Review looks at rural innovation spend

Review looks at rural innovation spend


Agribusiness
 More than $675 million was collected in revenue from compulsory grower levies and public funds by 15 research and development corporations in the 2016/17 financial year. Five took home a combined revenue of about $522m a year.

More than $675 million was collected in revenue from compulsory grower levies and public funds by 15 research and development corporations in the 2016/17 financial year. Five took home a combined revenue of about $522m a year.

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JUST what appetite exists for significant change in agricultural research and development is the question being bandied around in the wake of Federal Agriculture Minister David Littleproud’s move to pull together a “shared strategic vision”.

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JUST what appetite exists for significant change in agricultural research and development is the question being bandied around in the wake of Federal Agriculture Minister David Littleproud’s move to pull together a “shared strategic vision”.

Mr Littleproud has commissioned consultants Ernst & Young to consult extensively ahead of creating a road map for rural innovation in Australia.

He insists it is not a restructure of R&D corporations (RDC), however there is certainly some nervousness among RDC bosses as to whether their organisations will survive in their current formats.

While there are corners advocating for a significant overhaul, including complete mergers in some cases, the idea that Australia’s RDC model is world-leading and “the baby should not be thrown out with the bathwater” is strongly held.

Dominant opinion seems to be that a slight tinkering is all the review process will deliver, regardless of who holds the title of agriculture minister when the EY report is handed down.

Whether or not they believe it’s necessary, most say it would be a massive political call to attempt to dismantle RDCs in any way.

Mr Littleproud said he wanted the consultants to focus on spurring co-operation and collaboration, attracting capital from around the globe and improving pathways to commercialisation.

Australia needed a rural innovation system that was for the future, he said.

What’s the problem?

A perceived lack of co-investment in projects across the 15 RDCs and duplication of resources has raised questions over whether the 29-year-old model is serving its various farming and processing levy payers adequately.

Leaders in some agriculture sectors and even RDC bosses themselves, want more accountability, a more commercial approach to funding research and far greater collaboration.

Meat & Livestock Australia managing director Richard Norton said duplication was costing the red meat value chain “hundreds of thousands, if not millions, of dollars”.

However, other RDC bosses and producer groups have argued the different priorities and at times competing agendas, meant combined RDCs could never work.

The EY project will involve more than 450 interviews and 10 workshops and Mr Littleproud has urged all players to get involved.

Official response so far has been to “welcome” the project, although that has been encompassed in talk of rural industries prospering under the RDC model and it being the envy of agriculture systems around the world.

Of the 15 organisations established under the RDC model in 1989, 10 are now industry-owned companies and five are statutory authorities.

Levies on production are compulsory but the rate is set by each industry.

The Federal government matches the levy up to 0.5 per cent of the gross value of production for the commodity involved.

The basic thinking behind the model, Cotton RDC executive director Bruce Finney explained, was that it addressed under-investment in research where small producers were unable to capture sufficient benefits from self-funded research, the collection of compulsory levies avoided free-riding and it accounted for spillover benefits to the wider community.

Council of Rural RDCs executive officer Tim Lester said research, development and innovation had played a critical role in driving long-term growth and prosperity, sustainability and international competitiveness of rural industries.

It involved an estimated $3 billion a year and a broad mixture of public and private investors and providers, he said.

Both Mr Lester and executive director at the Australian Farm Institute Richard Heath pointed out the EY project was to look at the entire rural innovation system.

“RDCs are an important lever but they are only one lever, there are many other ways rural innovation is happening and I believe this is a genuine look at the entire system,” Mr Heath said.

“That is a relevant and important thing to do on an on-going basis.

“The system is undergoing significant change, particularly in the area of the proportion of funding coming from public versus private sources and the entry of agtech.”

Mr Heath also felt the move recognised the ongoing discussion about whether there was excessive duplication and inefficiencies in the way research was extended.

“One of the drivers is perhaps the agtech sector, which often is not contained to one industry but rather whole-of-agriculture issues – big data for example, or soils, workplace health and safety or climate change.

“Researching these areas within a siloed commodity group is questionable.”

Behind the scenes, reaction to the EY project has been mixed, with some RDC key players telling Fairfax Media it amounted to the first step in forced mergers and reduced government funding support.

Others said it was a justified and overdue move towards “doing business better”.

Whether they want change or not, most agree the project is effectively a review of RDCs and would like to see more explanation of the terms of reference provided to EY.

Fairfax Media has put that request to both Mr Littleproud’s office and EY.

Management expert Brian Ramsay, whose company Inovact Consulting specialises in agribusiness and industry service organisations, said there was much curiosity in the R&D sector “about what problems specifically we are looking to solve”.

“There are lots of examples of consultation and workshops in this sector and nothing happening as a result and business people are tired of talk fests,” Mr Ramsay said.

“What big questions will this project try to answer?

“It will certainly put more visibility on the need for innovation in ag R&D institutions but what it will produce beyond that, it’s hard to say.”

Federal Labor Agriculture spokesman Joel Fitzgibbon is far less reserved than his counterpart, openly calling out the problems he sees within RDCs.

“Some are top heavy, there is a lot of siloing, mission creep and some are effectively defacto farm leadership groups,” he said.

“In places, there is a disproportionate focus on marketing and I note with concern most tend to only invest to their matching cap, a clear sign things aren’t as good as they could be.”

The RDCs structure , despite being the work of Labor, would not be sacred territory under his review.

Mr Fitzgibbon said he would guarantee funding but make sure limited levy payer and taxpayer dollars were spent as effectively as possible.

Red Meat Advisory Council (RMAC) chairman Don Mackay said while the EY report would take a broad view of all of agriculture, it was what the red meat industry had been talking about for some time.

One area RMAC particularly wants looked at is adoption.

“We do a tremendous amount of research in this country but outside of high input intensive ag sectors who are early adopters, we lack extension services and the more broadscale industries are not good at adopting,” Mr Mackay said.

“There is no point research sitting on the shelf.”

The new vision of Australia’s innovation system is expected to be launched early next year.

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