Potential for Diversification of Rural Production in Canterbury

Potential for Diversification of Rural Production in Canterbury Prepared for: Canterbury Development Corporation Prepared by: The AgriBusiness Group J...
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Potential for Diversification of Rural Production in Canterbury Prepared for: Canterbury Development Corporation Prepared by: The AgriBusiness Group January 2015

Contents Potential for Diversification of Rural Production in Canterbury

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EXECUTIVE SUMMARY

2

2

BACKGROUND

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2.1 METHODOLOGY 2.2 LITERATURE REVIEW

6 7

3

FIRST STAGE ASSESSMENT.

12

3.1 IDENTIFICATION OF PRODUCTS TO BE INCLUDED 3.2 PRELIMINARY SCREENING

13 15

4

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SECOND STAGE RESULTS

4.1 4.2 4.3 4.4 4.5 4.6 4.7

PHARMACEUTICAL PLANTS MILKING SHEEP MANUKA HONEY WALNUTS BLACKCURRANTS PEA ISOLATE COMPARISON WITH ALTERNATIVES

25 28 32 36 39 43 45

APPENDIX 1: ORGANISATIONS CONTACTED FOR FIRST STAGE ASSESSMENT

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APPENDIX 2: LIST OF CROPS INVESTIGATED BY CROP AND FOOD.

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Please Read The information in this report is accurate to the best of the knowledge and belief of the consultants acting on behalf of the Canterbury Development Corporation. While the consultant has exercised all reasonable skill and care in the preparation of information in this report neither the consultant nor the Canterbury Development Corporation accept any liability in contract, tort or otherwise for any loss, damage, injury or expense, whether direct, indirect or consequential, arising out of the provision of information in this report.

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1 Executive Summary The Canterbury Development Corporation (CDC) has engaged The AgriBusiness Group to provide professional services to undertake a research project investigating the feasibility of options for diversification of rural land use in the Canterbury region. The overarching questions that this study was aiming to answer were:

 Is it likely that there is a compelling business case for the alternative products?  Is there a high likelihood of providing a commercial return on investment (particularly for products requiring irrigation)? The methodology was staged with two points at which the research team reported to CDC. The first point was to ensure that the work was comprehensive in its scope of products selected and the second point was to select the products which the team believe are worth further analysis. For the first stage screening the products were assessed against the following criteria.  Analysis of the production trends.  Analysis of the market and market trends for the product.  Analysis of the feasibility of production and its potential impacts.  Identification of any natural competitive advantages or barriers associated with production in Canterbury.  Identification of any capabilities and support required for the successful establishment and growth of the industry.  Analysis of the strategic potential and viability Some key findings that came out of the first level assessment were:  We have one of the most technologically advanced agricultural sectors in the world.  With our soils and irrigation we are capable of very high yields of high quality pasture and crops on a reliable basis.  Traditionally we have been very efficient ($ cost) at commodity production (very little value added).  The production sector is quite advanced in New Zealand in terms of seeking out and finding new opportunities to grow things.  The processed food sector is identified as the next area to grow but one of the barriers to growth is the scale of processing.  There is a need to concentrate on value chain development. The second stage analysis took a more in depth analysis of the top six products identified in the assessment exercise. This analysis included:  Detail of the investment required for the development of the product concept enterprise level as well as at a regional level.  An analysis of the potential returns from the investment.  A strategic analysis of the investment opportunity.

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Details of the first level screening and selection of the six to go through more detailed analysis are included in this report. The addition of further added value either in the on farm or further processing sectors was seen as an important element in selection. The six chosen for the second round analysis are:

Pharmaceutical Plants were chosen as an example of a completely new arable crop which has high added value potential.

Milking Sheep were chosen as a completely new pastoral crop that has the potential to be relatively low in the amount of Nutrients that it leaches to water.

Manuka Honey was chosen to represent the expansion of an existing activity into a higher return operation.

Walnuts were chosen as an example of an existing industry which has grown comparatively rapidly from a small base.

Blackcurrants were chosen as an example of an existing horticultural industry which has the opportunity to expand into further added value activities.

Pea Isolate was chosen because it was seen to offer the potential to the arable industry of further value added processing of the crop. Analysis of each alternative is based on the industry growing to 5,000 ha in size. The following results are variable in the accuracy as a result of the difficulty or ease of gaining information on them. It is fair to say that the on farm results are very accurate because of the ease of access to information on them. The processing results are less accurate as a result of the dearth of publically accessible results. In some instances the calculations on the processing industry are based on standard relationships in the processing sector therefore we are less sure of their accuracy.

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Table 1: Summary Results of Financial Analysis

NPV

IRR Return on Invested Capital

Pharmaceutical Plants On Farm Processing

$118.5m $160.2m

32%

32%

$107m $134m

24% 34%

25% 34%

$0.56m

15%

16%

$85m

17%

38%

$156m $235

16% 39%

25% 39%

$1.75m $137m

25%

25%

Milking Sheep On Farm Processing

Manuka Honey Beekeeping

Walnuts On Farm Processing

Blackcurrants On Farm Processing

Pea Isolate On Farm Processing

Pharmaceutical Plants Pharmaceutical plants are a very promising crop which would provide excellent returns for both the farmers and the processor. The ability to grow pharmaceutical plants could be dependent on gaining a licence to grow them from the Government. We recommend that:  Pharmaceutical plants should be considered as excellent new arable crops for Canterbury.  If required approval to grow pharmaceutical plants is gained and the regulatory regime is designed to meet the requirements of the crops.  Support should be offered to potential growers to locate either a joint partner investor in processing facilities or support in sourcing the required funds.

Milking Sheep Milking sheep is potentially an excellent product for farming in Canterbury because of the returns it offers and the fact that the nutrient leaching is lower than traditional dairy farming. The success of establishing an industry will rely on their being enough interest and the willingness of a processor to start up an operation in the province. We recommend that:  Further investigation into sheep milking as a new land use in Canterbury should be carried out with a more detailed analysis of the potential market, the optimal on farm production system, the economics of farming and the potential for nutrient discharges.  The organisation carrying out this further investigation should engage with Blue River Dairy to ascertain if they would be keen to process the production in Canterbury.  The concept of sheep milking in Canterbury should be promoted initially with Environment Canterbury and the major irrigation companies.

Manuka Honey The establishment of a Manuka honey industry in Canterbury as a result of planting land in Manuka with the UMF factor suffers as a financial consideration because of the long wait Potential for Diversification of Rural Production in Canterbury

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between planting and the first harvest and the potential for yields to be variable dependant on the weather conditions at flowering. We recommend that:  The industry should keep a watching brief on the results of the current trial work into establishing a Manuka honey plantation.  The local beekeeping industry should investigate the possibility of extending the current trial work into Canterbury on suitable sites.

Walnuts Walnuts suffer as a result of the long period between planting and first harvest as well as the highly variable productivity of the orchards, which is weather dependant. There is very little apparent value added in the processing industry. We recommend that:  A watching brief on developments in the walnut industry should be maintained over the next 10 years.

Blackcurrants Blackcurrants offer excellent returns for both the grower and the processor if demand can be created for their products from the health and wellbeing market through proving of the health benefits of products through human clinical trials. The cost of doing this is beyond the present limited number of growers and processors. We recommend that:  Assistance should be given to the blackcurrant grower group to help in raising funds to finance the required clinical human trials.  Assistance should be given to the blackcurrant grower group in developing a New Zealand brand around the product.

Pea Isolate The development of a Pea isolate business in Canterbury would not offer much additional financial advantage to farmers but would offer considerable advantages to a processor of the product. The level of returns from processing requires a lot of further work. We recommend that:  More detailed analysis of the opportunity to ascertain the true capital cost, processing cost and detail of the processes should be carried out.  The organisation carrying out this additional work should also engage with existing processors to ascertain under what circumstances they would be willing to enter the industry.

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2 Background The Canterbury Development Corporation (CDC) has engaged The AgriBusiness Group to provide professional services to undertake a research project investigating the feasibility of options for diversification of rural land use in the Canterbury region. The aim of the investigation was to identify categories of primary product that are currently, or with the right infrastructure could be, commercially viable to a scale that supports an export (or import substitution) industry in Canterbury. The overarching questions that this study was aiming to answer were:

 Is it likely that there is a compelling business case for the alternative products?  Is there a high likelihood of providing a commercial return on investment (particularly for products requiring irrigation)?

2.1 Methodology The methodology used was designed to counter the problem which this research project presents in that there was a very large potential for products to be analysed and a relatively small budget to carry out the work. Therefore we proposed that this project was best to be phased into two stages. The first stage assessment was relatively short in that the products were assessed against a standard template and that only those which score the best were then put through a more detailed assessment to test their worth for investment. The methodology was staged with two points at which the research team reported to CDC. The first point was to ensure that the work was comprehensive in its scope of products selected and the second point was to select the products which the team believe are worth further analysis.

2.1.1 Identification of products to be covered. This first stage was seen as being very important in being able to comprehensively compile a list of potential products to examine. This stage entailed a brief literature review to identify any previous work in this area and the results found from it. Our thinking at this point was that there was very little opportunity for new products at the farm level. We believed that there was probably more potential in the added value segment of the market. We were able to interview a wide range of people in Canterbury to try to come up with a comprehensive list of potential products. At this point we carried out a check back with the client to get approval to proceed with our list of potential products.

2.1.2 First stage screening. The first stage screening was designed to be comprehensive but also to be relatively quick in its assessment. Each product was assessed against a standard template which included:  Analysis of the production trends and any significant production issues - in New Zealand and in other relevant production areas. This included an analysis of productivity factors and significant contributing management factors.

