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Annual Report 2017 Delivering prosperity by transforming agriculture About AgResearch 02 Chair and Chief Executive’s review 04 Our highlights 06 Celebrating AgResearch scientists 08 The impact of our science 12 Snapshots of success 2016/17 28 Our people – Tō tātou iwi 30 Key performance indicators 34 Performance indicators 36 Financial performance indicators 40 Consolidated financial statements 41 Consolidated statement of comprehensive income 41 Consolidated statement of financial position 42 Consolidated statement of changes in equity 43 Consolidated statement of cash flows 44 Statement of accounting policies 45 Notes to and forming part of the consolidated financial statements 52 1 Revenue 52 2 Operating expenditure 52 3 Other gains/(losses) 53 4 Investments in associates 53 5 Taxation 55 6 Equity 58 7 Property, plant and equipment 58 8 Trade and other receivables 61 9 Trade and other payables 62 10 Biological assets – livestock 62 11 Biological assets – forestry 63 12 Other investments 64 13 Other non-current receivables 65 14 Provisions 65 15 Other non-current liabilities 67 16 Investments in subsidiaries 67 17 Reconciliation of surplus after tax with net cash flow from operating activities 68 18 Heritage assets 68 19 Operating lease arrangements 69 20 Joint operation investments 69 21 Transactions with related parties 70 22 Financial instruments 72 23 Contingencies and commitments 74 24 Capital management 74 25 Fair value measurements recognised in the statement of financial position 75 26 Significant events after balance date 75 Auditor’s report 76 Statutory reporting 78 Core funding report 82 Statement of responsibility 113 Corporate Governance 114 Directory 116 About us

For 25 years now, AgResearch has partnered with the pastoral sector to identify and deliver the innovation that is needed to create value for New Zealand.

Our vibrant and innovative organisation is truly These challenges present a national national in its reach, with staff spread across conundrum. How do we grow the value of our four campuses and 11 farms in the Waikato, primary sector exports while also meeting the Manawatu, Canterbury, Southland and Otago. escalating aspirations of our communities for cleaner, more usable lakes and rivers? Agriculture is one of New Zealand’s largest export income earners, and AgResearch plays AgResearch is tackling this challenge through a key role in delivering new knowledge and its research and development in areas of technologies which underpin the pastoral, pasture-based animal production systems and agri-food and agri-technology value chains. agriculture-derived greenhouse gas mitigation We do this by working closely with sector and pastoral climate change adaptation. partners and wider industry. Our focus extends to agri-food and bio-based In New Zealand that prosperity over the next products and agri-technologies, and we lead decade and beyond will be driven by the growth New Zealand’s forage science initiatives in value of exports from our primary sectors. with our work on new plant varieties. Our Hence the government’s target to double the understanding of plant and endophyte real value of exports from the primary sector technologies, such as metabolomics and by 2025 and investment towards achieving epigenetics, leads the supply chain and irrigation schemes and the Primary Growth supports the development of a new generation Partnership programmes, as two examples. of livestock and plant-derived products.

But that growth needs to be balanced with the Another area we study is land use and land need to ensure the quality of our environment management in relation to environmental and our ability to access and utilise those impacts and climate change.

About AgResearch resources for recreation.

02 enhancement ofanimalperformance. technology optionsforanimalreproductionand resistance. Also indevelopmentareadvanced growth rate,fecundity, meatqualityanddisease control economicallyimportanttraitssuchas and utilisethenaturalgenevariants that genomics-based researchtoolsthatwilldetect We alsouseabroadrangeofphysiology and and efficientruminantlivestock. animal processesbehindhealthy, productive livestock andunderstandingofrumen parasitic andinfectiousdiseasesofpastoral scientists have recognisedexpertiseinthe sustainable animalproduction. AgResearch health andwelfareoflivestockforefficient We arefindingways toimprove thenutrition, and ecosystems. on thequalityofsoil,water andatmosphere management, whilereducingnegativeimpacts pasture fertilisationandfarmnutrient research onsoilandwater management, production systems isaddressedbyinnovative Improving dairy, beef, lambanddeer it andhow itwillbesuccessfullydelivered. New Zealand needs, whowillpayfordelivering continue todoso,ensureallknow what and thewideragriculturalsector, andwill AgResearch isworkingcloselywithGovernment and agriculturaldevelopmentface. solutions forthechallengesourenvironment science andresearchtoleadtheway infinding There isnodoubtthatNewZealand needs of Māori-owned farms. sector toassistinincreasingtheperformance the distinctiveneedsofMāoriinpastoral commitment todeliversolutionsfocusedon And wedoallthiswhilebuildingonour agricultural issues. capacity tounderstandcomplex,interconnected farms andagribusinessesprovides the on creatingmoreprofitableandsustainable approach. Oursystems researchfocuses part ofourresearchanddevelopment Environmental systems thinkingisanintegral 03 About AgResearch 04 Chair and Chief Executive’s review step inthatprocess. field trialsintheUnitedStates areanimportant behindtherestofworld,and is notleft evaluation ofthesetechnologiessoNewZealand and oursectorpartnersarecommittedtothe Zealand undercurrentlegislation.However, we All ofthiscannotbeproperlyexploredinNew resistant todrought. as welltheplantsbeingsignificantlymore this ryegrass, andareductioninnitrateleaching, for animalsproducinglessmethanewheneating environmental gains. This includesthepotential potential benefitsthatmayevolveintoimportant greenhouse trialshave alsodeliveredother to better, fasterforageproduction,butthe more nutritionandenergy. This translates modification ofryegrassinorderforittostore This projecthasinvolved thegenetic technology outsidethelaboratory. States, whichwillallow ustotestthispromising transplant seedlingsintothefieldinUnited We weregrantedtheappropriatepermitsto our HighMetabolisableEnergyRyegrass project. year inoneofourmostsignificantprogrammes, A key milestonewas reachedlateinthefinancial and ourorganisationaltransformation. financial year, bothinourworld-leadingresearch AgResearch hasbeendoingover the2016/17 Zealand economy. This is evidentinthework sector translatestowiderbenefitfortheNew This supportandinnovation fortheagricultural value chain. benefits and opportunities right across the benefits andopportunitiesrightacrossthe of foodandbio-basedproductsiscreating farming systems scienceandthedevelopment of forage,animalscience,environmental and The workourscientistsaredoinginallareas to ensurethiscountry’s ongoingprosperity. institute hasasignificantleadershiproletoplay outcomes forNewZealand. The research improving pastoralagriculturepracticesand AgResearch scientistsareattheforefrontof Executive’s review Chair andChief

hundreds ofmillionsdollars fortheeconomy. for agricultureandasubsequent impactof those changescouldhave serious implications Argentine stemweevil.Unlessaddressed, evolutionary changesinacommonpest–the Professor StephenGoldsonisleadingaround That includestheworkourprincipalscientist and ourcommunities. of thechallengesfacingagriculturalsector applying importantthoughtleadershiptosome the way withresearchoutcomes. They arealso AgResearch’s scientistsarenotjustleading current stock. imported intoNewZealand tobolsterthe to newdairysheepgeneticsbeingsuccessfully for NewZealand’s sheepmilkindustryhasled fashion itemsontheworldstage.Ourresearch wool filtermasks thatare now appearingashigh- an innovative NewZealand company todesign Our textilescientistshave beenworkingwith and financialbenefit. lambing timeconsistentlyprovides production popular beliefthatdrenchingewesaround drenches, andrelatedresearchthatchallenges treating eweswithlong-actinganthelmintic apreviously unrecognised riskof identifying science highlightshave beenourresearch grown throughgeneticgainsince1995.Other New Zealand sheepindustrythathasbeen $170 millionperyearofadditionalvalue tothe the should increasethatrate,furtherlifting developed by AgResearch. The newtechnology Sheep Improvement Limited,largelyusingtests last decadeduetotheCentral Progeny Test and acceleratedsignificantlyover the sheep flock The rateofgeneticgainintheNewZealand XT-96 array. selection assays usingthenewIlluminaInfinium which combinesDNAparentageandgenomic sheep genotypedatatoBeef+LambGenetics, seen usdeliveranewtechnologytosupply Our researchhighlightsthisyearhave also

Lincoln andMasseyUniversities. is ourdevelopmentofinnovation hubswith Our othermostsignificantfinancialinvestment issues thatareuniquetotheirlocation. sector, anddeliverlocalfarmerssolutionsfor further theirenvironmental workforthedairy scientists basedatnearbyInvermay afacilityto use bytheendoffinancialyear. Itgivesour This newfacilitywas converted andreadyfor productivity andenvironmental objectives. new sciencesolutionsthatmeetthefarmer’s DairyNZ andthewiderdairysectortofinding an indicationofthepartnershipwehave with significant inmorethanmonetaryterms;itis The $5minvestment by AgResearch was Development Trust.Dairy collaboration withDairyNZandtheSouthern research facilitynearInvercargill aspartofa two sheepandbeeffarmsintoamoderndairy conversion financial yearhasseenaswift of of thinkinginthedairyfarmingsector. This The organisationisalsoleadinganewway before theproblemtakes hold. to getaheadoftheissueanddeliversolutions AgResearch’s scientistshave begunresearch thebio-controls, also evolveandoutflank With aconcernthatotherpestscould noticed aresurgenceintheweevilnumbers. decline forseveralyearsandresearchershave in the1990s. Butitseffectivenesshasbeenin Professor Goldsonandhisteamintroduced controlled byatiny South American wasp, which For thepasttwodecadesthispesthasbeen facing theagriculturalsector. leadership tosomeofthechallenges They arealsoapplyingimportantthought leading thewaywithresearchoutcomes. AgResearch’s scientistsarenotjust AgResearch Chair, Sam Robinson science. agriculture throughworld-leadingpastoral as webuildonoursuccessesintransforming and opportunitiesthe2017/18yearwillbring We at AgResearch look forward tothechallenges diligence andcommitment. AgResearch’s futurewillbeallthericherforhis some ofthisorganisation’s boldestchangesand The nineyearswithSamatthehelmhave seen the roleofchairandmakes way forJeffGrant. the batonasSamRobinson moves onfrom The endoftheyearseesanotherpassing end is$236.1m. investment plans. Ourequitypositionatyear campus redevelopmentprogrammeandother cash reservesof$59mavailable tofundour Our financialpositionremainsstrongwith taxof$4.6m. resulted inanetsurplusafter while maintainingvigilanceincost-control. This efforts ofstafftodelivertheirresearchcontracts in ourmid-yearforecast,thanks tothededicated The financialyearendswithapleasingupswing our relocationprogramme. already moved tothenewlocationsaspartof occupied in2019,withover 50 AgResearch roles The newfacilitieswillbothbecompletedand design stagesofbothbuildingsnearingtheend. already underway ontheLincolnsite,and Both projectsareonschedule,withearlyworks AgResearch Chief Executive, Tom Richardson 05 Chair and Chief Executive’s review 06 Our highlights 5% FTEs = Full-time equivalent staff equivalent =Full-time FTEs FTEs: Total Our highlights response to a call for cost reductions which which response to cost for reductions acall this yearexpenses and an all of business to over led $7mand implementation of reduced reviews years’ prior Our is strategic outsourced. and Water, Challenge, Land Our Science $3.5m National funding the for $6m-plus the Of our Farm Systems and Environment projects. largely impacted which co-funding and related in funding Government including reductions despite changes in funding mechanisms, achieved was A solid financial performance employee up by up employee Revenue per 619 98% disposals. optimise use their timing and science for the of We to sales costs. asset delayed relocation and construction for spend the reduced changes Future in the Footprint Programmes Some year and changes in timing flows. of cash result the for the reflects flow cash operating improved Our strong. are programmes and heading into Future the Footprint build operations position and to cash support sheet $1.5mnetted in savings balance Our to budget. operating margin operating in Increase 6,137 6,137 followers 876 submitted Client reports 269 Published: papers Scopus-indexed 33 4,219 1.17 media releases media Per scientist: Per followers 07 Our highlights 08 Celebrating AgResearch scientists while othersarerestrictedtoonlyafewoffspring. to explainwhy somespecieshave largelitters inhibiting fertility. Hercontributionshave helped onincreasingor oocyte asthemajor influence of herresearchhasbeentheidentification their reproductiveoutcomes. A major outcome how geneticmutationsinsheephave influenced research hasfocusedprimarilyonexplaining Reproduction Team, basedinInvermay. Her Jenny isPrincipalScientistwiththe AgResearch distinction inresearchandscholarship. is consideredanhonouroftrueinternational This prestigiousrecognitionforJenny Juengel Society ofNewZealand Jenny Juengel–Fellow oftheRoyal AgResearch scientists Celebrating and technologyinagriculturehorticulture. her workacrossthedevelopmentofscience staff tobecomeaFellow, whichacknowledges Jeanne isoneofonlyahandful AgResearch and HorticulturalScience Jeanne Jacobs–Fellowship ofNewZealand Instituteof Agricultural

modified technologiesforthepastoralsector. conversation aboutthebenefitsofgenetically in fieldtrials. Herdiscovery willopenupanew This hasledtothedevelopmentoffivepatents commercial cultivars tomarket. and reducingthetimetaken todelivernew thereby increasingtherateof geneticgain selection inplantbreedingprogrammes, markers andimplementationofgenomic Her workwillfacilitatethedevelopmentof rightly recognised. for perfectionanddeliveryofqualityscienceare mediation andleadershipskills, andherdrive and expertiseingeneticsgenomics, her Jeanne’s dedicationtoresearch,herknowledge prestigious journalNatureasthecover feature. work –astudythatwas publishedinthe to theforeinherpotatogenomesequencing Her contributiontothisareaofsciencecomes

acknowledgement. national andinternationalaccoladesrequireadditional supported bytheirexcellent teams.However, notable most usuallycelebratedcollaboratively, astheirworkis The workandsuccessesof AgResearch scientistsare Zealand sheepindustry, whicheventually performance recordingdatabasefortheNew John playedakey roleinestablishinganational service tothescienceofanimalproduction. This award recognisesJohn’s significant John McEwan –HonoraryLifeMember, New Zealand Societyof Animal Production of auditing sustained tools.development The and ensured through the quality data of evaluations improvedanalysed, accuracy the be that can number of traits the increased Zealand Sheryl-Anne industry. New sheep of the betterment research the for and genetics apply values to improve flocks their use who SIL breeding breeders sheep and with arange from of fields scientists with closely works engine since inception, Sheryl-Anne its Improvementleading Sheep (SIL) Ltd genetic world- in the of developments forefront the At Production Award, NewZealand Societyof Animal Sheryl-Anne Newman–Sir Arthur Ward

and abroad. and animalspecies, bothinNewZealand genomic analysis inmany additionalplant by-sequencing methodswhichareenabling to thedevelopmentanduseofgenotyping- Australia andBrazil.Heisamajor contributor United States, Iceland,Norway, France, China, links togenomicprojectsandgroupsinIreland, genetics andgenomicsinternationallywith John hasalsomademajor contributionsto Invermay campus. bioinformatics groupbasedon AgResearch’s what hasbecomeaworld-recognised SIL geneticenginewas running, heestablished became SheepImprovement Ltd.Oncethe profitable. less alot be would farms gains, these today’s Without Zealand New sheep duetoimprovement this are work. all partly and accelerations rate ofsheep in this the Zealand of New improvement merit in genetic 09 Celebrating AgResearch scientists 10 Celebrating AgResearch Scientists protects lipiddroplets, cysteine oleosin,was gene thatgeneratesaproteincoatsand contained inaplant. To achieve thisasynthetic the amountoflipidandthereforeenergylevels working onatechnologydesignedtoincrease This year’s Science prize was wonbytheteam Published in:PlantPhysiology. Arabidopsis leafbiomassandenergydensity In vivopackaging oftriacylycerolsenhances Science prizewinner significant environmental benefit. for aslongpossiblehasshown todeliver buffer (equivalent to2%ofthepaddockarea) as longpossible.Protectinga10m-wideCSA direction andbreaklayoutstoprotectCSAsfor winter foragecropping, grazing andmodifying contaminant lossfromlandscapesusedfor avoiding criticalsourceareas(CSAs)of The system recommendsrecognisingand winter foragecrops. runoff lossesofwater contaminantsfrom environmental impactsbyreducingsurface winter grazingthatcandeliversignificant simple technologyisanewsystem ofstrategic widget, asthisworthy recipientshows. The prize isnotnecessarilyaboutdevelopinga Winning theannual AgResearch technology forage crops. reducing contaminantlossesfromgrazedwinter Strategic wintergrazingpracticesfor Technology prizewinner Internal scienceawards Richard ScottandNickRoberts Some oftheteam:RuthCookson, Somrutai Winichayakul, modified technologiesforthe pastoralsector. conversation aboutthebenefitsofgenetically in fieldtrials, thisdiscovery willopenupanew forage plants. Oncethetechnologyisvalidated attention from AgResearch’s key partnersfor changer, andithasalreadygainedalotof We considerthistechnologytobe a game area anda50%increaseinleafbiomass. carbon dioxide assimilationrateperunitofleaf It hasalsoachieveda24%increaseinthe leaves, senescing leaves, androots, respectively. increases inthefattyacidcontentofmature This technologysaw a2-,3-,and5-fold encapsulation ofneutrallipids. Arabidopsis thalianaviatheproductionand in photorespirationthemodelspecies to anincreaseinenergydensityandareduction diacylglycerol acyltransferase(DGAT1). This led expressed atthesametimeasageneencoding systems. operations areadoptingbetterenvironmental enables themtodemonstratehow theirfarming to implement,incurslittlenocost,and the farmersindicatesthistechniqueiseasy as wellregionalcouncils. Feedback from has beenembracedandadoptedbyindustry This high-effect,low-cost technologysolution Ross Mongahan, Tom Orchiston,SethLaurenson

12 The impact of our science our science The impactof listed below throughthespecificimpactareasonright. including industry, government andMāori. We strivefortheoutcomes transfer oftechnologyandknowledge inpartnershipwithkey stakeholders, AgResearch willfulfilitspurposethroughtheprovision ofresearchand our StatementofCore Purpose. environmental andsocialoutcomesforNewZealand, asoutlinedin sector value chainstocontributeeconomicgrowth andbeneficial profitability ofNewZealand’s pastoral,agri-foodandagri-technology AgResearch’s purposeistoenhancethevalue, productivityand Outcomes D C B A balance economic,environment, socialandculturalimperatives. Increase thecapacityofruralcommunitiesandenterprisestoadaptchangingfarmingconditionsinways that Ensure thatNewZealand’s pastoralsectorisabletoprotect,maintainandgrow itsglobalmarket access production systems andproducts Position NewZealand asaglobal leaderinthedevelopmentofenvironmentally sustainable,safeandethicalpastoral pastoral-based productsandproductionsystems thatmeetcurrentandfutureglobalmarket needs Increase thevalue oftheseindustrysectorstotheNewZealand economy throughthedevelopmentofhigh-value Improved pan-sectorandMāoriagribusinessperformance products Improved returnsfrommeatandfibre Improved returnsfromdairyproducts on-farmperformance Improved meatandfibre Improved dairyon-farmperformance Impacts 18 18 17 16 15 14 13 12 10 11 9 8 7 6 5 4 3 2 1 New productsfromMāoriagribusiness enterprises Improve on-farmproductivityinMāoriagribusinessenterprises Practical policysolutionsdevelopedandadopted Reduced environmental footprintofpastoralfarmingoperations Higher value woolproducts Improved processingefficiency Meat productsandprocesseswhichconsistentlymeettheneedsofexisting newmarkets New high-value dairyandfoodsolutionproductsprocesses Continuous improvement infarmmanagementpractices Improved animalhealthstatusofmeat-andfibre-producinganimals Improved productivityinmeat-andfibre-producinganimals Improved productivityofforage Improved animalwelfare Control targetsmetfornationallymonitoreddiseases Adoption ofnewfarmmanagementpracticeswhichimprove productivity Improved animalhealthandmilkquality Improved rateofgeneticgaininthenationalherd Improved productionfromhome-grown feed 13 The impact of our science 14 The impact of our science Outcomes: High Metabolisable Energy Ryegrass Our scienceinaction now underway intheUnitedStates. capability. FieldtrialsoftheHMEryegrass are the greenhouse,suggestingdrought resistance efficiency comparedwithcontrol grassesin HME ryegrasshasa9%increaseinwater use unexpected benefitwas thediscovery thatthe reduce nitrogenlevelsinanimalurine. An The modellingalsosuggeststheryegrasswill gas emissionsfromthelivestockthateatit. date) areductionofupto23%ingreenhouse potentially meaning(accordingtoresearch a 5%decreaseinmethanecouldbeexpected, lipids intheleaf. For every1%increaseinlipids, control grasses, andcontainshigher levelsof (HME) ryegrassgrows upto50%fasterthan have shown thishighmetabolisableenergy energy andnutrition. Trials inthegreenhouse to enableitgrow fasterandtostoremore production ofgeneticallymodifiedryegrass This projectlooks atways toenhancethe Project A B Impacts: 3 8 modified foragesresearch. of $25millionover fiveyearsintothegenetically and otherstakeholders, meansaninvestment along withfundingfrom AgResearch, DairyNZ Innovation andEmployment’s Endeavour Fund, A grantfromtheMinistryofBusiness, Funding significantly boostfarmrevenues. of grassandimproved nutritionalvalue could pastures andwater races. Highergrowth rates levels inanimalurinewillpositivelyimpact supply forfarmers, andthereducednitrogen tolerance grasswillensureareliablefeed is abletobeusedinNewZealand. A drought technology willhave widerangingbenefitsifit The successfuldevelopmentofthisHME Benefit toNewZealand a fewdays. mortality rateof60-80%forthebeetleswithin initial fieldtrialsona Waikato farmshowed a has shown greatpromisewiththismethodand by thebeetle,producesafataltoxin. Labtesting Yersinia entomophaga(Ye), which,wheneaten The secondbiocontrolutilisesthebacterium for thebeetleeggstohatch. that thehigherpHlevels, thelongerittakes a levelofaround6. The initialindicationsare five tonnesahectareinordertokeep thepHat by spreadinglimeonthetestfieldsatarateof bacteria. RaisingthesoilpHhasbeenachieved a naturalinsecticideusingnaturallyoccurring the pHofsoil,aswelldevelopment The workhaslooked attheimpactofraising population. to have asignificantinitialimpactonthebeetle under development,andbothhave been shown Two methodsofbiocontrolforblackbeetleare Project Outcomes: Black BeetleBiocontrol Our scienceinaction A B Impacts: 3 8 Group andtheabove industryco-funders. support fromthe Waikato BlackBeetle Action DairyNZ with$120,000. There isalsoin-kind with $60,000,Graymont$24,000,and and issupportedbyBallance Agri-Nutrients $480,000 fromtheSustainableFarming Fund grant fromDairyNZ.Currentresearchhas continued withayear-longon-farminnovation Fund project‘BeatingBlackBeetle’and that sprangfromanearlierSustainableFarming This researchispartofathree-yearprogramme Funding incurs additionalcosttothefarmers. be clearoflivestockforatleastsixweeks, which unusable. Areas thatcanbere-seededneedto damage failtorecover, renderingfarmland damage. Somepaddocks withblackbeetle feeding larvae arecapableofseverepasture warm areasoftheNorthIsland,whereroot- Black beetle(Heteronychusarator)isfoundin Benefit toNewZealand 15 The impact of our science 16 The impact of our science Outcomes: Petfood NutritionStudy Our scienceinaction feeding themdifferentdiets. dogs andthelong-termhealth consequencesof be donetounderstandthedigestive system of this maynotthecaseandmuch moreneedsto and badbacteriainthegut. This studyshows same istruefordogsintermsofwhataregood in human,miceandratsassumedthe previously reliedonstudiesoffaecalmicrobiota on moodandbehaviour ofpets. Sciencehas diseases suchasobesity, aswelltheireffect is vitalbecauseoftheirlinks todigestionand Understanding how bacteriaworkinthegut digestion. of bacteriaassociatedwithproteinandfat to beabsorbed,andresultedinhigherlevels dogs todigest,meansmorenutrientsareable showed thatahigh-meatdietiseasierfor on markers ofintestinalhealth. The study this studyexploredtheimpactsofpetfoods Led by AgResearch andMasseyUniversity, Project D Impacts: 6 10 2015 andendsin2018. Targeted Research Fund. The project startedin Employment throughtheOutcomes forScience from theMinistryofBusiness, Innovation and and Ziwi)$1,754,001(over threeyears) manufacturers BombayPetfoods, K9Natural between leadingNewZealand Petfood Premium Petfood Alliance (acollaboration per yearforthreeyearsfromtheNewZealand The projectreceivedco-fundingof$21,500 Funding for thepetfoodindustrytoexplore. animal nutritionfield,andopensopportunities significant contributiontotheinternational research inthisareameaningstudyisa To datetherehasbeenlimitedpublished capability indeliveringground-breakingscience. the world,anddemonstrates AgResearch’s The studywas onlythesecondofitskindin Benefit toNewZealand to weaning. determining lambviabilityandsurvival through important thanconditionsduringlambingin conditions duringlatepregnancyproved more lighter orheavier. The studyfoundthatweather likely tosurviveweaningthanlambsborn lambs weighing5.5kg to6kg atbirthweremore pregnancy hadheavier lambsatbirth,andthat with higherbodyconditionscoresinmid- The lambsurvival projectestablishedthatewes have bredforincreasedfecundity. This isparticularlyimportantforfarmerswho rates oflambsininstancesmultiplebirths. deaths, inordertobettermanagethesurvival value causesofneonatallamb ofidentifying purpose was tohelpfarmersunderstandthe and morethan10,000lambpostmortems. The 20 stakeholders, 22sheepbreeders, 47 flocks over 10years, gainingthesupportofmorethan The workinvolved inthisprojectwas conducted Project Outcomes: Lamb SurvivalProject Our scienceinaction B C D Impacts: 10 16 Sustainable Farming Fund andOvitaLtd. by Ministryof Agriculture andFisheries Financial assistanceandsupportwereprovided Funding this researchcontinuetodeliverbenefits. new practicesadoptedon-farmasaresultof lamb survival rates. The lessonslearnedand changed on-farmmanagementandimproved lambsurvival andasaresulthas influenced maternal andenvironmental factorsthat research programmeidentifiedgenetic, New Zealand sheepfarms. This long-term biggest contributorstoincreasedprofitsfor Improving lambpercentagesisoneofthe Benefit toNewZealand 17 The impact of our science 18 The impact of our science Outcomes: Burn-Resistant Garments and innovation Build sciencecollaboration advantage. moisture inwooldoesappear toprovide an can offer. The relativelyhighlevel ofabsorbed the additionaldefenceabase-layer garment obvious reasons, butherewehave investigated the mainfocusisonoutergarments, for armed forcesoremergencyservicesalotof wool affectstheflammability. For thoseinthe and specificallyhow absorbedmoistureinthe andintenseheat, garments respondtoflame looked athow woolbase-layer(nexttoskin) company Armadillo Merino,theproject Innovation (AWI) andUK-basedNewZealand Working alongsideco-funder Australian Wool in thearmedforcesoremergencyservices. of fireprotectiontheycanprovide tothose use ofwoolingarmentstoexplorewhatlevel AgResearch scientistshave beentestingthe Project B C Impacts: 14 contributions of$110,000and$30,000. AgResearch and AWI withrespectivefinancial This one-yearprojectwas co-fundedby Funding opportunities forNewZealand wool. wool’s naturalanduniqueattributesoffersnew build andextendthescientificcredentialsfor This continuedresearchanddevelopmentto Benefit toNewZealand highland croppingsystems. previouslyworkingin fruit productionafter introducing newbiocontroltechnologiesinto A partnershipprojectwithINIAP, Ecuador, is especially inbiologicalcontrolofplantpests. of theimplementationnewtechnologies, America provides practicaldemonstrations projects inMalaysia, thePacific andSouth Foodstuffs Corporation. Work indevelopment Research InstitutewithintheChina Oilsand Chinese organisationtheNutritionandHealth a MemorandumofUnderstandingwith product science, AgResearch hassigned In theexciting areaoffoodandbio- gas emissions, foodsafetyandparasitecontrol. and willworkinkey areassuchasgreenhouse between NewZealand andtheirhomecountry, and postdoctoralstudentswhospendtime and Scotland. This meansco-funding11PhD generation ofscientistsinNewZealand, Ireland College (SRUC)focusondevelopingthenext and between AgResearch andScotland’s Rural and Teagascbetween AgResearch agreements regional agriculturaldevelopmentissues. The family livestockfarmersandwillnextfocuson led toafouryeardevelopmentprojectfor The partnershipwithINIAUruguayhasalready sectors. the sustainabilityofdairy, beefandsheep Development Authority (Teagasc) willfocuson (IRTA) andIreland’s Agriculture andFood Research & Technology &Food & Agriculture of Agricultural Research (INIA),Catalonia’s partnership withUruguay’s NationalInstitute New Zealand acrossarangeofdisciplines. The provide ahostofvaluable opportunitiesfor and key overseas scienceorganisationswill New relationshipsforgedbetween AgResearch Project Outcomes: International Collaborations and innovation Build sciencecollaboration A B Impacts: 10 11 12 to theNetwork. and $24,000forDrLishuiChen’s secondment the NZandChinesedairyvalue chains”project antimicrobial resistancedeterminantsacross Food ProtectionNetworkforthe“Mapping the private sector, $35,000fundedbyNZ-China Organisations e.g. FAO NationalInstitutesand funding hasbeenprovided byInternational $1.2m, Pacific Biocontrol $0.7m.Further providers: Uruguay$4m,Ecuadorbiocontrol partnership programmeswithlocalscience Foreign Affairs and Trade throughaseriesof been mostlyfundedbytheMinistryof Our internationaldevelopmentworkhas further funding. projects ofsharedinterestthatwillrequire collaborative shared capabilityandidentify portfolio andseedinginvestment tobuild contribution toward developingourstudentship Strategic sciencefundingof$300,000isour Funding experienced inNewZealand. and deliversafreshvisiontotheproblems new situationsneedingpracticalsolutions in developmentprojectsexposesstaffto areas offoodresearch.Directinvolvement of internationalfundingacrossmuchbroader offers anewpathway intomorediversestreams agreement withChinesecollaboratorsalso for theagriculturalsciencecommunity. The will provide invaluable learningopportunities Agreements thatsharestaffandknowledge Benefit toNewZealand 19 The impact of our science 20 The impact of our science Deer IndustryProfitability and innovation Build sciencecollaboration seven-year Passion-2-Profit programme. Targets isakey component oftheindustry’s deer industry, whichisa$250msector. Hitting information andotherfindings tothewider channels inplacetodeliverbest-practice practice change.Ithasclearcommunication This projectalsofocusesonadoptionand environmental andfoodsafetyoutcomes. animal genetics, animalhealth and welfare, seeks todeliverimpactthroughresearchin and DeerIndustryNewZealand. The project joint venturepartnershipbetween AgResearch is managedthroughtheDEEResearch Ltd is theaimofthisHitting Targets project,which productivity fortheNewZealand deerindustry Improving animalperformanceandon-farm Project Outcomes: A B Impacts: 3 6 8 past threeyears. contribution fromLandcorpFarming over the through thejointventure,withasignificant The projecthassecured$1.3minfunding Funding be implementedasbestpracticeinternationally. leading deerresearchteam,whosefindingswill continues toberecognisedashostingaworld- Success forthisprojectensuresNewZealand Benefit toNewZealand Outcomes: cows willbemilked over the2017/18season. commercial performance. An estimated640 be usedasthecontroltodemonstratetop to runupfour200-cow herds, withoneto system. The SouthernDairy Hubisdesigned research tobecarriedoutacrossthewhole wintering andyoungstock,allowing for 349-hectare farmwillbeself-containedfor local conditionstoproducedata. This Value Index,willbetestedandvalidated in current programmes, suchastheForage Farm systems willalso be comparedand management, winteringoptionsandeffluent. and innovation, including environmental Research willcompareandtestnewtheories industry-led agriculturalresearchopportunities. southern conditions, anddeliverinnovative, issues toberesearchedonsouthernsoils, in dairy farmwillallow forfarmer-ledandlocal farmers inOtagoandSouthland. The new region-specific sciencefacilitytobenefitdairy north ofInvercargill willprovide acollaborative, The creationoftheSouthernDairyHubjust Project Southern DairyHub clusters andinfrastructure Maximise thebenefitsofhubs, A B Impacts: 3 4 6 15 specific scienceforfarmers. organisation placesondeliveringhigh-quality, is significantandindicatesthevalue this $5m initialinvestment AgResearch hasmade Fonterra Co-operative Group Limited. The Dairy Development Trust, withsupportfrom partnership withDairyNZandtheSouthern The creationoftheSouthernDairyHubisa Funding sector acrossNewZealand. and Southlanddairyingcommunity, butthe opportunities. This willservenotjusttheOtago to increasingon-farmproductionandoff-farm improving systems andprocesses, withaview dairying industrywithuniqueopportunitiesfor research willpresenttheOtagoandSouthland demonstration. The evolutionofgeo-specific are addressedthroughlocalresearchand that dairychallengesandopportunities $1.9 billiongross. Itisthereforeessential 2017/18 seasonestimatedtobeworth and Otago,withtheinitialforecastfor Dairying isasignificantindustryinSouthland Benefit toNewZealand 21 The impact of our science 22 The impact of our science Outcomes: Future Footprint Programme clusters andinfrastructure Maximise thebenefitsofhubs, campus toanother. and executing amove from one AgResearch practical assistanceforallstaff considering to provide thesupport andfinancial relocation decisions. AgResearch willcontinue year, many ofourstaffwillbemaking programmes rampupinthecomingfinancial science issues. As ourjointfacilitybuilding Dunedin (Invermay) tofocusonregional be maintainedinHamilton(Ruakura)and other partners. Smallerresearch centreswill Lincoln campusesininnovation hubswith our facilitiesatPalmerston Northand complementary workandmodernising programme involves co-locatingstaffdoing organisation was created25yearsago. The significant changewehave madesincethe transformation programmesandthemost This isoneof AgResearch’s organisational Project A B Impacts: 11 12 15 16 cost isapproximately $140m. existing cashreservesanddebt. The estimated Programme throughthesaleofsurplusassets, AgResearch isself-fundingtheFuture Footprint Funding challenges thesectorisfacing. research-based solutionstoaddressthecritical land-based sector. This willdeliverbetter our abilitytoattractandgrow talentinthe quality andinnovation. We willalsoincrease productivity, we’llsignificantlyincreaseresearch food sciences, andland-basedsustainable much-needed modernfacilitiesfocusingon partnering withcollaboratorsandindustryin By co-locatingrelevant sciencecapability, Benefit toNewZealand Joint Food ScienceFacility. AgResearch JointFacility. Lincoln Universityand Palmerston North Lincoln and Environment researchgroup. and seniorscientistsfromtheFarm Systems Board, aswelltheMāori Agribusiness team awards by Tania Simpson ofthe AgResearch AgResearch was representedatthedinner development ofMāoriagribusiness. keen tosupportandrecognisethegrowth and of many agriculturalorganisationsthatare of excellence infarming. AgResearch isone is inits83rdyearandhasbecomeasymbol in Whangarei inMay. The iconicawards event Ahuwhenua Trophy, whichhelditsfinalsevent AgResearch was aproudSilverSponsorofthe Outcomes: Ahuwhenua Trophy Increase ourengagementwithMāori D Impacts: 17 18 and hisroleasashepherdonPihanuiStation. farming practicesthatsupportKaitiakitanga, At thedinnerMrBiddlespoke ofhisinterestin Fieldays inHamilton. Stakeholders Dinner, heldduringtheNational guest speakers attheannual AgResearch south of Wairoa. MrBiddlewas oneofthe 21-year-old shepherdfromPihanuiStation, Farmer Award was wonbyJordanBiddle,a This year’s Ahuwhenua Young Māori 23 The impact of our science 24 The impact of our science growing demand for halalmeatproducts. for Asian markets, includingaddressingthe Zealand meat’s qualityattributes, particularly That involves findingways tomaximiseNew States, Middle EasternandChinesemarkets. expectation intheEuropeanUnion,United marketand eatingquality)ofredmeattosatisfy to protectandenhanceproduct-life(shelf-life This MeatFutures projectisinvestigating ways increasing awareness andaffluence. quality, integrityandtraceabilityoffooddueto Consumers have higherexpectationsofsafety, life innewandexistinginternationalmarkets. premium meatproductswithextendedshelf- meet theincreasingdemandforhigh-value, research solutionsthathelpindustryto beef industry. Itsaimshave beentoprovide profitability fortheNewZealand sheepand range ofareastoincreaseproductivityand internationally, thisprojectcovers awide and acrossuniversitiesbothnationally Involving researcherswithin AgResearch Project Outcomes: Meat Futures Exploring newmarkets A B C Impacts: 12 13 mix totals$1.26minthenextfinancialyear. funding over thepastthreeyears. The funding- project hasattractedincreasinglevelsofco- The collaborativeexpertiseinvolved inthis Funding and capitaliseonglobalfoodtrends. impact ofincreasingnon-tarifftradebarriers Zealand’s redmeatindustrytominimisethe This researchpresentstheopportunityforNew Benefit toNewZealand development. with AgResearch fortheproject’s nextstageof Lanaco willcontinuetoworkinpartnership which wooltypeswouldworkbestinthefilters. used itsspecificknowledge tohelpestablish fashion designerKaren Walker. AgResearch firm Healthy Breathworkingwithleading mask’, andanotherrange launchedby Auckland most breathableurbanlifestyleairpollution date includeonemaskbrandedthe‘world’s perform forlonger. The productslaunchedto structure keeps thefilterdrierandableto easy tobreathethrough. The activewoolfibre the usersbreathethemin,aswellbeing technology trapsharmfulsubstancesbefore of dollarsonfacemasks everyyear. The consumers inpartsof Asia spendingbillions around theworld. The market ishuge,with is usedinpollutionmasks now beingmarketed development ofitswoolfiltertechnologythat fibre innovation company Lanacointhe AgResearch scientistshave worked with Project Outcomes: WoolFilter Technology Exploring newmarkets A C Impacts: 12 14 AgResearch. commission withmatchingcorefundingfrom project stemmedfroma$43,000Lanaco literature reviewsforLanaco,thisfour-month date backto2012whenwedidsomeinitial While anumberofshort-termpieceswork Funding and lucrativemarket. and value ofwoolforuseinthisfast-growing economic benefitthroughincreaseddemand opportunity forNewZealand farmersand of millionspeopleworldwide. This provides innovative productthatwillimprove thehealth Lanaco, itwillbesupportingthecreationofan As AgResearch continuesitsrelationshipwith Benefit toNewZealand 25 The impact of our science 26 The impact of our science magnesium. nutritional minerals;calcium, phosphorusand in termsofmedium-chaintriglycerols andthe compared toEuropeansheep milk,particularly milk ishigherinproteins, mineralsandlipids shows thatonaverage, NewZealand sheep milk samplescollectedatdifferenttimesofyear circumstances. Furthermore, analysis of500 ingredient forbeveragesundercontrolled potential tobeprocessedintoastablebase stream fromsheepcheese–wheyhasthe acids, andanother shows thatamajor waste sheep milkabettersourceofessentialamino digested thancow milkproteins, making that sheepmilkproteinsaremorereadily for asluggishgut. A separatestudyhasshown reduced constipationandgeneralimprovement which couldmeanimproved gutcomfort, to passthroughthedigestivesystem rapidly, finding thatshows sheepmilkcausessolids research have been completed, includingthe programme. Already anumberofpieces range ofbenefitsinacomprehensiveresearch AgResearch anditspartnershave establisheda Project Outcomes: Sheep MilkStudy Exploring newmarkets A D Impacts: 1 2 3 4 11 Victoria University. Callaghan Innovation, University ofOtagoand Zealand expertiseincludingMasseyUniversity, work iscompletedacrossbyabreadthofNew of ourCore-Funded Food Nutritionproject. The from BioresourceProcessing Alliance andpart Business, Innovation andEmployment,$43k a $6mfundinggrantfromtheMinistryof These projectshave beenmadepossibleby Funding helping ittogrow andprosper. advantages NewZealand’s systems produce, industry establishtheparticularqualitiesand farming. This projectwillhelpthedairysheep advantages ofyear-roundpasture-based unique tothiscountry, andwehave thenatural New Zealand’s dairysheepsystems are Benefit toNewZealand New Zealand’s dairy sheep systems are unique to this country, and we have the natural advantages of year-round pasture-based farming. 28 Snapshots of success 2016/17 2016/17 Snapshots ofsuccess start todeliverimpactsinthisfinancialyear. outlined threespecificprojectsweexpectedwould many yearstoreachfullpotential,wepreviously While mostoftheimpactsfromourresearchtake an alternativeplatformdueto market demand. and cattlegenotypingisstillbeing deliveredvia samples arebeingprocessed usingGBS,sheep fish andshellfish). At present,whiledeer all major livestockspecies(aswellasnumerous (GBS) technologyhasnow beenvalidated for Genotyping usinggenotype-by-sequencing available forallmajor livestockspecies. Genotyping-by-sequencing commercially well assingle-plantplotsandsinglerows. enable plantstobemeasuredinswards as seed companies. Moreworkis being doneto originally intendedanditisdemandedbythe The technologyhasbeendevelopedas breeding companies. estimating foragedrymatter, toplant Automated phenotypingtoolsfor using asystems approach. subjects astargetsforfurthercharacterisation together withqualitativeinformationfromthe biomarkers ofGITfunctionandcomfort, comfort. This willallow confirmationofexisting tract (GIT)functionalreadoutsoffunctionand psychological assessments, and gastro-intestinal demographic data,dietaryqualityoflife, subjects have beencategorisedaccordingto Irritable bowel syndrome (IBS)andhealthy high-value foods. phenotypes asamodelforinnovative, of functionalirritablebowel syndrome Determine thediagnosticpredictability

