G36 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 Improving dairy, beef, lamb and deer Environmental systems thinking is an integral production systems is addressed by innovative part of our research and development research on soil and water management, approach. Our systems research focuses pasture fertilisation and farm nutrient on creating more profitable and sustainable management, while reducing negative impacts farms and agribusinesses and provides the on the quality of soil, water and atmosphere capacity to understand complex, interconnected and ecosystems. agricultural issues. We are finding ways to improve the nutrition, And we do all this while building on our health and welfare of livestock for efficient and commitment to deliver solutions focused on sustainable animal production. AgResearch the distinctive needs of Māori in the pastoral scientists have recognised expertise in the sector to assist in increasing the performance parasitic and infectious diseases of pastoral of Māori-owned farms. livestock and understanding of rumen and animal processes behind healthy, productive There is no doubt that New Zealand needs and efficient ruminant livestock. science and research to lead the way in finding solutions for the challenges our environment We also use a broad range of physiology and and agricultural development face. genomics-based research tools that will detect and utilise the natural gene variants that AgResearch is working closely with Government control economically important traits such as and the wider agricultural sector, and will growth rate, fecundity, meat quality and disease continue to do so, to ensure all know what resistance. Also in development are advanced New Zealand needs, who will pay for delivering technology options for animal reproduction and it and how it will be successfully delivered. enhancement of animal performance. About AgResearch 03 Chair and Chief Executive’s review AgResearch scientists are at the forefront of Our research highlights this year have also improving pastoral agriculture practices and seen us deliver a new technology to supply outcomes for New Zealand. The research sheep genotype data to Beef+Lamb Genetics, institute has a significant leadership role to play which combines DNA parentage and genomic to ensure this country’s ongoing prosperity. selection assays using the new Illumina Infinium XT-96 array. The work our scientists are doing in all areas of forage, animal science, environmental and The rate of genetic gain in the New Zealand farming systems science and the development sheep flock accelerated significantly over the of food and bio-based products is creating last decade due to the Central Progeny Test and benefits and opportunities right across the Sheep Improvement Limited, largely using tests value chain. developed by AgResearch. The new technology should increase that rate, further lifting the This support and innovation for the agricultural $170 million per year of additional value to the sector translates to wider benefit for the New New Zealand sheep industry that has been Zealand economy. This is evident in the work grown through genetic gain since 1995. Other AgResearch has been doing over the 2016/17 science highlights have been our research financial year, both in our world-leading research identifying a previously unrecognised risk of and our organisational transformation. treating ewes with long-acting anthelmintic drenches, and related research that challenges A key milestone was reached late in the financial popular belief that drenching ewes around year in one of our most significant programmes, lambing time consistently provides production our High Metabolisable Energy Ryegrass project. and financial benefit. We were granted the appropriate permits to transplant seedlings into the field in the United Our textile scientists have been working with States, which will allow us to test this promising an innovative New Zealand company to design technology outside the laboratory. wool filter masks that are now appearing as high- fashion items on the world stage. Our research This project has involved the genetic for New Zealand’s sheep milk industry has led modification of ryegrass in order for it to store to new dairy sheep genetics being successfully more nutrition and energy. This translates imported into New Zealand to bolster the to better, faster forage production, but the current stock. greenhouse trials have also delivered other potential benefits that may evolve into important AgResearch’s scientists are not just leading environmental gains. This includes the potential the way with research outcomes. They are also for animals producing less methane when eating applying important thought leadership to some this ryegrass, and a reduction in nitrate leaching, of the challenges facing the agricultural sector as well as the plants being significantly more and our communities. resistant to drought. That includes the work our principal scientist All of this cannot be properly explored in New Professor Stephen Goldson is leading around Zealand under current legislation. However, we evolutionary changes in a common pest – the and our sector partners are committed to the Argentine stem weevil. Unless addressed, evaluation of these technologies so New Zealand those changes could have serious implications is not left behind the rest of the world, and the for agriculture and a subsequent impact of field trials in the United States are an important hundreds of millions of dollars for the economy. Chair and Chief Executive’s review Chair and Chief Executive’s step in that process. 04 AgResearch’s scientists are not just leading the way with research outcomes. They are also applying important thought leadership to some of the challenges facing the agricultural sector. For the past two