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 Analysis of the market and market trends for the product including an analysis of the product value chain to identify requirements and issues associated with establishing production and the processing and marketing of any product.  Analysis of the feasibility of production and its potential impacts – economic, social and environmental.  Identification of any natural competitive advantages or barriers associated with production in Canterbury.  Identification of any capabilities and support required for the successful establishment and growth of the industry.  Analysis of the strategic potential and viability for entering and growing the case study industry including the economic impacts at an enterprise and at a regional scale. Once the assessment was carried out the results were discussed with the CDC and the top six opportunities were chosen to take through to the second stage analysis.

2.1.3 Second stage analysis. The second stage analysis took a more in depth analysis of the top six products identified in the assessment exercise. This analysis included:  Detail of the investment required for the development of the product concept enterprise level as well as at a regional level.  An analysis of the potential returns from the investment.  A strategic analysis of the investment opportunity. This analysis provides the CDC with a much more detailed understanding of the potential for each of the products and the scale of investment required to get it off the ground.

2.2 Literature Review The literature review was able to find three studies which were relevant to the subject area that were carried out in New Zealand. In addition there were a number of studies that were of interest from the aspect of them having similar climatic conditions and from a process of discovery point of view.

2.2.1

Agribusiness and Economics Research Unit (AERU)

In Greer1 they examine the range of land uses that it is possible to grow within the areas of potential for irrigation development in North Canterbury. They examine the area from a growing point of view looking at physical conditions like soil type, land use class and climatic variations. They then go on to evaluate the potential land uses against a range of criteria which they have developed from previous work looking at the development of new industries.  Comparative and competitive advantage and innovation.  Complementarity with other enterprises.  The policy environment.  Access to infrastructure.  Industry structure and leadership. 1

Greer G, Marquet M, Saunders C: Potential Enterprises under Irrigation in North Canterbury.

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 Market development, promotion and brand promotion.  Key factors.  Efficient production system.  Efficient processing and value adding capacity accessible.  Product description and quality assurance system.  Efficient trading and distribution mechanisms established.  Effective market development program.  Brand oriented marketing program.  Can all product be disposed of economically?  Possible transition from development stage to maturity.  Funding and mechanism for research and development.  Industry structure.  Similarity to existing industries.  Attitudes of mainstream industry participants. They then go on to evaluate the potential land uses under the following headings and briefly describe each of the land uses identified:  Products of well established industries.  Dairy  Dairy support  Viticulture  Livestock finishing  Arable and conventional seed.  Products of well established industries not grown in scale in Nth Canterbury.  Process vegetables  Fresh vegetables  Pip fruit  Products for established niche markets.  Specialist seed production.  Blackcurrants.  Blueberries  Organic  Products of new and emerging industries  Hazelnut.  Walnut  Lavender  Olives  Truffles  Peonies

2.2.2 Coriolis In their review of emerging growth opportunities in the NZ food and beverage sector Coriolis2 used a screening methodology to create a short list of the categories that their analysis indicated hold the most potential for growth. The list in this report was designed to appeal to Coriolis (2012); An investor’s guide to emerging growth opportunities in New Zealand food and beverage exports. 2

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an investor point of view. The first level screening was on the size of existing exports and came up with 25 categories. The second level screening was based on quantitative criteria  Where are the global markets?  Who are the major exporting countries?  Who are the key firms in New Zealand?  Where do New Zealand exports go? And qualitative criteria:  What is the structure of the global market?  How is the New Zealand market structured?  What does New Zealand have to work with?  What are the challenges facing the sector? The qualitative criteria were further split into the following questions.  Large global market  Strongly growing demand  Asian opportunity  Premium for quality  Rich countries do it  Capital investment  Large number of firms  Required skills  Leverage country image  Able to differentiate  Strong trade access. Each element was scored and an overall score was developed and the categories were ranked according to their relative attractiveness as shown in the following table. Table 2: Coriolis’s ranking of attractiveness for New Zealand investors.

Good

Better

Best

Jams and Jellies Capsicum Peas frozen and dried Sugar confectionary Soups and broths Fresh onions Prepared fish Beef jerky

Chocolate Frozen French fries Beer Alcoholic cider Avocadoes Berries

Salmon Honey Spirits Biscuits Pet foods Cherries

2.2.3 The AgriBusiness Group In their preliminary analysis of options for Agriculture and Horticulture options for the Rotorua District Council, The AgriBusiness Group3 discussed a range of potential options in terms of Opportunities and Issues and then assessed them against a set of criteria which included:  Land use capability  Climate / site suitability 3

The AgriBusiness Group (2014): Grow Rotorua: Preliminary Analysis of Options for Agriculture and Horticulture Development.

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   

Geothermal utilization Existing production Market development Potential returns.

They then derived an overall rating for the following range of land uses: Horticultural crops  Blue berries  Kiwifruit  Avocados  Feijoa  Hops  Hazelnut  Outdoor flowers New crops / options  Manuka honey  Ginseng  Tea  Truffles  Maori Crops  Biofuels Geothermal Options  Tomatoes / Capsicum  Hot house flowers  Aquaculture  Food Processing.

2.2.4 Venture Southland The Crops for Southland project was established in 1994 by the Southland District Council and associated groups to investigate alternative land uses. The initiative undertook research, technology transfer and on-farm support. It reviewed a wide range of potential crops and this resource is still available on line at http://www.venturesouthland.co.nz/EconomicDevelopment/Regional-Projects/Agriculture-and-Food/Crops-for-Southland. The project fostered bio-oil and ornamental flower crop industries as well as other crops. A review of land use innovation in regions with a similar climate or type of farming was also undertaken.

2.2.5 Australia The new crops research programme of the Rural Industries Research and Development Corporation (RIRDC) – see http://newcrops.com.au/index.php. This as well as other long established projects have facilitated the establishment of a number of new primary industries such as the production of medicinal herbs in Tasmania.

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2.2.6 Oregon Oregon, especially the North West, has a similar climate to Canterbury, has 38,100 farms and approx. 6,875,000 ha of farmland4. It is known as a speciality crop state with over 220 recognised commodities with a value of US$5.4b per year in 20125. Some significant crops with exports from the state in 2011 include:  Seeds – US$331.5 m dominated by Perennial ryegrass, fescue and annual ryegrass seed production.  Tree nuts – US$71 m – dominated by hazelnuts  Fruit and fruit products - US$226m – blueberries, pipfruit, cherries, other berries and grapes.  Animal feed – US$38.7 m

2.2.7 United Kingdom The UK has been a traditional source of farming ideas for Canterbury farmers for many years. Recently there has been increased interest in the production of industrial crops including the following6:  Crambe – Abysinnian Mustard – has high levels of erucic acid. Yields average 2-2.5 t/ha. Replacing HEAR as it does not need a separation distance.  High Erucic Acid Rape (HEAR) – grown for its erucic acid content – yields 1.5-2 t/ha.  Echium – this is rich in stearidonic acid used in cosmetics. Yields average 250 kg/ha  Hemp – grown for both fibre and oil. Yields between 5-6.2t/ha of biomass.  Borage (starflower) – yields from .2 -.75 t/ha of seed. Production is predicted to increase in the UK with one of the reasons being that the UK has higher gammalinolenic acid (GLA) content (21-22%) than China which is 17%. A gross margin of over 1,000 UK pound/ha was predicted. Contracts in 2014 were for a min of 3,000 pounds UK per ton for cleaned seed7.  Camelina (Gold of Pleasure) – grown for its oil which contains a range of essential fatty acids. Has good drought tolerance. Yields 2-2.5t/ha.

2.2.8 Land Use Change MacLeod (2006)8 identified some of the key historical drivers for land use change In New Zealand. The most important drivers were land use intensification and diversification while agri-economic policies was also a key driver in certain periods such as the 1980`s.

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http://www.nass.usda.gov/Statistics_by_State/Oregon/Publications/facts_and_figures/facts_and_figur es.pdf 5 http://www.oregonfb.org/about/oregon-agriculture/ 6 http://archive.hgca.com/publications/documents/Industrialusesarablecrops1.pdf 7

http://www.fwi.co.uk/articles/23/01/2014/142942/borage-area-set-to-rise-in-2014.htm MacLeod C et al, Intensification and diversification of New Zealand agriculture since 1960: An evaluation of current indicators of land use change. – sourced from http://erg.otago.ac.nz/attachments/179_NZ%20intensification.pdf 8

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3 First Stage Assessment. The range of coverage of crops that was specified was quite extensive as is shown in Table 3. Table 3: Product Categories to be Included

Sector

Land use.

Arable Crops

Cereals Leguminous vegetables Root vegetables Potatoes Seeds Edible Brassicas Alliaceous vegetables Pumpkins Squash and gourds Sweetcorn Tomatoes Cucumbers and Gherkins Oil seed and oleaginous fruits. Herbs Fungi Market greens

Covered crops Speciality crops

Eggs Fruits and Nuts

Fibres

Grapes for wine Grapes for table Berries Pip fruit Nuts Feijoa Wool Plant fibres

Honey Cut flowers and flower buds Bulbs, tubers, tuberous roots, corms, crows and rhizomes. Plant derived bio actives. Natural health products Pharmaceuticals Animal derived bio actives Blood Bone Vaccines Dairy Cow Goat Sheep Dairy Support Biofuels

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3.1 Identification of Products to be Included This part of the study was a reasonably quick assessment of the range of crops and land uses available to go further into study. It relied on The AgriBusiness Groups knowledge of what is currently being investigated and who to contact to discuss the potential for the various options. A list of the organisations contacted is available in Appendix 1.

3.1.1 Results of Screening The following comments reflect the overall impression gained from the level of conversations carried out on the situation of each sector.