30 Our people Tō tātouiwi Our people AgResearch hasundertaken anextensive agriculture. Overthepast12months the future,todriveprosperitybytransforming the qualitiesthatwillsupportusnow andin Leadership andProfessionalism–theseare Customer Focus, Innovation, Thought and ourcustomers. Collaboration, Quality, AgResearch aspirestobe,bothourpeople Our Values speakvolumesaboutwhat Without oursciencethereisnoinnovation. Without ourpeoplethereisnoscience. Te Ao Māori. Te ourkey focusareaof Reo Māoritoreflect definitions ofthesevalues wehave woven in drive thesuccessofourorganisation.In the attributesthatareinnatetothosewhowill people toensurethatOur Values represent values. We have activelycollaboratedwithour itscoredefining programme ofworktoidentify agriculture. innovative ideasthathave thepotential totransformNewZealand the statusquo. We seektoinspireoursectorandotherswith leading agriculturalresearchinstitutethatisnotafraidtochallenge Āta – The ultimate care,focusandintent. We areatrusted,world- value tooneanother, ourcustomersandthewideragri-sector. AgResearch tomaximiseourshared knowledge andbringgreater Mahitahi – Working together. We collaborateinsideandoutside agri-technology sectors. challenges facingNewZealand’s pastoral,agri-foodand innovative solutionsthat meetsociety’s needsandaddressthe major Āta Mātai–Researching purposefullyanddeliberately. We provide customer andsectorcentricsolutionswhilstgeneratingrevenue. Zealand’s future. We applyouruniqueinsightsandexpertisetodeliver and committedtodeliveringsolutionsthatmake arealdifferencetoNew Mātai –Seeingandunderstanding. We arepassionateabout science ways toimprove thequalityofourresearchandinfrastructure. reviewed science,byassemblingtherightteams, andfinding Mātai Whetū – We aimforthestars. We undertake excellent peer- truthful andrespectfulmanner. whom youcantrusttohonourourcommitmentsinacourteous, Whakarangatira – To ennobleanddignify. We areprofessionals 31 Our people 32 Our people on ourcurrentandprojectedskillshortareas. across theorganisationwithaparticularfocus attraction, selectionandretentionofkey talent strategies thatwillsupportthesuccessful This workinvolves designingandexecuting Talent acquisition on-the-job trainingprogramme. delivering arobustcoaching, mentoringand self-paced, onlinelearningmodulesand Our focusremainsondevelopingmeaningful, growth intopotentiallymorecomplexroles. specific areasfordevelopmentandtosupport of allourpeople,targetedataddressing programme tosupporttheenhancedcapability We aredeliveringalearninganddevelopment Talent development plans. development oftailoredindividual assessment ofleadershippotentialandthe a comprehensiveprogrammeincludingfull people. Ourtalentdevelopmentprojectdelivers for ourcurrentleadersandhigh-potential Our LeadershipDevelopmentprogrammeis @ AgResearch Leading This workincludes: and thatweplantocontinueintheyearahead. Culture workthatwehave commencedthisyear established acriticalplatformforthePeople & Future andalongwithOur Values, wehave These projectsareknown collectivelyasOur existing employees. employment brandisforbothprospectiveand Proposition (EVP)anddefinewhatour ourEmployee people toidentify Value This yearwehave alsopartneredwithour everyday wayofdoing things. will helptoembedOur Values intoour Developing initiativesandactivities that other feedbackmechanisms. employee engagementandculturesurveys and organisation. We willachievethisthroughour practical adoptionofthese,throughoutthe measuring andassessingtheimpact and practices, ouremphasiswillbeonactively improving ourPeople &Cultureprocesses As wellasfocusingourenergyonrefiningand Measuring impact and execute. and easy forourleaderstoaccess, understand as customerfocusedandefficientpossible streamline themtomake ourpeoplepractices resources practices. The goalistoimprove and review ofourexistingtransactionalhuman The B2Bprojectinvolves conductingafull Back tobasics organisational levelandbyindividualteams. identified areasofimprovement bothatan innovative actionplans thatwilladdressour the organisationbydevelopingspecificand enhancing ourlevelsofengagementacross into oureverydayway ofdoingthingsand activities thatwillhelptoembedOur Values This projectisdevelopinginitiativesand Culture &engagement succession. or attractionprogrammestosupportthat implementing appropriatedevelopment within, andexternal,totheorganisation and recognisingpotentialsuccessorsfrom ourcriticalroles Here weareidentifying Succession planning positive andconductedingoodfaith. membership isprofessional,collaborative, partnership withthePSAandits AgResearch We arecontinuingtoensurethatour Our PSApartnership and workingphilosophy. of ourpeopleintermsworkenvironment impending changethatthiswillmeanforsome our transitiontothejointfacilitiesand transformational projectsandsystems, support ourpreparednessforquality This projectisdevelopinginitiativesthat preparedness Change managementandorganisational and ‘why youshouldworkhere’sections. AgResearch sciencestories, peopleprofiles, talent. This newwebsitewillbringtogether which isdesignedtoattractandretainquality organisation’sthe TalentStrategy, Acquisition specific portaltotargetnewstaffaspartof new AgResearch Careers website. This isa This yearhasseenthedevelopmentof Careers website 33 Our people 34 Key performance indicators for 2016/17,ataglance indicators Key performance

Research People Financial Stakeholders in ourstrategy(SCI). Outcomes identified to Impactsand needs andcontribute which meetsector R&D solutions performing workforce. Innovative andhigh strategic goals. enable achievementof performance to Sustainable financial with key stakeholders. Co-owned strategy relationships. players andtheir key andemerging the sector, including understanding of Comprehensive Strategic Goal strategy. needs anddeliverour future stakeholder meet currentand capabilities thatwill portfolio and has theresearch Ensure AgResearch workplace. We willallhave asafe increased. Staff engagement targets. Achieve financial goals. AgResearch strategic stakeholder and closer alignmentof revenue through Grow commercial understanding. recognition ofthat sector andthesector’s understanding ofthe Grow our Objective 2016 SciencePlan. Implement AgResearch’s Sciences Roadmap. Completean Animal accidents. No seriousharm year. causing losttime<70per Injuries (MTI)andMTI TotalMedical Treatment the staffsurveyof>61.2. Engagement Indexfrom budget achieved. Net ProfitBefore Tax achieved. Operating Profitbudget to >$1.7m. Grow internationalrevenue revenue secured. driven commercialscience >$40m ofstakeholder- strategy asgoodorbetter. contribution totheir understanding/ AgResearch’s stakeholders rate >90% ofsurveyed indicators forFY17 Key performance Science Planisongoing. year. The remainderofthe would bedeliveredthis where weconsiderimpacts Science Planmilestones We have implementedkey August 2017. reviewed bytheBoardin completed andwillbe This Roadmap was ‘serious harm’ incidents. We didnothave any causing losttimewas 38. number ofMTIand 30 June2017,thetotal From 1July2016 to 61.0, upfrom59.0in2016. Engagement Indexwas In 2017,ourStaff budget of($0.2m). of $6.2mexceeded our Our NetProfitBefore Tax budget of$5.7m. $6.1m comparedtoa Our OperatingProfitis international revenue. We achieved$1.8mof revenue. commercial science of stakeholder-driven We achieved$36.5m engagement. stakeholders tofacilitate contacts areallocatedto key AgResearchensuring The groupisfocusedon new sectoralignments. implemented thisyear, with Programmes groupwas the Partnerships and The newstructureof in ratingfrom2016. for theirreduction resources’ asreasons contact ’and‘limited noted the‘lossofakey Surveyed stakeholders 90% in2016. better in2017,down from to theirstrategyasgoodor understanding/contribution AgResearch’s stakeholders rated 83% ofsurveyed Result forFY17 Enabling Systems Research science. Quality, relevant to strategy. Infrastructure aligned delivery onstrategy. systems thatenable processes and Robust business Strategic Goal deliver toourstrategy. stakeholder needsand outputs thatmeet quality, reliableR&D Deliver relevant, high purpose. infrastructure isfitfor AgResearch processes. efficiency ofbusiness effectiveness and Improve the Objective science staffmember. reports publishedper > 1.0industry-funded scientist. papers publishedper > 1.0Scopus-indexed Footprint initiative. as partofourFuture and Palmerston North of newfacilitiesatLincoln Complete detaileddesign organisation. throughout the Capability programme AgResearch’s Coaching implementing development by Strengthen people management approach. to-end integratedproject by implementinganend- Core BusinessProcess Enhance AgResearch’s $225k revenueperFTE. Increase productivityto indicators forFY17 Key performance science staffmember. reports werepublishedper 1.07 industry-funded scientist. papers werepublishedper 1.17 Scopus-indexed plan andwithinbudget. milestones progressingto Palmerston North milestones met. finalised andFY17design for Lincolnfacilitiesis The Buildprogramme potential talent. resources forhigh- identification ofcoaching all linemanagersandthe mentoring workshops for two-day coachingand include thedeliveryof improve coachingculture Other initiativesto with athirdcohortshortly. that activitywillcontinue development programme; completed theleadership Two cohortshave nearly completed. for managingprojectsis in progress, andtraining System developmentis to Impact’)isunderway. approach (known as‘Idea project management end-to-end integrated Implementation of $235.3k. Revenue perFTEwas Result forFY17 35 Key performance indicators 36 Performance indicators Target figuresin[brackets] arefrom AgResearch’s 2016-21SCI. Years shown arefinancialyearsendinginJune2017orcalendarDecember2016. operating indicatorsagainstwhichprogresstoachievetheSCIoutcomesaremeasured. AgResearch’s 2016-21StatementofCorporate Intent(SCI)identifiedthefollowing non-financial As at30June2017 indicators Performance G.1 G.2 G.3 G.4 G.5 1.2 2.1 2.2 1.1 ID stakeholders Revenue from End usercollaboration Collection requests collaboration Research Stakeholder reports knowledge transfer Technology & Science quality Financial indicator stakeholders Confidence of Indicator from stakeholders withcentralGovernment. revenue fromcentralGovernment; includesco-investment Revenue coming directlyfromstakeholders. Excludes Revenue perFTEfromcommercialsources. AgResearch’s publiclyavailable collections. Number ofrequestsandenquiriesforaccessto (Data forthisindicatorisreportedcalendaryears.) NZ andinternationalauthors). c) withinternationalauthorsord)acombinationof with a)only AgResearch authors, b)withotherNZauthors, Publications withcollaborators. (Percentage ofpublications Number ofclientreportssubmittedby AgResearch staff. Commercial reportsperscientistFTE. (Data forthisindicatorisreportedcalendaryears.) publications ineachjournal). during theyear, weightedbythenumberof AgResearch assessed bySCImago,inwhich AgResearch staffpublished of 2-yearcitationsperdocumentforscientificjournals Impact ofscientificpublications. (The average value Revenue perFTE,basedonaverage FTEsover theyear. conducted byMBIE.) (Reported bythebiennial2016CRIstakeholder survey their collaborationorpartnershipwith AgResearch. (b) thepercentageofstakeholders whoweresatisfiedwith the CRI’s abilitytosetresearchpriorities, and and otherend-usersthathave ahighlevelofconfidencein (a) Percentage andnumberofrelevant fundingpartners Definition $44.39m [$47.1m] $90.0k [$98k] collection. samples fromits issued 1,373[3,000] Germplasm Centre The MargotForde (d) 21%[21%] (c) 26%[29%] (b) 39%[29%] (a) 14%[20%] 876 [270] 2.6 [1.0] 2.6 [2.7] $235.3k [$225k] (b) 75%[85%] (a) 51%[75%] Measure [target] 1

2.3 3.1 3.2 2.4 4.1 ID Licensing deals with Māori Effective relationships stakeholders Revenue fromMāori Adoption International linkages Indicator annum. services) withNewZealand andinternationalpartnersper Property (IP)(includingtechnologies, productsand licensing orotherdealsof AgResearch-derived Intellectual (a) Total revenue,(b)numberand(c)percentageof six thatwereinvited.) (*Five Māori agribusinesses responded to the survey out of the relationship survey. collaboration andpartneringintheannualcustomer who rate AgResearch as‘good’ orbetterforeffective Percentage ofMāoriagribusinesspartnersandend-users stakeholders. Revenue (directandleveraged)fromMāoriagribusiness conducted byMBIE.) (Reported bythebiennial2016CRIstakeholder survey knowledge and/ortechnologyfrom AgResearch. Percentage ofrelevant end-userswhohave adopted (c) Numberoftechnologieslicensedinfromoffshore. (Data forthisindicatorisreportedcalendaryears.) papers co-authoredwithaninternationalauthor. (a) Numberand(b)percentageofpeer-reviewedscientific Definition Zealand partners. [36%] werewithNew … ofwhich67% deals licensing andother … andexecuted 6[11] royalty revenue. $10.5m [$8.2m]of received atotalof group The AgResearch 80%* [80%] $393k [$1.01m] three years. AgResearch inthepast or technologyfrom adopted knowledge stakeholders had 91% [95%]of each yearsince2012. technology licensed to thezeroorone financial year, similar offshore duringthe were licensedinfrom 0 [1]technologies calendar year. AgResearch during the papers publishedby of allScopus-indexed comprised 47%[51%] collaborators international Papers with calendar year. author inthe2016 least oneinternational co-authored withat indexed papers 126 [171]Scopus- AgResearch published Measure [target] 2 3 37 Performance indicators 38 Performance indicators percentage thatprovided ascorebetween6and10. 3 2 1 AgResearch stakeholders surveyedduringtheJuly2016CRIstakeholder surveywhoresponded tothesetwoquestions;thisisthe Of thoseMāoristakeholders whoweresurveyedin AgResearch’s customersurveyandwhoprovided arating. Of the AgResearch stakeholders surveyedduringtheJuly2016CRIstakeholder surveywhoresponded tothisquestion. 4.2 5.1 6.1 7.1 7.2 ID collaboration Research journals reviewed scientific Publications inpeer- Staff engagement total FTEs Total FTEsand%of teams headcount inresearch Total FTEand Indicator right andtrademarkdatabases). during thefinancialyearinIPONZpatent,plantvariety Items (c)and(d)countIPthatwasrecordedas‘accepted’ (Data foritems(a)and(b)arereportedcalendaryears. research institutionsperannum. of IPoutputswithotherNewZealand orinternational reviewed publicationsand(c)number(d)percentage (a) Numberand(b)percentageofjointscientificpeer- (Data forthisindicatorisreportedcalendaryears.) FTE. Number ofScopus-indexed scientificpapersperscientist Staff surveyresultfor overall levelofstaffengagement. d) Total. c) Other b) Research Support a) Research Teams months duration,by: Excluding casualsandfixed-term employeesoflessthan6 d) Technicians/Technologists Headcount. c) Technicians/Technologists FTE b) Scientistsheadcount a) ScientistsFTE Divided into: Definition 8 IPoutputs. [10%] of AgResearch’s d) …whichwas 0% the financialyear. organisations during outputs withother produced 0[1]IP c) AgResearch publications. all AgResearch of b) This was 86% [80%] institutions. international research with otherNZor papers co-authored Scopus-indexed published 269[270] a) AgResearch the 2016calendaryear. scientist FTEduring indexed papersper 1.17 [1.0]Scopus- AgResearch published 2016 calendaryear. publications inthe 269 Scopus-indexed AgResearch published 2017 was 61.0[>61.2]. engagement surveyfor in AgResearch’s staff Engagement Index The value ofthe d) 619[651(100%)] (11%)] c) 88(14%)[74 (26%)] b) 152(25%)[170 (63%)] a) 379(61%)[406 headcount was 685. staff was 242and total Headcount ofother d) 196[189] c) 163[171] b) 247[247] a) 230[236] Measure [target]

40 Financial performance indicators that indicator. All otherindicatorsarebasedonthe Treasury prescribed calculations, whichmaydifferfromnormalaccountingcalculationsfor shareholders’ fundsexcluding assetrevaluation reserve,expressedasapercentage. tax(excludingAdjusted Returnfairvalue onEquity:Surplusafter movements netofassociatedtaximpact)÷ Average Indicator definitions: Equity Ratio% Capital Renewal Adjusted Return onEquity% Forecasting Risk% Operating Margin Volatility % Interest Coverage Quick Ratio Revenue Growth % Operating MarginperFTE$k Operating Margin% - Cash attheendofyear$k - Cash atthebeginningofyear$k - Total netcashflow $k - Effectofexchange ratechanges$k - Netcashflow fromfinancingactivities$k - Netcashflow frominvesting activities$k - Netcashflow fromoperatingactivities$k Cashflow For theyearended30June2017 indicators Financial performance Actual 2017 (18,115) 59,043 57,087 20,080 83.7% 34.5% 2,528 1,965 3.6% 0.3% 0.6% 8.7% 20.4 1.8 3.7 (9) - Budget 2017 (35,102) (43,090) (0.3%) (1.6%) 21,109 56,211 84.8% 38.6% 7,988 0.0% 7.3% 16.5 999 4.0 2.4 - - Actual 2016 (2,803) (8,805) (5.0%) 57,087 59,915 83.2% 40.6% 1,137 6,002 0.4% 0.0% 4.7% 10.3 (25) 0.9 3.8 - For theyearended30June2017 comprehensive income Consolidated statementof - Core Funding Ministry ofBusiness, Innovation andEmployment Revenue in thousandsofNewZealand dollars - OurLand& Water NationalScienceChallenge - Other Commercial Farm produce Total revenue operating Other revenue Impairment ofrevalued properties Revaluation ofproperties surplus ordeficit: Items thatwillnotbereclassifiedsubsequentlyto Other comprehensiveincome taxfortheyear Net surplus/(deficit)after Tax expense/(benefit) before tax Surplus/(deficit) Share ofdeficitassociates Finance costs Other gains/(losses) Operating expenditure assets Changes infairvalue ofavailable-for-sale financial or deficit: Items thatmaybereclassifiedsubsequentlytosurplus The statementofaccountingpoliciesand theaccompanying notesformanintegralpartofthesefinancialstatements. Equity holdersoftheparent Total comprehensiveincomeisattributableto: Equity holdersoftheparent Net surplus/(deficit)isattributableto: Total comprehensiveincomefortheyearnetoftax Other comprehensiveincomefortheyearnetoftax comprehensive income Income taxrelatingtocomponentsofother Note 1 6 6 5 4 3 2 6 5 Actual 2017 (142,546) 148,266 38,889 21,874 59,506 16,116 6,495 5,386 4,134 1,507 1,117 4,134 4,648 6,155 8,732 4,648 8,732 4,084 (677) (317) 267 267 (5) - Budget 2017 (147,661) 148,331 38,889 26,193 61,787 14,221 1,866 5,375 (880) (391) (210) (391) (391) (391) 181 ------Actual 2016 (149,695) 147,361 38,889 22,156 64,779 15,512 5,189 2,754 (992) (749) (335) (87) 836 657 310 310 872 657 872 215 (6) (8) (8) - 41 Consolidated financial statements 42 Consolidated financial statements 24 August 2017 24 August Chair Jeff Grant The statementofaccountingpoliciesand theaccompanying notesformanintegralpartofthesefinancialstatements. Total equity Retained earnings Revaluation reserves Share capital Equity Net assets Total liabilities Total non-currentliabilities Provisions -non-current Other non-currentliabilities Finance leases-term Deferred tax Non-current liabilities Total currentliabilities Other currentliabilities Current tax Provisions Finance leases-current Derivative financialinstruments Trade andotherpayables Current liabilities Less: Total assets Total non-currentassets Intangible assets Other non-currentreceivables Biological assets-forestry Property, plantandequipment Other investments Investments inassociatesandjointventures Non-current assets Total currentassets Current tax Property heldforsale Inventory Biological assets-livestock Prepayments Trade andotherreceivables Cash andcashequivalents Current assets in thousandsofNewZealand dollars As at30June2017 position Consolidated statementoffinancial 24 August 2017 24 August Director Andrew Macfarlane Note 14 15 14 13 11 12 10 6 6 6 5 5 9 7 4 5 8 Actual 2017 236,104 236,104 282,593 186,018 167,447 99,762 89,074 47,268 46,489 11,959 11,240 34,530 27,835 96,575 29,665 59,043 1,461 5,103 4,341 7,052 5,607 1,173 4,487 2,162 685 844 727 34 60 67 45 4 - - Budget 2017 226,000 101,322 226,000 265,208 210,418 179,890 77,410 47,268 39,208 12,199 11,263 27,009 21,142 18,070 54,790 25,554 21,109 5,703 2,076 4,341 1,041 5,000 1,498 4,306 2,323 (161) 240 696 325 - - - - - Actual 2016 227,372 227,372 271,892 173,892 162,944 95,109 84,995 47,268 44,520 12,681 11,853 31,839 26,238 98,000 33,060 57,087 5,472 4,153 1,041 4,367 3,717 2,561 744 903 484 726 849 83 83 41 1 5 - - The statementofaccountingpoliciesandtheaccompanying notesformanintegralpartofthese financialstatements. Balance at30June2017 Total comprehensiveincome comprehensive income Income taxrelatingtocomponentsofother Transfer ofrevaluation reserveonsoldassets financial assets Changes infairvalue ofavailable-for-sale Revaluation ofproperties Surplus after taxfortheyear Surplus after Balance at30June2016 Total comprehensiveincome comprehensive income Income taxrelatingtocomponentsofother Transfer ofrevaluation reserveonsoldassets financial assets Changes infairvalue ofavailable-for-sale Surplus after taxfortheyear Surplus after Balance at1July2015 in thousandsofNewZealand dollars For theyearended30June2017 Consolidated statementofchangesinequity Note 5 6 6 6 5 6 6 Share capital 47,268 47,268 47,268 ------Revaluation equipment plant and reserves, property, 88,204 84,314 84,390 3,890 4,134 (244) (68) (76) (8) - - - - - Available-for- sale assets (73) (87) (24) 870 189 267 681 199 310 482 (5) - - - Retained earnings 99,762 95,109 94,360 4,653 4,648 749 657 92 5 - - - - - 236,104 227,372 226,500 equity 8,732 4,134 4,648 (317) Total (87) 267 872 302 657 - - 43 Consolidated financial statements 44 Consolidated financial statements For theyearended30June2017 Consolidated statementofcashflows Receipts fromcustomers activities Cash receivedfromoperating in thousandsofNewZealand dollars Interest received Disposal ofinvestments andintangibleassets Total activities cashdisbursedonoperating Total activities cashreceivedfromoperating Dividends received Total cashreceivedfrominvesting activities and biologicalassets Disposal ofproperty, plant&equipment Cash receivedfrominvesting activities activities Net cashflowfromoperating Interest paid Payments toemployees activities Cash disbursedonoperating and biologicalassets Investment inproperty, plant&equipment Cash disbursedoninvesting activities Income taxpaid Payments tosuppliers Total cashdisbursedoninvesting activities Purchase ofotherinvestments andintangibleassets Restructuring Total netcashflow Net cashflowfrominvesting activities Partner contributiontoresearchconsortiums Cash at beginning ofyear Cash atbeginning Cash atendofyear held inforeigncurrencies Effect ofexchange ratechangesonthebalanceofcash The statementofaccountingpoliciesandtheaccompanying notesformanintegralpartofthesefinancialstatements. Note 17 Actual 2017 (18,115) 153,949 136,122 156,202 20,080 62,793 72,319 19,543 57,087 59,043 2,089 1,188 1,428 9,844 8,723 1,965 164 240 248 757 976 (9) 5 Budget 2017 (43,090) (35,102) 146,565 139,495 147,483 64,429 29,931 71,349 53,046 22,140 56,211 21,109 8,330 1,626 7,988 9,956 3,162 918 555 975 - - - Actual 2016 145,177 141,657 147,659 (8,805) (2,803) 68,410 10,789 68,670 12,244 59,915 57,087 2,249 3,314 6,002 3,439 3,900 (25) 233 125 671 975 480 6 • • • • yet effectiveasat30June2017: standards andinterpretationsthatwereissuedbutnot The Grouphaschosennottoearlyadoptthefollowing information presentedfortheyearended30June2016. the yearended30June2017andcomparative applied inpreparingthefinancialstatementsfor The accountingpoliciessetoutasfollows have been transactions orothereventsisreported. reliability, sothatthesubstanceofunderlying information satisfiestheconceptsofrelevance and manner whichensuresthattheresultingfinancial Accounting policiesareselectedandappliedina the considerationgiveninexchange forassets. financial instruments. Cost isbasedonthefair value of of biologicalassets, certainnon-currentassetsand basis ofhistoricalcost,except fortherevaluation The financialstatementshave beenpreparedonthe Basis ofpreparation the Directorson24 August 2017. The financialstatementswereauthorisedforissueby entities. reporting standardsasappropriateforprofit-orientated Standards (NZIFRS)andotherapplicablefinancial Zealand Equivalents toInternationalFinancialReporting in NewZealand (NZGAAP). They complywiththeNew accordance withGenerally Accepted Accounting Practice The financialstatementshave beenpreparedin Statement ofcompliance joint arrangementinterestscomprisetheGroup. Act 1989. The Company, itssubsidiaries, associatesand Research Institutes Act 1992andthePublicFinance Act 1993,theFinancialReporting Act 2013,theCrown in accordancewiththerequirementsofCompanies Zealand. The financialstatementshave beenprepared research anddevelopmentinthepastoralsectorofNew as aCrown Research Institute,itsprincipalactivityis company incorporatedinNewZealand. Operating AgResearch Limited(theCompany) isalimitedliability Reporting entity For theyearended30June2017 Statement ofaccountingpolicies • • • • 1 January2017); (effective foraccountingperiods beginning onorafter Annual Improvements toNZIFRSs2014-2016Cycle 2017); 1January accounting periodsbeginningonorafter Losses (AmendmentstoNZIAS12)(effectivefor Recognition ofDeferred Tax Assets forUnrealised 1 January2017); (effective foraccountingperiodsbeginningonorafter Disclosure Initiative(AmendmentstoNZIAS7) 1January2018); beginning onorafter Customers’ (effectiveforaccountingperiods NZ IFRS15‘Revenue fromContracts with AgResearch JointFacility costsincurredareinnote12. construction). Further detailsofLincolnUniversity and scoping, conceptdesign, detaileddesignand is basedonthestageofproject(i.e.feasibility FFP. The capitalisationofcostsrelatingtotheseprojects relation todevelopmentprojectsassociatedwith Various costshave beenincurredduringtheyearin Future Footprint (FFP)relatedcosts statements, are: effect ontheamountsrecognisedinfinancial accounting policies, thathave themostsignificant uncertainty andcriticaljudgementsinapplying Information aboutsignificantareasofestimation are recognisedintheperiodsaffectedbyrevision. on anongoingbasis. Revisions toaccountingestimates The estimatesandunderlyingassumptionsarereviewed Actual resultsmaydifferfromtheseestimates. are believedtobereasonableunderthecircumstances. on historicalexperienceandvarious other factorsthat The estimatesandassociatedassumptionsarebased disclosed intherelevant accountingpolicy ornote. estimates aresignificanttothefinancialstatements, are of judgementorcomplexity, orwhere assumptionsand accounting policies. The areasinvolving ahigherdegree judgement intheprocessofapplyingGroup’s estimates. ItalsorequirestheDirectorstoexercise NZ IFRSrequirestheuseofcertaincriticalaccounting The preparationoffinancialstatementsconformingwith Critical accountingestimatesandjudgements determined. the above standardsandinterpretationshasyettobe At thepresenttime,fulleffectofimplementing • • • • beginning on or after 1January2019). beginning onorafter NZ IFRS16‘Leases’(effectiveforaccountingperiods 2018); and 1January accounting periodsbeginningonorafter NZ IFRS9‘FinancialInstruments’(effectivefor 45 Statement of accounting policies 46 Statement of accounting policies the percentageofcompletioncontracts. Directors have exercised theirjudgementinrespect of In determiningtheservicerevenuetoberecognised, Revenue recognition farm buildings. include siteimprovements suchasroads, fencesand optimised depreciatedreplacementcostmethod. These on amarket basisandthesehave beenvalued usingthe Valuation Standards. Someassetscannotberevalued properties. The valuations conformtoInternational to market evidenceofrecenttransactionsforsimilar Colliers International,independentvaluers, byreference and ‘Buildings-Farm’ wererevalued at30June2017by The property, plantandequipmentclasses‘Land-Farm’ Farm landandbuildings revaluation Impairments madeappearinnote2and7. market exists. net presentvalue offuturecashflows wherenoactive to sellorvalue inuse. The value inuseisbasedonthe recoverable amountisthehigheroffairvalue lesscosts Where anindicationofimpairmentexists, the • • • • • • • whether thereareindicationsthat: impairment. Inparticular, consideration isgivento investments andotherassetsforindicationsof Before balancedateeachyear, the Directorsreview Impairment ofassets parties. ownership rightstopre-existingIPcontributedbythe and outputsofthejointarrangementretention theparties’rightstoeconomicinputs which specify operation byvirtueofthecontractualarrangements Grasslands Innovation Limitedisconsideredajoint Joint operation • • • • • • • other relevant factors. an assetis, orwillbe,worsethanexpected;and from internalreporting, theeconomicperformanceof life ofanasset; previously expecteddate,andreassessingtheuseful asset belongs, planstodisposeofanassetbeforethe discontinue orrestructuretheoperationtowhichan changes includetheassetbecomingidle,plansto an assetisusedorexpectedtobeused. These impacts theextenttowhich,ormannerin expected totake placeinthenearfuture, which Group have taken placeduringtheperiod,orare significant changeswithanadverseeffectonthe the asset; there hasbeenobsolescenceorphysical damageof decrease theasset’s recoverable amountmaterially; rate usedincalculatinganasset’s value inuseand and thoseincreasesarelikely toaffectthediscount on investments have increasedduringtheperiod, market interestratesorothermarket ratesofreturn in themarket towhichtheassetisdedicated; technological, market, economicorlegalenvironment period, orwilltake placeinthenearfuture, significant changeshave taken placeduringthe declined; the market value oftheassethassignificantly approximate theirfair values. of tradereceivables andpayables areassumedto The nominalvalue lessestimatedcreditadjustments period. exchange market ratesattheendofreporting exchange contracts isdeterminedusingforward financial instruments. The fair value offorward are usedtodeterminefairvalue fortheremaining techniques, suchasestimateddiscountedcashflows, market conditionsexistingateachbalance date. Other methods andmakes assumptionsthat arebasedon valuation techniques. over‑thecounter derivatives) isdeterminedusing not tradedinanactivemarket (forexample, The fairvalue offinancialinstruments thatare liabilities isthecurrentaskprice. price. The appropriatequotedmarket priceforfinancial for financialassetsheldbytheGroupiscurrentbid of thereportingperiod. markets isbasedonquotedmarket pricesattheend The fairvalue offinancialinstruments tradedinactive disclosure purposes. must beestimatedforrecognition,measurementand The fairvalue offinancialassetsand financial liabilities Fair valueestimates is appropriate. assets as‘heldforsale’, orotherwise,inthecurrentyear standard have beenconsidered andtheclassificationof Directors aresatisfiedthatthecriteriaoutlinedin Following reviewoftheGroup’s non-currentassets, the IFRS 5). Current Assets HeldforSaleaccountingstandard(NZ have exercised theirjudgementinapplyingtheNon- groups) tobeclassifiedasheldforsale,theDirectors In determiningthenon-currentassets(anddisposal Non-Current assetsheldforsale uninvoiced receivable/revenue inadvance. conjunction withtherecognitionofanappropriate recognised inthecurrentyearisappropriate, at yearend,theDirectorsaresatisfiedthatrevenue Following reviewoftheGroup’s contractsinprogress • • • • In makingtheirjudgement,theDirectorsconsidered: accounting policiesasforthesefinancial statements. budget. The budgethasbeenpreparedusing thesame of comprehensiveincomeandcapital expenditure noting thattheBoardapproval isofthestatement The budgetfiguresarethoseapproved bytheBoard, Budget figures • • • • prior estimates. the actualcostsincurredcouldbecomparedwith be clearlyidentifiedandmeasuredreliablysothat whether thecostsattributabletocontractcould be reliablymeasured;and stage ofcontractcompletionatbalancedate,could whether thecoststocompletecontractand the contractwillflow totheGroup; the probabilitythateconomicbenefitsassociatedwith reliably; whether totalcontractrevenuecouldbemeasured The Groupusesavariety of The quotedmarket priceused A. set outbelow. note. The remainingsignificantaccountingpoliciesare are (whereapplicable)disclosedinthecorresponding preparation andpresentationofthefinancialstatements The significantaccountingpoliciesusedinthe policies Significant accounting period. There werenochangesinaccountingpoliciesduringthe provides morereliableandrelevant information. required byastandardorinterpretationotherwise Accounting policiesarechangedonlyifthechangeis Changes inaccountingpolicies the Company. subsidiaries isattributedtotheowners of of theCompany. Total comprehensiveincome of comprehensive incomeareattributed totheowners Profit orlossandeachcomponent ofother Company ceasestocontrolthesubsidiary. the Company gainscontroluntilthedatewhen are includedintheProfitandLossfromdate subsidiary acquiredordisposedofduringtheyear subsidiary. Specifically, incomeandexpensesofa ceases whentheCompany losescontrolofthe Company obtainscontrolover thesubsidiaryand Consolidation ofasubsidiarybeginswhenthe • • • • investee aresufficienttogiveit power, including: whether ornottheCompany’s votingrightsinan all relevant factsandcircumstancesin assessing of theinvestee unilaterally. The Directorsconsider it thepracticalabilitytodirectrelevant activities investee whenthevotingrightsaresufficient togive voting rightsofaninvestee, ithaspower over the When theCompany haslessthanamajority ofthe the threeelementsofcontrollistedabove. indicate thattherearechangestooneormoreof controls aninvestee iffactsandcircumstances The DirectorsreassesswhetherornottheGroup • • • Control isachievedwhentheCompany: controlled bytheCompany anditssubsidiaries. AgResearch Limited(theCompany) andentities The consolidatedfinancialstatementscomprise Basis ofconsolidation • • • • • • • shareholders’ meetings. made, includingvotingpatternsatprevious activities atthetimethatdecisionsneedtobe have, thecurrentabilitytodirect therelevant indicate thattheCompany has, ordoesnot any additionalfactsandcircumstances that arrangements; and rights arisingfromothercontractual other voteholdersorparties; potential votingrightsheldbytheCompany, the othervoteholders; relative tothesizeanddispersionofholdings the sizeofCompany’s holdingofvotingrights returns. has theabilitytouseitspower toaffectits its involvement withtheinvestee; and is exposed,orhasrights, tovariable returnsfrom has power over theinvestee; D. C. B.

