Don't waste our money: grain growers

31 May, 2006 08:45 PM
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WA growers are concerned that the Grains Research and Development Corporation (GRDC) is ignoring farmers' priorities in its pursuit of private investment.

The GRDC generated $110 million revenue in 2004-05, spending $106.4m on research and development (R&D) and another $4.9m on its 46 full-time employees, while a further $5.5m was dished out on suppliers.

The compulsory 1pc grower levy, determined by the Grains Council of Australia (GCA), generated $64.2m in income to the GRDC's coffers, while for its part, the federal government contributed $35.7m based on an estimated 40pc of the budgeted income.

However, some WA growers are concerned that their R&D money is not being prioritised in the best interests of grower returns.

Growers are also concerned that they are being forced to pay twice for their investment in industry development.

Vice-president of WAFarmers grains council, Julie Newman, believes that growers are being forced to pay for industry research at the front and back ends.

"Farmers pay an expensive compulsory levy and should own the intellectual property (IP) we pay for, rather than let it go freely to investors planning to make money out of selling the new plant variety to farmers," Ms Newman said.

"Technology advances and intellectual property rights have rapidly improved in the plant breeding area. There is a global gold rush to stake claims over new plant-breeding intellectual property.

"This allows investors, including traditional public plant breeding institutions, to profit from farmers and from selling this IP to other researchers developing technology for our competitors."

Ms Newman's concerns were raised amid speculation that the GRDC was forming close ties with commercial partners as part of a possible long-term plan to corporatise.

Growers are concerned that by attracting corporate entities driven by a lone desire to make money, farmers will become nothing more than commercial targets.

Using its current method, the GRDC advertises for projects and plant breeding institutes and researchers apply for funding.

Of the total GRDC budget, about $60m in grants is awarded to plant breeding institutes such as the CSIRO.

When a new plant variety is developed, these institutes often advertise the variety for commercialisation.

A commercial firm such as AWB can then apply for the variety and buy it at a relatively low cost, providing the company can collect the plant breeding royalties (PBR) for the plant-breeding institute.

Under the Plant Breeder Rights Act, farmers pay either a royalty to the plant breeder when they buy the seed or at an end-point royalty system (EPR).

An EPR could be $4 a tonne for every tonne that is produced from the crop where the seed was planted.

This EPR is paid on an ongoing basis until the PBR expires or until farmers decide to plant a different variety.

Under this arrangement, farmers pay for early stage plant breeding, pay a high price for the seed when it is produced and pay an end point royalty and a collection fee.

It is also understood that the industry is starting to increase its prices further and farmers are expected to sign more onerous contracts.

WAFarmers is working on many ways to improve the plant-breeding situation to try to place a cap on the charge.

"We are hoping for cooperation with GRDC and plant breeders to link performance measurements with National Variety Trials (NVT) to compare $/ha benefits with $/ha costs to try to cap the costs," Ms Newman said.

"We also want to standardise contracts."

GRDC Chairman Terry Enright said the GRDC was conscious of protecting grower interests.

"The GRDC does not enter arrangements where the private sector is the prime beneficiary of income derived from the investment of grower levies, other than growers themselves who are in the private sector," Mr Enright said.

"We invest with private companies where they have technology and other expertise to advance the research effort and deliver benefits to growers.

"Obviously, when investing with the private sector they are looking for a return on investment, and this is reasonable if they are contributing valuable inputs to a program.

"It all comes down to an evaluation of whether a particular investment will deliver against the GRDC investment plan that is fundamental to achieving our strategy.

"It should be remembered that agricultural research in Australia represents about 3-5pc of world research, so there is a lot to be gained by working with others and many are in the private sector."

Mr Enright said that while the GRDC was forming closer alliances with commercial partners, there was no long-term plan to corporatise the GRDC.

"GRDC has alliances with commercial partners where such arrangements are judged beneficial to our research investment program," Mr Enright said.

"They have nothing to do with the discussion around corporatisation because there is no long-term plan to corporatise the GRDC.

"This matter has been raised over the years as some of the other rural research corporations have gone this way.

"To this point it has been regarded that GRDC, as an independent body with a focus on R&D, is well placed to provide benefits to the industry with its current structure.

"Industry structures will be reviewed over time, so at some point in the future, agreement may be reached to make changes.

"Any change should focus on whether a different structure can provide better results from research investment because the 3.5pc productivity growth in the grain industry over the past decade has been underpinned by a substantial R&D effort driven by the GRDC.

"It has been a very successful model, so any change will need to be very carefully considered by the industry."

The GRDC has some other issues to consider regarding its priorities.

One grower, Dale Metcalf, of Dowerin, is concerned that the GRDC is using the grower levy to conduct outdated trials.

"The GRDC has funded trials for outdated wheat varieties that no longer apply to growers in this region," Mr Metcalf said.

"They're spending our money on Mickey Mouse trials to tell us things we found out about 40 years ago, and really, who gives a continental about the old varieties?

"What we want to know is if any of the new varieties are going to be applicable to growers in the Wheatbelt area.

"We also need access to information on those results and more information on the money GRDC is spending on private breeders."

Mr Metcalf said it was important to be able to review the work of private breeders but was frustrated at the lack of access to this information.

He also said the GRDC needed to look closer at its spending priorities and do more consultation with local grower groups in specific regions.

"We want to know how the new varieties work in our region and what they can do to improve our returns and that's about it."

In response to this criticism, the GRDC said it was a perpetual argument that had resonated throughout the R&D debate and it was not always possible to please everyone.

GRDC western panel chairman Dale Baker said politics did not play a part in how the GRDC made its appointments.

"Members get appointed to the GRDC western panel on the basis of their skill level," Mr Baker said.

"Everyone is welcome to apply for a position on the panel because we are an open and transparent organisation.

"Members are interviewed by the board, then they get appointed for a three-year term based on skills alone.

"We aim to have a geographic spread of people from across the state to ensure we represent the interests of all growers."

Mr Baker also said the GRDC's method of spending ensured value for money for WA growers.

"In actual fact, all levies raised in WA are spent within WA and we can quite easily demonstrate that fact," Mr Baker said.

He said the western panel conducted grower consultative days to ensure a thorough consultation with stakeholders on R&D issues.

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