Overall Comments  We have one of the most technologically advanced agricultural sectors in the world.  With our soils and irrigation we are capable of very high yields of high quality pasture and crops on a reliable basis.  We are a long way away from our markets.  Traditionally we have been very efficient ($ cost) at commodity production (very little value added).  The majority of our processing sector has been owned by the producers (pastoral sector).  The production sector is quite advanced in New Zealand in terms of seeking out and finding new opportunities to grow things.  The processed food sector is identified as the next area to grow but one of the barriers to growth is the scale of processing.  There is a need to concentrate on value chain development.  The lack of food technology skills is limiting development.

Arable crops. “Must increase the value across the whole value chain” “At $50 K / ha there needs to be a significant shift in value to retain an arable sector from dairy conversion” “The relatively poor returns from growing the crop are increasingly forcing growers to take a position further up the value chain”

Fresh and Processed Vegetables. “We have too many growers producing too much crop for the fresh vegetable trade” “In the process sector we are concentrating on improving the costs of growing not looking at expanding our area” “The thing that would turn around the decrease of tomato growers in Canterbury would be the provision of a wide body jet to facilitate economic exports”

Meat “The top grade products sell very well internationally, the issue is to concentrate on what can be done to the lower value cuts” “We need to concentrate on what can be done with the by-products of the red meat trade to try and lift the overall return” “On farm we need to continue to improve productivity and production of feed”

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Fruit and Nuts “There is real potential for cool climate pipfruit production” “There is a market niche for more raspberries and strawberries grown in Canterbury utilising new North American varieties” “There is potential to handle a doubling of the production of walnuts with an expansion in the processing capability” “There is no doubt that Cherry Orchards will move North into Canterbury where the climate niches suit them”

Honey. “The market for UMF Manuka honey is very good – what makes it interesting is the potential to possibly establish the appropriate Manuka selection to enable the production of this honey outside its natural range”

Bioactives. “It should be seen as the utilisation of by-products of the meat industry rather than an industry in itself”

Dairy and Dairy Support. “Leading returns (and therefore growing quickly at present) quite considerably at present and looks to be quite sustainable”. “Environmental pressure may slow development”. “Returns for initial processing (drying) still greatly outweigh all further processing premiums. There is real potential for goats and sheep milk – without the same level of environmental risk”.

Bio fuels. “The economics of the bio fuel industry is negative at present and we don’t have the capacity to further refine for the human consumption sector where the real opportunities exists at present”.

3.1.2 Potential products to take into the first level screening. As a result of the outcomes of the first level of screening and discussions with CDC the following list of crops to put through the next level of screening was agreed. A table which represents a list of the entire arable, horticultural and covered crops that have been investigated by Crop and Food over the last two decades is shown in Appendix 2. It shows that there are many crops available to be evaluated many of which have been around and available for a number of years and have not made it into full scale production for a variety of reasons. Arable food crops Edible fungi Essential oils Medicinals Industrial crops Honey – high UMF Manuka. Animal derived bio actives. Cool climate pipfruit.

Cherries Strawberries Raspberries Walnuts Hazelnuts Milking Goats Milking sheep

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3.2 Preliminary Screening This preliminary level screening was primarily driven by value chain analysis starting at the market end first and working back to the production sector. The market analysis principally utilised the United Nations International Trade Centre – Trade Map Tool9. A summary of the sort of data that we got from Trade Map for horticultural crops is shown in Table 3 and provides reporting of Total World Exports and the Average Price experienced in 2012 then goes on to record the Total New Zealand Exports in 2012, the Average Export Price and the Annual Average Trend in growth of the New Zealand export sector over the period from 2008 to 2012. The production analysis utilised data from Statistics New Zealand most notably from the agricultural census. Table 3: Horticultural Crops – Preliminary Market Screening

Crop

Blueberries Cherries Flowers – cut Flowers – bulbs Hazelnuts Pipfruit Raspberry – fresh Raspberry – frozen Strawberries Saffron Walnuts

World Exports (tonnes) 2012

Average price (US$ /tonne) 2012

NZ 2012 Exports Production (tonnes)

Average Export Price 2012 ($US/tonne)

2008-2012 NZ value exports annual average trend

289,819 431,958 NA

$4,774 $3,928 NA

1,221 1,582 1,646

$11,790 $10,650 $15,247

16% 9% 2%

NA

$5,000

2,519

$2,519

5%

218,781 8,213,806 155,750

$6,895 $866 $5,194

4 309,464 2

$8,500 $948 $16,000

NA 5% 20%

367,448

$2,041

1,122

$2,096

-38%

858,939 1,395 194,588

$2,711 $104,522 $8,042

646 NA 4

$5,868 NA $9,500

5% NA 10%

In Table 4 the results of the same analysis for Arable Crops are displayed.

9

Trade Map provides - in the form of tables, graphs and maps - indicators on export performance, international demand, alternative markets and competitive markets, as well as a directory of importing and exporting companies. Trade Map covers 220 countries and territories and 5300 products of the Harmonized System. The monthly, quarterly and yearly trade flows are available from the most aggregated level to the tariff line level see http://www.trademap.org.

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Table 4 Arable Crops - Preliminary Market Screening

Crop

World Exports 2012 (tonnes)

Average price (US$/tonne)

121,818 4,105,841 NA 129,268 NA NA

$546 $435 $3,000 $876 NA

Buckwheat Pea - dried Quinoa Coriander Calendula Liquorice

NZ Production 2012 (tonnes) 268 25,520 NA 34 NA

Average NZ Price (US$/ tonne

2008-12 NZ Export Trends Value

$1,284 $889 NA $1,706 $6 kg $1 kg

NA 5% NA NA NA NA

The growth, or decline, of crops shown in Tables 5, 6, 7, 8 and 9 was derived using data from Statistics NZ. Table 5 Canterbury Region - Trends in Tree Crops (Ha)

Pipfruit 2012 2007 2002 2000 1996

238 279 419 533 1,625

Stone fruit 102 122 95 179 204

Wine Grapes 1,550 1,683 749 633 381

BlackOther currants berries 948 60 660 76 846 131 567 124 577

Olives 240 437 659 299

Chest nuts 30 66 99

Wal Hazel Other nuts nuts nuts 389 220 327 249 192 140 291

Source: Derived from Statistics New Zealand Table 6 Canterbury Region - Trends in Outdoor Vegetable Crop Area (Ha) Asparagus

Green beans 536 537 544 486

Carrots

Onions

2012 29 823 1,035 2007 94 488 686 2002 166 343 992 2000 150 456 1,060 1996 Source: Derived from Statistics New Zealand

Peas Process 3,619 4,705 4,820 4,611 5,026

Potatoes

Pumpkin/Squash

Sweetcorn

5,754 4,273 4,495 4,009 3,129

170 223 244 425

255 941 1,248 1,160

Table 7 Canterbury Region - Indoor Crops Area (Ha) Capsicum

Cucumber

Tomatoes

2012 2.18 3.06 4.88 2007 1.99 3.28 8.10 2002 3.18 5.17 15.34 2000 5.13 18.09 Source: Derived from Statistics New Zealand

Ornamental trees/shrubs

Bedding Plants

Flower bulb, corm tuber

8.63 4.78 12.54

10.83 20.51

3.73

Potential for Diversification of Rural Production in Canterbury

Orchid Flowers

14.68 2.03

Other Flowers and Foliage

Other indoor crops

24.34

6.49

16

Arable Crops Trends Table 8 Canterbury Region - Trends in Arable Crops (Ha) Wheat

Barley

Oats

Other Cereal

Field/Seed Peas

2012 47,787 43,597 1,907 1,788 2007 35,301 36,869 2,925 2,129 2002 18,316 16,945 4,631 1,689 2000 39,512 35,218 5,693 1996 37,169 50,779 5,166 Source: Derived from Statistics New Zealand

4,695 5,063 8,518 13,177 11,539

Other pulses

Herbage Seeds

1,007 352 1,424

28,623 25,420 NA

Vegetable Seeds 7,849 5,537 NA

All other crops 3,194 6,191 24,131 47,823

Some high level findings as a result of this analysis as well as other observations are:  NZ already gets a significant premium for many products. There are rapidly growing exports from Asia, Eastern Europe for many crops – however some high cost countries e.g. USA, Netherlands are still successful.  There is a great variation between the average returns per tonne for many products.  Food production can provide significant secondary benefits e.g. farming/food/tourism linkages – Italy, France.

3.2.1 Results of Screening. The results of this first level screening are summarised in the following Tables 9 to 25. Table 9: Summary of analysis of Arable Crops

Arable Crops Production Trends Market Trends

Economic Social Environmental Competitive Position Capabilities Strategic Potential

Barley / Wheat Grass Static production Export estimate$12m. Excellent Unsure Excellent Unsure

Peas Dried

Quinoa

Peas widely grown Low in NZ Market access barriers Growing (India) demand Could be a fad. Unsure Excellent Unsure Unsure Excellent Excellent OK Relatively Poor

Current small scale Existing capability plant. Unsure Good

Potential for Diversification of Rural Production in Canterbury

Good Unsure

17

Table 10: Summary of analysis of Dried Herbs / Medicinal / Essential Oils

Dried Herbs / Medicinal / Essential Oils Production Small scale NZ production. Trends Research carried out in NZ and Australia. Market Trends Large projected annual growth rate in the world market. Approx. 10,000 potential species. Relatively small scale export $ from NZ though some significant local initiatives e.g. dried parsley, flaxseed/linseed Some potential crops include – ginseng, valerian, echinacea, pyrethrum, native plant extracts Economic Excellent Social Excellent Environmental Excellent Competitive Some existing production. Position Large number of potential crops identified. Many low cost producers internationally. Capabilities Current small scale plant capable of processing. Strategic Potential has long been recognised for Canterbury. Potential Intellectual property / value added offer the potential rather than production. Could be opportunities in linking with Australia. Table 11: Summary of analysis of Pharmaceutical Plants

Pharmaceutical plants Production Trends

Market Trends

Economic Social Environmental Competitive Position Capabilities Strategic Potential

The majority of world production is from relatively low productive sites. Trial plantings produced in NZ. Requires a licence from Ministry of Health (MoH), Ministry for Primary Industry (MPI). Application for further trial plantings has been made. Tasmania is licenced to produce and has three processors. Very large projected growth in the Codeine and derivatives market. Very profitable sector of the pharmaceutical market. Increasing requirement for surety of production. Very good returns at the farm gate. (Lift average rotation by approx. $1,000 / ha). Excellent returns from further processing. Potential for public concern Excellent Very competitively placed if gain a licence. Potential to sell by-products for further processing. Potential to set up processing in NZ. Very good position if approval given.