financial statements. preparation andpresentationoftheconsolidated Consistent accountingpoliciesareemployedinthe full onconsolidation. between membersoftheGroupareeliminatedin expenses andcashflows relatingtotransactions All intragroupassetsandliabilities, equity, income, accounting policies. accounting policiesintolinewiththeGroup’s financial statementsofsubsidiariestobringtheir When necessary, adjustmentsare madetothe determined. rates prevailing atthedatewhenfairvalue was are retranslatedtothefunctionalcurrencyat value thataredenominatedinforeigncurrencies reporting period.Non-monetaryitemscarriedatfair currency attherateprevailing attheend ofthe foreign currenciesareretranslatedtothefunctional balance date,monetaryitemsdenominatedin prevailing atthedatesoftransactions. At each currencies) arerecordedattheratesofexchange other thantheentity’s functionalcurrency(foreign individual entities, transactionsincurrencies In preparingthefinancialstatementsof statements. presentation currencyfortheGroup’s financial is thefunctionalcurrencyofGroupand expressed inNewZealand dollars(NZ$),which and financialpositionofeachgroupentityare of theGroup’s financialstatements, theresults operates (itsfunctionalcurrency).For thepurpose primary economicenvironment inwhich theentity Group entityarepresentedinthecurrencyof The individualfinancialstatementsofeach Foreign currency Loss intheyearitisreceived. from 1July2011andisrecognisedintheProfit received. Core Funding fromtheCrown commenced or lossonasystematic basisintheperioditis to thisfundingisrecognisedasincomeintheprofit awards thefunding. The Government grantrelating as definedunderthecontractualagreementwhich that theGroupshouldundertake research activities activities oftheGroup. The primaryconditionis with certainconditionsrelatingtotheoperating the Groupinreturnforpastorfuturecompliance Government intheformoftransfersresourcesto Government grantsareassistanceprovided bythe Government grants reclassified items. retrospective restatementofitems, orwhenithas an accountingpolicyretrospectively, makes a comparative period,whentheGrouphasapplied presented asatthebeginningofearliest addition, aStatementofFinancialPosition is unless thereclassificationisimpracticable.In is changed,comparativeamountsarereclassified When thepresentationorclassificationofitems Comparatives 47 Statement of accounting policies 48 Statement of accounting policies E. Financial assetsatfairvalue throughtheProfitand A financialassetisclassifiedinthiscategoryif The classificationdependsonthenatureand financial asset. incorporates any dividendorinterestearnedonthe which theyarise. The netgainorlossrecognised are includedintheProfitandLoss intheperiod and lossesarisingfromchangesin thefairvalue Loss arerecognisedinitiallyatfairvalue. Gains instrument. they arenotdesignatedandeffectiveasahedging Derivatives arecategorisedasheldfortradingif the shorttermorifsodesignatedbymanagement. acquired principallyforthepurposeofsellingin • • This categoryhastwosub-categories: and loss Financial assetsatfairvaluethroughtheprofit the timeofinitialrecognition. purpose ofthefinancialassetsandisdeterminedat • • • • following specifiedcategories: Other financialassetsareclassifiedintothe initially measuredatfairvalue. ‘at fairvalue throughtheProfitandLoss’, whichare costs, except forthosefinancial assetsclassifiedas are initiallymeasuredatfairvalue, plus transaction established bythemarket concerned.Investments delivery oftheinvestment withinthetimeframe investment isunderacontractwhose terms require on tradedatewherethepurchaseorsaleofan Investments arerecognisedandderecognised Financial assets • • • for: and Lossintheperiodwhichtheyariseexcept Exchange differencesarerecognisedintheProfit retranslated. of historicalcostinaforeigncurrencyarenot Non-monetary itemsthataremeasuredinterms • • • • • • • • • and Lossatinception. those designatedatfairvalue throughtheProfit financial assetsheldfortrading;and loans andreceivables. ‘available-for-sale’ financialassets;and held tomaturityinvestments; and Loss’; financial assets‘atfair value through the Profit investment. recognised inprofitorlossondisposalofthenet in theforeigncurrencytranslationreserveand in aforeignoperation,andwhicharerecognised to occur, whichformpartofthenet investment for whichsettlementisneitherplannednorlikely receivable fromorpayable toaforeignoperation exchange differencesonmonetaryitems and in ordertohedgecertainforeigncurrencyrisks; exchange differencesontransactionsenteredinto foreign currencyborrowings; regarded asanadjustmenttointerestcostson included inthecostofthoseassetswhentheyare construction forfutureproductiveuse,whichare exchange differenceswhichrelatetoassetsunder Financial assets, otherthanthoseaccountedfor Impairment offinancialassets Loans andreceivables arenon-derivative financial Loans andreceivables Portfolio investments areindividually valued bythe Portfolio investments Gains orlossesarisingfromchangesinfairvalue Certain sharesheldbytheGroupareclassifiedas Available-for-sale financialassetsarenon-derivatives Available-for-sale financialassets The effectiveinterestmethodisaof Financial instrumentspurchasedwiththeintention Held tomaturityinvestments impacted. future cashflows oftheinvestment have been recognition ofthefinancialassets, theestimated the initial of oneormoreeventsthatoccurred after where thereisobjectiveevidencethat,asaresult reporting period.Financialassetsareimpaired for indicatorsofimpairmentattheendeach at fairvalue throughprofitorloss, areassessed interest rate. income isrecognisedbyapplyingtheeffective effective interestmethodlessimpairment.Interest receivables arestatedatamortisedcostusingthe are notquotedinanactivemarket. Loansand assets withfixed or determinablepaymentsthat loss arenotrecogniseduntilrealised. not areversalofpreviouslyrecognisedrevaluation investments astheyarise. Revaluation gainsthatare Group recognisesrevaluation losseson individual and Venture Capital valuation guidelines. The Fund ManagerusingInternationalPrivate Equity the period. revaluation reserveisincludedinprofit orlossfor loss previouslyrecognisedintheavailable-for-sale disposed oforisimpaired,thecumulativegain in theProfitandLoss. Wheretheinvestment is which arerecogniseddirectlytotheprofitorloss exchange gainsandlossesonmonetaryassets, using theeffectiveinterestmethodandforeign exception ofimpairmentlosses, interestcalculated the available-for-sale revaluation reservewiththe income’ intheProfitandLossaccumulated are recognisedwithin‘other comprehensive less impairment. being available-for-sale andarestatedatfairvalue classified inany oftheothercategories. that areeitherdesignatedinthiscategoryornot carrying amountofthefinancialasset. where appropriate,ashorterperiod,tothenet through theexpectedlifeoffinancialassetor, exactly discountsestimatedfuturecashreceipts period. The effectiveinterestrateisthethat and ofallocatinginterestincomeover therelevant calculating theamortisedcostofafinancialasset recognised onaneffectiveyieldbasis. interest ratemethodlessimpairment,withrevenue are recordedatamortisedcostusingtheeffective of beingheldforthelong-termoruntilmaturity In respectofavailable-for-sale equityinstruments, With theexception ofavailable-for-sale equity The carryingamountofthefinancialassetis For financialassets carriedatamortisedcost,the For certaincategoriesoffinancialassets, suchas For allotherfinancialassets, includingredeemable For unlistedsharesclassifiedas available-for-sale, available-for-sale reserve. comprehensive incomeandaccumulated inthe to animpairmentlossisrecognisedinother or loss. Any increaseinfairvalue subsequent profit orlossarenotreversedthrough impairment lossespreviouslyrecognisedthough impairment notbeenrecognised. what theamortisedcostwouldhave beenhadthe date theimpairmentisreverseddoesnotexceed that thecarryingamountofinvestment atthe reversed throughtheProfitandLosstoextent the previouslyrecognisedimpairmentlossis theimpairmentwas recognised, occurring after decrease canberelatedobjectivelytoanevent amount oftheimpairmentlossdecreasesand instruments, ifinasubsequentperiod,the recognised intheProfitandLoss. the carryingamountofallowance accountare credited againsttheallowance account.Changesin recoveries ofamountspreviouslywrittenoffare written offthroughtheProfitandLoss. Subsequent a tradereceivable isconsidereduncollectible, itis through theuseofanallowance account. When receivables, wherethecarryingamountisreduced all financialassetswiththeexception oftrade reduced bytheimpairmentlossdirectlyfor financial asset’s originaleffectiverate. of estimatedfuturecashflows, discountedatthe the asset’s carryingamountandthepresentvalue amount oftheimpairmentisdifferencebetween with defaultonreceivables. national orlocaleconomicconditionsthatcorrelate period of60days, aswellobservable changesin payments intheportfoliopastaverage credit payments, anincreaseinthenumberofdelayed include theGroup’s pastexperienceofcollecting impairment foraportfolioofreceivables could on acollectivebasis. Objectiveevidenceof impaired individuallyareassessedforimpairment trade receivables, assetsthatareassessednottobe • • • could include: lease receivables, objectiveevidenceofimpairment notes classifiedas available-for-sale andfinance objective evidenceofimpairment. of thesecuritybelow itscostisconsideredtobe a significantorprolongeddeclineinthefair value • • • bankruptcy orfinancialre-organisation. it becomingprobablethattheborrower willenter payments; or default ordelinquencyininterestprincipal counterparty; or significant financialdifficultyoftheissueror H. G. F.

The costofaninternallygeneratedintangibleasset Research expenditureisexpensedintheperiod Internally-generated intangibleassets-research licencesarecapitalised Acquired computersoftware Purchased intangibleassetssuchasintellectual Purchased intangibleassets Assets heldunderfinanceleasesareinitially Operating leasepaymentsareincludedinprofitor Group aslessee Operating leasereceiptsareincludedinprofitor Group aslessor Financial assetsaccountedforatfairvalue through Assets carriedatfairvalue phase oftheassetonly. represents expenditureincurredinthedevelopment incurred. and developmentexpenditure as incurred. programmesarerecognisedasanexpense software Costs associatedwithmaintainingcomputer (between 3and5yearsonastraightlinebasis). are amortisedover their estimatedusefullives bring tousethespecificsoftware. Thesecosts on thebasisofcostsincurredtoacquireand of eachannualreportingperiod. life andamortisationmethodisreviewedattheend varies between5and15years. The estimateduseful is chargedover their estimatedusefullives, which and accumulatedimpairmentlosses. Amortisation recorded atcostlessaccumulatedamortisation property, patents, trademarks andlicencesare Intangible assets a financeleaseobligation. the consolidatedstatementoffinancialpositionas corresponding liabilitytothelessorisincludedin present value oftheminimumleasepayments. The value attheinceptionofleaseor, iflower, atthe recognised asassetsoftheGroupattheirfair loss inequalinstalmentsover theleaseterm. loss inequalinstalmentsover theleaseterm. leases areclassifiedasoperatingleases. and rewards ofownership tothelessee. All other terms oftheleasetransfersubstantiallyallrisks Leases areclassifiedasfinanceleaseswheneverthe Leased assets point-of-sale costsatthepointofharvest. produce ismeasuredatfairvalue lessestimated realisable value. The costofharvestedagricultural determined onafirst-in,first-outbasis, andnet Inventories arevalued atthelower ofcost, Inventories recognised inprofitorloss. the instrumentandchangesinfairvalue are as theirfairvalue reflectsthecreditqualityof profit orlossarenotassessedforimpairment 49 Statement of accounting policies 50 Statement of accounting policies I. Goodwill, intangibleassetswithindefinite usefullife Where theassetdoesnotgeneratecashflows that At eachreportingdate,theGroupreviews Realised gainsandlossesarisingfrom disposalof Disposal ofintangibleassets Assets withindefiniteusefullivesarenotamortised, Other intangibleassets Computer developmentcostsrecognised software Computer developmentcoststhat software Internally generatedintangibleassetsthatsatisfy reversed. An impairmentofgoodwillisnotsubsequently is anindicationthattheassetmay beimpaired. tested forimpairmentannuallyand wheneverthere and intangibleassetsnotyetavailable foruseare generating unittowhichtheassetbelongs. estimates therecoverable amountofthecash- are independentfromotherassets, theGroup loss (ifany). order todeterminetheextentofimpairment recoverable amount oftheassetsisestimatedin impairment loss. Ifany suchindicationexists, the indication thatthoseassetshave sufferedan depreciation todeterminewhetherthereisany assets thataresubjecttoamortisationor carrying amountsofitstangibleandintangible Impairment ofassets Loss intheperiodwhichtransactionoccurs. intangible assetsarerecognisedintheProfitand class ofasset. Revaluations areforeachintangibleasset,nota fair value lessany accumulatedimpairmentlosses. the assetisrecordedatarevalued amount, being Whenever thereisanindicationofimpairment, but aretestedatleastannuallyforimpairment. lives (notexceeding 5years). as assetsareamortisedover theirestimateduseful and anappropriateportionofrelevant overheads. developmentemployeecosts include thesoftware are recognisedasintangibleassets. Directcosts economic benefitsexceeding costsbeyondoneyear, by theGroup,andthatwillprobablygenerate productscontrolled identifiable anduniquesoftware are directlyassociatedwiththeproductionof periods arebetween5and7years. which benefitsareexpectedtoaccrue. Thesefuture on astraightlinebasisover futureperiodsfrom the assetrecognitioncriteriaabove, areamortised • • • • been demonstrated: incurred unlessallofthefollowing conditionshave Development expenditureisexpensedintheperiod • • • • asset. development andtouseorselltheintangible financial andotherresourcestocompletethe the availability ofadequatetechnical, development; and attributable totheintangibleassetduringits the abilitytomeasurereliablyexpenditure economic benefits; how theassetcreatedwillgeneratefuture and useorsellit; the intentiontocompleteintangibleasset J. All employeesoftheGroupcanelecttojoin There areasmallnumberofemployeesthat Defined contributionplan Liabilities fornon-accumulatingsickleave are Provision foremployeebenefitswhicharenot Provision foremployeebenefitsexpectedtobe Provision ismadeforbenefitsaccruingto Where animpairmentlosssubsequentlyreverses, If therecoverable amountofanasset(orcash- contributions aspartofpayrollcosts. to theKiwiSaver schemeinlinewithemployee Group istocontributeaspecified percentage KiwiSaver scheme. The onlyobligationofthe incurred. contributions tothePlanareexpensedwhen contribution liabilityforfuturebenefits. TheGroup’s Crown andtheGroup hasnolegalorfinancial Plan. Future benefitsaregeneratedbythe part oftheCrown Defined BenefitSuperannuation the ratespaidorpayable. recognised whentheleave is taken andmeasuredat liabilities. reporting dateandarerecordedasnon-current respect ofservicesprovided byemployeesupto future cashoutflows tobemadebytheGroupin measured atthepresentvalue oftheestimated expected tobesettledwithin12months, are liabilities. at thereportingdateandarerecordedascurrent nominal values usingtheremuneration ratesas settled within12months, aremeasuredattheir and theyarecapableofbeingmeasuredreliably. where itisprobablethatsettlementwillbemade leave, retirementleave/gratuities andsickleave employees inrespectofwages andsalaries, annual Employee benefits increase. the impairmentlossistreatedasarevaluation asset iscarriedatarevalued amount,inwhichcase Profit andLossimmediately, unless therelevant reversal ofanimpairmentlossisrecognisedinthe the asset(cash-generatingunit)inprioryears. A had noimpairmentlossbeenrecognisedfor carrying amountthatwouldhave beendetermined increased carryingamountdoesnotexceed the recoverable amount,butonlytotheextentthat unit) isincreasedtotherevisedestimateofits the carryingamountofasset(cash-generating revaluation. decrease totheextentofasset’s previous impairment lossisfirsttreatedasarevaluation is carriedatarevalued amount,inwhichcasethe and Lossimmediately, unlessthe relevant asset use. An impairmentlossisrecognisedintheProfit an asset’s fairvalue lesscosttosellandvalue in amount. The recoverable amountisthehigherof (cash-generating unit)isreducedtoitsrecoverable carrying amount,theamountofasset generating unit)isestimatedtobelessthanits K. M. L. The Groupispartofthe Accident Compensation Financing activitiesarethoserelatingto Financing activities Investing activitiesarethoserelatingtothe Investing activities Operating activitiesincludealltransactionsand Operating activities Cash andcashequivalents includecashonhand, Cash andcashequivalents payables whichincludeGST. exclusive basiswiththeexception ofreceivables and The financialstatementsarepreparedonaGST Goods andservicestax(GST) specified maximum. all itsclaimcostsforaperiodof4yearsupto the Partnership ProgrammetheGroupisliablefor Corporation (ACC) Partnership Programme.Under Insurance contracts Group. changes intheequityanddebtstructureof investments andany othernon-currentassets. acquisition anddisposalofcurrentnon-current activities. other eventsthatarenotinvesting orfinancing liquid investments readilyconvertible intocash. cash inbanks, demanddepositsandotherhighly Statement ofcashflows N. The liabilityforthe ACC Partnership Programmeis At theendof4yearperiod,Grouppays a had animpactonthesefinancialstatements. new andamendedstandardsinterpretations interpretations applicabletotheGroup.Noneof mandatory newandamendedstandards In thecurrentyearGrouphasadoptedall current period Standards andinterpretationseffectiveinthe 31 March2017. using the Treasury-issued risk-free futureratesasat injuries. Expectedfuturepaymentsarediscounted salary levelsandexperienceofemployeeclaims Consideration isgiventoexpectedfuturewage and up tothereportingdateusingactuarialtechniques. made inrespectoftheemployeeinjuriesandclaims the presentvalue ofexpectedfuturepaymentstobe recognised inthe ACC provision andmeasuredas passes backto ACC. and theliabilityforongoingclaimsfromthatpoint premium to ACC forthevalue ofresidualclaims 51 Statement of accounting policies 52 Notes to financial statements Rent Royalties Dividends Interest Other revenue in thousandsofNewZealand dollars 2. Interest revenueisrecognisedonatimeproportionatebasisthattakes intoaccounttheeffectiveyieldonfinancialasset. Dividend revenuefrominvestments isrecognisedinthefinancialperiodwhichrighttoreceivepaymentestablished. Dividend andinterestrevenue Royalty revenueisrecognisedonanaccrualbasisinaccordancewiththesubstanceofrelevant agreement. Royalties estimated totalcontractcosts. reporting period. The stageofcompletionistheproportionthatcontractcostsincurredforworkperformedtodatebear Revenue fromacontracttoprovide servicesisrecognisedbyreferencetothestageofcompletioncontractatend Rendering ofservices ownership ofthegoods. Revenue fromthesaleofgoodsisrecognisedwhenGrouphastransferredtobuyersignificantrisks andrewards of Sale ofgoods Revenue recognition 1. For theyearended30June2017 financial statements Notes toandformingpartoftheconsolidated Financial andlegalexpenses Directors' fees Change inprovision fordoubtfuldebts Bad debts Auditor's remuneration-forservicesasauditor Financial andadministration Supplies Site andpropertyexpenses Science 3rdpartysub-contracts Other operatingexpenses Operating leaseexpenses Depreciation Amortisation ofintangibleassets Operational Defined contributionplans Salary andwages Employee related in thousandsofNewZealand dollars Operating expenditure Operating Revenue Note 7 16,116 10,461 12,543 23,365 21,550 61,465 3,179 2,312 2,550 5,806 3,025 9,595 1,638 (371) 2017 2017 164 324 370 266 360 15,512 13,165 20,653 22,559 68,984 2,855 9,953 2,471 2,285 6,216 3,291 9,310 1,748 2016 2016 (40) 233 378 277 292 8 Group andinvestee iseliminated. associates. InassessingtheGroup’s shareofearningsassociates, theGroup’s shareofany unrealisedsurplusesbetweenthe reserves areincreasedbytheGroup’s shareofthepost-acquisitionretained surplusandotherpost-acquisitionreservesofthe recognised directlyagainstthecarrying value oftheinvestment. Inthe StatementofFinancialPosition theinvestment andthe recognises itsshareofotherpost-acquisition movements inreserveswithinequity. Dividendsreceivedfromassociatesare share ofanassociate’s profitorlossis adjustedtoaligntheaccountingpoliciesofinvestee withthatoftheGroup. TheGroup The Grouprecognisesitsshareofanassociate’s postacquisitionnetprofitorlossfortheyearinitsProfitandLoss. TheGroup’s reassessment, isrecognisedintheProfitandLossperiodwhichinvestment isacquired. Any excess oftheGroup’s shareofthenetfairvalue oftheidentifiableassetsandliabilities over thecostofinvestment, after goodwill maybeimpairedany impairmentisrecognisedimmediatelyintheProfitandLossnotsubsequentlyreversed. of theinvestment. The goodwillisassessedfor impairmentaspartoftheinvestment. Whenever thereisanindication thatthe value oftheidentifiable assetsandliabilitiesoftheinvestee isrecognisedasgoodwill,whichincludedwithin thecarryingamount On acquisitionoftheinvestment inanassociate,any excess ofthecost investment over theGroup’s shareofthenetfair An investment in anassociateisaccountedforusingtheequitymethodfromdateonwhichinvestee becomesanassociate. constructive obligationsormadepaymentsonbehalfoftheassociate. recognising itsshareoffurtherlosses. Additional lossesarerecognisedonlytotheextentthatGrouphasincurredlegalor associate. When theGroup’s shareoflossesanassociateexceeds theGroup’s interestinthatassociate,theGroupdiscontinues torecognisetheGroup’sat costandadjustedthereafter shareoftheprofitorlossandothercomprehensiveincome Under theequitymethod,aninvestment inanassociateisinitiallyrecognisedtheconsolidatedStatementofFinancialPosition investment, oraportionthereof, isclassifiedasheldforsale,inwhichcaseitaccountedaccordancewithNZ IFRS5. The GroupfinancialstatementsincorporatetheGroup’s interestsinassociatesusingtheequitymethod,except whenthe financial andoperatingpolicydecisionsoftheinvestee, butdoesnotcontrolorhave jointcontrol over thosepolicies. An associateisanentityover whichtheGrouphascapacitytoexercise significantinfluencethroughparticipationinthe 4. 3. 2. Change infairvalue oflivestock Change infairvalue offorestry Impairment ofproperty, plantandequipment Change infairvalue ofderivative financialinstruments Net gain/(loss)onsaleofinvestments Net gain/(loss)onsaleofnon-currentassetsheldfor Impairment ofETS units Net gain/(loss)onsaleofproperty, plantandequipment Impairment/(writeback) ofavailable-for-sale financialassets Net gain/(loss)fromforeigncurrencyexchange in thousandsofNewZealand dollars Impairment ofinvestments Impairments andwritedowns/(writebacks) in thousandsofNewZealand dollars Investments inassociates Other gains/(losses) (continued) expenditure Operating Note Note 10 11 11 12 7 142,546 1,117 (251) 2017 2017 (26) (18) 618 103 275 165 221 59 31 - 149,695 2,754 2,869 (367) 2016 2016 (25) (20) 235 267 302 50 12 - - 53 Notes to financial statements 54 Notes to financial statements Aggregate carryingamount oftheGroupandCompany’s interestinSouthern DairyHubLP Aggregate carryingamountoftheGroup andCompany’s interestintheassociateinvestments Share oftotalcomprehensiveincome to theGroup. are recognisedintheGroup’s consolidatedfinancialstatementsonlytotheextentofinterestsinassociatethatarenotrelated When aGroupentitytransactswithanassociateoftheGroup,profitsandlossesresultingfromtransactionsssociate income relatingtothatreductioninownership interestistaken totheProfitandLoss. assets orliabilities. Where itdoes, theproportionofgainorlossthathadpreviouslybeenrecognisedinothercomprehensive recognised gainsorlosses. Itdoesso,ifthatgainorlosswouldbereclassifiedtotheProfitandLossondisposalofrelated previously When theGroupreducesitsownership interestinanassociatebutcontinuestousetheequitymethod,itmayreclassify (as areclassificationadjustment)whentheequitymethodisdiscontinued. to profitorlossonthedisposalofrelatedassetsliabilities, theGroupreclassifiesgainorlossfromequitytoprofit liabilities. Therefore, ifagainorlosspreviouslyrecognisedin othercomprehensiveincomebythatassociatewouldbereclassified in relationtothatassociateonthesamebasisaswouldberequiredifhaddirectlydisposedofrelatedassetsor disposal oftheassociate.Inaddition,Groupaccountsforallamountspreviouslyrecognisedinothercomprehensiveincome interest andany proceedsfromdisposingofapartinterestintheassociateisincludeddeterminationgainorlosson between thecarryingamountofassociateatdateequitymethodwas discontinued,andthefairvalue ofany retained a financialasset,theGroupmeasuresretainedinterestatfairvalue atthatdateinaccordancewithNZIAS39. The difference investment isclassifiedasheldforsale. WhentheGroupretains aninterestintheformerassociateandretainedis The Groupdiscontinuestheuseofequitymethodfromdateaninvestment ceasestobeanassociate,orwhenthe 4. Share ofprofit/(loss)fromcontinuing operations in thousandsofNewZealand dollars Partnership Southern DairyHubLimited Overseer Limited Lincoln HubLimited Encoate HoldingsLimited Farmax Limited [PPGR Consortia] Limited) Consortium heldvia(AgResearch Pastoral GreenhouseGasResearch Biopolymer NetworkLimited DEEResearch Limited New Zealand Limited VelvetResearch Antler Clone InternationalPtyLimited companies Associate Summarised financial information for associates andjointventures Summarised financialinformationforassociates All associatesareprivate entitiesandthereisnoquotedmarket priceavailable fortheinvestments. are norestrictionsontheabilityofany associatetopaydividends, repayloansorotherwisetransferfunds totheinvestor company. All associatesareincorporatedinNewZealand except forCloneInternationalPtyLimited,whichisincorporatedin Australia. There All oftheabove associatesareaccountedforusing theequitymethodintheseconsolidatedfinancialstatements. SDH GPLimited Investments (continued) inassociates

31 May 31 May 30 June 31 December 30 June 30 June 30 June 30 June 30 June 30 September 30 June Balance date interest and voting power interest andvotingpower 2017 37.5 37.5 held bytheGroup 50 20 50 50 21 33 50 50 25 % ofownership 2016 50 20 50 50 21 33 50 50 25 - -

