Annual Operational Plan GRDC. Grains Research & Development Corporation.

Transcription

1 Annual Operational Plan GRDC Grains Research & Development Corporation

2 GRDC The Grains Research and Development Corporation is a statutory corporation with a mandate to plan and invest in R&D for the Australian grains industry. Its primary business activity is the allocation and management of investment in R&D. GRDC Vision Driving innovation for a profitable and environmentally sustainable Australian grains industry. GRDC Values Commitment and action in meeting our stakeholder/customer needs and exceeding their expectations GRDC Mission To invest in innovation for the greatest benefit to its stakeholders. This will be achieved by being a global leader in linking science, technology and its adoption with industry and community needs. Winning as a team Achievement of superior results Creativity and innovation Openness and trust in dealing with people Performance-driven culture Ethical behaviour in all our activities

3 27 April 2006 The Hon. Sussan Ley, MP Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry Parliament House CANBERRA ACT 2600 cc The Hon. Peter McGauran, MP Minister for Agriculture, Fisheries and Forestry Dear Parliamentary Secretary I am pleased to submit for your approval the Annual Operational Plan of the Grains Research and Development Corporation (GRDC) for the financial year This is required under sections 25 and 26 of the Primary Industries and Energy Research and Development Act In developing the plan, the GRDC has been conscious of the need to facilitate performance reporting, as required under the Commonwealth Authorities and Companies Act This is consistent with the GRDC s responsibility to plan and report in an outcomes and outputs framework. The coming financial year will be the fifth and final under the corporation s third Five Year Research and Development Plan, Driving Innovation. Research activities supported in (outlined in this annual operational plan) will contribute to achieving the strategic direction and objectives set out in Driving Innovation for the period 2002 to Table 1 indicates how the GRDC s R&D portfolio addresses the Australian Government s National Research Priorities and Rural R&D Priorities. Section 6 of this Annual Operational Plan explains that estimates of expenditure are indicative. Changes in the operating environment may require the GRDC to vary the total expenditure or specific allocations to secure its objectives. Variations may be required as a result of additional investments not presented here, or as a result of budget revisions arising from changes in levy income. Yours sincerely TERRY J ENRIGHT Chairman 1st Floor, 40 Blackall Street, Barton ACT 2600 PO Box 5367, Kingston ACT 2604 Telephone (02) Facsimile (02) grdc@grdc.com.au

4 Postal address Grains Research and Development Corporation PO Box 5367 KINGSTON ACT 2604 Location Level 1, Tourism House 40 Blackall Street BARTON ACT 2600 Telephone: Facsimile: Website: Production notes Compliance editor: Noelia Freitas Program editor: Zoltan Lukacs Concepts, text and research: GRDC Editing and indexing: WordsWorth Writing, Canberra Design and typesetting: Four Design Group, Canberra Printing: Goanna Print Grains Research and Development Corporation 2006 ISSN X This publication is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without permission from the Grains Research and Development Corporation. ii

5 Contents Executive summary 3 Overview 3 Outcomes and structure 3 Priorities and performance 4 1 The Grains Research and Development Corporation 5 Overview 5 Structure 5 Strategic business plan 5 2 Investments 7 Business environment 7 Investment process 7 Investment priorities 8 3 Accountability 10 Annual operational plan 10 Output groups 10 Performance measurement 10 4 Research directions 11 Targeted research investment 11 Australian Government priorities 11 Australian graingrowers priorities 11 5 Planned outputs 15 Output Group 1 Varieties 15 Output Group 2 Practices 19 Output Group 3 New Products 23 Output Group 4 Communication and Customer Services 26 Key operational activities 28 6 Summary of income and expenditure estimates 31 Estimates of income 31 Estimates of expenditure 31 Consultation and projects with the Grains Council of Australia 32 List of abbreviations 36 1

6 Tables and Figures Tables Table 1 Investments to meet key customers priorities 11 Table 2 Estimates of expenditure 34 Table 3 Government Research Priorities ($ and % values) 35 Figures Figure 1 Previous and current business structures 6 Figure 2 Outcome and outputs relationship 10 Figure 3 Value chain 28 Figure 4 Forecast total income 31 Figure 5 Forecast levy income 31 Figure 6 Forecast expenditure 32 2

7 Executive Summary Overview The Annual Operational Plan (AOP) is the fifth and final plan devised against Driving Innovation, the GRDC s Five Year Research and Development Plan for 2002 to This year, the Annual Operational Plan again reflects the strategic business plan, The Way Forward, devised by the GRDC to translate our broad corporate aims into practical objectives and strategies that are embraced at all levels of the organisation. The Way Forward also sets the foundation for the development of the next five-year R&D plan, which will cover the period 2007 to 2012 and be implemented from 1 July After summarising the organisation and its objectives, this operational plan describes how through a targeted investment portfolio, four output groups and a clearly defined business structure the GRDC will meet and strive to exceed the expectations of our key customer groups and stakeholders in addressing R&D priorities for the Australian grains industry in Outcome and structure The overall outcome targeted by the GRDC remains unchanged: Through its commitment to innovation, an Australian grains industry that is profitable and environmentally sustainable for the benefit of the industry and wider community. The required outcome of the GRDC s strategy is an Australian grains industry in which R&D enables Australian graingrowers to effectively compete in the ever-changing global grains markets. This will be achieved through the following core strategies: coordination of a national grains R&D agenda and portfolio delivery of government priorities (in relation to the Australian Government s National Research Priorities and stated priorities for rural R&D corporations and companies 1 ) growth and leveraging of total grains R&D investment market-driven R&D. The outcome reflects the corporate vision in Driving Innovation, and is consistent with the Department of Agriculture, Fisheries and Forestry s portfolio goal of achieving more sustainable, competitive and profitable Australian agricultural, fisheries, food and forestry industries. This Annual Operational Plan details how four output groups will contribute to achieving the outcome in The four output groups, which reflect the four pathways to market identified in the strategic business plan, are: 1 Varieties 2 Practices 3 New Products 4 Communication and Customer Services. This plan also describes the business structure and enabling functions through which these output groups will meet their objectives. 1 The National Research Priorities are: an environmentally sustainable Australia; promoting and maintaining good health; frontier technologies for building and transforming Australian industries; and safeguarding Australia. The Rural R&D Priorities, announced in March 2003, are: sustainable natural resource management; improving competitiveness through a whole-ofindustry approach; maintaining and improving confidence in the integrity of Australian agricultural, food, fish and forestry products; improved trade and market access; use of frontier technologies; protecting Australia from invasive diseases and pests; and creating an innovative culture. 3

