Fonterra pushes for revamp of R&D funding methods

By Duncan Bridgeman

Friday 25th June 2004

Changes to the way certain research and development is funded in this country are expected as Fonterra seeks more efficiency for the dairy industry.

The dairy giant is in talks with the government over ways of co-ordinating R&D funding for the pastoral sector so Fonterra is not burdened with spending money on research not directly benefiting its value-added goals.

It has already cut funding to its own biotechnology arm Vialactia to concentrate its research on areas that return direct benefits to the co-operative's farmer shareholders.

Chief executive Andrew Ferrier said he was looking for a more efficient model that "makes sense" for all parties involved.

"We want to avoid as much duplication into the farming sector as possible."

For example, Vialactia carried out research into ryegrass genetics that benefited all farmers. Yet there were also other entities doing research into pasture quality for "industry good" purposes, such as levy-funded Dairy Insight.

Other R&D organisations included AgResearch and Dexcel, Crop & Food Research, various universities and Livestock Improvement Corporation.

"What we are saying to the government is that we want the research to be done but we want it done in a more efficient way."

Ferrier said the pastoral sector was underweighted in terms of R&D funding, given that it produced around 70% of gross domestic product.

"It doesn't get anywhere near like 70% of the government spend in this area but we're going to try and ensure ourselves that the spend is at least efficient."

Meanwhile, Fonterra confirmed it had cut its funding to Vialactia and laid off seven staff. Its original funding package was $150 million over five years.

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