods and ingredients

Novel marine products Biosecurity Ecoverification

tools

Enhanced international

competitiveness and environmental

quality through pest and disease

management solutions

Enhanced international

competitiveness and environmental

quality through optimal use of

inputs

Growth in export value and volume

of whole foods and ingredients based on fruits,

vegetables and grains

Growth in export value and volume

of premium seafood and

marine products

MISSION

STRATEGIC PRIORITIES

OUTCOME AREAS

STRATEGIC FOCUS

VISION

PERFORMANCE TARGETS

STATEMENT OF CORE PURPOSE

To enhance the value and productivity of New Zealand’s horticultural, arable, seafood and food and beverage industries

to contribute to economic growth and the environmental and social prosperity of New Zealand

OUR STRATEGY


A HEALTHY BUSINESS

Growth in value and volume of customer base

Sectors and customers

Te Rāranga Ahumāra

Internationalisation

Building our brand

Science reviews and Science

Advisory Panel

Intellectual assets, databases and

collectionsProductivity and

efficiency Our workplace

New business development

Client relationship management

Hubs, National Science

Challenges and other

collaborations

Managing risk Our technology Sustaining profitability

Existing business growth

Technology transfer and digital

engagement

Investing in science and

capabilityHealth and safety Our people Growing revenue

Enhanced engagement with our stakeholders

Engagement

Enhanced performance

through establishment of best teams from across company

and beyond

Science for impact

Enhanced performance through best

practice approaches to

people and assets

Organisational excellence

Enhanced performance through best practice use

of technology, workplace and

workstyles

Ways of Working

Enhanced profitability

and financial performance

Financial performance

OUR STRATEGY

ROADMAPFROM OUR STATEMENT OF CORPORATE INTENT 2016/17 - 2020/21

OUR STRATEGY


OUR

IMPACT


WE DELIVER IMPACT TO OUR INDUSTRY SECTORS AND CUSTOMERS BY ALIGNING OUR SCIENCE AGAINST THREE OUTCOME AREAS, UNDERPINNED BY FIVE STRATEGIC FOCUS AREAS.

SECTION2

Increase the value of the horticultural, arable, seafood, and food and beverage sectors to the New Zealand economy through the development of high-value products and processes that meet current and future global market needs.

Strategic focus areas → Better cultivars faster™

→ Premium foods and beverages

→ Sustainable premium seafood and marine products

Sustain growth in these industry sectors, driving ongoing efficiency gains with the development of environmentally resilient production systems.

Strategic focus area → Sustainable and profitable

production systems

INCREASE VALUE

Protect and enhance market access in New Zealand’s horticultural and arable sectors.

Strategic focus area → Residue-free pest and

disease control

PROTECT AND ENHANCE SUSTAIN GROWTH

THE FOLLOWING PAGES CONTAIN INDUSTRY IMPACT CASE STUDIES THAT ALIGN TO OUR PERFORMANCE TARGETS. FOR MORE GO TO PLANTANDFOOD.CO.NZ/GROWING FUTURES


OUR IMPACT

Standing out in an increasingly crowded marketplace is no mean feat. It takes novelty, visual appeal and a trusted reputation for consistent high quality.Our plant breeders create new fruits, vegetables, arable and ornamental crops with novel characteristics designed to perform better for growers and to meet the changing desires of global consumers. By targeting both the needs of industry and the wants of consumers, our new cultivar development programmes are delivering advantages to growers, including higher yields and increased pest and disease resistance, as well as consumer-focused benefits that help to grow market share and attract price premiums.

The genetic diversity of our germplasm collections is vast and provides us with strong expressions of the key traits desired in new cultivars. By discovering new knowledge about the genome and its associations with target traits, we’re accelerating the development of new cultivars and the conventional breeding process by using molecular markers and genome selection techniques.

Our understanding of both grower needs and consumer desires, underpinned by rigorous testing of new cultivars, has led to the development of a wide range of high-performing cultivars, including some of the world’s best-known fruit brands.

Scientists such as Andy Hay are developing plant breeding techniques to produce crops with better yield, improved disease resistance and characteristics desired by consumers.

Our conventional breeding techniques are supported by a comprehensive understanding of genomes. By using molecular markers and genome selection techniques, we screen for target traits introduced into elite varieties from our extensive germplasm collections for characteristics desired by growers and consumers alike.

INCREASE VALUE

BETTER CULTIVARS

FASTER™

INVESTMENTS ARE FOCUSED ON:

→ An evolving platform of breeding tools delivering cultivars, against industry-agreed development targets and concepts

→ A growing portfolio of evidence for genomic selection technologies being used to support breeding in New Zealand plant-based food crops.


→ New cultivars

→ Genomic selection tools

PERFORMANCE TARGET

Growth in export value and volume from production of Plant & Food Research-bred cultivars

FOR MORE IMPACT CASE STUDIES GO TO PLANTANDFOOD.CO.NZ/GROWING FUTURES

CASE STUDIES


→ Finding the right note for Jazz™

Since its release in 2004, the apple cultivar ‘Scifresh’ has become an important export product among New Zealand’s apple varieties.

Marketed as Jazz™, its excellent texture and rich flavour have contributed to its consumer desirability, with the product capable of selling for a 25% premium over other cultivars in some markets. Its robustness in long-term storage has also made it an attractive export product with New Zealand’s reliance on remote markets.

These attributes sit alongside an impressive export-quality yield. While just 9% of the total land planted in apples in New Zealand last year was in Jazz™, the variety was the third largest by export volume, at 31,000 tonnes.

The cultivar is the product of a series of crosses and reciprocal crosses in the mid-1980s between the ‘Braeburn’ and ‘Royal Gala’ varieties. The crosses resulted in the production of approximately 15,000 seeds, from which, of 8,500 seedlings, 5,000 were subjected to taste tests, with just one chosen to be the ‘Scifresh’ cultivar.

The researchers then evaluated the cultivar’s suitability for growing commercially, which included measuring yields and performance in different seasons, locations and conditions. They then monitored how well the fruit travelled and stored.

Jazz™ is now available to consumers worldwide throughout the year, with ‘Scifresh’ trees planted in ten countries in both the Northern and Southern Hemispheres, producing more than 500 million apples annually.

→ Breeding better cereals

The expansion of the dairy sector has led to increased demand for specialist forage crops of high quality and yield. Through their use in silage production and winter grazing, these crops provide excellent feed sources for livestock during times of low pasture production.

Forage cereals are a particularly useful option. Dry matter volume from these crops can be almost twice that of pasture during some critical growth periods, and the flexibility they offer with sowing, grazing and harvesting means feed supply can be matched to particular livestock requirements and seasonal demands.

In 2001, a joint forage cereal breeding programme was established between Plant & Food Research and proprietary seed company Agricom to establish high-quality cereal forages suitable for a range of New Zealand farming systems and with superior disease resistance. Plant & Food Research is responsible for the pedigree breeding of the new cultivars, from which Agricom then select the most promising for trialling in a range of geographic locations next to cultivars currently in the market.

The partnership focuses on oats, barley and triticale for their high dry matter and available energy contents, from which two cultivars of each cereal type have since been released. The programme also includes four cultivars and germplasm from earlier cereal breeding undertaken by the partners.

It is estimated that cultivars from the programme accounted for 70% of the area planted in proprietary forage cereals in New Zealand in 2014/15. A conservative analysis of four of the programme’s cultivars show the average net benefit to the pastoral sector of just a single one to be $9.1 million over a seven-year life cycle, suggesting a significant positive economic benefit to New Zealand.

Scientists are breeding new cereal crop cultivars to suit a range of geographical conditions, livestock requirements and seasonal demands.

Jazz™ apples sell for a 25% premium over other cultivars, such as Gala and Braeburn, in UK supermarkets.

OUR IMPACT


OUR IMPACT

Innovations in foods and beverages are the key to growth. New niches are opening all the time and what is novel now is soon mainstream.As a country, New Zealand punches well above its weight when it comes to the success of its plant and marine-based foods. Driven by a desire to be the best in the world at what they offer, many of our horticultural, wine, arable, seafood and processed food & beverage producers have built global brands.

We combine our research ability with business acumen to deliver science that is informative and useful to our industry partners, conducting both fundamental and applied science designed to contribute to their success.

In the laboratory this means increasing our understanding of how natural compounds in foods and the impact of our diet contribute to health and wellness; conducting the necessary science to validate a product’s proposed health claim; and connecting with industry to deliver new food solutions.

In global marketplaces we are investigating the motivations behind consumers’ food choices and identifying emerging trends to pre-empt and support opportunities for new food and beverage ingredients and products.

Success for New Zealand food and beverage exporters lies in being innovative and ahead of competitors, staying there with new novel products, and always delivering high quality to consumers.


→ In-market consumer insights, alongside in-depth knowledge of product attributes, to guide development/placement of premium New Zealand foods for export markets

→ Progress towards the development of new tools and technologies developed to deliver premium food products effectively to export markets

→ Steps towards the development of functional foods/ingredients and biomaterials, using knowledge of raw materials, nutrition, health and wellness, developed with local and multinational companies.


→ Consumer insights

→ Food technologies

→ Wellness foods and ingredients

PERFORMANCE TARGET

Growth in export value and volume of whole foods and ingredients based on fruits, vegetables and grains

INCREASE VALUE

PREMIUM FOODS

AND BEVERAGES


CASE STUDIES


→ Predicting kiwifruit likeability

Scientific knowledge of food attributes that influence consumer purchasing behaviour is important for making informed production and marketing decisions, maintaining competitiveness, and capitalising on opportunities for commercial growth.

Since 2002, scientists at Plant & Food Research have been conducting and refining consumer research on the attributes of Zespri kiwifruit cultivars that are most likely to determine consumer likeability of the product and their willingness to purchase.

A recurring observation from studies on consumer groups from around the world is the degree to which the concentration of the fruit’s dry matter content at harvest time is a good predictor of a consumer’s response regarding flavour, even after many months of storage and ripening – a factor that proved a more significant predictor of likeability than attributes such as size or firmness.

When accounting for methodological and seasonal variations, the findings suggest that most consumers prefer kiwifruit harvested with high dry matter content, an observation that led to additional research in determining the minimum acceptable dry matter threshold for each Zespri cultivar.

The findings help with strategic decision-making around storage, distribution and marketing, especially when associated with other aspects of the research that weighed a consumer’s taste experience against the price they are prepared to pay for the product.

The research has contributed to significant financial returns for the industry, and the dataset and methodologies established from the studies are set to guide Zespri’s investment in new cultivars and inform crop vine management and dry matter screening.

→ Growing research into shrinking waistlines

Obesity is a serious public health challenge that is placing increasing demands and costs on health services and economies through associated medical conditions and lost productivity. One estimate puts the annual cost of obesity to New Zealand at $911 million.

Despite treatments such as dieting, physical exercise and surgery, obesity rates have doubled worldwide since 2008, with New Zealand now having the third highest rate among OECD countries.

The prevalence and consequences of obesity have created opportunities for developing weight management products that suppress appetite or create a feeling of fullness, thereby reducing food intake.

Plant & Food Research has been leading the six-year MBIE-funded ‘Lifestyle Foods for Appetite Control’ programme in collaboration with the University of Auckland and Massey University, to advance the understanding of the biological mechanisms that control appetite and discover foods and natural ingredients that can be used in weight management.

One of the most promising ingredients is grape seed extract (GSE), which may act through delaying the digestion of carbohydrates, thereby stimulating the release of hormones associated with satiety. Planning is underway for a clinical trial to better elucidate the control mechanism operating for GSE, however a community trial of a GSE-based product, marketed as Satisfax®, saw participants lose an average of 2.9 kilograms over an eight-week period.

More recently, Plant & Food Research scientists have identified a plant extract (trademarked as Amarasate™) that regulates appetite through the increased secretion of gut peptide hormones. Although research is still in progress, a clinical trial of the extract saw the energy intake of participants who took the Amarasate™ extract lowered by 9% compared with the control.

Ongoing consumer research into kiwifruit likeability shows the importance of dry matter content.

OUR IMPACT

From left to right: Scientists Lyall Simmons and Kevin Sutton with Research Associate Patricia Davis from the Lifestyle Foods for Appetite Control team. Increasing rates of obesity worldwide have created opportunities for new research into weight management products.


OUR IMPACT

Discerning consumers are hungry for fresh, high-quality sustainable seafood products. By focusing on what is good for the fish, New Zealand is well positioned to capitalise on the growing consumer demand for ultra-premium products.

Extracting maximum value from seafood lies in using the whole fish, treating what’s caught with care, and applying novel processing technologies.New Zealand’s exclusive economic zone is among the largest in the world and the opportunities for our fisheries and aquaculture are vast. Our seafood industry is globally respected and has earned its premium status based on a legacy of consistently high quality, sustainably harvested products and food safety.

Our deep understanding of the biology of key commercial fish species, combined with knowledge of seafood pathogens and postharvest quality, allows us to work with industry to develop new technologies that increase production of seafood resources while ensuring quality is retained from capture to consumer. By using new, gentle, selective harvesting methods, seafood companies now have the ability to ensure that each fish is landed in the best possible condition, attracting premium prices in international markets.

Our fundamental understanding of marine molecules enables us to develop novel extraction and processing technologies to produce high-value marine products from under-utilised raw materials. By developing new methodologies to extract high-value compounds from marine resources in commercially viable quantities, we are creating new and diverse extracts and materials with wide-ranging potential applications.


→ Progress towards new harvest and postharvest technologies to support higher value seafood products

→ Steps towards the development of new technologies to support extended shelf-life and food safety

→ Understanding and responding to consumer preferences for seafood and seafood-based products

→ Progress towards the development of extraction technologies with maximum value capture and minimum wastage to produce novel high-value products.


→ Seafood production

→ Premium seafood products

→ Novel marine products

PERFORMANCE TARGET

Growth in export value and volume of premium seafood and marine products

INCREASE VALUE

SUSTAINABLE, PREMIUM

SEAFOOD AND MARINE PRODUCTS


CASE STUDIES


Once fully implemented, Tiaki is estimated to increase New Zealand’s gross domestic product by $43.6 million by 2025.

→ A revolution at sea

Producing premium products using sustainable production methods is a key goal of New Zealand’s primary industries, with the seafood industry being no exception. A new seafood category known as Tiaki has been developed for seafood products commercially caught using a revolutionary new method that improves product quality and the ongoing health of fish stocks.

Tiaki is based on technology known as modular harvesting systems. Resembling a large tube, the method creates a modified in-trawl environment that allows captured fish to continue swimming, thereby reducing their likelihood of becoming damaged through stress, exhaustion or collision. The fish are brought on board in pristine condition, resulting in a premium seafood product of greater quality and value.

The new technology contributes to sustainability by allowing undersized or unintended catch, if landed, to be returned to the sea in a better physical state than is possible with traditional net trawling, ensuring greatly improved survivability rates.

The Tiaki brand will also include a traceability app to allow consumers to access information on where and how their fish was caught.

The new modular harvesting system is the result of ten years of research by scientists at Plant & Food Research. It has been tested and commercialised through Precision Seafood Harvesting, a Primary Growth Partnership programme between the Ministry for Primary Industries and commercial fishing companies, Sanford, Sealord and Moana New Zealand (formerly Aotearoa Fisheries), with Plant & Food Research as the science research partner.

A new seafood harvesting technique has led to a premium seafood brand.

OUR IMPACT

→ Green processing using lipases

Lipases are enzymes that rearrange fats (lipids) by either pulling them apart or putting them back together. They remain unchanged in these reactions, so are used over and over again in the cell.

Unlike many chemical processes, lipases create reaction conditions that are extremely energy efficient and specific. By extracting them from organisms, these attributes can be harnessed to develop ‘green’ industrial processes.

Lipases are commercially very valuable and already used in the production of food and cosmetic ingredients, pharmaceuticals, detergents, and in biodiesel, as well as in the purification and concentration of omega-3 fatty acids.

Scientists at Plant & Food Research and Deakin University in Australia are working together to better understand the activity, selectivity, and possible applications of commercial microbial lipases, as well as new lipases from marine organisms.

Lipases can be expensive to extract, so attachment of the enzymes to solid supports is being explored. Once immobilised, the enzymes can be removed post-reaction and reused, decreasing overall processing costs.

Attachment of lipases can change the way they interact with lipids and other reactants – features which are being studied as means to control and tune their activity.

The project is funded by MBIE as part of the Export Marine Products programme, the Australian Research Council and Deakin University, and involves working with key industry partners in both New Zealand and Australia.

PhD student Tejaswini Ramakrishna loads samples with Dr Taiwo Akanabi in order to examine the role of lipases in improving the energy efficiency of industrial processes.

Image courtesy of Deakin University


OUR IMPACT

By understanding the biological environment within commercial fields and orchards, our Integrated Pest Management (IPM) programmes are helping New Zealand growers to produce high quality pest-free fruit, vegetable and arable crops with significantly less use of chemical spray controls.


→ Progress towards the development of new tools and systems for biologically based pest and disease control

→ Steps towards new cultivars with targeted pest and disease resistance

→ Progress towards the development of new ‘safe’ disinfestation technologies

→ Improved biosecurity risk assessments, detection technologies, optimised surveillance approaches and new tools for response and eradication.


→ Biological control agents

→ Disinfestation technologies

→ Biosecurity

PERFORMANCE TARGET

Enhanced international competitiveness and environmental quality through pest and disease management solutions

Protecting our productive environments from biological threats is vital. Success lies in targeting the damaging pest species and protecting the beneficial ones.It takes more than looking good and tasting great to command a price premium; increasingly it also means meeting the highest standards in product integrity and consumer trust. Our bioprotection science supports ongoing market access to more than 120 countries globally and ensures New Zealand produce meets the world’s strictest phytosanitary controls.

We take an ecosystems approach to understand the biology of farm and orchard environments. By adopting this approach we are developing new technologies, tools and protocols that offer farmers and growers effective means of protecting their crops with minimal use of chemical pest controls — maximising the effectiveness of beneficial insects and micro-organisms to minimise populations of damaging pests and pathogens naturally.

Our research supports important work across country borders to minimise incursions of new pests and pathogens, and to develop with industry partners new control methods and protocols when such incursions occur. Our genomics research is also identifying genes that confer natural resistance to pests and diseases in key crops, allowing us to develop molecular markers and support the development of new cultivars with increased natural resistance.

PROTECT & ENHANCE

RESIDUE-FREE

PEST AND DISEASE CONTROL


CASE STUDIES


→ Increasing access for avocados

Expanding export markets for New Zealand avocados, particularly in emerging Asian countries, requires meeting strict phytosanitary and quality standards. The presence of pests and undesirable organic matter on exported fruit can result in quarantine and cosmetic problems that negatively affect market access, profitability and reputation.

While high-pressure water (HPW) treatments can effectively remove unwanted pests and matter on many fruits, the system traditionally used did not adequately clean avocados to a standard for uninhibited access to sensitive markets.

With funding from the Technology for Business Growth Programme, in partnership with industry, Plant & Food Research utilised past experience in developing HPW systems to inform the design and development of a commercialised three-nozzle HPW system for targeting and cleaning individual avocados.

The system displayed remarkable efficacy for cleaning the fruit, removing up to 100% of some surface pests and approximately 98% of pests of quarantine concern. However, achieving reliable cleaning was difficult with this system. To address this, a rotary HPW was designed, which has subsequently been purchased by Compac®.

The New Zealand avocado industry has voluntarily adopted the use of HPW treatments for exported fruit. Since 2012, there have been no interceptions of pests of quarantine concern to the United States – a result that underscores industry confidence, and improves prospects for accessing new markets.

Postharvest scientist Dr Allan Woolf examines a high pressure washer with Craig Hart, General Manager at Compac. Effective high pressure washing is supporting the industry’s export goals by ensuring avocados meet market requirements.

→ Postharvest treatment supports export goals

Maintaining and expanding market access for New Zealand’s horticultural products is strengthened by new technologies that eliminate or manage pests and diseases, or assist with the production of residue-free produce.

Since 2012, Plant & Food Research has been developing postharvest disinfestation treatments for New Zealand’s fruit sectors using a mixture of carbon dioxide and ethyl formate – a naturally occurring compound found in fruits.

Research from large-scale commercial and semi-commercial trials on apricots, kiwifruit and capsicum have shown the treatment, applied under the trade name VAPORMATE®, to be effective in controlling a range of surface pests without compromising the quality of the produce.

The research positions VAPORMATE as an attractive fumigation option to replace treatments such as methyl bromide – a toxic, ozone-depleting gas which can negatively affect fruit quality. Controlling pests with VAPORMATE also opens up opportunities for increasing the volume of fruits and vegetables destined for organic and low-residue markets.

Since it was registered as a postharvest disinfestation treatment for apricots in 2015, growers using VAPORMATE have responded positively to the pest control achieved against NZ flower thrips (a high-priority pest of their industry) and more apricot growers are expected to use VAPORMATE in the coming season.

The efficacy of VAPORMATE for controlling surface pests helps the multi-million dollar apricot export industry to meet the phytosanitary requirements of importing countries. It also supports the summerfruit industry with its ambitious profit and performance targets, particularly with regard to producing residue-free fruit.

Research Associate Simon Redpath is part of a team aiming to improve access to overseas markets by exploring low-residue methods for controlling surface pests such as NZ flower thrips.

OUR IMPACT



OUR IMPACT

Sustainability is no longer a ‘nice to have’. In today’s environment it’s a consumer expectation.Sustainability was once a point of difference in the market, separating early adopters from the rest of their competitors — not anymore. Companies are now expected to demonstrate their sustainability credentials, and those with poor environmental or social practices now face significant backlash from consumers and uncertain futures.

True sustainability must take into account both the commercial environment and the natural one. Our understanding of productive ecosystems allows us to work with industry to develop production methods that are both economically and environmentally sustainable.

Our research uses knowledge of the commercial landscape and the natural environment to build and monitor sustainable production methods that minimise the impact of production systems on the environment while optimising yield, quality and economic performance. Our decision support tools and system models optimise water and nitrogen requirements in addition to minimising chemical inputs, dramatically reducing both the financial costs and the environmental footprint of production.

