Archive May 2011

Trees and bees the future for our hills? Peter Kerr May 26


Trees and bees may become the savior of hilly rural New Zealand…..why?

Because down on the farm, or more precisely, way up on the farm, things aren’t as rosy as the boom in commodity prices would have people believe.

There’s a crisis of sorts happening for much of our hill country – that steep, out the back of beyond land that is no longer economic to farm with animals, and is becoming weed infested and overrun.

Much of this land isn’t suitable for radiata pine forestry either – it’s too steep, and too far away from decent roading, and thus not a goer on that front.

Other tree and forestry types such as eucalyptus and blackwoods might have enough longterm value, and even if they aren’t suitable, the longterm farming of trees for carbon credits is becoming an alternative income source.

There’s also another tree with potential promise – manuka, which even though it is a native has been somewhat regarded as a ‘weed’ until relatively recently.

Taranaki regional councilor Neil Walker describes the tree, “as a truly sustainable crop”.

The and co-ordinator brains behind the Manuka Research Partnership, which was the recipient of a recent MAF Primary Growth Partnership funding deal ($1.7 million in total over seven years, half from both parties), Walker’s keen to see hill country being used in a mosaic of trees.

Manuka, and more particularly its honey, has a growing medical application. Demand for the honey, with its Unique Manuka Factor (rough shorthand for the active ingredient methylglyoxal), has an insatiable demand.

The MRP aims to greatly increase manuka honey production, much of it through improving the understanding of how to grow it.
Even at current production levels, the income from hives could make some of the hill country much more viable.

Walker recently had 85 beehives temporarily set up on his Nukuhau, Taranaki property, which earned $40 a hive and that is just ‘renting’ out the right to a bee keeper. This could represent only 10-15% of the actual value of the honey if the owner of the land was also the processor Walker says.

With the MRP aiming to increase the returns/hectare from honey production, it wouldn’t take too much for a passive income to start being derived from the increasingly rundown hill country blocks.

At the same time, it would be the steeper, less accessible pieces of land that would be just as suitable for planting, leaving the better land for other farming types.

Combining manuka’s honey and carbon credit income generating possibilities, and suddenly hill country farmers could have alternative cash from their farming operations.

‘What you have to consider is that farmers are only being asked to use the steep parts of their properties for this exercise not the easier parts where the bulk of their incomes comes from,’ says Walker.

‘These areas produce little income, are high cost, have erosion problems and detract from farm value. It could be that if everything works out this marginal land could make a profit of 20-50 times more than they are producing now.’

Walker’s anxious to see that older, often dispirited farmers, don’t see their life’s work disappear into weeds and regeneration.
Some hill country properties can’t even sell for $500/ha.

Trees and bees could change all this says Walker.

‘People would have new opportunities for revenue that was more realistic,’ he says. ‘Suddenly the land would become more valuable and those older farmers would have a way to get off their land.’

Walker says there would need to be more study on how to share the profits from manuka honey production — perhaps beyond the per hive payment that beekeepers currently pay to landowners.

But such issues aren’t unsolvable he says.

And, if the MRP fulfills its promise, sorting out an equitable return for the landowners, collectors of honey and marketers of the final product would be a good challenge to have.

For the sake of our hill country, and the opportunity of creating a mosaic of uses for this steep country, there’s a fair bit resting on the success of Walker’s innovative project.

Hi-tech and creativity aimed at niche/niche a key to Kiwi future — Paul Callaghan Peter Kerr May 24

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New Zealand is poor because it chooses to be poor according to Professor Sir Paul Callaghan, who packed out Te Papa’s Soundings Theatre last week..

The witty and amusing scientist, perhaps just as well known as being an excellent science and innovation communicator gave a presentation entitled; ‘New Zealand — The place where talent wants to live’.

In his optimistic way, , he gave his broad view of how we can give ourselves a prosperous future. in spite of some kiwi short-comings, mostly around our lack of self-belief.

Our future won’t, can’t be about more dairy cows. As a couple of graphs pointed out, if it wasn’t for dairying/Fonterra, our country would have even less wealth — but the environmental degradation caused by cows and the difficulty of adding value to milk makes making money on that front too difficult.

