Government announces Primary Sector Growth Fund projects

The government has announced a range of investment partnerships with farmers, growers and other primary industries, focused on more flexible use of land.

Speaking at Fieldays at Mystery Creek - which runs from Wednesday to Saturday and is expected to attract over 100,000 people - Prime Minister Christopher Luxon announced the moves alongside Agriculture and Forestry Minister Todd McClay and Māori Development Minister Tama Potaka.

In total, the government was investing $59 million into projects with a total investment value of $143m.

Christopher Luxon at Fieldays

Photo: RNZ/Nick Monro

The initiatives include*:

Government funds of $3.6m invested in a $8.5m five-year project to boost beef and sheep production

$18.3m on a $45.9m seven-year project to grow dairy output, aiming for a 20 percent reduction in nitrogen leaching per hectare, to increase hill country pasture utilisation by 20 percent and feed conversion efficiency by 30 percent

$19.1m in a $47.9m five-year commercial project that aims to unlock greater value from kiwifruit orchards in partnership with Zespri and New Zealand Kiwifruit Growers Incorporated

$11.7m in a $29.3 million project increasing King Salmon production through open ocean aquaculture, with New Zealand King Salmon (announced in March)

$3.2m over three years in a new $8m project to assess the feasibility of converting industrial-grade logs into higher-value timber for construction in the likes of hotels, student housing, apartments and offices in New Zealand and potentially Australia, in partnership with VoMo Limited, a Red Stag Investments company

up to $2.6 million over two years in a project that uses metrics to enhance Māori landowners' understanding of their farming systems, in partnership with Te Arawa Primary Sector Incorporated

The funding comes out of the Primary Sector Growth Fund (PSGF), which invests taxpayer dollars into projects organisations or companies would not be expected to complete as part of their core business with economic, environmental, social, or cultural benefits.

The government launched the PSGF in Budget 2025 with $246m over four years, replacing the previous Sustainable Food and Fibre Futures Fund set up under Labour which launched with $40m a year in 2018.

"Together, these projects matter because they will demonstrate, on real farms and orchards, what is possible when innovation, capital and ambition come together," Luxon said.

"This is about building confidence for our farmers and producers, rural lenders and investors. To show proof that innovation can deliver growth."

The government pointed to a Lincoln University and ASB Bank report that found adopting a mix of land use and new technology, science and systems could boost the economy by $10 billion over the next five to seven years.

McClay said the government was committed to backing farmers and growers to achieve their aspirations.

"Appropriate rules and regulation coupled with innovation ensures their ideas are not just pipedreams, but viable and profitable pathways," he said.

"These six projects will provide the confidence they need to not only meet environmental outcomes, but respond to changing consumer demand, trade opportunities, and increasing competition in international markets. Greater land use flexibility results in prosperity through productivity, and enabling that is part of this Government's commitment to fixing the basics and building the future."

PM prioritises growth over emissions reduction

Luxon said the projects were designed to showcase to farmers how more value and productivity could be generated.

"We want them to be producing more. We want in a world that's uncertain... national security. A big part of that is financial security, and a big part of how we do that is making sure our farmers can produce more and be more productive."

McClay said many of the projects were driven by farmers themselves, and he expected there would be many more projects in the next few years.

"We have to produce more to sell to the world, it's how we provide better jobs and better services to New Zealanders - but it can't be at the expense of the environment. This is a way that we actually get to do those two things together."

He said they were committed to New Zealand's 2050 climate obligations, while Fonterra and some of the meat companies were incentivising emissions reductions on farm.

"It gives farmers choice, it doesn't force them, and the one thing that's very, very important it's not taxing them.

"What we have to do is to produce more whilst meeting our obligations, not do what many countries are doing and saying, 'the way that you improve the environment for climate change is to farm less' - we can't do that. People around the world want the food that we produce."

Luxon similarly said it was up to farmers to decide which tools to adopt - and challenged on how they could be encouraged to do so, he pushed back on the suggestion that emissions needed to be reduced.

"No, we need to grow our economy, and that's our primary focus, is more productivity, more growth out of agriculture.

"We've also got a programme of work about reducing emissions, but that's through our technology - but our primary end game here is not just reducing emissions for the sake of reducing emissions, it's about actually growing our economy, and we think we can do both through adopting technology."

He said the country had "a long way to go, a wee way to go," before the 2050 targets, "but I want to reassure everybody we're not sending billions of dollars offshore".

It was in New Zealand's interests to stay in the Paris agreement, he said, because doing otherwise would "penalise and punish our farmers tremendously".

Our competitors, he said, would "love nothing worse than to kick New Zealand products off shelf up and down supermarkets all around the world".

* Figures have been rounded to the nearest $100,000

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