By working with industry to optimise production and measure environmental impacts, we are improving on-farm/orchard profitability and providing the necessary tools to prove their eco-credentials to global markets.

Adding value to production systems is about more than increasing output. Our science is providing growers and farmers with decision-making tools to help to optimise crop yields, reduce their environmental impact, and save time and money through improved efficiency.

SUSTAIN GROWTH

SUSTAINABLE AND PROFITABLE

PRODUCTION SYSTEMS


→ Progress towards the development of practices, tools and technologies to guide sustainable horticulture and agriculture

→ Extending and refining pan-sector modelling platforms

→ New scientific understanding underpinning farming within limits, including productivity, profitability, environmental constraints and regulatory/compliance frameworks.


→ Production technologies

→ Systems modelling

→ Ecoverification tools

PERFORMANCE TARGET

Enhanced international competitiveness and environmental quality through optimal use of inputs


CASE STUDIES


→ Making better wine, faster

Heavy red wines have traditionally been matured in oak barrels, which allow small amounts of oxygen to seep through the wood and diffuse into the wine. The process helps to soften tannins, stabilise colour and improve taste and texture.

Using oak barrels can be expensive, adding as much as $1.75 per litre to the cost of the wine. Likewise, wines produced in steel vats require complex micro-oxygenation systems which come with large upfront costs and ongoing expenses.

A team of students enrolled in the University of Auckland’s Master of Commercialisation and Entrepreneurship programme identified a way of reducing costs associated with micro-oxgenation using the technology behind Plant & Food Research’s ERC™ valve – a product originally developed to release small, consistent volumes of ethylene for the controlled ripening of stored fruits, such as pears and bananas.

Working with Plant & Food Research, the team developed the Wine Grenade: a simple, easy-to-use oxygenation device which is manually activated and dropped into a wine tank.

Product trials have shown the Wine Grenade to be highly effective in mimicking oak barrel maturation. This, along with a significant reduction in cost and complexity, make it an attractive oxygenation option for small-to-medium sized winemakers.

With the current global volume of heavy red wine production sitting at approximately 5.7 billion litres per annum, Wine Grenade is set to make a major contribution to the wine industry by providing consistent quality and exciting new styles with reduced production costs.

MORE INFORMATION ON WINE GRENADE CAN BE FOUND AT WINEGRENADE.COM

Wine Grenade CEO, Hamish Elmslie, demonstrates how the standalone tool puts the process of micro-oxygenation within reach of all winemakers giving them complete control over the maturation process.

→ Bringing in the beetroot

Widespread publicity on the health benefits of beetroot has contributed to a global demand that has seen New Zealand export volumes of processed beetroot increase from a 2007-11 average of 88 tonnes per annum to 18,000 tonnes currently, equating to an average annual export value of $23.4 million.

A key aspect of this expansion was Heinz Wattie’s decision to relocate their beetroot processing operation from Australia to Hawke’s Bay to take advantage of the region’s excellent growing conditions with a state of the art production facility.

The facility processes a range of products, and this, combined with the high consumer demand for beetroot, means tight windows of opportunity for processing the vegetable at the site.

Ensuring operational efficiency means matching the required volume and size of the beetroot coming in for processing to the capabilities and needs of the facility at that particular time. Any misalignment with volume, timing, or vegetable size relative to the production preferences can mean additional operational costs or a loss of revenue.

To address this issue, Plant & Food Research has conducted field experiments as part of a four-year research programme funded by Heinz Wattie’s and Callaghan Innovation to develop crop scheduling tools and management models which help growers and managers with their decision-making.

The tools and models assist with predicting yield, size, and timing of the beetroot crop. This improves scheduling and operational efficiencies with processing, ensuring the right volume of beetroot at the right time, and with the right specifications, regardless of seasonal variations or growing conditions.

Crop scheduling tools help beetroot growers and managers to meet the volume and size demands to suit production requirements.

OUR IMPACT


Providing the right tools and work environment helps enable our staff, like kiwifruit scientist Luis Gea, to get the best research outcomes.

A HEALTHY

BUSINESS


A HEALTHY BUSINESS PROVIDES AN IMPORTANT MEANS OF ENSURING WE FOCUS NOT JUST ON WHAT WE DELIVER TO INDUSTRY, BUT ON HOW WE DELIVER IT AND PERFORM AS A COMPANY.

Strategic focus areas

→ Sectors and customers

→ Engagement

→ Science for impact

→ Organisational excellence

→ Ways of working

→ Financial performance

SECTION3


Our research focuses on the needs of industry, providing scientific outcomes that help our customers achieve commercial growth.


→ Growing existing business relationships p40

→ Engaging with new customers p46

→ Delivering on our Te Raranga Ahumāra strategy p44

→ Increasing the value of our international p47 business activities

SECTORS AND CUSTOMERSGROWING THE VALUE AND VOLUME OF OUR CUSTOMER BASE

Our research is focused on the value chains of our key sectors, for both New Zealand and a growing number of offshore customers.Our research is strongly aligned with challenges and opportunities faced by our customers. Through joint investment and regular dialogue with key stakeholders, we are working together to ensure science delivers results that enable our customers and the wider industry to achieve its productivity and profitability goals.

We have a range of customers in kiwifruit, seafood, wine, pipfruit, avocados, mixed cropping, summerfruit, berryfruit, potatoes, vegetables, onions and their associated value chains. We also undertake research that underpins success for these industries in pan-sector areas: consumer & health, honey & hive, biosecurity, farming within limits, and enabling technologies. One of our key goals is the creation of additional value for existing and new local and international customers through the delivery of innovation that will transform their businesses.

We work closely with our customers to ensure the relevance of our science. Pictured with Research Associate Kathryn Wright is blackcurrant grower Stuart Stephens.

A HEALTHY BUSINESS



→ Delivering client relationship management p40 strategies and systems

→ Building our brand p42

→ Optimising technology transfer through p46 digital engagement


→ Investing in future science and capability p58

→ Ensuring science quality, performance p58 and strategy

→ Delivering value from our intellectual assets, p46 databases and collections

→ Enhancing effectiveness and impact through p61 research collaborations

ENGAGEMENTPARTNERING FOR SUCCESS

Having a strong focus on effective partnerships and finding innovative ways to engage with our customers are critical to our business and theirs. Our regional spread is also key to ensuring we have people on the ground, ready to help, in areas where our sectors are most active. Joint appointments, secondments, improved customer relationship management, brand recognition, effective technology transfer and the use of the latest digital technologies are all dimensions of our evolving engagement strategy.

SCIENCE FOR IMPACTOPTIMISING SCIENCE QUALITY AND BUILDING THE BEST TEAMS

Benchmarking our science against the world’s best ensures we have the necessary skills to deliver high quality and relevant science to our industries. Through our participation in National Science Challenges, Clusters and Hubs we are strengthening our research collaborations, integrating our activities to enhance their efficiency, and delivering innovative science ideas and platforms. Our investment of around $10 million annually in Future Science reflects our belief in the importance of sustaining scientific discoveries that will deliver impact for today’s customers and tomorrow’s markets.

Principal Scientist Stuart Tustin shares research progress with industry during a field day in Hawke’s Bay. By partnering with industry we ensure our research focus remains aligned with the needs of our customers and that technology transfer helps improve industry outcomes.

A HEALTHY BUSINESS


ORGANISATIONAL

EXCELLENCEENHANCING OUR PERFORMANCE

Plant & Food Research has a strong and enduring commitment to continual improvement across all our business systems.We seek to go beyond legislative requirements and set high performance goals when managing our people and assets. Our safe workplace reflects a positive culture underpinned by pride in the work we do, and respect and consideration for others. Key areas of activity include professional development, compliance and health & safety, to ensure we can deliver the complex science needed by our customers, safely and in accordance with regulatory frameworks. As a company we are always seeking productivity gains to enhance our efficiency and effectiveness, and have been recognised by awards for our success in doing so.

Plant & Food Research was highly commended in the Drake New Zealand-sponsored Government category of the 2015 AUT Excellence in Business Support Awards Pictured receiving the award is Chief Operating Officer Bruce Campbell (centre) with former Drake New Zealand General Manager Mark Gibson (left) and Dean of the AUT Faculty of Business, Economics and Law, Professor Geoff Perry (right).


→ Optimising health & safety culture p55 and systems

→ Managing risks effectively p71

→ Maximising productivity and efficiency p41

A HEALTHY BUSINESS


FINANCIAL

PERFORMANCESUSTAINING PROFITABILITY TO CREATE FLEXIBILITY

Our financial performance is built on a strong commercial revenue pipeline and track record. Investing selectively in capacity to achieve target revenue growth and managing succession planning are key opportunity areas for us. Financial strategies that support growth while minimising risk underpin the delivery of our vision of being a world-leading, sustainable business, recognised and valued for business innovation and science excellence.

WAYS OF WORKINGCREATING INSPIRING WORKPLACES AND WORKSTYLES

Our Ways of Working initiative is creating exciting environments for our teams to perform at their best. New work spaces enabled by information technology solutions are supporting and enabling science and business innovations throughout the business. Significant investment into existing buildings and new purpose-built facilities are creating an opportunity to rethink how we work.

A refurbished floor of the Hamilton Building at the Mt Albert campus.


→ Growing revenue p78

→ Sustaining profitability p78


→ Supporting and enabling our people p55

→ Adopting and adapting technology to p61 support innovation

→ Building inspiring workplaces p52

A HEALTHY BUSINESS


Our aim is to continually strengthen our relationships with customers, developing meaningful connections for commercial results. This includes work with Freshmax New Zealand Ltd to enhance the quality of kiwiberry. Pictured is Freshmax Export Manager Rodger Bayly (left) with Research Technician Andrew Barnett (right) from Plant & Food Research’s Te Puke site.

OUR

RELATIONSHIPS


WE TAKE A CUSTOMER-CENTRIC APPROACH TO OUR SCIENCE AND WORK WITH THEM TO ENSURE OUR RESEARCH ALIGNS WITH THEIR STRATEGY AND COMMERCIAL ASPIRATIONS.

SECTION4

“


BRUCE CAMPBELLChief Operating Officer

This has been an exceptional year for us and we are proud that we have delivered high impact science for our customers and sectors. Our own growth and increase in productivity have contributed to this strong performance and positions us well for the future.

As I look forward there certainly appear to be some excellent opportunities ahead of us. There is growing interest in plant-based foods to improve people’s health and wellbeing, as well as providing a lighter footprint on the environment compared with those of animal-based food systems. Seafood and aquaculture is a growing area of interest globally; and here in New Zealand we can expect to see an ever-increasing expansion of the Māori economy and the opportunities for innovating in food, seafood and production systems. The past year has been a great success and all indications are that these trends will continue.

GROWING EXISTING BUSINESS RELATIONSHIPS

Against a background of consistent MBIE funding, we have attracted significantly more revenue from our existing domestic commercial customers. Business and revenue from these customers has increased to $38.3 million, exceeding our original target of $36.7 million. Over the past year this represents growth of 13%, a very pleasing result.

Highlights include:

→ Significant growth in revenue in our partnership with Zespri and work with Pipfruit NZ, NZ Winegrowers and Precision Seafood Harvesting

→ Increased interest in innovation from a number of our emerging sectors including avocado, summerfruit and hops

→ Growth in Māori-involved research to $6.35 million in 2015/16 through active development of new opportunities through Te Raranga Ahumāra and Nuku ki te Puku, over double the target of $3 million. The 2018 target of $10 million is likely to be revised upwards early in 2016/17.

FOR MORE ON OUR MĀORI ENGAGEMENT GO TO PAGE 44

ENHANCING OUR

CUSTOMER FOCUS

DELIVERING CLIENT RELATIONSHIP MANAGEMENT STRATEGIES AND SYSTEMS

Our ever-evolving efforts to establish closer client relationships are also yielding positive results. Through our Te Raranga Ahumāra strategy, joint governance models and other working groups we are creating new opportunities to add value to our clients while also growing our capabilities as an Institute.

Highlights include:

→ Exploring new opportunities in berryfruit with Tūhono Whenua Horticulture Ltd, creating potential for significant growth of the berryfruit sector

→ Development of our partnership with New Zealand Winegrowers to enhance our ongoing relationship and support their establishment of a Regional Research Institute in 2016/17.

Postharvest scientist Jem Burdon leads a tour of Zespri staff through the postharvest research facilities of our Mt Albert campus.

OUR RELATIONSHIPS


MAXIMISING PRODUCTIVITY AND EFFICIENCY

Underpinning this growth with our customers and sectors, we have also delivered some excellent science outputs this year. The quality and quantity of our science outputs are a strong reflection of the high calibre of our people and their knowledge. Our ongoing refurbishment and development of new laboratories and facilities is adding to the research capabilities of the Institute and enhancing the ability of our staff to deliver high-impact research to benefit New Zealand.

Highlights include:

→ 602 full-time equivalent researchers on staff in June 2016 compared with 579 in June 2015, growing our science capability and bringing on new staff and ideas

→ Our target of 1:1 scientist:technologist ratio was also reached, achieving a better balance of skills in science teams

→ 350 peer-reviewed science papers published this 2015/16 year compared with 303 last year, giving greater peer-reviewed visibility to our science

→ 25 Plant variety rights granted this 2015/16 year compared with 9 last year, releasing more of our unique outputs from breeding into the commercial world

→ 445 customer reports provided this year compared with 388 last year, increasing quality technology transfer to our customers and sectors.

0.76Customer reports per Science FTEUP FROM 0.68 IN 2014/15

Our scientific output is enhanced by the industry knowledge of our staff. Pictured is Research Associate Richard Gillespie from our Lincoln campus.

OUR RELATIONSHIPS


CUSTOMER SURVEYUNDERSTANDING THE STAKEHOLDER EXPERIENCE

46%of survey respondents indicated they were ‘completely confident’ that Plant & Food Research considers their sector’s priorities when setting research prioritiesUP FROM 32% IN 2014

54%of survey respondents indicated they were ‘completely confident’ that Plant & Food Research understands their priorities. UP FROM 45% IN 2014

Each year Plant & Food Research joins with other CRIs in an MBIE-led survey of stakeholders, conducted by market research company Colmar Brunton. It gives valuable insight into how each CRI performs over time and how it can improve performance for stakeholders. The survey explores the overall rate of satisfaction experienced by Plant & Food Research’s stakeholders, with a particular focus on three key operating principles established in our Statement of Core Purpose:

→ End-user collaboration: CRIs are expected to develop strong, long-term partnerships with industry, government and Māori, and to work with them to set research priorities that are well linked to the needs and potential of their end-users.

→ Research collaboration: CRIs are expected to develop collaborative relationships with other CRIs, universities and other research institutions within New Zealand and internationally to form the best teams to deliver the CRI’s core purpose.

→ Technology and knowledge transfer: CRIs are expected to transfer technology and knowledge from domestic and international sources to New Zealand industry, government and Māori.

BUILDING OUR BRAND

In addition to the MBIE customer survey, we also commissioned additional research to explore customer perceptions of our brand. Their feedback provided valuable insight into how our actions create an impression in the minds of customers, with them using terms such as collaborative, expert, professional, strategic, connected and approachable to describe the Institute.

OUR RELATIONSHIPS


THE CRI CUSTOMER SURVEY EXPLORES THE PERCEPTIONS OF OUR CLIENTS AND COLLABORATORS.

OVERALL STAKEHOLDER SATISFACTION

Plant & Food Research Average CRI respondent

2012 2014 2016

86%

85% 85% 84%

84% 84%

CONFIDENCE CRI CONSIDERS SECTOR’S PRIORITIES

2012 2014 2016

Plant & Food Research Average CRI respondent

75% 70% 70%

79% 76% 75%

CONFIDENCE CRI CAN PUT TOGETHER MOST APPROPRIATE RESEARCH TEAMS

90% 96% 86%

88% 86% 84%

2012 2014 2016

Plant & Food Research Average CRI respondent Plant & Food Research Average CRI respondent

2012 2014 2016

STAKEHOLDER ADOPTED KNOWLEDGE OR TECHNOLOGY FROM CRI IN PAST 3 YEARS

93% 90% 88%

93% 92% 90%

The MBIE-led stakeholder survey helps to ensure we are meeting the expectations of our business partners, research collaborators and customers, such as Xenos Ltd. Pictured is Food Solutions Team Leader, Dr Lee Huffman, with Xenos owner and developer, Mike Rockell, at the New Zealand Food Innovation Network’s FoodBOWL Open Day.

OUR RELATIONSHIPS

“


ALBY MARSHMāori Relationship Advisor

DELIVERING ON OUR TE RARANGA AHUMĀRA STRATEGY

Plant & Food Research’s Māori strategy is led by Te Raranga Ahumāra, the kaitiaki which provides guidance on business and research interactions, and helps the company to deliver innovation and value to Māori. It is supported by the Te Aka Matua working group, which seeks opportunities that can add value to Māori assets in horticulture, wine and seafood as well as realise value from taonga species.

In addition, the Ngā Toa Ngaki Kai working group aims to increase the understanding of science among Māori and build an awareness among Plant & Food Research staff of Māori perspectives on environment, culture and society.

These initiatives are designed to increase Plant & Food Research’s capabilities to help to realise the potential of the Māori economy through enduring partnerships based on mutual trust and respect.

KEY TARGETS AND HIGHLIGHTS

Adding value to Māori assets in horticulture, wine, food and seafood

→ Providing innovative research to seafood industry partners Moana, Sanford and Sealord that supports the use of new, sustainable fishing technology. The technology allows fish to be carefully selected and handled, resulting in a premium product. Fish caught in this way have been branded as Tiaki. Precision Seafood Harvesting, the research-industry partnership responsible for commercialising the technology, won the inaugural Māori innovation award at the New Zealand Hi-Tech Awards.

Kia piki ake mātou ngā matauranga ō te ao putaiao e ngā Iwi Māori. Ka hangaia ake ngā kaiputaiao Māori e mātou. The knowledge and understanding of research science and technology by Iwi Māori is increasing and is evidenced by the variety of projects we are now undertaking. We will also continue the drive to develop more Māori scientists. Ka mahia te mahi mau.

Realising the value from taonga Māori

→ Undertaking research to explore the commercial potential of a range of taonga species, including kamokamo, āwheto, mānuka and kawakawa.

→ Sequencing the mānuka genome and making the data available to tangata whenua and New Zealand’s research community to facilitate breeding and build an understanding of how different genetic profiles influence honey characteristics.

Increasing understanding of science by Māori and understanding of Māori by our staff

→ Deepening our relationship with Ngāi Tahu through research on the chemistry of taramea to support the commercialisation of fragrances and the development of propagation technologies.

→ Building capability and understanding among 70 science and business experts through workshops on the Māori economy and ways to build engagement with Māori.

→ Working with our research proposal writing teams to identify connections that will deliver on our Te Raranga Ahumāra strategy, ensuring our research maximises opportunities to deliver outcome benefits for Māori.

→ Contributing to Tūhoe Tuawhenua Trust’s science strategy and supporting access to Plant & Food Research’s resources as part of a Vision Mātauranga Capability Fund project.

MĀORI ENGAGEMENT

TE RARANGA AHUMĀRA – WEAVING TOGETHER PLANT AND FOOD KNOWLEDGE.

OUR RELATIONSHIPS


→ Values guiding indigenous engagement

A project carried out with Australian colleagues in the Plant Biosecurity Co-operative Research Centre has led to the development of a model for engaging with indigenous peoples.

Plant & Food Research scientists and Aboriginal colleagues from Charles Darwin University shared their engagement experiences to find ways to help agencies and indigenous communities work together to identify and address biosecurity threats to crops with economic, environmental and cultural value.

The values and principles of Māoridom associated with pōwhiri were drawn upon to identify key elements in relationship building. Plant & Food Research team members introduced their Aboriginal research colleagues to these values and were, in turn, hosted by Australian researchers who explained the values behind their Welcome to Country ceremonies.

The research teams are now turning their focus to testing and communicating the model to colleagues in Australia and New Zealand who seek to engage with indigenous communities over biosecurity threats on both sides of the Tasman.

→ Building capacity in science

Every year Plant & Food Research provides opportunities for students to work with our scientists over the summer months as part of the company’s Excellence Programme.

The programme provides students with industry-focused research experience and includes Ngā Toa Ngaki Kai scholarships, designed to support Māori school leavers pursuing a tertiary qualification in science.

Last summer saw 41 applicants apply for five Ngā Toa Ngaki Kai scholarships, illustrating a growing interest among young Māori in these prestigious scholarships. The successful students worked in research areas as diverse as kiwifruit yield, biosecurity through engagement with Māori communities, understanding oil yield variability in taramea, and determining how fibre intake influences gut microbiota.

Brogan McGreal, a previous recipient of a Ngā Toa Ngaki Kai studentship, is now a full-time Research Associate in our Bioprotection Technologies team.

→ Supporting Māori food industry enterprises

Members of the Plant & Food Research and Callaghan Innovation supported NukuOra delegation explore new food concepts with NZTE in the United Kingdom.

Plant & Food Research has partnered with Callaghan Innovation to support the Nuku ki te Puku network of Māori food business leaders, investors and entrepreneurs. This unique group brings together Māori food industry players across the value chain, from landowners and producers, to marketers, retailers and brand owners, as well as innovators in agri-food technology and high-value nutritional products.

In working with this group, Plant & Food Research has prioritised opportunities for co-innovation and mutual learning. This has included opening up access to our local and international network of food industry collaborators and introducing members to industry thought leaders, conferences and trade events. Nuku ki te Puku members have been generous in sharing with our staff the drivers and goals of their own iwi and businesses, and, in so doing, have made an invaluable contribution to our strategy to assist Māori as they further develop their food industry enterprises.

Supporting the development of Māori food industry enterprises aligns with the Government’s Vision Mātauranga policy, which seeks to unlock the innovation potential of Māori knowledge, resources and people.

OUR RELATIONSHIPS

CASE STUDIES

“


We have continued to develop our ’Growing Futures’ website, with 42 case studies now published and more added annually to demonstrate the impact of our science and the commercialisation efforts of our clients.