Overseer modeltoendusers Operating entitysetuptosub-licensethe sector inNewZealand andinternationally opportunities togrow asustainableagri- Deliver agri-sectorresearchandeducation probiotics stabilisationtechnologies To researchanddevelopbacteria management software Development anddistributionoffarm any resultingintellectualproperty gases producedbyruminantsandexploit To undertake researchintogreenhouse performance biobasedproducts Research anddevelopmentofhigh (except deervelvet) farming andprocessingfordeerproducts Research anddevelopmentrelevant todeer intellectual property research andcommercialisingthe Managing investments invelvetantler Cloning highvalue horses, cattleandsheep Principal activity General partner industry goodactivities Promotion anddevelopmentofdairy 2017 5,607 5,026 (677) (677) 581 2016 (749) (749) 484 484 - Deferred taxexpenserelatingtotheorigination andreversaloftemporarydifferences Adjustments recognisedinrelationtothe currenttaxofprioryears Current taxexpense Tax comprises: expense in thousandsofNewZealand dollars Total taxexpense/(benefit) Group anditisprobablethatthetemporarydifferencewillnotreverseinfuture. in jointventureoperationsarerecognised,except wherethetimingofreversaltemporarydifferenceiscontrolledby Foreign deferredtaxassetsthatresultfromoperatinglossesinrespectofsubsidiaries, associates, jointventureentitiesorinterests deferred taxexpenseorincome. Exchange differencesondeferredforeigntaxliabilities orassetsrecognisedintheProfitandLossforperiodareclassifiedas Foreign taxliabilitiesandassets • • Current anddeferredtaxisrecognisedasanexpenseorincomeintheProfitLoss, except when: Current anddeferredtaxfortheperiod Group intendstosettleitscurrenttaxassetsandliabilitiesonanetbasis. Deferred taxassetsandliabilitiesareoffsetwhentheyrelatetotheincometaxes leviedbythesametaxationauthorityand liabilities. from themannerinwhichGroupexpects, atthereportingdate,torecover orsettlethecarryingamountofitsassetsand enacted byreportingdate. The measurement ofdeferredtaxliabilitiesandassetsreflectstheconsequencesthatwouldfollow liabilities givingrisetothemarerealisedorsettled,basedontaxrates(andlaws) thathave beenenactedorsubstantively Deferred taxassetsandliabilitiesaremeasuredattheratesthatexpectedtoapplyperiod(s)when utilise thebenefitsoftemporarydifferencesandtheyareexpectedtoreverseinforeseeablefuture. with theseinterestsareonlyrecognisedtotheextentthatitisprobabletherewillbesufficienttaxableprofitsagainstwhich differences willnotreverseintheforeseeablefuture.Deferredtaxassetsarisingfromdeductibletemporaryassociated ventures except wheretheGroupisabletocontrolreversaloftemporarydifferencesanditprobablethat Deferred taxliabilitiesarerecognisedfortaxabletemporarydifferencesarisingoninvestments insubsidiaries, associatesand joint relation totaxabletemporarydifferencesarisingfromgoodwill. combination) whichaffectsneithertaxableincomenoraccountingprofit. Furthermore, adeferredtaxliabilityisnotrecognisedin differences givingrisetothemresultfromtheinitialrecognitionofassetsandliabilities(otherthanasabusiness tax offsets(forexamplelosses)canbeutilised.However, deferredtaxassetsandliabilitiesarenotrecognisedifthetemporary extent thatitisprobablesufficienttaxableamountswillbeavailable againstwhichdeductibletemporarydifferencesorunused In principle,deferredtaxliabilitiesarerecognisedforalltaxabletemporarydifferences. Deferredtaxassetsarerecognisedtothe those items. from differencesbetweenthecarryingamountofassetsandliabilitiesinfinancialstatementscorrespondingtaxbase Deferred taxisaccountedforusingthecomprehensivebalancesheetliabilitymethodinrespectoftemporarydifferencesarising Deferred tax Current taxforcurrentandpriorperiodsisrecognisedasaliability(orasset)totheextentthatitunpaidrefundable). loss fortheperiod.Itiscalculatedusingtaxratesandlaws thathave beenenactedorsubstantivelybyreportingdate. Current taxiscalculatedbyreferencetotheamountofincometaxes payable orrecoverable inrespectofthetaxableprofitortax Current tax 5. May andisapropertyholdingLPsetupforthepurposeoffosteringresearchintodairyfarminginsouthernSouthIsland. all partnersjointcontrol. The investment ismeasuredusingtheequitymethod. The LimitedPartnership hasabalancedateof31 funding decisionstobeconsentedbythethreepartners(AgResearch, DairyNZandSouthernDairyDevelopment Trust), giving ownership interestinthejointventure. The SouthernDairyHubLimitedPartnership Agreement requiresmajor operatingand During theperiod AgResearch invested $5millionintotheSouthern DairyHubLimitedPartnership ofwhichitholdsa37.55% Southern DairyHubLimitedPartnership 4. goodwill orexcess. it arisesfromtheinitialaccountingforabusinesscombination,inwhichcaseistaken into account inthedeterminationof it relatestoitemsrecognisedinequity, inwhichcasethedeferredtaxorcurrentisalsorecogniseddirectlyequity; Taxation Investments (continued) inassociates 2,039 1,507 (930) 2017 398 (114) (992) (911) 2016 33 55 Notes to financial statements 56 Notes to financial statements 5. in thousandsofNewZealand dollars Net currenttax(liability)/asset Income taxpayable Current taxassets Benefit ofcurrentyeartaxlosses Tax refundreceivable Current taxassets Current taxassetsandliabilities in thousandsofNewZealand dollars Total deferredtaxrecogniseddirectlyinothercomprehensiveincome Revaluations ofavailable-for-sale financialassets Property revaluations Arising onincomeandexpensestaken directlytoequity: Deferred tax Income taxrecogniseddirectlyinothercomprehensiveincome in thousandsofNewZealand dollars Income tax expense/(benefit) recognisedinprofitorloss Income taxexpense/(benefit) Adjustments recognisedinthecurrentyearrelationtoanddeferredtaxofprioryears Non assessablecapital(gain)/loss Associates' resultsreportednetoftax Effect ofimpairment(reversals)/lossesthatarenot(assessable)/deductible Effect ofexpensesthatarenotdeductible Foreign surplus/(deficit)notrecognisedfortax Effect ofrevenuethatisexempt fromtax Income taxexpensecalculatedat28%(2016:28%) Surplus fromcontinuingoperations reconciledtotheaccounting profitasfollows: The totalchargefortheyearcanbe Taxation (continued) (1,461) 1,507 1,577 1,723 6,155 2017 2017 2017 1,751 (317) (244) (70) (95) (55) (23) (79) (73) 290 290 30 76 - (1,281) (992) (376) (616) (335) 2016 2016 2016 (87) (94) 546 116 159 (87) (87) 726 800 227 573 25 74 - Tax losses Unused taxlossesandcredits Intangible assets Available-for-sale financialassets Revaluation ofproperties 2016 Available-for-sale financialassets Revaluation ofproperties 2017 ofothercomprehensiveincome Income taxeffectsrelatingtoeachcomponent in thousandsofNewZealand dollars Provisions Available-for-sale financialassets Property, plant&equipment Biological assets Temporary differences 2016 Tax losses Unused taxlossesandcredits Provisions Available-for-sale financialassets Intangible assets Property, plant&equipment Biological assets Temporary differences 2017 following: Deferred taxassets/(liabilities)arisefromthe in thousandsofNewZealand dollars 5. Taxation (continued) Opening (15,119) (14,243) (12,715) (12,715) (11,853) (12,193) balance 1,828 1,092 1,591 1,129 (187) (329) (265) (405) 340 - Charged to surplus 1,248 1,293 (237) (318) (124) (76) (16) 571 847 911 340 930 37 95 - - comprehensive Charged to Before tax amount income 4,401 4,134 (244) other (317) (317) (87) (73) (87) (87) 302 310 267 (8) ------Acquisitions/ Disposals expense (244) (317) (87) (73) (87) Tax 38 29 38 9 ------tax amount (12,193) (14,243) (11,853) (11,240) (11,262) (13,194) balance Closing Net of 1,591 1,129 4,084 3,890 1,467 1,224 (265) (405) (338) (421) 215 223 194 340 (8) 22 57 Notes to financial statements 58 Notes to financial statements • • • The above amountsrepresentthebalanceofimputationcreditaccountasatendreportingperiodadjustedfor: Imputation creditsavailable forsubsequentreportingperiods Imputation credits Foreign subsidiaries withinvestments differencesassociated andinterests Unrecognised taxabletemporary in thousandsofNewZealand dollars annual reportingperiod. using thestraightlinemethod. The estimatedusefullives, residualvalues anddepreciationmethodarereviewedat the endofeach useful lives. Leaseholdimprovements are depreciatedover theperiod oftheleaseorestimatedusefullife,whicheverisshorter, capital workinprogress, atdepreciationratescalculatedtoallocatethe assets’costorotherrevalued amountover theirestimated Depreciation isprovided foronastraightlinebasisalltangibleproperty, plantandequipment,otherthanfreeholdland recorded atcost. All otherassetsarerecordedatcostless accumulateddepreciationandimpairment.Capital workinprogressis revaluation ofthat asset. in ProfitandLosstotheextentthatitexceeds thebalance,ifany, heldintheassetrevaluation reserverelating toaprevious charged. A decreaseincarryingamountontherevaluation ofland,landimprovements andbuildingsischargedasanexpense expense inProfitandLoss, inwhichcasetheincreaseiscreditedtoProfitandLossextentofdecrease previously revaluation reserve, except totheextentthatitreversesarevaluation decrease forthesameassetpreviouslyrecognisedasan Any revaluation increasearisingontherevaluation ofland,landimprovements andbuildingsisaccumulatedintheasset hierarchy isincluded innote25. value ofland,land improvements andbuildings isnotmateriallydifferentfromtheirfair values. Informationaboutthefair value recognised inthefinancialstatementsofGroupandarereviewedatendeachreportingperiodtoensurethatca rrying are revalued atleast every3yearsorwhenevertherehasbeenasignificantmovement inthefair value. The fair values are subsequent accumulateddepreciationandimpairment losses. Land,landimprovements andbuildings valuation prepared byexternalvaluation experts(usingeithermarket value oroptimiseddepreciatedreplacementcost),lessany Land, landimprovements andbuildingsaremeasuredatfairvalue. Fair value isdeterminedonthebasisofanindependent Fair valuemeasurement • • • • • • • • • The Grouphasthefollowing classesofproperty, plantandequipment: 7. impairment lossorgainonthisrevaluation isrecognisedintheProfitandLoss. An assetisrevalued tothelower ofitscarryingamountorfairvalue lesscoststosell,whenitisclassifiedas available forsale. Any retained earnings. the portionofassetrevaluation reserverelatingtothatassetandwhichisthereforeeffectively realised,istransferreddirectlyto The assetrevaluation reservearisesontherevaluation ofland,landimprovements andbuildings. Where revalued assetsaresold, Reserves Capital consistsof47,268,000fullypaidordinaryshares$1.00each(2016:shares). Share capital 6. 5. Imputation creditsthatwillarisefromthereceiptofdividendsrecognisedasreceivables atthereportingdate. Imputation debitsthatwillarisefromthepaymentofdividendsrecognisedasaliabilityatreportingdate;and Imputation creditsthatwillarisefromthepaymentofamountprovision forincometax; Capital Work inProgress. Plant andEquipment Vehicles Leasehold Improvements Buildings -Farm Buildings -Campus Land Improvements Land -Farm Land -Campus Property, plantandequipment Equity Taxation (continued) 2017 995 - 1,395 2016 295 Cost orvaluation Balance atendofyear Accumulated depreciation Restated costor valuation Restatement adjustment Depreciation Revaluations Disposals Additions Balance atbeginningofyear 2016 (Restated) in thousandsofNewZealand dollars Restatement adjustment Balance atendofyear Accumulated depreciation Cost orvaluation Balance atendofyear Disposals restatement alsoincludesadjustments forassetsincorrectlyclassified. loss onrevaluation beforeadjustingtheaccumulateddepreciation tonil,overstating thecostandaccumulated depreciation. The impact onthenetbookvalue. The restatementisduetoprioryear’s revaluations incorrectlyadjusting theassetcostforany gain/ The 2016costandaccumulateddepreciation hasbeenadjustedbyatotalof$14.436macrosstheassetclasses above, withnil Balance atendofyear Restated accumulated depreciation Depreciation Reclassified as ‘Assets HeldforSale’ Impairments Revaluation Additions Balance atbeginningofyear 2017 in thousandsofNewZealand dollars • • • • • The following estimatedusefullivesareusedinthecalculationofdepreciation: directly toretainedearnings. the attributablerevaluation surplusremainingintheassetrevaluation reserve,netofany relateddeferredtaxes, istransferred Depreciation onrevalued buildingsischargedtotheProfitandLoss. Onthesubsequentsaleorretirementofarevalued property, 7. Plant andEquipment Vehicles 3-10years Leasehold Improvements 3-40years Buildings (includingfarms)5-80years Land Improvements 5-50years Property, plantandequipment(continued) • • • Other PlantandEquipment3-15years. Computer Hardware 3-5years Dairy PlantandEquipment5-25years Improvements Improvements Land & Land & (2,907) (1,878) (1,072) (1,006) 73,438 74,444 76,688 76,688 73,438 76,322 71,885 77,760 73,438 2,259 1,901 3,699 (706) (716) (46) 313 - - - - Buildings Buildings (19,314) (11,615) (10,390) (3,517) (3,707) (7,758) 72,380 80,138 72,511 72,511 72,380 91,753 71,953 11,556 82,901 72,380 3,962 3,461 (10) (45) (13) 435 (8) - Improvements Improvements Leasehold Leasehold (1,475) (1,173) 1,879 1,016 (479) (459) (26) (18) (20) 247 706 270 237 716 237 247 247 21 10 - - - - - Equipment Equipment (72,038) (76,031) (72,060) Plant & Plant & (4,984) (5,076) 16,719 88,779 17,922 17,922 16,719 88,574 16,826 93,953 16,719 4,918 6,337 (41) (22) (58) 205 - - - - Vehicles Vehicles (383) (470) (398) (77) (76) (15) 160 558 533 207 559 160 160 25 30 89 89 5 ------(14,436) (96,117) (88,442) (81,681) 162,944 244,625 259,061 161,141 167,447 255,889 167,447 162,944 162,944 (9,310) (9,595) 11,190 10,126 14,436 4,134 Total Total (69) (45) (59) (58) (8) 59 Notes to financial statements 60 Notes to financial statements optimisation forobsolescenceandsurpluscapacity. valuation based onanestimateofthecurrentgrossreplacementcostassetlessallowances forphysical deterioration,and site improvements suchasroadsandfences wellasfarmbuildings. Optimiseddepreciatedreplacementcostisamethodof Assets thathave aspecialisedusefortheGrouphave beenvalued atoptimiseddepreciatedreplacementcost. These assetsinclude • • • same orasimilarasset,value isdeterminedbyoneormoreofthefollowing: valued usingeithermarket value oroptimiseddepreciatedreplacementcost.For assetswherethereisanactivemarket forthe Colliers Internationalundertherequirementsof Valuation Standards2013.Farm landandbuildingshave been Farm landandbuildingshave been revalued inthecurrentperiod. These valuations wereperformed byindependentvaluers subsequent depreciationandimpairments. The Group’s landandbuildings arestatedattheirrevalued amounts, beingthefairvalue atthe dateofrevaluation, lessany Fair valuemeasurementoftheGroup’s landandbuildings Buildings Land andlandimprovements in thousandsofNewZealand dollars measured onahistoricalcostbasis, theircarryingamountwouldhave beenasfollows: Had theGroup’s landandbuildings (otherthanlandandbuildingsclassifiedasheldforsaleorincludedinadisposalgroup)been Impairment reversalthroughProfitandLoss Impairment throughProfitandLoss in thousandsofNewZealand dollars A netimpairmentdecreaseofassets$59k(2016:nil)consistedof: Decreases throughtheassetrevaluation reserve,beingareversalofprioryearrevaluations Increases throughtheassetrevaluation reserve in thousandsofNewZealand dollars A netrevaluation increaseofassets$4,134k(2016:$8krevaluation decrease)consistedof: Through theProfitandLossaccount Through theassetrevaluation reserve,beingareversalofprioryearrevaluations in thousandsofNewZealand dollars A totalwritedown ofassets$733k(2016:$8k)was reflected: 7. cost approach. income; and direct comparison; Property, plantandequipment(continued) 48,274 21,368 4,134 4,802 (668) 2017 2017 2017 2017 (59) (65) 733 668 65 6 48,897 21,574 2016 2016 2016 2016 (8) (8) 8 8 - - - - - Balance atendofyear Receivables written-offduringtheyear Additional provisions made/reversedduringthe year Total tradereceivables Over 3months of defaults. The Groupdoesnotholdany collateralover thesebalances. The ageinganalysis oftradereceivables isasfollows: $1,258k) werepastduebutnotimpaired. These relatetoanumberofindependentcustomersforwhomthereisnorecenthistory basis. The onlyreceivables impairedareprovided forwithindoubtfuldebts. As at30June2017,tradereceivables of$3,646k(2016: Terms oftradevary accordingtoindividualcustomercontracts. Trade receivables areassessedforimpairmentonanindividual Receivables fromrelatedpartiespastduewere$36k(2016:$1,301k). The fairvalue oftradeandotherreceivables isapproximately equaltotheircarryingvalue. Net receivables Balance atbeginningofyear Movement intheprovisionfordoubtfuldebts in thousandsofNewZealand dollars Total tradereceivables Over 3months 2 to3months Past due 1 to2months Current 2016 2 to3months Past due 1 to2months Current 2017 in thousandsofNewZealand dollars Less provision fordoubtfuldebts Total receivables Receivables fromotherrelatedparties Receivables fromassociates Trade receivables in thousandsofNewZealand dollars 8. Trade andotherreceivables 27,399 26,661 22,993 29,050 26,443 21,473 Gross 3,668 1,651 3,135 1,403 1,520 248 956 533 Doubtful 29,665 29,687 26,661 debts 2,894 (370) (248) (145) (393) (393) 2017 2017 (22) (22) (22) 393 132 (1) 22 22 ------33,060 27,399 26,639 22,993 26,443 21,473 28,657 33,453 29,050 3,646 3,113 1,258 1,258 1,520 4,338 2016 2016 (32) Net 393 956 533 433 393 (8) 65 - 61 Notes to financial statements 62 Notes to financial statements The Grouphasfinancialriskmanagementpoliciesinplacetoensurethatallpayables arepaidwithinthecredittimeframe. Financial riskmanagementstrategies No interestischargedontradepayables. The fairvalue ofpayables isapproximately equaltotheircarryingvalue asallamountsareexpectedtobesettledwithin90days. Total payables Accrued salariesandwages Income inadvance Goods andservicestax(GST) Trade payables in thousandsofNewZealand dollars Balance atendofyear Decreases duetosales Increases duetoacquisitions Balance atbeginningofyear Reconciliation ofchangesinthecarryingvalue 2017 in thousandsofNewZealand dollars recognised intheProfitandLoss. allowance ismadeforareductioninthevalue ofcertainlivestockheldforresearchtrials. Changesinthevaluation oflivestockare Livestock arevalued attheirfairvalue lessestimatedpoint-of-salecostsbyreferencetothemostrelevant activemarket. An 10. effective interestmethod. Thisrepresentstheirfair value giventheshort-termnatureofliability. from thepurchaseofgoodsandservices. Trade andotherpayables aresubsequentlymeasuredatamortisedcostusingthe Trade payables andotheraccountspayable arerecognisedwhentheGroupbecomesobligedtomake futurepaymentsresulting 9. Quantity oflivestockatendyear Balance atendofyear point-of-sale costs Changes infairvalue lessestimated and deaths Net increaseduetobirths, growth Decreases duetosales Increases duetoacquisitions Balance atbeginningofyear carrying value Reconciliation of changesinthe 2016 Quantity oflivestockatendyear point-of-sale costs Changes infairvalue lessestimated and deaths Net increaseduetobirths, growth Trade andotherpayables Biological assets–livestock (1,641) (1,058) Sheep 1,139 9,190 1,238 8,887 417 935 935 874 443 218 627 21 (1,300) 1,482 cattle 1,165 1,020 1,571 (877) (116) Beef 888 911 911 434 873 194 366 (1,315) 1,203 1,413 cattle 1,413 1,142 1,654 1,038 Dairy (489) (366) 696 444 170 334 75 27,835 17,195 9,226 1,169 (110) (148) 2017 Deer 653 761 458 663 998 458 121 342 131 194 28 94 11 (3,540) (3,398) 26,238 17,775 2,029 3,717 4,487 3,717 1,873 1,497 4,254 1,521 6,659 1,353 (367) 2016 Total 451 618 Details ofthefairvalue hierarchy areincludedinnote 25. • • • • Additional inputstothevalue arrivedatare: • • • on: occurred forsimilartreecrops, value isbasedon thosetransactions. Where therehave beennosuchtransactions, value isbased The methodologyusedis‘stand-based’inlinewithforestrymanagementpracticesandharvesting. Where transactions have During theyear, theCompany’s shareofforestryheldaspartajointoperationwith Tainui Group Holdingswas sold. Forestry was valued by Alan Bell& Associates asat30June2017. The value offorestryat30June2017was $727k(2016:$1,041k). Forestry valuations The 2016area(ha)offorestatyearendhasbeenrestatedfrom254hato268hadueanerrorintheprioryear. Area (ha)offorestatendyear Balance atendofyear Changes infairvalue lessestimatedpoint-of-salecosts Decreases duetoharvestingandsaleofforestry Increases duetocapitalisedexpenditure Balance atbeginningofyear Reconciliation ofchangesinthecarryingvalue in thousandsofNewZealand dollars 11. and managementstrategies. forces. The Grouphasprocessesinplaceaimedatmonitoring andmitigatingthoserisks, including pestanddiseasemonitoring The Groupisexposedtofinancialrisks relatingtothedamage tolivestockfromclimaticchanges, diseasesandothernatural Financial riskmanagementstrategies into accounttheage,breed,type,conditionandlocationofanimals. Livestock was valued byPGG Wrightson Limitedbyreferencetomarket evidenceofrecenttransactionsforsimilarlivestock,taking valuationmethod Livestock 10. The GrouphasradiatapinetreecropsatBallantrae,Invermay and Woolford. Compensation unitsarerecognisedbasedontheirmarket value onthedatereceived. land ischangedfromforestrytosomeotherpurpose),adeforestationliabilitywillarise. Forestry landissubjecttotheprovisions oftheNewZealand Emissions Trading Scheme(ETS). Shouldthelandbedeforested(the Emissions TradingScheme applicable discountrate.Changesinthevaluation offorestsareaccountedforthroughprofitorloss. Forests arerecordedattheirfairvalue lesspoint-of-salecostsonanannualbasisusinganticipatedharvesttimingandyield • • • • • • • rolling average prices publishedbytheMinistryforPrimaryIndustries. current market pricesandlongtermtrendsinlogprices. Logpricesusedarebasedon currentmarket pricesand12-quarter an assumed3%compoundingrateonstandardcosts;and a 9%realdiscountrateonpre-taxcashflows; anticipated harvesttimingandyield; for intermediatecrops, amixtureoftheabove. for youngcrops, standardinvestment costs;and for maturecrops, estimatesoffuturecostsandreturns; Biological assets–forestry (continued) Biological assets–livestock 1,041 (417) 2017 110 727 103 - 1,041 2016 268 235 794 12 - 63 Notes to financial statements 64 Notes to financial statements transferred totheLimitedPartnership uponitsincorporationandwhichwillformpartoftheCompany’s equityinthat Partnership. Limited Partnership was notestablished.Otherinvestments include,theshareofcostsincurredtodate($3,031k) whicharetobe costs ofbuildingacommonfacilitywhich willbeheldinaLimitedPartnership, owned bythetwoentities. At balancedatethe Shortly following thereportingperiod,Company enteredintoadevelopmentagreementwithLincolnUniversitytosharethe Lincoln University AgResearch JointFacility Total Other BioPacific Ventures Fund in thousandsofNewZealand dollars During theyear, theimpairmentofotherinvestments inprioryearswerereversedasfollows: Impairment ofotherinvestments with thecompliancestandardforFonterra Co-operative shares). disposed ofitsinvestment inNewZealand PharmaceuticalsHoldingsLimited.12,790Fonterra sharesweredisposedoftocomply standard isassessedeachyearbasedontheprevious3yearsaverage milkproduction.(2016:BioPacific Ventures investment fund year 1,178Fonterra sharesweresoldtocomplywiththecompliancestandardforFonterra Co-operative shares. The compliance The BioPacific Ventures investment funddisposedofitsinvestment inNew Zealand KingSalmonduringtheyear. Duringthe Disposals • • • • • Valuation ofotherinvestments Total Other investments Lincoln University AgResearch JointFacility BioPacific Ventures Fonterra Co-operative GroupLimited in thousandsofNewZealand dollars 12. liability isnotrecognisedonthebalancesheetastherenocurrentintentionofchanginglandusesubjecttoETS. In theeventthatforestareasareharvested,adeforestationliabilityequivalent tothedecreaseincarbonwillbeincurred. This Land valueandcontingency risks ofadeclineintimberprices. not expecttimberpricestodeclinesignificantlyintheforeseeablefuture.Ithasthereforetaken any measurestomanagethe The Groupisexposedtofinancialrisks arisingfromchanges in timberprices. TheGroupisalong-termforestryinvestor anddoes Financial riskmanagementstrategies units onhandarecarriedattheiroriginalcostof$4.15perunit. match thepriceatwhichCompany hasanobligationtosellunitsattachedapreviouslandsaletransaction. All remaining No ETS unitswereacquiredordisposedofduringtheyear(2016:Nil).During31,142revalued to$3.14, Emissions units 11. Other investments areunlistedequitiesorco-operativeswhosesharepricessetbytheindividualentities. Silver Fern Farms sharesarevalued usingthequotedmarket priceontheNZXunlistedmarket. Livestock Improvement sharesarevalued usingthequotedmarket priceontheNZAXmarket. Fonterra sharesarevalued usingthequotedmarket priceontheNZXmarket. revaluations undertaken bythe Fund Manager. Investments heldthroughtheBioPacific Ventures investment fundarecarriedatcost,lessany impairmentarisingfrom Other investments Biological assets–forestry(continued) 7,052 1,008 3,031 3,003 (251) (249) 2017 2017 (2) 10 4,367 2,743 2016 2016 267 245 631 993 22 - Beyond 1year In thefirstyear in thousandsofNewZealand dollars recognised infutureperiodsis: of deferral. The interestincome recognisedintheyearended30June2017is$188k(2016:$188k). The interestincometobe Under NZIAS18Revenue, thediscountwillbetaken totheProfitandLossrecognisedasinterestincome over theperiod discount rateapplied. 2014, being4.55%. There hasbeennomaterialchangeduringtheperiodtounderlyingassumptionsusedincalculating The purchasepriceofPropertyBhasbeendiscountedtonetpresentvalue usingthe Treasury discountrateapplicableat30June settlement oftheamountdue. the land. To minimisetheriskoflosstoCompany throughdefaultbythepurchaser, titletothepropertywillberetaineduntil subject toapeppercornrentandhasfullrightsto,obligationsfor, theeconomicbenefitsandliabilitiesflowing fromuseof Under thetermsofsaleandpurchaseagreementpurchaserhasacquiredpossessionpropertythroughalease Present valueofnon-currentreceivable Less discounttonetpresentvalue Amount receivable undersale&purchaseagreement in thousandsofNewZealand dollars receivable representsthepresentvalue ofthesalepricePropertyB,assetoutbelow: Under thesaleandpurchaseagreementpartieshave agreedtodefersettlementofPropertyBuntilMay2019. The non-current and paymentfor, thoseassetsalsooccurredduringthatyear. Flock Housesite. With theexception ofoneparcelland(andassociatedimprovements) -referredtoasPropertyBdeliveryof, During 2014,theCompany enteredintoanagreementforthesaleofland,buildingsandotherproperty, plantandequipmentatits 13. All provisions except forlong-termemployeeentitlementsareexpectedtobepaidwithinthefollowing financialyear. can bemeasuredreliably. receivable isrecognisedasanassetifitvirtuallycertainthatreimbursement willbereceivedandtheamountofreceivable When someoralloftheeconomicbenefitsrequiredtosettleaprovision areexpectedtoberecovered fromathirdparty, the is material,theexpectedexpendituresarediscountedtotheirpresentvalue usingpre-taxdiscountrates. All provisions arerecordedatthebestestimateofexpenditurerequiredtosettleobligationbalancedate. Where theeffect Provisions arenotrecognisedforfutureoperatinglosses. • • • Provisions arerecognisedwhen: 14. the amounthasbeenreliablyestimated. it ismorelikely thannotthatanoutflow ofresourceswillberequiredtosettletheobligation;and the Grouphasapresentlegalorconstructiveobligationasresultofpastevents; Other non-currentreceivables Provisions 4,341 4,700 (359) 2017 2017 171 188 4,153 4,700 (547) 2016 2016 359 188 65 Notes to financial statements 66 Notes to financial statements • • • • • involves: The Groupmanagesitsexposurearisingfromtheprogrammebypromoting a safeandhealthy workingenvironment, which Objectives formanagingrisks isolated eventtoanindividualemployee. The Groupisnotexposedtoany significantconcentrationsofinsuranceriskasworkrelatedinjuriesaregenerallytheresultan material impactonthefinancialstatements. The value ofthe liabilityisnotmaterialfortheGroup’s financialstatements. Therefore,any changesinassumptionswillnothave a issued futureratesasat31March2017. The discountratesare Treasury-issued risk-free futureratesasat31March2017. and 50%ofthemovements inthe Average Weekly Earnings(AWE) Index.Post-valuation dateclaiminflationratesare Treasury- the totalcostofclaimsuptoalimit$224k.Pre-valuation dateclaiminflationhasbeentaken as50%ofmovements intheCPI For theclaimyearended2017Grouphaschosenastoplosslimitof175%risk,whichmeansthatwillonlycarry attested satisfactionastothenature,sufficiencyandaccuracyofdatauseddetermineoutstandingliability. An independentactuarialvaluer (AON NewZealand) hascalculatedtheGroup’s liabilityasat30June2017. The valuer has Liability valuation ACC partnershipprogramme Employee entitlementsrepresentsannualleave, alternativedays leave, sickleave, longservice leave andperformancepay. Employee entitlements The restructuringprovision representsthedirectcostsofrestructuringandincludesterminationbenefits. Restructuring provision Total provisions Non-current liabilities Current liabilities Represented by: Provisions usedduringtheyear Provisions madeduringtheyear Balance atbeginningofyear 2016 Provisions usedduringtheyear Provisions madeduringtheyear Balance atbeginningofyear 2017 in thousandsofNewZealand dollars Balance atendofyear Provisions reversedduringtheyear Total provisions Provisions reversedduringtheyear Non-current liabilities Current liabilities Represented by: Balance atendofyear 14. identification ofworkplacehazardsand implementationofappropriatesafetyprocedures. riskareasandimplementing mitigatingactions;and recording andmonitoringworkplaceinjuries andnearmissestoidentify actively managingworkplaceinjuriesto ensureemployeesreturntoworkassoonpractical; induction trainingonhealthandsafety; implementing andmonitoringhealth safetypolicies; Provisions (continued) Restructuring (334) (503) (108) (17) 421 421 337 435 355 421 421 165 165 165 - - entitlements Employee (6,794) (5,785) 4,841 4,841 4,700 4,700 4,758 6,073 5,743 5,818 4,841 4,666 (181) (174) 83 34 (430) (198) (234) ACC 293 293 246 477 411 293 293 272 272 272 - - - (7,558) (6,486) 5,555 5,472 6,656 6,655 6,584 5,555 5,555 5,137 5,137 5,103 (198) (516) Total 83 34 United Statesof America. All subsidiarycompaniesareincorporatedinNewZealand, except Phytagro LLC andPhytagro Corp, whichwereincorporatedinthe * Phytagro Corp andPhytagro LLC werewound upduringtheyear. Grasslanz Technology Limited. All othersubsidiarycompaniesaredirectsubsidiariesof AgResearch Limited. Grasslanz Technology LimitedisadirectsubsidiaryofCelentis Limited. AgResearch (USA)Limitedisadirectsubsidiaryof Key moneyreferabletoleaseincurrentperiod Key moneyreceivedinadvance in thousandsofNewZealand dollars the lease(includingrenewal periods). has paidanupfrontlumpsumaskey moneyinrelationtothelease. The key moneyisbeingrecognisedasincomeover thetermof In 2015, AgResearch Limitedsoldabuildingandenteredintosub-leaseofthelandonwhichislocated. The lessee Key money 15. Phytagro NewZealand Limited Covita Limited Research Consortium) Limited AgResearch (Johne’s Disease Limited AgResearch (PPGRConsortia) Consortia) Limited AgResearch (Pastoral Genomics AgResearch (USA)Limited Grasslanz TechnologyLimited Celentis Limited Subsidiary companies recognised onacquisitionplustheirshareofpost-acquisitionsurpluses. The interestsofany non-controllingshareholdersarestatedinproportionofthefairvalues oftheidentifiableassetsandliabilities control commencedoruntilthedatethatceased. The resultsofany subsidiariesthatbecome,orceasetobe,partoftheGroupduringyearareconsolidatedfromdate Subsidiaries areentitiescontrolledbytheGroup. 16. Phytagro LLC * Phytagro Corp * Phytagro Corp * Other non-currentliabilities Investments insubsidiaries 31 December 31 December 31 December 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June Balance date

interest and voting power interest andvotingpower 2017 100 100 100 100 100 100 100 100 held bytheGroup - - - % ofownership 2016 100 100 100 100 100 100 100 100 66 80 8

Develop andlicenceIPinforagecrops Develop andlicenceIPinforagecrops Develop andlicenceIPinforagecrops Holding company Holding company Holding company Holding company Holding company the USA Cultivar developmentandmanagementin Cultivar developmentandmanagement Holding company Principal activity 2017 (59) 685 744 2016 (60) 744 804 67 Notes to financial statements 68 Notes to financial statements Net cash flow from operating activities Net cashflowfromoperating Other repaymentsreclassifiedasinvesting activities Net (gain)/lossonsaleofinvestments andintangibleassets Net (gain)/lossonsaleofproperty, plantandequipment activities Items classifiedasinvesting Increase/(decrease) inpayables Increase/(decrease) inprovisions (Increase)/decrease inprepayments (Increase)/decrease inreceivables (Increase)/decrease inlivestock (Increase)/decrease ininventory Change incurrenttaxation Movements inworkingcapital Other non-cashitems Decrease indeferredtax Change infairvalue ofderivative financialinstruments Net (gain)/lossfromforeigncurrencyexchange Asset impairment/writedown Change infairvalue offinancialassetsorliabilitiesdesignatedatfair value Change infairvalue offorestry Share ofdeficitassociates Intangible assetsamortisationandimpairment Depreciation Non-cash items tax Surplus after in thousandsofNewZealand dollars 17. Margot Forde GermplasmCentre Asset outlined below: Directors believethereisnopracticalbasisuponwhichtoreliablymeasurethe value ofthiscollection.Detailsthecollectionare The natureofthisheritageasset,anditssignificancetothescienceGroupundertakes, make itnecessarytodiscloseit. The geographical, scientificand/orenvironmental attributes. TheGrouphasidentifiedagermplasmcollectionasheritageasset. Heritage assetsarethosethatheldforthedurationoftheirphysical livesbecauseoftheiruniquecultural,historical, 18. Reconciliation of surplus after tax with net cash flow from operating activities taxwithnetcashflowfromoperating Reconciliation ofsurplusafter Heritage assets grasses andlegumes New Zealand’s nationalgenebankofgrassland plantsand Australia’s genebank forperennial Description 20,080 2,051 3,059 2,187 9,595 4,648 (165) (418) (770) (324) (240) (928) (103) 2017 (18) (45) 399 677 391 (1) 26 59 - (2,869) (1,100) (2,969) 6,002 2,587 9,310 (238) (713) (247) (949) (235) 2016 (63) (25) 537 650 593 749 292 657 10 25 - property attheexpiryofleaseperiod. operating leaseshave normalprovisions forperiodicrentreviewstomarket rates. Nolessees have anoptiontopurchasethe 1 monthand11years, withone leasehaving anoptiontoextendforafurtherfiveterms, eachof5years. With oneexception, Operating leasereceivables relatetolandandbuildingsowned andleasedby AgResearch Limited. The leasetermsarebetween Total leases non-cancellableoperating Receivable laterthan5years Receivable laterthan1yearand notlongerthan5years Receivable nolaterthan1year leasereceivables Non-cancellable operating Refer tonote2wheretheoperatingleaseexpenseforyearisdisclosed. normal provisions forperiodicrentreviewstomarket rates. Building leasesareforatleast10yearsorhave rightsofrenewal whichare,inaggregate,foratleastthatperiod. All leaseshave using thelandprimarilyforagriculturalpurposesand/orresearchanddevelopmentpurposes. Limited. The leasehasarestrictioninrespectoftherighttooccupyperpetuity, whichonlycontinuesif AgResearch Limitedis The landleasewith Tainui GroupHoldingsLimitedisinperpetuitybutwithrightsofrenewal thatareexecutable by AgResearch All significantoperatingleasecommitmentsrelatetolandandbuildings. Total leases non-cancellableoperating Payable laterthan5years Payable laterthan1yearandnotlonger5years Payable nolaterthan1year leasepayables Non-cancellable operating in thousandsofNewZealand dollars 19. the jointarrangementandretentionofownership rightstopre-existingIPcontributedbytheparties. theparties’rightstoeconomicinputsandoutputsof a jointoperationbyvirtueofthecontractualarrangementswhichspecify AgResearch Limited. GrasslandsInnovation LimitedisincorporatedinNewZealand. GrasslandsInnovation Limitedisconsidered The 30%interestinGrasslandsInnovation LimitedisheldviaGrasslanz Technology Limited,awholly-owned subsidiaryof Grasslands Innovation Limited Details oftheGroup’s material joint operationsattheendofyearareasfollows: joint operation. transacts withitsjointlycontrolledentities, unrealisedprofitsandlossesareeliminatedtotheextentofGroup’s interestinthe are incorporatedintotheGroupfinancialstatementsonalinebybasisusingproportionatemethod. Where theGroup project andshareinany resultingoutput. The Group’s share oftheassets, liabilities, revenuesandexpensesofjointoperations undertake aspecificbusinessprojectandinwhichthejointpartiesareseverallyliablerespect ofcostsandliabilitiesthe Joint operationsarejointarrangementsbetweentheGroupandanotherpartyinwhichthereisacontractualagreementto 20. Operating leasearrangements Operating Joint operation investmentsJoint operation 30 June Balance date interest and voting power interest andvotingpower 2017 held bytheGroup 30 % ofownership 2016 30

