Corporate performance
South East Premium Wheatgrowers Association (SEPWA) members (left) Mic Curnow, Christian Siemer and Mark Biven visited flour mills in Singapore, Malaysia and a brewery in China to gain a better understanding of grain quality and market requirements. Photo: SEPWA
The GRDC’s corporate performance is assessed on the basis of formal surveys and analysis. It is measured against the corporate strategies and performance indicators established in the Strategic R&D Plan 2007–12, Prosperity through Innovation, the Annual Operational Plan 2007-08 and in the 2007–08 Portfolio Budget Statements for the Department of Agriculture, Fisheries and Forestry.
This section describes the GRDC’s corporate performance in 2007–08 in terms of:
• evidence of effective implementation of the corporate strategies set out in the Strategic R&D Plan 2007–12
• grain grower feedback on performance, based on the 2008 GRDC Organisational Performance Research Survey
• results of the impact assessments of five R&D project clusters
• Australian Bureau of Agricultural and Resource Economics findings on farm financial performance and total factor productivity in the grains industry.
The details of the performance of each output group against established indicators are shown in the respective output group sections.
Corporate strategies
Table 4 provides examples of how the GRDC progressed against its performance measures for 2007–08 and its objectives and strategies for 2007–12.
| Table 4 Corporate overview | |
|---|---|
| Strategy: Coordinate a national grains R&D agenda and portfolio | |
| Indicator | Performance |
Significant evidence of the GRDC taking a lead role in coordinating and facilitating a national grains R&D agenda, which has major impact on grower profitability and sustainability Key GRDC investments demonstrate national coordination with research partners |
The GRDC, in collaboration with other RDCs, CSIRO and the federal, state and territory governments, facilitated the development of the draft national Climate Change Research Strategy for Primary Industries. The GRDC worked with those partners to develop relevant performance indicators and time-lines to implement the national strategy. The GRDC has been working with breeding companies, seed companies, bulk handlers and marketers to simplify End Point Royalty (EPR) collection systems and build a whole-of-industry ‘culture of compliance’. During 2007–08, agreement was reached on an industry standard plant breeder’s rights (PBR) licence. As well as supporting the process, the GRDC published a fact sheet on the PBR agreement. The GRDC facilitated the work of the Australian Winter Cereals Pre-Breeding Alliance to endorse a list of medium- to long-term priority traits for research in biotic and abiotic stress tolerance in wheat. These lists will guide future investments by the GRDC and its research partners in wheat pre-breeding. The GRDC facilitated the formation and implementation of National Agribusiness Reference Group workshops and Regional Agribusiness Reference Groups in Horsham (Victoria), Moree (New South Wales) and Perth. |
| Strategy: Deliver against Australian Government priorities | |
| Ongoing endorsement by the Minister for Agriculture, Fisheries and Forestry and the Parliamentary Secretary to the Minister on meeting the Australian Government prioritiesa | The GRDC’s Strategic R&D Plan 2007-12 was approved by the Minister on 7 July 2007. The GRDC’s Annual Operational Plan 2007–08 was approved by the Minister on 9 July 2007. The GRDC’s investments in 2007–08 addressed the following priorities of the Australian Government:
The GRDC’s Annual Operational Plan 2008–09 was approved by the Minister on 27 June 2008. |
| Strategy: Grow and leverage total grains R&D investment | |
| Significant evidence of leveraging total grains R&D investment | The GRDC continued to act as a catalyst in growing and leveraging total grains R&D investment in Australia. For example, for every dollar the GRDC invested:
Other examples of the GRDC’s leveraging include investments in wheat breeding, barley breeding and Philom Bios (Australia) Pty Ltd. |
| Strategy: Ensure R&D is market-driven | |
| Significant evidence of market signals being taken into account in R&D investments | Market
signals on new opportunities for future research were obtained through
GRDC-sponsored visits to bakers, millers and other manufacturers in
Asia. The list of priority traits for research in biotic and abiotic
stress tolerance in wheat endorsed by the Australian Winter Cereals
Pre-Breeding Alliance will guide future investments by the GRDC and its
research partners in wheat pre-breeding. The
GRDC’s investment in the National Variety Trials (NVT) program provided
growers and agricultural advisers with independent information on the
agronomic performance of new variety releases of winter cereals, canola
and selected pulse crops. The GRDC considered grower R&D needs and priorities in detail while developing the annual operational plan. |
a
The indicator listed above is taken directly from the Australian
Government’s 2007-08 Portfolio Budget Statements. Due to the change in
government GRDC is now accountable to the Australian Government through
the Minister for Agriculture, Fisheries and Forestry. b Table 9 shows examples of how GRDC-supported projects addressed Australian Government priorities; Appendix 1 details how GRDC investment dollars were apportioned to meet Australian Government priorities. |
|
In 2008 growers felt more positive about the current state of the Australian grains industry than in 2006. The majority (70 percent) described the industry as being in ‘extremely good’, ‘good’ or ‘fair’ shape, while 30 percent felt the industry was under some or considerable threat (down from 49 percent in 2006).