Potential for Diversification of Rural Production in Canterbury

18

Table 12: Summary of analysis of Saffron

Saffron Production Trends Market Trends

Economic Social Environmental Competitive Position Capabilities

Strategic Potential

Very small current production in Canterbury. Interest from established industry in Tasmania. Very high labour content in harvesting and processing. Highest priced spice in the market. Large export market dominated by relatively low cost / low quality producers. Tasmania maintain that higher quality production can offer very good returns. Expected to grow. Very high gross return from product but it depends on the yield and the total labour cost. Good Excellent. Needs to be linked with a high value chain – NZ cannot compete with commodity saffron Rural Industries Research and Development Corporation (RIRDC) reported on `Development of an Internationally Competitive Australian Saffron Industry” in 2007. Unsure

Table 13: Summary of analysis of Peas

Peas (dried for protein isolate) Production Trends Very well established industry in growing peas. Market Trends Potential replacement for Soya bean product. Higher digestibility and allergen free. Annual growth in value of world trade is 10%. Economic Average returns $ / ha US$3,600. Believe that it would be a cheaper protein than milk Social Unsure Environmental Excellent Competitive Position Unsure Capabilities Extensive capability for growing and drying. Strategic Potential Unsure.

Potential for Diversification of Rural Production in Canterbury

19

Table 14: Summary of analysis of Milking Goats

Milking Goats Production Trends

Market Trends Economic Social Environmental Competitive Position Capabilities Strategic Potential

One very successful co-operative set up in Hamilton Have developed a range of consumer packaged nutritional powders. An alternative to cow’s milk products that have a degree of resistance. Increase in demand for all milk proteins. Growing demand from middle class Asian markets. Very good returns for farmers and from the subsequent processing and sale of products. Good Excellent. No significant production in Canterbury at present. Requires someone to promote the option. Very good.

Table 15: Summary of analysis of Milking Sheep

Milking Sheep Production Trends

Market Trends Economic Social Environmental Competitive Position Capabilities Strategic Potential

Increasing slowly in size in NZ. Most production is for frozen export or unique production of cheeses. Very basic further processing developed. Increase in demand for all milk proteins. Growing demand from middle class Asian markets. Very good returns for farmers but unsure about the subsequent returns from scaled processing. Good Excellent Excellent. None in Canterbury at present. Requires someone to promote the option. Very good.

Table 16: Summary of analysis of Cool Climate Pipfruit

Cool Climate Pipfruit (Bennets Waipopo Honey Crisp) Production Trends Current relatively small boutique producers. Seeking to grow the grower base. Market Trends Targeting a small portion of the American market Economic Excellent returns to the grower, less from value added. Social Good Environmental Excellent Competitive Excellent, counter season production to the Nth American Position producers. Capabilities Crop handling can be scaled with the development of the growing capacity. Strategic Potential Very good. Potential for Diversification of Rural Production in Canterbury

20

Table 17: Summary of analysis of Hazelnuts

Hazelnuts Production Trends Market Trends

Economic Social Environmental Competitive Position Capabilities Strategic Potential

Relatively static production in NZ. Used as an import substitute or added value product on the local market. Expected to drop returns as production increases. Relatively high returns dependant on management from growing and relatively low returns from on handling the crop. Low Excellent. Mainly as an import substitute. Co-operative company set up which processes and sells a wide range of hazelnut products. Medium

Table 18: Summary of analysis of Walnuts

Walnuts Production Trends Market Trends

Economic Social Environmental Competitive Position Capabilities Strategic Potential

Slow but steady growth in the planted area. Rapid expansion of both the volume and value of walnuts exported internationally. Mainly based around import substitution. Relatively high returns dependant on management from growing and relatively low returns from on handling the crop. Low Excellent. Climatic conditions appear suitable. Processor set up maintains that it will require grower support for expansion of processing capability. Medium

Table 19: Summary of analysis of Cherries

Cherries Production Trends

Market Trends Economic Social Environmental Competitive Position Capabilities Strategic Potential

Relatively small area of cherries grown nationally with the majority in Otago. Only 32 ha grown in Canterbury although they can be grown here on dry sheltered sites. Growth in world trade around 10% annually. High returns (dependant on yield) from growing and relatively low returns from on handling the crop. Medium Excellent. Climatic conditions appear suitable though not ideal. Most Canterbury orchards set up to service local demand. Low

Potential for Diversification of Rural Production in Canterbury

21

Table 20: Summary of analysis of Strawberries

Strawberries Production Trends Market Trends Economic Social Environmental Competitive Position Capabilities Strategic Potential

Unsure of total market size because the majority is for local consumption. Continuing demand for total all year round production including imports. High returns from growing for a relatively short period (Jan / Feb). Medium Excellent. Highly competitive for a relatively short time. Potential land available but very few skills Exports require airfreight Low

Table 21: Summary of analysis of Raspberries

Raspberries. Production Trends Market Trends

Economic Social Environmental Competitive Position Capabilities Strategic Potential

Declining national production Potential for productivity gains through the use of new varieties. NZ imports a reasonable amount of frozen raspberries at a relatively low value. Any development of the industry would be based on import substitution. Low returns to the grower. High Medium Not in a strong position to compete with low value imports. Barkers in Geraldine would be the main processor. Low

Table 22: Summary of analysis of Blackcurrants

Blackcurrants. Production Trends Market Trends Economic Social Environmental Competitive Position Capabilities

Strategic Potential

Grown in Canterbury for over 35 years. Area grown has doubled in the last 10 years. Steady demand for the juice concentrate. Expansion of powders and medicinal extracts. Grower returns are average but the added value potential is quite large. Low Excellent Strongly placed in terms of development of non-juice characteristics. Industry product group and co-operative marketing group. Comprehensive research program has identified varieties. Medical research into the medicinal properties. High

Potential for Diversification of Rural Production in Canterbury

22

Table 23: Summary of analysis of Truffles

Truffles Production Trends

Market Trends

Economic Social Environmental Competitive Position Capabilities Strategic Potential

A few successful operations established in NZ. Reported yields in Nth Canterbury are some of the highest in the world. Potentially very high returns, dependant on yield (0 to 100kg /ha) and quality. Demand exceeds supply. Potentially very high. Low. Excellent In an excellent position to compete on the world market. There is a good infrastructure set up to support the industry in Canterbury. High but at high risk.

Table 24: Summary of analysis of Manuka Honey

Manuka Honey (UMF) Production Trends Productivity varies considerably according to the climatic conditions. Number of hives has steadied and is rising again. UMF honey has been produced in Canterbury. UMF Manuka plantation trials Market Trends Manuka honey is the most expensive honey in the world. Demand is continuing to rise as the UMF message spreads. Economic Potentially very high from growing and packaging. Social Low. Environmental Excellent Competitive In an excellent position to compete on the world market. Position UMF is only found in NZ and Australia. Potential problem with the current weak standards of description for UMF. This is causing some problems with counterfeiting of the product. Capabilities There is a good infrastructure set up to support the industry in Canterbury. Strategic Potential High

Potential for Diversification of Rural Production in Canterbury

23

Table 25: Summary of analysis of Animal Derived Bio actives.

Animal Derived bio actives. Production Trends The raw materials are derived from the slaughter of livestock. Therefore the availability depends on the number slaughtered. New Zealand has been active in the industry but has recently been able to produce more refined high quality products. Market Trends The value of NZ’s exports in this sector has increased at a rate of 36% per annum over the last 5 years. From a relatively small base. Economic Very high from recovery and further processing. Social Low. Environmental Excellent Competitive Starting from a very low proportion of world trade but the value Position proposition means that location is not important. The quality of slaughter facilities is very important in terms of recovery of the glands etc. Capabilities There are already a number of specialist companies in Canterbury as well as the major processors increasingly getting involved. Strategic Potential High The results of this screening of potential crops was presented to CDC and the decision was made to take the following crops through to the second stage of screening. This decision was made to examine a mix of crops from ones that are all already well established in the region but show promise for further growth through to crops which are completely new to Canterbury. In making this decision the factor of the potential for added value income being created in the region was a strong factor in the decision. Crops chosen to progress to the second stage of screening.  Pharmaceutical Plants  Milking Sheep  Manuka Honey  Walnuts  Blackcurrants  Pea Isolate.

