Listed rural servicing company PGG Wrightson has identified its new AgriTech arm as its primary source of new revenue and growth.
The company last month announced a new structure, under which its global seeds, New Zealand nutrition and grains departments would be incorporated into AgriTech, while its traditional stock and station roles - rural merchandising, livestock, real estate and finance - would be included in the new AgriServices division.
PGG Wrightson chief executive Tim Miles said in an interview there was still potential to expand AgriServices and to improve profitability, but these businesses were mature and "New Zealand-centric".
There was greater potential for top-line growth from the AgriTech businesses, which focused on technology and the development of new products in a world that would turn to science to feed a booming population.
Mr Miles told investors in Christchurch revenue for the 2010 financial year from AgriTech business would be $391 million and earnings before interest, tax, depreciation and amortisation (ebitda) $42 million.
Full-time equivalent staff total 426.
It was a case of being in the right place at the right time, Mr Miles said, as producers looked to technology in an effort to double food production in the next 50 years to feed a booming world population, with agricultural land likely to increase only 1% in that time.
New Zealand land prices were among the highest in the world, meaning it had to be extremely productive to make it pay, something which would come from new high-producing grasses and plants, he said.
He released data showing in 2008 irrigated land suitable for dairying in New Zealand was a third more expensive than it was in Australia and four times that of the United States and Chile.
Seeds have previously been a strong performer for PGG Wrightson, with new varieties being developed to complement existing cultivars. It exports seed varieties to Chile, US, United Kingdom, Ireland, France and China.
In 2008, seed earned revenue of 224.7 million, in 2009 $260.2 million and in 2010, PGG Wrightson was forecasting revenue from seed of $259.3 million. Gross margins on that revenue were about 30%.
PGG Wrightson had joint ventures with science and development companies in New Zealand, Australia, Uruguay and Argentina working on seed cultivars, which could take 12 years to develop, Mr Miles said.
However, the result was pasture that deterred birds and was ideal for airports; made more efficient use of nitrogen; resulted in more milk and meat production; and was more resilient to pests and weeds.