8 Priorities and performance To help to achieve the objectives set out in Driving Innovation and The Way Forward, the GRDC has identified key operational and investment priorities for This plan provides details of these priorities, and describes how they relate to the prevailing business environment and the R&D priorities of our key customer groups. Priorities for include: improve and enhance the performance of the National Variety Trials program implement a coordinated national approach to barley breeding implement a coordinated national approach to pulse breeding manage the transition to new wheat-breeding arrangements to ensure that the needs of Australian graingrowers continue to be met develop a coordinated approach to pasture breeding and management take conservation agriculture to the next step by identifying limits to its adoption redefine the delivery channels (best ways to get products to market) for the adoption of R&D technology outputs better define what drives the adoption of R&D outputs, including awareness, tools and capacity to adopt changes, and what motivates growers to adopt new technology conduct an audit of grains industry capacity needs review the total grains R&D portfolio to help determine the appropriate balance between the different areas and types of investment prepare a detailed value driver analysis as a tool to determine maximum payback for R&D investment decisions. These priorities are part of the core strategy of coordinating a national approach to grains R&D, which includes an emphasis on reducing duplication and fragmentation. Performance measurement, at both the corporate and program levels, continues to be a key component of the Annual Operational Plan. Performance indicators for each output group have been identified. The GRDC undertakes annual independent market research to measure the performance of its four output groups as well as the satisfaction of its stakeholders, including the Australian Government and graingrowers. The information gathered from this market research, and the detailed assessment of performance, will be discussed in the GRDC s annual report. 4

9 1 The Grains Research and Development Corporation Overview The Grains Research and Development Corporation (GRDC) was established in 1990 as a statutory corporation under the Primary Industries and Energy Research and Development Act The GRDC s role is to invest in research, development and related activities to benefit Australian graingrowers, the wider grains industry and the Australian community. In doing so, the GRDC invests in research where obstacles to industry s progress exist and where R&D may be effective in overcoming these obstacles. This includes: investigating and evaluating the requirements for R&D in the grains industry coordinating or funding the execution of R&D activities facilitating the dissemination, adoption and commercialisation of the results of R&D. The GRDC research portfolio covers a total of 25 leviable crops. 2 These span temperate and tropical cereals, oilseeds and pulses. The following sections describe how the GRDC is structured to deal with the complexities of investing in R&D on behalf of the grains industry, and approaches the task through clearly defined organisational and investment strategies, linked to rigorous risk management and performance measurement processes. Structure Board and management team A board of nine directors governs the GRDC, while the Executive Management Team, based in Canberra, leads its nationwide operations. As well as advising the GRDC Board, the management team is responsible for realising the Board s priorities and managing and evaluating R&D investments in the Australian grains industry. National Panel The National Panel includes the three regional panel chairs and the GRDC s Managing Director and executive managers. It is the key body for developing and recommending to the Board the GRDC s overall corporate 2 Crops with levies are: wheat; coarse grains barley, oats, sorghum, maize, triticale, millets/panicums, cereal rye and canary seed; pulses lupins, field peas, chickpeas, faba beans, vetch, peanuts, mung beans, navy beans, pigeon peas, cowpeas and lentils; and oilseeds canola, sunflower, soybean, safflower and linseed. strategies and direction. It also develops and recommends investments for the national elements of the research programs. In doing so, the panel considers advice from the teams that manage the GRDC s R&D investment portfolio. The National Panel also assists the Board in maintaining linkages with its two key customer groups, the Australian Government and Australian graingrowers, as well as research partners. Regional panels The GRDC s three regional panels develop regional investment strategies and make recommendations on the allocation of investment budgets to meet regional needs and priorities. This is also achieved through their membership on program teams that advance recommendations on investments to the GRDC Board via the National Panel. Regional panels also identify investments that may respond to national priorities. An additional core function of the regional panels is to provide an interface with key customer segments, principally growers, to promote awareness of GRDC investments and research outcomes and the GRDC s strategic direction. Strategic business plan Purpose In 2004 the GRDC conducted a significant strategy review that led to the release of the GRDC strategic business plan, The Way Forward, in January This strategic document is both supplementary and complementary to Driving Innovation, the GRDC s Five Year Research and Development Plan for 2002 to 2007, and articulates the GRDC s response to: the complex and dynamic research environment the GRDC currently works in predictions for industry growth outlined in the Australian Grains Industry Strategic Plan the rapid changes and consolidation occurring within the grains industry the changes occurring within state-based departments of agriculture the changing profile of the Australian graingrower. The strategic plan identifies four principal pathways to market for its outputs, in order to effectively deliver research outcomes to end-users and customers: better varieties faster, better farming practices adopted faster, new products, and building research capacity. 5

10 Implementation In 2005, as the first step towards implementing the new strategy, the GRDC reorganised its business structure. The new business structure comprises: four output groups Varieties, Practices, New Products and Communication and Customer Services each of which corresponds to one of the strategic pathways to market two enabling functions Corporate Strategy and Program Support, and Corporate Services. Figure 1 illustrates the relationship between the previous organisational arrangement and the revised structure. In other steps towards implementing The Way Forward, the GRDC has also: developed separate investment strategies for each output group clearly identified two key customer groups the Australian Government and Australian graingrowers improved communication between its key customer groups, research partners, Board, panel members and staff articulated the roles and responsibilities of the national and regional panels simplified and streamlined the corporation s procurement guidelines developed a comprehensive risk register, comprising strategic and operational risks, and provided quarterly traffic light risk reports (identifying levels of risk as red, amber or green) to the Board selected an off-the-shelf project management system, to which business processes will be aligned. Figure 1 Previous and current business structures Outcome Through its commitment to innovation, an Australian grains industry that is profitable and environmentally sustainable for the benefit of the industry and wider community Varieties Practices New Products Communication and Customer Services Winter Cereals Improvement Crop Improvement Sustainable Farming Systems Crop Protection* Value Chain and Business Development Product and Service Delivery Crop Protection* P A T H W A Y S T O M A R K E T Corporate Strategy and Program Support Corporate Services Strategic Development E N A B L I N G F U N C T I O N S Figure Key and Notes Dark Red Lines of Business Black Former Business Units and Programs * A number of investments previously in the Crop Protection Program will be in the Varieties line of business 6