Potential for Diversification of Rural Production in Canterbury

24

4 Second Stage Results The following results of the second stage screening of the six selected crops with potential are variable in their results as a result of the difficulty or ease of gaining information on them. Where access to reliable information was good we have a high degree of confidence that the results reported here are a fair assessment of the crops potential within the constraints of the time available to carry out this assessment. Where access to reliable information was difficult to access some of the assessment parameters have had to be constructed from limited data or information then we are less confident about the quality of the results. Each crop has a background which includes a summary of the information gained in the first level assessment and an overview of the sources of information. In the second section we have listed the scale of investment required to either start or expand the scale of the crop up to taking up 5,000 ha of land in Canterbury. In the potential returns we have reported the Gross Returns, Net Present Value which is a value of a variable income stream for 25 years, the Internal Rate of Return which is able to be used to compare the performance of different crops and, where possible, the Return on Invested Capital. Then in the final section we have provided a strategic analysis of each investment and a list of recommendations on what should be done to take the concept further.

4.1 Pharmaceutical Plants Pharmaceutical plants were chosen as an example of a completely new arable crop which has high added value potential.

4.1.1 Background On farm Trial evaluations of the growing of poppies (Papaver somniferum) have been recently undertaken in Canterbury. For this reason poppies have been examined in more detail in this study. There are other pharmaceutical plants that may also show potential if examined in more detail. The species of poppy trialled in Canterbury provide alkaloids for use in pharmaceuticals including morphine, thebaine, codeine, oripavine, papaverine and noscapine, and poppy seeds which are used in the culinary trade and for bio oil extraction. The alkaloids are extracted from the “poppy straw” which is the dried mature seed head plus a small amount of the stem minus the seed. The types of poppy that could be grown in New Zealand are morphine and non-morphine species including thebaine and codeine producers. This assessment includes the development of a processing and extraction facility to establish New Zealand as a supplier of the pharmaceutical raw materials. The growing of poppies in broad scale agriculture has been carried out in Tasmania for more than 30 years and this area is now seen as the reliable source of the highest quality product on the market. The potential to grow poppies in New Zealand is partly driven by the Tasmanian’s having reached the productive limit of their area to grow the crop aa well as the ability to gain a more assured level of production from irrigated agriculture in New Zealand. This is aided by the fact that the top group of New Zealand growers are much more capable agronomically than the average Tasmanian grower.

Potential for Diversification of Rural Production in Canterbury

25

In 2013 there was US$663.m of concentrates of poppy straw traded internationally (HS Code 293911). There has been a 28% per annum increase in the value of exports between 200913 however the annual growth in quantity has fallen by 15% per year over the same period. The UK is the largest exporter with 55.5% of world exports. In 2013 it exported 52 tons of product at an average price of US$5.7m tonne. Spain was the next largest exporter with 8.6% of world exports (104 tons at an average price of US$447,837 tonne.) In 2012 the UK imported US$86.3m of poppy straw concentrate - US$40.7 of this from Australia (HS Code 29391100). These figures indicate that there is a very high value added component in the further processing of the crop to at least Concentrate of Poppy Straw (CPS). Codeine is used for mild pain relief and as a cough suppressant, and is the most commonly used product. Global production of codeine has risen from 210 tonnes in 1991 to 337 tonnes in 2010, an increase of 60% over this period. The majority of codeine, 90-95%, is currently produced semi-synthetically from morphine. The production of codeine concentrate of poppy straw (CPS) derived from the newly developed ‘Tasman’ poppy variety enhances access to markets such as the United Kingdom. There is expected to be substantial use of codeine in the future in the areas of treatment for obesity and for addictions. Therefore the demand for the product is very strong and is growing rapidly with growing average incomes. Growth of the crop is considered to be relatively straight forward for our arable farmers. Poppy straw sits within the top group of performers on a gross margin basis. Poppy production would be considered a specialist crop for several reasons, e.g. the requirement for specialist harvesting equipment, but the gross margin on offer would lead us to believe that poppy straw production will be seen as very attractive to growers. This change in the crop mix over the whole rotation would lead to a significant increase in the average gross margin by 12% with the inclusion of poppies and an extra winter grazing.

Processing. There is the potential for investment of capital in extraction capacity in New Zealand. This would lead to additional employment and greatly enhanced economic benefits for the Canterbury area and the wider New Zealand economy. The business case for construction of a locally based extraction plant in New Zealand would depend on the following factors:  The capital cost of providing new capacity in New Zealand in order to take advantage of expanding international prices.  The potential for enhanced cost efficiency of a new factory in New Zealand, with new extraction technology, compared with the capacity of older existing processors.  The ability of New Zealand producers to be able to market their product effectively in the world markets.

4.1.2 Investment Required The capital cost is considerable to establish the sort of plant which could process all of the output from 5,000 ha.

4.1.3 Potential Returns The potential additional returns on farm of growing the crop over 5000 ha is as follows. Potential for Diversification of Rural Production in Canterbury

26

NPV

$118.5m

The potential returns from establishing a further processing facility in Canterbury are. NPV IRR R O Cap

$160.2m 32% 32%

In addition there would be considerable additional employment created around the industry which grows the crop and harvests it and also around the processing facility. For example one of the processors in Tasmania has over 60% of its staff with a first level university qualification or higher.

4.1.4 Strategic Analysis Our summary of the strategic factors is as follows:

Strengths

Weaknesses

Very strong product champion. Fits well into the arable rotation. Increased returns above what is available. Very high NPV both on farm and in processing. Very high value added component. High level of graduate employment.

Regrowth plants Operator harm from poppy dust. Potential establishment of a competitor for growing area. Large investment in processing capability and technical staffing.

Opportunities

Threats

Rapidly increasing global demand. Public concerns around illicit use. Ability to set up latest technology processing. Not granting of the application for a licence.

Recommendation  Pharmaceutical plants should be considered as excellent new arable crops for Canterbury.  If required approval to grow pharmaceutical plants is gained and the regulatory regime is designed to meet the requirements of the crops.  Support should be offered to potential growers to locate either a joint partner investor in processing facilities or support in sourcing the required funds.

Potential for Diversification of Rural Production in Canterbury

27

4.2 Milking Sheep Milking Sheep were chosen as a completely new pastoral crop that has the potential to be relatively low in the amount of nutrients that it leaches to water.

4.2.1 Background To date the sheep milking industry in New Zealand has been made up of a few small scale artisanal producers that have produced yoghurts and cheeses for the local market. That has then expanded into the production of frozen milk which has been exported to Australia and the production of ice cream. Lately the one big commercial producer and processor in New Zealand (Blue River Dairy in Southland) has developed the capacity and technology to produce milk powders and has further diversified into the production of infant formula milk products for export into Asia (particularly China). They aim to be the only manufacturer of sheep milk products that is licensed to export to China. There has been comparatively little research lately or commercialisation of sheep milking however the production of milk products internationally from sheep is significant with approximately 2% of total milk being produced by sheep globally. In New Zealand the Blue River Dairy Company has successfully established a sheep milking operation which includes the production of cheese, ice cream and milk powder. Revenue is estimated at between $1015m per year. The company suggests that sheep milking provides a way forward for the NZ sheep industry and would more than compensate for the decline in returns from wool. The company has a 10 year development plan and hopes to see an industry with at least 10 million sheep within 10 years. The Parliament Primary Production Committee looked into the sheep milking industry in 2013. It is believed to be superior to cow’s milk for the following reasons:  It is a complete protein containing all the essential amino acids without the heavy fat content and catarrh (mucus) producing materials of cow's milk.  The fat globules of Sheep's milk are finer than those of cow's milk, allowing for a greater surface to volume ratio for enzymatic attack. This enables the fat of Sheep's milk to be broken down and digested more easily.  Medium Chain Triglycerides which are higher in Sheep's milk than cow's milk, have a unique ability to provide energy to the human metabolism, as well as an ability to lower, inhibit and dissolve cholesterol deposits.  The lactase enzyme provides for the digestion of lactose, or milk sugar. People who do not possess this enzyme are lactose intolerant. Sheep's milk contains less lactose than cow's milk, and people can generally tolerate Sheep's milk better than cow's milk.  Lactose is the most important carbohydrate present in milk. The lactose content of Sheep's milk is about 10% lower than that of cow's milk.  Milk protein is comprised of about 80% caseins and 20% whey proteins, the caseins are present in the form of micelles: these are large aggregates of protein and calcium phosphate. The number of small micelles is much greater in Sheep's milk than cow's milk.  The fatty-acid composition of Sheep's milk exhibits substantial differences from that of cow's milk. Sheep's milk fat contains more short-chain and medium-chain fatty acids. The seasonal variation in the fatty-acid composition is lower than that of cow's milk.

Potential for Diversification of Rural Production in Canterbury

28

Therefore sheep’s milk is seen as an excellent source for infant formula to market into the Asian market where there is a relatively high degree of lactose intolerance and an increasing awareness of the benefits of the product. Some findings from the market are:  Sheep milk sells for around four times the price of cow’s milk. It has higher solids content and offers twice the amount of cheese per litre of milk than cow’s milk.  There is a high demand for sheep milk products a driver being that approximately 50% of Asians are intolerant to cow’s milk though not to sheep (or goats) milk.  Though the current East Friesian sheep were suitable for milk production there was significant potential for improvement in their productive capacity.  The Blue River Dairy Company believes that sheep milking can get substantially higher return on investment than cow’s milk off the same area of land. There are few models for sheep farming for milk production in New Zealand however there is extensive research on sheep husbandry. There is also good knowledge by farmers on sheep husbandry as well as support networks and markets for by products e.g. wool, milk lambs. There has however been limited research into the optimal breeds for sheep milking. Nutrient loss (P and N) from sheep is known to be lower than from cows because there is less concentration in the individual urine patch, however these assumptions will need to be reviewed in relation to the more intensive management systems and stock types used for sheep milk production. Blue River Dairy believe that their loss of Nitrogen is approximately half that of cow systems. This has become an important issue in Canterbury with the majority of irrigated producers now being limited in the amount of Nitrogen that they can leach by regulations in the recently released Canterbury Land and Water Regional Plan. Early estimates find that, for dairy farming in particular, the total amount that they will be permitted to leach will be about half what they are at present. This will mean either the adoption of less intensive farming systems or further investment in mitigation techniques to allow them to continue to produce at current or higher levels. For new development of irrigation capability (approximately 80,000 ha consented in Canterbury in large irrigation schemes at present) sheep milking could offer an alternative which both met the N leaching requirements of the regional plan and the return on investment targets of investors. In the following discussion on the modelling of potential returns the information on the on farm operation of the sheep milking option has been taken from discussions with Blue River Dairy10 the assumptions on the processing capital costs, operational costs and returns are based on similar models used in the dairy Industry. Sheep milk for a lactation length of 180 days. The length of this lactation period coupled with the shape of the pasture growth curve or irrigated land in Canterbury means that you would require approximately 1.5 times the peak number of ewes to be able to maximise the productive capacity of the land for the full period of pasture growth. These ewes would be required to have staggered lambing dates to best meet the pasture production curve.