In addition we have initiated a project to explore digital approaches to technology transfer. We expect the initial outputs of this project in the first half of the 2016/17 financial year.

DELIVERING VALUE FROM OUR INTELLECTUAL ASSETS, DATABASES AND COLLECTIONS

2015/16 was a strong year for our royalties, a mechanism through which Plant & Food Research shares in the long-term value generated from the intellectual property we help to create. Zespri Gold Kiwifruit, T&G’s Jazz™ and Envy™ apples and ‘Wakefield’ raspberries (licensed through our partner NorthWest Plant Company) all performed above expectations, a testament both to the products themselves and to the quality of the marketing programmes associated with them.

During the year we continued to build our portfolio of intellectual assets with the addition of 25 new Plant Variety Rights, 8 patents and 2 trademarks.

Over the past 12 months Plant & Food Research has continued to grow its customer base and develop its international dimension. We have seen significant growth in new customer revenue and achieved strong results against each of our key international business objectives. Together with the projected growth in royalties, things are looking very positive for the future.

BUSINESS DEVELOPMENT

AND COMMERCIALISATION

DAVID HUGHESGroup General Manager Commercial

Plant & Food Research has been working with Northwest Plant Company in the USA to develop an intensive breeding programme for superior raspberry varieties, including the premium ‘Wakefield’ cultivar, specifically bred for Pacific North West conditions.

ENGAGING WITH NEW CUSTOMERS

In addition to growing our relationships with our existing customers, over the last year we have worked to build our engagement with new clients. This has resulted in $3.5 million of revenue from new customers. These new customers represent a mix of New Zealand-based and international organisations with a connection to New Zealand. In some cases our engagement approach focused on understanding the clients’ needs and the fit with our science capabilities, while in other cases we jointly investigated export markets in search of high-value niches, premium product concepts and the science needed to realise those products.

OPTIMISING TECHNOLOGY TRANSFER THROUGH DIGITAL ENGAGEMENT

The world is going digital and our stakeholders are no exception to that trend. Over the last year we have strengthened our web presence though both our website and social media channels. Our online engagement is now a major focus of our communications, promoting frequent interaction with our customers, industry bodies, government departments and the New Zealand public.

OUR RELATIONSHIPS


→ Growing in China

Kiwifruit is a popular product on the Asian continent, with the Chinese market in particular showing dramatic growth. Zespri has announced a new phase in their China strategy which involves determining the feasibility of producing their green kiwifruit in China’s Shaanxi province. Crucial to the viability of the initiative is the ability to produce premium fruit which preserve the company’s reputation for excellence. Project areas such as cultivar evaluation, soil nutrition and pollination technology have been identified as focus points for lifting the quality of any fruit grown in the province to a level aligned with Zespri’s standards. This activity will complement the research relationships and joint laboratories Plant & Food Research has built in other provinces of China, particularly in Hunan and Sichuan.

→ Growing vitality

Consumers are becoming increasingly conscious of the food they eat, meaning products promoting health and wellbeing can command a premium price. Since 2010, Plant & Food Research has been working with industry bodies in both New Zealand and Australia to develop vitalvegetables® – a range of vegetable mix products with scientifically validated health benefits. In November 2015, two vitalvegetables products were launched in the Australian market through the food manufacturer and distributor GSF Australia Pty Ltd – vitalimmunity® slaw, a product high in vitamin C and vitamin A to help to maintain a healthy immune system; and vitalbones® slaw, with vitamin K and vitamin C to support bone health. Established growing practices and quality assurance protocols mean that the combinations of vegetables selected for each product range guarantee concentrations of the selected vitamins year round.

→ Pipfruit for warmer climates

Plant & Food Research has partnered with Spain’s Institut de Recerca I Tecnologia Agroalimentaria (IRTA) in a joint breeding programme to develop apples and pears that are better suited to warmer climates. Known as the IRTA-PFR Research & Innovation Unit (IPRIU), the partnership provides an opportunity to research apple varieties in environments different from New Zealand’s. Since its establishment in 2002, the partnership has identified a small suite of apple and pear selections for evaluation. The first of these are scheduled for grower trials and quarantine testing in the near future, with the aim being to establish their regional suitability and overall commercialisation potential.

→ Optimising pollination

Although honey bee hives are often placed in macadamia and avocado orchards throughout Australia to assist with pollination, a significant proportion of pollination is thought to be carried out by feral honey bees and other unmanaged insect species. To better manage the services of these pollinators, Plant & Food Research has been working with Horticulture Innovation Australia, the University of New England, Avocados Australia and the Australian Macadamia Society to gauge the relative contributions of specific pollinators more accurately. It is hoped that the research findings can be used to assist with developing pollination strategies through improved orchard design and pollinator management.

INCREASING THE VALUE OF OUR INTERNATIONAL BUSINESS ACTIVITIESOur international activities focus on four key objectives:1. Providing in-market and behind-borders support for

New Zealand companies, industries and licensees

2. Providing access to world-leading science capabilities

3. Commercialising intellectual property to realise value where the New Zealand industry does not have capacity to do so, and in ways that create opportunities for New Zealand

4. Directly supporting the New Zealand Government’s interests and priorities.

Over the last year we have: → Worked with key clients as they build offshore production

in the USA, Europe and China

→ Supported Ministry of Foreign Affairs and Trade (MFAT) through the provision of a range of International Development Projects

→ Continued to strengthen our research platforms with multiple partners in China.

Our revenues from customers and activities outside New Zealand grew to $18.9 million, or 14% of total revenue, a 16% increase on the previous year.

OUR RELATIONSHIPS

Foods with scientifically validated health benefits can command a premium price.

CASE STUDIES


Brazil 1

Argentina 2 8

Chile 2 26

Peru 2

Mexico 2 2

Uruguay 1 2

France 6 5 19

Spain 4 3 13

UK 10 2 23

Italy 13 11

Switzerland

2Belgium 2

Equador 1

USA 29 22 23

6Canada 8 7

6

1 21

→ A model for sustainability

Agriculture plays a significant role in the Vietnamese economy, with approximately 26 million people dependent on the sector for their livelihoods. The excessive use and widespread misuse of toxic agrochemicals have created environmental and food safety issues leading to health problems among the population. A five-year development project which draws on Plant & Food Research’s expertise in sustainable horticulture has been established in Binh Dinh Province to improve the environmental and economic sustainability of vegetable farms, and safety outcomes for both farmers and consumers. The project is funded through MFAT’s New Zealand Aid Programme and includes the Binh Dinh Department of Agriculture and Rural Development, who aim to grow the knowledge of local stakeholders to help to expand the model nationwide.

→ New opportunities for dragon fruit

A research collaboration funded through MFAT’s New Zealand Aid Programme is supporting sustainable economic development for farmers and supply chain participants of Vietnam’s dragon fruit industry. Plant & Food Research has been working with the Southern Horticultural Research Institute (SOFRI) and the Sub-Institute of Agricultural Engineering and Post-Harvest Technology (SIAEP) since 2013 as part of a five-year project exploring breeding and commercialisation opportunities for novel dragon fruit varieties, as well as the development of improved production and postharvest systems. Breeding objectives for the project include improved flavour, colour, yield, storability and disease resistance. The project also aims to transfer these new systems and technologies to the wider industry to support the economic development of Vietnam’s rural sector.

RESEARCH COLLABORATORS

COMMERCIAL COLLABORATORS

AID PROJECTS

CULTIVARS LICENSED

We’re exploring breeding and commercialisation opportunities for Vietnam’s dragon fruit industry.

Our research is improving environmental and economic sustainability for farmers in Vietnam.

INTERNATIONAL CASE STUDIES CONTINUED

OUR RELATIONSHIPS

CASE STUDIES


Kenya 2 1 1

Denmark 1 1

Sweden 1

The Netherlands 942

Finland 1 1

Norway 3 1

Japan 3 3 14

Korea 5

China 25 2 4

Viet Nam 3Cambodia 2

India 3

Nepal 8

Turkey 1 1

Greece 1

Ukraine 1

Israel 1

Australia 25 22 47New Caledonia 1

South Africa 3 7

Germany 6 3 17

Poland 5

Czech Republic 1

Austria 3 1

Egypt 2 Myanmar 1

Brunei 1

Iran 1

Singapore 4

Hong Kong 1

Morocco 1

Fiji 1

3 1

1

UAE 11

Our worldwide engagement delivers

scientific and commercial returns

to New Zealand

OUR GLOBAL

REACH

OUR RELATIONSHIPS


Our multicultural workforce is a strength, reflecting the international nature of our science. Research Associate Asha Chhagan works in the applied entomology team and was involved in the research of VAPORMATE®, a postharvest fumigation option which helps the multi-million dollar apricot export industry meet the phytosanitary requirements of importing countries FOR MORE GO TO PAGE 29

OUR

PEOPLE


OUR PEOPLE ARE OUR GREATEST ASSET AND AN ESSENTIAL SOURCE OF OUR SUSTAINED COMPETITIVE ADVANTAGE.

SECTION5

“


GOOD EMPLOYER

RESPONSIBILITIES

CRAIG JENSENGeneral Manager Human Resources

Our performance and reputation as a good employer is underpinned by our commitment to fostering a positive workplace culture that is characterised by shared values.

OUR PEOPLE

Our values capture what is important for us and provide a framework for our people-related initiatives and decision-making.

We are committed to the practice of equality of opportunity, which provides for equal access, consideration and encouragement in recruitment, selection, promotion, conditions of employment and career development for both current and prospective employees.

We view our diverse workforce, comprising people from many different cultures and nationalities, as a strength that aligns well with the increasingly international nature of our research and development programmes.

ENHANCING OUR PERFORMANCE THROUGH BEST PRACTICE APPROACHES TO PEOPLE AND ASSETS

We use best practice selection procedures for all appointments, with line managers being supported throughout the selection process by our HR Advisory team. All vacancies are advertised internally to provide opportunities for career development and advancement. When advertising externally, we use web-based technologies to access a diverse range of communities and candidates. A comprehensive induction and orientation programme ensures all new recruits are supported to become effective contributors as early as possible.

→ In 2015/16 we appointed 83 people from 22 different nationalities (43 female, 40 male), including 12 from within the organisation.

BUILDING INSPIRING WORKPLACES

The redevelopment and modernisation of our work environments is being guided by a set of principles and objectives that capture the way we aspire to work. Collectively known as Ways of Working, they are being applied in a major rebuild of our large research centre in Auckland and new facilities for seafood technologies research being built in Nelson.

The Ways of Working change programme is designed to ensure people participate in the development and operation of their new work environments, with effective communication promoted through a network of representatives and through regular staff forums and workshops.

OUR VALUES→ The creative application of our

knowledge→ Achievement through leadership→ Relationships based on mutual

respect and trust.


OUR PEOPLE

PROMOTING EQUAL EMPLOYMENT OPPORTUNITIES

Our EEO initiatives are directed at increasing the percentage of women at senior levels, both in science and in other areas of the Institute, and increasing opportunities for groups that are historically under-represented in our workforce, including Māori, Pasifika and people with disabilities. Progress is reviewed annually through a set of workplace demographic metrics and data covering gender, ethnicity, nationality and disability collected from new recruits.

→ The proportion of senior women scientists, including those in group leadership roles, continues to increase, largely through internal promotions, and we expect that further progress will continue to be made over the next decade as significant numbers of our senior scientists retire.

→ Our Māori business unit Te Raranga Ahumāra is focused on leading the implementation of Māori research and innovation objectives. This is supported by performance indicators for developing capability and increasing understanding within Plant & Food Research and among Māori regarding opportunities to work more closely.

→ Our annual Summer Studentship Programme provides promising science students from across New Zealand with their first experience of working in science. In 2015 seven of the 25 studentships were awarded to Māori and Pasifika people as part of a broader initiative for increasing participation from groups that are under-represented in the scientific workforce.

PROGRESSIVE CONDITIONS OF EMPLOYMENT

The Plant & Food Research General Terms & Conditions of Employment include provisions promoting equal employment opportunities, career development and employee participation in the development of the workplace. They provide a wide range of benefits, including superannuation, medical insurance and generous leave provisions.

→ Our partnership agreement with the PSA serves as an effective mechanism for involving staff in the ongoing development of a high-quality work environment, in line with the principles of partnership and EEO.

→ Additional paid parental leave, on-site child care facilities at our larger sites and flexible and part-time hours of work enable people to balance their work and family responsibilities and minimise disruption to their careers. 17% of our salaried staff work part-time, including a significant number who have reduced their hours while they care for dependents.

→ Career and associated remuneration structures utilise standard job evaluation methodologies and peer review to ensure equity and transparency in both pay and progression opportunities. The historic pay gap between male and female science staff is reducing, with median female pay levels now at 98% of the median pay rates for males across our eight science salary ranges. This ratio is repeated across our six salary ranges for general staff.

→ Staff working towards retirement have the option of progressively reducing their hours and responsibilities. Retraining and outplacement support is available to staff affected by change in the workplace.

Research Associate Bronwyn Hall (left) and Team Leader Kathleen Hofman (right). Our EEO initiatives have ensured an increase in the proportion of women in senior scientist roles at Plant & Food Research.


OUR PEOPLE

NZ WORKFORCE PROFILE as at 30 June 2016

2011 2012 2013 2014 2015 2016 Total

Māori 2 1 4 1 2 4 14

NZ European/Pakeha/NZ 29 22 19 31 18 48 167

Pacific Island 1 1 2

Australia 3 3 3 2 1 12

China 2 3 2 4 5 4 20

India/Pakistan/Bangladesh/Sri Lanka 7 4 4 2 5 5 27

Other Asia 3 7 3 4 6 6 29

United Kingdom/Ireland 5 1 1 5 5 4 21

Other Western Europe 1 4 3 5 4 17

Eastern Europe 1 2 1 2 6

USA/Canada 3 4 2 2 1 12

Latin America/Caribbean 1 1 1 4 7

South Africa 2 2

Other Africa 1 1 1 1 2 6

Total 56 49 41 60 53 83 362

NATIONAL/ETHNIC ORIGIN OF NEW RECRUITS at 30 June

<30 30-39 40-49 50-59 60-69 70+

%50

40

30

20

10

0

RESEARCH TEAMS

OTHER

AGE

RESEARCH TEAMS

RESEARCH SUPPORT

GENERAL

SENIOR LEADERSHIP

GENDER

51%49%

0 20 40 60 80 100%

ASIAN 20%

EUROPEAN

76%MĀORI/PACIFIC 2%AFRICAN/OTHER

2%

ETHNICITYRESEARCH SUPPORT

79

GENERAL

140

SENIOR LEADERSHIP

12

RESEARCH

642

873

HEAD COUNT



OUR PEOPLE

SUPPORTING AND ENABLING OUR PEOPLE

Our Performance, Planning and Review process ensures that all staff have work and development plans that are reviewed annually with their manager. All staff have the opportunity to be supported in studying toward qualifications that align with the Institute’s requirements. Women across the organisation have the opportunity to apply for financial support through the Margaret Hogg-Stec scholarship, with up to three being awarded annually.

Our strengths-based Leadership Programme provides development opportunities for current and future leaders at all levels of the organisation.

→ Over the past year 77 people participated in the Programme, including 36 for the first time through the Cornerstones of Leadership option, which is targeted at people who have yet to have line management responsibilities. A further 41 people participated in follow-up development sessions, which use 360º surveys to measure programme impact, with resurveys consistently delivering positive results.

→ 46 people participated in a new programme providing career insight coaching and a robust foundation for development planning.

→ Further initiatives included a pan-CRI senior leaders’ mindset programme with the NZ Leadership Institute, with ongoing programmes promoting resilience and positive decision-making, and business skills development.

OPTIMISING HEALTH & SAFETY CULTURE AND SYSTEMS

The National Health & Safety Committee, comprising staff and management representatives, is responsible for setting and reviewing the Institute’s health and safety programme, in line with continuous improvement principles. The programme includes objectives developed by local health and safety committees drawn from staff at each of the Institute’s sites.

→ The Institute’s ongoing efforts in this regard have seen it achieve tertiary level requirements for ACC’s Workplace Safety Management Practices programme in successive biennial audits.

→ They are also reflected in continuing low injury rates, including those requiring medical treatment or time off, and a continuing improvement in the Institute’s position relative to industry benchmarks.

Our Code of Conduct & Ethics and Policy on Unacceptable Behaviour define those actions, including harassment, bullying and unlawful discrimination that will not be tolerated and provide processes for responding to situations where unacceptable behaviour may have occurred. A network of trained contact people provides confidential support and advice on the Policy.

LOST TIME INJURIES

2015/16

2014/15

2013/14

1512

9

MEDICAL TREATMENT INJURIES

1325

14

2015/16

2014/15

2013/14

NEAR MISS/RISK ALERTS

949191

2015/16

2014/15

2013/14

Scientist Ivan Kurtovic performs a titrimetric assay to examine enzyme activity.


Understanding the biology of commercially valuable species such as flounder will support the seafood industry in meeting its future targets.

OUR

SCIENCE


SCIENCE EXCELLENCE IS THE KEY TO ENSURING OUR WORK REMAINS WORLD-CLASS AND DELIVERS SUSTAINED IMPACT FOR OUR CUSTOMERS.

SECTION6

“


RICHARD NEWCOMBChief Scientist

ENSURING SCIENCE QUALITY, PERFORMANCE AND STRATEGY

To ensure science excellence, Plant & Food Research engages a Science Advisory Panel to oversee our science and undertakes a programme of workshops and science reviews, bringing in external experts to review various aspects of our science. Our science reviews promote continuous improvement in science quality, focus research to increase impact, and identify capability gaps. A key measure for our science programmes is that they employ the appropriate approach to communicate results, from publication of research findings in international peer-reviewed journals to the implementation of agreed outcomes with end-users.

This year our Science Advisory Panel reviewed the area of Precision Agriculture in New Zealand, making recommendations to position Plant & Food Research in this research endeavour. At the same time a portion of the $2 million available within the Future Science fund within Core Funding was targeted to this area, supporting projects focused on ‘Digital Tools for Primary Production’. The other target area within Future Science for 2015/16 was ‘Consumer First’, promoting an emphasis on a consumer approach to research activity across the value chain. We used a ‘sandpit’ process to facilitate new interactions among scientists and developed fewer, more collaborative research proposals. External peer reviews assessed science excellence. A significant ongoing emphasis of Future Science in 2015/16 is to support the better management and analysis of science data across the science disciplines.

SCIENCE

EXCELLENCE

Making sure we have the right science capabilities and are conducting excellent research are essential for delivering future impact.

OUR SCIENCE

INVESTING IN FUTURE SCIENCE AND CAPABILITY

Investment in Future Science across our outcome areas includes:

→ Better cultivars faster™ – DNA-informed whole genome selection and breeding, regulation of hormone pathways, optimising mānuka breeding technologies, exploring ways to handle metadata, developing skills in network analysis, developing a genotype database

→ Residue-free pests and diseases – stress signalling pathways, regulators of resistance to fungi, developing insect gustatory recording technology, sensing disease, biodiversity and ecosystem services for sustainability, digital tools for biosecurity, culture collection database development

→ More sustainable production systems – models to predict developmental phenotype from genotype, branching in woody perennials, data checking automation and data management, and a big-data approach for supply chain management

→ Proprietary foods with premium prices – benefits to consumers from food beyond eating, understanding the role of food texture on the delivery of wellness attributes, the role of plant mRNAs in health, fruit quality attributes of skin, and chemistry database development and integration

→ Secure, sustained seafood production – domestication of new finfish species.

INDICATORS OF SCIENCE QUALITY

9 12 41 3.1 15%*INTERNATIONAL

AWARDSINVITATIONS FOR

EDITORIAL BOARDSINVITATIONS FOR INTERNATIONAL

COMMITTEES

AVERAGE NUMBER OF CITATIONS PER PUBLISHED PAPER

PROPORTION OF PUBLISHED PAPERS IN TOP 25

INTERNATIONAL JOURNALS

10-15 5-10 7-12 2.8-2.9 20%

*Below target; review of Top 25 Journals indicated changes required to reflect new journals in the field.


→ Better analysis faster

Two of the global trends in science today are pervasive digitisation and enhancing the reproducibility of research. The digital transformation of data collection, management and subsequent analysis underscores these. This project considered ways to ensure Plant & Food Research is well positioned to achieve Better Analysis Faster. A diverse team with a common interest sought input from national and international experts by initiating collaborations with NeSI (New Zealand’s eScience Infrastructure network), the University of North Carolina Charlotte and EMC (a global company working in leading-edge IT solutions) to ensure best practices, capabilities and tools being compiled were robust and future-focused. The toolset, best practice guidelines as well as ideas generated by the project team are informing Plant & Food Research’s data management policy. iRODs has been recommended as a metadata management solution, a website created outlining best practice operational methods, and a white paper written on future strategic directions in informatics at Plant & Food Research. Communications are already underway around the company to socialise the findings and to highlight the benefits of new systems to enable better analysis.

OUR SCIENCE

→ Domesticating a new finfish species

Aquaculture is the fastest growing animal production sector in the world. However, lack of species diversity in New Zealand aquaculture threatens our long-term growth and resilience. Plant & Food Research’s Seafood Production group has identified the domestication of new species as an opportunity to increase the value of our seafood exports. They have developed accelerated breeding approaches for the domestication of endemic marine finfish species. The breeding approach is based on novel tools adapted from other food production industries, including the use of whole genome information coupled with automated assessment of commercially relevant traits, such as increased hardiness, growth and disease resistance. The focus of the breeding programme has been on snapper. Over the last 10 years a sophisticated pedigree has been developed and a high quality snapper genome has been recently assembled. This is allowing the team to take the snapper breeding programme to the next level by optimising the genetic diversity and support trait selection in the pedigreed population.

Advanced breeding programmes have not been trialled on native New Zealand finfish species before, but this approach holds tremendous promise to domesticate novel species in less time and for less money than traditional approaches. This approach will assist the aquaculture sector to achieve its vision of becoming a $1 billion industry by 2025.