Our best hope is using our brains much better he says, but he’s wary of politicians and bureaucrats trying to pick winners.

‘We will be good at what we’re good at,’ he says.

This mostly will be about a niche within a niche. A $500 million market isn’t going to be that appealing to the General Electrics or Samsungs of the world he reckons, but it wouldn’t take too many of these types of markets to really start making an impact on New Zealand’s economy.

Callaghan gave the example of such niche/niche players as Fisher & Paykel Healthcare and their dominant position in hospital respiratory products and Rakon who make oscillating crystals for use in mobile phones. The Wellington company he helped set up, Magritek, who make small nuclear magnetic resonance imagers was another.

He didn’t gloss over some of the negative aspects about New Zealand in comparison to some of our OECD compatriots. Among some hard to digest figures are the fact of the very wide disparities of wealth in this country, and the high rate of imprisonment.

The same table of indicators also pointed out that, comparatively speaking, New Zealand’s level of scientific and mathematical literacy is up near the top — though Callaghan was pretty scathing of media’s understanding or reporting of such issues.

Along the way he was very scathing of what he described as ‘egregious hypocrisy’. (sticKhad to look this up). Who is New Zealand or the rest of the developed world to criticize countries like Indonesia for cutting down forest in order to grow palm oil, when the past 500-1000 history of western countries has seem them do exactly the same thing he asked?

That was the negatives — at least some of them.

One interesting point, one that as a nation we could change is that as such, New Zealand is not a small country.

‘We have the fifth largest economic zone in the world,’ he says. Under the waters under our control is much more potential wealth. Callaghan says we should mine our assets, selectively and when it would help produce wealth.

With reference to our territorial waters, ‘we need to lift our eyes beyond the land,’ he says.

And, increasingly, if we aspire to be wealthier as a nation, New Zealand has a lot going for it says Callaghan.

He listed our advantages:
• Water
• Renewable energy
• Multiple climatic zones
• An abundant and natural environment
• Excellent education
• A civil society

These are all aspects that people from other countries deem as highly desirable says Callaghan; and heading down a more enlightened economic path, we could easily attract them.

‘Without even trying, we’re already doing $5 billion a year in high technology exports,’ he says.

‘Imagine if we inspired our kids to think about entrepreneurship, to be engineers and scientists and not lawyers and accountants. Our children need to understand what and how they can use their creativity.’

There’s money in manuka honey, and trial aims to greatly increase it Peter Kerr May 19


There’s plenty of research on why manuka honey’s so useful from a medical and human health point of view.

Equally we understand bees pretty well.

The missing part of the puzzle, ironically, particularly as it is a plant that’s indigenous to New Zealand is how to best grow the native.

But a newly formed consortium, the Manuka Research Partnership (NZ) Ltd., along with well-known honey marketer Comvita Ltd., aims to change that.

It has pooled together $850,000, and has obtained matched funding through MAF’s Primary Growth Partnership for a planned seven year trial to increase the reliability of supply and proportion of medical grade Manuka honey out of New Zealand.

Based on what might initially seem aspirational numbers, the consortium reckons it can produce 16 times the current quantity of manuka honey (and with it the Unique Manuka Factor = active ingredient methylglyoxal) to crack $1 billion a year in sales.

Clearly MAF’s bought the sizzle, and for that the industry and eventually the country may thank Taranaki’s Neil Walker for putting together the sausage.

He’s no stranger to research, and research applications. The recently retired Fonterra employee obtained over 380 Foundation for Research, Science and Technology grants during his 35 years in the dairy industry.

He bought 200ha of hill country land in Nukuhau, Taranaki, a few years ago, looking to use if for a mosaic of uses. The longtime Taranaki regional councilor has already planted 110ha in trees, including for their carbon sequestering and trading component. He has also recently purchased another 40ha at Rangitatau West and will plant 30ha in manuka later this year.

Taihape apiarist Don Tweeddale put 85 of his 17,000 beehives on the Nukuhau property a couple of years ago to take advantage of the manuka stands, and being a polymath, Walker took a great deal of interest in the hives’ performance.

