Look before leaping on levies: Keogh

19 Feb, 2015 01:00 AM
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AFI executive director Mick Keogh .
It’s the failing of the representative groups that’s causing a lot of the current angst
AFI executive director Mick Keogh .

DO THE producer groups seeking to control levy funds really understand what they are getting themselves into?

Mick Keogh is concerned that they don’t. The executive director of the Australian Farm Institute (AFI), who conducted a global study of farm representation models in 2013, is worried that the effect of these movements could be politicisation of the research and development funding process, and all the “moral hazard” that goes with it.

It might also deal a fatal blow to State farming organisations (SFOs), which could have unforseen consquences for the commodity group funding model.

A distance between political representation of a commodity and its research and development corporation (RDC) is essential to the current model, which handsomely leverages producers’ levy contribution.

Of the $1 billion spent each year on agricultural research, about a quarter comes from producer levies, and another $250 million provided by government in matching funds. The remaining $500 million, or thereabouts, comes through other sources.

“It’s the failing of the representative groups that’s causing a lot of the current angst among producers, and they are transferring that concern to the RDCs,” Mr Keogh said.

“I think they are mixing up the responsibilities of the two.”

Some producer groups are agitating for greater control, a voice - but Mr Keogh said it’s hard to know how that’s meant to work.

“There are real issues around who marks the homework and who makes recommendations about the use of levies, and how those uses are reviewed; but I don’t think you need to go to an agripolitical representative structure, because I don’t see how that structure would turn out sound long term decision making about R&D investment.”

Direct election of those who sit on the commodity groups would also have ramifications for the SFOs, which currently staff the commodity peak councils with representatives elected from their own commodity groups.

Take away the conduit for SFOs to have a voice on the peak councils, and the SFO funding that currently supports those councils is also likely to disappear, Mr Keogh observed.

(The SFOs themselves might also be in trouble. If through their levies, a producer is automatically a member of a national organisation with political reach, Mr Keogh wonders whether they will also bother to voluntarily pay to be a member of their SFO.)

The AFI’s global research shows that commodity advocacy is seldom - if ever - adequately financially supported by memberships to a peak council.

Exhibit A: Cattle Council of Australia (CCA), which after extensive lobbying opened the council up to direct membership, but has only received about 200 new members as a result.

“All the research we did around the world gave the very clear impression that almost without exception, every farm organisation globally has fee for service offering in order to be commercially viable for members,” Mr Keogh said.

“The representation is a bit of a side issue.

“If you look at the Farm Bureau in the US: the bulk of the organisation’s income comes from State farm insurance companies, and their commercial offerings, and that’s why they have 6 million members in a country with two million farmers. The commercial operations give them the luxury of carrying out the advocacy work.

“It’s the same in Europe: the organisations basically survive off a range of services like compliance with EU regulations or extension services on behalf of the government. None of them survive off pure representation or advocacy.”

That’s hardly surprising, Mr Keogh thinks. Once, commodity organisations were the sole conduit between producers and policymakers. Now, there are many channels for getting a message out.

The old system, where a grassroots proposal worked its way up through a complicated system of committees before it reached a peak council, was often frustrating but it tended to refine a raw idea in the process.

Now, “if you’ve got five people and a computer, you can be broadcasting material here, there and everywhere very quickly”.

That sometimes puts ideas into the echo chamber that would have benefited from more rigorous input before they were released.

Sitting underneath all these issues is something more fundamental, regardless of the commodity representation model: how do you determine the direction of useful R&D, and measure its effectiveness once its done?

The benefits of R&D investment can take 15-30 years to realise - long after the agripolitics of the day is dust.

“One of the projects the AFI has got in front of us this year is about how we make decisions about how much R&D is necessary,” Mr Keogh said.

“One of the frustrations with the whole system is that if a group has to make a decision about the level of R&D, the basis for making that decision is obscure. No-one can seem to come up with a good logical framework that says, here are the sort of questions you should ask, here’s the sort of information you should have to make that decision.”

“It’s almost, if it feels alright, let’s go with it.”

And for now, that’s the case for whoever is in charge.

More on this in Mick Keogh’s AFI blog post: Time for a few home truths in agricultural levy debate.

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FarmOnline
Matthew Cawood

Matthew Cawood

is the national science and environment writer for Fairfax Agricultural Media
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READER COMMENTS

angry australian
19/02/2015 8:38:56 AM

Patently based on these comments a $billion a year isn't much money to Mick. Tell me Mick what is the return on capital invested to our farmers and nation on this $billion a year? How much in profit/productivity increases translate into tax dollars for our governments?Comments like "The benefits of R&D investment can take 15-30 years to realise - long after the agripolitics of the day is dust.",is little different to climate change scientists claiming disaster in the same time frame. Why would I want to fund research that doesn't benefit me?
White lighning
19/02/2015 12:13:18 PM

Not hard at all, Mick, it's a simple law of commerce and democracy, if you pay the bills you call the tune. The more control growers have the better they will get at it. Take the trainer wheels off and let them pedal, there will be a few bruises along the way but so what. Mick, you are making an argument for the do-nothing team SFOs have had 50 plus years to change and adapt, some are getting it done others are slow. Growers need to direct there priorities and manage the outcomes. In the US its called ownership.
John Hine
20/02/2015 9:59:02 AM

Two issues here; * if you want R&D with short term benefits, which is logical, start your own applied R&D group as the people in Birchip, NW Victoria did a while ago. Check out the Birchip Cropping Group. Impressive. * persuade the Commonwealth to allow a 50% cut in levies for access of farmers to R&D tax incentives, now not available to farmers. If farmers could access these tax incentives, they could do their own R&D, without needing approval from anyone and own the results of the work. We need something like this to help the move from commodities to products.
John NIven
20/02/2015 5:54:51 PM

3 brilliant comments.

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