The Horticulture and Food Research Institute of New Zealand Ltd Economic Return on R&D Investment in Berry fruit in New Zealand and Future Opportunities

The Horticulture and Food Research Institute of New Zealand Ltd

Economic Return on R&D Investment in Berry fruit in New Zealand and Future Opportunities for

Socio-Economic Benefits

Jill Stanley


Outline

» HortResearch» Berryfruit in New Zealand» Case study: Economic Return on R&D Investment in

Blueberries

» My view of current socio-economic impact of berryfruit production in NZ

» Future opportunities for socio-economic benefits from berryfruit R&D in NZ


A commercially focused research organisation, wholly owned by the Government of New Zealand

HortResearch has more than 500 staff working at ten sites in New Zealand

The Horticulture and Food Research Institute of New Zealand

Who we are


HortResearch is dedicated to searching for ways to improve human health, well-being and performancethrough a unique understanding of fruits, plants and sustainable production systems

Science discovers the goodness in fruit



ZESPRI GOLDTM kiwifruit

You will know some of our workThe Horticulture and Food Research Institute of New Zealand

JAZZTM

apples

Arguta kiwifruit


RIPESENSETM, a fruit sensor label


You will know some of our work


Karaka Black

Range of blueberries


HortResearch has:• One of the largest fruit gene and compound database in the world• A large fruit germplasm collection• Main EST databases on apple but also kiwifruit & Vaccinium

Future Fruit


Genomics and gene function and discovery:



HortResearch cultivars around the world

JapanBerryfruitStonefruit

AustraliaJazzTM, Pacific Series ApplesBerryfruitKiwiberry Baby KiwifruitStonefruit

New ZealandJazzTM, Pacific Series ApplesZespriTM GOLD KiwifruitBerryfruitStonefruitKiwiberry Baby KiwifruitNew Citrus Cultivars

EuropeJazzTM, Pacific Series ApplesZespriTM GOLD KiwifruitStonefruitBerryfruitKiwiberry Baby Kiwifruit

United StatesJazzTM, Pacific Series ApplesStonefruitBerryfruitZespriTM GOLD KiwifruitKiwiberry Baby Kiwifruit

South AmericaStonefruit

© HortResearch www.hortresearch.com


Science Focus

Research focused into 22 teams

Future FruitPipfruit & summerfruit breedingKiwifruit & hops breedingBerryfruit breedingGenomics technologyGene discovery & function

BioprotectionPlant pathogen interactionsGene based insect scienceApplied plant pathologyApplied entomologyBiosecurity

Health & FoodConsumer & Sensory ScienceBioproductionFoods for healthNutrigenomicsHuman health & performanceBiosensors & biomeasurementFormulation & deliveryMolecular olfaction

Quality SystemsStorage TechnologiesPlant developmentOptimising fruit & crop growthSustainable land use


» Value of Horticulture sector

$720M

$387M

$432M

$73M

$62M

$43M

$41M$25M

Total = $1.8B

$79M

Other (persimmon, olive, tamarillo, feijoa, walnut)

Berryfruit

Avocado

Onion

Summerfruit

Ornamentals

Pipfruit

Grapes

Kiwifruit

General


Recent changes to the programBerryfruit in New Zealand (2005)

Crop Planted Area (ha)

Crop Volume (tonnes)

Value

($NZ)

Blackberries 120 - -

Blackcurrants 1300 8000 process $10M

(3% global)

Boysenberries 240 1500 fresh 3800 total

$8M

(1/3 global)

Raspberries 300 1500 fresh $7M

Blueberries 430 850 fresh

3000 total

$11M

Strawberries 275 6500 fresh $28M


Annual Blackcurrant Production

0

2000

4000

6000

8000

10000

12000

2001/02 2002/03 2003/04 2004/05 2005/06

Year

Tonnes

BlackcurrantBlackcurrant


Growing Futures

http://www.growingfutures.com

» Initiated by HortResearch and Crop & Food Research, together with Zespri and New Zealand Trade and Enterprise, Growing Futures has been supported by other NZ industry participants.

» The project’s goal: to highlight innovation and excellence in New Zealand horticulture, and redefine the industry’s image as a modern, knowledge-driven player in increasingly sophisticated global markets.

» Growing Futures presents a range of case studies that highlight key success stories in New Zealand’s horticulture industry.


Case Study: Blueberries

What is the rate of return on the investment in R&D research?

Factors taken into account: • Benefits from the science and innovation• Return on investment:

•key data •counterfactual considerations (What would have happened if this innovation had not occurred?)


Benefits from the science and innovation

• NZ bred cultivars have lengthened the harvest season by up to 6 weeks

• HortResearch, as the New Zealand breeder, receives significant royalties from offshore nurseries

• The larger fruit produced by the NZ bred cultivars are attractive to consumers in the export markets. These fruit also have improved eating and postharvest storage qualities.