11 2 Investments Business environment Each quarter, the GRDC reviews the ever-changing business environment in which it operates, to identify emerging issues and key drivers of change. Key issues that the GRDC expects to face in are: the continuing decline in real terms of trade for the grains industry, with rapidly increasing on-farm input costs driven by rising fuel prices causing particular concern among many graingrowers markets driven by consumers and by the logistics required to deliver food and fibre to aggregations of people in cities the need to demonstrate compliance with internationally accepted quality standards and global accreditation programs threats to Australia s competitive advantage as a supplier of grain in the global marketplace, such as research in North America that seeks to develop wheat varieties to compete with Australian varieties that are sold to Asian markets increasing grain production from competitors, with countries including Brazil, China and India emerging as major players increasing uncertainty regarding AWB Limited s management of the single desk, as a result of the investigations by the Inquiry into certain Australian companies in relation to the United Nations Oil-for-food Program (the Cole Inquiry) the need for the GRDC to work closely with marketers and bulk handlers to identify and meet the needs of high-value grain markets in which Australia can secure a competitive advantage the ongoing globalisation of agribusiness and agricultural research, which is producing many new cross-sectoral alliances, mergers, acquisitions and joint ventures a number of issues around grower willingness to pay End Point Royalties (EPRs) on grain varieties, as EPRs increasingly become part of the Australian grains industry continuing work by the GRDC and its R&D partners to review strategic directions for wheat breeding, barley breeding and pulse breeding. These are complex undertakings requiring intensive consultation and careful change management. The period will see the establishment of nationally coordinated breeding programs for barley and pulses, through Barley Breeding Australia and the National Pulse Breeding Program. Investment process The GRDC s investment process is based on a three-stage cycle of strategy review, investment planning and implementation. After undergoing a rigorous review, in consultation with stakeholders, the GRDC Investment Plan was released to the research community in October This plan included all investments going to open tender. The plan provides a clear indication of the GRDC s investment priorities for that will complement the existing research portfolio and help to achieve the objectives outlined in both The Way Forward and Driving Innovation. Increasingly, the GRDC is focusing on developing flexible business models and enabling strategic alliances that provide access to additional capital and allow enhanced management of intellectual property. The GRDC will continue to link science with business, and to commercialise research outputs where there are clear benefits to stakeholders, and where commercialisation allows further investment in developing good research outcomes. The GRDC s procurement process for each investment priority includes open tender as well as limited tender and direct negotiations. In addition, the E-concept process introduced in has continued to be used for investments. The process invites proposals, via the GRDC website, for innovative ideas with potential to make major contributions to graingrowers benefit and profitability. It ensures a pathway through to the GRDC for high originality and innovation. 7

12 Investment priorities The investment priorities in are guided by the objectives and strategies of each of the four output groups. They are also guided by the five key themes of Driving Innovation: driving innovation; business driven; linking science, technology and adoption; being a global leader; and sustainability the triple bottom line. Outputs consistent with these themes are delivered through the output groups and enabling functions (shown in Figure 1). The Australian Government s National Research Priorities are reflected in the existing GRDC investment portfolio and will be reinforced in new investments, as follows: An environmentally sustainable Australia investments in developing practical environmental management systems for graingrowers Promoting and maintaining good health investments in research related to the assessment of food safety risks, on-farm management of food safety, and breeding for health-related grain traits Frontier technologies and building and transforming Australian industries investments in wheat and barley molecular marker programs and other frontier breeding technologies Safeguarding Australia collaborative investments in discovering and introducing plant genes to defend against pests and diseases, as well as improving farming practices to minimise the impact of pests and diseases. These are presented in more detail in Table 1. As described in the Executive Summary, the GRDC has identified key priorities for that will help to achieve the strategies set out in Driving Innovation and The Way Forward. The new and continuing investments that will address these priorities are described in more detail in Part 5, and include the following: National Variety Trials The National Variety Trials program (NVT) is a national initiative to provide growers with information on the performance of new grain varieties through independent, robust and comparative variety testing. It is expected that this information will lead to faster adoption by growers of new superior varieties, thereby improving grain production. A coordinated national approach to barley breeding The GRDC and its partner organisations in barley breeding have agreed in principle to establish a coordinated national breeding program called Barley Breeding Australia. In the GRDC and its partners will focus on formalising the arrangement, which involves rationalising six breeding programs into three while continuing to service barley growers nationally, and implementing research plans to meet national, market-driven objectives. A coordinated national approach to pulse breeding The GRDC and its partners have established a national program for pulse breeding to provide an internationally competitive breeding capability for four major temperate pulses: chickpeas, faba beans, field peas and lentils. The program will improve integration and collaboration at the national level, while recognising specific regional needs of growers and end-user requirements of the marketing sector. New grain products The GRDC is forming a joint venture, with CSIRO and the French company Groupe Limagrain, to bring high-amylose wheat to market. The advantage of high-amylose wheat is that it contains high levels of a starch that is not easily digested, thereby imparting a low glycemic index with associated health benefits. This attribute has the potential to support claims that consuming high-amylose wheat will reduce the risk and impact of diet-related diseases such as colorectal cancer, type II diabetes and obesity. Biological Inputs for Profitable Farming The GRDC and its Canadian partner Philom Bios are forming a joint venture in Australia to help bring to market new soil inoculant products sourced from GRDC-supported research programs at CSIRO and Australian universities and departments of agriculture, and from Philom Bios. 8

13 A coordinated approach to pasture breeding and management The GRDC, in partnership with Australian Wool Innovation Limited, Meat and Livestock Australia, Dairy Australia and the Rural Industries Research and Development Corporation, is developing a coordinated approach to the breeding and management of pasture, known as Pastures Australia. The focus is on maximising the benefits to growers from the use of pastures. Partnerships with government breeders and scientists and with the seed industry will be crucial to providing least-cost benefits to growers. Conservation farming Conservation farming techniques have been adopted widely in some agroecological zones, but their uptake is still patchy in others. A new initiative to identify limits to the adoption of conservation agriculture, and to take the techniques to the next step, is being developed. In particular, the use of cover crops to maximise surface cover and discs to minimise soil disturbance, and the application of approaches to plant nutrition and precision agriculture more appropriate to conservation farming, will be tested across the southern and western regions. Best practice benchmarking In response to the decline in terms of trade for Australian graingrowers, the GRDC will embark on an initiative in to analyse and benchmark productivity-enhancing practices and technologies that can ultimately be adopted by graingrowers across wider areas of the grains belt. A key feature of this initiative will be to identify the key onfarm practices in each region and benchmark them against physical, financial and environmental outcomes. Capacity building The GRDC continues to work collaboratively with research partners (universities, departments of agriculture, CSIRO, R&D corporations and cooperative research centres) to map industry capacity. This work will identify likely future capacity gaps where there will be a lack of expertise to underpin the national effort on grains research. Market driven/focus The GRDC will extend the objective grain quality testing technology developed for wheat and barley to the stage at which it can be transferred to a commercial partner to enable the development of instrumentation capable of being used by grain majors. Proactively addressing the Australian Government research priorities The GRDC will continue to effectively integrate the Australian Government s National Research Priorities and priorities for rural R&D corporations into the corporation s goals and priorities for new investment. 9