and otherforagetechnologies opportunities inproprietaryforagecultivars To identify, developandexploitproduct Principal activity 10,801 11,594 1,872 6,209 2,720 1,246 7,615 2,733 2017 10,668 13,677 2,486 7,022 1,160 2,278 8,541 2,858 2016 69 Notes to financial statements 70 Notes to financial statements * Trading transactionswithentities ofwhichkey managementpersonnelareassociatedinclude: The weightedaverage interestrateontheloansis3.22%(2016:3.84%). During theyear AgResearch Limitedmadeinterestpaymentsof$85k(2016:$203k)toitssubsidiariesonintercompany loans. parties. received. Noexpensehasbeenrecognisedintheperiodforbadordoubtfuldebtsrespectofamountsowed byrelated The amountsoutstandingareunsecured,onnormaltradetermsandwillbesettledincash.Noguaranteeshave beengivenor Entities ofwhichkey managementpersonnelareassociated* Transactions between Associates Subsidiaries Transactions between AgResearch andrelatedparties: Research, developmentandotherservices in thousandsofNewZealand dollars Entities ofwhichkey managementpersonnelareassociated* Transactions between AgResearch andrelatedparties: Jointly controlledentities Associates Subsidiaries Transactions between AgResearch andrelatedparties: Research, developmentandotherservices in thousandsofNewZealand dollars Trading transactionswithrelatedparties other relatedpartytransactionsisdetailedbelow. owned enterprisesandgovernment departments, whicharecarriedoutonacommercialandarm’s lengthbasis. A summaryof The ultimateshareholderoftheGroupisCrown. The Groupundertakes many transactionswithotherCrown entities, state 21. Transactions withrelatedparties AgResearch andrelatedparties: 10,402 9,061 1,173 8,108 3,797 2017 2017 116 339 Purchase ofservices Sale ofservices 15,180 10,234 6,552 1,015 4,317 2016 2016 266 223 2,738 2,894 1,036 2017 2017 246 132 23 - Due from Due to 4,408 2,151 1,106 2016 2016 806 81 65 - 21. Salaries andothershorttermemployeebenefits in thousandsofNewZealand dollars The compensationoftheDirectorsandExecutives, beingthe key managementpersonneloftheGroup,comprised: Key compensation managementpersonnel Details ofthepercentageinterestsheldinrelatedpartiesaredisclosednotes4and16tofinancialstatements. Equity interestinrelatedparties management personnelareassociated(includingsubsidiariesandassociates). The 2016numbersintheabove tableshave beenrestatedtocorrectlydisclosealltradingtransactionswithentitiesofwhichkey ** Key managementpersonnelarenolongerassociatedwiththeseentities. Total Zenoch ManagementLimited** TBFree NewZealand Limited Tainui GroupHoldingsLimited Silver Fern Farms Limited Overseer Limited for Growth &Development) Gravida (NationalResearch Centre Macfarlane RuralBusinessLimited Lincoln University Lincoln HubLimited Limited Landcare Research NewZealand Hamilton CityCouncil** Grasslanz TechnologyLimited Foundation for Arable Research Firstlight Venison (NZ)Limited** Firstlight Foods Limited** Farmax Deer IndustryNewZealand Limited ** DairyNZ Incorporatedand CSIRO** Ballance Agri-Nutrients Limited AsureQuality Limited** ANZCO Foods Limited in thousandsofNewZealand dollars Transactions withrelatedparties(continued) 8,108 1,293 3,797 2017 532 533 835 383 486 116 63 20 34 9 7 ------Sale ofservices 15,180 1,095 4,317 6,862 2016 863 423 604 564 295 66 20 20 13 26 5 7 ------9,061 6,144 2,251 2017 200 116 159 17 21 35 14 91 Purchase ofservices 8 5 ------6,552 2,624 2,710 2016 554 223 175 145 36 30 32 13 2 5 3 ------2,275 2,275 2,492 1,013 2017 2017 Due from(dueto) (34) 230 373 357 393 19 35 82 18 6 ------2,528 2,528 3,602 1,026 1,640 (328) 2016 2016 (11) 190 288 202 500 (4) 15 29 23 32 ------71 Notes to financial statements 72 Notes to financial statements measures therisks. There hasbeennochangeduringtheyeartoGroup’s exposuretoliquidityrisks orthemannerinwhichitmanages and • • • • Liquidity riskismanaged: shortfalls. As at30June2017therewerenofundsdrawn againstthefacility(2016:$Nil). flows fromitsoperatingactivitiestomake timelypayments. facilityof$1mtocover any Itdoeshowever maintainan overdraft Liquidity riskrepresentstheGroup’s abilitytomeetitsfinancialobligationsontime.Generally, theGroupgeneratessufficientcash Liquidity risk not material. The Grouphasnoborrowings andisthereforenotexposedtointerestrateriskotherthaninrelationitsinvestments, whichare Interest raterisk There hasbeennochangeduringtheyeartoGroup’s exposuretocurrencyrisks orthemanner inwhichitmeasurestherisks. The Groupusesforeigncurrencyforward exchange contracts, withintheabove treasurypolicylimits, tomanagetheseexposures. anticipated exposureis(toamaximumof12months). manage theriskonagroup-widebasis. Underthetreasurypolicypurchasedcover isupto95%dependingonhow faroutthe For thosecurrencyexposureslesscertainintheirtimingandextent,suchasfuturesalespurchases, itistheGroup’s policyto Cash flowhedges estimated thata10%increaseintheNewZealand dollarwouldreduceprofitandequityby$335k(2016:$121k). It isestimatedthata10%decreaseintheNewZealand dollarwouldincreaseprofitandequityby$409k(2016:$148k).Itis use offorward foreignexchange contracts. Currency riskinrespectoftheGroup’s transactionsismanagedinaccordancewiththeGroup’s treasurypolicyandincludesthe ruling atbalancedate. transaction, oratratesapproximating them. Assets andliabilities areconverted toNewZealand dollarsattheratesofexchange Revenues andexpensesinforeigncurrencyaretranslatedtoNewZealand dollarsattheexchange ratesineffectatthetimeof Currency risk Market risk value ofeachfinancialassetinthestatementposition. The Grouphasnosignificantconcentrationsofcreditrisk. Themaximumexposuretocreditriskisrepresentedbythecarrying • • • Credit riskismanagedthroughthetreasurypolicywhich: and accountsreceivable. The financialinstrumentswhichpotentiallysubjecttheGrouptocreditriskarecash,short-termdeposits, forward rateagreements Credit risk The Grouphasatreasurypolicywhichitappliestoactivelymanagetheserisks (referbelow). • • • The Grouphasexposuretothefollowing risks fromitsuseoffinancialinstruments: Financial riskmanagement policies whererelevant. financial instruments, receivables andtradecreditors. Theparticularrecognitionmethodsadoptedaredisclosedintheaccounting Financial instrumentscarriedinthestatementoffinancialpositionincludecashandequivalents, investments, derivative 22. through regularoversight bythe Audit &RiskCommittee. through monthlyreviewbyseniormanagement;and through compliancewiththetreasurypolicy, which setsaliquiditybufferforunforeseencashflows; with these; by monitoringcashflow forecasts(bothoperational andanticipatednon-recurringitems)aligninginvestment decisions sets parameterswithinwhichshort-terminvestments mustbemade. restricts thecounterpartiesthatmaybeusedto A Graderegisteredbanks andtheNewZealand Government; and places restrictionsonthelevelofinvestment withany onecounterparty; liquidity risk market risk credit risk Financial instruments Derivative financialinstruments payables other and Trade Financial liabilities investments Other receivables current non Other receivables other and Trade Derivative financial instruments payables other and Trade Financial liabilities Cash andcashequivalents Financial assets 2016 investments Other receivables current non Other receivables other and Trade Cash andcashequivalents Financial assets 2017 in thousandsofNewZealand dollars Fair valueoffinancialassetsandliabilities Foreign currencycontractsareshown atfairvalue. Derivative financialinstruments values ofunlistedassociates. Investments, except for‘other investments’ whicharevalued atfairvalue, arecarriedatcost.Itisnotpracticaltoestimatethefair Investments value. The carryingamountsoffinancialassetsandliabilitiesrecordedatcostinthestatementsapproximate theirfair Cash andcashequivalents,tradereceivables,otherreceivables payables Fair value Finance leases Derivative financialinstruments Trade andotherpayables 2016 Finance leases Derivative financialinstruments Trade andotherpayables 2017 in thousandsofNewZealand dollars Maturity analysis–financialliabilities 22. Financial instruments(continued) Note 12 13 12 13 9 8 9 8 receivables 94,300 93,049 33,060 57,087 29,665 59,043 Loans 4,153 4,341 and ------On demand Available -for-sale 4,367 4,021 4,367 4,021 41 41 67 67 ------amortised cost Less than1 liabilities at Financial 19,579 18,609 26,284 27,906 19,579 18,609 26,238 27,835 year 41 67 5 4 ------Between 1 year and5 Carrying amount 98,667 18,609 97,070 29,665 59,043 19,620 18,676 19,579 33,060 57,087 4,021 4,341 4,367 4,153 years 41 67 1 1 ------Fair value 98,667 97,070 19,620 18,676 26,285 26,238 27,906 27,835 19,579 33,060 57,087 18,609 29,665 59,043 4,367 4,153 4,021 4,341 Total 41 67 41 67 6 4 73 Notes to financial statements 74 Notes to financial statements been acceptedbytheinsurer. The quantumoftheclaimisstilltobedetermined. Currently thereisaclaimwiththeCompany’s insurerinrespectofdamageasaresulttheChristchurchearthquake whichhas Contingent assets There arenoknown significantcontingentliabilitiesorpendinglitigation. Litigation andothercontingentliabilities development concludesasexpected,thecontributionswillbecirca$24minadditiontoalreadycontractedcommitments. As at30June2017,aconditionalagreementhasbeenenteredintorelationtheMasseyJointFood ScienceFacility. If Other commitments Total capitalcommitments Lincoln University AgResearch JointFacility Funding commitmentstoresearchconsortiums Asset purchasescommittedtoandcontractedforatbalancedate Capital commitments in thousandsofNewZealand dollars There have beennomaterialchangesintheGroup’s managementofcapitalduringtheyear. The Group’s policiesinrespect ofcapitalmanagementandallocationarereviewedregularlybytheBoardDirectors. The Groupisnotsubjecttoany externallyimposedcapitalrequirements. research forthebenefitofNew Zealand. The Crown Research Institutes Act 1992requires AgResearch Limitedtomaintainitsfinancialviabilityinorderundertake • • • • The Group’s capitalisitsequity, whichismadeupof: 24. 23. retained earnings. available-for-sale assetrevaluation reserve;and asset revaluation reserve; share capital; Capital management Capital management Contingencies andcommitments 13,778 4,972 1,975 6,831 2017 4,215 2,900 1,315 2016 - Other investments* Available-for-sale financialassets 2017 in thousandsofNewZealand dollars Livestock Non-financial assets • • • Levels 1to3basedonthedegreewhichfairvalue isobservable: The following tableprovides ananalysis ofitemsthataremeasuredsubsequenttoinitialrecognitionatfairvalue, groupedinto 25. which includes$3,031kalreadyspentand $4,972kcommittedto(refernote23). the jointfacilityandcontributetocosts. Ifthedevelopmentconcludes asexpected, AgResearch’s contributionswillbecirca$80m, Lincoln UniversityCouncil inJuly2017. The agreement outlinestheway inwhichthetwopartieswillworktogetherdeveloping The Development Agreement fortheLincolnUniversity AgResearch JointFacility was approved bythe AgResearch Boardand 26. Other investments* Available-for-sale financialassets 2016 Derivative financialliabilities Financial liabilitiesdesignatedatfairvalue Buildings Land andlandimprovements Forestry Livestock Non-financial assets the Level1and3criteria. The 2016comparativesofotherinvestments hasbeenrestatedtocorrectlyreflectthe available forsaleassets thataremeasuredby Joint Facility, whichisstatedatcostandthereforenotreflectedintheabove table. investments of $1,008k (2016:$631k)aspernote12.Note12alsoincludescostsrelatedtotheLincolnUniversity AgResearch *Other investments consistofFonterra shares$3,003k(2016:$2,743k),BioPacific Ventures Fund $10k(2016: $993k)andother The changingofoneormoreinputswouldnotchangesignificantlythefairvalue of theLevel3investments. There werenotransfersbetweenany levelsduringtheyear. Derivative financialliabilities Financial liabilitiesdesignatedatfairvalue Buildings Land andlandimprovements Forestry are notbasedonobservable market data(unobservable inputs). Level 3–fairvalue measurementsarethosederivedfromvaluation techniquesthatincludeinputsfortheassetorliability observable fortheassetorliability, eitherdirectly(i.e.asprices) orindirectly(i.e.derivedfromprices);and Level 2–fairvalue measurementsarethosederivedfrominputsotherthanquotedpricesincludedwithinLevel1that liabilities; Level 1–fairvalue measurementsarethosederivedfromquotedprices(unadjusted)inactivemarkets foridenticalassetsor Fair value measurements recognised in the statement of financial position Fair value measurementsrecognisedinthestatementoffinancial Significant events after balancedate Significant eventsafter Note 12 10 12 11 10 11 7 7 7 7 Level 1 3,042 2,779 3,042 2,779 ------155,315 151,166 Level 2 72,511 76,688 72,439 73,415 4,487 3,717 1,041 969 595 727 67 41 Level 3 993 993 10 10 ------158,367 154,938 72,511 76,688 72,439 73,415 4,021 4,487 4,367 3,717 1,041 Total 727 67 41 75 Notes to financial statements 76 Auditor’s report Auditor’s report Auditor’s We have fulfilled our responsibilities in accordance with the Auditor the with accordance in responsibilities our fulfilled have We We carried out our audit in accordance with the Auditor our for Basis responsibilities relating to the financial statements, we comment on other information, and we explain our independence. The 24 completedwas on audit Our - - We believe the audit that evidence we obtained have is sufficient and standards a and Ethical Standards and the International Standards on Auditing (New Zealand). Our responsibilities under those ourIn opinion, the statements that include accounting policies other and e changes in equity and consolidated statement of cash flows for the year ended on that date and the notes to the financial 201 June 30 at as position financial Group consistingof AgResearch Dente Bruno me, The Auditor 2017 30 YEAR JUNE THE ENDED FOR STATEMENTS FINANCIAL ITSAND LIMITED AGRESEARCH SUBSIDIARIES OF THE TO READERS REPORT AUDITOR’S INDEPENDENT The Board of Directors’ responsibilities responsibilities of Directors’ Board The cease operations, or no has realistic alternative so. but to do matters related to going concern using and the going basis concern of accounting, unless the Board of toDirectorshas company’s ability going applicable, a ofresponsible Directors as is to concern. continue as also disclos TheBoard ing, for preparingIn the financial statements, the Board of Directors is responsible of the on behalf company for assessing the financial statements that are free from material misstatement, w prepare to it enable to necessary is determines it as control internal such for responsible is Directors of Board The and presented The Board of Directors is responsiblebehalf company for ofpreparing the on statements financial that are fairly Directors of Board the of Responsibilities We have audited statementsthe financial of Opinion the Auditor Reasonable assurance is opinion. our includes that report auditor’s an issue to and error, or fraud to due whether misstatement, material from free whole, are as a statements, financial the whether about assurance reasonable obtain to are objectives Our Auditor the of Responsibilities taken taken on the basis of these financial statements. readers of decisions the influence to expected be could reasonably they aggregate, the in or individually if, material or d amounts differences of or omissions basis for our opinion is explained below. In addition, we outline the responsibilities of of Board our the and Directors we responsibilities the below. outline is opinion our for basis addition, In explained to International Financial Reporting Standards Reporting Financial International to comply - - fairly, present - - re further described in the Responsibilities of the auditor section of our report. report. our of section auditor the of Responsibilities the in described re further General is the auditor of General’s Auditing Standards will detectalways material a misstatement when it exists. Misstatements are opinion that complythat with generally accepted accounting practice in New Zealand. with generally accounting accepted practice in Zealand in accordance New with New equivalents Zealand its financial performance and flowscash for the year then ended; and its financial position at as , using the staffusingresourcesand the of Deloitte financial statements of the Group: in all material respects: material all in a higha level of assurance, but it is not a guarantee that an audit carried out in accordance with August 2017 Limited and and Limited for the audit of the financial statements financial the of audit the for AgResearch its and Limited subsidiaries AgResearch 7 , the consolidated statement of comprehensive income, consolidated statement of arise from arise isclosures and can arise from fraud or error. Misstatements are considered considered are Misstatements error. or fraud from arise can and isclosures 30 June 2017; and . Thisis. the date which at our opinionexpressed.is itssubsidiaries and other controlled entities, the Group for the financial statements financial the for the Crown Researchthe Crown ActInstitutes 1992. - . General’s Auditing Standards, which incorporate the Professional Professional the incorporate which Standards, Auditing General’s pages 40 pages on xplanatory information. xplanatory Limited , to carryto the out financial the audit of, statements the of hether due to fraud or error. error. or fraud to due hether - General’s Auditing Standards. Standards. Auditing General’s to 75, to appropriate to provide a basis for our audit opinion. audit our for basis provide a to appropriate (the Group). The Auditor The Group). (the that comprisethat the consolidated statement of on his behalf. behalf. - General has appointed appointed has General Auditor’s report Auditor’s - - O and significant audit findings, including significant any deficienciesin internal control we that identify during our audit. W - on pages pages on T Oth - - maintainand professional scepticism throughout the audit. Also: A We did not W I regard. report to thisin nothing We have fact. that report we to required are information, this other of misstatement material a obtained in the audit, or otherwise appears to be basedmaterially misstated. If, on our work, we conclude that we consider whether the other information is materially inconsistent with the financial statements or our knowledge I opinion or assurance conclusion thereon. O for for Partner B O Ethics for Assurance Practitioners (Revised): 1 Standard Ethical and Professional of requirements independence the incorporate which Standards, Hamilton, - Auditor the of behalf On n n connection with our audit of the financial statements, our responsibility doingis to othe rread information. In the so, ndependence he Board of Directors is responsible for the other information. The other information comprises the information included included information the comprises information other The information. other the for responsible is Directors of Board he s auditpart of an in accordance with the Auditor runo Dente ur responsibilities responsibilities ur ur opinion financial statementson the does not cover other the information do and we not express form any audit of ther the than audit, e communicate with the Board of Directors regarding, among other matters, the planned scope and tim and scope planned the matters, other among regarding, Directors of Board the with e communicate e are independent of the company in accordance with the independence requirements of the Auditor the of requirements the independence with accordance in company the of independent e are Deloitte er Information er may causemay the company to cease to continue as goinga concern. conditions or events future However, report. date of our the auditor’s to up obtained evidence the audit on based in the financial statements or, if disclosures such to modify inadequate, are our opinion. Our conclusions are material uncertainty exists, we are required to draw attention in our auditor’s to the related report disclosures cast may that significant doubt on the company’s ability weto concludecontinue going a aas If that concern. basedand, on the audit evidence obtained, whether material a uncertainty exists related to events or conditions W the by made disclosures related and W achieves fair presentation. presentation. fair achieves whetherand the financial statements represent the underlying transactions and events in manner a that W the company’s internal control. of the effectiveness on opinion an but the expressing not for purpose of circumstances the in appropriate are W omissions, misrepresentations, or the ov from fraud is higher for than one resulting from fraud as error, may involve collusion, forgery, intentional a and error, design perform and audit procedures responsive to those risks, and obtain audit evidence is that sufficient W to 11 78 to 39 and 2 to e conclude on the appropriateness of the use of the going concern going the of use the of appropriateness the on e conclude e evaluate the appropriateness of accounting policies used the and reasonableness of accounting estimates luding the disclosures e evaluate the overallpresentation, structure disclosures content and the of the financial statements, including e obtain understanding an of internal control relevant to the audit in order to design audit procedures that e identify assess and the risks of material misstatement of the financial statements, whether due to fraud or evaluate the security controls and over the electronic publication of the financial statements. New Zealand New Limited ppropriate to provide basisa for our opinion. The risk of not detecting a material misstatement resulting arise from the Publicarise 2001 Audit from Act we have no relationship with, or interests in, the General 6 , but, does not include the financial statements, and our auditor’s report thereon. issued by the New AuditingZealand and Assurance Standards Board. Board of Directors of Board erride of internal control. internal erride of - General’s Auditing Standards, we exercise professional judgement judgement professional we exercise Standards, Auditing General’s . . . company basis of accounting by the Board of Directors - Gen ing audit of the eral’s Auditing Auditing eral’s Code of of Code there is is there 77 Auditor’s report 78 Statutory reporting is updatedregularly. during theyear. These interestshave been appropriatelyrecordedwithintheinterestregister, which or shareholdingsinprivate trustsandsmallcompanieswithwhomnotransactionshave occurred Interests aredirectorshipsunlessotherwisestatedanddonotincludetrusteeships, directorships Directors’ interestsdisclosedduringtheyearto30June2017aresetoutintablebelo by DirectorswiththeCompany. information thatwouldnototherwisehave beenavailable tothem. There werenosharedealings The BoardreceivednonoticesduringtheyearfromDirectorsrequestinguseofCompany Directors’ interests No dividendsweredeclaredduringtheyearto30June2017. Dividends aspects undertheCrown Research Institutes Act 1992fortheyearended30June2017. The Directorsarepleasedtoreportthat AgResearch Limitedmetitsobligationsinallmaterial To ourshareholdersandstakeholders For theyearended30June2017 Statutory reporting Paul Reynolds Andrew Macfarlane (retired 30June2017) Michelle Alexander (Deputy Chair) Jeff Grant June 2017) (Chair –retired30 Sam Robinson Enviro-Mark SolutionsLtd Challenge, Chair Our Landand Water NationalScience Landcare Research Ltd Edgewater Resort HotelLtd&subsidiaries Dumbarton LandCompany Ltd Deer IndustryNZ(Chair) Deebury Pastoral Ltd Creighton PropertiesLtd ANZCO Foods Ltd(ANZCOBeef) Kiwi Pacific Foods Ltd Antares NewZealand HoldingsLtd Company Ltd Antares Restaurant GroupProject Antares Restaurant GroupLtd Southland SharedServices&CEO’s Group Southern Instituteof Technology OSPRI NewZealand NAIT Mt LintonStation Milford SoundDevelopment Authority LakelandAdventures Wanaka Ltd Finance Now Ltd D&G Holdings Copper ValleyHoldings (representing ShanghaiMaling) Silver Fern Farms JV& Associated Companies Co-op Bank(removed during2016) Tourere Asset ManagementLtd Opihi Ltd Lincoln HubLtd Company Ltd Hawke’s BayRegional Investment Brownrigg Agriculture Directors’ interests Research Trust Motu EconomicandPublicPolicy and (Gisborne) Ltd WoodEngineering Technology Lincoln UniversityCouncillor Ngāi Tahu Farming Macfarlane RuralBusinessLtd Lincoln HospitabilityLimited Kintore Farm Ltd Fernside HoldingsLtd&subsidiaries Shareholder of Tango NewZealand Limited Tango NewZealand Ltd Tango HoldingsNewZealand of TowerShareholder Hill Trust Wanaka Ltd Shareholder ofLakeland Adventures Shareholder ofD&GHoldings Shareholder ofCopper Valley Holdings Predator-free 2050Limited TBfree Ltd SBS Bank Management Ltd of TourereShareholder Asset Shareholder ofSilverFern Farms Shareholder ofRavensdown Fertiliser Co-op Shareholder ofRangelandFarms Ltd operative brokingbusiness) Shareholder ofPrimary Wool (H/bayco- Shareholder ofFarmlands Ltd Shareholder ofBallance Agri-Nutrients

w. including membershipofBoardCommittees, duringtheyearwereasfollows: Remuneration andotherbenefitspaidorduepayable toDirectorsforservicesasaDirector, Directors’ remuneration Robert JohnHay (Chair) Grasslanz TechnologyLimited Teresa Ciprian Barry Harris Tania Simpson Andrew Macfarlane Dr Paul Reynolds Dr Peter Stone Michelle Alexander Jeff Grant(DeputyChair) Sam Robinson (Chair) Peter Stone Tania Simpson (University ofSouthernQueensland) National Centre forEngineeringin Agriculture James Cook University) Tropical LandscapesJoint Venture (CSIRO- Oceania GroupLtd Kōwhai Consulting Ltd Global Women Deep SouthNationalScienceChallenge Directors Directors’ interests(continued) Shareholder of Argo Investments Limited Shareholder ofNufarmLimited Shareholder ofMightyRiverPower Ltd Tainui GroupHoldings Reserve BankofNewZealand 15,000 36,405 36,405 36,405 36,405 41,497 70,774 2017 44,807 - - 15,000 35,778 44,028 35,778 35,778 35,778 35,778 40,778 69,528 2016 35,778 79 Statutory reporting 80 Statutory reporting the Officeof Auditor-Generalandundersection21ofthe Crown ResearchInstitutes Act1992. Mr BrunoDenteofDeloitteLimitedistheappointedauditor oftheCompany undercontractfrom Auditor permissible bylaw. The Company alsohasDirectorsandOfficersinsurance. During theyear, theCompany indemnifiedDirectorsandcertainemployeestothefullestextent Directors andemployeesindemnityinsurance No donationswerepaidduringtheyearended30June2017. Donations termination oftheiremploymentwiththeGroup. During theyear, theGroupmadefollowing paymentstoformeremployeesinrespectof Termination payments Business Performance (58)andsubsidiaries (8). Communications &Marketing andFinance& Chief Executive’s Office,SharedServices, Remuneration was receivedbyScience(130), severance andexitpayments. superannuation benefits, vehiclebenefits, Remuneration includedperformanceawards, per annum,asshown intableonright. received remunerationoforexceeding $100,000 During theyearended30June2017,196staff Remuneration greaterthan$100,000 Number ofemployees Total amountpaid Total $630,000 to$639,999 $350,000 to$359,999 $270,000 to$279,999 $250,000 to$259,999 $220,000 to$229,999 $210,000 to$219,999 $201,000 to$209,999 $190,000 to$199,999 $180,000 to$189,999 $170,000 to$179,999 $160,000 to$169,999 $150,000 to$159,999 $140,000 to$149,999 $130,000 to$139,999 $120,000 to$129,999 $110,000 to$119,999 $100,000 to$109,999 Group $725,881 196 22 12 16 20 29 45 41 1 2 1 2 1 3 3 4 4 5 7

82 Core Funding report Dairy On-farm Sector grouping farmed livestockinNewZealand. impact ofmanagementpracticeson thewelfareof A numberofresearchprogrammes aremeasuringthe FY17 Key Achievements practice andhighlightingpotentialareasofwelfarerisk. recommendations forfarmersandprocessorsonbest industries, providing guidanceandmanagement research willhave along-termimpactonthelivestock and improve market success. The outcomesfromthis improve compliance, maintainfreedomtooperate welfare risktoNewZealand livestockindustries, This programmewillreducespecificareasofanimal Objective Animal welfareformarket success SSIF platform: reported here. stakeholders andendusers. The financial value anddetailsofthisco-investment arenot financial year. Many oftheseprojectsarealigned,co-invested andconnectedto AgResearch’s This sectionidentifies key achievementsfrom Core-funded projectsundertaken inthe2016/17 Corporate Intentandoutlinedonpage12-13. These projectsalignwiththeOutcomesandImpactsdefinedin beneficial environmental andsocialoutcomesforNew Zealand. pastoral, agri-foodandagri-technologysectorvalue chainstocontributeeconomicgrowth and AgResearch’s Core Purposeistoenhancethevalue, productivityandprofitabilityofNew Zealand’s • • • • • • with theCrown. Activities supportedbyCore Funding caninclude: delivers inaccordancewithitsStatementofCorporate IntentandtheCore Funding Agreement devolved toaCrown Research Institute(CRI) tosupportitachieveitsCore Purpose,whichit Business, Innovation andEmployment(MBIE)asCore Funding. Core Funding isfundingthat In 2016/17(FY17) AgResearch received$38.889m (2015/16:$38.889m)fromtheMinistryof As at30June2017 Core Funding report Premium Agri-Foods Agri-Food Production National Databases building strongernationalandinternationalcollaborationsthatfurthertheCRI’s Core Purpose. responding toemergenciesandchangingnationalpriorities; maintaining NationallyImportant Assets; providing policyadvicetoGovernment; transferring knowledge andtechnologiestoend-usersstakeholders; New Zealand; undertaking basicandappliedresearchexperimentaldevelopmentofimportanceto $1,232,000 FY17 Core Funding Investment by AgResearch. website. This calculatorisbasedonmodels developed an off-paddockpadhasbeendeployedontheDairyNZ calculator’ toolthatestimatestheusefullife-spanof improve animalwelfare. Also, aweb-based‘off-paddock lying surfacesthatmaximisetimesandtherefore The dairyindustrywillusethisinformationtopromote aversion tolyinginareascontaminatedwithfaeces. surfaces comparedwithdry, whiletheyalsohave an dairy cattlespendsignificantlylesstimelyingonwet For example,researchhasempiricallydeterminedthat AgResearch Statementof

different grubbingefficacyandpasturedisturbance is littlepasturedisturbance. The modelenablesmany grubbing iscompletedbymid-November andthere hill pastures, populationgrowth doesnotoccurif the currentaverage grubbing efficacyin Canterbury and decreaseswithincreasinggrubbingefficacy. At how populationgrowth increaseswith disturbance population modelforNassellatussockwehave shown formulation couldbemoreeffective. By developinga Sclerotinia sclerotiorum.Itsuggeststhatamulti-strain to foliageapplicationsofthebioherbicidefungus explain theweed’s variable responseinpastfieldtrials thistle collectedfromaroundNewZealand may commercial potential.Geneticvariation inCalifornian be consideredforfurtherstudytodetermineits the thistleintemperatepasturesandthatitshould fungus haspotentialasabioherbicideforuseagainst applied toitsfoliage. This findingindicatesthatthe thistle, causesadebilitatingdiseaseintheweedwhen cucumerina, anewlyrecordedpathogenofCalifornian We have establishedthatthefungusPlectosphaerella FY17 Key Achievements key groupssuchasthethistles, grassesandbuttercups. research withafocusonherbaceousweeds, including bio-economic/farm system modellingandempirical It willachievethisthroughnovel populationand dairy supportforagecroppingsystems inNewZealand. weeds insheepandbeefpastures, dairypasturesand developing long-termcost-effectivemanagementof This projectwillprovide thescientificbasisfor Objective Weed ecologyandmanagementinpasturesforagecrops 3. 2. 1. The projectwill: well over due. below-ground disease burdenonpotentialproductionis potential, worktounderstandtheextentandcostof modern foragecultivars arenotreachingtheirfield towards decreasedpasturepersistence.Giventhatmany in lostnutrientuseefficiency, noritscontribution and wehave notaccounted fortheroleofrootdisease yet, however, wehave nocomparablecostsforryegrass, clover costfarmersupwards of$600perHayear. As Recent workhasshown thatsoil-bornediseasesofwhite Objective Defining theimpactofsoilbiologicalconstraintstopastureproduction between pasturedevelopmentand pathogenlevels. pathogens inpastoralsoils, andinvestigate links establish thedistributionandpopulation sizeofkey DNA-based analysis; and from diseasedroottissue/soilusingclassicaland keyidentify soil-borne,root-pathogenicorganisms pasture plantroots; that areattributabletosoil-bornediseasesofforage theproduction-basedandeconomiccosts quantify $1,222,000 FY17 Core Funding Investment control ofthisweedisrequired. competition levelsandadvisegrowers onwhether existing cropmodelstodetermineeconomicthreshold sIMulator (APSIM). This modelwillinterfacewith for registrationwiththe Agricultural ProductionSystems We have submittedagrowth modelfortheweedfathen species toNewZealand. implications forfutureintroductionsofpasturegrass (using agentsfromoverseas), andwillhave wider poor targetforaclassicalbiologicalcontrolprogramme via molecularstudieswillindicatethatthisweedisa pasture grassinthe1970s. Confirmation ofthisfinding a Setariaspeciesintroducedandtrialledaspotential between thelong-naturalisedformofspeciesand pastures, indicatethatthisweedcouldbeahybrid bristle grass, aninvasive weedofNewZealand dairy using theherbicide.Ourmolecularstudieswithyellow grass and/orNassellatussockhave beencontrolled over-sowing intodryhillpastureswhereChileanneedle making regardingpastureplantcultivar selectionfor North Canterbury. The experimentwillinformdecision- two farmsineachofHawke’s Bay, Marlboroughand flupropanate (Task Force) hasbeenestablishedon for theirsusceptibilitywiththenew-to-market herbicide of thisweed. An experimentcomparingpasturecultivars programmes aimedattheregional-scalemanagement datesforregional pest management setting ‘cut-off’ scenarios tobesimulatedandprovides guidancefor $270,000 FY17 Core Funding Investment industry onthisareaofwork. have the nextstepsinengagingwith helpedusidentify held discussionswithDNZandRavensdown staff that targeted forfuturediseasecontrolstrategies. We have determine cause-and-effectrelationshipsthatcanbe of potentialpathogensneedstobeinvestigated to Initial pathologyanalyses suggestthatacomplex pasture persistenceissuesseeninthe Waikato region. diseases areplayinganimportantroleinthewidespread losses. This resultsupportstheideathatsoil-borne diseases presentthatcausedsignificantproduction for farmers. Few soilsinCanterbury orSouthlandhad losses occurred. This translatestoa40%profitloss in soilsof Waikato, wherethegreatestproduction white clover andryegrass respectivelyweremeasured New Zealand. Productionlossesof30%and20%to disease acrossthethreemaindairyingregionsof costs ofmajor pasturespeciesattributabletosoil-borne We have quantifiedtheproductionandeconomic FY17 Key Achievements 83 Core Funding report 84 Core Funding report • FY17 Key Achievements to pastureproduction. estimated toprovide anannualaddedvalue of$1billion stakeholders. Past useofseedsfromthecollectionis new andexistingneedsofpastoralmarkets and future researchanddevelopmentthatmeetsthe fostering conservation andsustainability andenabling provides aplatformforpublicinformationsharing, It suppliesseedtoresearchersaroundtheworld,and distribute itforresearchandproductdevelopment. plant germplasm(seed),conserveit,replenishitand plants. The primary rolesoftheMFGC aretoobtain New Zealand’s nationalgenebankofgrassland The MargotForde GermplasmCentre (MFGC) is Objective AgResearch nationallysignificantdatabase(Margot Forde Germplasm Centre) nutrients throughhealthierrootsystems. predation andimproving plantaccesstowater and productivity andresiliencebybothreducinginsect more effectiveEpichloëstrainswillimprove pasture seed productionandstorage. The identificationof seed transmissionandendophyte viabilityduring options tosolvechallengesassociatedwithendophyte by currentcommercialstrains. This projectprovides ground, andparticularlythosepestsnotcontrolled endophytes thattargetinsectpestsabove andbelow to helpdevelopnextgenerationgrassEpichloë The overall objectiveoftheseinterlinked aimsis endophyte duringthelifecycleofhostplant. in coordinatingthegrowth anddevelopmentofthe evaluating theroleofplantshootapicalmeristem impact ofendophytes onplantdevelopment,through regulation. The researchalsoseeks tounderstandthe newsecondarymetabolitesandtheir to identify endophyte transmissionandviability, aswellseeking goals isperformedtoimprove understandingof grasses. Fundamental researchunderpinningthese commercialisation ofEpichloëendophytes fortemperate that invests inresearchforthediscovery and Innovation (EI),anunincorporatedjointventure This projectiscompletelyalignedtoEndophyte Objective Epichloë endophytes forthefuturefarm • research/experimental accessions. institutes outsideofNewZealand, andbreeding/ Altai mountainsinRussia,accessions sourcedfrom included accessionsfromcollecting missionsto to theCentre databaseduring2016/17. This A totalof6,701newseedaccessions wereadded New Zealand’s agriculturalpractice. to bioticandabioticstressfactorstheireffecton and topotentialgenesforresistancetolerance access togermplasmfromthemostexotic locations and futuretargetedcollections. This willimprove improving thequality ofthecollectionanddatabase projects. We have madelonger-termprogressin germplasm fortheendophyte andforage research benefits fromitsworkincludedproviding accessto and achievedsignificantprogress. Short-term The MFGC workplansfor2016/17wereallexecuted • • • • • $2,000,000 FY17 Core Funding Investment peer-reviewed journalsandonePhDstudentgraduated. scientific papershave beenpublishedininternational deterrence. Overthepast12monthsseveralkey intermediate metaboliteleadingtoblackbeetlefeeding and blackbeetlefeedingtrialsidentifiedthe key was dissectedthroughgenedeletion,chemistryanalysis new activityagainstinsects. The ergotalkaloidpathway in thebiosynthesis ofnovel compoundswithpotentially transfer ofonegenebetweenendophyte strainsresulted involved ininsectbiocontrolwereidentified. The genes requiredforthebiosynthesis ofakey metabolite (a genusoffungalendophytes) andryegrass. The maintain theinteractionbetweenEpichloëendophytes region have beenidentifiedaspotentialcandidatesthat inflorescences. Genesexpressedintheplantmeristem colonisation ofnewlydevelopingtillersor into ryegrassseedisduetofailuresinendophyte Poor transmissionofprotectivefungalendophytes FY17 Key Achievements • • • • • New Zealand. in FY18andseedavailability for researchpurposesin with duplicatesinLincolnFY17 for seedincrease subterranean clover weregrown inPalmerston North In total,66accessionsofthecore collection of clover forNewZealand hillcountry. research projects specifically focused on subterranean partially importedfrom Australia toNewZealand for The corecollectionofsubterraneanclover was and January. subterranean clover inNewZealand inDecember North Islandtocollectnaturalisedpopulationsof Staff weredeployedtotheEast Coast ofthe increased atMFGC over 2016/17. Seeds of175accessionswerereplenishedor abroad over thepastyear. significantly towards researchinNew Zealand and By distributingseed,theCentre hascontributed Australia, CzechRepublic, Croatia,Israel andJapan. New Zealand companiesandoverseas institutionsin external users).Externalusersincludedfive (5,208 toresearchersat AgResearch and903to A totalof6,111accessionsweresentouttousers range offutureresearch. collection andprovides potentialtoassistawider seed database,increasesthevalue ofthe overall of seedstoredintheMFGC, whichstrengthensthe This increaseinseednumbersbroadensthediversity 3. 2. 1. Sciences Roadmap): recommended intheFarm Systems andEnvironmental by supportingthefollowing appointments(as and capacityoffarmsystems expertisein AgResearch This projectisfocusedonincreasingthecapability Objective Farm systemsroadmap-newcapability this importantpasturepest. our limitedknowledge ofthebehaviour andbiologyof Information gatheredfromtheseexperimentsimproved of rootaphidtoendophyte-free perennial ryegrass. lentisci. Two experimentsassessedolfactoryresponses morphological featuresoftherootaphid,Aploneura designed andproducedanolfactometertosuitthe responses ofinsectstomultipleodoursources. We Olfactometers areglassarenasusedtoassessolfactory FY17 Key Achievements New Zealand farms. the effectivenessofendophytes inpest managementon current AgResearch endophyte programmetoimprove the discovery ofnewendophytes. This willaddtothe compounds thatwillbecomeanimportantpartof newbioactive pest controlandpotentiallyhelpidentify give usgreaterinsightintotheirdeploymentforinsect to thepresenceoffungalendophytes in grasseswill Understanding thebehaviour ofinsectsinrelation volatiles givenoffbyaplant. involves aresponseto plant selectionbyinsectsoften grass grub)toendophyte-infected ryegrass. Host pasture pests(Argentinestemweevil,rootaphidand behavioural andolfactoryresponsesofthreemajor affect insectsthroughgaininganunderstandingofthe the mechanismsbywhichryegrassfungalendophytes This PhDprojectwillexpandourexistingknowledge of Objective Ryegrass fungalendophytes -PhD • • last twoyears. sent anddepositedaround1,400accessionsover the agricultural cropdiversity. Intotal, MFGC hasnow back-up ofNewZealand’s forageseedandassociated storage facility, andthedepositprovides avaluable Svalbard Vault istheworld’s largest secureseed Global Seed Vault (Norway) duringtheyear. The seed was deployedanddepositedattheSvalbard The secondbatchofNewZealand’s foragecollection collection development. were importedintoNewZealand forthefinalcore and GPSinformation,around700accessions was developedusingeco-geographicaldataandGIS The firstsubsetoftheworldcollectionwhiteclover focus. farm systems scientistwithhillcountryand deer farm economist;and farm systems andenvironmental scientist;

