Epichloae endophytes of family Clavicipitaceae (comprising genera Epichloë and Neotyphodium) are fungal symbionts of Pooideae grasses. The associations formed, range from mutually beneficial to antagonistic and the nature of this relationship is dependent upon the importance of vertical (via host seeds) versus horizontal (ascospore mediated) transmission of the fungus. These endophytes can enhance their hosts’ survival through protection from abiotic and biotic stresses and can thus be utilized in an agricultural context. Animal-safe grass-endophyte associations that confer bio-protective properties for increased pasture persistence and productivity have been developed and commercialized. One of the crucial drivers underpinning the selection of epichloae strains for commercial development is endophyte derived bioactivity. The potential of next generation endophytes is determined by testing a number of attributes such as agronomic fitness, animal and food safety as well as compatibility with host plants of interest. Strategic research supports these activities by focusing on elucidating mechanisms of compatibility between host and fungal symbiont, as well as investigating other molecular drivers of symbiosis such as siderophore mediated iron-uptake, fungal signalling, fungal growth in host plants and fungal secondary metabolism. This review weaves together the different strands of multidisciplinary research aimed at ultimately exploiting epichloae endophytes for increased pasture performance.

Summary: While much is known about the biosynthesis of secondary metabolites by filamentous fungi their biological role is often less clear. The assumption is these pathways have adaptive value to the organism but often the evidence to support this role is lacking. We provide the first genetic evidence that the fungal produced secondary metabolite, peramine, protects a host plant from insect herbivory. Peramine is a potent insect feeding deterrent synthesized by Epichloë/Neotyphodium mutualistic endophytes in association with their grass hosts. The structure of peramine, a pyrrolopyrazine, suggests that it is the product of a reaction catalysed by a two‐module non‐ribosomal peptide synthetase (NRPS). Candidate sequences for a peramine synthetase were amplified by reverse transcription polymerase chain reaction. Four unique NRPS products were identified, two of which were preferentially expressed in planta. One of these hybridized to known peramine producing strains. This clone was used to isolate an Epichloë festucae cosmid that contained a two‐module NRPS, designated perA. Nine additional genes, which show striking conservation of microsynteny with Fusarium graminearum and other fungal genomes, were identified on the perA‐containing cosmid. Associations between perennial ryegrass and an E. festucae mutant deleted for perA lack detectable levels of peramine. A wild‐type copy of perA complemented the deletion mutant, confirming that perA is a NRPS required for peramine biosynthesis. In a choice bioassay, plant material containing the perA mutant was as susceptible to Argentine stem weevil (ASW) (Listronotus bonariensis) feeding damage as endophyte‐free plants confirming that peramine is the E. festucae metabolite responsible for ASW feeding deterrent activity.

The invertebrate pests most commonly affecting New Zealand’s pastoral‐based production in ‘average’ years cause losses of between $1.7B and $2.3B p.a. of which up to $0.9B occur on sheep and beef farms and $1.4B on dairy farms. The native scarab grass grub is the most costly pest causing losses of $140–380 M on dairy farms and $75–205 M on sheep and beef farms annually. The exotic scarab, black beetle, although only affecting approximately 1 M ha, costs dairy farmers up to $223 M and sheep and beef farmers up to $19 M annually. Porina cause losses up to $84 M and $88 M respectively. Pasture nematodes are estimated to cost up to $274 M p.a. for dairy farmers and $326 M p.a. for sheep and beef farmers. Two exotic pests, Argentine stem weevil (ASW) and clover root weevil (CRW) are causing damage estimated at up to $200 M p.a. and $235 M p.a. respectively in dairy and sheep and beef pastures. While CRW is subject to successful biological control management it still causes considerable losses. Lesser pests also contribute to lost production, particularly as they often coexist with more major pests. However, their economic cost to New Zealand is difficult to calculate due to the variable nature of infestations on both temporal and spatial scales. At farm and paddock level, it is abundantly clear that substantial savings could be made if pest management is achieved. It is equally clear that in many instances the tools to do so are limited but if developed would contribute substantially to farm profitability.

Pasture mealybug ( Balanococcuspoae ) was found infesting two field trials evaluating the performance of selected strains of the endophyte Neotyphodium lolii in ryegrass ( Lolium spp.) in Canterbury, New Zealand. Deterioration of endo‐phyte‐free plots relative to endophyte‐infected plots had been observed. In Trial A, pasture mealybug were sampled in plots of the perennial ryegrass cultivar ‘Grasslands Nui’, without endophyte (nil), or infected with the wild‐type endophyte, or the selected strains, AR1 and AR37. In Trial B, mealybug numbers on six ryegrass cultivars infected with AR1 or wild‐type were compared with those on the same cultivars without endophyte. In sampling these trials, the presence of a root aphid, Aploneura lentisci , was also noted. Populations of mealybug in both trials were similar on all endophyte‐infected treatments and significantly lower than populations on nil treatments. Neither AR1 nor wild‐type appeared to reduce root aphid numbers, while AR37 may have had some effect. The amount of dead grass was significantly greater in nil than in endophyte‐infected plots in Trial A, and yield of ryegrass was correlated with numbers of mealybug and root aphid present. Pasture productivity in nil treatments had recovered by spring, in the year of the outbreak. The presence of endophyte, strain of endophyte and cultivar were all significant factors affecting both total dry matter and green yield in Trial B. Pasture mealybug accounted for 55% of the variation in a decline in growth rate that occurred in this trial over the summer‐autumn periods between 2000 and 2001, particularly in the nil treatments. Two years after the outbreak there was 25% less ryegrass and persistently lower pasture yields in nil plots. We conclude that pasture mealybug are capable of inflicting severe damage to endophyte‐free ryegrass in Canterbury, particularly during dry summer‐autumn periods.