Our research in aquaculture will assist the sector to achieve its vision of becoming a $1 billion industry by 2025.

Functional proteins with different proportions of intrinsic disorder.

Aquaculture researchers, Maren Wellenreuther and Therese Wells, tend to fish as part of research designed to develop an accelerated breeding programme for commercially relevant traits.

→ The role of intrinsically disordered proteins in plant biochemical pathways

Biotic and abiotic stresses have a tremendous effect on a plant’s growth pattern and form, sometimes jeopardising the commercial viability of plant species, e.g. Psa disease in kiwifruit. This project investigated key aspects of plant stress response focusing on the emerging role(s) of intrinsically disordered proteins (IDPs) in signalling pathways. Traditionally, proteins have been thought of as having a rigid structure-function relationship. In contrast, IDPs are known to lack ordered structure, but provide crucial biological functions. They often act as hub proteins in numerous regulatory and signalling processes and play a role in molecular recognition, offering advantages over ordered globular proteins. The team’s ground-breaking research has resulted in a series of publications in high impact journals on the nature of plant IDPs. Literature to date suggests IDPs are intimately associated with virtually every developmental stage in the lifecycle of organisms, so Plant & Food Research’s discoveries will contribute to many downstream applications seeking to better understand the control of most facets of plant biology. One particularly useful opportunity is to deploy new IDP knowledge to manipulate plant signalling pathways to accentuate existing useful traits or develop new ones for plant improvement in areas such as disease resistance and drought tolerance. The team is now exploring new methods to deliver these benefits to our sector partners.

CASE STUDIES



REACHING OUT TO SUPPORT THE PRIMARY INDUSTRIES

To help with developing a skilled, scientifically literate workforce, Plant & Food Research has established an outreach strategy and working group to provide an integrated, expansive and measurable approach to its ongoing work in educational engagement.

The strategy targets science and agribusiness students at secondary and tertiary levels through engaging educational activities and attendance at key employment and industry events. The aim is to enlighten students on the career opportunities available in science and within the primary industries in particular.

The strategy also supports primary and intermediate teachers through professional development in science teaching and the provision of resources.

Unlocking curious mindsAs part of the MBIE Unlocking Curious Minds programme, Plant & Food Research soil scientist Dr Trish Fraser and colleagues hosted more than 300 senior primary and intermediate students from schools in the Selwyn district over three days at Plant & Food Research’s Lincoln site.

Through a series of presentations and hands-on demonstrations, the students were taken on a scientific journey in sustainable production, crop breeding, crop protection and nutrition, and all with the potato as the central subject.

Feedback collected from teachers and students suggests the children gained a greater appreciation of science as something which is ‘everywhere’ and in things which might easily be taken for granted. They also acquired a better understanding of the importance of science, the roles scientists play in society, and the diverse career opportunities available.

Dr Fraser’s project also included a workshop to identify novel ways in which researchers could provide support to teachers for increasing student engagement in science.

Teachers reported a renewed passion or greater confidence to teach science subjects, and an awareness that teaching science need not be limited by access to scientific equipment, but can be observational as well.

The MBIE programme was a collaboration between Plant & Food Research and the Lincoln Ngā Mā tā puna o Ngā Pā kihi Learning Community Cluster, with support from Potatoes New Zealand and Lincoln New World.

Ambassadors for scienceSixteen Plant & Food Research scientists are doing their bit to improve student engagement with primary sector science as ambassadors in the Futureintech programme. Futureintech is an initiative of the Institution of Professional Engineers New Zealand, funded by Callaghan Innovation and the Ministry for Primary Industries, which aims to enlighten young New Zealanders about careers in technology, engineering and science by bringing professionals working in these fields into secondary schools.

Building educational capabilityPlant & Food Research mentored seven teachers during the 2015 school year from around the country as part of The Royal Society of New Zealand’s Science Teaching Leadership Programme. The professional development programme aims to improve science teachers’ knowledge, skills and leadership capabilities, and encourage schools to enhance their science curriculum in student and community engagement.

A summer of scienceA lifetime fascination with the natural world led to an insightful summer of science for University of Waikato science student Anita Pearson – just one of 25 of the most recent participants in Plant & Food Research’s Summer Studentship programme.

The programme gives industry experience to high-calibre tertiary students who may be considering a career as a scientist or industry professional, allowing them to work on real research projects alongside world-recognised scientists.

OUR SCIENCE

Soil scientist Dr Trish Fraser provided scientific insights on primary production to local students as part of the Unlocking Curious Minds programme.

OUR SCIENCE


OUR SCIENCE

Partnering to protect New Zealand

Plant & Food Research is a partner in a key initiative designed to undertake a pre-emptive strike on the Queensland fruit fly. SITplus is a collaboration of research, regulatory and funding agencies including Plant & Food Research Australia, Horticulture Innovation Australia, Primary Industries and Regions South Australia, CSIRO, New South Wales Department of Primary Industries, South Australian Research and Development Institute and Macquarie University.

SITplus has been established to develop the use of Sterile Insect Technique (SIT) for the management of Queensland Fruit Fly, the most devastating insect pest of horticultural crops in eastern Australia and a key risk to New Zealand horticulture. From 2018, millions of reproductively sterile male flies will be available to release into the field to mate with wild females. Eggs of females mated by the released males fail to develop, reducing pest numbers in the next generation. Reducing the pest population in Australia is expected to decrease the risk of further incursions into New Zealand significantly.

ADOPTING AND ADAPTING TECHNOLOGY TO SUPPORT INNOVATION

As a knowledge-based research organisation, the curation of our data, information and intellectual property is vitally important. As a Government-owned research institute, we have a particular responsibility to ensure that the data and knowledge we generate are readily available to future generations of researchers. Initiatives to support this responsibility include the development of improved systems for information management, and alignment of data management policies and procedures with those of the wider research sector.

We are making significant investments in our IT infrastructure to improve the resilience of Information and Communications Technology (ICT) services and to protect our data, to support and enable high quality science. The new Ways of Working inspired environments are also enabling greater staff mobility and feature spaces designed to encourage collaboration through content sharing and presentations across our geographically separated sites. Wireless connectivity is now extending beyond buildings at research sites, aiding accurate data capture and access to information ‘in the field’ for science staff.

ENHANCING EFFECTIVENESS AND IMPACT THROUGH RESEARCH COLLABORATIONS

Building the best research teams that combine essential experience and skills is essential to delivering excellent science and impact for our customers. National and international research collaborations ensure we access the latest thinking and capacity to address challenges facing New Zealand’s economic, environmental and social prosperity.

New Zealand Food Safety Science and Research CentreAs a partner in the New Zealand Food Safety Science and Research Centre, we will contribute to a research platform that will conduct world-leading food safety science and further strengthen New Zealand's reputation as a global leader in the supply of safe food.

Our research partners include Massey University, AgResearch, Cawthron Institute, ESR, the University of Auckland and the University of Otago. Together we will help to promote, co-ordinate, and deliver food safety science and research for New Zealand. Industry funders include the Dairy Companies Association, the Meat Industry Association and Zespri.

Research projects in the Centre will help to protect New Zealanders from food safety-related health threats, such as Salmonella, Campylobacter and other food-borne diseases. Research will also meet the needs of industry, helping to grow exports and ensure local food and beverage businesses have access to foreign markets by meeting internationally recognised food safety standards.

A key function of the Centre is to integrate existing food safety science and research to make the best use of New Zealand and international resources. This will see the Centre link established collaborations with the international science community and related international research platforms.

Building the health capabilities of berriesUnderstanding the health-promoting benefits of berryfruit is the key theme of a collaboration between Plant & Food Research and the North Carolina Research Campus (NCRC) — including North Carolina State University, University of North Carolina Chapel Hill, Appalachian State University and the Dole Nutrition Research Institute.

The objective is the development of joint research opportunities and publications for scientifically validating the intrinsic health outcomes from berryfruit, creating a robust dossier of scientifically validated health claims and thereby positioning them as a high-nutrition ‘go to’ food.

By sharing research capabilities and technology, and aligning research interests, the organisations aim to enhance scientific outcomes and hasten the delivery of new findings which can be applied as commercial opportunities for the New Zealand and US berryfruit industries.

Food safety science is important for preserving New Zealand’s reputation as a world-leading food producer.

OUR SCIENCE


CORE FUNDING

OUR SCIENCE

Core Funding* is a sum of money, provided by Government to Plant & Food Research, designed to support its activities towards achieving its Core Purpose. The following pages provide a breakdown of how the investment is spread across our five strategic focus areas in science, each with targets and evidence for how we have achieved them.

*Now known as the Strategic Science Investment Fund

Our strategy for allocating our $43.1 million of Core Funding involves a portfolio approach that gives consideration to the collective outputs and impacts that result from a suite of investment mechanisms, including Core, Contestable and Commercial revenue.

Projects that introduce and develop new science, establish new science platforms, and develop or maintain essential science capability for New Zealand.

$10.1 million

$43.1 million

FUTURE SCIENCE +

OUTCOME AREA STRATEGIC FOCUS AREA CORE FUNDING

INCREASE VALUE $16.1 millionIncrease the value of the horticultural, arable, seafood, and food and beverage sectors to the New Zealand economy through the development of high-value products and processes that meet current and future global market needs.

→ Better cultivars faster™

→ Premium foods and beverages

→ Sustainable premium seafood and marine products

PROTECT & ENHANCE $8.5 millionProtect and enhance market access in New Zealand’s horticultural and arable sectors.

→ Residue-free pest and disease control

SUSTAIN GROWTH $8.4 millionSustain growth in these industry sectors, driving ongoing efficiency gains with the development of environmentally resilient production systems.

→ Sustainable and profitable production systems


INCREASE VALUE

BETTER CULTIVARS FASTER™

$8.3 millionSubcontractor: Lincoln UniversitySector & industry alignment: Arable, Kiwifruit, Onion, Vegetable, Ornamental, Pipfruit, Potato, Wine

Target: an evolving platform of breeding tools delivering cultivars, against industry-agreed development targets and concepts

→ Novel pea lines have been created to investigate the complex interaction of carbon and nitrogen source to sink relationships, and preliminary results confirm a range of sugar, starch and protein concentrations, all across variable times to flowering (maturities). Results are being used to inform a parallel project looking for transporter gene mutations in variable materials created through conventional mutation treatments, which in turn will provide parental material for the vining pea breeding programme and the development of novel sugar/starch/protein cultivars.

→ A very effective cryopreservation/cryotherapy protocol has been developed for Actinidia chinensis var. chinensis and is being applied to remove Betaflexiviridae virus in two kiwifruit clones and two species of Pseudomonas bacteria from kiwifruit with 80% and 100% success rates. The method is now being tested for application to Psa-infected kiwifruit.

→ Following the identification of a very good high-throughput marker for the dwarfing locus Dw1, marker assisted selection in apple rootstock is leading to substantively greater efficiencies in the breeding programme, with the proportion of plants in the breeding population required to be subjected to field screening cut to less than 10% of the original population.

→ A SCAR marker for the woolly apple aphid resistance gene Er1 has been used to confirm that the woolly aphid-resistant apple cultivar ‘Honeycrisp’ does not carry the Er1 gene, suggesting that there are other sources of resistance in ’Honeycrisp’. PFR’s apple breeders will exploit this genetic resource when breeding superior cultivars for the future. Export fruit carrying woolly aphid are prohibited from entering some Asian countries, e.g. China.

→ An international consortium, including IASMA-FEM (Italy), UC Davis (USA) and INRA (France), has been established to improve the genome assembly of pear. The sequencing of a double haploid pear cultivar ‘Bartlett’ from France was initiated and will be completed by August 2016, followed by genome assembly. The new pear genome will have a high proportion of contigs assembled into pseudo-chromosomes, which will improve genotyping for genomic selection and association studies, as well as gene prediction.

→ Following the development of in vitro ovule culture protocols, more than 300 novel hybrids, including a small number of back-cross hybrids, have been delivered to the blueberry breeding programme for phenotypic evaluation.

→ A blackcurrant population is providing phenotypic data to inform a preliminary genetic map in collaboration with James Hutton Institute, Scotland.

→ Combinations of tools to collate, analyse, and visualise data, including E-Brida, PowerPlant, R, Shiny, and PostGres, are broadening the data available to breeders and associated scientists. These data are increasingly being accessed and reported through ‘Apps’ – webpages that provide ways to view and process the data at multiple levels, from whole programmes to single vines.

Target: a growing portfolio of evidence for genomic selection technologies being used to support breeding in New Zealand plant-based food crops

→ The long-standing cereal-grains breeding partnership between Luisetti Seeds and PFR continues to introduce cereal cultivars successfully to the New Zealand market. New lines of feed barley, feed wheat and high quality bread wheat have all performed very well within advanced stage collaborative industry trials and will be evaluated on a wider semi-commercial scale in the coming season. Decisions to release lines commercially will be made in 2017. The barley has yielded very highly across all sites, from the southern North Island to Southland, particularly in the presence of the disease scald, a widespread barley industry constraint. The feed wheat has performed particularly well under dryland conditions, expanding options for lower input cost production-systems, and the bread wheat maintains high quality and very high yields.

→ Twelve advanced potato lines were evaluated by various industry participants across table, crisping, French-fry, specialty and home-garden types. Field performance and early quality evaluation means most of these remain firmly on track for commercialisation, particularly the most advanced lines where licences have already been conferred: two for the fresh sector (one a very attractive, smooth, cream-skinned, white-flesh; the other a red-skinned, yellow-flesh); two for the crisping sector (one of which is being evaluated in Australia); two for the French-fry sector (one of which is being evaluated globally); one specialty intensely purple cultivar, which will be focused on the food service and ingredient markets; and one home-garden cultivar.

→ Two new sweet potatoes are being licensed non-exclusively to several companies within New Zealand, with one of these also exclusively in Australia. Both provide new colour/taste/texture options for the fresh market sector.

→ The wetter, cooler January conditions allowed previously non-observable off-type contaminants within some pure-seed multiplication blocks to be recognised. The nucleus seed stock for our latest vining pea commercial cultivar ‘Acclaim’, which is providing small sieve-size peas and high yields for the pea processing industry, was re-selected to remove a low percentage of late types that this unseasonal weather allowed to be distinguished. This re-selected line will be supplied to our licensee to re-start the commercial seed multiplication process.

→ A new raspberry selection, NN08002, currently being evaluated in grower trials, has proven to be extremely resistant to root rot, and will be commercialised by one of our commercial partners.

→ A new phenotyping method was successfully used to screen for the presence of scab (Venturia pirina) resistance genes in pear – inoculation of leaves under a water film held in place for 40 hours not only allows multiple inoculations on the same plant over time but also observation of symptoms characteristic for the resistance gene.

OUR SCIENCE


these components. Most importantly, this has confirmed that variations are under genetic control, creating the potential to develop new wheat cultivars with targeted wellness attributes.

→ A series of food information management tools, including the Food Composition and Food Health Relationship Databases, has been expanded, generating essential resources for companies making health claims under New Zealand’s regulatory environment and in overseas jurisdictions.

→ Keynote presentations at the New Zealand Society for Viticulture & Oenology Sauvignon blanc workshop on “Diversity is what sets us apart and brings us together” continued to raise winemakers’ awareness of the dominant role of volatile thiols and pyrazine compounds in the distinctiveness of Marlborough Sauvignon blanc.

Target: steps towards the development of functional foods/ingredients and biomaterials, utilising knowledge of raw materials, nutrition, health and wellness, developed with local and multinational companies

→ Research on the effects of adding fibre to a convenience, mashed potato product (cooked/chilled/re-heated) has confirmed that it changes the rate of starch digestion, suggesting that this product concept could be used to add health-beneficial fibre to our diet.

INCREASE VALUE

SUSTAINABLE, PREMIUM SEAFOOD

AND MARINE PRODUCTS

$2.4 millionSector & industry alignment: Seafood

Target: progress towards new harvest and postharvest technologies to support higher-value seafood products

→ Experience gained with handling snapper and butterfish has been applied to achieve a third commercial New Zealand species spawning in captivity. Requirements to sustain high-quality fish through all life stages are under development.

Target: progress towards the development of extraction technologies with maximum value capture and minimised wastage to produce novel high-value products

→ Testing of squalene in shark liver oil by suppliers and analytical laboratories is inconsistent, and some methods are inaccurate. A refined and validated GC-MS method has been published that accurately determines the squalene content. A rapid Raman spectroscopic method with good correlation against the GC-MS has also been developed, offering great benefit to a commercial client who purchases oil based on the squalene content.

INCREASE VALUE

PREMIUM FOODS AND

BEVERAGES

$5.0 millionSubcontractors: Lincoln University and the University of AucklandSector & industry alignment: Arable, Onion, Vegetable, Potato, Wine, Consumer & Health

Target: in-market consumer insights, alongside in-depth knowledge of product attributes to guide development/placement of premium New Zealand foods for export markets

→ Consumer research on food preferences, and the attitudes and behaviour held by Asian consumers with respect to food, particularly in the areas of oral processing and physiology, is providing insights to help to identify new opportunities for New Zealand foods and beverages in key export markets.

→ Consumer insights work and interactions with industry have identified ’weaning foods' for export to Asia and the USA as an area of opportunity for New Zealand food companies. PFR nutrition and health expertise is being used to illustrate the potential of ‘weaning food’ concepts and demonstrate the value of underpinning science to support New Zealand industry.

→ Predictive relationships between Sauvignon blanc juice metabolites and the aroma/flavour potential of the corresponding wine have been established and shared with industry partners, helping to maintain the freshness of existing New Zealand wine styles.

Target: progress towards the development of new tools and technologies developed to deliver premium food products effectively to export markets

→ Working with partners in the tomato and vegetable sectors, a series of storage time, temperature and treatment trials for glasshouse-grown capsicums and tomatoes has been completed to support the development of sea freight storage and handling guidelines. Work has included investigations into the storage potential of small specialty tomato lines, and the impact of handling procedures and storage temperatures on capsicum quality.

→ Onion skin density – a useful estimate of skin strength – appears to be associated with increased accumulation of cellulose rather than a general increase in all cell wall components. Since onion skins are dead tissues, the adjustment in composition must occur on or before the scales-to-skin transition. This preliminary finding will provide a better focus for screening field management practices to improve onion quality.

→ Screening protocols developed for coeliac peptides and FODMAP carbohydrates are being used on PFR wheat germplasm, revealing significant variation in the presence of

OUR SCIENCE


INCREASE VALUE

SCIENCE COLLECTIONS AND

INFRASTRUCTURE

$0.4 million Target: national collections of fruit, arable and vegetable crop germplasm maintained and made accessible to collaborators

→ Fruit, arable and vegetable collections have been maintained, made accessible and germplasm incorporated into breeding programmes to meet industry impact targets and generate new knowledge.

PROTECT & ENHANCE

RESIDUE-FREE

PEST AND DISEASE CONTROL

$8.5 millionSubcontractors: Lincoln University and Landcare ResearchSector & industry alignment: Avocado, Arable, Kiwifruit, Onion, Vegetable, Pipfruit, Summerfruit, Potato, Wine, Biosecurity

Target: progress towards the development of new tools and systems for biologically based pest and disease control

→ Canker management strategies have been re-assessed and strategies developed using improved knowledge of the disease cycle, pathogen biology and infection processes. New control measures around ‘leaf fall’, e.g. changing postharvest foliar fertiliser use, are greatly reducing risks of new infections.

→ Fruit damage from sprays of copper or oil to control a range of pests and diseases can cause major losses in kiwifruit orchards. Research has recently identified characteristics of skin development that predispose the fruit to spray damage. This new knowledge is being used to develop an assay that will allow safe versus susceptible periods in the growing season to be rapidly identified, enabling timely recommendations to be made to growers on control options.

→ A fixed-wing UAV aircraft has been developed to support regional elimination of codling moth populations in the Central Hawke’s Bay. Sterile codling moth are being released in a collaboration with the award-winning Okanagan-Kootenay Sterile Insect

Release (OKSIR) Programme in British Columbia, Canada. The UAV aircraft has been developed for efficient delivery of sterile moths across 200 ha of orchards. The technique is proving very effective; the catch of wild moths in pheromone traps of treated orchards has decreased by >95%.

→ The changing status of oriental fruit moth (OFM) as a potential pest of apples continues to be assessed. It was trapped in ~90% of orchards surveyed in Hawke’s Bay, is often very abundant, and a number of larvae were recovered in fruit sampled during phytosanitary inspections of export consignments. New guidelines for ‘residue-free’ management of OFM are being developed to ensure that this potential risk to the apple export programme is appropriately managed.

→ For some time the apple leafcurling midge sex pheromone has been used to predict the timing of specific insecticides regionally for this important market access pest. This pheromone has now been developed into a new ‘Lure and Kill’ formulation that has the potential to reduce adult activity, shoot damage and larval infestation significantly.

→ A proof of concept trial that evaluated the efficacy of mating disruption technology to manage leafrollers in avocados has led to funding being secured to further develop mating disruption technology for the avocado industry. The three-year Sustainable Farming Fund (SFF) programme will refine and validate a leafroller pheromone blend for use in avocado orchards on a regional scale. Knowledge gained this year, in particular leafroller feeding behaviour and regional species composition, has added to the fundamental knowledge required for this SFF programme.

→ Sensitivity of single spore isolates of Zymoseptoria tritici, the fungi causing speckled leaf blotch of wheat, and of Ramularia collo-cygni, the fungi causing ramularia disease in barley, to several fungicide groups was determined. These results contributed to the development of resistance management programs and guidelines for the New Zealand arable industry.

→ All known variants of ‘leafroll 3’ (Grapevine leafroll-associated virus 3) are now detected using commercial antibodies following assessments undertaken by Plant & Food Research. This is assisting the operationalisation of the New Zealand Winegrowers’ (NZW) Grafted Grapevine Standard for commercial nurseries by improving the identification of infected vines within vineyards.

