Business as (un)usual for the Coast

TAIRAWHITI could be at the centre of some of the country’s most exciting new industries, and Ruatoria-based charitable company Hikurangi Enterprises is working hard to make that happen.

Over the past year and a half since forming they have been investigating a range of alternative industries for Tairawhiti, including the potential of carbon farming native trees, and developing biotechnology ventures around hemp, kanuka and kina extracts.

Their business model is to combine the resources and skills available in the rohe (area) with modern technology, putting employment and environmental sustainability at the core.

The focus area is from Waipiro Bay north to Rangitukia, either side of the mighty Waiapu awa, in the heart of Ngati Porou country.

All of the new industry areas take into account the nature of doing business in one of the most isolated areas of the country.

“Farming and forestry are well established, and will continue to do their thing,” project manager Manu Caddie says.

“But they are high-volume, low-value commodities. We are so far from markets, and so both labour costs and transport are major factors in their sectors. So we thought, ‘How can make high value products instead?’”

All of the products they are investigating have multi-million dollar potential.

The hemp product market is exploding all over the world with one product having sales of over $350million in the US alone and annual sales growth of over 300 per cent. With overseas interest already in the kanuka products and kina extracts for natural health and pharmaceutical sectors, there is a real possibility of transforming towns like Ruatoria into a hive of commercial activity.

Since forming in January 2016 the charitable enterprise has established joint ventures with private investors and established companies to engage dozens of experts from all over the world to help them focus in the right areas.

With an emphasis on building local skills and capacity, Hikurangi Enterprises has organised workshops on increasing manuka honey production, light-earth building processes using locally-sourced materials and have an upcoming conference in Gisborne focusing on agritech and foodtech for increasing the productivity of growing food in the region.

A successful hemp crop trial last summer gained national attention and already they are market testing several hemp products with plans for a multi-million dollar investment opportunity to be offered to locals before the end of this year.

Also this year they have begun a series of independent clinical trials testing kanuka extracts for the treatment of acne, eczema and even to reduce stress and anxiety.

In the last few months they launched another research trial looking at the bioactive potential of kina, and are putting themselves at the forefront of carbon farming native trees in New Zealand with plans to establish a carbon farming cooperative amongst interested landowners.

Many of the projects involve exploring opportunities to develop Maori land, much of which has been considered under-utilised, in a sustainable manner based on the principle of kaitiakitanga (guardianship and stewardship).

“We are looking at what the natural resources are and what the skill base here is,” general manager Panapa Ehau says.

With hemp it involves utilising the skills already available, namely in growing its crop cousin marijuana, but also the benefits of hemp’s ability to improve soil quality, compared to other crops such as maize and provide better returns to landowners.

“With kanuka and manuka it is about increasing biodiversity, and if we can keep the trees there rather than cutting them down, it all helps with environmental development, and can in turn help with cultural development.”

The company is fully owned by Hikurangi Huataukina Trust, which has a focus on economic development and job creation in the rohe.

It has five directors: Bella Paenga, Mateawa Keelan, Panapa Ehau, Elizabeth Ngarimu and Natasha Koia – all with experience and interests in development in the region.

The goal of the company is to provide a dividend to the trust, which in turn can re-invest it in the community, including support for other start-ups, providing educational opportunities to increase local capability and maybe larger scale projects if one or more of the ventures goes global.

Both the trust and company have charitable status, as their stated mission is to increase employment and reduce poverty in the rohe. The unemployment rate on the East Coast is one of the highest in the country.

Employment potential has been generally limited to farming, fishing or forestry, something the company is trying to expand.

“Hapu groups have had a focus on environmental, cultural and educational outcomes and supported the idea of a common entity across the rohe to focus on local economic development ,” says Mr Ehau, a tutor at EIT Ruatoria with a background in social enterprise and property development.

In forming the company there was a survey of local businesses and discussions with others in the community, including GDC councillor Bill Burdett and local businessman Joe McClutchie, about what else could be done to support businesses and grow jobs.

Increasing employment opportunities was not only about relieving poverty in the rohe, but providing opportunities for those who want to live in the area after finishing formal study or have been living away and want come to home.

In the 2013 census, 71,052 people identified as Ngati Porou, with only 11,985 of them living in the Gisborne/East Coast region. A further 30,000 are estimated to be living overseas, predominantly in Australia.

A study conducted by the trust last year found many of those living away from the region wanted to return home, but did not because of the lack of jobs and opportunities.

“It is a high unemployment area, and a lot of people say they want to come home but they need jobs to come back to,”says Mr Caddie, a former Gisborne District councillor with experience in community development and social enterprise.

“And the ones who are here don’t want to move away, but they need decent jobs too.”

The long-term goal is to provide pathways for rangatahi (youth).

“The youth theme coming through is really strong,” Mr Caddie says.

“They are seen as priority but we need to create more opportunities for them to have well paid work on their own land and sea.”

“We haven’t done well for them, as a community. There are high suicide rates, drug use, that sort of stuff, so we have to be doing things differently to what we have been.

That involves including them in the businesses and two young women are already key members of the Hikurangi management team.

Many of the research projects are science-based and utilise resources those growing up on the Coast are familiar with.

“There are great opportunities for rangatahi to grow into those roles. It expands their options and grows the science and commercial expertise in our operations.”

The company already has a steam extraction facility in place, to extract essential oils from plants like kanuka, and is looking to develop a large processing plant with cornerstone customers already making commitments to bring their products to Ruatoria for extraction.

In the future there could be several processing plants in Ruatoria, developing products from local and imported biomass.

There is also potential to develop products that are even smaller and more easily transportable: intellectual property.

“For example with kina, if we can learn how to extract the bioactive potential, then we can own and license that IP,” Mr Caddie says.

“That is where the real value is. You can send that product in an email rather than on a truck or train.”

“It does not make sense to do all of the processing in Ruatoria, but it could be managed from here.

“We could end up with Ruatoria as a hub for IP managers, production consultants, brand developers and investment advisors, not just doing manual work.”

Already the company has about 20 people involved.

While most are volunteers, there are close to 10 people employed part-time, and more with the various research projects.

“While some of it is one-off work, the goal is building capability and quickly move to commercialisation,” Mr Caddie says.

Overall the company has had a good response, both locally and around the country.

“We have had really positive responses, but we have been wary of raising expectations too high too quickly as some ideas may not work out so we’ll learn and try something else.

“At the same time it is a unique commercial model that relies heavily on the local social license to operate, as it will involve developing the community’s land.

“Already we have had many offers, as people want to see something happening on their land.”

The company’s early funding is coming from a mix of private investment, co-funding from government agencies and three grants from philanthropic organisations.

“It appeals to ethical investors, people looking for something more than just making money with their funds,” Mr Caddie says.

“The more support we have from private investors shows a level of confidence people have in what we trying to do, and other investors and funds will be willing to put more money in.”

They also want to keep investment local.

More than 160 people have already expressed interest in investing in the hemp enterprise, most of them are based in Tairawhiti. About half have offered less than $1,000 but others are in the $5-20,000 range and 3-4 are willing and able to commit over $100,000.

“So we are setting up an investment company, where local people can invest, and it will put most of the money into hemp initially but it will have an ownership stake in some of the other projects as well.

“It will be a chance for locals to be real stakeholders in the future success of our ventures and the region.”

Original article and image: Business Quarterly, The Gisborne Herald. 4/9/17

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