14 3 Accountability Annual operational plan The GRDC s Annual Operational Plan is published in response to directions given in legislation and by the Australian Government. These are: section 25 of the Primary Industries and Energy Research and Development Act 1989, which requires the Annual Operational Plan to describe how the activities planned for the year will satisfy the objectives and strategies outlined in the five-year R&D plan a ministerial direction which requires the annual operational plan to demonstrate a clear link to the outcome output input framework identified in the five-year R&D plan include relevant performance information, as the subsequent annual report will require assessment and comment for its report on the GRDC s achievement of planned outputs and outcomes comply with the enabling legislation and be consistent with the reporting requirements outlined in the Commonwealth Authorities and Companies (Report of Operations) Orders 2002 made under section 48 of the Commonwealth Authorities and Companies Act 1997 a departmental direction which requires consistency with the outcomes, outputs and performance measures specified in the minister s Portfolio Budget Statements. Output groups For the purposes of the Annual Operational Plan and annual report, the GRDC s operations are divided into four output groups, which reflect the four pathways to market identified in the strategic business plan. The output groups are: 1 Varieties 2 Practices 3 New Products 4 Communication and Customer Services. The relationship between the GRDC s outcome and outputs is shown in Figure 2. Performance measurement As an Australian Government authority, the GRDC reports on its performance as part of the annual budget process, addressing agreed performance indicators set out in the Department of Agriculture, Fisheries and Forestry portfolio budget statements. The output groups performance indicators are tracked by data sources, including annual surveys of industry and government stakeholders, covering: changes in the level of the Australian Government s satisfaction (expressed in feedback from the Department of Agriculture, Fisheries and Forestry) with the extent to which the Australian Government s National Research Priorities and the stated priorities for rural R&D are being addressed significant evidence of the GRDC taking a lead role in coordinating and facilitating a national grains R&D agenda graingrowers assessment of the GRDC s performance (the target is for the proportion of growers giving the GRDC a rating of high or very high performance to increase to 75 percent by the end of ) improvements in the performance of the grains industry, measured by Australian Bureau of Agricultural and Resource Economics analyses of industry performance within the industry s agroecological zones. Other, corporate-level performance indicators are tracked by: assessment of innovation and flexibility in developing contractual relationships with the GRDC s R&D partners assessment of the quality of the GRDC s corporate governance, measured against Australian National Audit Office best practice guidelines. Figure 3: Outcome and outputs Outcome Through its commitment to innovation, an Australian grains industry that is profitable and environmentally sustainable for the benefit of the industry and wider community Output Group 1 Varieties Output Group 2 Practices Output Group 3 New Products Output Group 4 Communication and Customer Services 10

15 4 Research Directions Targeted research investment Each year, the GRDC tailors its investment portfolio to best address the R&D priorities identified by its key customer groups: the Australian Government and Australian graingrowers. Table 1 presents a summary of new investments in that address these priorities. The expected total expenditure allocated to address the Australian Government s research priorities appears in more detail in Table 3, page 59. Australian Government priorities The GRDC s R&D portfolio is linked to the Australian Government s: National Research Priorities, as outlined by the Prime Minister in December 2002 priorities for rural R&D, as announced by the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry in March Australian graingrowers priorities The GRDC identified Australian graingrowers R&D priorities for during the development of Driving Innovation, through consultations with the Grains Council of Australia (GCA) and graingrower workshops. Key priorities identified by growers were: sustainability and resource management new and innovative product development development of new alliances and links to market bringing biotechnology to bear on sustainability and consumer benefit outcomes, to support profitable farming systems and access to premium markets effective and targeted transfer and adoption of technology and knowledge for Australian growers integrated pest management to minimise the total cost of pests, diseases and weeds, and to maintain options and control strategies genetic improvement and regional adaptation of new grain varieties for improved resistance to biotic and abiotic stress, and quality standards for specific end-uses independent crop variety evaluation. GRDC investments in particular activities involving the GCA are discussed in detail in Part 6. Table 1: Investments to meet key customers priorities Priorities Australian Government NRP-1 3 : An environmentally sustainable Australia. RRDP-1 4 : Sustainable natural resource management. Relevant new GRDC investments A project to develop, test, demonstrate and communicate improved conservation farming systems that meet the specific and changing needs of cropping regions. The key aims are to improve soil condition and fertility, protect soils from erosion and assist growers to meet catchment management requirements, while producing quality grains that are more attractive to markets. Basic research to develop strategies to maximise microbial benefits from stubble retention. A feasibility study on the potential for perennial wheat to improve water balance, ground cover and system productivity. Workshops that assist growers to understand and better manage the water available in their cropping soils. Work to develop a graingrower-focused decision support tool to manage climate variability. 3 NRP refers to one of the Australian Government s four National Research Priorities. 4 RRDP refers to one of seven ministerial priorities for rural R&D corporations and companies. 11

16 Table 1: Investments to meet key customers priorities Priorities Australian Government RRDP-2: Improving competitiveness through a whole-of-industry approach. NRP-2: Promoting and maintaining good health. RRDP-3: Maintaining and improving confidence in the integrity of Australian agricultural food, fish and forestry products. RRDP-4: Improved trade and market access. NRP-3: Frontier technologies for building and transforming Australian industries. RRDP-5: Use of frontier technologies. NRP-4: Safeguarding Australia. RRDP-6: Protecting Australia from invasive diseases and pests. RRDP-7: Creating an innovative culture. Relevant new GRDC investments A project to identify and benchmark on-farm management practices at a regional level and link farm practices to per hectare profitability. Work to develop value chain maps illustrating movement of grain through the value chain and identifying costs of various pest control treatments and costs of control failures. Work to develop more profitable supply chains for grains into key feed grain markets. An initiative to facilitate investment in innovative value adding in Australia s grains industry. An information program for consumers, relating to grain nutrition and health that will assist the grains industry to maintain and grow demand for grain-based food products. A project to measure the incidence of lupin allergies in the population so that the food and lupin industries can better manage product development. Related work to develop testing protocols for the management of lupin allergen risk in Australasia. Work to ensure more consistent and accurate assessment of quality attributes for barley, particularly the malting quality and the marketability of Australian barley. Work on the development and application of near-infrared (NIR) technology for use in early generation selection of grain quality, quality assessment of grain at receival, and grains processing. Work to develop wheat germplasm with enhanced product colour and colour stability, which are important quality attributes in a number of overseas markets. The evaluation of options to develop an effective genetic wheat transformation platform to link wheat functional genomics programs across Australia. Defect elimination research to develop basic information, more efficient screening technologies and improved parental germplasm that will allow plant breeders to develop wheat cultivars that are less prone to quality downgrading at receival. The evaluation of options to identify existing intellectual property (IP) that is available in other technology areas and might be adapted for the grains industry. Related work seeking to identify third-party IP that is available overseas and might be brought into or adapted for use in Australia. A joint venture between the GRDC and CSIRO that aims to identify candidate genes from insects to deliver insect or disease resistance for crops. The project includes two broadspectrum anti-fungal genes, two anti-insect genes with feeding disruption activity, a mycotoxin degradation gene with potential activity against aflatoxin, and gene enzyme systems for degrading glyphosate and paraquat with crop herbicide tolerance implications as well as a potential human therapeutic application. Projects exploring natural plant resistance to insect feeding. In particular, research on Russian wheat aphid resistance has revealed large differences in the effectiveness of known resistance genes for different aphid biotypes. A project to deliver integrated management packages for pulse diseases in the Northern Region, to incorporate agronomic practices, fungicides, quarantine, and improved genetic resistance. Work will focus on developing effective strategies for chickpeas, mung beans, soybeans and peanuts. A similar project in South Australia to provide growers with situation updates and disease management strategies for pulse crops. Work to develop a diagnostic procedure to identify yield-limiting factors, using existing soil, plant and biological tests and farmer records. Once the procedure has been refined it will be made available to farmer groups, agribusiness and extension officers. Work to develop soil management packages integrating soil biology, physics and chemistry in a form suitable for advisers and leading growers for each of the agroecological zones. Projects to ensure more effective communication and extension between private agronomists and local grower groups in each of the GRDC s three production regions. A project to gather data on how graingrowers use agribusiness as a means to synthesise information for their (grower) use. A range of projects to support the professional development of growers, advisers and researchers, to enhance their capacity to support ongoing industry development. Development of tertiary-level material on precision agriculture for undergraduate courses in agriculture/horticulture, and for post-graduate training. 12