→ Testing whether Botrytis cinerea (botrytis bunch rot) has become resistant to anilinopyrimidine and succinate dehydrogenase fungicides is a high priority for NZW because uncontrolled bunch rot severely affects both grape yield and wine quality. Practical assays for resistance detection have been developed and applied in a national vineyard survey funded jointly by NZW and the agrochemical industry.

→ A research project to investigate bioprotection technologies in glasshouse-grown crops (e.g. capsicum, tomato, cucumber) has led to the development of the predatory mite Amblydromalus limonicus as a biological control agent for key glasshouse pests. The ability of the mite to prey on different prey species has been established. Testing of ‘Lure and Infect’ and ‘Lure and Kill’ prototypes established that olfactory cues substantially increase the efficacy of such devices.

→ Discussions with the onion industry have led to the development of a project on the sustainable management of soil-borne diseases, which are believed to be a key cause of reduced skin quality and yield of export grade onions.

OUR SCIENCE


Target: steps towards new cultivars with targeted pest and disease resistance

→ Fusarium avenaceum and F. solani were previously identified as the principal soil-borne pathogens responsible for root rot of pea in Canterbury. Forty-one pea accessions from the germplasm collection were tested against these two pathogens; more than 15 of these showed moderate to high levels of resistance against either F. avenaceum or F. solani. These accessions will be incorporated in the pea breeding programme for resistance cultivars as part of an effective control system against fusarium root rot.

Target: progress towards the development of new ‘safe’ disinfestation technologies

→ Trials using high pressure washing (HPW) targeting Tomato Potato Psyllid (TPP) on capsicums showed that 86.6% and 99.7% removal of TPP eggs and nymphs could be achieved, respectively. HPW may be used in combination with pre-harvest controls to demonstrate low pest prevalence on capsicum fruit.

Target: improved biosecurity risk assessments, detection technologies, optimised surveillance approaches and new tools for response and eradication

→ Elsinoe spot on apple fruit is caused by the fungal pathogen Elsinoe pyri. It is difficult to control this disease in organic apple production. This season, fruit infection unexpectedly blocked the export of organic crops to valuable North American markets. New knowledge generated about elsinoe disease, its biology and control, is providing greater certainty for organic growers targeting these high value export markets.

→ A unique pre-emptive biocontrol risk assessment is being taken for Brown Marmorated Stink Bug (BMSB) in preparation for its possible but unwanted establishment in New Zealand. Research is under way to predict the environmental impact of a potential effective biological control agent (Trissolcus japonicas) on insects closely related to the BMSB – information that will be required for its release in New Zealand. If BMSB establishes here, biocontrol responses can be much more quickly implemented, perhaps enabling an eradication attempt to be launched.

→ The Global Eradication and Response Database (GERDA) was developed by the Better Border Biosecurity programme (B3) with international collaborators to determine characteristics that lead to successful eradication programmes and others to failed attempts. The intent of GERDA is to provide access to this biosecurity information enabling rapid, well-informed and defendable decisions with regard to biosecurity incursions. A recent end-user survey, with funding from the Plant Biosecurity Co-operative Research Centre, has reinforced the need for such a database and identified several future developments of GERDA to enable it to become a fully operational and widely used tool.

→ Research continues on strategies to protect New Zealand borders from future incursions of the Queensland fruit fly (Qfly). Several initiatives are under way, including the identification of new chemical attractants, based on sex pheromones and other odours, that could be used to develop improved detection and control techniques. New protocols for detecting and managing potential new Qfly incursions are also being designed. As well, research is under way with partners in SITplus, a A$22 million consortium aimed at developing new technologies to control Qfly in Australia.

SUSTAIN GROWTH

SUSTAINABLE AND PROFITABLE

PRODUCTION SYSTEMS

$8.4 millionSubcontractors: AgResearch, Landcare Research, Lincoln UniversitySector & industry alignment: Avocado, Arable, Biosecurity, Kiwifruit, Ornamental, Vegetable, Pipfruit, Potato, Summerfruit, Wine, Environment

Target: progress towards the development of practices, tools and technologies to guide sustainable horticulture and agriculture

→ Research suggests that if vine phenology in the spring is late and flowering conditions are good (information supplied weekly to more than 400 growers through Vinefacts), there is an increased risk of carrying a 30% additional crop. Some wine companies are moving back to laying 4-canes at pruning (up from 3), by cutting off the extra cane or mechanically thinning. If spring phenology is early and flowering conditions are cool, they are more likely to leave the 4th cane on. If 5% of the Marlborough vineyard is managed in this way in a season with poor flowering, this would translate to ~4000 t or $20 million of export revenue.

→ The international market expansion of the new PREVAR apple cultivar Smitten™ has been constrained by the challenge of producing large-sized fruit. New ‘precision crop management’ technology developed to achieve accurate, very early-season crop thinning using new methods that involve selective floral bud removal at the time of budbreak has repeatedly achieved average fruit size increases of 25–30 g. Applied into commercial evaluations in 2016, fruit size distributions comprised approximately 50% of the yield in large size classes, with no associated loss in total productivity. These size classes now enable sales into the previously unfilled high-demand US market at prices approximately double the previous value of markets receiving smaller fruit sizes.

→ Erratic bearing in avocado orchards is an international problem. In New Zealand, low temperature conditions (2-4°C) experienced by flowers about to open can lead to their ovules aborting. This provides some answer to industry partners questions about the origin of erratic bearing.

→ Flower and fruit thinning protocols for kiwifruit growers to manage their Gold3 crops to achieve high yields of large, high dry matter fruit have been developed and delivered to growers. Research demonstrates yield potential of about 30,000 trays/ha of large (122 g) and high dry matter (18%) fruit, indicating a grower value of $340 000 Orchard Gate Return per hectare is possible.

OUR SCIENCE


→ New kiwifruit cultivars lose firmness in storage at different rates and respond differently to different treatments. Techniques optimised to monitor the firmness of breeding lines in cool storage have been implemented to help to determine value to market at an earlier stage in the selection of promising new cultivars.

→ Apricots are a climacteric fruit with a limited storage period and this restricts marketing and distribution opportunities. The new cultivar ‘NZSummer3’ has low-climacteric traits, and thus has shelf-life more than 3.5 times longer than the current standard ‘Clutha Gold’. In addition, these fruit soften more slowly on the tree, which enables sweeter fruit to develop. Harvest and storage protocols are now being revised for this cultivar.

→ Soil water repellency is a major constraint on productivity and adds to the potential for adverse environmental impacts from farming operations. New understanding of repellency at different soil depths associated with soil carbon content is informing hydrology modelling in New Zealand and international collaborative scientific programmes, each considering different aspects of land use and productivity opportunities.

Target: new scientific understanding underpinning farming within limits, including productivity, profitability, environmental constraints and regulatory/compliance frameworks

→ A project conducted by a summer student has highlighted the challenges facing New Zealand’s biosecurity system as a result of increasing trade and tourism with Asia. An analysis of publications for selected pests and diseases of biosecurity concern in the standard international databases in English and Chinese databases in Chinese indicates that there are many more publications in the Chinese databases.

→ The Priority Ranking of Non-Target Invertebrates (PRONTI) model is a new risk assessment tool being developed to help biosecurity decision makers to understand how introducing new biological control agents, such as beneficial insects, might affect New Zealand’s native invertebrate populations. The model prioritises New Zealand invertebrates so that further testing can be undertaken before the biocontrol agent is cleared for release into the environment. PRONTI is now being trialled by risk assessment decision makers, such as the Environmental Protection Agency and Department of Conservation, to assess its suitability as best-practice in the risk assessment process for new biological control agents.

→ A new molecular approach developed to establish the pathogenicity (or propensity to cause disease) of unknown micro-organisms is nearing completion. The pathogenic PCR test has been well received by a key end-user and will be run together with other methods to help to characterise unknowns of biosecurity significance once the technique has been published. A manuscript is currently drafted for a high impact journal.

→ The Matrix of Good Management (MGM) project led by Environment Canterbury with other regional council, central government, industry and environmental body input has progressed to a first-stage population of the matrix table. This phase involved parameterising narratives describing

Good Management Practices (GMP) into modelling terms for use within Overseer. In addition, a process for automating translation and checking between Overseer update versions has been developed.

→ APSIM, an internationally recognised agricultural production simulation tool, has recently undergone very significant upgrades. This has required a complete rewrite of the code to exploit recent software advances, ensure model performance prior to release, including sophisticated error-checking routines, better ‘what if’ scenario building for research use, and modern source code repository and workflow to accommodate thousands of users and contributors. Crop modelling experts have made a significant contribution to the intellectual decision-making process, code writing work flow development and testing.

→ A significantly improved method for estimating potentially mineralisable nitrogen in soils has been developed. This method is quicker and cheaper to perform and validation trials indicate the result is also far more effective than currently accepted methods. Knowing the start point accurately will enable methods for predicting in-season nitrogen mineralisation to be developed.

→ Winter forages for dairy cows are traditionally consumed by cows grazing in the paddock. Cow treading and excess nitrogen deposition (urine and dung) damage future yield potential of these soils as well as increase risks for downstream pollution events. Recent work has provided a practical framework to assist in determining relative risk and economic costs associated with restricted grazing, including options for remedial soil aeration treatments following grazing.

INCREASE VALUE

PROTECT & ENHANCE

SUSTAIN GROWTH

FUTURE SCIENCE

$10.1 million Target: innovative, over-the-horizon and high risk research projects and associated capability managed to create value for New Zealand’s sectors to support science quality

→ A portfolio of Discovery Science projects that are consistent with our SCP has been initiated to deliver value to New Zealand’s sectors through high quality science over time.

OUR SCIENCE


OUR

GOVERNANCE


OUR GOVERNANCE SYSTEMS APPLY BOTH A BUSINESS PERFORMANCE AND A SCIENCE EXCELLENCE LENS TO ENSURE THE WORK WE DO REMAINS CONSISTENT WITH OUR STRATEGY AND OF WORLD CLASS QUALITY.

SECTION7


CORPORATE GOVERNANCE

STATEMENT OF CORE PURPOSE

The Statement of Core Purpose (SCP) outlines the clear, explicit and enduring strategic role for Plant & Food Research as determined by the New Zealand Government. The SCP outlines the Institute’s roles and responsibilities and how these will benefit New Zealand, and is used by the Crown to evaluate performance on a four-year rolling basis.

Plant & Food Research’s SCP can be found online at www.plantandfood.co.nz/file/pfr-scp.

STATEMENT OF CORPORATE INTENT

The Statement of Corporate Intent (SCI) outlines the Institute’s five-year strategy, including the nature and scope of activities and performance targets. The SCI includes plans to contribute to the outcomes described in the SCP and outlines key performance indicators to support their delivery.

Plant & Food Research’s SCI 2016/17 to 2020/21 can be found online at www.plantandfood.co.nz/file/sci-2016-17.pdf.

LEGAL OBLIGATIONS

Plant & Food Research is subject to (amongst others):

→ Crown Research Institutes Act 1992

→ Commerce Act 1986

→ Crown Entities Act 2003

→ Crown Entities Amendment Act 2013

→ Health & Safety in Employment Act 1992

→ Official Information Act 1982

→ Public Audit Act 2001

→ State Sector and Public Finance Reform Act 2012.

BOARD OF DIRECTORS

The Board of Directors, appointed by the Minister of Science & Innovation according to the Crown Research Institutes Act, sets the Institute’s strategic direction and delegates responsibility for the management of the Institute to the Chief Executive.

The Board acts under a Charter which formalises and sets out the manner in which the Board’s powers and responsibilities will be exercised and discharged, adopting principles of good corporate governance and practices that accord with best practice and the application of laws in the jurisdictions in which the company operates. In line with best practice, the Board completes an annual Board performance evaluation.

The Board regularly reviews key policies across the Institute. ‘Deep-dive’ reviews are also periodically undertaken; in the past year, these have included:

→ Health & safety

→ Risk management

→ Treasury policy

→ Delegation of authority.

For the 2015/16 year

Number of meetings held: 9 Meetings held at: Mt Albert, Wellington, Lincoln, Nelson, Ruakura

Michael Ahie, Chairman (9) Appointed: 1 July 2010

Greg Gent, Deputy Chair (9) Appointed: 1 July 2013

Andrew von Dadelzsen (9) Appointed: 1 July 2014

Colin Dawson (9) Appointed 1 July 2015

Professor Juliet Gerrard (9) Appointed: 1 July 2013

Stana Pezic (9) Appointed: 1 July 2011

Mark Stuart (9) Appointed: 1 July 2010

(number in brackets indicates number of meetings attended during the 2015/16 year)

Profiles of the current Board of Directors can be found on page 72 or on the plantandfood.co.nz website. Remuneration details for the Directors can be found on page 80.

Schedule of major annual activities

→ February: Annual Health & Safety Review, Board Evaluation

→ March: Research Portfolio Review, Strategy Review

→ April: SCI and Business Plan

→ June: Annual review of risk and company risk management framework

→ August: Annual Report

→ October: Insurance Renewal, Strategy Review

→ November: Science Advisory Panel, Annual General Meeting

The Plant & Food Research Board, appointed by the Minister of Science & Innovation, sets the Institute’s strategic direction and delegates responsibility for the management of the Institute to the Chief Executive.

OUR GOVERNANCE


There are currently three standing Committees operating under the direction of the Board Chair:

Audit & Risk Management CommitteeStana Pezic (Chair), Greg Gent, Mark Stuart Number of meetings in 2015/16: 4

The primary objective of the Audit & Risk Management Committee is to act as the main conduit with the company’s auditors, to serve as an independent and objective party in reviewing financial information, auditing, accounting, compliance and financial reporting strategies and processes.

In the 2015/16 year, the Committee reviewed and approved the Institute’s:

→ Internal Audit Programme

→ External Audit Programme

→ Treasury policy

→ Insurance policy.

Appointments & Remuneration CommitteeMark Stuart (Chair), Michael Ahie, Juliet Gerrard Number of meetings in 2015/16: 1

The purpose of the Appointments & Remuneration Committee is to oversee the appointment, performance review and remuneration of the Chief Executive Officer and senior executives who report directly to the CEO.

Mt Albert Redevelopment Project CommitteeJuliet Gerrard (Chair), Greg Gent, Stana Pezic, Ross Brown (Advisor) Number of meetings in 2015/16: 4

The Mt Albert Redevelopment Project Committee was established in 2014 to ensure effective Board visibility and oversight of the three-year redevelopment project for the Mt Albert Research Centre.

SCIENCE ADVISORY PANEL

The Board also receives advice from the Institute’s external Science Advisory Panel.

The purpose of the Panel is to provide objective strategic advice to the Board to promote its decisions on research strategies, future science activities and development associated with achieving Plant & Food Research’s Core Purpose.

Members of the Science Advisory Panel are:

→ Professor Marston Conder (Chair, University of Auckland)

→ Dr Ernst van den Ende (Wageningen University & Research Centre, The Netherlands).

→ Professor Cathie Martin (John Innes Centre, UK)

→ Professor Alastair Robertson (Australia)

Profiles of the Science Advisory Panel members can be found on page 73 or on the plantandfood.co.nz website.

MANAGING RISK EFFECTIVELY

Plant & Food Research has an established framework for managing risk in an effective, efficient and consistent manner, to inform strategic and business planning processes, optimise allocation of resources and allow Plant & Food Research to effectively recognise, prioritise and respond to risks. The Risk Management Framework adopts processes consistent with those established in the ISO 31000:2009 Standard: Risk Management – Principles & Guidelines.

Plant & Food Research has a Business Continuity Plan (BCP) which acts as a framework for organisational preparedness, emergency response and recovery after disruption by a significant natural or man-made incident. The BCP focuses on the response and recovery of critical assets and operations to mitigate the potential impact of an incident to the Institute’s ability to deliver on its business and strategic plan and to protect Institute staff and the wider community. The BCP also includes a framework for site-specific Emergency Response Plans (ERPs).

CODE OF CONDUCT & ETHICS

Plant & Food Research’s reputation is determined to a large degree by perceptions of the conduct and performance of its staff. The Code of Conduct & Ethics is intended to inform and guide the Institute’s staff on the standards of conduct, decision-making and ethical behaviour that are important at Plant & Food Research.

The Code of Conduct & Ethics includes guidelines on:

→ Acting with honesty and integrity

→ Consistently demonstrating professionalism

→ Respecting and acting within the law

→ Maintaining confidentiality

→ Avoiding conflicts of interest

→ Being socially responsible.

Plant & Food Research operates its scientific research activities in accordance with national legislation, including ethics approvals for all human and animal studies (coordinated by the Institute’s Biosafety Advisory Committee).

OUR GOVERNANCE


BOARD OF DIRECTORS

FOR THE 2015/16 YEAR

Number of meetings: 9

Meetings held at: Mt Albert, Wellington, Lincoln, Nelson, Ruakura

Michael Ahie (Chairman)

Taranaki Nga Ruahine Ngati Ruanui

Michael Ahie is a business owner and company director based in Wellington. He is Pro Chancellor of Massey University, Chairman of the Food Safety Assurance and Advisory Council, Chairman of ComplyWith Limited and a director of a number of companies including FMG and BCC Limited. He is a founding partner of leadership and business coaching company AltusQ.

Andrew von Dadelszen

Andrew von Dadelszen has held diverse governance and leadership roles, including central and local government and corporate governance, finance and investment advice, large-scale farming, service industries and the not-for-profit sector. He has been a member of the Board of the Environmental Protection Authority – a Crown Agency. Andrew is a qualified Resource Management Consent Hearings Commissioner with a Chairs Endorsement, and has been a member of the District Licensing Committee for Tauranga City Council.

Colin Dawson

Colin Dawson was formerly Chief Executive of Otago Innovation Ltd, the commercialisation arm of Otago University. He has held directorships of a number of biotechnology and medical companies including BLIS Technologies and Pacific Edge Ltd, and is the owner/director of Dawson Cherries. He is director of MARS Bio Imaging Ltd and executive Chair of TIRO Life Sciences Ltd. (Appointed 1 July 2015)

Greg Gent (Deputy Chair)

Greg Gent, of Ruawai, is a senior commercial director with dairy farming interests in Northland. He has strong governance expertise having spent a decade on the Fonterra Board, and holding other directorships in the dairy, insurance and financial services.

Professor Juliet Gerrard

Professor Juliet Gerrard is Professor in the School of Biological Sciences and School of Chemical Sciences at The University of Auckland. Juliet has more than 125 publications, as well as three books. She is an active member of three of New Zealand’s Centres of Research Excellence, as a Principal Investigator in both the MacDiarmid and Riddet Institutes and an Associate Investigator in the Maurice Wilkins Centre. Juliet was made a Fellow of the Royal Society of New Zealand in 2012; she is also Chair of the RSNZ Marsden Fund Council.

Stana Pezic

Stana Pezic has held roles as Chief Financial Officer of Stevenson Group and Metrowater, and as General Manager at Whitcoulls Group. She has extensive experience in financial management, general management, strategy development and process change.

Mark Stuart

Mark Stuart has broad general management and governance expertise combining entrepreneurial and public sector experience and a strong focus on innovation. He is a Partner in Movac, a leading Venture Capital firm, and has a background in building technology-based businesses including as the Chief Executive of WaikatoLink, the technology transfer company of the University of Waikato. Mark has extensive governance experience and is currently also a director of Author-it Holdings and Industrial Tube Manufacturing Company.

OUR GOVERNANCE


SCIENCE ADVISORY PANEL

Our Science Advisory Panel is an important part of ensuring our science continues to have a focus on high quality, and is open to new international developments and ideas. The panel provides our Board with their insights on Plant & Food Research’s science quality, strategy, and involvement in and uptake of new international developments.

Professor Marston Conder (Chairman)

MSocSc (Waikato) MSc DPhil DSc (Oxford) FNZMS FRSNZ FTICA Department of Mathematics, University of Auckland, New Zealand

Professor Marston Conder is currently a Professor of Mathematics at the University of Auckland. He is one of New Zealand’s most eminent mathematicians and scientists, recognised, for example, through Fellowship of the Royal Society of New Zealand, Marsden awards, a James Cook Fellowship, and a DSc from Oxford University. He has played a significant role in University and Government science policy, serving, among many other positions, as Deputy Vice Chancellor Research for the University of Auckland, on the Marsden Council, as President of the New Zealand Royal Society Academy, and chairing the New Zealand Committee to establish the Performance Based Research Fund (PBRF) for University funding.Professor Conder brings to the panel particular expertise in governance, in evaluation and assessing science and science quality, and a wide understanding of the New Zealand science scene, Government policy, and funding and policy systems and processes.

Dr Ernst van den Ende

PhD Managing Director, Plant Sciences Group (PSG), Wageningen University, The Netherlands

Dr Ernst van den Ende has an extensive international background in agricultural science, particularly in management of urban green areas, plant diseases, plant pathogenic fungi and plant and crop protection. He has responsibility for the Plant Sciences Group at Wageningen, which conducts plant-related research and teaching programmes from the molecular through to the population level. Professor van den Ende has particular experience in the Wageningen University/PRI structure, which provides a relevant model for University/Research Institute collaboration and interaction. This is seen in the cluster of the Plant Sciences Group (PSG) which embodies applied research (Applied Plant Research), strategic research (Plant Research International), fundamental research and education (Wageningen University).Dr van den Ende brings to the panel particular understanding of research collaboration and development of interacting research structures. He also provides an important link with European organisations of interest to Plant & Food Research and an international perspective on sustainable plant production.

Professor Cathie Martin

PhD Group Leader, Department of Cell and Developmental Biology, John Innes Centre, UK

Professor Cathie Martin is an international leader in plant science, focusing on cellular specialisation and differentiation, particularly in relation to gene function. She has an extensive background in University and Research Institute research processes and programmes. Professor Martin, in addition to her position at the John Innes Centre, has a background in University visiting professorships and University relations. As former Editor-in-Chief of the world’s leading plant science journal, Plant Cell, she has particular experience in identifying current and future international trends in plant science, and in evaluating science quality. Currently she is an Associate Editor for Plant Physiology. Her own research interests in cellular and metabolic regulation and functionality, particularly in the areas of nutritional properties of plants, which are of particular importance to Plant & Food Research's research interests.Professor Martin brings to the panel particular experience in leading international plant science, science evaluation, and an in-depth understanding of current and future trends and developments in both research technologies and science disciplines. She also strengthens Plant & Food Research's links with UK and European research organisations of interest.

