GRDC levy in firing line

23 Feb, 2006 01:03 PM

GROWERS with shrinking profit margins are questioning whether the Grains Research and Development Corporation (GRDC) levy delivers benefits, according to Pastoralists and Graziers Association (PGA) Western Graingrowers Committee chairman Leon Bradley.

"The 1pc GRDC levy is a crude instrument on your gross income," he said.

"The 1pc is amplified on your net income to 30-50pc.

"For example, if you get paid $140/t on a 2t yield, that's a $1.40 levy.

"It is quite possible to have a $30 growth margin on the 2t yield and $1.40 can go to 5pc of that.

"It has a disproportionate effect on a gross margin and also reflected even more on overall profitability of business."

Mr Bradley said the GRDC claimed that for every dollar it received from the grain levy, growers gained $7 in return through research findings.

"They believe they would be filling your pockets with money," he said.

Mr Bradley said the average WA grower produced 16,000t a year and most of the $65m raised by the GRDC levy was from WA but spent in the eastern states.

"GRDC could be a lot more effective than they are," he said.

"A lot of money goes into projects of doubtful benefit.

"They're buying constituencies by throwing money at all sorts of groups under the guise of research and development in order to maintain their revenue through levies."

The Federal Government matched farmers' GRDC contributions.

WA Federated Farmers Grains Council vice-president Julie Newman said levies on growers for research and development should be directed towards farmers' interests.

"It should be invested to ensure a healthy financial return not just for scientists and investors," Ms Newman said.

"Farmers should be securing intellectual property for the funds they donate.

"For what we are paying we are not getting much."

Ms Newman said there was unrest among farmers because they were losing confidence in grain varieties.

"There is not enough testing done before varieties are released," she said.

"They are not coming up with what we really want."

Ms Newman said she would rather GRDC spend more money to get a better variety than produce a larger quantity of poorer quality.

Grain produced and registered as seed grain and sold attracts the levy.

According to the Grains Council of Australia, seed retained on farm, including that which is cleaned, graded and pickled for use by the producer as seed for sowing, does not attract a levy.

A levy paid late incurs a penalty at a rate of 2pc per month, compounding on the sum of the unpaid amounts, including accrued penalties.

The GRDC received $162,000 in 2004 and $70,000 in 2005 in levy penalties.

A levy is collected on coarse grains to fund research and development programs including the Winter Cereal Improvement Program, which aims to improve barley, oats, cereal rye and triticale.

There is a Crop Improvement Program for sorghum, maize, canary seed and millet.

The programs cover plant breeding, agronomy, breeding technology, market quality, germ plasm development, pathology and education.

Farm Weekly had not received a response from the GRDC at the time of print.

BROOMEHILL farmer Graeme Smith has no problem with the GRDC levy but is upset about the Agriculture Department's $4/t levy on the soft grain variety EGA 2248.

"It is the highest of any levy," he said.

"Soft wheat prices have fallen but the Agriculture Department still gets the highest possible royalty of $4/t.

"The Agriculture Department is double dipping."

Mr Smith said the department was receiving funds from the Grains Research and Development Corporation (GRDC) for research and development and through the additional levy.

Mr Smith said soft wheat growers complained when the additional levy was introduced but were referred to the GRDC, which was surprised to learn of it but did not take action.

"Farmers pay taxes already," Mr Smith said.

"We are having to pay another tax on a product already funded by GRDC."

Gnowangerup farmer Philip Patterson said farmers should have to pay for research and development but they shouldn't have to pay twice.

He said GRDC would have made more profit from the grain levy this year than some farmers would have made.

He had asked for the Agriculture Department's $4t end point royalty on EGA 2248 to be reduced to $2t to keep it in line with other varieties.

Agriculture Department commercialisation officer Tresslyn Walmsley said the reason for the high end point royalty was due to increased administration costs associated with growing EGA 2248 on a contractual basis.

"$4/t is high," Ms Walmsley said.

"We have given a commitment that we are undergoing a review of the rate.

"We are looking at a fair and equitable across the board rate."

Ms Walmsley said the Agriculture Department would meet with soft wheat growers next month to review contract conditions and the end point royalty rate.

The Agriculture Department is expected to conduct a review of the EGA 2248 rust management requirements this year.

Ms Newman said to help solve some of the problems farmers are facing with EGA 2248 they should seek to have it re-rated.



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