17 Table 1: Investments to meet key customers priorities Priorities Australian graingrowers Relevant new GRDC investments Sustainability and resource management: farming systems and rotations to protect and enhance the soil and water resource base genetic improvement for sustainability. New and innovative product development: identify premium markets to enhance grower returns ensure flow of market signals. Development of new alliances and links to market. A project to develop, test, demonstrate and communicate improved conservation farming systems that meet the specific and changing needs of cropping regions. A project to increase sustainable agricultural profits on alkaline soils through the identification and validation of productive practices to overcome constraints and harness opportunities. A project to develop a management package covering how to avoid or overcome chemical toxicity in highly alkaline soils and sodic subsoils, and the impact of chemical toxicity on crop growth and yield. Basic research to develop strategies to maximise microbial benefits from stubble retention. Workshops that assist growers to understand and better manage the water available in their cropping soils. Work to develop agronomic packages for the use of mustard (Brassica juncea) as a non-cereal rotation crop in cropping systems. A feasibility study on the potential for perennial wheat to improve water balance, ground cover and system productivity. Research under the Soil Biology Initiative to develop soil biological inoculants as follows: nitrogen fixation for legumes phosphorus solubility for legumes and cereals disease suppression and growth promotion for cereals. Work across the grain food chain to enable market signals to drive plant breeding, product innovation and cultural change. A feasibility study analysing the global biofuels industry and assessing the potential for Australian grain farms to supply biofuel substrates which include green biomass, oils, sugars, starches, cellulose, lignin and straw for an Australian grains-based biofuels industry. A project to develop and deliver advice to plant breeders on the canola traits needed for an effective dual-purpose (grazing grain) canola variety. Work to ensure more consistent and accurate wheat quality measurements, across breeding programs, and information on the quality attributes of newly developed varieties. An additional facet is gathering knowledge about wheat products and markets that can be relayed back to breeders. Work to develop closer alliances between Australia s grains and livestock industries, including: a project to develop new tools to monitor and increase end-use value of pulses and oilseed meals in the livestock feed industry work to develop more profitable supply chains for grains into feed grain markets. A project to measure the incidence of lupin allergies in the population so that the food and lupin industries can work together to better manage product development. Bringing biotechnology to bear on A project to develop barley germplasm carrying novel traits or genes in adapted sustainability and consumer benefit backgrounds, for quality attributes and resistances to abiotic and biotic stressors, and to outcomes, to support profitable combine novel traits or genes in these barley lines for adoption by breeders. farming systems and access to Work to develop high-amylose wheat grains in which the amylose content is at least 70% premium markets. (normal content is approximately 24%). Effective and targeted transfer and adoption of technology and knowledge for Australian growers. A project to develop a precision agriculture (PA) training course aimed at growers, consultants and others who are not yet familiar with PA. An initiative to ensure that machinery and equipment logistic systems are designed and tested specifically to meet the needs of Australian cropping systems and conditions, and to improve the efficiency and timeliness of critical operations particularly stubble management, seeding, and spraying. A project to deliver best practice management packages and relevant pathology information to growers, agronomists and the pulse-breeding programs. Emphasis is on the main pulse production areas of the Wimmera and Mallee and the emerging pulse industry in the high-rainfall cropping zone in south-eastern Australia. Projects to ensure more effective communication and extension between private agronomists and local grower groups in each of the GRDC s three production regions. R&D into instrumentation packages to enable rapid on-farm delivery to growers of grain and soil property information based on NIR and mid-infrared (MIR) or other technologies. 13

18 Table 1: Investments to meet key customers priorities Priorities Australian graingrowers Effective and targeted transfer and adoption of technology and knowledge for Australian growers. (continued) Integrated pest management to: minimise total cost of pests, diseases and weeds maintain options and control strategies. Genetic improvement and regional adaptation of new grain varieties for: improved resistance to biotic and abiotic stress quality standards for specific end-uses. Independent crop variety evaluation. Relevant new GRDC investments Work to develop a diagnostic procedure to identify yield-limiting factors, using existing soil, plant and biological tests and farmer records. Once the procedure has been refined it will be made available to farmer groups, agribusiness and extension officers. Projects to develop practical, integrated weed management techniques that provide effective weed control in farming systems in the Northern Region and Southern Region and reduce the likelihood of the development of herbicide resistance. A project to reduce losses from crown rot in durum and bread wheat by determination of disease risk before sowing, crop management advice and improved varieties. Improved crown rot management is expected to lead to an expansion of durum production in South Australia and Victoria. Work investigating infection processes and genetic variation in blackleg and sclerotinia isolates in Australia, with the aim of delivering improved disease control through enhanced fungicide treatments, stubble management strategies and crop resistance. Work to develop and deliver sound management advice to minimise the economic and environmental impact of canola yield decline. A project to provide Northern Region grain growers with effective management packages for root lesion nematodes. A project to develop and test a novel chemical derived from smoke for control of weed seed germination. Work to more effectively integrate chemical and non-chemical insect control systems for stored grain. A project to develop barley germplasm carrying novel traits or genes in adapted backgrounds, for quality attributes and resistances to abiotic and biotic stressors, and to combine novel traits or genes in these barley lines for adoption by breeders. A project to develop new high-yield, high-quality cultivars of wheat with good resistance to barley yellow dwarf virus and other rust diseases. Work to develop improved advanced breeding lines of oats with several new sources of stem and leaf rust resistance. A soybean improvement program focusing on the development of high-yield, high-value varieties (combining culinary quality with phytophthora resistance) for irrigation areas, and new varieties with weathering tolerance and light hilum for the coastal areas of New South Wales and Queensland. Work to identify the mechanisms for exclusion of or tolerance of crops (other than wheat and chickpeas) to chloride, and ways in which these traits could be incorporated into breeding programs. Work to ensure that new barley varieties developed by Barley Breeding Australia can be evaluated under a range of management regimes in the Southern Region, especially in the southern slopes of New South Wales, the Mallee and Wimmera regions of Victoria, and South Australia. Work to develop variety-specific agronomic packages for wheat, barley, canola and pulses for each agroecological zone. A project to provide independent and objective screening of advanced breeding lines, from all of the barley-breeding and wheat-breeding programs in the Northern Region, for herbicide tolerance, prior to the commercial release of new cultivars. The evaluation of canola and mustard germplasm specifically for northern New South Wales, plus an increased understanding of nutrition, insects and disease. Work to develop and release higher yielding dual-purpose triticale varieties. A project to identify and validate winter cereal genotypes that have potential for high yield under irrigation. 14