Professor Alastair Robertson

PhD FFSC CChem FIFST Group Executive Food, Health & Life Science Industries, CSIRO, Australia

Professor Alastair Robertson is a leading international expert in food science. His career has involved research positions in both industry (in the UK) and in research institutes. These positions have included Director of the UK’s Institute of Food Research (IFR), CEO of Food Science Australia, a joint venture between CSIRO and the Victorian Government, and CSIRO Executive Director (and subsequently Deputy Chief Executive), Science Strategy and Investment. He led the consolidation of the Australian National Research Flagships and oversaw the integration of the CSIRO Science Investment Process and Performance Management Framework as strong governance mechanisms to underpin CSIRO’s delivery of impact from mission directed research. Professor Robertson currently holds an Honorary Professorship at the University of East Anglia (UK) and is a Research Professor at the University of Tasmania.Professor Robertson brings to the panel wide international expertise in food science, and in developing and managing research structures based on science excellence and delivery. He also helps to consolidate Plant & Food Research's developing interaction with key Australian research centres and science initiatives.

OUR GOVERNANCE


SENIOR MANAGEMENT TEAM

OUR GOVERNANCE

Peter Landon-Lane

Chief Executive Officer (CEO)

Peter Landon-Lane took up the role of CEO at Plant & Food Research in September 2008. Prior to that he held a number of senior positions within Fonterra and the New Zealand Dairy Board, including heading businesses in Taiwan, Japan and Europe. Peter started his career at the former Department of Trade and Industry, which included serving as a trade commissioner in China and the Philippines. He is a board member of Science New Zealand, the NZ Committee of the Pacific Economic Cooperation Council, a member of the New Zealand China Council’s advisory board, Callaghan Innovation’s Stakeholder Advisory Group, and several Plant & Food Research joint ventures and research partnerships. Peter has degrees in science and economics and is a member of the New Zealand Institute of Directors.

Dr Bruce Campbell

Chief Operating Officer (COO)

As Chief Operating Officer, Dr Bruce Campbell is responsible for the science staff within Plant & Food Research and for providing effective leadership of company strategy, operational excellence and productivity, business growth, capital investments, regulatory compliance and enhancing relationships with Māori. Bruce is a member of The Royal Society of New Zealand, the Institute of Directors and the International Society of Horticultural Science, and is a director on several Boards; Horticulture NZ Vegetable Research and Innovation Board; National Centre for Advanced Bio-Protection Technologies; Jukebox NZ Limited; and Kiwifruit Supply Research Limited.

Michael James

Chief Financial Officer (CFO)

Michael James, our Chief Financial Officer, provides leadership in strategy development, organisational performance, risk management and investment. He has extensive senior management experience in innovative companies with scale and global reach and is a Chartered Accountant of Australia and New Zealand and a Chartered Member of the Institute of Directors. Michael's past positions include CFO at Navman, a global provider of GPS-based navigation products.

Craig Jensen

General Manager Human Resources

Craig Jensen, as General Manager Human Resources, is responsible for Plant & Food Research’s people-related activities including organisational and workforce development, recruitment, employment relations, remuneration and health & safety. Craig has a strong interest in the relationship between employee engagement, leadership and organisational culture and performance. He has extensive experience in human resource management within the New Zealand science sector, and holds a Bachelor of Arts and Postgraduate Diploma in Personnel and Employment Relations from the University of Auckland.

David Hughes

Group General Manager Commercial

David Hughes, as Group General Manager Commercial, oversees the commercial groups within Plant & Food Research, including business development – both domestic and international, marketing and the commercialisation of intellectual property including plant varieties and cultivars. David joined Plant & Food Research in July 2009 and has a successful track record of business development and innovation within the food sector, including several high-profile roles within the dairy industry in New Zealand, Australia, the USA, Japan and Bahrain. He is a member of the New Zealand Institute of Directors, a Director of KiwiNet and BioLumic Ltd, and Chair of the Biopolymer Network Limited.

Professor Richard Newcomb

Chief Scientist

Professor Richard Newcomb is the Chief Scientist overseeing all aspects of science quality, science strategy and science capability development across the institute. Richard is Professor of Evolutionary Biology at the University of Auckland and undertakes research on taste and smell and its evolution. He completed his BSc and MSc in Zoology at the University of Auckland, followed by a PhD in Biochemistry and Molecular Biology from The Australian National University based at the CSIRO in Canberra. He is an associate editor for the Journal of Chemical Ecology and PLoS ONE and on the editorial boards of Insect Biochemistry and Molecular Biology, Chemical Senses and Flavour.

Our Senior Management Team oversees all aspects of Plant & Food Research and is accountable to the Board of Directors via CEO, Peter Landon-Lane. Collectively the team ensure the delivery of all research activities, finance and legal requirements, assets and services, human resources, commercial functions and science quality.


ORGANISATIONAL CHART

Chief Scientist

PROFESSOR RICHARD NEWCOMB

Impact Evaluation

Business Development

Intellectual Property

Design & Photography

Group General Manager Commercial

DAVID HUGHES

Plant Varieties

Strategic Marketing

Communications

Organisational Development

General Manager Human Resources

CRAIG JENSEN

Human Resources

Health & Safety

Payroll

SCIENCE DELIVERY→ Breeding & Genomics→ BioProtection→ Sustainable

Production→ Food Innovation→ Seafood Technologies

Chief Operating Officer

DR BRUCE CAMPBELL

Māori Engagement

Biosafety & Compliance

Customers & Business

Science Publishing

Financial Planning & Analysis

Information & Knowledge Services

Chief Financial OfficerMICHAEL JAMES

Finance

Legal

Assets & Services

Investment

Chief Executive OfficerPETER LANDON-LANE

BOARD OF DIRECTORS

OUR GOVERNANCE


FINANCIAL

STATEMENTS


OUR ABILITY TO INVEST IN THE FUTURE RELIES ON US REMAINING A SUSTAINABLE COMPANY.

SECTION8

“


MICHAEL JAMESChief Financial Officer

We should be proud of achieving not only a record financial performance, but a significant lift in effort across the organisation to deliver impact for our customers and also building new capability for our organisation that will endure long beyond this financial year.

OUR FINANCIAL

PERFORMANCE

GROWING REVENUE AND SUSTAINING PROFITABILITY

Plant & Food Research has achieved a better-than-budget and a record financial performance this year. Our Net Profit after Tax (NPAT) of $10.6 million was $7.2 million better-than-budget and $6.2 million better than last year. This year’s result was achieved with a planned gain on sale of property of $3.6 million.

Total revenue for the year was $3.6 million better-than-budget and $10.9 million better than last year, driven by higher commercial research and royalty revenues. Total operating costs were $3.7 million better than this year’s budget and $7.2 million higher than last year. Good cost control across all areas of the organisation and lower than budgeted depreciation contributed strongly to the better-than-budget profit result this year.

We have been able to grow our revenue and profitability above budget expectations over the last two years. This positive performance track record gives us confidence in our ability to achieve or exceed our five-year business plan targets, and to execute our investment plans. We have made good progress in executing our strategic asset investment plans, with the most significant investment this year in our Auckland, Nelson and Te Puke locations. Investments in science facilities are to replace end-of-life buildings and equipment and invest in new capability to support our strategy. They will contribute not only to an improved asset base and return on equity for our shareholder, but also to a more sustainable and resilient organisation for New Zealand.


OUR NET PROFIT AFTER TAX (NPAT) OF $10.6 MILLION WAS $7.2 MILLION BETTER-THAN-BUDGET AND $6.2 MILLION BETTER THAN LAST YEAR.

PROFIT (NPAT) AND CAPITAL EXPENDITURE

150

140

130

120

110

1002013/14

Purchase of property, plant and equipment

2015/162014/15

30

24

18

12

6

0

PROFITABILITY – NPAT BRIDGE

2015 NPAT

Revenue Gain on sale of assets

Costs 2016 NPAT

4.4

10.6

20

16

12

8

4

0

REVE

NUE

($N

ZM)

$NZM

PURC

HASE

OF

PROP

ERTY

PLA

NT

AND

EQUI

PMEN

T ($

NZM

)

NPAT

IMPROVED NPAT


DIRECTORS’ REMUNERATIONDuring the year the following remuneration was paid or payable to Directors in accordance with the schedule approved by the Shareholding Ministers:

Group $M Ahie 70,400G Gent 44,750S Pezic 39,560M Stuart 36,560J Gerrard 36,560A von Dadelszen 34,560C Dawson 34,560 (appointed 1 July 2015)

REMUNERATION OF EMPLOYEESThe number of employees and ex-employees whose total remuneration, including benefits and severance payments, on an annualised basis, was in excess of $100,000 in $10,000 bands, is:

Remuneration Number of Remuneration Number ofbands in $000 employees bands in $000 employees100 - 109 49 200 - 209 3110 - 119 43 210 - 219 1120 - 129 25 230 - 239 1130 - 139 16 240 - 249 1140 - 149 17 250 - 259 2150 - 159 7 260 - 269 1160 - 169 4 370 - 379 1170 - 179 4 380 - 389 1180 - 189 1 460 - 469 1190 - 199 2 580 - 589* 1

* Includes the Chief Executive’s remuneration

For and on behalf of the Board of Directors:

Michael Ahie, Chairman25 August 2016

DIRECTORS’ REPORT

2016 2016 2015Actual Budget Actual$000 $000 $000

Revenue 139,748 136,175 128,879

Profit-before taxation 13,415 4,071 6,453

Less taxation expense 2,810 622 2,008

Profit attributable to Owners 10,605 3,449 4,445

PRINCIPAL ACTIVITY OF THE GROUPThe Group’s principal activity is to provide scientific research that benefits New Zealand, within the horticulture, arable, seafood and processed food industries; in accordance with the purpose and principles for the operation of Crown Research Institutes as set out in sections 4 and 5 of the Crown Research Institutes Act 1992.The Company is a private company limited by shares and incorporated in accordance with the Companies Act 1993.

REVIEW OF OPERATIONSA review of the operations accompany this report on page 14.

SHARE DEALINGSThe Directors have not, and are unable to, trade in shares of the Company as all shares of the Company are held by the Shareholding Ministers on behalf of the Crown. Accordingly the Board has received no notices of dealings in relevant interests in shares of the Company.

DIRECTORS’ INSURANCEDirectors’ and Officers’ liability insurance was effected for the Directors and certain employees of the Company. The insurance is in respect of certain specified liabilities, not including criminal liability, incurred by a Director or employee in respect of any act or omission in his or her capacity as a Director or employee of the Company.The Company has indemnified Directors and certain employees of the Company for costs and proceedings and for liabilities incurred by the employee in respect of any act or omission in his or her capacity as an employee of the Company. The indemnity for liabilities incurred does not extend to criminal liability or liability for breach of a fiduciary duty owed to the Company.

AUDITORSKaren Shires, with the assistance of PricewaterhouseCoopers, is the appointed auditor on behalf of the Auditor-General. The Auditor-General is the statutory auditor pursuant to section 14 of the Public Audit Act 2001 and section 21 of the Crown Research Institutes Act 1992.

SIGNIFICANT CHANGESThere were no significant changes to the business of the Company during the year.

THE DIRECTORS ARE PLEASED TO PRESENT THE FINANCIAL STATEMENTS OF THE NEW ZEALAND INSTITUTE FOR PLANT & FOOD RESEARCH LIMITED FOR THE YEAR ENDED 30 JUNE 2016.

RESULTS OF GROUP OPERATIONS


The Auditor-General is the auditor of The New Zealand Institute for Plant and Food Research Limited. The Auditor-General has appointed me, Karen Shires, using the staff and resources of PricewaterhouseCoopers, to carry out the audit of the financial statements of the Group consisting of The New Zealand Institute for Plant and Food Research Limited and its subsidiaries, on her behalf.

OPINIONWe have audited the financial statements of the Group on pages 82 to 105, that comprise the balance sheet as at 30 June 2016, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date and the notes to the financial statements that include accounting policies and other explanatory information.

In our opinion, the financial statements of the Group:• present fairly, in all material respects:

- its financial position as at 30 June 2016; and - its financial performance and cash flows for the year

then ended; and• comply with generally accepted accounting practice in

New Zealand in accordance with New Zealand Equivalents to International Financial Reporting Standards.

Our audit was completed on 25 August 2016. This is the date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board of Directors and our responsibilities, and explain our independence.

BASIS OF OPINIONWe carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and carry out our audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

Material misstatements are differences or omissions of amounts and disclosures that, in our judgement, are likely to influence readers’ overall understanding of the financial statements. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.

An audit involves carrying out procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including our assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the preparation of the Group’s financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

An audit also involves evaluating:• the appropriateness of accounting policies used and whether

they have been consistently applied;• the reasonableness of the significant accounting estimates and

judgements made by the Board of Directors;• the adequacy of the disclosures in the financial statements; and• the overall presentation of the financial statements.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements. Also, we did not evaluate the security and controls over the electronic publication of the financial statements.

We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.

RESPONSIBILITIES OF THE BOARD OF DIRECTORSThe Board of Directors is responsible for the preparation and fair presentation of financial statements for the Group that comply with generally accepted accounting practice in New Zealand.

The Board of Directors’ responsibilities arise from the Crown Research Institutes Act 1992.

The Board of Directors is responsible for such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is also responsible for the publication of the financial statements, whether in printed or electronic form.

RESPONSIBILITIES OF THE AUDITORWe are responsible for expressing an independent opinion on the financial statements and reporting that opinion to you based on our audit. Our responsibility arises from the Public Audit Act 2001.

INDEPENDENCEWhen carrying out the audit, we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the External Reporting Board.

In addition to the audit we have carried out a research assignment in relation to the High Value Nutrition National Science Challenge which is compatible with those independence requirements. Other than the audit and this assignment, we have no relationship with or interests in the Group.

Karen Shires PricewaterhouseCoopers On behalf of the Auditor-General Auckland, New Zealand 25 August 2016

INDEPENDENT AUDITORS’ REPORT

TO THE READERS OF THE NEW ZEALAND INSTITUTE FOR PLANT AND FOOD RESEARCH LIMITED’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016


STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 30 June 2016

GROUP2016 2016 2015

Actual Budget ActualUnaudited

Note $000 $000 $000PROFIT AND LOSSRevenueCore funding 43,103 43,103 43,103Crown-funded research contracts 16,638 16,495 17,092Commercial science research contracts (4) 78,027 75,342 66,284Other income 1,980 1,235 2,400

139,748 136,175 128,879

Less operating costs (4a)Personnel costs 77,667 77,140 74,732Depreciation expense (5) 8,708 10,216 8,410Amortisation expense (5) 596 854 703(Gain) on sale of assets (3,607) (1,850) (10)Other operating expenses (6) 43,423 45,923 39,384

126,787 132,283 123,219

Profit before interest & taxation 12,961 3,892 5,660Finance income 450 225 875Finance costs (105) (46) (91)Share of profit of associates and joint ventures (15) 109 - 9

Profit before taxation 13,415 4,071 6,453Taxation expense (7) 2,810 622 2,008Profit after taxation attributable to owners 10,605 3,449 4,445

OTHER COMPREHENSIVE INCOMEItems that may be reclassified subsequently to profit or loss:Currency translation differences (44) - 67Cash flow hedges (18) 110 - (63)Other comprehensive income 66 - 4Total comprehensive income attributable to owners 10,671 3,449 4,449

The accompanying notes form part of these financial statements.


STATEMENT OF CHANGES IN EQUITYfor the year ended 30 June 2016

ATTRIBUTABLE TO OWNERS OF THE GROUP

Note Share capitalRetained earnings

Foreign currency translation

Cash flow hedge Total Equity

$000 $000 $000 $000 $000

Balance as at 01 July 2014 17,436 63,325 (89) 12 80,684

Changes in equity forProfit for the year 4,445 4,445

Other comprehensive income, net of taxes Currency translation 67 67Revaluation of cash flow hedges (18) (63) (63)

Balance as at 30 June 2015 17,436 67,770 (22) (51) 85,133

Changes in equity forProfit for the year 10,605 10,605

Other comprehensive income, net of taxesCurrency translation (44) (44)Revaluation of cash flow hedges (18) 110 110

Balance as at 30 June 2016 17,436 78,375 (66) 59 95,804



BALANCE SHEETas at 30 June 2016

GROUP2016 2016 2015


Note $000 $000 $000

Current assetsCash and short-term deposits (8) 11,885 (1,721) 12,004Short-term investments - - 7,500Receivables and prepayments (9) 25,456 25,699 24,838Inventories 249 56 258Assets held for sale - - 690Total current assets 37,590 24,034 45,290

Current liabilitiesAccounts payable and accruals (10) 18,376 12,037 17,389Employee entitlements (11) 9,063 9,126 8,428Current portion mortgage 19 18 18Taxation payable 1,364 160 1,453Total current liabilities 28,822 21,341 27,288

Working capital 8,768 2,693 18,002

Non-current assetsProperty, plant and equipment (12) 87,175 92,807 68,423Intangible assets (13) 1,686 1,120 936Investments - associates (15) 599 482 490Investments - other 128 160 162Total non-current assets 89,588 94,569 70,011

Non-current liabilitiesEmployee entitlements (11) 1,668 1,222 1,456Mortgage 187 5,192 207Deferred tax liability (16) 697 2,041 1,217Total non-current liabilities 2,552 8,455 2,880

NET ASSETS 95,804 88,807 85,133

Represented by:EquityShare capital (17) 17,436 17,436 17,436

Retained earnings 78,375 71,452 67,770Foreign currency translation reserve (66) (81) (22)Cash flow hedge reserve (18) 59 - (51)

TOTAL SHAREHOLDERS EQUITY 95,804 88,807 85,133

For and on behalf of the Board of Directors:

Michael Ahie, Chairman Stana Pezic, Director25 August 2016 25 August 2016



CASH FLOW STATEMENTfor the year ended 30 June 2016

GROUP2016 2016 2015


Note $000 $000 $000

Cash flows from/(applied to) operating activitiesReceipts from customers 144,138 140,278 129,527Interest and dividends received 533 225 876

Payments to employees and suppliers (123,352) (129,165) (118,905)Interest paid (105) (89) (75)Tax paid (3,004) (688) (676)

Net cash flows from operating activities (20) 18,210 10,561 10,747

Cash flows from/(applied to) investing activitiesSale of property, plant and equipment 4,594 3,000 38Proceeds from short-term investments 7,500 - 2,000

Purchase of property, plant and equipment (29,478) (37,600) (11,859)Purchase of intangible assets (13) (881) - (214)

Net cash flows (applied to) investing activities (18,265) (34,600) (10,035)

Cash flows from/(applied to) financing activitiesRepayment of mortgage (18) (16) (18)Repayment of loan - 5,000 -

Net cash flows (applied to) financing activities (18) 4,984 (18)

Net cash flow (73) (19,055) 694

Effect of foreign currency translation adjustment (46) - 54Opening cash and cash equivalents 12,004 17,334 11,256

Closing cash and cash equivalents (8) 11,885 (1,721) 12,004



NOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2016

1. REPORTING ENTITIESThe New Zealand Institute for Plant & Food Research Limited (the “Company” or “Plant & Food Research”) and its subsidiaries (the “Group”) is a Crown Research Institute governed by the Crown Research Institute Act 1992 and is a limited liability company incorporated and domiciled in New Zealand. The whole of the share capital is held by Ministers of the Crown on behalf of the New Zealand Government. The Company’s registered office is 120 Mt Albert Road, Sandringham, Auckland 1025.

The Group is primarily involved in research services on a fee-for-service basis.

The Group is designated as a profit-oriented entity for financial reporting purposes.

These financial statements have been approved for issue by the Board of Directors on 25 August 2016.

2. BASIS OF PREPARATIONThe financial statements are presented in New Zealand dollars (NZD), which is the Company’s functional and presentation currency. All financial information presented in New Zealand dollars has been rounded to the nearest thousand dollars ($000).

The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

(A) Statement of ComplianceThese financial statements have been prepared in accordance with the requirements of the Crown Research Institutes Act 1992, the Public Finance Act 1989, the Companies Act 1993 and the Financial Reporting Act 2013.

The financial statements have also been prepared in accordance with New Zealand generally accepted accounting practice (NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS), and other Financial Reporting Standards, as appropriate for profit-oriented entities. They comply with International Financial Reporting Standards (IFRS).

The Group is a Tier 1 entity.

(B) Use of EstimatesThe preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Although these estimates are based on management’s knowledge of current events and actions that may be undertaken in the future, actual results may ultimately differ from estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised in the period in which the estimate is revised and in any future periods affected. Use of estimates and assumptions is disclosed further in note 3(W).

(C) New and Amended Standards and Interpretations Adopted by the GroupThere were no new standards or amendments to standards that had an impact on the current period financial statements.

(D) Standards and Interpretations Issued and not yet AdoptedThe following new standards and amendments to standards that have been issued but are not yet effective and have not been early adopted by the Group are:

NZ IFRS 9 Financial InstrumentsEffective from 1 January 2018 NZ IFRS 9 will replace the classification and measurement models in NZ IAS 39 Financial Instruments: Recognition and Measurement. NZ IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. The Group intends to adopt NZIFRS 9 on its effective date and is currently assessing its full impact.

NZ IFRS 15 Revenue from Contracts with CustomersEffective from 1 January 2018 NZ IFRS 15 replaces the current guidance in IAS 18 Revenue and IAS 11 Construction Contracts. It deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The Group intends to adopt NZ IFRS 15 on its effective date and is currently assessing its full impact.

NZ IFRS 16 LeasesEffective from 1 January 2019 NZ IFRS 16 replaces the current guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchance for consideraton. Under NZ IAS 17, a lessee was required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). NZ IFRS 16 requires a lessee to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. Included is an optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees The Group intends to adopt NZ IFRS 16 on its effective date and has yet to assess its full impact.


NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2016

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(A) Basis of Consolidation(i) SubsidiariesThe consolidated financial statements of the Group include the parent entity, Plant & Food Research, and its controlled entities. The Group controls an entity when the Group is exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. This power exists where the Group controls the majority voting power on the governing body or where such policies have been irreversibly predetermined by the Group or where the determination of such policies is unable to materially impact upon the level of potential ownership benefits that arise from the activities of the subsidiary. The financial statements of subsidiaries are included in the consolidated financial statements from the date which the Group obtains control and until such time as the Group ceases to control the entity.

The Group measures the cost of a business combination as the aggregate of fair values, at the date of exchange, of assets given, liabilities incurred or assumed, in exchange for control of the subsidiary plus any costs directly attributable to the business combination.

Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill. If the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised exceeds the cost of the business combination, the difference will be recognised immediately in the Statement of Comprehensive Income.

The purchase method of accounting is used to prepare the consolidated financial statements of the Group. In preparing the consolidated financial statements, the effects of all transactions, balances and unrealised gains and losses on transactions between entities in the Group have been eliminated. The Group’s investment in its subsidiaries are initially carried at cost in the Parent’s financial statements subject to any write down arising from an annual impairment review.

(ii) AssociatesAssociates are those entities over which the Group has significant influence, but not control, of the financial and operating policies.Investments in associate companies have been accounted for using the equity method of accounting and are initially recognised at cost and the carrying amount is increased or decreased to recognise the Group’s share of the surplus or deficit of the associate after the date of acquisition. The Group’s share of the surplus or deficit of the associate is recognised in the Group’s Statement of Comprehensive Income. Distributions received from an associate reduce the carrying amount of the investment.

If the Group’s share of deficits of an associate equals or exceeds its interest in the associate, the Group discontinues recognising it’s share of further deficits. After the Group’s interest is reduced to zero, additional deficits are provided for, and a liability is recognised, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports surpluses, the Group will resume recognising its share of those surpluses only after its share of the surpluses equals the share of the deficits not recognised.

The Group’s share in the associate’s surplus or deficits resulting from unrealised gains on transactions between the Group and its associates is eliminated.

(B) RevenueRevenue is recognised at the fair value of consideration received or receivable to the extent that it is probable, that economic benefits will flow to the Group. Revenue is shown net of GST, returns and discounts and after eliminating sales within the Group. The following specific recognition criteria must be met before revenue is recognised:

(i) Core fundingCore funding from the Crown, was established 1 July 2011 and is recognised in the Statement of Comprehensive Income in the year it is received.

(ii) Crown-funded research contractsRevenue from the Crown is recognised in the Statement of Comprehensive Income when the requirements under the funding agreement have been met.

(iii) Commercial science research contractsSale of goodsRevenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the amount of revenue can be reliably measured. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer.

Sale of servicesResearch services are provided on a fixed-price contract, with contract terms generally ranging from less than a year to five years.

Revenue from a contract to provide services is recognised by reference to the stage of completion of the transaction, assessed on the basis of the actual service provided as a proportion of the total services to be provided. If circumstances arise that may change the extent of the progress toward completion, the estimates are revised. These revisions may result in increases or decreases in estimated revenues or costs and are reflected in income in the period in which the circumstances that give rise to the revision become known by management.

RoyaltiesRoyalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement.

(iv) Other incomeRental incomeLease receipts under an operating lease are recognised as revenue on a straight-line basis over the lease term.

(v) Interest revenueInterest revenue is recognised on a time-proportion basis using the effective interest method.



(C) Foreign Currency TranslationForeign currency transactions are translated into New Zealand dollars using the exchange rates prevailing at the dates of the transactions, except when forward currency contracts have been taken out to cover short-term forward currency commitments. Where short-term forward currency contracts have been taken out, the transaction is translated at the rate contained in the contract. Foreign currency denominated monetary assets and liabilities are translated at the exchange rate prevailing at the period end. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at balance date of foreign denominated monetary assets and liabilities are recognised in the Statement of Comprehensive Income, except when deferred in equity as qualifying cash flow hedges.

The results and balance sheets of all foreign operations that have a functional currency different from New Zealand dollars are translatedinto the presentation currency as follows:

The assets and liabilities of foreign controlled entities are translated by applying the rate ruling at balance date and revenue and expense items are translated at the average rate calculated for the period. The exchange differences arising on the re translation are taken directly to equity in the foreign currency translation reserve.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowing and other currency instruments designated as hedges of such investments, are taken to shareholder’s equity.

(D) Borrowing CostsBorrowing costs are recognised as an expense in the period in which they are incurred.

(E) Cash and Short-term InvestmentsCash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with maturities of three months or less from date of acquisition, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.

Short-term investments are investments with maturities of more than three months from date of acquisition.

(F) Trade and Other ReceivablesTrade receivables are recognised initially at fair value, plus any transaction costs, and subsequently measured at amortised cost using the effective interest method, less any provision for doubtful receivables.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off when identified. A provision for doubtful receivables is established when there is objective evidence, for example notice of liquidation or receivership, that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted at the effective interest rate, if applicable. The amount of the provision is recognised in the Statement of Comprehensive Income.

When a trade receivable is uncollectible, it is written off against the provision if it has been provided for or immediately recognised in the Statement of Comprehensive Income, within other operating expenses, if not. Any recoveries of trade receivables written off are credited against bad debts in the Statement of Comprehensive Income.

(G) Property, Plant and EquipmentThe Group has four classes of property, plant and equipment: - Land - Buildings - Plant and equipment - Motor vehicles

Land is recorded at cost. All other property, plant and equipment is shown at cost less accumulated depreciation and any accumulated impairment losses, except for assets transferred from the Crown. Property, plant and equipment transferred from the Crown has been included in the accounts at values established by independent valuers which is the deemed cost. All subsequent expenditure has been initially recorded at cost.

Cost includes expenditures that is directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount only when it is probable that future economic benefits or service potential associated with the asset will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the Statement of Comprehensive Income when the expense is incurred. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition. The Group constructs some items of plant for use in research. These have been brought into the accounts at the cost of direct labour and materials plus an appropriate proportion of direct overheads.

Land transferred to the Group cannot be freely traded. Section 30 of the Crown Research Institutes Act 1992 requires that prior to sale sections 40-42 of the Public Works Act 1981 be complied with. These sections require that land offered for sale must be offered to the original owner of that land or their successors. An arbitration clause is included to establish fair values for such offers.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposal are included in the Statement of Comprehensive Income.

(i) Non-current Assets Held for SaleNon-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable.



(H) DepreciationDepreciation on assets, except land, is calculated using the straight-line method, at rates calculated to allocate the asset’s cost, less estimated residual value, over its estimated useful life. Leasehold improvements are depreciated over the shorter of the unexpired period of the lease and the estimated useful life of improvements.

The useful lives of major asset classes of property, plant and equipment have been estimated as follows: Buildings 10 - 100 years Plant and equipment 3 - 10 years Motor vehicles 3 - 10 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each financial year-end.

The assets’ carrying value is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

(I) Intangible Assets(i) SoftwareThe cost of software, databases and related items, either acquired or internally generated, is recognised as an expense when incurred, except for:

The cost of software, databases and related items, either acquired or internally generated, which are unique and controlled by the Group, and that will probably generate measurable economic benefits exceeding costs beyond one year is capitalised as intangible assets.

Costs associated with maintaining computer software are recognised as an expense when incurred.

The carrying value of software is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date that the asset is derecognised. The amortisation charge for each period is recognised in the Statement of Comprehensive Income.

The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows: Software 3 - 5 years

(ii) Trademarks and licensesThe cost of acquired trademarks and licenses are capitalised as intangible assets where they will probably generate measurable economic benefits exceeding costs beyond one year. Trademarks and licenses have a finite useful life and are carried at cost less accumulated amortisation.

Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful lives, which is between 10 and 15 years.

(iii) Research and developmentResearch and development is the business of the Company. Most work is performed under contract for others, and in most cases intellectual property rights are retained. All research and development costs are expensed in the period they are incurred.

When a project reaches the stage where it will probably generate future measurable economic benefits exceeding development cost, development cost is recognised as an intangible asset. The asset is amortised from the commencement of commercial production of the product to which it relates, on a straight-line basis, over the period of expected benefit.

(J) Investments and Other Financial AssetsThe Group classifies its investments by the following categories: financial assets at fair value through profit or loss, and loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.

Financial assets and liabilities are initially measured at fair value plus transaction costs unless they are carried at fair value through profit or loss, in which case the transaction costs are recognised in the Statement of Comprehensive Income.

Purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used is the current bid price.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

(i) Financial assets at fair value through profit or lossThis category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management.Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date. After initial recognition they are measured at their fair values. Gains or losses on remeasurement are recognised in the Statement of Comprehensive Income.

Financial assets in this category include derivatives, see note 3 (S).



(ii) Loans and receivablesThese are non derivative financial assets with fixed or determinable payments that are not quoted in an active market.

After initial recognition they are measured at amortised cost using the effective interest method. Gains and losses when the asset is impaired or derecognised are recognised in the Statement of Comprehensive Income. Loans and receivables are classified as “trade and other receivables” and “cash and short term deposits” and “short term investments” in the Balance Sheet.

(K) Impairment of Financial AssetsAt each balance sheet date the Group assesses whether there is any objective evidence that a financial asset or group of financial assets is impaired. Any impairment losses are recognised in the Statement of Comprehensive Income.

(L) Impairment of Non-Financial AssetsThe carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is an indication that an asset may be impaired. Where an indicator of impairment exists, or where annual impairment testing for an asset is required, the Group makes a formal estimate of the recoverable amount. Assets that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is depreciated replacement cost for an asset where the future economic benefits or service potential of the asset are not primarily dependent on the asset’s ability to generate net cash flows and where the entity would, if deprived of the asset, replace its remaining future economic benefits or service potential.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The value in use for cash-generating assets is the present value of expected future cash flows. An impairment loss is recognised in the Statement of Comprehensive Income. Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date, this is recognised in the Statement of Comprehensive Income.

(M) Trade PayablesTrade payables are initially measured at fair value and subsequently measured at amortized cost using the effective interest method.

(N) ProvisionsProvisions are recognised when the Company has a present obligation (either legal or constructive), as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date, the discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as an interest expense.

(O) Employee Benefits(i) Wages and salaries, annual leave, sick leave and other benefitsProvision is made for employee benefits accumulated as a result of employees rendering services up to balance date including related oncosts.

The benefits include wages and salaries, annual leave, sick leave, incentives and other benefits. The provision for employee benefits is measured at the remuneration rates expected to be paid when the liability is settled.

The Group recognises a liability for sick leave to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that the Group anticipates it will be used by staff to cover those future absences.

The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

(ii) Long service leave and retirement leaveService leave and retirement leave entitlements are calculated based on the employee’s entitlement and their current pay rate. The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

Long term benefits expected to be settled within 12 months are classified as employee entitlements under current liabilities.

(iii) Pension and post retirement benefitsThe Group operates a defined contribution superannuation plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions to a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

The Group’s contributions made to defined contribution superannuation plans are recognised as an expense in the Statement of Comprehensive Income when they are due.



(P) LeasesThe Company leases certain plant and equipment, land and buildings.

Operating lease payments, where the lessors effectively retains substantially all the risks and benefits incidental to ownership of the leased item, are recognised as an expense in the Statement of Comprehensive Income on a straight line basis over the lease term.

(Q) Income Tax(i) Current taxIncome tax expense comprises both current tax and deferred tax, and is calculated using tax rates that have been enacted or substantially enacted by balance date. Current tax and deferred tax are charged or credited to the Statement of Comprehensive Income, except when they relate to items charged or credited directly to equity, in which case the tax is dealt with in equity. Current tax is the amount of income tax payable based on the taxable profit for the current year, plus any adjustments to income tax payable in respect of prior years.

(ii) Deferred taxDeferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences calculated using the liability method and unused tax losses. Deferred tax is not accounted for if it arises from initial recognition of goodwill or from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax is recognised if it arises from investments in subsidiaries and associates, and interests in joint ventures, except where the company can control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is measured using the tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(R) Goods & Services Tax (GST)The Statement of Comprehensive Income has been prepared so that all components are stated exclusive of GST. All items in the Balance Sheet are stated net of GST, with the exception of receivables and payables which include GST invoiced. Where GST is not recoverable as input tax then it is recognised as part of the related asset or expense. The net amount of GST recoverable from, or payable to, the Inland Revenue Department is included as part of receivables or payables in the Balance Sheet.

The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cash flow in the Cash Flow Statement.

Commitments and contingencies are disclosed exclusive of GST.

(S) Derivative Financial InstrumentsThe Group enters into derivative transactions, principally forward currency contracts. The purpose of these transactions is to manage the currency risk arising from the Group’s operations. All derivative financial instruments are recognised in the Balance Sheet at their fair value. Changes in the fair value of derivative financial instruments are recognised either in the Statement of Comprehensive Income in equity depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or cash flow hedge.In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes.

Changes in the fair values of forward currency contracts that are designated and qualify as cash flow hedges, to the extent that they are effective hedges, are recorded in equity. The gains and losses that are recognised in equity are transferred to the Statement of Comprehensive Income in the same period in which the hedged item affects earnings. On sale, expiry, or de-designation of a forward currency contract, the cumulative gains or losses are maintained in equity until such time as the forecast transaction impacts earnings. If the forecast transaction is no longer expected to occur the cumulative gain or loss is transferred to the Statement of Comprehensive Income. The Group documents at inception of the transaction the relationship between hedging instruments and hedging items, as well as its risk management objective and strategy for undertaking various hedge transactions. The process includes linking all forward currency contract derivative financial instruments to specific firm commitments or forecast transactions. The Group also documents its assessment, both at the hedge inception and on an ongoing basis, of whether the forward currency derivative financial instruments used are highly effective.

(T) BorrowingsBorrowings are initially recognised at their fair value plus transition costs. After initial recognition all borrowings are measured at amortised cost using the effective interest method.

(U) Budget FiguresThe budget figures are derived from the Statement of Corporate Intent as approved by the Board, and the Shareholder, at the beginning of the financial year. The budget figures have been prepared in accordance with NZ IFRS, using accounting policies that are consistent with those adopted by the Group for the preparation of these financial statements. The budget figures are unaudited.



(V) Critical Accounting Estimates and AssumptionsIn preparing these financial statements the Group has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(i) Retirement and long service leaveThe present value of the retirement and long service leave obligations depend on a number of factors that are determined on an actuarial basis using a number of assumptions. Two key assumptions used in calculating this liability include the discount rate and the salary inflation factor. Any changes in these assumptions will impact on the carrying amount of the liability.

In determining the appropriate discount rate the Company considered the interest rates on NZ government bonds which have terms to maturity that match, as closely as possible, the estimated future cash outflows. The salary inflation factor has been determined after considering historical salary inflation patterns. A weighted average discount rate of 2.52% and a salary inflation factor of 3.50% were used.

If the discount rate were to differ by 1% from the Company’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $50,000 higher / lower.

If the salary inflation factor were to differ by 1% from the Company’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $13,000 higher / lower.

The carrying amount of employee entitlements are disclosed in the Balance Sheet.

(W) Critical Judgements in Applying the Company’s Accounting PoliciesManagement has exercised the following critical judgement in applying the Company’s accounting policies for the period ended 30 June 2016:

(i) Revenue recognitionIn determining the revenue to be recognised from a contract to provide services judgement is required in respect of assessing the percentage of completion of the project. In making this judgement the actual service provided as a proportion of the total services to be provided is reviewed. If circumstances arise that may change the extent of the progress the estimates are revised.



GROUP2016 2015

Note $000 $000

4. COMMERCIAL SCIENCE RESEARCH CONTRACTSRoyalties 27,871 20,261Other commercial science research contracts 50,156 46,023Total commercial science research contracts 78,027 66,284

4A. PROFIT BEFORE TAXATIONAfter chargingAuditors’ remuneration Audit fees for financial statement audit 129 119Directors fees 297 261Employer contributions to defined contribution plans 1,218 1,131Unrealised foreign exchange losses/(gains) 92 (208)

5. DEPRECIATION AND AMORTISATIONDepreciation Buildings 2,806 2,395 Plant and equipment 5,398 5,498 Motor vehicles 504 517Total depreciation on property, plant and equipment (12) 8,708 8,410

Amortisation Software and databases 596 703 Patents, trademarks and licences - -Total amortisation of intangible assets (13) 596 703

6. OTHER OPERATING EXPENSESOther operating expenses Materials 5,683 5,495 Research & services contracts 12,065 9,976 Rental and operating lease costs 7,221 7,292 Travel 5,035 4,211 Other general operating costs 13,419 12,410Total general operating expenses 43,423 39,384



GROUP2016 2015

Note $000 $0007. TAXATIONProfit before taxation 13,415 6,453Prima facie taxation @ 28% 3,756 1,807

Plus/(less) taxation effect: Non-assessable income (956) 2 Non-deductible expenditure 45 33 Prior period adjustment 11 220 Imputation credits on dividends received (3) (4)

Utilisation of tax losses (43) (50)

2,810 2,008

The taxation charge is represented by: Current taxation 3,330 2,833 Deferred tax benefit (16) (520) (825)

2,810 2,008

The Company is not required to maintain an Imputation Credit Account pursuant to section OB1(2)(d) of the Income Tax Act 2007.

8. CASH AND SHORT-TERM INVESTMENTSCash on hand and at bank 6,885 7,004Short-term deposits 5,000 5,000

Cash and short-term deposits 11,885 12,004

The carrying value of short-term deposits with maturity dates of three months or less approximates their fair value. The weighted averageeffective interest rate for term deposits is 2.84% (2015: 4.20%).

Short-term investments - 7,500

The carrying value of short-term investments with maturity dates greater than three months approximates their fair value. The weighted averageeffective interest rate for term deposits is nil (2015: 4.15%).



GROUP2016 2015$000 $000

9. RECEIVABLES AND PREPAYMENTSTrade receivables 18,105 16,981Provision for impairment (279) (204)

17,826 16,777

Accrued income 5,475 6,006Prepayments and other receivables 2,155 2,055

25,456 24,838

The carrying value of receivables approximates their fair value. The carrying amount of receivables that would otherwise be past due, butnot impaired, whose terms have been renegotiated is $528,000 (June 2015 $1,451,000). As at 30 June 2016 and 30 June 2015, all overduereceivables have been assessed for impairment and appropriate provisions applied, as detailed below:

The provision for impairment has been calculated based on expected losses for the Group’s pool of debtors. Expected losseshave been determined based on an analysis of the Group’s losses in previous periods, and review of specific debtors.

Movements in the provision for impairment of receivables are as follows: GROUP2016 2015$000 $000

Balance at 01 July (204) (204)Additional provisions made during the year (100) -Receivables written-off during the year 25 -

Balance at end of year (279) (204)

GROUP 30 June 2016 30 June 2015

Gross Impairment Net Gross Impairment Net

Not past due 17,404 (106) 17,298 15,470 (144) 15,326Past due 1 - 30 days 374 (100) 274 966 - 966Past due 31 - 60 days 139 - 139 258 - 258Past due 61 - 90 days 120 (5) 115 209 (10) 199Past due > 91 days 68 (68) - 78 (50) 28Total 18,105 (279) 17,826 16,981 (204) 16,777



GROUP2016 2015$000 $000

10. ACCOUNTS PAYABLE AND ACCRUALSTrade payables 9,318 10,935Other payables and accruals 3,108 2,702Revenue in advance 5,950 3,752

18,376 17,389

Accounts payable and accruals are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value ofaccounts payable and accruals approximates their fair value.

11. EMPLOYEE ENTITLEMENTSAnnual leave 4,911 5,097Service leave 1,194 1,084Retirement leave 2,939 2,697Other leave and accruals 1,687 1,006

Total employee entitlements 10,731 9,884

Comprising: Current 9,063 8,428Non-current 1,668 1,456

10,731 9,884



12. PROPERTY, PLANT AND EQUIPMENTGROUP

Land BuildingsPlant

and Equipment Motor Vehicles Total $000 $000 $000 $000 $000

CostOpening balance 01 July 14 7,415 61,086 96,127 5,280 169,908Additions 463 6,988 6,375 333 14,159Disposals - - (426) (158) (584)Transfers - (95) 427 - 332Foreign exchange movement - - 1 - 1

Closing balance 30 June 15 7,878 67,979 102,504 5,455 183,816

Accumulated depreciationOpening balance 01 July 14 - 28,225 75,257 3,520 107,002Additions - 2,395 5,498 517 8,410Disposals - - (405) (151) (556)Transfers - (95) 632 - 537

Closing balance 30 June 15 - 30,525 80,982 3,886 115,393

Net book value 7,878 37,454 21,522 1,569 68,423

GROUP

Land BuildingsPlant

and Equipment Motor Vehicles Total $000 $000 $000 $000 $000

Cost Opening balance 01 July 15 7,878 67,979 102,504 5,455 183,816Additions - 18,954 8,976 462 28,392Disposals - (3,609) (1,166) (286) (5,061)Transfers (36) (251) (178) - (465)Foreign exchange movement - - - - -

Closing balance 30 June 16 7,842 83,073 110,136 5,631 206,682

Accumulated depreciationOpening balance 01 July 15 - 30,525 80,982 3,886 115,393Additions - 2,806 5,398 504 8,708Disposals - (3,219) (1,121) (254) (4,594)Transfers - - - - -

Closing balance 30 June 16 - 30,112 85,259 4,136 119,507

Net book value 7,842 52,961 24,877 1,495 87,175

Some land holdings are restricted assets to the extent that they are potentially subject to Maori land claims. The book value of land potentially subject to Maori claims is $7,069,000.

There are no restrictions over the title of the remaining Group’s property, plant and equipment, nor is any property, plant or equipment pledged as security for liabilities except property at Kerikeri pledged as security for the mortgage liability.

The Company holds numerous germplasm collections of horticultural material for research purposes. Due to the nature of the collections their value can not be measured reliably for financial purposes, however they have a fundamental importance to the Company’s research.

