ii creating value final version 120314
TRANSCRIPT
Creating value from indigenous resources through innovation and public private partnerships Learning from the New Zealand experience
Dr Max Kennedy - National Manager Biological Industries
Ian Ivey – Principal, Caribbean
We need a ‘destination’. Having an end goal drives innovation and value creation
1 2 3 4 5 6 7 8 9 10+
Horizon 1Operational
Horizon 2Strategic
Horizon 3Preferred Scenario
Where we got
to
Resources
Connections
Sustainability
Life and work
How we
started
Economic
Social
Environment
Years
Why is the NZ story relevant to the Caribbean?
• It was an English colony• It supplied cheap agricultural commodities to Europe• It subsidised commodities to encourage production• In 1984 the country faced serious economic challenges• All subsidies were removed• A go-forward plan was developed with long-term goals• Value adding and innovation were encouraged• NZ is small with just 4.4 m people and far from markets• Today the country is still a major agricultural producer –
but the value add is much higher• Biological exports account for 70% of NZ merchandise
exports• The country now ranks in place 17 on the GII • The NZD has strengthened in value against the USD
Innovation creates value and moves us up the value triangle
Factor X – e.g. bioactives, perceptions, egoistic satisfiers etc.
US$ 400 – 1,500/kg +
US$ 40 – 399/kg
US$ 10 – 39/kg
US$ 2 – 9/kg
Commodity raw materials
The New Zealand 2025 end-goal
This requires:• Real export growth of between 5.5%
and 7% per annum• The real value of exports to double
over the next 13 years (from $60 billionto around $120 billion)
The Goal: Increase the ratio of exports to GDP to 40% by 2025
Government’s Business Growth Agenda:
Turning R&D into value – the NZ modelAcross the value chain
Basic CommercialisationTech transfer
MBIE contestable fundingCore funding for Crown research institutes
Applied ExperimentalDevelopment
Product DevelopmentUntargeted Targeted
Marketing
Primary Growth Partnerships (industry/government)
MBIE partnerships (industry/government)
Performance-based Research Fund (universities)Centres of Research Excellence
Callaghan Innovation support for businesses
International collaborations
Marsden
Funding for infrastructure
Sustainable land management and climate change
Sustainable farming fund
Global Research Alliance
Being focused and working with business
New Zealand Nutraceuticals and Functional Foods
Size
New Zealand industry aggregate turnover $1Bn
Industry target is $5Bn by 2025 (11% growth rate pa)
Example of Products now at Large Scale
• Manuka Honey
• Green-lipped mussels
• Deer Velvet
• Dairy product derivatives
• Dairy-related bacteria
Collaborative Companies• Just the Berries• Manuka Health• Fonterra • Vitaco• Comvita• Alpha Laboratories• Nutrizeal• ANZCO• Seperex• Douglas Pharmaceuticals• Comvita• New Image• New Zealand Berryfruit Group
Specific MBIE R&D projects to add value to indigenous resources
anti-allergy ingredients from raw milk
berry fruit with validated health properties for gut health, exercise recovery and physical fitness
novel bioactive proteins in milk as ingredients in functional foods
gene specific foods
other activities include seafood extracts, green lipped mussel extracts, anti-inflammatory extracts, vitamin C.
Manuka honey - the rise of a ‘star’
Manuka - Leptospernum scoparium
• Manuka is indigenous to New Zealand• It was regarded as ‘useless bush’ until the 1980s• Wild stands survived in many areas, mainly remote
and marginal.• Manuka honey was just honey with a different taste• That changed in 1988 when Prof. Peter Molam at the
University of Waikato identified a unique factor (UMF)in manuka honey that was heat and digestion stable and lethal to bacteria.
• UMF levels varied in honey by regional biotype.• Molam developed a UMF 1 – 20 activity scale.• High active grades (15+) killed MRSA and other
antibiotic-resistant bacteria • In 2008/2009 methoglyoxal and a synergistic molecule
were identified as being key parts of the UMF.• Today it is the basis for a large hi-growth industry. • Manuka is being planted to meet growing demand.
The value increase
Double digit growth rates
USD 200/kg in Singapore
Products driving the value increase
The Comvita Story• Driven by a strong vision• 80% of sales are in export markets• Key alliances a feature
Examples of other key players
USD O – 20m in 5 years. 50 staff. Sales in 45 countries
• Living Nature founded in 1987 by Suzanne Hall
• T/O $ 20million - exports to 14 countries• 100% natural ingredients - certified
by BDIH Germany.
Dealing with the competition –Manuka challenges and initiatives
Challenges InitiativesRaw material supply limitations
False claims; product counterfeiting; other countries launch ‘active honey (e.g. Chile ‘Ulmo’ and Active Jelly Bush Honey from Australia)
A 7 year Primary Growth Partnership (PPP) with $1.7m funding to improve supply and yields of medical grade manuka honey –includes replanting 50,000 ha of erosion prone land. Cross-government input, Comvita, Massey University + 3 private companies.
Honey molecular ‘finger-printing’ – Auckland University and honey sector. Above PPP to improve ‘active factor’ yields.
‘Innovation’ PPPs – challenges and benefits, - the NZ experience
Challenges Benefits• Short-term dominates over long-term
• No requirement to maintain scientific capacity
• Governance cost is additional
• The larger the funding the greater the monitoring
• Highly competitive industry/topic areas generate competition between participants
• SMEs can access more knowledge• A platform of common issues (e.g. product
safety)• Can leverage funding from all sources• Unified R&D strategies• Industry takes lead role thus greater
commercialisation potential• Network building• Better overall stakeholder
engagement/collaboration/dialogue• Longer term funding = longer term projects• Greater industry appreciation of the value of R&D• Independent governance• One point of contact for government• Incubator/spin out function
What’s essential for a successful PPP from the NZ experience?
• Independent chair• High calibre General Manager• The best value propositions• Cash co-funding• Industries and/or topic areas that are conducive to joint
R&D programmes• Mutual benefits for all parties• Linking industry knowledge networks (‘smart money’)• Government an ‘official observer’ at governance level
What’s happening to our indigenous resources in the Caribbean?
• Let’s take Trinitario cocoa - ‘ best in the world’
• As a commodity it sells for USD 3 – 5.00 /kg
• It’s made into products by smart offshore players that then retail for 100s to 1000s of $/kg
USAUSD 305/kg
ItalyUSD 315/kg
USA USD 1,500/kg
Why is this happening?
1. We need to have long-term national goals and a ‘destination’
2. We need greater focus on defined priorities
3. We need to focus more on adding value
4. We need to improve collaboration
5. We need more well-based public private partnerships
6. We need an integrated system to ‘implement creativity’
What’s the solution? An integrated national innovation system!
Unless everyone is going in the same direction we will never
reach our ‘destination’
Thank you for listening!