19 5 Planned outputs Output Group 1: Varieties Investment budget for : $58.00 million Objectives Provide growers with access to new superior varieties by actively developing world-leading, cost-efficient breeding programs in Australia. Accelerate the rate of gain in key genetic traits of importance to the Australian grains industry by focusing germplasm enhancement research on traits of significance, reducing duplication and fragmentation, building international alliances and accelerating the speed to market. Explore potential delivery channels for genetically modified (GM) crops in Australia. Accelerate grower adoption of superior varieties, including through promoting results from the National Variety Trials program (NVT). Planned outputs New, improved varieties of wheat, barley, canola, pulse crops and summer crops released to the Australian grains industry. New advanced germplasm, with associated molecular markers, developed and used by relevant Australian breeding programs. New genes with potential importance to the Australian grains industry discovered and made available for proof-of-concept testing and further development. New breeding technologies developed and made available to researchers and crop breeders. A report published, analysing the delivery channels for GM crops in Australia. Crop variety yield and performance data made available to Australian graingrowers through the NVT. Performance indicators for Wheat-breeding programs achieve key milestones for Barley Breeding Australia, the newly established national barley-breeding program, achieves key milestones during its first year of operation. The newly established National Pulse Breeding Program achieves key milestones for field pea, chickpea, faba bean and lentil breeding. New alliances, in addition to CIMMYT (the International Maize and Wheat Improvement Center), are established to introduce and evaluate potentially valuable international germplasm. Major research programs the Australian Centre for Plant Functional Genomics, Cooperative Research Centre for Value Added Wheat, Cooperative Research Centre for Molecular Plant Breeding and Australian Winter Cereals Molecular Marker Program achieve key milestones for NVT achieves key milestones and implements planned enhancements on time. 15

20 Achieving the objectives Scope The Varieties output group reaches across the GRDC s 25 leviable crops, spanning cereal crops (including wheat and barley), summer coarse grains, pulses and oilseeds. It includes GRDC investments in gene discovery, breeding technologies, genetic resources, functional genomics, germplasm enhancement, genetic transformation, plant breeding, crop variety testing, grain quality research, plant pathology (where directly related to breeding), and education. Varieties supports crop improvement for growing domestic industries, as well as for exports, with the aim of raising the overall value of the Australian grains industry. The continuing prosperity of the industry depends on the development of new varieties with enhanced yields as well as quality attributes that add value and meet market demands. The latter is being achieved by collaborating with the grains industry to clarify end-user requirements. Growing superior high-yield varieties using optimal systems for crop management will lead to increased productivity. The search for new sources of disease resistance to incorporate into crop plants continues, alongside research to improve our understanding of the processes involved in resistance breakdown. Investment priorities Wheat breeding Continued GRDC investment in wheat breeding will build on previous success and ensure growers have access to new, improved wheat varieties. Significant structural change is currently taking place in the wheat-breeding sector. Since the advent of the Plant Breeder s Rights Act 1994 and the introduction of End Point Royalties, the prospect has existed for wheat breeding to eventually become self funded. This prospect has encouraged investment by some new participants. During , the GRDC s investment strategies will place particular importance on managing the transition to these new arrangements in such a way that wheat breeding remains robust and sustainable and continues to cater for the needs of Australian graingrowers. Barley breeding In , for the first time, the GRDC will invest in barley breeding via a nationally coordinated barley-breeding program, Barley Breeding Australia (BBA). BBA comprises three regional nodes (west, south-east and north). Its work will be underpinned by a national, market-focused business plan and driven by a determination to achieve best operating practice in barley breeding. The program will coordinate the development and release of new varieties, ensuring there are appropriate protocols, and will endorse new varieties in consultation with industry stakeholders. A management board comprising representatives of all state and university signatories and the GRDC has been set up to govern BBA. The board is in the process of establishing close ties with industry, including growers, maltsters, Barley Australia and the newly established Livestock Feedgrain Users Group, to ensure that it represents the needs of its diverse range of stakeholders. A management committee has also been established to ensure intellectual property issues do not impede operations. The aim is to give breeders full licence and freedom to operate and access germplasm, molecular markers and software. BBA will foster important linkages with education, training and teaching programs. Canola breeding Significant progress is being made to identify regional adaptation of canola and mustard, two important non-cereal rotation crops that can reduce the incidence of diseases in wheat and barley. In , continuing work will focus on the genetic improvement of canola, canola-quality mustard (Brassica juncea) and condiment mustard. Canola-quality mustard is of particular interest as it is more tolerant of heat and drought than canola and could therefore expand the production base into areas that are too marginal for canola production. It is approaching commercialisation as a crop for low-rainfall regions in Australia, where it should become a reliable and profitable break crop. Increasing contact with grower groups and conducting on-farm trials will help expand the area sown to mustard in Australia. Pulse breeding The GRDC and its research partners have established the National Pulse Breeding Program (NPBP) to provide an internationally competitive pulse-breeding capability in Australia that meets the needs of growers and marketers. For the benefit of Australian growers, most of whom depend on pulses as part of their cereal crop rotation and/or as cash crops, the NPBP will unite breeding programs for field peas, chickpeas, faba beans and lentils, across five states. 16

