Agriseeds chief executive Murray Willocks said a $6 million, five-year joint venture between his company, Australian research group Molecular Plant Breeding CRC and New Zealand Trade and Enterprise, would look at using endophytes to enhance the performance of perennial ryegrass.
Mr Willocks said Agriseeds would invest $1.5 million, Molecular Plant Breeding $3 million and Trade and Enterprise $1.5 million, through its Australia-New Zealand Biotechnology Partnership Fund.
Most of the research would be done in Australia.
The research sought to develop pastures that would benefit farmers on both sides of the Tasman, producing plants that were water efficient, heat tolerant, more resistant to insects and offered improved animal health.
Molecular Plant Breeding CRC was described by Mr Willocks as having performed "world-class'' research, with the two organisations working on endophyte development for the previous two years.
He said endophytes, a microscopic fungi, were the key to plant survival and performance, and as a result were they essential to increasing farm productivity.
But, the project would go further, producing ryegrass varieties more adaptable to harsh conditions and with the ability to grow in regions where they do not currently survive.
Mr Willocks believed there were many more gains to be made in endophyte research.