Executive Summary: Sustainable Harakeke Packaging – technoeconomic analysis

Summary of Project and Key Findings:
The Matekuare Whānau Trust vision is “to create a vibrant healthy whānau community, culturally based and thriving on their whenua whilst residing in warm healthy homes all within a life of wellness”.

The Matekuare Whānau Trust is exploring the development of sustainable packaging options alongside a microgreens production centre based at Te Whaiti, near Minginui. The Matekuare Whanau Trust is a “harakeke growing site” as defined by the Harakeke Alliance* and has provided SCION with harakeke samples to analyse known as “tow”.

The Matekuare Whānau Trust seeks to be part of this industry and has already established a plantation of harakeke (2,000 plants), with plans to expand their plantings (an additional 2,000 plants). Multiple uses have been identified for the highly valued (taonga) blade of the harakeke (mats/carpets, apparel, fibre glass alternative composite materials, etc), leaving the offcuts (midrib, edges, and tip) as a ‘waste stream’.

The techno-economic analysis (TEA) evaluated the feasibility of producing sustainable harakeke-wood pulp trays. Scenarios with three different mix ratios were considered based on a production of 1,456,000 harakeke fibre trays per year. The baseline comparative product is an imported “bagasse tray “priced at approximately
$0.35 each.

The current economic conditions do not support the use of harakeke in the development of trays for sustainable packaging on this scale. The Matekuare Whanau Trust though may still explore the possibilities of “smaller runs” of harakeke fibre trays to help market microgreens.

Key Findings:

1. Financial Performance: All harakeke/wood pulp mix ratios (10/90, 30/70, 50/50) result in negative EBITDA and Net Income, indicating operational losses at current production levels and market prices.
2. Capital Investment: The required investment of over $1.2 million is unsustainable given the projected negative returns.
3. Operational Costs: Labour and raw material expenses significantly outweigh potential sales revenue.
4. Harakeke Content: Increasing the proportion of harakeke might improve product properties but leads to higher production costs and greater losses.
5. Pricing Challenges: The break-even price ($15/kg, or $0.54 per tray) is 50% higher than the estimated market value ($10/kg), indicating a substantial gap between production costs and market pricing.
6. Return on Investment: Even at break-even, the Return on Capital Employed (ROCE) of 9.3% falls below the 15-20% threshold typically required for investments of this risk profile.
7. Scale and Supply: Higher percentage mixes necessitate significant scaling of harakeke cultivation, presenting challenges in agricultural management and supply chain stability.
8. Raw Material Cost: Even assuming zero cost for harakeke tow (currently a waste product), the project remains economically unviable.

* The Harakeke Alliance has developed a strategic plan to build a viable and thriving Harakeke industry in Aotearoa/New Zealand over the next five years.

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