New plant business model from US partnership

It shows how New Zealand’s scientific research and innovation can be taken to the world in a financially sustainable and mutually beneficial way, says Andrew MacKenzie, business development manager, plant varieties.

PFR won the PwC Commercial Deal Award this year in the Kiwinet Research Commercialisation Awards for business innovation in commercialising the Wakefield raspberry. 

The deal involved working with Northwest Plant Co (NWPCO), in Washington, to revolutionise the traditional plant variety commercialisation model from plant sales-based royalties to a participation in the commercial success of a new raspberry cultivar. 

The judges were impressed how PFR put a “very clever business model around some clever science which maximises return to New Zealand”.

In accepting the award, Mackenzie said the plant varieties team had “made a habit of commercialising things in different ways” and he said the team believes “innovation in our science should be matched by innovation in our business dealings”. 

There was “nothing sadder than having a wonderful science innovation put on a pedestrian path to market,” he said. 

Mackenzie told Rural News that because of the small scale of its own raspberry trial plots, PFR researchers in NZ had challenges in meshing their product development process with large-scale mechanised production systems used commercially. Meanwhile Northwest Plant Co had a large industry keen for more sustainable solutions to a significant plant disease problem.

The Pacific Northwest region of North America is home to possibly the world’s highest value process raspberry industry, representing about 10% of total world raspberry production. The region has large-scale plantings, is highly mechanised, and has integrated production, processing and marketing capability. 

Pacific Northwest growers regularly need to renew their raspberry production fields, because of Rubus Bushy Dwarf Virus (RBDV), plus other viruses and fungal root rot diseases that limit the productive life of growers’ plantings. The six year plant renewal cycle creates ongoing sales opportunities.

However the high cost of replanting depresses plant sales prices. A couple of traditional varieties have been the mainstay of the industry in the Pacific Northwest for many years. They are readily propagated and available to growers at reasonable cost. 

NZ raspberry production is small relative to world production and does not have the market profile to launch value added products.

In its raspberry genetic improvement research, PFR was driven by pragmatism in wanting to realise the investment made to date, and advance a sound body of science. It was a “use it or lose it” approach. 

PFR’s collaboration started with Northwest Pacific in 1999, chiefly to develop new process raspberry cultivars. Although PFR had figured out machine handling attributes this could only be validated by machine harvesting – and this is how the relationship between PFR, NWPCO and Enfield Farms developed. 

One selection, Wakefield, bred in NZ and sent to the US for evaluation, has now been commercialised there. So PFR is now working with the US partners in new variety creation, evaluation, product development, intellectual property protections, licensing, commercialisation and after sales product support. 

A joint venture company, Pacific Berries LLC, has been incorporated in Washington state to own the intellectual property rights in the varieties to be commercialised from the joint programme. 

Northwest Pacific and PFR recognised that royalties based on plant sales would not generate sufficient revenues to justify even starting, let alone sustaining, a plant breeding programme, even if the resultant varieties were hugely successful. 

“PFR of course had significant experience with structuring licence arrangements and revenue shares based on fruit sales volumes and market returns, such as for Zespri Gold Kiwifruit (‘Hort16A’), and Jazz/‘Scifresh’ apples,” Mackenzie says.

“In the case of raspberries, the crop is not always differentiated by variety at consumer or even wholesale level.” 

NWPCO and PFR decided the most accessible reference point for the use of particular raspberry varieties was the planted area in growers’ fields. So plants are supplied to growers by NWPCO under a contract that provides for the mapping and monitoring of fields, and requires an annual licence fee by the grower for their use of the varieties over the life of the planting. 

To determine the appropriate licence fee payable, the parties worked from the principle of calculating this as a “proper share” of the benefit that the intellectual property delivered to the end users. 

“As a result of consistently good performance by Wakefield, Northwest Pacific had sold out of plants through to 2014, with orders of more than 1 million plants for 2015. This bodes well for the commercial future of ‘Wakefield’,” he says. 

About 15% of today’s planted area of process raspberries in the region are now Wakefield. From performance to date it appears Wakefield’s productive life will extend beyond the usual six year cycle for raspberry plantings in the region.

The next goal for the partnership is to release a second process raspberry variety commercially from among the 15 currently in advanced trials. 

“Beyond this the aims of the programme are the incorporation of new quality and disease resistance traits into the next generation of raspberry varieties.”

No blowing raspberries

A successful raspberry breeding programme can provide Plant & Food Research with licensing revenue, career and capability development for the research team, plus links and leverage into new science and commercial opportunities. 

“Operating such a programme offshore has different challenges from operating within New Zealand. It also provides new opportunities and different research and commercial perspectives, which are invaluable in driving further science innovation and collaboration,” Mackenzie says. 

Northwest Pacific is well respected in the raspberry industry in the Pacific Northwest. 

The relationship provides PFR with a credible entrée to this territory, direct access to personnel and infrastructure supporting the research effort, and a ready market for innovations in raspberry genetics, Mackenzie says.