‘A normal beehive produces 35kg of manuka honey during the season,’ he says. ‘We produced a total of 4750kg, averaging 55kg a hive.’

It inspired Walker, along with Wairarapa farmer Dan Riddiford, and Massey University’s Prof Richard Archer to some radical thinking.

‘What if we maximized returns through plantations of manuka we asked ourselves,’ he says? ‘What if we grew the manuka to maximize flowering and increased the length of flowering time?

From this, Walker figured it could be possible to double the amount of active ingredient in the honey, double the yield of honey, double the number of beehives per hectare, and double the number of hectares of manuka stands — hence a 16 fold increase for a market with an insatiable demand. According to Comvita’s Dr Nevin Amos demand is, in economic terms, extremely elastic.

At the same time, the group realised that there is no information about what sites, weather conditions, sunshine and other factors influence manuka growth and production. This is particularly so for manuka’s active ingredient which is very variable around the country.

Hence, the initial concept application to MAF in Dec. 2009, the full (hundreds of pages) business plan in July last year, and recent negotiations and acceptance as the 9th PGP project.

Massey University is to coordinate the research, carrying out a range and scale of field trials, and carrying out climate experiences on campus.

Comvita is looking at producing better cultivars as well.

‘We’re also going to look to develop research tools,’ says Walker. It would be good to know what a manuka plant’s UMF factor could be before planting, and the group wants to have a set of tests that predicts that activity.

‘We’re setting up projects to develop an understanding and discover all sorts of things we don’t yet know anything about,’ says Walker.

Which, all in all is a pretty good place to start, and for a native plant that not so long ago was considered a bit of a weed, a potential well worth exploring.

Given too that this native won’t require fertiliser and is a carbon sequestering crop it promises to be one of most sustainable crops for some of our difficult hill country.

All power to the Manuka Research Partnership. It is a true value added crop.

Milk defence mechanism looks for global play Peter Kerr May 17

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Considering that a cow’s udder is a potential site of invasion for pathogens, it makes sense that nature’s provided some defence mechanisms in the milk itself to fight the microorganisms.

Somewhat surprisingly, the full power of this suite of natural Immune Defence Protein, as they’ve been trademarked, has only recently been discovered.

The novel milk fraction with proven (and being further proved) anti-inflammatory, antioxidant and antimicrobial properties are the basis of Hamilton-based company Quantec’s bid to carve a niche in the global human and animal health products market.

Quantec has recently obtained a $250,000 venture capital injection from Waikato-based Central Capital Investments, matched by the government’s NZ Venture Investment Fund.

The company’s managing director, Rod Claycomb, had been working on a dairy industry robotic milking project in the early 2000′s (the Greenfield Project), and one spin-off of that project looked at fractionating (breaking down milk to its basic components) at that time. ‘The robotic milking project was a terrific platform for which to discover new ways to add value to NZ dairy farmers.’

The discovery of a new bioactive fraction led to the creation of Quantec, and the development of patents on what has become called IDP.

“The ah ha moment for us was the discovery of the synergistic effect of a suite of the proteins,” Claycomb says. Breaking down these 20 or so proteins to their individual components loses their antimicrobial activity; though the company doesn’t yet fully understand why.

“There’s a synergist molecular interaction, which shouldn’t really be a surprise given our knowledge of how enzymes and other products work,” he says.

Since establishing Quantec in 2007, Claycomb and his co-founder, Dr Judy Bragger have worked on the science, and though its first IDP-based products are aimed at human health, the formulation’s anti-mastitis attributes is seen as having the greatest potential.

“Ironically, for human health formulations we don’t need as many approvals because it isn’t a pharmaceutical and is a milk protein,” he says.

“We’ve proven IDP’s efficacy in its ability to kill organisms responsible for acne, caries, dental health and bad breath.”

Based on this science, the first products containing IDP are to be released by licensed companies in China and America as gums, lozenges and ‘chewables’.

“Our business model is as an ingredient supplier,” Claycomb says. “While there are good margins in retail products, that would take a lot of investment to do. We’re going to focus on what we’re good at; that’s intellectual property and discovery.”

