THE gradual decline of research, development and extension in Australian agriculture has the potential to impact on the profitability, productivity and performance of Australia as a food producer.
That's the opinion of Australian Farm Institute (AFI) executive director Mick Keogh.
In an address to the Ag Institute Australia WA division conference, Busting the Productivity Barrier, last week, Mr Keogh said it was important for Australia to increase its level of investment in research and development agriculture.
"I think Australia faces the option of passively allowing the research and development system to continue its gradual decay," Mr Keogh said.
"That is certainly what all indicators suggest has been happening over the last few decades and with it we have to recognise national agricultural competitiveness.
"If we don't have that productivity growth we are not going to stay competitive and we are not going to stay profitable by definition unless we are lucky with terms of trade."
Mr Keogh said Australia needed to consider re-engineering the research and development system to create a new model capable of facilitating a surge in innovation and productivity growth.
"That is certainly what we are going to need if all these expectations about Australia in the Asian Century and being the food bowl of Asia are going to be met," he said.
"I think that is a real challenge a lot of us are going to face."
Mr Keogh said Australia had historically relied on research and development funded by government bodies and supplemented by grower-funded levies, but changes to the funding system in the last decade had led to a decline in the real level of funding for research and development.
Mr Keogh cited a reduction in State Government funding contributions, a distracted and removed CSIRO, an undersupply of university graduates and limited university resources, short-term focused projects and a dominant private sector as reasons for the decline.
"Productivity gains are being maintained through the reduced use of inputs with the exclusion of chemicals, and the issue from that is that there is a limit on how much farmers can keep reducing inputs to secure productivity levels," he said.
Mr Keogh said technological change and improved technological efficiency was key to achieving productivity growth in Australian agriculture.
"Productivity growth provides an opportunity to increase profitability," he said.
"If we can't get productivity up we are going to have to rely on favourable terms of trade to increase profitability.
"And history suggests that is not a good thing to rely on."
Mr Keogh estimated Australia received between $400 and $500 million of Commonwealth funding, about $200m of State Government funding and additional industry research and development to generate innovation to facilitate productivity gains.
He said although industry investment had increased in real terms over the years, it had trended downwards as a proportion of output since the 1970s and 1980s.
"That is a worry because if we look internationally the data suggests that most other nations are maintaining, if not increasing their investment in agricultural research and development," he said.
"Most main agricultural regions in the world are actually seeing an increase in the investment in agricultural research and development and you would assume from that they would be moving toward a pick up in their productivity."
Mr Keogh cited China, Latin American, various African nations and the US, among others, as examples.
"This suggests that in order to remain competitive Australia is going to have to do better in terms of research and development and transferring that in terms of on-farm productivity and profitability," he said.
