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Breakthrough For New Zealand Pastoral Technology Exports To The United States

Fuseworks Media
Fuseworks Media
Breakthrough For New Zealand Pastoral Technology Exports To The United States

20 August 2009 - New Zealand Agritech Inc.(NZA) and Cullen Agricultural Technologies Inc. (Cullen) have signed a strategic cooperation agreement to fast track the rollout and commercialisation of Kiwi pasture technology in the South-eastern United States - a market with potential earnings in excess of $US100 million to New Zealand.

NZA and Cullen will work together to mitigate barriers to market entry for NZA members and to provide opportunities to realise the potential of growth available in various markets there.

NZA is New Zealand's industry body for companies selling agricultural enabling technologies (including seeds, electric fences, milking machines, weigh scales, animal health products and genetics) and its membership includes companies such as Ancare Scientific, Gallagher, Tru-Test, Donaghys and PGG Wrightson Seeds.

Cullen is a USA incorporated research and development company committed to the commercialisation of advanced agricultural technologies, primarily in the animal food sector. Cullen is a member of the group of companies including New Zealand-incorporated Cullen Investments Ltd.

NZA CEO Colin Kennedy said the United States market represents a perfect storm for New Zealand's exports of rotational grazing technology and systems at the moment, with a market potential three to four times bigger than the entire New Zealand market.

The dairy industry there is tenuously placed at the moment because of the high cost structure of fuel and supplementary feeds and low milk prices, together with sustainability and animal welfare issues on the horizon. These matters are making the efficiencies of pasture based farming adaptations increasingly attractive to the American farmer.

"The United States dairy industry is overwhelmingly based on a grain feed confinement system, but since 2004 producers in Missouri, for example, have invested more than $US100 million into pasture based dairies and the number of cows on pasture in that state has grown from about 5,000 to 20,000. "A Dairy Farmers of America meeting in Memphis earlier this year told 350 dairymen that their best hope was to convert to New Zealand-style grassland dairying.

That endorsement represents a massive opportunity for New Zealand technology exports. "New Zealanders are acknowledged internationally as world leaders in low input intensive rotational grazing systems, which gives us a major brand advantage in that market," he said.

Dr Richard Watson of Cullen said the agreement with NZA is an important and public step towards Cullen's recognition as an exporter and commercialisation platform for New Zealand products and technologies, with immediate focus on the United States. Cullen is at the leading edge of the grazing industry in the United States, with two fully operational research farms in Georgia focused on the development of efficient grazing-based farming systems for the local market.

The operation of those farms includes adapting components of systems prevalent in other grazing markets, including New Zealand. Cullen is currently undertaking plans to expand its own farm network based on its grazing-based management model.

"We are also finding increased demand for our advisory services as American farmers, industry participants and commentators recognise the benefits of pasture-based dairy systems. "In the South East United States there is a market of $US20 - $US30 billion in farm-gate receipts and a US$100 billion wholesale dairy product market (cheese, butter, yogurt, powder)."

Dr Watson said there were 9.2 million cows in 2008 in the United States, but the current crisis has seen cow numbers culled significantly through an increase in the slaughter of animals, and herd buyouts organised by the USAD. For the first time in 40 years national milk production has fallen - as opposed to historical 2% annual increases.

"The confinement system in the United States is suffering from a high costs structure (feed and fuel) and sustainability requirements mean the industry needs to at least shift in the direction of pasture-based farming. The shift may be transitional for some farmers, but there is a definite desire to change where local conditions allow.

"The Southeast USA is ideal for pasture based farming, but we must stress it is not New Zealand and there is significant adaptation of New Zealand technologies and management practises required to make it work. This is where Cullen's presence and experience as a proven applicator of these technologies combine to provide the platform for NZA members to enter a market which has significant potential.

"The land mass in the Southeast could easily accommodate the entire USA dairy industry on New Zealand style grazing farms and would require between 15 and 20 million cows on pasture to the current industry volume," said Dr Watson.

He said Cullen's own roll-out of farms is planned to be substantial and that alone will provide significant opportunity to NZA companies.

"However, the size of the opportunity is huge and beyond our own farming plans we see a role for Cullen in providing guidance to New Zealand Agritech Inc. members into the market, while helping United States farmers to adopt various aspects of the grazing model to improve their profitability."

New Zealand Trade and Enterprise Biotech operations manager, Paul Vaughan, said the organisation welcomed the Strategic Cooperation Agreement because New Zealanders are perfectly positioned to gain from an international reputation for agricultural technology expertise.

"There are obvious and lucrative opportunities for the IP and technology that has been built up around New Zealand's dairying sector. We're at a tipping point in the United States where its becoming readily accepted that grass-fed is an alternative and it makes sense," he said.

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