Wellington, May 28 NZPA - One agricultural sector -- the horticulture industry -- says it is already working on a project to tap the Government's new funding for primary production.

Horticulture NZ president Andrew Fenton said tonight he plans to have a project ready by the end of the year for consideration by the $190 million primary growth partnership.

The partnership announced in today's budget will start with a $30m injection, and at its peak will invest $70m a year in primary sector innovation in the pastoral, horticulture, seafood, forestry and food processing industries.

The money will be stepped up to $40 million for 2011; $50 million for 2012; and $70 million from 2013, with the private sector expected to match it dollar-for-dollar.

One lobbyist, Federated Farmers president Don Nicolson, said the budget emphasised agriculture as the nation's biggest and most important industry: "It's welcome realism".

Mr Fenton said the horticulture industry would make the most of the funding because increased investment in research, development and commercialisation of new market-leading products was critical to its future.

There were exciting opportunities to double the size of the sector to $10 billion by 2020 by boosting the value of its products.

"The new fund will definitely help us to accelerate the rate of application of science, technology and innovation, creating more jobs and more exports," Mr Fenton said.

The biggest horticultural exporter, Zespri, said the additional financial support for research would stimulate economic growth.

Zespri chief executive Lain Jager said the kiwifruit sector would be able to partner with the Government for additional innovation including improvements to fruit quality, taste and health benefits, and development and future introduction of new kiwifruit varieties.

Dairy cooperative Fonterra -- which has the primary production sector's biggest private research arm -- said the investment acknowledged the economic importance of agriculture.

Fonterra chief executive Andrew Ferrier said investment in innovation would help grow the future of dairying.

Meat and Wool New Zealand chairman Mike Petersen said that the level of investment highlighted recognition of the primary production sector's considerable earning potential.

It already generated $24.5 billion for the economy from its 64 percent share of exports.

Though the nation was in for "a challenging few years", it was better placed than many other countries for an earlier recovery, with sheep and beef industries leading the way.

"Given the difficult economic conditions, I'm particularly pleased to see the Government stand by a realistic funding commitment," Mr Petersen said.

Meat processors and exporters are also discussing potential projects for the funding.

"Potential projects exist right across the value chain including process automation and extracting very high value components from meat products," said Meat Industry Association chief executive Tim Ritchie.

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