$348,384 FY17 Core Funding Investment been identifiedfortheothertworoles. for capabilitydevelopmentandrecruitment inFY18has the JournalofNewZealandGrasslands . A newstrategy is progressingwellandapaperhas beensubmittedto model onhow tolinkpricepremiumfarmsystems well asotherprogrammes. A conceptualeconomic Innovations intheNewZealand Pastoral Industry’as delivery intoaproject‘Economic Valuation forScience the postdoctoralresearcherrecruitedhasbegun We have recruitedthefarmeconomistpositionand FY17 Key Achievements $670,000 FY17 Core Funding Investment $38,657 FY17 Core Funding Investment infection. the behaviour ofthisinsect inrelationtoendophyte- experiments arerequirednextyeartobetterunderstand ryegrass onhostselectionofgrassgrublarvae. Further of endophyte infectionintallfescueand perennial A thirdolfactometerwas usedtoassess theeffect its hostplant. information onhow thisimportantpasturepestselects undamaged plants. These resultsprovide further stem weevilselecteddamagedryegrassplantsover host selectionofthe Argentine stemweevil. Argentine induced plantvolatiles, releasedbyinsectfeeding, on Three experimentsinvestigated theeffect ofherbivore- behaviour ofthisinsectinrelationtofungalendophytes. This informationprovides greaterunderstandingofthe endophyte-infected andendophyte-free plants. plants usingolfaction,butcannotdistinguishbetween that Argentine stemweevilareabletolocatetheirhost weevil adults. Results fromtheseexperimentsindicate infection onolfactoryresponsesof Argentine stem experiments investigated theeffectofendophyte A secondolfactometerwas developedandthree DivSeek. prestigious globalgenebankcollaborationinitiative of thegermplasmphenotypingworkinggroupat Director was votedinandappointedasthe Vice Chair France (France TV) andtheUK(BBC). Also, MFGC three otherradiostationsandnewspapers), with mediaorganisationsinNewZealand (RNZand and gave arangeofinterviewsaboutthegenebank annual genebankmanagers’conferencein Australia, Centre was aninvited speaker attheCrop Trust’s the GlobalCropDiversity Trust. The Directorofthe the yearthroughitsdeepeningrelationshipwith The Centre’s internationalprofile was raisedduring 85 Core Funding report 86 Core Funding report reduce leachablenitrateloads, optimiseforagecrop levels ofproduction,assimilatemoreNfromsoilto animal urinarynitrogen(N)excretion, sustainhigh scientific knowledge forforageoptionsthatreduce Overall, theFRNLprogrammewillprovide new environmental impact. challenges ofincreasingproductivitywhilereducing Forages offera realistic pathtoward meetingthetwin implementing changeintheirforagebase/croprotation. at managingpasturesandcrops, andcapableof capabilities alignaroundforages. Farmers areproficient industries. NewZealand’s RS&Tandfarmmanagement and foragecropoptionsforend-usersinallofthese by delivering(by2020)proven, adoptablepasture and mixed farmbusinessesby20%fromcurrentlevels nitrate leachinglossesfromdairy, arable,beef/sheep research targetwithinthisprogrammeistoreduce ‘Forages forreduced nitrateleaching’(FRNL). The This projectsupportstheDairyNZ-led programme Objective Forages forreducednitrateleaching first trial was designedtotestallstepsoftheprocess the 10July2017.Conducted intheUnitedStates, this The firstHMEryegrassfieldtrial was completedon FY17 Key Achievements Business Plan2015. seven-year scienceplanoutlinedintheHMEForage increased growth rates. This researchunderpinsa levels (from4%to8%)ofleaflipidsandup50% energy (HME)perennialryegrasslineswithdoubled project todatehasdevelopedGMhighmetabolisable efficiency andreduced environmental impacts. The annum throughincreasedproductivity, increased could beintherangeof$2billionto$5per benefit totheNew Zealand pastoralindustry, ifadopted, and qualitywithrespecttoanimalfeed. The potential forage ryegrasscultivars toimprove forageproduction profitability bydevelopinggeneticallymodified(GM) this programmeistoboostpastoralagriculturesector energy) inaspecificweightoffeed. Theprimarygoalof the amountofusableenergy(known asmetabolisable quality istheenergyvalue offeed,whichismeasuredby One ofthemostimportantmeasuresanimalfeed Objective Previously titled‘Geneticallymodified(GM)forages’. energyforagecommercialisation High metabolisable nutrient flow from the rumen. fermentation profileissuggestiveoflargechangesin fed todairycows at ratescommonlyseenonfarm,the the rumeninlactatingcows. When fodderbeetwas pattern andthefermentationprofileobtainedfrom 40% ofthedrymatterintake) changes thediurnal moderate amountsoffodderbeetinthediet(about Achievement: Ourresultsindicatethatfeedingeven FY17 Key Achievements benefit willexceed $2billionperannum. annum fromdairyaloneby2030,andtotalnational gross economicbenefitofmorethan$500millionper catchment), weestimatepotentialregional(Canterbury) industries. Basedononeexample(HurunuiRiver sustainable economicdevelopmentintheend-user in freshwater catchments, whichcanthenfacilitate will bedeliveredtocreatenutrientload‘headroom’ from October2013toSeptember2019.Solutions into farmingsystems. The FRNLprogrammeruns phases ofarablerotations, andarereadilyintegrated $1,900,000 FY17 Core Funding Investment water useefficiencycomparedwithcontrolryegrass. has shown thatHMEryegrasshas9%increasedactual and seedtransmission.Controlled environment testing HME ryegrassandfoundnodifferenceinitsgrowth also assessedthegrowth oftheryegrassendophyte in a 20%increaseintherateofphotosynthesis. We have up to50%fastergrowth ratesthancontrollinesdueto fixing andseedproduction.Someoftheselineshave based fieldtrialsin2018,withactivitiesincludingtrait We have threeHMElinesprogressingtoward overseas- plant growth. control plantsandthattheenvironment was suitablefor that establishmentofHMEryegrasswas equivalent to glasshouse measurements. The trialdemonstrated photosynthesis measurementswereconsistentwith level expressionoftheHMEtrait.Increasedin-field used asingleHMEryegrasseventthathasmid- assess theefficacyofHMEryegrass. Thetrial and thevarious experimentalprocessesneededto pre-germination incontainment,transfertothefield including regulatoryapproval, seedproduction,

due course,environmental) outcomes. pasture cropsthatdeliverthebestproductivity(and,in allied toeasy-to-use decisiontoolsforselectionofthe gain ineconomicallyimportantpastureplanttraits, general, willbenefitthroughimproved ratesofgenetic Dairy farmers, andtheNewZealand economy in productivity andenvironmental sustainability. gain targetsthatwillmove theindustryforward inboth andfacilitateachievementofforagegenetic will identify the scientificbaseofexistingforage value index,and Specifically, researchintheprogrammewillstrengthen the key stakeholders. linked directlytofuturegeneticgaintargets agreedby a collaborative,world-bestforageevaluation system, (NZPBRA). The visionforthisprogrammeistodevelop Zealand PlantBreedingandResearch Association New Zealand initiativeledbyDairyNZandtheNew The Forage Value Indexisaseven-year(2013-2020) Objective Forage value simulation model, APSIM, ithasthepotentialtobe While themechanismwas developedin oneparticular the soilwithextremeheterogeneityinnitrogen. when theirrootsystems arespreadacrosspatchesin modelling theeffectsofcompetitionbetweenplants development andtestingofaninnovative approachto Organisation (CSIRO), Australia, completedthe with theCommonwealth Scientificand Research Achievement: Inthepastyearwehave, incollaboration by developingnewresearchproposals. fermentation profile. We arefollowing upthesefindings aspects ofmilkquality, duetothe changesinrumen how fodderbeetfeedingoflactatingcows couldimpact Furthermore, ourresearchhasprovided insightsinto in pregnantsheep(Beef+LambNewZealand). have beenpreparedtoassesstheuseoffodderbeet ruminants. Following ourfindings, successfulproposals waysidentifying tousefodderbeetinasafeway with implications fordrycattle. This researchisvaluable in cows suggestthattheuseofthisfeedhasimportant circulating aminoacidconcentrationsinfodder-beet-fed findings, togetherwithourpreviousworkprofilingthe fodder beetispotentiallyalow Nleachingcrop,these with otheranimaltraits. Although indicationsare investigation ofco-benefitsorpotentialtrade-offs nitrogen excretion totheenvironment require Impact: Managementpracticesaimedatreducing

$1,370,000 FY17 Core Funding Investment • • FY17 Key Achievements $662,161 FY17 Core Funding Investment OVERSEER®. potential tohave immediate impactoncecapturedin a partofrecalibrationproject. Thus theresultshave (Nutrients BudgetModel)inthenext12monthsas used toimprove the APSIM modelandOVERSEER® losses totheenvironment. The informationisbeing because theurinepatchis‘engine’ fornitrogen patches inarangeofpasturespeciesisimportant Impact: Understandingthenitrogendynamicsinurine conditions andirrigatedpasture. effects onNuptake andNleachingriskofdrysummer implications forNleachingrisk. We have comparedthe from urinepatchesondifferentpasturespeciesandthe Achievement: We have comparednitrogenuptake that includediversepasture. results willbetterenablethemodellingoffarmsystems climates inwhichthetechnologiesshouldbeused. The whole-farm systems andacrossthevariety ofsoilsand support theexperimentalfindingsforintegrationinto Impact: Process-basedmodellingisessentialto research. plants andhasquitealongreachintothisareaof adopted byothermodelsrequiringcompetitionbetween • • consequent reductioninnitrateleaching. nitrogen isdepositedinurinepatches, witha degradation ratewouldmeanlessexcess dietary clover. This isanimportantresultbecauseaslower more slowly intherumenthanleaves ofnormal hypothesis thatthicker-leaved clovers woulddegrade We obtainedinitialproofofconceptforthe Agricultural Research. in aspecialissueoftheNewZealandJournal nitrogen fertiliserinputs. The resultswillbepublished grown withorwithoutclover, andwithlow orhigh tested theperformanceofeightryegrasscultivars field experiment at four different sites. The experiment With DairyNZwecompletedacollaborativegrazed 87 Core Funding report 88 Core Funding report protein beta-lactoglobulininthemilk. These results by removing productionoftheallergy-causingwhey milkcompositionfromcattle also beenusedtomodify increase heat-toleranceoflivestock. The techniquehas coat colour, atraitthathasthepotential tosignificantly from cattletoinsertageneknown toresultinlighter Gene-editing hasbeensuccessfullyusedincell-lines FY17 Key Achievements sectors. improving theprofitabilityofsheep,beefanddairy gain inreproductiveperformanceoflivestock,thereby techniques andmanagementtoolstoaccelerategenetic Its overall objectiveistodevelopprecisionbreeding within theNewZealand meatanimalanddairysectors. reproductive efficiency(a keydriverofprofitability) This programmerepresentstargetedresearchinto Objective Animal reproduction “fundamental aspectofcellbiology whichsetsthefungi the apex. citedasa This modeofgrowth isoften has beenthatvegetativehyphae grow exclusively at Until recently, theprevailing paradigmoffungalgrowth Objective FY14 SciencePrize:Sensingandsignallingintercalarygrowth inEpichloëendophytes both productiveandenvironmental benefits. management andprecisionplacementoffertiliserfor low chemicalinput decision making),improved weed (pasture growth forecasting, whichiscriticaltoenable (more legumes),betterforecastingoffeedsupply points identifiedincludedincreasingfeedquality centred onkaitiakitanga(stewardship). The leverage the approachhasbeenfarmingsystems basedand points tosubstantiallyincreasefarmprofitability; With Māorifarmerswehave identified key leverage FY17 Key Achievements ecological andculturalboundaries. capability tofarmsystems thatcanoperatewithinboth entities inordertoimprove productivityandprovide to developingresearchnetworks withMāoriagriculture relevant toMāori,andadoptsa‘grass-roots’ approach and threats).Programmeresearchisspecifically facing local,regional,nationalandglobalopportunities systems astheycontinuetoevolveintothefuture(while productive, profitable,resilientandsustainablefarming and technologiesthatdrivethedevelopmentof the projectwillprovide farmswithresearch,knowledge prosperity ofNewZealand’s pastoralsector. Specifically, farming systems, inordertoensurethefuture and discussionaboutcurrentfutureNewZealand develop thoughtleadershipandstimulatethinking In thisprogramme,wewillworkwithstakeholders to Objective Future farmingsystems $4,787,461 FY17 Core Funding Investment to selectforimproved rammatingsuccess. production traits, itindicatesthatwouldbepossible As thisfindinghasnostrongassociationswithother moderately consistentacrossyearsforindividualrams. lambs siredbyeachramvaries betweenramsbutis heats. Insheep,wehave shown thatthenumberof breeding andalsoincreasingthenumberofpre-mating including increasingtheperiodpost-partumbefore area ofconcernfortheindustry, are beingdeveloped, strategies toimprove reproductivesuccess, amajor causes ofearlyembryo-lossindairycattle. As aresult, made significantadvances inunderstandingthe project withDairyNZand Victoria University, wehave New Zealand’s livestocksectors. Inacollaborative demonstrate thepotentialvalue ofgene-editingfor growth thatoccursthroughintercalary(non-tip)cellular hyphae isincompatiblewiththemechanismofgrass (Ascomycotina, Clavicipitaceae),apicalextensionof of grasscolonisationbyEpichloëfungalsymbionts off fromothermajor kingdoms”. However, inthecontext $340,000 FY17 Core Funding Investment programme thatincludesinfiltrationrates. technology companiesanddiscussionsforanMBIE project. Ithasalsoledtonewrelationshipswith Hub irrigationbidand AgResearch Digital Agriculture Innovation Systems approachhasinformedtheLincoln relationships withcommercialpartners. Successofthe in soilsunderirrigationaswellstrengthened has ledtodiscovery knowledge oninfiltration rates understanding variability inpastureproduction. This and newknowledge onlayersofdatarequiredfor management (grassgrubwithvariable ratetreatment) of focushave beenbringing newtechnologytopest ceiling’ onahigh-performingdairyfarm;twoareas identified newleveragepointsfor‘breakingproduction cultural driversoffarmdecision-making. Research also material forEastCoast farming thathadrelevance for for variegated thistle. These resultedinusefulextension agent forthistlecontrol,anddevelopingadecisiontool Tangihanga, whichincludesintroducingbiocontrol their success, developingaweedcontrolstrategyfor establishing legumesinhillcountryanddemonstrating enterprises. Further achievementsforFY17were relationship withkey EastCoast Māorifarming This workcontributedtothedevelopmentofacredible New Zealand andglobalsectors. insect-active microbesthatwillhave utilityinboth work willbetouseatargetedapproach tofindnew irrigation-based systems. A secondcomponentofthis formulations tothefield-tailoredfordeliveryin the cost-effectivedeliveryofrobust,persistentfungal sporulation andmicrosclerotiadevelopment,allowing production systems anddefinethetriggersforfungal One componentofthisworkaimstoimprove fungal long-term restingstructurestermedmicrosclerotia. porina caterpillars. Importantly, theseisolates form Metarhizium anisopliae,whichisactiveagainst is activeagainstblackbeetlelarva andadults, and active fungalspecies, Beaveriabrongniartti,which insect pests. Ourteamhasidentifiedtwo key insect- effectively andpotentiallymoreconsistentlycontrol more conducivetothefieldapplicationoffungi, Zealand pastoralsystems will provide anenvironment conditions. The increasing useofirrigationinNew efficacy dueinparttotheirrequirementformoist scenarios fungihave beenfound tohave limitedfield species, specificallyryegrassandclover. Insome soil invertebrates suchasnematodes, tovarious plant trophic-level components, frommicrobial,protozoan, ecology, andhassignificantexpertisein various team hasdevelopedkey expertiseinthe areaofsoil development andplantmicrobeinteractions. The biology teamasaworldleaderinbiopesticide The projectwillsupportandhelpdevelopthesoil Objective and optimisingfungalproduction F in geneexpressionfungalculturessubjectedto the fungus. This yearwehave analysed globalchanges host cellsisthepredominantstimulusforgrowth in previously thatmechanicalstresscausedbyexpanding respond bygrowing insynchrony. We have shown are abletosensegrowth oftheirryegrasshosts, and question concerninghow fungalsymbionts ofgrasses The programmeisattemptingtoanswer afundamental FY17 Key Achievements sense andstimulateintercalaryhyphal extension. hypothesis thatmechanicalstretchaloneissufficientto studentship, currentdataisincreasinglysupportingour who beganthisresearchisattheendofhisPhD require otherhostfactors. While thecurrentstudent, and whethertheswitch tointercalarygrowth doesnot Epichloë hyphae respondtomechanicalstretchalone, and thisdeviceisbeingusedtoconfirmwhether was re-engineeredtostretchhyphal filamentsinvivo, growth. As partofthisproject,awoolfibrestretcher that maydetectmembraneperturbationsandstimulate characterise theroleoftwopotentialmechano-sensors is thetriggerforintercalarygrowth, andtofunctionally appointed toconfirmwhethermechanicalstretchalone hyphae bygrowth ofhosttissues. A PhDstudentwas growth isstimulatedbymechanicalstretchimposedon colonisation. Ourhypothesis was thatintercalaryhyphal underpinning intercalarygrowth inhyphae duringleaf 2010 wesetouttocharacterisethemolecularprocesses expansion. InaMarsdenprogrammethatstartedin Y16 Science Prize: Defining new pathogens, plant microbe interactions interactions Y16 SciencePrize:Definingnewpathogens,plantmicrobe $112,000 FY17 Core Funding Investment Y. entomophaga formulations. high-calibre publicationsandshouldunderpinfuture combined withRNAsequencingdata,willleadto of Y. entomophaga virulenceandsecretion. This data, PhD studiesareunderway lookingattheregulators some strainshave alteredvirulenceproperties. Two will allow arapidgenome screeningtodefinewhy 24 differentY. entomophaga strains. Their identification determine thegenesinvolved incontrollingvirulenceof bacterium andsequencingstudieshave enabledusto registration. The projectidentifiedtwohotspotsforthe deployed inothercountriessuchas Australia, aiding in theUnitedStatesandtoolscanalsonow be We passedtheseimprovements ontoourcounterparts a biocontrolagentinNewZealand andoverseas. significantly helpwiththebacterium’s registrationas Y. entomophagahasbeendefined,whichwill re-isolated inNewZealand. The reservoirof Yerisinia entomophaga,whichwas forthefirsttime isolation ofinsectpathogens, specificallythebacterium tools. This advance inturnimproved thedetectionand insect pathogensthatitcouldusetorefinemolecular This projectundertookadedicatedsearchfornew FY17 Key Achievements $49,752 FY17 Core Funding Investment interested injoiningustocontinuetheresearch. postdoctoral studentfromtheUnitedKingdomwhois area byseekingfurtherfunding. We have ahigh-calibre all fungi. We aimtostrengthenourcontributioninthis original claimthattipgrowth isnotadefiningfeatureof used andintheresultsobtained,support outcomes arehighlyinnovative, bothintheprocedures fungal growth occursexclusively atthehyphal tip. These fungal growth, whichhasassumedfordecadesthat grasses. This resultcontravened thecurrentdogmaof (growth alongthelengthoffilament)extensionin to demonstratethatfungiareablegrow byintercalary stretch. The originalSciencePrizeprojectwas thefirst thefungalsensorsthatdetectmechanical identifying The programmeisalsocompletingworkaimedat California inMarch2017. as aposteratthe29thFungal GeneticsConference in challenging andexciting workwas recentlypresented cell division,expansionandwall synthesis. This as astress;rathertheyperceiveitstimulusfor that fungaltissuesdonotperceivemoderatestretch immediately, stretch,shows orthreehoursafter frame. Geneexpressioninsamplestaken, either mechanical stretchonacustom-designedstretching