Growers generally remained confident that grains R&D is addressing on-farm long-term sustainability threats (73 percent, slightly down from 77 percent in 2006), while 85 percent of growers believed that investment in R&D is critical for their farm business. Most growers (76 percent) felt they were directly benefiting from grains industry RD&E activities undertaken in the past five years—a slight decrease from 77 percent in 2006—with the majority (61 percent) believing that GRDC-specific activities played a role, although this group had declined significantly since 2006 (68 percent).
More results from the GRDC Organisational Performance Research Survey are provided in the reports on performance for individual output groups.
Impact assessments
One of the GRDC’s core business processes is to ‘Evaluate the impact of R&D and report to stakeholders’. During 2007–08 the corporation engaged an independent consultant to assess the impact of five major project clusters which have either been completed or achieved significant milestones between 2003 and 2007. The assessment method was approved by the Productivity Commission and the Council of Rural Research and Development Corporation Chairs. The following sections summarise the findings of the independent reviews.
Grain grower survey
The GRDC has set key performance indicators (KPIs) for each of the four output groups, as identified in the organisation’s Strategic R&D Plan 2007–12, Prosperity through Innovation. Many of these KPIs are based on the perceptions and activities of grain growers—such as their uptake of new grain varieties and adoption of new farm management practices and technologies. The GRDC Organisational Performance Research Survey of Australian grain growers is the primary means of collecting data about these factors.
As foreshadowed in last year’s annual report, the GRDC Organisational Performance Research Survey of Australian grain growers took place again in 2007–08, after being suspended the previous year as part of the GRDC’s response to the effects of the severe drought that occurred in 2006–07. Under the Strategic R&D Plan 2007–12, the GRDC intends to conduct grower surveys biennially, in 2008, 2010 and 2012.
The survey results in Table 5 present the GRDC’s track record of achievement against selected KPIs over the period from 2004 to 2008. The 2008 results are based on the conduct of 1,201 computer-assisted telephone interviews with grain growers across Australia, covering the GRDC’s three production regions and key agroecological zones.
The large majority of growers surveyed (68 percent) continued to rate the overall performance of the GRDC fairly highly, although this proportion fell slightly from over 70 percent in both 2005 and 2006. The organisation is seen to provide highly credible information by 85 percent of growers, although there are opportunities to enhance the GRDC’s relevance through working more closely with, and engaging, growers.
| Table 5 GRDC performance against selected key performance indicators, 2004 to 2008, by proportion of growers surveyed (percent) | ||||
|---|---|---|---|---|
| Key performance indicator | 2004 | 2005 | 2006 | 2008 |
| Growers rating GRDC performance very or fairly high | 68 | 72 | 71 | 68 |
| Growers directly benefiting from GRDC specific activities or initiatives in the past five years | 67 | 66 | 68 | 61 |
| Growers adopting actions to ensure longer term sustainability of farm | 92 | 88 | 89 | 86 |
| Growers adopting actions to ensure longer term sustainability of farm as a result of GRDC-specific activities or initiatives | 40 | 40 | 45 | 40 |
| Note: The GRDC Operational Performance Survey was suspended in 2007 as part of the GRDC’s drought response. | ||||
Esperance grower Ross Whittal shows off his crop, which was planted using controlled-traffic technology. Photo: Evan Collis
Total investment in the projects between 2004 and 2008 was $16.9 million, of which $5.8 million was contributed by the GRDC. The project has an estimated net present value of $10.4 million and a benefit to cost ratio of almost 2.7:1 over 25 years.
Social benefits of these programs included reduced risk and increased resilience, achieved by maintaining more diverse cropping and grazing, and buffering farmers and regions against production and price volatility.
Functional genomics
The functional genomics projects identified and cloned a large number of genes and/or proteins for the development of new cereal varieties. The projects produced a number of patent applications.
The total investment between 2000 and 2004 was $14.8 million, of which $5.9 million was contributed by the GRDC. The project has an estimated net present value of $3.8 million and a benefit to cost ratio of 1.4:1 over 25 years.
Major economic, social and environmental impacts of the projects include:
- increased profitability through higher yielding varieties
- more efficient water usage
- potential for improved health of consumers through a higher fibre intake
- the increased capacity of Australian science to be engaged in genetic manipulation activities in plants.
Figure 10 shows a Monte Carlo analysis of possible net present value outcomes when incorporating factors of risk in the evaluation. This shows there is a 66 percent probability that the net present value will be between $25.0 million and $100.0 million over a 25-year time frame.
Australian Cereal Rust Control Program
The Australian Cereal Rust Control Program (ACRCP) monitors and produces information on cereal rust pathogens, identifies and characterises new sources of rust resistance in cereals, and assists Australian cereal breeders to incorporate rust resistance into new cultivars.
Total investment in the ACRCP between 1991 and 2007 was $57.7 million, of which $17.6 million was contributed by the GRDC. The 17-year investment by GRDC has an estimated net present value of $632 million and a benefit to cost ratio of 23:1 over 25 years.