21 Intellectual property management and commercialisation plans being developed under the NPBP will ensure that germplasm, enabling technologies and intellectual property are shared freely among the parties so that the investment in pulse research is maximised. The NPBP also aims to achieve efficiencies through greater integration and collaboration at the national level, while recognising the need to address specific regional and end-user requirements. Peanut breeding The Australian peanut industry is aiming to double production, from 50,000 tonnes per year to 100,000 tonnes per year, over the next three years. Peanut production in Queensland is already expanding, particularly in the coastal Burnett region and around Mackay. In , the GRDC will continue to invest in the evaluation and release of peanut varieties suitable for dryland production areas. The work will target specific quality attributes, including high oleic content, blanchability and large-seededness, as well as early maturity and increased disease resistance. The project will continue the GRDC s collaborative linkages with international peanut breeding programs in the United States and India to gain access to elite peanut germplasm for the benefit of the Australian industry. It is anticipated that three new varieties will be released in Maize breeding Australia produces about 400,000 tonnes of maize per year, mostly under irrigation. Current maize hybrids do not perform adequately in the variable conditions of the hot dry tropics and subtropical southern Queensland. Heat stress at flowering can severely affect fertilisation (seed set), and water stress affects plant growth and grain development. Insect and disease pests present specific problems depending on the environment. The private sector maize-breeding effort in Australia mainly focuses on the irrigation areas. The GRDC will therefore continue to support dryland maize-breeding, through the program based at Kairi on the Atherton Tableland that is seeking to develop heat-tolerant and drought-tolerant parental material for use by the private sector. Other breeding programs The GRDC will continue to support breeding programs for sorghum, lupins, soybeans, mung beans, sunflowers, vetch, oats, triticale, lucerne and pasture legumes during Gene discovery and new technologies The GRDC s investments in gene discovery, functional genomics and gene technologies provide Australian breeding programs with cutting-edge know-how and technologies that enable them to compete internationally. As a result of such research, breeders are able to predict which genes should be added or modified to enhance existing traits or create novel traits. Molecular marker technologies assist breeders to fast-track the best gene combinations through their breeding programs. Continuing GRDC investments in will include: co-investments with the Australian Research Council and others in the Australian Centre for Plant Functional Genomics and Cooperative Research Centre for Molecular Plant Breeding, to focus on the discovery of genes that confer tolerance to abiotic stressors such as salt, drought, frost and toxic soil minerals the Cereal Functional Genomics Program, with the University of Adelaide and University of Melbourne, to study quality attributes in the developing cereal grain the Grain Protection Genes program, with CSIRO, to discover novel approaches to fungal and insect pest resistance the Australian Winter Cereals Molecular Marker Program, to enhance the efficiency of breeding programs by allowing breeders to combine a greater number of desirable traits into a single plant over a shorter period of time the international Brassica A genome-sequencing program, to link Australian canola research to research overseas projects to build Australia s capability for cereal transformation, to bring the benefits of gene technologies to Australian wheat and barley growers. New investments will be made to take gene discoveries in model systems to proof-of-concept stage in grain crops. These include: research at the Australian National University to identify the main determinants for water use efficiency in wheat research at CSIRO to increase grain numbers and size under drought conditions the evaluation in wheat of a novel gene to boost grain yield. 17

22 Another important activity will be to scope whether commercialisation is the most suitable delivery channel for GM crops. Together, Australian research organisations and the GRDC invest millions of dollars each year in research projects that aim to develop GM food crops and derived products. When this research approaches proof-of-concept stage, further investment will be required to bring these crops to market. However, as the delivery channel is still unclear, the GRDC and Single Vision Australia have commissioned a report to guide future investments by the Australian grains industry, including the GRDC, in the development, production and processing of GM crops in Australia in the event that state moratoria on GM products are lifted. The GRDC s participation in will be managed jointly by the Varieties and New Products output groups. Development of enhanced germplasm Access to information and genetic material from both domestic and international genetic resource collections is vital to germplasm development activities. The GRDC provides significant funding support for the curation of Australia s national collections of grain crop and pasture legume species, and has been an active participant, together with the state and Australian governments and other R&D corporations, in coordinating the operations of state-based genetic resource centres. The GRDC also collaborates internationally through centres such as CIMMYT (the International Maize and Wheat Improvement Center) in Mexico, and through the Global Crop Diversity Trust (GCDT). The GCDT will help to eradicate poverty and sustain our environment by ensuring the conservation of the crop diversity that underpins food security. New arrangements have been put in place to coordinate the introduction and evaluation of genetic material from overseas. In the GRDC will be looking to expand the number of international alliances it has for the introduction and evaluation of germplasm. A review has been undertaken of GRDC investments that aim to improve wheat quality. New initiatives are being developed in collaboration with grain handlers and marketers to develop wheat varieties with quality attributes that are suited to new domestic and export markets. Examples include research into colour and colour stability of wheat for Asian noodles, and research into desirable wheat quality attributes for sponge and dough bread making. Other research is addressing the problem of managing grain protein content. Genetic approaches to achieving resistance to pests and pathogens are managed in collaboration with the Practices output group. This includes investment in the Australian Cereal Rust Control Program and research to breed for resistance to exotic pests and diseases, such as Russian wheat aphid and Karnal bunt, that are not yet present in Australia but pose serious threats to Australian cereal production. Faster adoption of better varieties The NVT is a national initiative introduced in to provide growers with information on the performance of new grain varieties through independent, robust and comparative variety testing. The first year of operation saw more than 500 trial crops planted across five states. Growers and farm advisers can view the test results on the new website, and obtain customised trial reports. Rapid access to trial results is expected to lead to faster adoption by growers of superior varieties and, hence, to improved grain production. During the GRDC will consolidate the NVT scheme and improve and enhance its performance. Commercialisation As in previous years, during the GRDC and its research partners will make substantial investments in the breeding of new plant varieties. The intellectual property in these new varieties is jointly owned by the GRDC and its research partners. In recent years, a dozen or more new varieties have been commercialised annually: subject to successful field trials, it is anticipated that a similar number of new varieties will be ready for release in Where GRDC plant-breeding investments are made with institutional research partners, the GRDC is actively involved in seeking plant breeder s rights and the commercialisation of each new variety. This activity includes both the selection of licensees and the negotiation of suitable agreements. Where the GRDC invests in plant breeding in the private sector, the private sector company will be responsible for commercialising any new varieties produced, and the GRDC will participate in the commercialisation process through research or equity arrangements, as negotiated. 18

23 5 Planned outputs Output Group 2: Practices Investment budget for : $37.89 million Objectives Develop and validate better farming practices and have them adopted faster. Develop sustainable farming systems, adapted to each of the industry s agroecological regions, that are responsive to grower, community and catchment needs. Develop and deliver cost-effective, robust and environmentally responsible solutions to current and potential crop protection threats and thus minimise their cost to industry. Planned outputs New technology and practices to overcome soil constraints, harness the benefits of soil biota, and extend cropping rotation options. Integrated farm management practices that enable diverse farming businesses responsive to product prices; protect crops from disease and weed invasion; assist in overcoming subsoil constraints; improve opportunities for nutrient inputs, particularly nitrogen fixation; and allow for weather and climate variability. Natural resource management practices integrated into viable farming systems that lead to efficient water use and reduced drainage below the root zone; provide for efficient nutrient uptake; improve catchment management of salinity and water quality; and develop new learning methods. Improved management of weeds, diseases and pests through a better understanding of their biological interactions with crop plants. Increased diversity of crop protection strategies through understanding and use of the genetics of pest or host. Improved risk management through rapid identification of and response to threats. Weed, disease and pest management options that conform to economic, environmental and social demands. Performance indicators for Useful results from the continuation of a stratified survey to measure current on-farm practices such as the use of gypsum and lime for soil amelioration; controlled traffic; precision agriculture; variable rate technology; nutrient budgeting; the application of risk management tools; the monitoring of water use and deep drainage; and the sowing of perennial pasture species. Enhanced management options for cereal foliar and root diseases across agroecological zones. Enhanced farmer capacity to deal with weed, disease and pest constraints on profitable grain production. Increased farmer adoption of weed management practices that delay the development of herbicide resistance. Identification of new avenues of pest control through the genetic manipulation of the pathogen, weed or invertebrate pest, or its host plant. 19