89 Core Funding report 90 Core Funding report established atthreesitesinNewZealand. increasingly complexpastureshasbeendesignedand A trialtoinvestigate thediversityofinvertebrates within FY17 Key Achievements Canterbury andOtago. of typicalryegrass/whiteclover pasturesin Waikato, established alternativepasturespeciesintoarange is challenging. This projectwillintroduceapatchof However, generatingmeaningfuldatatoprove this against pestoutbreaks andnewinvasive species. in pasturecommunities, andinturnincreaseresilience complexity andfunctionalbiodiversity, promotestability in pasturewillenhanceinvertebrate community data. We hypothesise thatincreasingplantbiodiversity This isintuitivelylikely, butwehave littlesupporting resistance, allowing peststoreachdamagingdensities. New Zealand’s pasturesaresimpleandlackbiotic communities inpasture.Ithasbeensuggestedthat and trophicinteractionsofplantinvertebrate yet weknow surprisinglylittleaboutthestructure Pastoral farmingisvitaltotheNewZealand’s economy, Objective FY17 Technology Prize:Influenceofpasturepatchdiversityoninvertebrate colonisation Dairy On-farm FY17 Core Funding Investment Total $125,000 FY17 Core Funding Investment recommendations onpestresilientpastures. design researchprogrammesthatwilldeliverregional persistence, wewillhave astrongbasisonwhichto and especiallyifgreaterplantdiversityfacilitates waste], parasitoids)comparedwithadjacentpasture, detritivores [organismsthatbreakdown organic increased abundanceofbeneficialspecies(predators, able toprove ourhypothesis thatourpatcheshave an webs withinthewiderpastureecosystem. Ifweare impact thatamorediversepasturemayhave onfood are associatedwithalternativepasturespeciesandthe whichinvertebrateswe caninitiatestudiestoidentify of ecosystems. Ifthistechniqueissuccessfulintrial investigate thebreakdown oforganicmatterinarange using atechniquethathaspreviouslybeenusedto clover pasturesin Waikato, Canterbury andOtago alternative pasturespeciesintotypicalryegrass/white We have introducedreplicatedpatchesofestablished $15,127,415 Dairy Off-farm Sector grouping these relationships. by definingtheunderlyingroleof the microbiomein determine causeandeffectoffood-health relationships microbiome initiatives. The researchspecificallyaimsto Challenge), andinalignmentwithmajor international FIET andtheHigh-Value NutritionNationalScience Combifoods, Food Nutrition)andMBIE(Petfoods, Funding (e.g. Added Value Foods Naturality, Red Meat and programmesfundedby AgResearch Core from, butcomplementarytovarious researchprojects programme inthatfield. Theresearchwillbedistinct and establishinganewresearchdevelopment sourcing ahigh-levelspecialistinmicrobiomeresearch to buildonourcompetencyindigestivehealthby The aimofthehumanmicrobiomeseedprojectis Objective Human microbiome-seedproject • • FY17 Key Achievements raise dairyandmeatindustryprofitability. desirable consumercharacteristics, andsimultaneously to developfoodswithimproved healthbenefitsand properties offoods. This understandingwillbeused processing onboththefunctionalandphysical and increasingunderstandingoftheimpactdairy optimisation ofthedigestivebehaviour offoods, pet-food market, developingmodelssupporting to differentiateNew Zealand meatsinthepremium includes gatheringnewinformationonopportunities with afocusonnaturalityandfunctionality. This value foodsinNewZealand’s meatanddairysectors, initiatives thatsupportthedevelopmentofnewadded This programmewillundertake anumberofresearch Objective Added valuefoods • • is adifferentratiofromstandardkibbleddiets ratio of45:51:4(%metabolisableenergy),which consume dietscontainingaprotein:fat:carbohydrate Dogs, whengiventheabilitytoself-selectnutrients, New knowledge oncaninedietshasbeenestablished. of composition. differentiating theirmeatproductsonthebasis for accurate,robust,accreditedmethods on theresultingdata,meetindustryneed understanding oftheeffectssamplepreparation laboratory. These advances, whichincludeabetter improvements toanexternalIANZaccredited pasture-fed ruminantmeatandtransferringthese methods forfattyacidcompositionanalysis in Excellent progresshasbeenmadeinrefining $350,000 FY17 Core Funding Investment understand thefood-healthrelationships. interest inhow microbiome researchhelpsustobetter the foodindustrywithspecificstakeholders generated women withorwithoutosteoporosis. A presentationto better designthemicrobialanalysis offaecalsamples of theOPTIMUMcohortageingconsumersandto been appliedtodataanalysis ofmicrobiotacomposition and healthresearch. To date,expertknowledge has to strategicallysupportthe AgResearch portfolio offood that liveinsideandonthehumanbody)was appointed genomes ofthemicrobes, includingbacteriaandfungi, An expertinthehumanmicrobiome(thecollective FY17 Key Achievements $1,100,000 FY17 Core Funding Investment • • • • properties ofthemilkmaterials. development basedinthedifferentiatedphysical producers andopportunitiesfornewdairyproduct form abasistosupportnutritionalbenefitsfordairy artefacts totheresults. The knowledge generatedwill the gelnetworkofproductandsoitminimises internal structureoftheyoghurtwithoutdisturbing optimised. This methodallows ustoobservethe scanning microscopyhasbeendevelopedand microstructure ofyoghurtusingconfocallaser An improved methodtoinvestigate the through tailoredprocessing. opportunities fordevelopingdifferentiatedproducts oxidative modifications. Bothstudieshighlightthe milk, aswellthesusceptibilityofproteinsto partition betweenthecreamandskimphaseof milk. This includeshow differentclassesoflipids the microstructureandmolecularcompositionof heat andhomogenisationpressureinteracttoaffect common processingconditionsdemonstratedhow the propertiesofdairyproducts. A comparisonof understanding ofhow foodprocessingaffects The programmehascontinuedtoexpandour particularly thosemanufacturing‘natural’petfoods. to bettertailortheirproductsthecaninediet, opportunity forNewZealand petfoodmanufacturers (carbohydrate levelsof30-60%). This mayofferthe 91 Core Funding report 92 Core Funding report • • FY17 Key Achievements through validated claimsofqualityand/or health. food exporterswillgainagreatercompetitiveadvantage ingredients andproducts. As aresult,NewZealand generated bythisresearchtodevelophigh-value food food companiesthroughapplyingtheknowledge markets, andincreasedexportearningsbyNewZealand for consumersbothinNewZealand andinoverseas markets. The benefitswillbetwo-fold:betterhealth ingredients andfoodproductsfortheinfantaged companies tosupportthedevelopmentofnovel National ScienceChallengeandNewZealand food will increasethecapacityofHigh-Value Nutrition to theknowledge base,toolsandtechnologiesthat In achievingtheseaims, theprogrammewillcontribute flow-on effectstothebrain. the effectsoffoodingredientsonGITfunctionand biomarkers ofexposureorresponses, andevaluating gastrointestinal tract(GIT)function,identifying and validating cell-basedandanimalmodelsofhuman of actiontheserelationships. Itincludesdeveloping by definingtheunderlyingbiomarkers andmechanisms determine causeandeffectoffood-healthrelationships NSC HVN(Objectives1to8).Itspecificallyaims High-Value Nutrition,NSCHVN);and/or2)the10-year (C10X1003; mappedtoNationalScienceChallenge 2) incollaborationwith(andgatedby)Fonterra funded IntestinalBarrierFunction project(Objective from, butcomplementaryto1)thesix-year MBIE- This programmewillcarryoutresearchthatisdistinct Objective Food nutritionprogramme • • possible tousethismethodforcaprineandovine Furthermore, insilicoanalyses indicatethatitwillbe subsequent experimentalvalidation oftheirfunction. bovine miRNAinmilk samples, whichisakey stepin theamount of This willallow usto directlyquantify sequencing technologiesandmorecosteffective. more thanisfeasibleusingreal-timePCRor measure 179miRNAatatime,whichisconsiderably nCounter technology. This dataindicatesthatwecan the amountofbovine milk-derived miRNAusing We establishedadirectcountingmethodtomeasure presentation. by thehighlyregardedjournalforanonlinevideo science communityandthepublicationwas selected plasma. This novelty ofthe results was notedbythe gut microbialcommunityandlipidmetabolitesin variation inguttransitrelatestochanges inthe provided novel insightsintohow stress-induced achievement forthisyearwas apublished studythat together withstress, anxietyanddepression. A key occur Human functionalgutdisordersoften $2,025,000 FY17 Core Funding Investment • • • • • • animal studies. are concernedabouttheconsumerperceptionof health, particularlyforthoseindustrypartnerswho the effectsofdairy-basedfoodingredientsonbrain to secureindustryco-fundingsupportthestudyof Excellence. Already thiscollaboration hasenabledus Research andtheBrainResearch Centre ofResearch and expertiseavailable throughtheCentre forBrain in vitromodelsofthebrain,aswellequipment brain axisresearchbygivingusaccesstoadditional Auckland. This willstrengthenourcapabilitiesingut- the Centre forBrainResearch attheUniversityof A newcollaborationwas developedwith key staffin important aspectofahealthy gut. fermented foodstomodulategutmotilityinvitro,an has generatedresultsthatsupporttheconceptof one ona Walsh PhDScholarship. This collaboration students spendingthreeyearsintotalat AgResearch, Joint ProgrammingInitiative,whichincludestwoPhD collaboration from Teagasc (Ireland)throughthe intervention inhumans. This researchispartofa and futureevaluation offermentedfoods inclinical and investigation ofgutmotilityreceptor modulation controlled fermentationandselectionforfoodtexture New Zealand non-bovine milks paves theway for benefits. Isolationofbacterialculturesfrom their physiological attributesandinferredhealth fermented milks withpeptideprofileanddetermining successfully connectingthefoodstructureof Research onfermentedfoodsforhealthis Challenge. as partoftheHigh-Value NutritionNationalScience in humans, includingthestudiescurrentlyconducted significant potentialforclinicalinterventionstudies samples. These newmethodshave, respectively, peptides tohostandfoodproteinsinhumanfaecal spectrometry methodwas establishedtoidentify identification inhumancohort.Similarly, amass and adatabasecreatedtoassistwithmetabolite in humanfaecalsampleshasbeenestablished metabolites spectrometry methodtoidentify developed andvalidated. Inparticular, amass samples toestablishresponsesfoodswere Novel methodstocharacterisehumanbiological affect health. unknown componentsinmilks thatcouldpotentially because theyprovide newknowledge ofrelatively milk-derived miRNA. These findingsareimportant • FY17 Key Achievements • • • • • The key objectivesoftheprojectareto: domestically andinternationally. as aleadingmeat/foodscienceresearchprovider both enhance AgResearch’s reputationandvalue proposition short-term secondmentsofleadersinfieldsthatwill international links throughcollaborationand a visionarymeatscientist,andbuildingstrategic key areasthatneedaddressing, suchasrecruiting was completedin2015. The roadmapidentifiedsome recommendations oftheFood SciencesRoadmap that This projectspecificallygiveseffecttothe Objective Visionary meatscientist-seedproject experimentation priortohumanvalidation. formulate hypothesis tobetestedthoughpreclinical functionality offoodproductsandameansto will provide aninexpensivetoolforpredictingthe The developmentofthesemathematicalmodels • • • • The mathematicalmodelsdevelopedintheprojectwill: and coloniccellsinthehumanbody. (bacteria thatarepartofthenormalflorainmouth) fermentable carbohydrates, commensalbacteria better understandthecomplexinteractionbetween This projectwilldevelopmathematicalmodelsto Objective bacteria andintestinalcells Modelling the complex interactions between fermentable carbohydrates, commensal fermentablecarbohydrates, commensal thecomplexinteractionsbetween Modelling • • • • • • • • • • mapping, stakeholder prioritiesandinterests, and newprojectmapping, collaborator capability talent, up-to-datecapabilitymapping, existing developing aresearchstrategyincluding:recruiting AgResearch hasmadesignificantprogress in ensure success. strategy aroundthecomplementaryprogrammesto international groupsandinstitutionsbuilda develop key partnershipswithotherleading ingredients andproducts; offer industrynewopportunitiessuchasinnovative University’s RiddetInstitute; develop astrongpartneredapproachwithMassey rebuild nationalcapabilityforthefuture; increase thoughtleadershipinfoodsciences; the bloodstream. predict thelevelsofbacterialmetabolitesthatenter metabolites bythelargeintestinalcells;and describe theactiveandpassiveuptake ofbacterial on thelargeintestinalmucus; describe theeffectsofdietandbacterialmetabolites in diet; the commensalbacteriaasaresultofperturbations bacteria populationsandthemetabolitesproducedby predict thechangeinlargeintestinalcommensal $310,000 FY17 Core Funding Investment • • • • • • following results: has generatedsignificantinterest.Itachievedthe their metabolitesthroughtheuseofmathematics in dietontheproportionsofbacteriagutand The researchdescribingtheeffectsofperturbations FY17 Key Achievements • • • • • • collaborator withourresearchteam. highly respectedmeatscientistinternationally, asa University ofCentral Buenos Aires, Argentina), a AgResearch hasengagedDrPeter Purslow (National University College. Agropecuarias (Uruguay)andScottishRural CSIRO (Australia),InstitutodeInvestigaciones opportunities forjointprojectswith Teagasc (Ireland), We have madecollaborativeeffortstodevelop and Grasslands. collaboration wereconductedat AgResearch-Ruakura our meatscienceprogrammeandopportunitiesfor Workshops involving strategicdiscussionsabout value chain. sources andintegrationofknowledge alongthemeat off-farm factorsonthequalityofmeatfromdifferent support theevaluation oftheimpacton-farmand provide thoughtleadershiptoourprogrammeand Food Assurance &MeatQualityteamin2016/17to A seniormeatscientistwas recruitedtojointhe awareness andreflection. business development,advertisingforbrand needed toaccuratelypredictmulti-culturedynamics. studies. This reducesthenumberofexperiments growth parameters determined frommonoculture bacteria, andcanbeaccuratelypredictedusing and preference,ratherthanthepresenceofother the growth kinetics are basedonsubstrateavailability source foranother).Specifically, wehave shown that when theend-productofonebacteriumisfood growth dynamicsbetween cross-feedingbacteria(e.g. We have establishednewunderstandingofco-culture hallii andAnaerostipescaccae; commensal (beneficial)gutbacteriaEubacterium source forthecellsoflargeintestine)producing the butyrate(ashort-chainfattyacidthatisanenergy We have newinsightsintothemetabolicpathway of 93 Core Funding report 94 Core Funding report Meat &FibreOn-farm Sector grouping environmental impact. production efficiency, productquality, animalhealthand a primetargetforinterventionstrategies toenhance the mosteasilymanipulatedinputs on-farmandisthus critical forachievingproductiontargets; itisalsooneof embryo toadult).Furthermore, nutritionisnotonly performance throughoutthewholelifecycle(from potent environmental signalsthatinfluences animal requirements. Animal nutritionisoneofthemost production outcomesthatarerelevant toindustry potential fornutritiontoinfluenceruminantlivestock to delivernewknowledge thatdemonstratesthe AgResearch’s capabilityinruminant nutrition.Itaims This projectrepresentsatargetedefforttogrow Objective ‘Future Rumen’. Ruminant Nutrition–Growingcapability’, and – Role ofEarlyLifeNutrition’, ‘DairyCattle Nutrition’, 2015/16, namely:‘DrivingNZDairyBeefProduction complementary projectsthatranseparatelypriorto This newlyformedprogrammecombinesfour throughnutrition production Driving livestock • • • • strains. gut microbialecosystem thanknowing thespecific bacteria isfarmoreimportanttounderstandingthe groups ofbacteriashows thatthefunctionof A mathematicalmodelbuiltbasedonsixfunctional Aberdeen. with internationalresearchersfromtheUniversityof competing bacteria. This researchwas carriedout bacteria, ratherthanbythepresenceorabsenceof that beneficialmetabolitesareproducedbythe ecosystem isinfluencedbythehumanhosttoensure have shown thattheevolutionofgutbacterial Modelling simulations between cross-feeding bacteria Dairy Off-farm FY17 Core Funding Investment Total 4. 3. 2. 1. The key objectivesofthisprogramme of workareto: $88,588 FY17 Core Funding Investment • • AgResearch. physiology andmicrobiologycapabilitywithin sources (targetingH1)tohelpsustain thenutrition, industry co-fundingwherepossible,andcommercial H2/H3 researchthroughgovernment sourceswith bring toindustry, generatenewsourcesofrevenuefor through demonstratingthevalue that ourcapabilities outcomes tothelivestocksector;and grow industrypartnerships todeliverscience requirements; performance outcomesrelevant toourindustry potential fornutritiontoinfluenceruminantlivestock deliver newknowledge thatdemonstratesthe reputation; the agriculturalsectorandinternationalscientific disciplines), aswellitsthoughtleadershipwith (including nutritionalphysiology andmicrobiology grow AgResearch’s capabilityinruminantnutrition competitive probiotic. on differencesindietandtheintroductionofa changes intheinfantgutmicrobialsystem based mathematical modelissufficientlyrobusttopredict UC Davis inordertotestwhetherthedeveloped collaborations. Datahasbeenobtainedfrom Impossible Foods, whichhasresultedinnew at UniversityofCalifornia, Davis (UCDavis) and leader Amyvan Wey Lovatt presentedherresearch in Science Award obtainedinFY16,theproject Funded bytheZonta Clubof Wellington Women $3,873,588 were presentedat thePlantand Animal Genome revenue streamsasindustryhasadopted it.Results including goats, cattleanddeer, leadingtocommercial been developedandimplemented inmultiplespecies Genotyping-by-sequencing (GBS) technology has FY17 Key Achievements specifically relevant toMāori. sheep anddeerindustries. Aspects ofthisprojectare animal productivityandprofitabilityinthebeef, dairy, Zealand’s livestockherdsandflocks, therebyimproving the projectwillultimatelysupportgeneticgaininNew key capabilityandnovel technologiesdevelopedin and AgResearch’s StatementofCorporate Intent. The opportunities inalignmentwithstakeholder needs and deliveringstrategicresearchdevelopment in thegeneticsandgenomicsspace,byidentifying AgResearch’s futurevisionfordevelopment ofimpacts quantitative geneticsthatwillstrengthenanddiversify This projectwillprovide scientificleadershipinapplied Objective ofgeneticevaluationtotheNewZealand agriculturalindustry Bringing thebest Sequencing Programproject. This willusemetaomics Joint GenomeInstituteforanalignedCommunity gaining thesupportofUSDepartmentEnergy’s gene functioninrumenmicrobes’was successfulin The AgResearch Scienceprizeproject‘Defining FY17 Key Achievements their environmental footprint. enhancing theproductivityofruminantsandreduce processes intherumenandwillleadtonewways of This workwillimprove ourunderstandingofdigestive and thefinalstepsleadingtoformationofmethane. metabolism ofsubstratesthroughtovolatilefattyacids, genes encodingthebreakdown oflignocellulose,the in rumenmicrobes, withaparticularfocusonthose This projectwillinvestigate thefunctionofkey genes Objective FY17 SciencePrize:Genefunctioninrumenmicrobes is increasinglyrecognisedbyindustryasanimportant Improved feedingandmanagementofyounglivestock born smallerandlighter, andhad reducedsurvivability. increased fatandmusclemobilisation.Lambswere in liveweightandbodyconditionscoreasaresultof both eweandlambperformance.Ewes werelower levels ofproteinhadnegativeconsequencesfor valuable sourceofnutritionforanimals, thelow demonstrated that,whilethecropisanextremely in winterforlivestockfarmers. Ourresearchhas Fodder beethasquicklybecomeamajor foragecrop an importantfactorinanimalproductivity. colostrum duringthefirstfewdays post-calvingwillbe is recommended,therefore,thatimproved accessto incidence ofdiarrhoeaandreducedweightgain.It calves collectedearlierhaving asignificantlygreater the timeofcollectionfromcalvingareas, withthose of immunityindairycalvesisstronglyinfluencedby Research hasdeterminedthatfailureofpassivetransfer FY17 Key Achievements $800,000 FY17 Core Funding Investment to ourresource. Awassi breedstandardsfromNewZealand wereadded sheep breederstoascertainbreed proportions and scheme. We successfullyengagedinternationaldairy genetics todeveloptheSpringSheepdairybreeding strategic developmentteamwithLandcorpandFocus from theprojectteamhave beeninvited tobepartofa commercial genotypingcontracts. AgResearch scientists relationships withB+LNZGeneticsandresultedin Development of a dairysheep SIL module hasenhanced Genetics) fornationaldeliveryofbreedingvalues. adopted by Beef + Lamb New Zealand Genetics (B+LNZ at the2017SheepMilkingConference andwillbe breeding values fordairysheep.Results werepresented implemented astatisticalmodeltoestimategenomic and developedinsalmon. We have alsodevelopedand Conference inSanDiego.GT-seq hasbeeninvestigated $114,726 FY17 Core Funding Investment methane formation. for enhancinglignocellulosebreakdown andreducing and improve ourabilitytodiscover new technologies our understandingofruminaldigestiveprocesses Defining thefunctionsofthesegeneswillincrease the rumenmicrobiomewithoutknown functions. issue ofassigningactivitiestothemany geneswithin production diet. This projectaddressestheimportant beef cattleonafinishingdietanddairycows ona genomes fromsheeponpasture,beefcattle will generateacomprehensiveglobalsetofreference fatty acidsor‘unwanted’ methane. The programme the metabolismofsubstratestoeither‘wanted’ volatile techniques toinvestigate rumenfunction, including $1,100,000 FY17 Core Funding Investment nutritional interventions. and theirpotentialtobeprogrammedthroughearly-life of thegastrointestinalmicrobialcommunitiesincalves, generate anunderstandingofcompositionandfunction ‘Defining genefunctioninrumenmicrobes’. Thiswill Genome InstituteCommunity ScienceProgramme in an AgResearch-led USDepartmentofEnergyJoint to understandingofrumenmicrobialgenefunction New Zealand sheephave beenobtainedtocontribute Samples fromtherumencontentsofpasture-grazed turn reducingtheintensityofenvironmental emissions. slaughter therebyreducingproductioncostsandin product quality(marbling),andreducingthetimeto include programmingtissuedevelopmenttoenhance lifetime productivityindairy-beefheifers. Itsbenefits demonstrated thatearly-lifenutritioncaninfluence welfare, andreducingenvironmental impacts. We have contributor toprofitability, lifetime performance,animal 95 Core Funding report 96 Core Funding report development ofanthelminticresistance. days old. This mayhave importantimplicationsforthe drug inthebloodstreamoflambsasyoungtwo lambs viamilk.Initialresultsshow veryhighlevelsof of long-actinganthelminticsfromtreatedewestotheir We conductedafieldstudydocumentingthetransfer FY17 Key Achievements the necessityandsignificanceofthisresearch. production andtreatmentcosts, whichdemonstrates New Zealand farmers$700millionperannuminlost vaccines. Internalparasitesinlivestockcurrentlycost solutions, anddevelopmentofeffectiveparasite problems: betterparasitecontrolthroughmanagement research themesthatarekey tosolvingparasite parasites). The projectexplorestwocomplexinterlinked internal livestockparasites(includingresistant and superioranimalwelfare,specificallytargeting produce resilientfarmsthathave low chemicalinputs This programmewilldeveloptechnologydesignedto Objective Programme’. 2015/16, namely:‘Vaccine Pipeline’and‘Parasitology complementary projectsthatranseparatelypriorto This newlyformedprogrammecombinestwo Animal health Meat &FibreOn-farm FY17 Core Funding Investment Total $1,974,000 FY17 Core Funding Investment and todevelopapotentialcommercialisationstrategy. infection. Studiesarecontinuingtorefinethe vaccine scientists shows significantefficacyagainsttheparasite a prototypevaccine recentlydevelopedby AgResearch production inmostsheep-producingregions. However, worm), despiteitbeingthemajor pathogenofsheep worm speciesHaemonchuscontortus(barberspole ever beendevelopedagainstthehighlypathogenic enhance efficacy. Norecombinant protein vaccinehas of otherbacterialspeciesinthevaccine willfurther science teamarecurrentlytestingwhethertheaddition registration toenablefuturecommercialisation. The agricultural compoundsandveterinarymedicines commercial partner(MSD Animal Health)toseek in thefield,withresultsencouragingenoughforour A vaccine tocontrolovine pneumoniahasbeentested We aredevelopinganumberofanimalhealthvaccines. $3,988,726 • • FY17 Key Achievements and otherresearchproviders. with boardrepresentationfromproducers, processors Limited, ajointventurewithDeerIndustryNewZealand, The overall programmeismanagedbyDEEResearch within thecontextofNewZealand deerindustry. genomics, animalhealthandproducttraceability use, early-lifenutrition,geneticsandgeneticselection, The programme’s researchthemesincludeefficientland improved productivity, profitabilityandsustainability. in achievingitsmedium-andlong-termtargetsof and technologytoassisttheNewZealand deerindustry This programmewilldelivertheunderpinningscience Objective supply systemsproject[VSSP]’. future fortheNewZealanddeerindustry’and‘Venison Previous namesforthisprogrammewere‘A profitable Hitting targetsfordeerindustryprofitability(HITDIP) Meat &FibreOff-Farm Sector Grouping • • product qualityandvalue. opportunity tofocusontraitsthatdirectlyinfluence DEERSelect. This provides thevenisonindustryan New Zealand’s nationaldeerrecordingdatabase, is now incorporated intoameatmodulewithin venison qualitytraits(e.g. tenderness, pH).EMAUS carcass yield,massofotherhigh-valued musclesand scanning (EMAUS), andispositivelycorrelated with accurately measuredinvivobyultrasoundeye-muscle loin sizeishighlyvariable andheritable, canbe to datehasbeenthatwehave demonstratedcarcass completion in2018. The mostsignificantoutcome The DeerProgeny Test (DPT)isapproaching producing animals. of slaughterat9-11monthsageforvenison- industry toallow anthelminticuseclosetotime in deer. This isdesperatelyrequiredbytheNZdeer registered animalhealthproductlabelledforuse to furtherdevelopandmarket themini-bolus asa in discussionswithapotentialcommercialpartner Having completedfieldtrials ofitsefficacy, weare which deliversafive-day, low-dose releasepattern. parasitic) mini-bolushasbeendevelopedfordeer, A biodegradableruminalanthelmintic(anti- $1,333,000 FY17 Core Funding Investment • • • • • • standards. highly phenotypedindividuals, key siresandbreed including fullGBSgenotypingofmorethan2500 towards developinggenomicbreedingvalues fordeer, on initialstudies. Recent progresshasbeenmade breed-typing andinbreedingassessmenttoolsbased the deerindustryhasadoptednewDNAparentage, deer industry. Already thestudbreedingsectorof genotyping-by-sequencing fortheNewZealand Studies arecontinuingontheapplicationsof venison traits. attractive ‘gold standard’forgeneticselectionof is anautomatedprocess, thusmakingitamore prediction ofcarcassyieldfromCTscanningand The ‘spiralscan’ wouldprovide moreaccurate to betheoverall predictorofthetraitsinterest. However the‘spiralscanning’techniquewas shown predictive thanthepreviously-used‘fixed-points’. system. The new ‘fixed-points’ proved tobeless traits, aswellevaluating anew‘spiralscanning’ methodology fordeertopredictdetailedmuscling We validated anewCTscanning‘fixed-point’ deer. will contributetobetternutritionalmanagementof risk factorsforhindperformance. This information has demonstratedswedes areassociated withsome While findingnoeffectsonfetal wastage,thestudy indicating anutritionaldeficiencyinlatepregnancy. with adeclineinlevelsofbloodureanitrogen, crop was only8%crudeproteinandwas associated swede cropshadadequatecrudeproteinlevels, one (e.g. measuresofliverdamage). While mostofthe was noevidencethathindswereadverselyaffected found inmany pungentplantssuchasswedes), there glucosinolates (agroupofsecondaryplantmetabolite that whilethecropsappearedtohave toxic levelsof and fetalwastage (loss).Ourstudydemonstrated wintering ofpregnantreddeerhindsonswede crops We investigated anallegedlinkbetweenover- 97 Core Funding report 98 Core Funding report • FY17 Key Achievements access. form ofreducedcompliancecostsandgreatermarket expected togainthekey benefitsoftheresearch,in country oforigin.NewZealand foodcompaniesare value throughNewZealand provenance andprotecting confidence, animalwelfare,opportunitiestocreate Brand’. This includesfoodsafety, increasedconsumer consumers andareconsistentwiththe‘NewZealand provenance andproducedinways thatareattractiveto of superiorquality, ethicallyproduced,have defendable aimed atensuringthatNewZealand’s exportsaresafe, This projectcovers researchfrom‘fork-back-to-farm’ Objective Food provenanceandassurance • • • FY17 Key Achievements and processingbenefits. nutritional compositionoffood,aswellphysiological and companionanimals(pets). The aimistooptimise meat-based ingredientsforconsumptionbyhumans the creationandexportofadded-value, innovative for technologiesandindustryengagementtosupport traditional dishes. The Combifoods projectisaplatform that canbeusedinawiderangeoffoodsbeyond Proteins inredmeatandco-productsarearichresource Objective end-to-endmanagementofproteinvalue Red meatcombifoods: • • • • Primary Industries(MPI)aboutthe epidemiologyof This researchwillprovide informationtoMinistryfor spoilage enzymessuchaslipases and proteases. Bacillus specieswerealsofoundtoproduce milk from raw milkharbouredtoxin genesandsome showed thatBacillusandClostridiumspeciesdetected compared withsummer. Further investigation spore formersduringthewinterandspringseasons has identifiedanincreaseinthenumberofaerobic food-borne illness. We have identifiedthiswork Raw milkispotentiallyahigh-riskproductfor stretch itsestablishedbusinessmodel. product categories, andhelpingthemeatindustry the nutritionofmeatavailable inawiderrangeof High-profile promotionservesourgoalsofmaking paper onmeat-basedfoodsforolderconsumers. experiments) weresummarisedinaninvited review during theprogramme.Sixoftheseprototypes(nine derivatives have beendevelopedandtestedeveryyear Novel foodproductscontainingredmeator programme. universities multiplythereachandimpactof non-traditional foodcategories).Studentsandtheir four interns(projectsonusingmeatderivatives in crosslinking infoodproteins),twostudentsand attributes frommoleculardata;asecondyearon (a firstyearonpredictingconsumerrelatedfood The programmementoredtwoPhDcandidates backed upwithpublicationsandoutreach. two externalreports. Ourcreativityandcredibilityare 10 presentations, postersortradepublications, and Outputs includedtwonewmanuscriptssubmitted, • • $1,154,000 FY17 Core Funding Investment • • • • • • • • may harbourmorethan50separate E.colistrains, from calffaecalmaterial. While individualanimals establishing E.colicommunitystructureanddiversity put culture-independentsequencing methodfor We defined(andpublished)anovel, high-through- bobby veal. ongoing riskassessmentofSTEC7contamination reduce pre-harvestprevalence andcontributetothe assist intargetingon-farmmitigationinterventionsto include transmissionviabirdsandflies. Findingswill Federal MeatInspection Act). High-riskfactors States asadulterantsinbeefproductsunderUS 7’ STECarethesevenidentifiedbyUnited of livestockenteringaslaughterplant.(Note:‘Top serogroups associatedwithnaturalcontamination and transmissionpathways of‘Top 7’STECE.coli improved theunderstanding ofpotentialreservoirs market accessintotheUnitedStates. This studyhas Bobby vealisconsideredtobeahigh-riskproductfor an internationaljournal. bacteria infarmdairyeffluenthasbeenpublished A researchpaperonthediversityofsporeforming diversity ofspoilagebacteriafordairyprocessors. spore-forming bacteriaindairyfarmsaswellthe hydrolysate products. descriptions ofingredientsformarketing of to conventional analyticalassays andimproved willalsoleadtolower-costsoftware alternatives Advances inourproprietaryHERBERT data-mining taste-stimulating moleculesandflavour attributes. useful propertiesofthese,suchasbioactivity, We developednewalgorithmsthatcanpredict hydrolysing itintomixturesofsmallerpeptides. products canbere-tasked asafoodingredientby The proteincontentoflow-value ‘off-cut’ carcass of newtoddlerandgeriatricfoods. differentiation andoptimalcombinatorialformulation responses toingredientsisakey toproduct type ofmuscleandcut.Understandingphysiological changed withtheageofsourceanimaland digestibility ofmeatinwholemealsandhow that restaurant accompanimentsontheinvitro We evaluated theeffectsofmostpopular keeps usalignedwithmanufacturingpriorities. Meaningful dialoguewithourpartnercompanies analysis opportunitieswithgoatskins. toquantify techniques. Another KiwiNetprojectusedaminoacid funding tostudyacceleratedshelf-lifemeasurement innovation, MeatLovers Chocolate,weusedKiwiNet In newworkonourmostrecentexampleoffood • • • FY17 Key Achievements wastage alongthelogisticschain. and contributetoincreasedearningsthroughreduced value toanddifferentiateNew Zealand meatproducts technologies developedinthisprogrammewilladd and beefindustries. Adoption ofnewknowledge and increasing productivityandprofitabilityinthesheep ethical premium-qualityredmeatproducts, thereby Zealand’s reputationasaproducerofsafeand implement scientificapproachestoenhanceNew This longrunningprogrammeaimstodevelopand Objective andlamb:valuefromquality NZ beef aimed athelpingtopromotetheexpected transition outputs thatcanfeedintootherobjectives andare while notinterdependent,arelinked andwillgenerate of Textile andBio-based products. These objectives, the woolvalue chainasidentifiedintherecentroadmap established andemergingnon-traditionaluseswithin strongly alignedtomeetthestrategicneedsfor New Zealand wool industry. These objectivesare uses forwool,andensuresustainabilityofthe products andwoolprocessingtechniques, discover new science inordertofacilitatedevelopmentofnovel wool longer-term fundamentalandshorter-termapplied This programmewilldeliveracomprehensivemixof Objective science Integrated wool • • • powder derivedfromgoatandthatofbovine powders, aswelldifferentiatingbetweenmilk predicted somefunctionalattributesofdairy progressed well.For example,wehave successfully characteristics (i.e.provenance andintegrity)has testing systems aproduct’s thatcanverify unique Work todevelopnon-invasive spectroscopic pathogens onmeat. to assesstheimpactofinterventionsreduce structure ofE.coliinexperimentalstudiesdesigned useful forcharacterisingthediversityandpopulation present atlow abundances. This methodwillbe alongside alargepoolofsubdominantstrains communities aredominatedbyfewerthan10strains halal meatproductionforexport. number ofslaughteredanimalsbeingrejectedduring to trainslaughtermenandpotentiallyreducethe slaughter have beenestablished. These willbeused Key criteriaforcattleandsheephalalindustrial acceptable longshelf-lifeproductbeingsold. prevent thesporadicfailuresthatotherwise intervention and/ormanagementstrategiesto into why spoilageoccursandallows ustotarget that resultinspoilage. These studiesprovide insights proliferate andproducetheunpalatableend-products biochemical pathways usedbyspoilagebacteriato Using phenotypicdatawehave identifiedthe $1,262,000 FY17 Core Funding Investment • • the areaofnovel manufacturingfromproteinsources. within teamsandpositionusasa ‘go-to’ collaboratorin Technological Innovation, whichwilldevelopcapability to theNationalScienceChallengefor MPI partnership‘NewUsesFor Wool’ andmapped understanding fibreproductionwillbealignedtothe Objectives withafocusonnewusesforwooland grower tolate-stage processor. sustainability fortheNewZealand woolindustry, from to increasedexportearningsandimproved economic within thenewusessector. Ultimatelythiswilllead to agreateremphasisandco-fundingopportunities $1,000,000 FY17 Core Funding Investment • • pathogenic andnon-pathogenicbacterialisolates. a rapidscreeningtestforthediscriminationof between theseorganismsmaybeusedtoprovide understanding ofhow themetabolitedifferences – faecalorsoil. This workhasgivenusabetter groups werefurtherdiscriminatedbyon-farmsource without thevirulencegenes, stxandeae. These discriminate betweenE.colistrainO26withand Using theHyperspectralImagerwewereableto and arepathogenicorposeafoodsafetyrisk. Not allbacteriaofthesametypecarrytoxin genes compromised qualityreachingconsumers. can reducetheriskofretail-readyproductswith will bepossibletodevelopascreeningsystem that (microbial shelf-life).Basedonthesefindings, it the organoleptic(taste)propertiesofproduct the stageofbacterialgrowth thatwillaffectnegatively feasibility ofusingsensorstonon-invasively detect vacuum-packed lambmeat.Results demonstratethe than 11weeks) chilledstoragethatoccurinside associated withbacterialgrowth duringlong(more Studies have identifiedthechemicalchanges working withspray-driedfood. and hasattractedsignificantinterestofresearchers Dairy Federation World DairySummitinRotterdam was awarded thebestposterin2016International presented ininternationalconferences. Oneofthem another country). This workhasledtothreeposters thawed) andprovenance (NewZealand against storageconditions(chilledvsfrozen- and beef), authenticating differentmeatspecies(lambvspork manufactured fromdifferentprocessingplantsand milk, differentiatingbetweeninfantformula 99 Core Funding report 100 Core Funding report which attractsthebeads, thuscapturingthecellsand created byamagnetplacedonthesideoftesttube surface ofmicrobialcells. The concentrationprocessis these antibodiesandbindtoantigenspresentonthe specific antibodies. Paramagnetic beadsarecoatedwith a meansofconcentratingpathogensusingantigen- Immunomagnetic capturetechnology(ICT)offers the population,withoutthemselvesappearingtobesick. capableoftransmittingthedisease,infecting are often specific andsensitivediagnosticmethods. Thesecattle through eitherroutinesurveillanceorthemostcurrent subset ofanimalsinfectedwithbTBcannotbeidentified used todetectbTBhave significant limitations, inthata immune response.For thisreasoncurrenttechnologies exhibit any signsofinfectionnormount ameasurable individuals, andthereforethoseindividualsdonot biological markers inthebloodortissues ofinfected scarcity oftheMycobacteriumbovisorganismsortheir Mycobacterium bovis. A key factorinthisdifficultyisthe (bTB) incattlethatareinfectedwiththepathogen It isextremelydifficulttodiagnose bovine tuberculosis Objective Tuberculosis vaccinedevelopment • • • • FY17 Key Achievements • • • • has beendevelopedforwoolcarpets. The process A newdurablefluorocarbon-freestain-resistprocess hospital in2018. refined andincorporatedintoatrialatChristchurch typical five-layer system. Thisfabricwillbefurther these fabricswas equivalent totwo-thirdsofthe units). When testedforthermalresistanceoneof layer systems forprematurebabies(inneonatal tackle theissueofrequirementforbulky, multi- A seriesofnewfine-woolfabrics was engineeredto garments. severe burninjuriesthaniftheywerewearingwool in theUnitedKingdomputthematriskofmore standard issueforpoliceandmilitarypersonnel suggested thatsynthetic-base layersthatarecurrently further exposingthewearer’s skin. This trialstrongly to theskin,bothworseningany burninjuryand synthetic fibreswillmelt away, dripandadhere undergarments comprisedofnon-flame-resistant simulant methodconfirmedthatthereisarisk during exposuretoasourceofignition. This skin assess impactofdifferentfabricsonskindamage We devisedabrandnewtestmethodanduseditto function ofwoundedskin. protein (inanourishingmask)onskinbarrier particles (inacleanser)andintermediatefilament cleansing andnourishingsystem containingwool positive effectofanew, detergent-free,2-step A humanvolunteerstudydemonstratedasignificant $100,000 FY17 Core Funding Investment Zealand. tool forhelpingeliminate TB fromcattleinNew blood isbeingevaluated asapotentialnewdiagnostic approach todetectthepresenceofpathogenin skin testssoremainundiagnosed. The abilityofthis animals whichdonotrespondtocurrently-used assay system, thatwillenablethedetectionofinfected highly sensitiveandspecificimmunomagneticcapture controlling thedisease.Ourresearchisdevelopinga causative organismofbovine tuberculosis, iscriticalto The accuratediagnosisofMycobacteriumbovis,the FY17 Key Achievements infected withbovine tuberculosis. of Mycobacteriumbovisintissuesandbloodcattle for itsabilitytoenhancedetectionandidentification In thisproject,ICTwillbedevelopedandcharacterised facilitating theconcentrationofbead-attachedcells. $1,950,250 FY17 Core Funding Investment • • • • decomposition topreparehighlystructuredmaterials. wool’s strongaffinityformetals, anditsthermal templates ofwool. The methodwedevelopeduses Hollow ceramicfibreswerepreparedfrom processors ofNewZealand woolaroundtheworld. conventional insecticidesandcouldbeemployedby solution totheinsects’increasingresistance approach toprotectingwoolproductsoffersa carpet beetleandthewebbingclothesmoth. This two mainpestspeciesinternationally:the Australian The nanoparticlesdeliversignificantcontrolofthe carpets (andsubsequentlypublishedthesefindings). nanoparticles tocontrolwool-consuminginsectson We becamethefirsttodetermineefficacyof competitors. stain-resistance shown bywool’s synthetic fibre is asignificantadvance towards exceeding the wool carpetsandrugs. The developedtreatment identified bytheindustryas key issuefacing in arenowned journal.Stain-resistancehasbeen finishes. Someofthe key findingswerepublished stains andwoolfibrestreatedwith various physical interactionsbetweencommonhousehold is builtonafundamentalstudyofthechemicaland • FY17 Key Achievements farm productquality. value chainexpertisefromon-farmproductiontooff- protein andfibre. Theprojectwilldraw on AgResearch’s expanded inthefuturetoothernutrients, suchas example ofcapabilityandsystems integration,tobe Research Programmeproposal,ande)becomean data andstakeholder supportforafuturelargerMBIE awareness, interestandinput,d)preliminary research network/collaborationbuilding, c)industry value chainwithin AgResearch, b)internalandexternal target a)anintegratedscienceapproachacrossthe and producehigh-value products. This projectwillalso profitability withinenvironmental andfeedconstraints farm managementdecisionstomaximiseon-farm ‘animal-centric systems model’, whichwillinform longer-term aimofthisinitiativeistodevelopan practices andincreasedmeatproductvalue. The will contributetobothmoreefficientfarmproduction animals. The purposeistoprovide informationthat a predictivemodeloffatmetabolisminruminant This projectwilltake thefirststeptowards creating Objective development Animal biologymodel • untapped areasofresearchthatwillfacilitatethe together ina‘PlatetoPasture’ approachtoidentify product qualitytoon-farmproduction,was brought AgResearch’s collectiveexpertise,fromoff-farm Meat &FibreOff-farm FY17 Core Funding Investment Total $250,000 FY17 Core Funding Investment • • systems. animals raisedinarangeofforage-basedfarming to predictfat-relatedcharacteristicsofmeatfrom which amodeloftheanimalsystem canbebuilt knowledge representsanimportantfoundationfrom relevant modelsandhow theycouldbeused. This which includedasurveyofpreviouslydeveloped, model ofthegrowing lambwas alsodeveloped, meat quality. A strategyforbuildingamathematical how thesearedepositedinthemuscle,thusaffecting and lipidsaremetabolisedinruminantanimals, and We developedahigh-levelrepresentationofhow fats meat products. in responsetonewmarket signalsforhigh-value more rapidlyandsustainablymake on-farmchanges step toenabletheNewZealand redmeatsectorto this project. This knowledge provides animportant new MBIEEndeavour Fund proposalstemmingfrom this processcanbemanipulated,was proposedina converted tomuscleinthegrowing lamb,andhow underlying biologicalmechanismsbywhichforageis New Zealand farmsystems. An understandingofthe production ofhigh-value premiummeatproductin $7,049,250 101 Core Funding report 102 Core Funding report one moreidentifiedfromJuly2017.Inaddition,staff Scotland’s RuralCollege (SRUC)have alsostartedwith work acrossarangeoftopics. Three PhDstudentswith Teagasc have been filled, and students have commenced Six outofthesevenPhD Walsh fellowships through FY17 Key Achievements in theMOUsforeachofthosefourcollaborations. support activitiesthatdeliverontheobjectivessetout organisation. This Core Funding investment isusedto a MemorandumofUnderstanding(MOU)witheach collaborations, andthesehave subsequentlyresultedin to explore details for formal organisation-to-organisation visited fourinternationalagriculturalresearchinstitutes AgResearch’s ChiefExecutive andResearch Director intellectual propertyandaccesscapabilities. In2015, international collaborations, asaway ofacquiringnew flexibility andscalability was collaborations, inparticular that onekey strategicdrivertoachievingtherequired Resourcing Model). The Resourcing Modelrecognised sustainable financialperformance(known asthe backdrop ofcontinuedrevenuevolatility, alongwith the agriculturalsectorandNewZealand againstthe to enableusdeliverimpactsandoutcomesfor have amoreflexibleandscalableresourcingmodel The AgResearch BusinessModelincludedanaimto Objective International sciencecollaborations Agricultural Policy &Māori Agribusiness Sector grouping • FY17 Key Achievements influenced byclimatechange. the timescaleandnatureofactivitymaybe national levelstomake informedchoicesinareaswhere necessary fordecision-makers atfarm,regionaland change. A furthergoalistoprovide theinformation control systems) sotheyremaineffectiveunderclimate key technologies(e.g. nitrogenfixationandbiological environment. This activityincludesfuture-proofing to ameliorateortake advantage ofthechanging develop adaptationsthatwillenableagriculture animal interactionsinpastoralagricultureandto of theimpactsclimatechangeonsoil,plantand The primaryaimofthisprojectistoprovide forewarning Objective Climate changeandthepastoralsector:impactsadaptation • include meta-analyses (wheredatasetsarecombined global researchonclimatechange. The studies international co-operativestudiesthatarepartof (FACE) experimentarebeingusedinfivecurrent Data fromourFree Air Carbon dioxide Enrichment $300,000 FY17 Core Funding Investment from eachorganisationdevelopingplans. (Colombia) andfivethemes identified,withpersonnel Heads of Agreement was alsosignedwithCorpoica along withjointpapersacceptedforconferences. A exchanges have occurredandjointproposalsdeveloped and PracticeChange,twowithfarmsystems. Staff and threeworkshops wereheld,onewith Adoption off theprojects. TheMOUwithCSIRO was finalised proposals. INIAsetaside$500KUSdollarstostart are conductinginfivethemesandformalising have undertaken aninventory ofwork allfourinstitues workshop thatdevelopedaresearchplan.Participants with INIA, Teagasc, IRTA and AgResearch helda mechanisms beingidentified. Thestrategic Partnership project plansareunderdevelopmentandinvestment that identifiedareasofcollaboration. Collaborative milk andhealthwas heldwithscienceandindustry workshop atUCDavis toexchange knowledge on from AgResearch inthefoodspace. A verysuccessful UC Davis intheanimalspaceandasecondment country strategy. We have apostdoctoralstudentwith in hillfarmsystems toalignwith AgResearch’s hill have visitedSRUCtolookatbuildingupcollaborations $740,000 FY17 Core Funding Investment • • dioxide levels. Northland thathave adaptedtotheelevated carbon collected fromanaturalcarbondioxide springin populations isunderway whichincludeslegumes climate change.Geneticanalysis ofdifferent legume that mightavoid thispotentiallydamagingeffectof and arenow taking stepstofindplantadaptations atmospheric carbondioxide onnitrogenfixation We have demonstratedanegativeeffectofelevated effort tomanageclimatechange. to make anotablecontributiontotheinternational interpretation oftheanalyses) enables NewZealand gases. The provision ofthesedata(andthe climate changeimpactsandmitigationofgreenhouse and parameterisationofmodelsbeingusedtolookat to draw moregeneralconclusions)and validation • FY17 Key Achievements one oftheOVERSEER® owners. This represents AgResearch’s fundingcontribution as science advicetotheOVERSEER® owners asrequired. the model,testingservicesandproviding strategicand services ofissuesloggedintotheJIRAsystem within staff. Business-as-usualactivitiesincludemaintenance usual activitiescarriedoutby AgResearch OVERSEER® OVERSEER® owner workprogramme forbusiness-as- Most FY17Core Funding willbeusedinthe Plenty. nitrogen (N)leachingatahigh-rainfallsiteintheBayof advice, and(c)supplementingfieldmeasurementsof model development,maintenance,testing, andstrategic release inpasturetofoddercroprotations, (b)ongoing for FY17were:(a)researchintonitrogenmineralisation support business-as-usualactivities. The threeprojects incorporated intoOVERSEER® andtocontinue to improve thedevelopmentofnewsciencebeing The objectivesofOVERSEER® Core Funding are AgResearch. Zealand, theMinistryforPrimaryIndustries(MPI)and is jointlyowned bytheFertiliser Association ofNew development sincetheearly1990s. OVERSEER® farming systems, and AgResearch hasmanagedits good nutrientmanagementpracticeinNewZealand (OVERSEER®) istheprimarytoolusedtosupport The OVERSEER NutrientBudgetsModel® Objective OVERSEER • predicted bythemodel. higher thanexpectednitrogenleachinglossesbeing crop blocks beforecropgrazingwhichcontributedto large accumulationofsoilmineralnitrogeninfodder OVERSEER® cropmodelevaluation identifieda Ltd. andPlant&Food Research. Inaddition, a literaturereviewandworkshop withOVERSEER® by OVERSEER® ’s cropmodelwereidentifiedusing expected nitrogen (N) leaching losses being predicted Key underlyingissuescontributingtothe higherthan ® scienceandcapability $750,000 FY17 Core Funding Investment • • • • • • • • OVERSEER® Nleachingestimates. validation dataisparticularlyimportant forimproving the rangeofcalibrationdataset. This typeof new validation dataforOVERSEER® fromoutside a high-rainfallsitenearRotorua, which hasprovided Nitrogen leachingmeasurementsweretaken from this way helpingitbecomeatrustedtool. increasing thetransparencyofOVERSEER® andin to BlockScale. This representsamajor steptowards Effluent Management,andDistributionof FarmData Characteristics ofCrops, Animal Intake andExcreta, completion offourcore Technical Manualchapters: KPI’s throughouttheyear. A highlightwas the The OVERSEER® workprogramme,hasmet work inJuly-August2017. from OVERSEER® Ltdwas securedtocontinuethis of nitrogenleachinglossesfromcrops. Newfunding objectives, whichwillultimatelyimprove predictions Research, andPastoral 21toalignmultipleindustry collaboration withOVERSEER® Ltd,Plant&Food The cropmodelprojectdemonstratedgood OVERSEER® cropnitrogenmodel. validate themodelwhichwillultimatelyimprove the grazing (fromurine). after The datawillbeusedto present beforegrazing(fromNmineralisation)and June tounderstandhow muchsoilmineralNis 10 winterforagecropsaroundNewZealand in We undertookextensivefieldmeasurementsfrom 103 Core Funding report 104 Core Funding report incursions. prioritisation ofbiosecurityresponses topotential they establish. This willenablesignificantly improved be available forassessingtheir likely impactsshould of riskposedbythevarious threatsandmodelswill modelling systems willbeavailable fordefininglevels Novel andconstantly upgradableanalyticaland defined bothoff-shoreandattheNew Zealandborder. their riskquantifiedandoptimalpointsforintervention species ofthreattoNewZealand willbebetterknown, Further, by2017,the major disease,weedandpest key end-usersandstakeholders. and thatthesewillbeavailable to,andimplementedby NewZealand’sand immediatelyafter nationalborder ensure thatharmfulorganismsareexcluded before,at develops newknowledge, toolsandapproachesto and protectingitsuniqueterrestrialecosystems. B3 competitiveness ofNewZealand’s exportindustries thereby supportingandprotectingtheinternational to improve borderbiosecurityforplantpests, The programmedeliversscience-basedsolutions Scion. including AgResearch, Plant&Food Research and a voluntarycollaborationbetweensciencepartners applicability inNewZealand andinternationally. Itis research, knowledge andtoolsthatwillhave wide to beaworld-leadingprovider ofborderbiosecurity The BetterBorderBiosecurity(B3)programmeaims Objective biosecurity Better border • FY17 Key Achievements OVERSEER® NutrientBudgets®model. models and/ordecisionsupporttoolssuchasthe it andincorporateintocatchment–farm-scale science toend-usersandstakeholders forthemtoapply to groundwater, andtosubsequentlycommunicatethe improve scientificunderstandingofphosphorusloss The immediategoalofthisproject,therefore,isto phosphorus. reasons researchhasfocusedmoreonnitrogenthan leaching, ithasbeenrecognisedthatforanumberof the importanceofbothnitrogenandphosphorus in NewZealand sinceatleastthe1970s. Despite as key contaminantsofconcernforwater bodies pastoral agriculture. They have alsobeenrecognised phosphorus arekey nutrientsforNewZealand’s This researchisimportantgiventhatnitrogenand gap withrespecttophosphoruslossgroundwater. understanding ofapotentiallysignificantknowledge The goalofthisprojectistoprovide abetter Objective Factors affecting phosphorusleachingandrelevancefor OVERSEER • from astony soilirrigatedwithfarmdairy effluent example, 10timesmoretotalphosphoruswas lost irrigation andthesourceofphosphorus. For phosphorus lostbyleachingwas affected bysoiltype, Data fromthisstudyhasshown thattheamountof • • • FY17 Key Achievements $370,000 FY17 Core Funding Investment • • • • • • • • • • • New Zealand distributionsandimpactsinNewZealand. risk assessmentsuchasexamining theirpotential are worthy ofconsiderationforadditionalphases clover receivedriskscoreswhichwouldindicatethey New Zealand thatwouldlikely feedonryegrassor notes thatamongtheinsectspecies notpresentin of theseweedandpestlists. The insectpestreport for DairyNZoutliningprogressonthecompilation Industry Agreement. Reports have beenproduced by DairyNZastheyworktowards aGovernment- produce ahighpriorityweedandpestlisttobeused Zealand pasture. This goalofthisactivityisto potentialweedand pestthreatstoNew identifying discussion andtwoworkshops, andresearchtowards Engagement withDairyNZhastaken placevia and responseteam. rust have beenusedbytheMPIincursioninvestigator b3.net.nz/climenz. The modelandmapformyrtle maps. ItisaccessedfromtheB3website:http:// assessment, toquicklygenerateNZclimatesuitability Primary Industries(MPI)asaconvenient toolforrisk developed whichisbeingusedbytheMinistryfor A climatesuitabilitymodel,Climenz,hasbeen for researchstartingon1July2017. research concepts, andfinallymakingfullproposals National ScienceChallengeobjectives, drafting aligning worktoBiosecurity2025,andtheBioheritage understanding end-usersprioritiesgoingforward, B3 strategy‘refresh’. They have spenttimeon Researchers have focussedstronglyonthe for how wemanagephosphoruslosstowater. affect theamountofmovement andhasimplications These studiesindicatethesourceofphosphoruscan getting intogroundwater. may bemoving deeperthroughthevadose zoneand to findouthow muchofthephosphorusindrainage farm dairyeffluentarebeinganalysed. Thepurposeis years fromalong-termdairyfarmsiteirrigatedwith As aresult,groundwater samplescollectedover 10 dung comparedwiththatfromphosphorusfertiliser. be greaterfromtheapplicationofdairyeffluentor zone below thesoilandabove thegroundwater) may movement throughthevadose zone(theunsaturated We alsofoundevidencetosuggestthatphosphorus dairy effluent)thansoilswithphosphorusfertiliser. with organicsourcesofphosphorus(cow dungor amounts ofphosphorusarelostfromsoilsamended support thesefindings. Theyalsofoundthatgreater Other experimentswedidonadifferentstony soil irrigated witheffluent. over a12-yearperiodthanfinertexturedsoilnot ®