10

Anne O Connell: Farming Systems Manager Blue River Dairy. Personal communication.

Potential for Diversification of Rural Production in Canterbury

29

Sheep produce an average of 1litre per day with a milksolids concentration of approximately 11.5% meaning that they produce 20.7 kg milksolids in each lactation. The capital costs for set up of the milking operation are very similar to dairy cow costs. It is estimated that for the addition of 5,000 ha of sheep milking in Canterbury there would be at least an additional 125 jobs on farm and the additional jobs required in the processing industry. The following analysis is based on the entire processing of the production into milk powder which is then further combined into infant formula and then sold into the Asian market.

4.2.2 Investment Required On Farm Development Costs

$61.6m

Processing Capital cost of plant

$48.5m.

4.2.3 Potential Returns On Farm Gross Returns Net Returns NPV IRR Return on Investment

$33.75m $15.2m $107m 24% 25%

Processing Gross Returns Net Returns NPV IRR Return on Investment

$48.5m $16.5m $134m 34% 34%

Potential for Diversification of Rural Production in Canterbury

30

4.2.4 Strategic Analysis Our summary of the strategic factors is as follows:

Strengths

Weaknesses

Long experience with farming sheep. Huge potential in the Asian market for the product (unproven as yet). Relatively low cost of development on farm. Relatively high returns on investment. Potentially meets Land and Water Plan’s nutrient discharge limits.

No experience in Canterbury. The ultimate efficient system as yet unproven for irrigated production. No product champion in Canterbury. No processor keen to take the production as yet.

Opportunities

Threats

Establish a relationship with existing processor in Southland. Develop a model of the most efficient system for irrigated Canterbury. Promote the concept.

Insufficient uptake of the idea amongst land owners. No one keen enough to take up the processing opportunity. Market resistance in Asia.

Recommendations  Further investigation into sheep milking as a new land use in Canterbury should be carried out with a more detailed analysis of the potential market, the optimal on farm production system, the economics of farming and the potential for nutrient discharges.  The organisation carrying out this further investigation should engage with Blue River Dairy to ascertain if they would be keen to process the production in Canterbury.  The concept of sheep milking in Canterbury should be promoted initially with Environment Canterbury and the major irrigation companies.

Potential for Diversification of Rural Production in Canterbury

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4.3 Manuka Honey Manuka Honey was chosen to represent the expansion of an existing activity into a higher return operation.

4.3.1 Background Market Trends In 2012 there was 526,193 tonnes of natural honey fresh (HS Code 040900) exported worth US$1,732m. Argentina had 12.4% of world trade (by value) while other large exporting countries included China (12.4%), Germany (7.3%) and New Zealand (6%). Between 2008 and 2012 the annual growth in world trade was 4% while the annual growth in value was 9% for the same period. In 2012 the average price per tonne was US$3,293 per tonne with a range in average from a low of US$1,952 per tonne for Chinese honey up to US$11,999 for honey from New Zealand (UNITC Trade Map). In 2010 NZ produced 12,553 tonnes of honey with exports of 8,606 tonnes worth US$103.3m. Major markets are the UK (21% of exports), Hong Kong (13%), Singapore (11%), Australia (11%) and Japan (9%). Between 2008 and 2012 the value of honey exports grew by 20% per annum while the volume of exports increased by 4% per annum. Honey was identified by the MED/Coriolis 201211 as one of the top opportunities for investment and growth. It specifically identified Manuka Honey as a significant opportunity and that it was only naturally present in New Zealand and Australia providing a competitive advantage. Some honey from nectar collected from Manuka flowers has antibacterial properties and is now the most expensive honey in the world. The report identified opportunities for further value creation through:  Further development of medicinal products to the medical sector  Industry consolidation  Further research to identify the active ingredients in honey  Greater promotion and distribution to Asia  Production of added value products e.g. cosmetics, natural health products, flavours.

Production Trends Canterbury has a strong and active beekeeping industry which is involved in the production of White Clover, Varietal, Manuka honey as well as the provision of pollination services to both the arable and pastoral industries and the sale of queens or whole hives to the North Island. Over the last decade we have seen a consolidation of the number of hives into fewer operators which has seen a corresponding lift in the performance of honey production per hive and profitability. At the same time there is substantial investment in the extraction and marketing of the product in Canterbury. The drive to harvest Manuka honey is caused by the differential being paid for it compared to the other sorts of honey available. For this exercise we have assumed $20 / kg for Manuka honey, $6 / kg for clover and $7 / kg for varietal honey12. Therefore the price premium between 11

Coriolis Investment Opportunities in the New Zealand Honey Industry. Part of the Food and Beverage Information Project May 2012 – www.foodandbeverage.govt.nz 12

Prices supplied by large beekeeper and processor in Mid Canterbury.

Potential for Diversification of Rural Production in Canterbury

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Manuka honey and the alternatives is very high. This partly reflects the difficulty in producing it at present but mainly reflects the premium that the markets are prepared to pay for a relatively rare but special product. An economic analysis of plantation Manuka production was reported as part of a MPI Sustainable Farming Fund (SFF) project that looked into alternative land uses for marginal lands (class 6/7) in the Raukawa rohe (Edlin J, Duncan A 201313). One option was via a profit share model with Comvita. It calculated an income of between $180 - $360/ha with investment return (Marginal IRR) of between 6.7% and 14.5%. This compares with a suggested $95/ha/yr return from sheep and beef farming on this marginal land. The report also reviewed a selfmanagement scenario which projected an income of between $350- $900/ha. The Edlin report suggests a minimum of $2,000/ha to plant out a Manuka plantation– with additional costs if land clearing is required. Based on this it was suggested that it would take at least 9 years from the establishment of a Manuka plantation to make a net profit. The performance detailed in the Edlin model is used in this analysis. The following strategic level issues were identified in the Coriolis report.  Introduction of other diseases and the monitoring and control of established diseases (e.g. American foulbrood, varroa mite)  Market issues – counterfeiting; exaggerated claims (e.g. non-active being sold as active), False claims bring disrepute on the industry; Identification of active chemical in honey threatens the supply of raw product to the medical sector (e.g. willow bark vs. aspirin); Increasing amount of regulatory restrictions; could be classified as medicine; Scares/contaminations/disease damaging consumer image of New Zealand  Other countries launching “active” honeys (e.g. Chile’s Ulmo active honey)14 Other issues identified in the production of Manuka honey include:  There is significant variation in the yield of Manuka between seasons and sites. There are also regional variations in UMF levels with uncertainty on the factors creating these variations.  Manuka is susceptible to Manuka blight (sooty mould) however the host (scale insect) is susceptible to a parasitic fungi.  Limited resource – there are limits on the numbers of hives that can be carried on land – overstocking results in significantly depressed overall yields as nectar is used by the bee for foraging rather than stored as honey. Bees can forage over large distances (i.e. 3km). It is possible for neighbouring apiary sites to harvest honey from a Manuka plantation – degrading any returns for those that have invested in establishing a Manuka plantation.  There is some confusion on the production of UMF honey from Manuka and Kanuka15 and as well the `weak’ standards for describing UMF honey. The model that has been developed for analysis in the case of enhancing the Manuka honey production capacity in Canterbury involves the purchase of 100 ha of lower quality hill country land which is planted in Manuka by an existing beekeeper who has all of the hives and skills necessary to run them. Therefore the analysis is for a beekeeping operation as it is at present 13

http://maxa.maf.govt.nz/sff/about-projects/search/M12-168/headlands-alternative-land-use-scoping-study.pdf MPI SFF Grant No: M12/168 14 http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11134305 15 http://www.radionz.co.nz/news/rural/105546/kanuka-honey-research-divides-scientists

Potential for Diversification of Rural Production in Canterbury

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compared to a bee keeping operation with 100ha of Manuka from which to harvest the honey. Therefore the analysis shows the operation with the Manuka stand minus the operation without the Manuka stand. There is no production from this block until year seven. At the same time the bee keeping operation is set up as a very efficient operation with revenue from White Clover and other varietal honey as well as Manuka honey with additional revenue from pollination services into the arable industry. Total Revenue per hive is $440 and costs are $170 / hive. The product is sold direct to a processor and packer of honey so there is no analysis of the added value component. For the sake of a fair comparison between the options chosen for this report the figures have been scaled up to the area included as Manuka producing being 5,000 ha.

4.3.2 Investment Required Development Costs Time to first Manuka harvest Yield / hive (Manuka) Price / kg.

$47.5m 7yrs 15 $20

4.3.3 Potential Returns Beekeeping Gross Returns Net Returns NPV IRR Return on Investment

$7.5m $0.15m $0.560m 15% 16%

4.3.4 Strategic Analysis Our summary of the strategic factors is as follows:

Strengths

Weaknesses

Existing beekeeping industry well established. Processors and packers well established. Currently a very high premium for Manuka (high UMF) product. Poor returns for alternative land use of the class of land required. One income stream as part of an intensive beekeeping operation.