Included within total additions for the year is $18.1M (2015: $6.0M) associated with the redevelopment of our Mt Albert site.



13. INTANGIBLE ASSETSGROUP

Software, Databases

Patents, Trademarks Goodwill Total

$000 $000 $000 $000CostOpening balance 01 July 14 7,956 467 19 8,442Additions 214 - - 214Disposals - - - -Transfers (332) - - (332)

Closing balance 30 June 15 7,838 467 19 8,324

Accumulated amortisationOpening balance 01 July 14 6,736 467 19 7,222Additions 703 - - 703Disposals - - - -Transfers (537) - - (537)


Net book value 936 - - 936

GROUPSoftware, Databases

Patents, Trademarks Goodwill Total

$000 $000 $000 $000CostOpening balance 01 July 15 7,838 467 19 8,324Additions 881 - - 881Disposals - - - -Transfers 465 - - 465


Accumulated amortisationOpening balance 01 July 15 6,902 467 19 7,388Additions 596 - - 596Disposals - - - -Transfers - - - -


Net book value 1,686 - - 1,686



14. INVESTMENTS - SUBSIDIARIES Principal Activity Balance Interest

Date Held %

CropSeed Limited Seed growing services 30 June 100Plant & Food Research (USA) Corporation Marketing and consultancy services in the USA 30 June 100Plant & Food Research Australia Pty Limited Science, marketing and consultancy services in Australia 30 June 100Truffle Investment New Zealand Limited Non trading 30 June 100

Plant & Food Research Australia Pty Limited is incorporated in Australia. Plant & Food Research (USA) Corporation is incorporated in the USA.All other subsidiaries are incorporated in New Zealand.

15. INVESTMENTS - ASSOCIATESThe Group’s share of profit/(loss) in its associated companies and joint ventures for the year was $109,000 (2015: $9,000).

Principal Activity Interest Total Total Revenue Profit/(Loss)30 June 2016 Held Assets Liabilities

Pacific Berries LLC Developing & commercialising IP 50.0% 290 - 225 219Jukebox NZ Limited Developing & commercialising IP 50.0% 78 7 - (1)Forage Innovations Limited Developing & commercialising IP 49.0% 1,167 760 1,403 (138)Biopolymer Network Limited Developing & commercialising IP 33.3% 1,178 400 3,542 83Rhindo International Limited Developing & commercialising IP 25.0% 10 - - -

30 June 2015

Jukebox NZ Limited Developing & commercialising IP 50.0% 78 6 - (1)Forage Innovations Limited Developing & commercialising IP 49.0% 1,242 697 1,443 (11)Biopolymer Network Limited Developing & commercialising IP 33.3% 1,055 361 3,697 59Rhindo International Limited Developing & commercialising IP 25.0% 10 - - -

GROUP2016 2015$000 $000

Jukebox NZ Limited 39 39Forage Innovations Limited 183 249Biopolymer Network Limited 230 196Pacific Berries LLC 145 4Rhindo International Limited 2 2

Total associate and joint venture investments 599 490



16. DEFERRED TAX ASSET/(LIABILITY)

Property, plant Investments- Derivative financial Employee Other Tax Totalequipment associates instruments entitlements provisions losses

$000 $000 $000 $000 $000 $000 $000GROUPBalance at 01 July 2014 (4,390) (121) 3 2,214 252 - (2,042)Charged to statement of comprehensive income 589 (2) (17) 231 24 - 825Balance at 30 June 2015 (3,801) (123) (14) 2,445 276 - (1,217)

Charged to statement of comprehensive income 331 9 31 157 (8) - 520

Balance at 30 June 2016 (3,470) (114) 17 2,602 268 - (697)

GROUP2016 2015$000 $000

17. SHARE CAPITAL & RESERVESOrdinary shares (000’s)On issue opening balance 17,436 17,436Issued for cash - -

On issue at closing balance 30 June 17,436 17,436

All issued shares are fully paid and have no par value.The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.All shares rank equally with regard to the Company’s residual assets.

18. CASH FLOW HEDGE RESERVEOpening balance at 01 July (51) 12Transferred to cost of sales - -Revaluations 110 (63)

Closing balance at 30 June 59 (51)

The hedge reserve is used to record fair value gains or losses on foreign exchange forward contracts that qualify as cash flow hedges.



GROUP2016 2015$000 $000

19. COMMITMENTSThe following amounts have been committed to by the Group or Parent, but are not recognised in the financial statements:

a) Capital commitments Property, plant and equipment 20,601 35,280

b) Operating commitments (excluding leases) 706 395

c) Operating lease commitmentsLease commitments under non-cancellable operating leases are as follows: Not later than one year 996 839 Later than one year and not later than five years 4,785 938 Later than five years 16,891 160

22,672 1,937

d) Operating lease incomeLease income under non-cancellable operating leases are as follows: Not later than one year 603 629 Later than one year and not later than five years 645 84 Later than five years - -

1,248 713

Included within capital commitments is $17.1M for the development of our Mt Albert site.

The Group received rental income of $905,000 during the year (2015: $908,000). Rental income is included within Other income in the Statement ofComprehensive Income.

The Group leases premises and plant and equipment. Operating leases held over properties give the Group the right to renew the lease subject to a redetermination of the lease rental by the lessor. There are no renewal options or options to purchase in respect of plant and equipment held under operating leases.

The Group rents premises. Operating leasees have the rights to renew the lease subject to a redetermination of the lease rental.

20. RECONCILIATION OF PROFIT AFTER TAX WITH CASH FLOW FROM OPERATING ACTIVITIESProfit after tax 10,605 4,445

Add/(less) non-cash items:Share of retained profit of associates and joint ventures (109) (9)Depreciation and amortisation 9,304 9,113Movement in foreign exchange - 10Non-cash movements in investments 34 (5)Decrease in future tax liability (520) (825)Increase/(decrease) in employee entitlements 847 (1,506)

9,556 6,778Add/(less) items classified as investing activities:

(Gain) on sale of property, plant and equipment (3,458) (10)

Movements in working capital:Increase in receivables and prepayments (717) (2,774)Decrease/(increase) in inventory 9 (28)Increase in trade payables and accruals 2,304 505(Decrease)/increase in taxation payable (89) 1,831

1,507 (466)

Net cash flow from operating activities 18,210 10,747



21. RELATED PARTY TRANSACTIONSThe Company is a wholly owned entity of the Crown. The government significantly influences the role of the Company in addition to being a major source of revenue.

The Group enters into transactions with government departments, state-owned enterprises and other Crown entities. These transactions occur within a normal customer / supplier relationship on terms and conditions no more or less favourable than those which it is reasonable to expect the Group would have adopted if dealing with that entity at arm’s length in the same circumstances. Such transactions have not been disclosed as related party transactions.

Core funding amounting to $43,103,000 was received from MBIE (a government department) during the year to 30 June 2016. Core funding is disclosed on the face of the Statement of Comprehensive Income.

Sale of services Due from2016 2015 2016 2015

Transactions with: $000 $000 $000 $000

Associates 1,504 1,573 457 215

For the year ended 30 June 2016, the Group has not impaired or written off any related party receivables (2015: $0).

The Group contracted with parties associated with certain directors during the year. These are as detailed below.These transactions were all at normal commercial rates.

GROUP2016 2015$000 $000

Parties associated with Directors Nature of the transaction

Kiwi Innovation Network Limited Services 235 675The Bio Commerce Centre Limited Rent 1 1

b) Key management personnel compensation:Salaries and other short term employee benefits 2,556 2,350

Key management personnel include the Board of Directors, the Chief Executiveand the other members of the senior executive team.



22. FINANCIAL INSTRUMENTSThe Group’s activities expose it to a variety of financial instrument risks, including market risk, credit risk and liquidity risk. The Group has a series of policies to manage the risks associated with financial instruments and seeks to minimise exposure from financial instruments. These policies do not allow any transactions that are speculative in nature.

Market riskCurrency riskCurrency risk is the risk that the fair value or future cash flows will fluctuate due to changes in foreign exchange rates. The Group purchases goods and services overseas which require it to enter into transactions denominated in foreign currencies. The Group also holds small balances of AUD, EUR and USD at call in order to settle transactions denominated in foreign currencies. As a result of these activities, some limited exposure to currency risk arises.It is the Group’s policy to manage foreign currency risks arising from contractual commitments and liabilities by entering into foreign exchange forward contracts to hedge the foreign currency risk exposure. All of the forward exchange contracts have maturities of less than one year at the balance sheet date.

Sensitivity analysisThe Group’s results are not sensitive to changes in foreign exchange rates.

Credit risk Credit risk is the risk that a third party will default on its obligations to the Group, causing the Group to incur a loss.Due to the timing of its cash inflows and outflows, the Group invests surplus cash with registered banks with a Standard & Poor’s credit rating of A- or above. The Group’s investment policy limits the amount of credit exposure to $10M with any one institution.The largest credit exposure with any one institution at balance date is $9M.

The Group’s maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash and short-term deposits (note 8), short-term investments, net receivables (note 9) and derivative financial assets. There is no collateral held as security against these financial instruments.

Management has a credit policy in place under which each new customer is individually analysed for credit worthiness and assigned a credit limit before the standard payment and delivery terms and conditions are offered. Where available the Group reviews external ratings and references are obtained. Credit limits are reviewed on a regular basis.

Net receivables includes two customers who represent 44% of the total trade receivables at balance date. The Group is not exposed to any other concentrations of credit risk.



22. FINANCIAL INSTRUMENTS (CONTINUED)

Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty raising liquid funds to meet commitments as they fall due. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group aims to maintain flexibility in funding by keeping committed credit lines available. It is the Group’s policy to provide credit and liquidity enhancement only to wholly owned subsidiaries.

The table below analyses the Group’s derivative financial instruments and other financial liabilities that will be settled on a gross basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.

GROUP 2016Carrying Contractual Up toamount cash flow 12 months 1-2 years 3 years +

Trade and other payables 10,980 10,980 10,980 - -Mortgage 206 206 19 38 149

11,186 11,186 10,999 38 149

Forward exchange contractsInflow 59 1,364 1,364 - -Outflow - - - - -

GROUP 2015

Trade and other payables 12,207 12,207 12,207 - -Mortgage 225 225 19 38 168

12,432 12,432 12,226 38 168

Forward exchange contractsInflow - 854 854 - -Outflow (51) - - - -

Fair value estimationThe group uses various methods in estimating the fair value of a financial instrument.

- The fair value is calculated using quoted prices in active markets (Level 1)- The fair value is estimated using inputs other than quoted prices included in Level 1 that observable for the asset or liability either directly (as prices)

or indirectly (derived from prices) (Level 2); and- The fair value is estimated using inputs for the asset or liability that are not based on observable market data (Level 3).

The Groupʻs derivative financial instruments are all level 2 forward foreign exchange contracts with a fair value of $59,000 (2015: $51,000).

These have been fair valued using forward exchange rates that are quoted in an active market.

In the period to 30 June 2016 there were no significant changes in the business or economic circumstances that affect the fair value of the Group’sfinancial assets and financial liabilities.



23. CATEGORIES OF FINANCIAL ASSETS AND LIABILITIESThe carrying amounts of financial assets and liabilities by classification are as follows:

GROUP2016 2015

Note $000 $000

Loans and receivablesCash and short-term deposits (8) 11,885 12,004Short-term investments - 7,500Trade and other receivables (9) 23,301 22,783

(18) 59 -Total financial assets 35,245 42,287

Financial liabilities measured at amortised costAccounts payable and accruals (10) 10,980 12,207Derivatives used for hedging (18) - (51)Employee entitlements (11) 9,063 8,428Mortgage liability 206 225

Total financial liabilities 20,249 20,809

The fair value of the financial assets and liabilities approximate their carrying value.

24. CAPITAL MANAGEMENTThe Company’s capital is its equity, which comprises share capital and accumulated funds. Equity is represented by net assets.

The Company is subject to the financial management and accountability provisions of the Crown Research Institutes Act 1992, which imposes restrictions in relation to borrowings, acquisition of securities, issuing guarantees and indemnities and the use of derivatives.

The Company manages its equity as a by-product of prudently managing revenues, expenses, assets, liabilities and general financial dealings to ensure the Company effectively achieves its objectives and purpose, whilst remaining a going concern.

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.

25. CONTINGENCIESContingent LiabilitiesThere were no contingent liabilities known to exist at balance date (June 2015 $0).

Contingent AssetsThere were no contingent assets known to exist at balance date (June 2015 $0).


PERFORMANCE INDICATORSfor the year ended 30 June 2016

2016 2015Actual Actual

RESEARCH COLLABORATIONPeer reviewed publications 350 303

Book chapters 24 23

TECHNOLOGY & KNOWLEDGE TRANSFERLicences - new 7 13Client reports 445 388Plant variety rights

Granted in NZ 15 5Granted overseas 10 4

Patents 8 12Trademarks

Registered 2 1

Requests for information from databases and collections 13 11

SCIENCE QUALITYScience reviews 1* 4

International awards 9 16Invitations for international committees 41 35Invitations for editorial boards 12 8

* Just a single science review was held in 2015/16, as the review team focusedon undertaking an audit of our science capability across Plant & Food Research.


STATEMENT OF RESPONSIBILITYfor the year ended 30 June 2016

In the financial year ended 30 June 2016, the Board and management of The New Zealand Institute for Plant & Food Research Limited were responsible for:

→ the preparation of the financial statements and the judgements used therein.→ establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial and

non-financial performance reporting.

In the opinion of the Board and management of The New Zealand Institute for Plant & Food Research Limited, these financial statements fairly reflect the financial position and operations of The New Zealand Institute for Plant & Food Research Limited for the year ended 30 June 2016.

Michael Ahie, Chairman Stana Pezic, Director25 August 2016 25 August 2016


DIRECTORY

NEW ZEALAND

AUCKLAND120 Mt Albert RoadSandringhamAuckland 1025Private Bag 92169Auckland 1142Tel 09 925 7000Fax 09 925 7001

CLYDE990 Earnscleugh RoadRD 1, Alexandra 9391

DUNEDINDept of ChemistryUniversity of OtagoBox 56Dunedin 9054

HAWKE’S BAYCnr Crosses and St George’s RoadsHavelock North 4130Private Bag 1401Havelock North 4157

KERIKERI121 Keri Downs RoadRD 1, Kerikeri 0294

LINCOLNGerald StreetLincoln 7608Private Bag 4704Christchurch 8140

MARLBOROUGH85 Budge StreetBlenheim 7201PO Box 845Blenheim 7240

MOTUEKA55 Old Mill RoadRD 3, Motueka 7198

NELSON300 Wakefield QuayPort NelsonNelson 7010Box 5114Port NelsonNelson 7043

PALMERSTON NORTHBatchelar RoadPalmerston North 4474Private Bag 11600Palmerston North 4442

PUKEKOHECronin RoadRD 1, Pukekohe 2676

RUAKURABisley RoadHamilton 3214Private Bag 3230Hamilton 3240

TE PUKE412 No 1 RoadRd 2, Te Puke 3182 WELLINGTONLevel 14Prime Property Tower86 Lambton QuayWellington 6111

AUSTRALIA

Level 1497 Creek StreetBrisbaneQLD 4000, Australia

Level 3169 Fullarton RoadDulwichSA 5065, Australia

PO Box 1059Blackburn North 3130Victoria, Australia

USA

430 F Street, Suite FDavis CA 95616, USA

Our research examined the effect of plant extracts on the body’s mechanisms for feeling full. Grape and kiwifruit extracts showed promise and have now been commercialised into the natural weight-management supplement, Satisfax®.

FOR MORE GO TO PAGE 25


DIRECTORS

Michael Ahie Chairman

Greg Gent Deputy Chair

Andrew von Dadelszen

Colin Dawson

Professor Juliet Gerrard

Stana Pezic

Mark Stuart

CHIEF EXECUTIVE OFFICER

Peter Landon-Lane

SENIOR MANAGEMENT TEAM

Dr Bruce Campbell Chief Operating Officer

David Hughes Group General Manager Commercial

Michael James Chief Financial Officer

Craig Jensen General Manager Human Resources

Professor Richard Newcomb Chief Scientist

REGISTERED OFFICE

120 Mt Albert Road Sandringham Auckland 1025New Zealand

AUDITORS

PricewaterhouseCoopers on behalf of the Auditor General

BANKERS

ANZ Bank New Zealand Ltd


AAid 16Apple 23, 46, 63, 65, 66Aquaculture 26, 40, 59Australia 4, 5, 6, 9, 11, 27, 31, 45, 49, 54, 61, 63, 66, 71, 73, 74, 108Avocado 6, 14, 29, 34, 40, 47, 65, 66Award 8, 9, 11, 36, 44, 58, 65, 73

BBerry 6, 34, 40, 46, 61, 63Bioprotection 28, 45, 65, 75Blackcurrant 63Blueberry 63Board 10, 15, 58, 70, 71, 72, 73, 74, 75Breeding 9, 11, 22, 23, 41, 44, 46, 48, 58, 59, 60, 63, 65, 66, 67, 75

CCEO 3, 15, 16, 71, 73, 74Cereal 6, 23, 63Chairman 11, 15, 70, 72, 73, 109China 8, 9, 47, 49, 63, 74Core Funding 3, 4, 58, 62

Cropping 4, 5, 11, 34Cultivar 3, 8, 9, 18, 21, 22, 23, 25, 28, 46, 47, 58, 62, 63, 64, 66, 67, 74Customer 3, 4, 14, 15, 16, 17, 19, 21, 33, 34, 35, 36, 40, 41, 42, 43, 46, 47, 61, 75, 78

DDairy 23, 61, 67, 72, 74Director 3, 15, 70, 72, 73, 74, 75, 109Disease 3, 9, 18, 21, 22, 23, 28, 29, 48, 58, 59, 61, 62, 63, 65, 66, 67, 73

EEmployer 3, 52Environment 1, 2, 9, 14, 16, 18, 21, 27, 28, 30, 32, 37, 40, 44, 45, 47, 48, 52, 53, 61, 62, 64, 66, 67, 72Ethics 55, 71

FFinancial Statements 3, 76Food 3, 4, 5, 8, 14, 16, 18, 21, 22, 24, 25, 26, 27, 40, 44, 45, 47, 48, 58, 59, 61, 62, 63, 64, 72, 73, 74, 75Food Innovation 75

GGene 63, 73Genomics 18, 22, 28, 63, 75Governance 3, 15, 40, 68, 70, 72, 73Government 4, 8, 9, 14, 15, 36, 42, 45, 46, 47, 61, 62, 67, 70, 72, 73

HHealth 3, 8, 10, 11, 19, 24, 25, 27, 31, 34, 36, 40, 47, 48, 55, 58, 61, 64, 70, 73, 74, 75Highlights 3, 44Honey 9, 34, 44, 47Hub 14, 16, 19, 35, 59

IImpact 1, 3, 7, 11, 14, 15, 16, 17, 18, 20, 21, 24, 30, 33, 35, 40, 41, 46, 55, 58, 59, 61, 62, 64, 65, 66, 67, 71, 73, 75, 78Insect 8, 9, 10, 28, 47, 58, 61, 65, 66, 67, 74

KKiwifruit 6, 8, 9, 14, 16, 25, 29, 32, 34, 45, 46, 47, 59, 63, 65, 66, 67, 74, 108

MMānuka 9, 44, 58Māori 3, 8, 14, 16, 40, 44, 45, 53, 75

NNational Science Challenge 8, 14, 16, 19, 35New Zealand 1, 2, 4, 5, 6, 9, 10, 18, 21, 22, 23, 24, 25, 26, 27, 28, 29, 31, 34, 36, 38, 40, 41, 42, 44, 45, 46, 47, 53, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 70, 72, 73, 74, 78, 108, 109, 112

PPea 63, 66Pear 47, 63People 3, 8, 10, 15, 19, 35, 36, 37, 40, 41, 45, 48, 50, 52, 53, 55, 74Performance 2, 3, 7, 15, 17, 18, 19, 21, 22, 23, 24, 26, 28, 29, 30, 33, 35, 36, 37, 40, 42, 52, 53, 55, 58, 63, 67, 70, 71, 73, 74, 78Pest 3, 9, 18, 21, 22, 28, 29, 58, 61, 62, 65, 66, 67Pipfruit 6, 14, 34, 47, 63, 65, 66Potato 6, 9, 34, 60, 63, 64, 65, 66

INDEX


RRelationship 1, 3, 16, 19, 34, 35, 38, 40, 42, 44, 45, 46, 47, 52, 59, 63, 64, 74Risk 16, 19, 28, 36, 37, 55, 61, 65, 66, 67, 70, 71, 74

SScience 1, 3, 4, 5, 7, 8, 9, 10, 11, 14, 15, 16, 17, 18, 19, 21, 24, 27, 28, 30, 33, 34, 35, 36, 37, 40, 44, 45, 46, 47, 53, 56, 58, 59, 60, 61, 62, 64, 65, 67, 70, 71, 72, 73, 74, 75, 78, 112Science Advisory Panel 3, 19, 58, 70, 71, 73Seafood 2, 3, 4, 5, 6, 8, 14, 16, 17, 18, 21, 24, 26, 27, 34, 40, 44, 52, 56, 58, 59, 62, 64, 75Seafood Technologies 52, 75Senior Management Team 3, 15, 74, 109Snapper 59, 64Staff 4, 11, 15, 17, 32, 40, 41, 44, 45, 52, 53, 55, 61, 71, 74Strategy 3, 12, 14, 15, 17, 19, 34, 35, 40, 44, 45, 47, 58, 60, 62, 70, 72, 73, 74, 78Summerfruit 6, 14, 29, 34, 40, 65, 66

Sustainability 2, 27, 30, 48, 58Sustainable Production 27, 30, 58, 60

UUSA 4, 6, 46, 48, 54, 63, 64, 66, 74, 108

VVegetables 18, 22, 24, 29, 34, 47

WWellness 18, 24, 58, 64Wine 4, 5, 6, 10, 16, 24, 34, 44, 63, 64, 65, 66

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