Enhancing private-sector agricultural RD&E investment in Australia

In 2011 the Australian Farm Institute completed a research report titled Private sector investment in agricultural research and development in Australia (Keogh & Potard 2011). Five years later the AFI will be undertaking similar research with the critically important addition of the word enhancing. Adding enhancing to the title brings a sense of urgency. Rather than just investigating the level and status of private-sector research and development (R&D) there is a recognition that the agriculture sector needs more private-sector R&D and it needs it now. So, why the urgency?

The Australian Government currently invests approximately $200 million in CSIRO agricultural research, $250 million in matching R&D funding for the rural research and development corporations (RDCs), and some $50 million in agriculture-related Cooperative Research Centres each year. Australian farmers also invest approximately $250 million annually, collected via R&D levies. State governments are estimated to invest approximately $250 million annually in agricultural R&D, although this has declined over recent years. In total, current public-sector R&D investment equates to approximately $1000 million annually, or between 1.5% and 2% of the gross value of agricultural production. This is a significant decline from the investment intensity levels recorded throughout the 1970s and 1980 and all expectations are for government support to continue to decline.

Based on available evidence, the level of public investment intensity in agricultural RD&E in Australia is lower than that observed in Canada; is comparable with some other developed nations; and is higher than the level observed in the United States (US). However, a critical difference in relation to agricultural research, development and extension (RD&E) investment in the US is that public RD&E investment is complemented by a substantial amount of private-sector investment, which makes up between 30% and 50% of total US agricultural RD&E investment (depending on definitions used). In Australia the estimates of private-sector investment in agricultural RD&E range from $200 million (Keogh & Potard 2011) to $600 million (ABS AgSurf database 2015) annually, although definitional issues cloud the accuracy of these estimates.

Increasing private-sector agricultural RD&E will help to maintain research investment intensity however it will also potentially leverage the declining public-sector investment for more targeted outcomes. Public-sector research investment in Australia is declining however it is still relatively strong amongst OECD nations. As several papers in the Autumn 2016 issue of the Australian Farm Institute’s Farm Policy Journal point out however, the conversion of research inputs in Australia to innovation outputs is abysmal.

In their paper, ‘Five ways to improve the agricultural innovation systems in Australia’, Roberson et. al. (2016) argue that in countries where there is a very strong conversion of research inputs to innovation outputs there is generally much stronger relationships between government, research and industry. Enhancing private-sector investment in agricultural RD&E in Australia, if done correctly, could strengthen innovation delivery partnerships and ensure that declining public investment is used as effectively as possible.

Leveraging and adapting research from global life science and engineering companies to suit the relatively small and often unique Australian agriculture sectors is also in some cases the only way that research can be directed to specific Australian issues. In many cases Australian agricultural production systems are not large enough to self-fund research and the declining public spend is generally being directed away from small industries. Researchers and industry partnering with the private sector to adapt global research outputs to suit Australian conditions can help to address areas of market failure.

The research that will be carried out by the AFI will detail current levels of investment in agricultural RD&E by the private sector and will importantly also develop a comprehensive understanding of the factors that influence investment decisions. Barriers to investment will be further investigated to determine policy measures or initiatives that will assist in increasing the level of private-sector agricultural RD&E investment in the future. 

Image:  ACIL Tasman