He says the majority of the recently acquired angel investment will be to provide a proof of principle mastitis efficacy trial in animal health, and setting up a global business development manager to be based in Auckland.
IDP are subcontract manufactured in New Zealand, with this country as a source of origin being one of the product’s best selling points.

The concentration of IDP in raw milk is less than 0.1%, and the remaining milk fraction is destined for casein powders,anhydrous milk fat and other high value products, so nothing is wasted.

“We have a disease free herd, and our milk’s considered one of the best in the world,” he says.
In three years time, Claycomb envisages being on target to produce the world’s first naturally derived and approved treatment for mastitis.

“That’s the goal, our passion lies in that animal health market, although IDP in human health will be significant too,” he says.

The mastitis market is huge around the world. Cracking a naturally derived cure, based on a cow’s own in-built defence mechanism would be a neat way of treating the disease and more than likely not require the withholding period needed with the use of synthetic antibiotics.

Not bad for an ‘ah ha’ moment a few years ago!

Who are you going to call……well, a scientist actually! Peter Kerr May 12

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From an engagement and getting innovation out into wider business point of view, Industrial Research has been fronting footing it quite a bit in the past 18 months.

The Crown Research Institute has continued its play of getting its ‘brains’ out into the business sector with yesterday’s launch of ‘Scientist for a Day’.

This initiative, where businesses who might have a process, product or a general problem/challenge, can have a scientist (or engineer for that matter) pop along to their premises – free – for a day (though that can actually be split up across two or three days if required).

Given that IRL is New Zealand’s major concentration of applied chemistry, physics, mathematics and process engineering R&D, it strikes sticK as being an excellent offer.

Often businesses are so involved with busy-ness, they don’t have the opportunity to explore options.

And sure, the objective for IRL is to increase its own commercial business beyond that obtained from government science funding.

But isn’t that what the ‘I’ part of the new Ministry of Science and Innovation is all about – that is, cranking up the production of new, novel, price-making rather than price-taking goods and services?

The SFAD idea came out of a group of scientists taking part in a leadership programme that IRL’s had in place for the past two or so years.

It could almost be regarded as a sibling to the What’s Your Problem New Zealand? competition won by Resene last year, where the paint company won $1 million of research into producing a non-oil (in fact carbohydrate-based) paint base.

Organic chemist Ralf Schwoerer was one of the presenters at the launch – in part reflecting that about half of IRL’s scientists are originally from outside New Zealand.

In the leadership programme, “we asked ourselves, why not get our technical people to go out and talk with industry,” Schwoerer says.

And so it is, and businesses of any size are being invited to register their interest via IRL’s website (register here).

As BusinessNZ chief executive Phil O’Reilly commended (though as one of the SFAD’s sponsors you wouldn’t expect any less), “this is an original, fresh idea.”

O’Reilly also made the comment that with regards to innovation and business, “something is in the air.”

“Businesses are seeing innovation as a method of competitive advantage for them. Businesses realise they can’t cost-cut their way to success, and in looking for a more effective way of competing are looking to add to their income line.”

For a country with thin capital markets, a long way away from many of its markets, new and novel products are a key way to achieve enhanced income. IRL clearly sees part of its role as helping the country – working for its greater good even.

Applications to have a SFAD come and visit a business are open till June 30.

A measure of its success will be over-subscription.

Now, wouldn’t that be a good problem, no challenge, for IRL to have!

National Network of Commercialisation Centres struggling to launch Peter Kerr May 05

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As the shampoo commercial says, it won’t happen overnight, but it will happen.

So it seems is the National Network of Commercialisation Centres – a Ministry of Science and Innovation initiative to leverage this, sometimes thin, expertise in New Zealand.

When the scheme kicked off in August last year, the hope was something, maybe virtual, maybe real bricks and mortar, would’ve been in place by May of this year.

But that’s not going to be met, as regional incubators and university and CRI commercialisation centre managers and the MSI flesh out exactly what and how the 2-4 NNCCs should operate. The project’s been allocated $11 million over four years, so naturally there’s quite a ‘follow the money’ incentive for participants to do just that.

The overall goal is for the NNCCs to take over MSI’s investment and management of its pre-seed funds (presently $5.3m a year), picking projects with promise and maintaining robust investment management processes.