Long period from planting to first harvest. Variable production based on seasonal weather conditions. Unsure of the resultant UMF factor in the honey.

Opportunities

Threats

Continuing to expand our knowledge into Other beekeepers bees can harvest the how we can maximise the UMF factor in the product (exclusivity). honey. The market may offer lower returns as a result of the increased production.

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Recommendations  The industry should keep a watching brief on the results of the current trial work into establishing a Manuka honey plantation.  The local beekeeping industry should investigate the possibility of extending the current trial work into Canterbury on suitable sites.

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4.4 Walnuts Walnuts were chosen as an example of an existing industry which has grown rapidly from a small base.

4.4.1 Background On Farm Canterbury has a relatively small (389 ha in 2012), but steadily growing area planted in Walnuts. A processing facility was established in 1996 (A Cracker of a Nut) which purchases walnuts in-the-shell from properties throughout New Zealand. Walnuts are then stored, cracked and separated into a variety of sizes and grades for sale to the hospitality, manufacturing and retail sectors. Over the years, further development and processing has enabled A Cracker of a Nut to become a year round business and extend the range of products available to include walnut oil, paste, flour, dukkah, chutney and pickled walnuts. Grinding and grading the walnut shells has seen the development of products for the abrasives, cosmetic and wood turning industries. At the same time a NZ Walnut Industry Group (NZWGI) was formed which has tried to enhance growers knowledge around what to grow and how to go about it. In 2012 there were exports of 194,588 tonnes of fresh or dried, shelled or peeled (HS Code 08232) walnuts worth US$1,564 m. The USA has 41.5% of world trade while other large exporters included Mexico (10.3%) and Chile (9%). Between 2008 and 2012 the annual growth in world trade was 10% while the annual growth in value was 5% for the same period. In 2012 the average price per tonne was US$8,042/tonne with a range in average from a low of US$3,597/tonne for walnuts from the Ukraine up to US$12,842 for walnuts from Chile. (UNITC Trade Map). In 2012 New Zealand imported US$5.5m (600 tonnes) at an average price of US$9,227/tonne with $4.2m coming from the USA and minor amounts from the China, Australia and India. Exports in 2012 were only US$38,000 (4 tonnes) with most of these going to Fiji and Australia at an average price of US$9,500/tonne. It is apparent that there is very little potential for further value added for the crop beyond the shelling of the walnuts. The New Zealand Tree Crops Assn walnut production guide provides a good summary on the management of walnuts. This reports that for Canterbury, areas with lower rainfall are preferred because higher rainfall areas are more likely to have problems with blight. It also highlights the need for frost-free conditions during the growing season. Soils need to be fertile and free draining as water logged soils will quickly kill trees. It is interesting that the largest growing areas in the world are China, where by far the majority of production is for local use, and the USA where there are large areas planted for commercial production and export mainly to Europe. It should be noted that the areas planted for commercial production are predominantly in California which is subject to the required amount of winter chilling but is frost free during the growing season. Potential for Diversification of Rural Production in Canterbury

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Australia has one large producer with land in Tasmania and South Australia, totalling 2,235 ha, which again combines the two ingredients of the right amount of winter chilling but being frost free during the growing season. Most of their planting is relatively new and is highly mechanised in both its production and processing facilities and it sells the majority of its product in the shell to either export or further processors. It is interesting to note that they project that their productivity will be relatively low at approx. 1.5 tonnes per planted ha when it reaches full production. The jury is still out on the viability of growing walnuts in Canterbury16. Because the time from planting walnuts until they first fruit in harvestable volumes is 10 years and then up to a further 10 years before you reach potential peak production there is no hard knowledge of how much that walnuts will yield in Canterbury. This is further clouded by the fact that the crop has been affected by frosts in Canterbury. So the picture is of some seasons when the yields have been very promising, up to 40 kg / tree, and others when there has been no production at all because of frost impact.

Processing It appears that the processor can handle the volumes produced in New Zealand at present (100 tonnes) but would require significant investment if it were to upgrade its processing plant to handle any further volume17.

4.4.2 Investment Required The following on farm costs and returns are taken from the NZWGI Growers Manual. Development Costs Time to first harvest Yield / ha Price / tonne.

$12,000 /ha 10 years 1500 kg / ha $4000

4.4.3 Potential Returns On Farm Gross Returns Net Returns NPV IRR Return on Investment

16 17

$30m $22.5m $85m 17% 38%

Nelson Hubber Chair NZWIG personal communication. J Lawrence Cracker of a Nut personal communication.

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4.4.4 Strategic Analysis Our summary of the strategic factors is as follows:

Strengths

Weaknesses

Strong group of initial investors. Long period from planting to harvest. Industry organisation set up. Potential for frosts to impact on yield. Very high potential returns once fully Relatively weak local demand. productive. A long way from key markets (Europe). Potential to be high yielding. Very little value added. No real product champion.

Opportunities

Threats

Limited until the potential is realised.

Potential for blight. Inconsistent production.

Recommendation  A watching brief on developments in the walnut industry over the next 10 years should be maintained.

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4.5 Blackcurrants Blackcurrants were chosen as an example of an existing industry which had the opportunity to expand into further added value activities.

4.5.1 Background On farm. In 2012 Canterbury had 948 ha of blackcurrants which reflects a steady increase in planted area from the 567 ha in 2000. In 2012 there were 1,408 ha planted in New Zealand with the balance of production in the Tasman region. Blackcurrants have been grown in Canterbury for more than 40 years. Over the years the area has waxed and waned according to the world market price which has fluctuated quite considerably during that time. Over the last 10 years the area planted in blackcurrants in Canterbury has doubled in size as a result of the increased interest in payment for the crop from Glaxo Smith Kline which markets the concentrate juice as Ribena. They take just over half of the New Zealand production of blackcurrants. Canterbury growers have long been held up as the leaders in global production both for the yields which they receive but also the high quality of the product. The crop requires a fair degree of winter chill and then fine frost free weather during flowering. Sometimes yields are variable as a result of poor weather or frosts at the time of flowering. The industry is loosely structured around a mix of individual sales of products, sales to Ribena and other processors and sales to the industry cooperative NZ Blackcurrants. There are a number of processors who concentrate the juice and some who manufacture a range of powders and market them. There is also a long established and reasonably active industry product group Blackcurrants NZ (BCNZ). This group operates under the New Zealand Horticulture Export Authority (HEA) Act 1987 since 10 August 1990. It is the view of BCNZ that the blackcurrant industry will most effectively develop and grow with a structure that supports tight cooperation, yet still encourages innovation through development of new products and markets. The base of the industry comprises product forms which are included in the provisions of the HEA Act, and NZ does have a superior position in the market as a supplier of these products. This will be maintained by:  rigorous maintenance of quality standards, including the residue free status of concentrate,  retention of production efficiencies,  adherence to an international marketing plan, that is developed for the industry and tailored to suit individual market requirements,  attention to servicing overseas markets in an efficient, controlled and cost effective manner,  use of reliable market intelligence to control and plan overseas market development, presentation of a consistent product, and excellent promotion by exporters which includes all elements of product knowledge, research, plant breeding and quality standards, development of strategic alliances by exporters on behalf of the industry, providing assurance of orderly supply in recognition of their investment in blackcurrant product and market development. Potential for Diversification of Rural Production in Canterbury

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The most significant roles that BCNZ has undertaken over the last decade has been the trialling and introduction of superior blackcurrant varieties, support of the identification of the health benefits of blackcurrants and development of the market in Japan. Despite these significant achievements the returns to blackcurrant farming has not improved materially to the growers. It appears that the product returns are stuck in a commodity cycle.

Market Opportunity In 2012 there was US$11.711m of blackcurrant juice concentrate exported from New Zealand (HS Code 2009892015) with US$7.446m to Malaysia and US$1.074 to Australia.  There are some well established capabilities in the region including:  Blackcurrants NZ 18– an industry product group with a marketing strategy under the Horticulture Export Authority.  New Zealand Blackcurrant Co-operative19 – made up of 40 growers in Nelson and Canterbury who have co-ordinated research and marketing.  Just the Berries20- produce a range of extracts from blackcurrants including powders and trademarked product- Delcyan a powder formulated to improve brain function. The company is linked with NZ Pharmaceuticals and uses their processing facility in the Manawatu. Blackcurrants are marketed mainly as a fruit juice which is high in Vitamin C and has a relatively high amount of antioxidants in it. In 2007 the Blackcurrant Cooperative had a research scientist review a range of trials carried out in Japan on the impact of taking blackcurrant juice. These were clinical trials which proved that extracts from blackcurrants and other berry fruit have been shown to increase blood flow with the following range of statistically significant physical outcomes:  Vasodilation (widening) of blood vessels  Reduced muscle stiffening under repetitive work  Reduced eye visual fatigue. These results are attributed to the presence of relatively high proportions of anthocyanins in blackcurrants. In 2011 Plant and Food reported in the results of their research into the health benefits of blackcurrants that the following soft marketing claims could be made which were backed by science:  Controlled oxidative stress and inflammation  Controlled muscle damage and soreness  Assisted immune protection -enhanced immunity  Speedier tissue repair, recovery and performance in exercise  Train/work harder …….and for longer. In 2013 Plant and Food reported that: “We found that, compared to a placebo, taking an enriched blackcurrant extract before performing stressful mental tests helped trial participants maintain accuracy, and that their mental fatigue was significantly reduced. Our next stage is to identify exactly which 18

http://www.blackcurrant.co.nz/aboutus.html http://www.nzblackcurrants.com/ 20 http://www.justtheberries.com/blackcurrants.php?pg=82 19

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compounds are creating this effect, and using this knowledge to develop new whole and processed foods or ingredients that deliver optimised performance.” However it is proving difficult to trade on these health benefits without hard extensive human health trials. These are very expensive to set up and run which to date has proven too difficult for the growers and processors to fund themselves and they have been unsuccessful in raising the funds to carry out such research from elsewhere. This analysis takes a high order view of the nature of the industry in Canterbury, and assumes that the health benefits were irrefutably proven with human health trials and the industry size had expanded to incorporate the 5,000 ha size seen as possible in this project. The entire raw product is concentrated and dried into a powder form and marketed as such into the ever expanding and highly lucrative health and wellbeing market. In this analysis the returns to the growers are kept at a level with the highest return from the sale of blackcurrants being the present return from the sale of Blackcurrants to Ribena. The capital cost, yields, costs and returns from the processing of the powder are taken from indications of likely costs, known relationships, assumed proportions of costs and what the product is selling for on the market at present. We feel that there is a high degree of reliability in the on farm calculations but the processing costs and returns are less accurate.

