Researchers look to new era

By SIMON COLLINS science reporter

The boards of HortResearch and Zespri will go out to dinner together in Te Puke tomorrow night to celebrate what may be a new era in the research institute's relationships with its industry.

Until recently, according to one HortResearch scientist, his bosses and Zespri managers "were not talking at all".

Apple and pear growers also were alienated because of a HortResearch decision last year to put its pipfruit breeding programme up for tender. The growers have not paid anything towards it for two years.

But tomorrow, the HortResearch board will be asked to approve in principle two deals:

* The final part of a memorandum of understanding under which HortResearch will sell some of the intellectual property in its kiwifruit research to Zespri, in return for Zespri boosting its payments to HortResearch from $2.4 million a year to $3 million from July 1.

* Sale of the marketing rights to HortResearch's new apple and pear varieties to a joint venture comprising the institute, Pipfruit Growers NZ, Horticulture Australia, Australian pipfruit growers, and growers in Australasia, the US, South America, Europe and South Africa grouped in the Associated International Group of Nurseries (AIGN).

This deal will give HortResearch $1.2 million a year, also from July 1.

Although the pipfruit venture is not yet finalised, the two deals are the first big signs of a rebound for the state-owned research institute since it lost $5.5 million in Government funding and had to axe 41 of its 500 jobs last July.

Former Fonterra executive Paul McGilvary took over the institute's top job from Dr Ian Warrington in August, shifted the head office from Palmerston North to Auckland and completely restructured the organisation.

There have been casualties.

Former general manager of science capabilities Dr John Shaw is now working at Massey University's aviation school.

The general manager of bioactives, bioengineering and environment, Dr Garth Smith, has gone out as a consultant.

McGilvary has hired new people from business backgrounds led by Greg Mann, former general manager of Lower Hutt exhaust maker Southward Engineering, now HortResearch's general manager of business development.

The Batchelar Centre in Palmerston North, which housed the institute's head office, sold for $2 million to a New Zealand-Asian group for student accommodation.

The institute's half-share in a facial eczema treatment called Time Capsule was sold this month to AgResearch's commercial arm, Celentis, for $3.25 million.

Last week, the institute reported a $600,000 loss for the December half-year, following a $738,000 loss for the year to last June.

But McGilvary said on Friday that he was confident of a profit for the full year to this June and of staff numbers growing from 482 now to 502 by next year.

"We eliminated duplications, but we have hired in to increase commercial capacity," he said.

He is having meetings with staff at the institute's 10 research centres to outline the results of a strategic review carried out with former Victoria University marketing professor David Culwick.

It emerged that HortResearch was doing a few things wrong, he said. "There was no real picture of where we were heading."

The review sees HortResearch's future in two broad fields: healthy fruit-based foods and sustainable biological production.

"In the longer term we can take that knowledge area of healthy foods and become the pre-eminent producer in the world of the science related to human health and performance from compounds and other things in fruit," McGilvary said. "So if a company like Nestle wants to make a claim for what fruit can do for you, such as high anthocyanins are good for eyesight, we want to be able to build up the capacity to really provide the science behind that."

The institute's production expertise could be used to develop new fruits that needed less water and fewer chemicals and so "tread lightly on the Earth".

HortResearch's gene technologies section has built up what McGilvary calls "the best gene database in the world for apples, kiwifruit and blueberries".

"We are mining those to look for genes with particular functionality."

If plants with useful genes can be bred through normal breeding methods, they will be bred in NZ. For example, HortResearch is developing an apple variety that will be resistant to painted apple moth.

But McGilvary said that if it was more efficient to breed new varieties through modern genetic modification techniques, HortResearch would do it overseas rather than meet the $500,000-plus costs AgResearch paid to get approval to genetically modify cattle.

"The regulations in New Zealand will potentially stop us doing any genetic [modification] work here," he said.

"Why would you want to go through the huge costs and all the potential problems in NZ when you can go to North America and get a licence for $15 to grow a [genetically modified organism]?"

He has hired as a biotechnology adviser Ken Mooney, an inventor of the "Flavor Savor" tomato - from the US firm Calgene - which was genetically modified for long shelf life.

"The Flavor Savor tomato failed because they couldn't grow the tomatoes. People ate thousands of them," McGilvary said.

"He [Mooney] is quite excited by what he sees our capability as. He thinks we should focus on the North American market."

HortResearch is already working with two big nursery companies in the US Pacific Northwest - Northwest Plants and Fall Creek Farm and Nursery - to develop varieties of raspberries and blueberries for American conditions.

"There is no reason we shouldn't do the same thing in peaches, nectarines and so on," McGilvary said.

On April 9, he will sign a two-to-three-year, $2 million deal in Auckland with Queensland Premier Peter Beattie to work with the state's primary industries department on the genetics of tropical plants.



At home, the painted apple moth crisis has led to new Ministry of Agriculture and Forestry contracts, and McGilvary's two-person Maori business development unit helped seal a deal with a Waikato trust for work on edible ferns and on river remediation.

A joint venture with Logistics Solutions called Fresh Appeal Ltd is developing technology to keep apple slices fresh. McGilvary reports "some significant interest out of Europe".

A partnership with Gourmet Paprika, Gourmet Berries Ltd, is developing blueberry exports.

A joint venture with Enzo Pharmaceuticals of Christchurch to develop drugs from pine bark is going slowly.

Five new divisions now more streamlined

In his restructuring of the institute, McGilvary has streamlined his scientists into five new science divisions:

* Future Horticulture, led by Dr Pauline Mooney, in Kerikeri, has 225 staff members researching new varieties, post-harvest systems, pest and disease protection.

* Gene Technologies, led by Dr Richard Newcomb, in Auckland, 70 staff.

* Bioengineering, led by Godfrey Bridger, at Ruakura, 50 staff.

* Food, led by Dorian Scott, in Auckland, 30 staff.

* Environment, led by Dr Brent Clothier, at Palmerston North, also 30 staff.

He has left most of the finance and communications teams in Palmerston North, but the general managers of science, Dr Michael Lay-Yee, human resources, Craig Jensen, and finance, Graeme Brown, will join McGilvary and Mann as the senior executive team at the new head office in the Mt Albert Research Centre.

The move to Auckland, in McGilvary's eyes, was primarily to lead the troops on the institute's biggest single site, with 200 of the 480 staff.

"We lacked a bit of leadership," he said.

"It's hard for me to set leadership standards by remote control from Palmerston North.

"So I wanted to be among the mass of the people."