New levy proposal puts onus on growers

28 Feb, 2014 01:00 AM
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Just doing a one-year trial in farming is hopeless because you can have so many seasonal influences.

GROWER levies are the source of constant conjecture, but a new proposal believes growers should be given the power to decide exactly where their levies are invested.

iCrop Australia founder Paul McKenzie has developed a model whereby growers pay a compulsory industry contribution and select which research bodies or initiatives it is invested in, based on their own needs.

"It's a smaller levy which generates better cash earnings to the individual farm businesses," Mr McKenzie said.

"That allows for an improved standard of living and an improved capacity of farmers to invest in their own productivity initiatives."

One area that Mr McKenzie believes growers would be willing to contribute more of their levy money would be to arresting soil acidity in the Wheatbelt.

He said the constant outpouring of levies and end point royalties (EPR) is significantly impacting the ability of farm businesses to fund liming programs and other necessary farm investments.

"Every business I know would like to be able to double or triple their liming program but they've got one hand tied behind their back because their 'productivity dollar' has been skimmed off," Mr McKenzie said.

He believes that if growers received an invoice for levies paid, there would be far more growers questioning the cost impost.

While still in the development phase, the proposed model looks at a compulsory contribution of $1/tonne, over a five-year investment period.

"We're talking about a five-year allocation period because farming is a long-term investment horizon and researchers need long-term certainty regarding their career interest," Mr McKenzie said.

"Plus just doing a one-year trial in farming is hopeless because you can have so many seasonal influences (that affect results)."

Mr McKenzie believes there is a significant lack of engagement between researchers, scientists and farmers, which must be reversed.

Under the new model, the demand for research and development will be determined by farmers' choices.

"Therefore it creates a cycle of greater engagement leading to improved research and development outcomes for better financial results for farmers," Mr McKenzie said.

"Researchers that deliver results will get more and more business from the farmers.

"Those that don't – well natural selection will apply."

Mr McKenzie said ideally, before harvest, growers would determine how, over the next five years, they want to allocate their levies.

The grower then selects where their funds are distributed, whether it be to grower groups, universities, investment in aerial drones and so on.

According to Mr McKenzie, under the current structure 20 per cent of growers' surplus is invested in centralised research, while another 20pc goes into end point royalties.

"Out of any five-year period farmers work one year for GRDC, one year for the plant breeder and only three out of the five for themselves," he said.

"That's having a negative impact on the ability of businesses to firstly make money, which lowers their standard of living, and then adversely impacts all sorts of things such as education, liming programs, succession planning and the like.

"It needs to be recognised that the levy is actually the farmer's money.

"Farmers borrow money to pay the levy therefore farmers should have the right to choose where that capital is allocated to and which projects are funded."

Access to the internet is a critical part of the proposed model and an area which Mc McKenzie believes is considerably under-utilised by bodies such as the GRDC.

"Stockbrokers said online trading would never work, travel agents said people would never book a flight over the internet, internet banking – people said 'you can't be serious'," he said.

While an overhaul of the levy structure is sure to be a disruptive change, Mr McKenzie believes most farmers are currently farming with one hand behind their back.

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READER COMMENTS

Deregul8
28/02/2014 11:04:07 AM, on Farm Weekly

Where do we sign up Paul? GRDC is a costly behemoth generating questionable and at best intangible returns. WA growers are certainly sick of paying levies to breed new varieties only to have the rights to grow those variaties sold to private companies who then double dip. Mace was bred by GRDC levies yet growers pay $3.50/t. 70% of the WA will be planted to it in 2014.

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