The individual commercialisation offices based in universities and Crown Research Institutes will remain, continuing their current roles, the NNCCs are to ‘collaborate with purpose’.

The goal is to better commercialise publicly funded research, and link with domestic and international innovation specialists, and the overseas kiwis movement (KEA).

Another intended function is to develop a national database or repository of commercialisation opportunities, projects and IP – such that a wealthy overseas person could have a single point of contact to check things out.

Discussions have been ongoing since the Requests for Proposals were received in late January.
As you can imagine, creating a flesh and blood NNCC (even if it is virtual) is a tad trickier than flying a kite on the idea.

But MSI/senior management has always maintained that the project will be a work in progress, and that rather than being a contestable process, it will bring together the best ideas and people and bring something unique to life.

There’s a fair degree of trust building going on between what are often parochial regional players by all accounts, but senior managers are confident that the NNCCs will come into being.

In New Zealand’s rapidly developing innovation ecosystem, while sooner would be good, excellent would be better. We’ll have to see if the wait is worth it.

No such thing as a ‘typical’ angel investment Peter Kerr May 02

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The tables were turned as angel investors pitched to would-be entrepreneurs at an Unlimited Potential function in Wellington last Thursday.

Well over 150 people turned up to hear four speakers – and here’s a selection of comments from angels who are all members of Wellington’s Angel HQ.

Jelle Sjoerdsma

• Was in theory to talk about the ‘black art of valuations’ [of a start-up] – to which he gave the short answer “I don’t know”
• Question is… you want to do a deal?
• Come up with how much money you need, come up with some financial figures
• Looking for somewhere between 20% and 40% of the business (angel’s investment). Come up with something that’s sensible….a round number that’s plausible for the angel and that you’ll be happy with later….and try to do a deal

John Petersen

• Asked the question (of himself) or why he is in angel investing. Interested in testing the limits of an idea….possibilities.
• As angel investor can help close the financial gap
• It isn’t about the future projections of cash, is about how fast the entrepreneur is going to burn through that capital. What costs have to be met to achieve what is needed….get hard numbers.
• Sense of realism
• Many people when giving the ‘elevator pitch or barbeque pitch’ start with the what, then how, then why. Reverse that. Instead start with the why (a product service etc will work/is needed), then how, and followed by what.

Suse Reynolds

What makes an investible entrepreneur
• Driven, committed, capable + coachable and engaging
• Angel investment is like getting married….will be good times and tough times, need to manage this
• Know your market and how you’re going to make lots of money
• Most angels want to see you be as flash as you can be
• Need a great team around you. Convince others that your idea is good, even in the face of skepticism

Dave Moskovitz

• Don’t make any commitments you can’t meet
• Be scrupulously honest in everything you do……angels will examine your trail of relationships….any dishonesty, angels will walk away
• Be realistic about the valuation of a start-up….angels want to get a deal done….go low, err on the side of being too low
• Have an exit plan
• Like to see plans that can turn into a $100 million company…means has to play to international scale rapidly, have a big, addressable international market (which isn’t just Australia!)
• Needs to be barriers to existing competitors
• Preferable to have some ‘secret sauce’
• Requires founder who is enthusiastic, persistent and totally committed to what they’re doing
• Proof = early customers
• Have a team in place. Shows that can work with others. Relationship is a two-way thing with the angel investor
• Pluses = when other peoples’ money on the table, ‘space’ that’s heating up, not the first time that doing something like a start-up
• Is better is have some outstanding personal characteristic. Anything excellent in life that you’ve achieved, something that you know a lot about.
• Focus on making money by generating value….not in some corporate structure, tax advantages
• If you have an uncomplicated capital structure, is much preferable

General answers to questions from the audience

• There is no such thing as a typical scenario for an angel investor
• Shorter, faster, harder in meeting milestones shows that people will be more successful
• Angel investment is only the start of the investment story….as founders, you’re probably going to get valued down.
• ‘Would you rather have a large part of the hind quarter of a cattle beast, or the whole ant’
• Around confidentiality. Angels’ reputation is important to them too.
• Ideas are meaningless. What is important is the management team, market, capability

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