• The ability to transport fresh blueberries in CA storage has allowed container

shipping to replace the more costly airfreight.


Return on R&D Investment

The return on R&D investment was assessed by comparing the industry performance with the innovation in place, to that of a counterfactual situation which identifies a possible industry performance, had the innovation not happened.


Fresh Blueberry Export Value from New Zealand

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

1980 1985 1990 1995 2000 2005 2010

Exp

ort

Val

ue

($N

Zm

)

In 2004:

Fresh exports worth $7.4m

Frozen exports worth $1m


Data Used in Analysis (in 2004)

Early season(Oct/Nov)Mostly NZ cvs

Mid seasonDec/JanMostly US cvs

Late seasonFeb/Mar/Apr50:50 US:NZ cvs

% Exports


Counterfactual e.g

1. The industry based on USA cultivars (ad hoc evaluation) 2. No overseas royalties. 3. Industry cost to cover evaluation of the imported cultivars. 4. All fresh blueberries for export are produced during the mid season (low

prices)5. No premiums for early and late season fresh exports.


Assessment Results

The 2009 assessments are based on the assumptions that: ▪ Crop area will not increase between 2004 and 2009 ▪ Fresh export will increase at 4% per year with same profile of early, mid and late season sales. ▪ HortResearch’s forward projections of royalty income will be met.

▪ Processed exports and domestic sales will continue at present levels.


Annual Blueberry Gross Margins

0

5000

10000

15000

20000

25000

30000

35000

2004 2005 2006

$/to

nne

Blueberries Fresh

Blueberries Frozen

Blueberry: gross margins


Health team

» Socio-economics is the study of the relationship between economic activity and social life.

» It typically analyses both the social impacts of economic activity and economic impacts of social activity.

» Causes of socioeconomic impacts include new technologies such as cars or mobile phones, changes in laws, changes in the physical environment, and ecological changes.

» The goal of socioeconomic study is generally to bring about socioeconomic development, usually in terms of improvements in metrics such as GDP, life expectancy, literacy, levels of employment, etc.

Socio-economics


» Social impacts of economic activity » Changed dynamics of local communities» Health improvements through increased consumption of

berryfruit» Environmental issues e.g. pesticides near urban

expansions

» Economic impacts of social activity» Pressure for reduction of pesticides, environmental issues

e.g. methyl bromide» Changed needs of consumers- need to provide different

products» Increasing demand by consumers for high quality

Optional subtitle

Socio-economic impact of increased berryfruit production in NZ


HortResearch Berryfruit Programmes

» Healthful Berries: New varieties and berry products

» Food for Health

» Other berry projects e.g. pest and disease management


Healthful Berries

» Total programme

Breeding

Health components

Genetic Regulation

Bioavailability

Health Effects

Blackcurrant Rubus Blueberry

Premium products

Anthocyanins, phenolics, lignins, folate

New cultivars with high levels of health component

Enhanced uptake

Link to health (cognition, anti-aging, cancer)

New marketsJapan – supplements, “health” foods

Healthful Berries


Recent changes to the program

» Changes from July 2006» Health focus

» Move away from age-related diseases » New focus gut health» “Fresh and Processed Berryfruit Products to Enhance Gut

Health”

» Rationale:» Year 1 clinical trial showed positive effects but not on

cognition» Interest from industry partners in gut-health» Preliminary results show positive effect of berryfruit on gut

health» Strength of all researchers (Crop and Food, Massey

University, HortResearch).

Recent changes to the programme


Berryfruit Anthocyanin Content

0 100 200 300 400 500 600 700

Blackberry

Raspberry

Black Raspberry

Purple Raspberry

Boysenberry

Blueberry

Blackcurrant

Loganberry

Anthocyanin conc (mg/100g FW)

maxmin Commercial cultivars


Anthocyanins are absorbed into the body

Boysenberry Extract (530 nm)

Human Urine (530 nm)


Reduction in Oxidative Stress in humans

Plasma antioxidant capacity increases for blackcurrant

Plasma Antioxidant Capacity (ORAC)

0

20

40

60

80

100

120

140

0 Weeks 24 Weeks

% C

on

tro

l

Control Blackcurrant

Lipid peroxidation trends downwards for blackcurrant

Plasma lipid peroxidation (MDA)

0

20

40

60

80

100

120

0 Weeks 24 Weeks

% C

on

tro

l

Control Blackcurrant


Food for Health Focus

→ Mood→ Arousal, activation, vigilance, attention and sleep→ Motivation and effort→ Perception→ Memory→ Intelligence→Cognitive decline

