What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The research centre was launched in 2016 by then-Science and Innovation Minister Steven Joyce and then-Food Safety Minister Jo Goodhew.
It was founded as a partnership between government, industry organisations and research institutions with the aim of ensuring New Zealand’s food safety system remained among the best in the world.
Initially, the National Government invested $2.5 million in the partnership.
Now, AERU has given the centre’s work a conservative valuation of $164 million each year, something the centre says is a considerable return on the Government’s initial investment.
“It is not easy to put a dollar value on what is effectively an insurance policy against what may or may not have happened without the Centre’s science and research support,” says Professor Caroline Saunders, the agricultural economist who led the study.
“We made our assessment as quantitative as possible using case studies from the dairy, horticulture and poultry industries,” she adds.
Early in the Covid-19 pandemic, there were significant concerns that food processing facilities would be shut down overnight or New Zealand products would be shut out of overseas markets.
At that time, the Centre reviewed global literature as it evolved, and worked to assure industry that food and food packaging would not be a source of Covid infection.
Industry members interviewed by AERU for the study said they found value in the Centre as a fast and efficient way of getting access to the best scientists, and expertise in identifying, framing, and managing research projects.
They told researchers it saved them time and gave managers and board members confidence in the research.
“We have had tremendous support from the Centre in dealing with an outbreak of Salmonella Enteritidis, and ongoing management of Campylobacter which besets the industry worldwide,” says Michael Brooks, executive director of the Poultry Industry Association.
“The Centre’s ability to use new whole genome sequencing techniques to trace pathogens is critical,” Brooks adds.
Dr Libby Harrison, director of the centre, says the New Zealand economy relies on its reputation for safe, high-quality food, meaning the country cannot afford mistakes regarding food safety.
“Foodborne disease outbreaks can cost millions, and long-term damage to a company or food sector’s reputation, which can also hurt the New Zealand brand more generally,” Harrison says.