Environmental benefits of this program included higher soil moisture storage, less erosion, and reduced export of contaminants into waterways. Social benefits included the greater stability of production in rural communities and a contribution to national food security.
Precision Agriculture Initiative
The Precision Agriculture Initiative was developed to provide significant benefits to grain growers through the development of precision agriculture variable rate technology. The primary quantifiable impact of this program is increased profitability to grain growers through efficiencies in the management of farm inputs (such as fertiliser and herbicides).
The total cost of the initiative between 2002 and 2007 was $15.6 million, of which $5.9 million was contributed by the GRDC. The project has an estimated net present value of $56.5 million and a benefit to cost ratio of 9:1 over 25 years.
Environmental benefits derived from this program included:
- reduced off-site impacts from excess nutrients and herbicides, resulting in improved water quality and aquatic habitats
- reduced degradation of natural resources from the improved match between land capability and land use
- increased sustainability of resources using environmental management systems. Social benefits included improved occupational health and safety, through reduced operator fatigue; and the stronger capacity of rural regions to use new developments in information technology.
Other cereals
The ‘other cereals’ project cluster is made up of the oats, triticale and durum breeding programs. These breeding programs have improved productivity and have an important role in maintaining sustainable grazing systems.
With receipts rising relative to costs, farm cash income in the grains industry is projected to more than triple to average $167,500 per farm. This is expected to contribute to the average grain producer recording a farm business profit of $48,000 in 2007–08 after realising a sizable loss of almost $83,000 per farm in 2006–07, the largest average farm business loss recorded by cropping farms since ABARE commenced its survey of broadacre farms in 1977–78.
The rate of
return (including capital appreciation) rose slightly to 7.1 percent in
2006–07 (the latest year for which rate of return data were available
from ABARE at the time of publication) after hitting a six-year low of
6 percent in 2005–06.
Total factor productivity
Total factor productivity (TFP) growth in Australia’s broadacre industries is highly variable on a year-to-year basis, but has generally trended up over the past three decades. The latest TFP results available from ABARE are for the period between 1977–78 and 2005–06. During that period, broadacre producers’ productivity growth averaged 1.5 percent a year, with cropping (2.3 percent) and mixed livestock-cropping farms (1.7 percent) recording the highest annual growth in productivity.
Productivity growth within the Australian cropping industry is fairly similar among regions, but the factors driving it differ markedly. Producers in the western and southern agroecological regions realised strong growth in farm outputs as well as incurring some input growth. In the northern agroecological region productivity growth was the result of more modest growth in output, accompanied by a reduction in overall input use.
| Table 6 Total factor productivity growth by GRDC production region, 1977–78 to 2005–06 (percent) | |||
|---|---|---|---|
| Region | Input growth | Output growth | Total factor productivity growth |
| Northern | -0.7 | 1.7 | 2.3 |
| Southern | 2.4 | 4.8 | 2.4 |
| Western | 2.2 | 4.7 | 2.4 |
| Source: ABARE, Financial performance of grains producers, 2005–06 to 2007–08, Australian Grains Industry Report 08.1, June 2008. | |||
Climate variability
The climate variability projects focused on reducing the impact of climate variability through the development of decision tools and rules. Key impacts included enhancing grower productivity through better risk management, and providing better information for natural resource management.
The total cost of the investment from 2003 to
2007 was $13.5 million, of which $5.9 million was contributed by the
GRDC. The project has an estimated net present value of $4.9 million
and a benefit to cost ratio of 1.7:1 over 25 years.
Environmental
benefits of this project cluster include better natural resource
management. Social benefits include the enhanced capacity of land
managers and communities to understand and manage climatic variability
and climate change and reduce risk.
Figure 11 shows a Monte Carlo Analysis of possible net present value outcomes when incorporating factors of risk in the evaluation. This shows there is a 52 percent probability that the net present value will be between $15 million and $100 million over a 25-year time frame.
Farm performance in the Australian grains industry
The
GRDC looks at farm financial performance and total factor productivity
to assess the industry-wide impact of the GRDC’s corporate strategies.
In
order to monitor farm performance in the Australian grains industry,
the GRDC, along with other rural R&D corporations (RDCs) and the
Department of Agriculture, Fisheries and Forestry, funds a range of
surveys and analytical research conducted by the Australian Bureau of
Agricultural and Resource Economics (ABARE), in particular the
Australian Agricultural and Grazing Industries Survey (AAGIS). The
results presented below for farm financial performance and total factor
productivity (TFP) draw heavily from the information obtained in the
AAGIS survey.
Financial performance
Grain producers are projected to realise a 20 percent increase in total cash receipts in 2007–08, after a 56 percent rise in cropping receipts due to increased production and prices is partly offset by a decrease in livestock receipts as producers rebuild livestock numbers. Higher input prices and increased crop plantings are expected to increase outlays on crop inputs, in particular fertilisers, chemicals and fuel.
Mr John Quealy, CLIMA, emasculating narrow-leafed lupin flowers prior to cross pollinating with yellow lupin pollen. Photo: Evan Collis