→ Strength and Power→ Endurance, energy supply and recovery→ Hydration/rehydration→ Flexibility→ Tissue Growth→ Free radical scavenger capacity → Immune function

→ Gastrointestinal Wellbeing→ Bowel Habit and Transit Time→ Composition and Activities of Gut Microbiota→ Natural Gut Defence→ The Immune System: Systemic and Mucosal Immunity→ Measurement of Immune States and Function → Infections, Atopy and Inflammatory Disorders Bold indicates HortResearch focus

Mental State and Performance Physical Performance and Fitness Gut Health and Immunity


Research areas:• The effects of fruit and fruit components on mental and physical performance and gut health and immunity • The exploitation of that in creating innovative functional foods• The synergistic effects of food and food components on mental and physical performance and gut health and immunity

Health and HortResearchFoods for Health


Food Megatrends

COMMERCIAL LEADERS

Health(28%)

Convenience(12%)

Sensory(60%)

Time factor→Snack & grazing→Heat & serve→Meal assembly

Consumer well-being→Food plus→Food minus→Natural/organic→vegetarian

Sensory→Fun & entertaining→Ethnic & exotic→Premium & indulgent

Guilt free indulgence

One stop nutrition

Convenience plus

Size of the circle and numbers in brackets are % of respondents who chose each factor as their primary purchase motivation

The Horticultural and Food Institute of New Zealand


Discovery Engine

COMMERCIAL LEADERS

Find Extract Assay Formulate Test ManufacturingProcess

In Vitro

In Vivo

Cell basedBiocore

Chemical

Small AnimalHuman

(clinical, ESOP)

Foods for Health Foods for Health Foods for Health Foods for Health Foods for Health

Healthful Berries Healthful Berries Consumer andSensory Science

BioproductionHuman Health andPerformance

Human Health andPerformance

Biosensors andBiomeasurement

Formulation and Delivery

Nutrigenomics

Foods for Health

Flavour andFragrance


Boxes indicate the HortResearchProgramme names


Product Concept Process

COMMERCIAL LEADERS

Idea

Science

Stage One Stage Two Stage Three

Marketing

Targets

Market Target•Size•Growth Rate•Benefits/needs satisfied•Freedom to Operate

Customer Target•Interest•Size•Geography

ConsumerTarget•Demographics•Needs•Benefits•Worldview

Background•Current knowledge•Current work•Literature Search•Potential IP Outputs

Testing – In vitro•Which test?•Relationship to benefit

Testing – In vivo•Animal•Human

Market Research

Ethnographic•Observe•Use•Discuss

Focus Group•Form of product•Use environment•Benefits•Decision Making

Formulation•Prototype•Storage•Production•Regulations•Packaging

Focus GroupEvaluate completed product

Marketing Package•Market Background•Consumer•Science•Prototype•Claims



So how do we do this? EINSTEIN – Drink Smart

COMMERCIAL LEADERS

The product: Blueberry juice with added microencapsulated fish oil as a source of omega-3.

Benefits:

→ Sensory: A great blueberry taste with good texture and mouth feel

→ Health: Brain health with both long and short-term benefits. A natural product with no added sugar and low GI

→ Convenience: A quick serve beverage containing 1.5 serves of fruit per pack (USDA recommended serve is 177mL).

Packaging: 300mL glass, screw-top bottles.

Marketer advantages:

→ First to market advantage→ A successful new product launch into a high volume and

value growth market→ Allows marketer to meet consumer demand for variety in

format and flavour→ Involvement at a critical stage of development allows

marketer to guide development


Raspberry

» Methyl bromide replacements» Improved pest & disease management- knowledge,

decisions, alternatives e.g. blackcurrant target pesticide-free fruit

» Nutrient nitrogen management for better disease control in berries

» Understanding of and developing management regimes for enhancing phytochemical composition on-farm via crop nutrition

» Industry traceability programme

Other areas of berryfruit research


Boysenberry

Annual Boysenberry yield and gross margin

0

2

4

6

8

10

12

14

16

18

2001/02 2002/03 2003/04 2004/05 2005/06

Year

Yield (t/ha)

Gross Margin ($1000/ha)

Boysenberry


» Berryfruit development in New Zealand until now has mainly been focused on economic benefit for growers: » Development of cvs for NZ conditions» Improved yield» Higher quality- larger berries, improved shelf-life» Expanded harvest period

» There have been some social impacts as a result of economic activity:» Community growth» Health benefits

» Now focus has changed. Still a focus on economic benefit but through looking at delivering social benefits:» Health benefits » Environmental benefits

Conclusion


www.hortresearch.co.nz

[email protected]

Documents

The Horticulture and Food Research Institute of New Zealand Ltd Economic Return on R&D Investment in Berry fruit in New Zealand and Future Opportunities