4.5.2 Investment Required On Farm Development Costs Time to first Harvest

$130.25m 3 seasons.

Processing Capital cost of plant

$70m.

4.5.3 Potential Returns On Farm Gross Returns Net Returns NPV IRR Return on Investment

$56m $32.8m $156.9m 16% 25%

Processing Gross Returns Net Returns NPV IRR Return on Investment

$78.8m $27.6m $235m 39% 39%

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4.5.4 Strategic Analysis Our summary of the strategic factors is as follows:

Strengths

Weaknesses

Well established growing industry. At the forefront of world production. Reasonably profitable at present. Some health benefits proven in a limited form. Existing processors producing a limited amount of the target market.

Some variability in annual production caused by adverse weather. Lack of scale amongst existing growers to fund the sort of investment required.

Opportunities

Threats

To prove the health benefits in clinical trials. Failure to prove clinical health benefits. To develop a marketing plan and branding Copying the product by other countries and around New Zealand blackcurrant powder. under cutting the market.

Recommendations  Assistance should be given to the blackcurrant grower group to help in raising funds to finance the required clinical human trials.  Assistance should be given to the blackcurrant grower group in developing a New Zealand brand around the product.

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4.6 Pea Isolate Pea isolate was chosen because it was seen to offer the potential to the arable industry of further value added processing of the crop.

4.6.1 Background Pea Isolate is the product of the further processing of dried yellow peas (Pisum Sativum). Canterbury has a long history in the production of yellow peas which were once a corner stone crop in our on farm cropping rotation. They were sold into Europe and Asia where they were seen as a good source of protein in prepared meals. Consequently the arable growers were seen to be very efficient in the production of the crop and achieved yields and product quality that were right near the top of production in the world. Ultimately the demand for New Zealand grown yellow peas dropped off as a result of intense price pressure from large scale low cost producers such as Canada. Since then there has been the development of the powdered pea isolate which is widely used in the food industry. Pea protein is a food additive with a neutral taste that is used in dairy alternatives such as cheeses and yogurt. Pea Protein Isolate powder is a high quality hypoallergenic protein powder containing a balanced supply of amino acids, good digestive quality and a protein level of 85%. It is an alternative for people wishing to avoid dairy and soya based proteins due to food allergy and intolerance, and is also gluten and GM free. It is high in valuable Branched Chain Amino Acids (BCAAs), it has a healthy nutrition profile, low in carbohydrates and low in fat. The digestion rate of Pea Protein Isolate is slow compared to sources like Whey protein. The processing of the dried peas entails dry grinding them to obtain pea flour which is then hydrated and after separation of the starch and fibre then the protein coagulation occurs. It is then purified and carefully dried in an atomizer. Scientists at Plant and Food CRI have indicated that the processes are relatively straight forward and should be able to be replicated in New Zealand once some of the details of the individual processes are further researched. Pea Protein Isolate is increasingly being marketed into the growing health and wellbeing market as a powder which can be rehydrated and drunk. It is growing in popularity in the body building and health sectors because it is:    

Natural (additive and flavour free) Great for Vegetarians and Vegans Free of additives and GMO free Hypo-allergenic

Packaged and marketed into those sectors it is retailing at about $50 / kg. In the following modelling the on farm returns are calculated as the additional return from including dried peas into the rotation, which have been calculated as $350 / ha. For the processing sector the capital costs and operating costs have been impossible to determine so they have been taken at the rate for standard differentials for the processing sector determined by the final sale price of the product. Potential for Diversification of Rural Production in Canterbury

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4.6.2 Investment Required On Farm Development Costs

nil

Processing Capital cost of plant

$77m.

4.6.3 Potential Returns On Farm Gross Returns Net Returns NPV IRR Return on Investment

$1.75m

Processing Gross Returns Net Returns NPV IRR Return on Investment

$48.1m $19.2m $137.7m 25% 25%

4.6.4 Strategic Analysis Our summary of the strategic factors is as follows:

Strengths

Weaknesses

Experienced growers. High ultimate returns from the product. High amount of value added.

Lack of an existing processor. Lack of knowledge in the process. Little additional return on farm.

Opportunities

Threats

To re-establish a welcome crop for growers. To find out more about the processing of the crop. To establish a New Zealand brand around the quality of the product to extract the maximum returns.

Competition from growers of the crop internationally that can grow the crop cheaper than in New Zealand. Unwillingness for a processor to become involved.

Recommendations  More detailed analysis of the opportunity to ascertain the true capital cost, processing cost and detail of the processes should be carried out.  The organisation carrying out this additional work should also engage with existing processors to ascertain under what circumstances that they would be willing to enter the industry.

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4.7 Comparison with Alternatives In order to carry out a comparison of the financial returns generated with what is being achieved at present the following analysis was carried out.

Pastoral Sector The analysis of the potential returns from the pastoral sector reports the marginal return to the investment. In this way the common investment elements like cost of the land and the cost of irrigation equipment are left out of the comparison to allow comparison of the choice to adopt one system or the other. Table 26: Marginal returns to investment in the pastoral industry (/ha).

Capital Invested Return on Capital Dairy Farming Sheep Milking Dairy Support Sheep and Beef

11,500 9,500 3,500 4,200

28% 25% 22% 18%

As can be seen from Table 26 Dairy farming still offers the best return on capital but Sheep milking is very close behind and offers the non-financial advantage of creating lower Nitrogen leaching.

Arable Sector Comparison of the two arable examples are different because they do not require the investment of any additional capital. Therefore the comparison between them and what is occurring at present is the return received from the total rotation, expressed as Cash Farm Surplus, compared to the total amount of capital invested in the farming operation, Total Assets. Table 27: Return on Total capital invested in arable operation.

Capital Invested Return on Capital Rotation including peas & pharmaceutical plants. Rotation including pharmaceutical plants. Rotation including peas. Existing rotation.

9.9% 8.9% 8.5% 7.5%

As can be seen from Table 27 the inclusion of both pharmaceutical plants and peas into the rotation offers a significant lift in the return on total capital above what is being achieved at present. The addition of either pharmaceutical plants or peas alone also offer a significant lift in overall returns. However it is the returns from processing which really offers the most in terms of additional value added to the arable industry.

Horticultural Sector The returns from the Horticultural sector are worked out on the marginal returns from the investment. The comparison is made with the existing returns achieved from Blackcurrants and the potential returns that can be made from Wine grapes. These are the only two horticultural crops that we had recent analysis on

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Table 28: Marginal returns to investment in the horticultural industry (/ha).

Capital Invested Return on Capital Walnuts Future Blackcurrants Wine Grapes Existing Blackcurrants

12,000 26,000 40,000 26,000

28% 25% 19% 13%

As can be seen from Table 28 both Walnuts and the future Blackcurrants offer considerably better returns than both Wine grapes and existing Blackcurrant production.

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Appendix 1: Organisations Contacted for First Stage Assessment Organisation Foundation for Arable Research Plant and Food Midland Seeds McCains Tomato Grower MG Marketing Berries Aoraki Business Development Enterprise North Canterbury Grow Mid Canterbury NZ Food Innovations NZ Horticultural Consultants Cracker of a Nut Beef and Lamb NZ Silver Fern Farms ANZCO AgResearch Plant and Food Dairy Goat Co-operative New Zealand Hops Ngāi Tahu Lincoln University - BHU

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Appendix 2: List of crops investigated by Plant and Food. Crop

Arable

Productive Requirements Intensive Marginal Soils Require Shade or a Horticulture host

Food & Herb Crops Buckwheat X Coriander (herb & seed) X X Elderberry X Gevuina (nut) X Horseradish* X X Konjac* X Maté (tea) X Saffron X Ulluco X Wasabi* X Yacon X -Edible fungi Black Truffle* Borchii truffle Burgundy truffle Saffron Milk cap* Shoro Plant Extracts -Essential Oils Clary Sage* X Coriander X X Dill X Lavender X a, Natives oils * X Oregano X Pepermint X Rose* X Sage* X Thyme X -Medicinals Arnica* X Calendula X Echinacea* X Ginkgo X Ginseng* Goldenseal Licorice X Milk (variegated) thistle X Rosehip* St John’s Wort Valerian* X Industrial Crops Pyrethrum X Biofuel/Biodiesel* X Hemp X Meadowfoam oil X *: an economic assessment of the potential crop returns has been a: Requires market development.

X

X

X

X X X X

X X X X X

X

X

X X X

X X X X X X

X

undertaken for this crop

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