• • • 1. FY17 Key Achievements (OLW). directly alignedtotheNationalScienceChallenge market volatilityanduncertainty. The programmeis enable themtoprosperinanenvironment oflimits, environmental andsocial/culturalimperatives andwill farming conditionsinways thatbalanceeconomic, rural communitiesandenterprisestoadaptchanging directly contributetowards increasingthecapacityof sustained regionalgrowth intothefuture. This will of strong, resilientruralcommunities necessaryfor resilient land-basedenterprisesthatsupportthegrowth local, contextuallyappropriatestrategiestobuild communities byexploring, creating andimplementing extend thecapacityandexperiencethatresidesinrural The primaryaimofthisprogrammeistobuildonand Objective Resilient ruralcommunities • • • seeds andmicrobes. This researchdirectlyledto vector diverseorganismssuchasnematodes, weed shoes) clearlyshowed thattransportedsoilcan containers oradheringtoairlinepassengers’ transported soil(e.g. insoilcontaminatingsea- B3’s well-citedresearchonbiosecurityrisks in Agreement. group tobeformedundertheGovernment Industry by theNewZealand Fruit FlyCouncil, thefirstsuch an internationalpanelofexperts, commissioned MPI. This isnow formingthebasisforareviewby fruit flysurveillance system hasbeensignedoffby andoptimisingNewZealand’swork onquantifying myrtle rustin Taranaki. Inaddition, AgResearch’s MPI pestanddiseasesinvestigations, including AgResearch designedsurveillancesurveys forthe found thissummer. alpine sitesinknown localitiesforthebug, itwas not Despite intensivecollectingover thesummeratfour is themostcloselyrelatednativeinsecttoBMSB. brown marmoratedstinkbug(BMSB),becauseit testing withapotentialbiologicalcontrolagentfor Ranges. The alpinebugwas neededforhostrange was previouslyknown fromseveralCentral Otago to helpcollectaSouthIslandalpineplantbugthat AgResearch staffweredivertedfromplannedprojects classes. high schooltoinformdiscussionin seniorgeography with ruralcommunitiesanditisgoingtobeusedina to facilitatestrategicdiscussionsaboutlocalpolicy Temperature Agriculture (TempAg) researchproject Challenge. IthasalsobeenusedintheOLW of resiliencecovered intheOLW National Science used thisyeartocarryoutanauditofthedimensions individual andcommunity-theFramework hasbeen and organisational-atdifferentspatiallevels, farm, Resilience- social,cultural,economic,environmental Framework whichidentifies fivedimensionsofRural Last year, wedevelopedandtested aResilience $1,600,000 FY17 Core Funding Investment 3. 2. $1,977,000 FY17 Core Funding Investment • • • • entities. new workfor AgResearch withseveralotherMāori Framework asthebasisfor discussionaboutpotential Māori Agri-business teamhasalsousedtheKaitiaki approach tolandusedecision-making. AgResearch’s also interestedinusingthisMāorivalues based shown toseveralother Māorientitieswhoare was videoedandthevideohassubsequentlybeen implementation oftheKaitiakiFramework onfarm co-developed lastyearwithaMāorientity. The with oneMāorientity. The KaitiakiFramework was Kaitiaki -Land-useDecisionMakingFramework This yearwecompletedtheinitialtestingof useful. piece ofworkindicatethatthemethodispotentially community orregion. The initialfindingsfromthis that theyreliablyindicateresilienceordeclinefora resilience exhibitthresholdsorbreakpointssuch that examinedwhetherindicatorsusedtomeasure also developedandtestedanewmethodology Resilient Agriculture). Inthe TempAg researchwe TempAg and TSARA (Targets forSustainableand of internationalworkonresilienceindicators: resilience thresholdsthatcontributetotwopieces We identifiednewresilienceindicatorsand client reports. publications, 12conferencepresentationsandsix Outputs fromFY17includesevenpeer-reviewed New Scientistmagazine. world andtheachievementwas evenpublicisedin time abutterflyhasbeeneradicatedanywhere inthe Zealand inNovember 2016. This was thefirst-ever declared greatwhitebutterflyeradicatedfromNew the DepartmentofConservation andMPIformally The eradicationprogrammewas successful,and genetics, developmentofluresandbiologicalcontrol. spanned areassuchasmathematicalmodelling, began inNovember 2012.Itsdiverseresearch white butterfly, startingfromwhen thecampaign Conservation’s eradicationcampaignagainstgreat B3 provided researchsupportfortheDepartmentof research forbiosecurityin Antarctica. Antarctica NewZealand abouttheimplicationsofthis Canterbury) andB3iscurrentlyindiscussionwith the ChathamIslands(co-fundedbyEnvironment transport links betweenmainlandNewZealand and a greatervigilanceofbiosecurityrisks arisingfrom 105 Core Funding report 106 Core Funding report went ontofacilitateprogrammelogicandevaluation as ‘MonitoringandEvaluation Champions’, and Four AgResearch scientistsweretrainedandmentored programmes, amongstothers. Management andClimateChangeResearch review P21 programmeplanning, MPI’s SustainableLand DairyNZ-led Reproductive Fertility programme; workshops withexternalstakeholder groupsincluding AgResearch ranprogrammelogicorimpact planning MBIE Endeavour Fund proposals. Inaddition, planning processforapproximately 10ofthesubmitted of the Animals Roadmap; andaspartoftheproposal larger Core (now SSIF)projects;8+workshops aspart participatory workshops including:13workshops for logics and/orevaluation planshave beendevelopedin plan forandevaluate impact.DuringFY17 programme using programmelogicsand/orevaluation plansto Many of AgResearch’s scienceprojectteamsarenow FY17 Key Achievements beginning. adoption andpracticechangeconsiderationsfromthe the designandconductofresearchinvolves buildingin involves achangeofculturewithin AgResearch sothat stakeholders throughoutthelifeofprogramme.It systems approach,andworkingalongsideour This willbeachievedthroughtakinganinnovation neededtoincreaseuptake ofresearch. cultural shift adoption andpracticechangebringaboutthe developing toolsandprocesses, inordertoenhance is aboutbuildingcapabilityandcapacity, aswell focus onadoptionandpracticechange. This project of newknowledge andtechnologiesthroughagreater AgResearch istoincreaseuptake bythepastoralsector 2018 StatementofCorporate Intent. A key focusfor target ImpactStatementspresentedinthe2013- specifically throughenhanceddeliveryofthe18 that itisbetterequippedtofulfilits Core Purpose, AgResearch initiatedthisprojectin2013/14toensure Objective Adoption andpracticechangeproject The programmealsoincludesstrategy development the proposedworkstreams withtheOL&Winitiative. Science Challengehasrecognised strong alignmentof and RichardMcDowell, ChiefScientistoftheNational to OurLandand Water NationalScience Challenge This programmeofworkalignscloselywithdelivering is notcurrentlyinthepublicdomain. pathway toimpactforexistingscienceinformationthat and LCR) aswellnewcollaboratorsandprovide a with theSLURIandLUCIpartnerorganisations(PFR workstreams thatfacilitateongoingcollaboration this 12-monthprogramme,wewillestablishnew to themanagementofplants, soilsandwater. In thescienceknowledge, modellingandpolicyrelevant programmes have madeimportantcontributionsto The SLURIandLUCIcollaborativeresearch Objective Sustainable landuse $410,000 FY17 Core Funding Investment • • marked increasein: the baselinesurveyinNovember 2014,thattheyhada email surveyamongstsciencestaffshowed, against towards adoptionandpracticechangeimpact. An AgResearch aroundawareness, knowledge andattitudes impact areas. There isevidenceofculturechangewithin the limitationsaswellopportunitiestomapping tool, andwenow have increasedunderstandingof network linkagesin Wool research.SNAisauseful Analysis (SNA)andusedthisapproach tomapout AgResearch hasdevelopedcapabilityinSocialNetwork project inColombia, UruguayandPeru. AgResearch’s MinistryofForeign Affairs and Trade have beentranslatedintoSpanishandhave supported Your Research Proposal”. Many oftheseresources and the‘how to’ guide“BuildingCo-innovation into include: thePrinciplesofSuccess,updatedtemplates, resources thathave beendevelopedandshared being doneonadoptionandpracticechange.New and externally, andasaway ofshowcasing thework is beingusedandpromotedbothwithin AgResearch The BeyondResults website(www.beyondresults.co.nz) AgResearch. at theprojectlevelaspartofculturalchangewithin and hashelpedtoembedmonitoringevaluation evaluation acrossthesciencegroupsin AgResearch and capabilityinimpactplanningmonitoring planning. The Championsprogrammehasbuiltcapacity as partofproposaldevelopmentand/orevaluation workshops withscienceteamsoutsideoftheirown, • FY17 Key Achievements future farmingsystems andplantsfortheenvironment. opportunities, largelyintheareaoflandsuitability, that willinformfuturescienceneedsandfunding • • • and evaluation toolstoachievethisimpact. impact withtheirresearch,andonusingmonitoring the importancetheyplacedonachievinglong-term of programmelogicandimpactplanningtool; adoption andpracticechangeproject,theiruse familiarity withthetoolsdevelopedthrough Modelling ofthesoil–water dynamicssuggeststhe that developedatthebaseofcatchment. event asaresultofsaturationexcess conditions flow. Runoffoccurredrapidlyduringtheirrigation applied water exitedthecatchmentas overland Otago. Duringirrigationevents, upto8%ofthe irrigation system onrollingdownlands inNorth dynamics weremeasuredunderacentre-pivot in surfaceandsubsurfaceflow pathways. Soil-water and agreaterpropensityforwater tomove laterally irrigating flatland. Theseinclude variable soildepth complexities thatareotherwisenotpresentwhen Irrigating tohillslopesintroducesanumberof information. The Nleachingtrialwillhelpprovide thiscrucial that DairySheephave alower environmental impact. impact ofdairysheepisrequiredto enableustostate crucial baselineinformationontheenvironmental potential tohave alower environmental footprint,but are anemergingindustryinNewZealand withhuge with MBIEand Waikato Regional Council. Dairysheep dairy sheep(objective3). This isaco-fundedproject establishment ofanitrogen(N)leachingtrialunder Another objectiveofthisprogrammeistosupportthe in the Valley proposal. opportunitiesand supportresearcheffort better identify capacity inprecisionirrigationsciencewillenableusto through precision Ag techniques. Improving ourexisting AgResearch Core andRavensdown toboostproductivity will bealignedtoaparallelprojectcurrentlyfundedby work tobecarriedoutonRakaiaIslandDairiesand precision managementofirrigation. This willinclude also beusedtoadvance AgResearch expertiseinthe investment intothehub. A portionofthefundingwill this proposalisexpectedtobeamulti-milliondollar developed for Valley Irrigation(Nebraska).Ifsuccessful relevant toasmartirrigationproposal that willbe a proposal,clientinteractionandscientificmeetings This fundingwillsupport AgResearch stafftoprepare development oftheLincolnHubpartnerships. Overall projectfundsintoprojectsthatsupportthe Objective Lincoln Hubseedfund-Irrigation,Nleachingand AgInform • • • • animal treadingdamagebasedonclaycontentand We have identifiedareasthatweremostproneto accounting forPleachinglosses. estimates ofNleachingfromurinepatches, and for reviewingguidelinesirrigation,improving The modeldevelopedcanbeusedinfuturework flow ofsolutesthroughmacroporesandsoilmatrix. APSIM soilmodelsbyaccountingforthedifferential have onsolutetransport. We have modifiedexisting the effectsthatpreferentialflow of watercan of thecurrentsoilmodelsin APSIM candescribe determining nutrientlossesinsomesoils, butnone Preferential flow canbeanimportantfactorin hill slopes. the complexityofhillslopehydrology tobestmanage provides thebasisfornewresearchonunderstanding mobilising contaminantssuchasnitrogen. This work and hasenvironmental significanceasavectorfor in overland flow compromises water useefficiency slowly permeableBhorizon(subsoil). Water lost in preferentialmovement ofwater laterallyalongthe saturation withinthesoilmatrixthathave resulted proposed tohave ledtolocalisedareasofwater A combinationofirrigationintensityanddepthis apparent inresponsetorainfall. presence ofpreferentialflow. However, this was not profile reachingapointofsaturation,indicatingthe onset ofoverland flow occurredpriortothesoil $166,255 FY17 Core Funding Investment funded by, theMBIEdairysheepprogramme. research iscloselylinked with,andwillcontinuetobe to demonstratealow environmental footprint. This an importantpartofthedairysheepindustry’s objective evidence fortheNfootprintofdairysheepwhichforms Spring Sheepdairyfarmnear Taupo. The trialprovides A nitrogenleachingtrialwas setuponLandcorp’s change. water shortagesandpossibleadverseeffectsofclimate around NewZealand, future-prooffarmingagainst to improve existing trendsindecliningwater quality application depth.Betteruseofirrigationisrequired design despitetheabilityof VRI technologytovary properties arerarelyconsideredincurrentirrigation design certificatecourseforindustry. Currentlysoil including soilinfiltrationrate,aspartofitsirrigation involved intheprojectandwillpromote key metrics, to irrigationefficiency. IrrigationNZ(INZ)wereclosely Soil infiltrationrate was shown tobethemajor barrier technologies suchasvariable rateapplication (VRI). the farmbeingequippedwithadvanced irrigation was observedundercentrepivotirrigation, despite possible solutionswhereconsiderablepondingofwater A case-studywas undertaken onafarmtoidentify FY17 Key Achievements $508,000 FY17 Core Funding Investment services. continue toincreasethebenefitofearthworms tosoil (to atleast600earthworms persquare metre)will increases earthworm abundanceabove thisminimum per squaremetre. Any managementpracticethat to have aminimumofatleast200earthworms This projectsuggeststhatlandowners shouldaim impacts onsoilservicessuchasleachatevolume. Different earthworm functionalgroupshaddiffering earthworm abundanceinfluencessoilservices. Another objectiveunderthisprojectexploredhow resilience). (including matchinglandusewithagiven us progresstowards managinglandscapesbetter better assesstheroleofsoiltreadingdamage,helps providing theoverall impactoflostpasturewecan given paddockduetosoiltypeandwater flow. By the spatialdistributionofriskdamageacrossa runoff. Theupdatedmodelallows ustoestimate infiltration, greenhousegasemissionsandsurface damage onotherimportantfunctionssuchaswater enable ustobetterpredicttheimpactsoftreading by puggingdamage. This isimportantasitwill for reductioninpotentialplantgrowth caused properties duetocompactionaswellaccounting the APSIM modeltodescribethevariations insoil water content. This informationwas usedtorefine 107 Core Funding report 108 Core Funding report organisations. will beusedtoleverageprojectswithmultipleMāori unique abilitytoprovide value. The Core Funding of thosebusinessesandthatdemonstrate AgResearch’s on-and off-farmprojectsthataddressparticularneeds collectives and AgResearch throughtargetingboth collaboration betweenMāoriagribusinessentitiesand The specificaimofthisprojectistoencourageco- projects withmultipleparticipants. dedicated staff, have experienceinestablishingsuch with theirculturalparadigm. AgResearch, throughits to createsuccessfullong-termbusinessesthatalign thebusinessmodelthatwillallow them to identify trusted advisorsandserviceproviders toassistthem Many Māoriagribusinessassetowners arelookingfor Objective Māori agribusiness research principlesforguidinghow AgResearch can A frameworkintegratingMāoriandnon-Māori FY17 Key Achievements sectors forIwi/Hapūandnon-Māori. impact andprofitabilityofresearchinvestments inthese Zealand’s innovation system willultimatelyimprove the addressing barrierstoinnovation byMāoriinNew research withMāoriagribusiness. and Identifying of agriculturalinnovation systems approachesinto intended toinformfuturework,namely, theintroduction and improve theframework.Further, thisresearchis responses tothemethodsemployedareusedrefine are tobeappliedwithMāoriagribusinessesandtheir and CRIs. To testthisframework,researchprinciples research relationshipsbetweenMāoriagribusinesses KRA) toguidetheformationandmaintenanceof of aframework(HeKorero Rangahau Ahuwhenua; an integratedsetofresearchprinciples, intheform This programmewillco-developwithMāorientities Objective Research scientistlinked capability:Māorisocial toPrimaryInnovationprogramme Agricultural Policy &Māori Agribusiness FY17 Core Funding Investment Total $436,000 FY17 Core Funding Investment • • FY17 Key Achievements $210,000 FY17 Core Funding Investment international journal. He Korero Rangahau Ahuwhenua forsubmissiontoan peer-reviewedpublicationon outcomes wereadraft innovative capacityofMāoriagribusiness. The research will increasetheimpactofourresearchbyrealising research engagementwithMāorientities, AgResearch Māori entities. By usingKRAasaframeworkfor to usingKRAasaframeworkforengagementwith identified barriersandopportunitieswithin AgResearch of workingembodiedinKRA. This testinghasalso the value thattheseMāorientitiesplaceontheway Farms and Te Tumu Paeroa, whichhasdemonstrated evaluated in AgResearch engagementwithNgāi Tahu suitable innovation project(s).KRAhasbeentestedand process ofinteractionwithMāorientitiestoidentify implementation ofKRAbeginsattheoutset work effectivelywithMāorieconomicentities. The • • performance ofMāoriandNZIncatthesametime. support Māori agribusiness the while economic lifting enables thestrategicdirectionof AgResearch to that alignwiththeiruniqueculturalparadigm. This and helptobuildsuccessfullongtermbusinesses agribusinesses tocreateenduringrelationships contract hasallowed AgResearch toworkwithMāori theperformanceoftheirbusinesses.to lift The SSIF tools requiredatthestrategicandoperationallevels We identifiedandco-developedthedecision-making agribusiness assetowners. and developmentprovider formultipleMāori We becamethetrustedpartnerandresearch $7,467,255 • • achievements fromthreeareprovided below. We conducted21CuriosityprojectsinFY17.Key FY17 Key Achievements the achievementofitspriorityimpacts. with theStatementofCorporate Intentandsupporting each). The CuriosityFund isfocusedtowards aligning received externalco-fundingfromKiwiNet($15,000 there was atotalof20Curiosityprojects, twoofwhich for eachprojectisavailable. During2015/16, Core Funding. Eachyear, fundingofupto$35,000 creative ideasthatmaynotbeenabledthroughother it representsanopportunitytoresearchinterestingand Core Funding hasbeenallocatedtothisfundbecause AgResearch encouragestheseedingofearlystageideas. The CuriosityFund isoneofthemechanismsbywhich Objective Curiosity Fund Relevance toallsectors Residual grouping • • anti-microbial properties. This studyprovided the culturesthatmighthavemicrobiome) toidentify (a catalogueofreferencegenomesfromtherumen Another studyminedtheHungate1000resource presented withperennialryegrassmini-sward. ryegrass isnotrelatedtoalkaloidtype,wheninitially One studyshowed thatheiferpreferenceforperennial Relevance toallsectors FY17 Core Funding Investment Total $700,000 FY17 Core Funding Investment • • forming bacteriamoreaccurately. many foodindustriestoisolateanddetect spore- and established,thismethodologywillbeusefulto samples aswellfoodmatrices. Oncestandardised such asClostridiumspeciesfromenvironmental anaerobicbacteria reliable methodologyinidentifying conditioned media. This willfurtheraidindevisinga investigate whatwas inhibitingBacillusspeciesinthe study was animportantsteptounderstandand secreted intheClostridiumenrichedmedia. This species was foundtobeantimicrobialpeptides responsible forinhibitingthegrowth ofBacillus In theproject‘Whoisthis Agent X’, anagent from overgrazing. lolitrem Bandergovaline, always protectsryegrass endophyte, whichcontainstoxic alkaloidssuchas validity ofthecommonlyheldbeliefthatwildtype three years. Ourresultsbringintoquestionthe which willfundanextensionofthisprojectafurther foundation forasuccessfulERS-GASfundingbid, $700,000 109 Core Funding report 110 Core Funding report • FY17 Key Achievements research aimstotestthesemechanisms. urine patchspreadfromsurface-soilcompaction. This to non-lactatingcows, orstockingrateeffectson frequency andurine-Nratefromlactatingcows relative mechanisms forthiscouldbedifferencesinurination apparent effectsofstockingrateonNleaching. Possible in urinepatches. A previousgrazingstudyshowed well astheurinationfrequencyandrateofNdeposited of Nleachingisthetotalcow urinary-Nexcretion, as pastures grazedbydairycows. The maindeterminant influence theextentofnitrogen(N)leachingfrom A rangeofanimalrelatedfactorscanpotentially Objective Effects ofcowlactationonNleaching systems ingrazedpastoralsystems. discussion abouttheroleand potential ofdigital develop thoughtleadershipandstimulate thinkingand and Environment Groupandthewider AgResearch, to capability arounddigitalagriculture withintheLand andstarttobuild for pastoralagriculture;andidentify the potentialofdigitalagriculturetoprovide solutions digital sphere;raiseawareness within AgResearch of strategic positioningof AgResearch scienceinthe The overall objectives ofthisprojectareto:develop Zealand pastoralindustry. provide; andthestructure andfunctioningoftheNew based systems forthetypeofscience AgResearch would be appliedtograzedsystems; theimplicationsof AI- which systems alreadydevelopedinotherindustriescan This projectisaimedatunderstandingtheextentto have hadtoradicallychangetheirmethodsofoperating. disruptive, tothepointwhereexistingindustrygroups of newtechnologiesinotherindustrieshasbeen impact onpastoralagriculturalsystems. The application Deere), andarenow projectedtohave anincreasing cropping systems (e.g. Bayer, Monsanto,Prospera,John These systems arealreadybeingintegratedinto Livestock Australia 2016; Whitehead 2016). learning systems (KPMG2016;SmallMeat& artificial intelligence(AI)decisionsupportandself- improved dataconnectivityandcomputer-based technologies includingimproved sensorcapability, Small, 2016),inpartduetothedevelopmentofnew radically changeover thenext10years(KPMG2016; Farm systems andtheirmanagementareprojectedto Objective Digital farming and Environment Farm Systems • grazing studyusinganovel methodtodefineurine- non-lactating) wereevaluated inalate-autumn Implications ofcow lactationstatus(lactatingversus $160,000 FY17 Core Funding Investment • • • • • FY17 Key Achievements • • • • • which commencedinJune2017. efficiency bypasturearebeingexaminedinthisstudy generated. Effectsonurinespreadandnitrogenuse where differencesincompactionwereartificially compaction werealsoevaluated inasmall-plotstudy Implications ofcow stockingonsurfacesoil nitrogen leachingpotential. of effectslactationstatusandstockingrateon study willbeimportantinguidingunderstanding being statisticallyanalysed. The resultsfromthis treatment wereanalysed fornitrogenanddatais of nitrogenleaching. Over300urinepatchesper nitrogen depositionrate,whichisthemajor driver • humidity inmeasurements. farm. Also includedaltitude,temperatureand every 30secondsinrealtimeatthe Tokanui dairy GPS couldbedetermineddown to20mmaccuracy Developed technologysothatanimalpositionvia understanding ofdigitalagriculture. Zealand leadersin the agricultureindustryontheir We provided partfundingforasurveyof40New • • science AgResearch undertakes, included: impacts ofdigitalagricultureon AgResearch, andthe Our worktoimprove understandingofpossible of theproposedresearchprogrammeforFY18. number ofstaff, whichhasinformedthedevelopment and science. This ledtodetaileddiscussionswitha its possibleimpactsontheagricultureindustry raise awareness ofdigitalisationagricultureand We ranseminarsatthreecampusesforstaffto • • • applications. sampling densitiesofGPSdatafor different energy requirements, andtodetermineoptimised budgets fornutrienttransferandmetabolic of parametersusedinOVERSEER® Nutrient The datawillbeusedtoassesstheadequacy agricultural. better understandtheindustrypositionondigital holding meetingswithover 15stakeholders to agriculture; attendance bystaffatthreeconferencesondigital • FY17 Key Achievements water qualitystandards. and land-managementshave onachievingswimming determine therelativecontributionofdifferentland-uses measurements willbeincorporatedintomodelsto reduce thefaecalmicrobiallossesfromfarms. These of thisprogrammeistodeveloptechniques “recreational water quality”standards. The objective on water qualityandinparticularswimming or Faecal microbiallossesfrompastoralland-useimpact Objective Microbial waterqualityimpacts • FY17 Key Achievements practised. case study, wherelandapplicationofsewage iscurrently recycling vialandapplication. Taupo willbeused as a sewage processingandtheeffects benefitsof New Zealand onNandPemissionsfromcurrent simple modelapplicabletoDistrictCouncils throughout waterways inNewZealand. This projectwillproducea Sewage isasignificantcontributorof N andPto Objective Life cycleanalysis • • • • • • did notsecurefundingfromMBIE. was submitted. Unfortunatelythesubmittedproposal significant investment oftimeandeffort,aproposal faecal microbialimpactsonwater quality. a After in substantialsupportforanMBIEproposalaround departments, industryandregionalcouncils)resulted Stakeholder meetings(includingrelevant government life cycleincludingthefarmstage. A simplemodel losses towaterways relativetootherstagesofthe products isadominantcontributortonutrient The sewage generatedfromeatingagricultural of Artificial Intelligence-based systems onthetypeof We preparedareportthatoutlinestheimplications Enterprises andRuralLivesinNewZealand’ Technology and Agriculture: Foresight forRural We preparedapaperforpublicationentitled’Digital • • management disciplinestooversee theanalysis. animal welfareandbehaviour, andnutrient mathematics andstatistics, proteomics, genomics, by assemblingagroupofscientistsfrom transdisciplinary researchactivitiesin AgResearch This programmeofworkisbeingusedtoimprove $146,856 FY17 Core Funding Investment • • • $60,000 FY17 Core Funding Investment • $250,000 FY17 Core Funding Investment programme forFY17-18. informed thedevelopmentofproposedresearch and establishingnewrelationships. They have also These activitiesprovided opportunitiesfornetworking • • • • impacts. discharges offarmdairyeffluent to streamsandtheir A modellingapproachtofurtherinvestigate understanding ofinstreamsourcesmicrobes. Southland. The paperraisedquestionsaroundour Conference onmodellingtheOtautaucatchmentin submitted totheNewZealand Freshwater Sciences of Water and Atmospheric Research Ltd,was A paperinconjunctionwiththeNationalInstitute nutrient andsedimentinputfromgrazedpastures. trial differentmitigationstrategiestoreducefaecal, and term monitoringoffourcatchmentstoquantify Invermay farm. This equipmentwillallow forlong- and measurementequipmentwas installed on Experimental paddock-scale water flow monitoring nitrogen) acrossthelifecycleofagriculturalproducts. whole environmental footprint(e.g. byabout20%for land applicationofsewage, aswellinreducingthe recycling andreducedenvironmental impactsfrom Analyses have illustratedthebenefitinnutrient revised accordingly. Council staffprovided feedbackandthemodel was and implicationsforlandapplication. Taupo District water, asaffectedbysewage processingmethod and phosphorusfromsewage, including lossesto has beendevelopedtoestimatetherateofnitrogen programme. possible strategyfordevelopingadigitalagriculture science AgResearch wouldprovide, andidentifiesa 111 Core Funding report 112 Core Funding report on thecontrol,biologyandimpactofkey invertebrate provide thepastoralindustryindependentinformation The AgPest website(www.agpest.co.nz) continuesto FY17 Key Achievements an initiativetotargetusebyruralprofessionals. throughout thepastoralindustry–inparticularthrough is widelypromotedasafarmer-friendlyextensiontool and 3)incollaborationwithBeef+LambNZ, AgPest outbreaks andappropriatemanagementresponses; timely mannertowarn farmersofinsectpestandweed and Text Alert servicesarereviewedandsentoutina weeds andpestsareaddedto AgPest; 2)thePest Alert The corefundingwillensurethat:1)atleastfournew Objective AgPest Farm Systems andEnvironment FY17 Core Funding Investment Total $45,000 FY17 Core Funding Investment on thevarious pestpagesengagingwiththecontent. website statisticsindicatethatusersarespendingtime and websitetrafficisup over20%onlastyear. The returning usersviewingtheinformationeachmonth There areover 2,000newvisitorsplusaround700 impact ofpestsand AgPest has482followers on Twitter. farmers totake pre-emptiveactionandminimisethe Email andtextalertshave beendisseminatedtoenable (including amaranth,blacknightshadeandmallows). weed pageshave beencreatedandareliveon AgPest and plantpests. SinceSeptember2016,17new $661,856 Limited andGroup. financial yearended30June2017fairlyreflectthepositionandoperationsof 3. IntheopinionofBoard AgResearch Limited,theannualfinancialstatementsfor reliability offinancialreporting;and a system ofinternalcontroldesignedtoprovide reasonableassuranceastotheintegrityand 2. The Boardof AgResearch Limitedacceptsresponsibilityforestablishingandmaintaining financial statementsandthejudgementsusedinthem; 1. The Boardof AgResearch Limitedacceptsresponsibilityforthepreparationofannual AgResearch Limitedcertifiesthat: For theyearending30June2017 Statement ofresponsibility 24 August 2017 24 August Chair Jeff Grant 24 August 2017 24 August Director Andrew Macfarlane AgResearch 113 Statement of responsibility 114 AboutCorporate AgResearch Governance decisions. These includedividendpayments, matters onwhichonlytheBoardcanmake approved bytheBoardclearlysetoutthose operating proceduresoftheBoard. The policies This manualsetsoutallthefunctionsand Corporate IntentandtheBoard’s manual. Entities Act 2004, theannualStatementof Research Institutes Act 1992,theCrown 1993, AgResearch’s constitution,theCrown conduct aregoverned bytheCompanies Act The workingsoftheBoardanditscode performance. Chief Executive andannuallyreviewstheir the appointment,fromtimetotime,of Chief Executive. The Boardisresponsiblefor day-to-day affairsoftheCompany tothe The Boarddelegatestheconductof direction set. business toensureitisalignedwiththe monitoring management’s runningofthe setting objectives, strategyandkey policies;and charting thedirectionofCompany by: The Boardisresponsibletoshareholdersfor Role oftheBoard diversity todecisionmaking. whose skillsandexperiencebringbalance has onlyindependentdirectorsontheBoard, Directors’ “Code of Practice forDirectors”. It embodied intheNewZealand Instituteof The Boardendorsestheoverall principles AgResearch Limitedanditssubsidiaries. conduct byalldirectorsandemployeesof of corporategovernancepracticeandethical The Boardpromotesthehigheststandards Corporate Governance their dutiesandresponsibilitiesasdirectors. operations orundertakingstoassistinfulfilling concerning any aspectoftheCompany’s professional adviceattheCompany’s expense the righttoseekindependentlegalandother prior approval oftheChair, eachDirectorhas Independent professionaladvice,withthe Statement ofCorporate Intent. performance againstthebudgetand throughout theyeartomonitormanagement’s prepared andthesearereviewedbytheBoard Board. Monthlymanagementaccountsare which arereviewedandapproved bythe of Corporate Intentandanoperatingbudget, Each year, theCompany producesaStatement expenditure andacquisitions. to subsidiariesandassociates, major capital financial statements, appointmentofdirectors major borrowings, approval oftheannual solvency certificates, raisingnewcapital, Chair authorisesexpenditurefromthisbudget. improve thegovernance oftheCompany. The Board meetingsonmatterlearntthatwould matters. Directors whoattendreportbackat courses andconferencesongovernance Directors withthefinancialcostsofattending The Boardhadabudgetof$15,000toassist Director education on 30June2017. and Michelle Alexander retiredfromtheBoard reappointed forfurtherterms. SamRobinson appointed forathreeyeartermandmaybe 6 otherDirectors. Directorsaregenerally the financialyearconsistedofChairand a maximumofnineDirectors. The Boardin Board ataminimumof Two Directorsand The constitutioncurrentlysetsthesizeof Board membership Number ofmeetingsheld Board ofdirectors Andrew Macfarlane Michelle Alexander Tania Simpson Sam Robinson Paul Reynolds Peter Stone Jeff Grant Board meetings attended 10 10 10 10 8 9 7 9 independent legalorotherprofessionaladvice. employees inpursuingitsdutiesandtoobtain to seekany informationitrequiresfrom The BoardandeachCommittee isempowered and theRemuneration Committee. governance –the Audit andRiskCommittee with overseeing certainaspectsofcorporate committees toguideandassisttheBoard The Boardhasestablishedtwostanding during thecourseoffinancialyear. Committee meetingsattendedbyDirectors The tablebelow setsouttheBoardand Directors’ &BoardCommittee meetings. Audit &risk committee 4 4 4 4

Remuneration Committee 4 4 2

4

4 115 115 AboutCorporate AgResearch Governance 116 Directory Directory (Joined June2017) People andCultureDirector Lee Gardiner and Safety National ManagerHealth Andy Anderson Kaiurungi Ahuwhenua Chris Koroheke Marketing Director Communications and Monique Devereux Performance Director Finance andBusiness Sharon Cresswell Shared ServicesDirector Andrew McSweeney Programmes Director Acting Partnerships and Research Director Greg Murison Chief Executive Dr TomRichardson Executive Team Director Dr Peter Stone Director Tania Simpson Director Dr Paul Reynolds Director Andrew Macfarlane Director Jeff Grant Director Michelle Alexander Chair Sam Robinson Board ofDirectors AJ Park, WellingtonAJ Patent Attorney Findlay,Buddle Auckland Solicitors Westpac BankingCorporation Bankers Auditor-General Deloitte onbehalfofthe Auditors Information that works for New Zealand. sustainable andinnovative nation—together we willcontinue to deliver science Over thepast 25years ourscience hasbeenhelpingto create amore prosperous, AgResearch isproud to beaCrown Research Institute.

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