24 Achieving the objectives Scope The Practices output group aims to develop optimal farm management practices that, when used to grow superior high-yielding varieties, will lead to increased productivity from sustainable grain production systems. Better farming practices contribute to increased productivity by minimising yield losses caused by a broad and constantly changing spectrum of biotic and abiotic stressors, such as weeds, diseases and invertebrate pests, poor soils and variations in climate. The scope of the output group s activities includes developing and validating agronomic packages tailored to different regions to allow growers to gain the maximum advantage from the crops they grow, as well as new technologies to better manage crop threats before harvest and maintain grain quality after harvest, and integrating these with existing farming practices. The output group also focuses on developing solutions that are cost-effective, innovative and diverse. The increasing complexity of farming systems, and the need to reduce reliance on traditional chemicals to minimise the development of pest resistance, provide crop protection challenges that demand integrated solutions. Increasingly, the challenge is to integrate control methods not only within pest categories but also across them, in an effort to develop whole-of-farm management strategies that reduce crop protection costs. As we develop a better understanding of the genetics and diversity in both crop pests and crop hosts, our ability to manipulate pest host interactions increases, providing farmers with vital alternatives to traditional mechanical and chemical solutions. Another important focus is slowing the development of herbicide resistance in several important weed species. Research in this area is seeking to develop more sustainable weed management practices to delay the onset of resistance in regions and cropping systems at risk, as well as to develop alternative control strategies where herbicide resistance already exists. The output group also supports education, training and other capacity-building activities that facilitate on-farm practice change and allow the grains industry to make the best use of new technology. Investment priorities Agronomic packages for new crop varieties As a result of NVT, Australian growers are now receiving the best independent information available on the performance of new crop varieties. However, crop performance is assessed only under the limited conditions of the NVT trials and cannot possibly be tested under the full range of environmental and management conditions that might be relevant for all growers and regions. Tillage systems, fertiliser application and use of fungicides, as well as crop configuration, are all variables that differ across farms. With GRDC support, pilot studies underway in southern New South Wales, South Australia and the Mallee and Wimmera regions of Victoria are examining the performance of new crop varieties under a range of different management regimes. The aim is to provide growers with better information on how new varieties might perform under the management conditions used on their farms. In other work, during new agronomic packages will be developed and validated for a range of entirely new crops that offer significant potential for Australia and are at various stages of precommercial development. These include dual-purpose canola, suitable for both grazing and grain production, canola-quality mustard (Brassica juncea), and perennial wheat. Disease resistance and response to grazing are key considerations for dual-purpose canola, while the agronomic package for canola-quality mustard will cover seeding rates, time of sowing, within-crop management, harvesting, and impacts on the crop rotation. It is early days yet, but, if successful, perennial wheat could revolutionise how wheat is grown in this country. Making the most of inputs The GRDC is partnering with the Natural Heritage Trust and Land and Water Australia in the Healthy Soils for Sustainable Farms Program. As increasing oil prices drive up the price of manufactured fertilisers it becomes even more important that growers take full advantage of nutrients already available in soil and organic matter. Findings on how best to manage soil micro-organisms, arising from the GRDC Soil Biology Initiative, will be integrated into information and training packages on ways to manage soil health. In many Australian soils, subsoil constraints limit the ability of crops to use the available water and achieve potential yield. The Subsoil Constraints Initiative is addressing these issues nationally and has identified a need for a management package on how to avoid or overcome carbonate, bicarbonate and aluminium in highly alkaline soils, and high levels of exchangeable magnesium in sodic subsoils. In other studies, the mechanisms allowing wheat and chickpeas to exclude or tolerate chloride have been identified and will be examined further during in other crops such as barley, canola and certain pulses. 20

25 Methods will be developed to allow these traits to be incorporated into grain-breeding programs. The costeffective removal or avoidance of subsoil constraints will revolutionise the use of sodic soils for grain production. For many years, precision agriculture (PA) has had the potential to make best use of farm inputs, but to date less than 10 percent of graingrowers are using PA methods in any form and less than 3 percent are using the full suite of PA data and methods. To assist advisers in providing advice to growers on what elements of PA best suit their farm businesses, a PA manual is being produced. The manual will examine the economics of PA, the importance of variability, how to get started with PA technology and how to apply it on on-farm. Conservation farming, in various guises, has been practised in Australia for many years, but its uptake remains patchy. No-till systems have been widely embraced in some areas, but not in others, and some potential problems with no-till (such as herbicide resistance and stratification of nutrients in surface soil) are becoming apparent. There is no single conservation farming panacea, and conservation systems must constantly evolve to meet the changing needs of sustainable cropping. Improved stubble management; increased maintenance of ground cover, especially through the use of cover crops; new nutrient tests and fertiliser placement systems; and the integration of spatial technologies are all seen as potentially taking conservation farming to the next level from Current average grain yields in Western Australia are 1 tonne per hectare less than expected on the basis of seasonal rainfall. In the GRDC will support a new farming systems project, involving researchers, advisers and farmers, to investigate the reasons behind yield limitations and assess options to raise the yield of crops to the level set by seasonal rainfall. An additional aim of the work is to demonstrate a process of diagnosis and treatment of the factors that are limiting productivity at the paddock scale. This will assist growers to diagnose what is limiting grain yield on their farms. The economic impact of this work is potentially large. For wheat alone, an extra tonne per hectare of yield at current prices ($180 per tonne) and extra costs of $100 per hectare, over an area of 4.4 million hectares, given an adoption rate of 15 percent, would result in annual returns to growers of over $50 million per year above what they currently collectively achieve. Farm machinery The annual cost to Australian graingrowers of owning and operating farm machinery is about the same as the total of all other major input costs (seed, fuel, chemicals and fertiliser) combined. Much of the machinery critical to efficient cropping is manufactured or modified in Australia, generally by companies whose turnover is not large enough to warrant generic research into machinery design and improvement. These companies undertake incremental improvement to their own (and imported) equipment, but this does not provide the fundamental understanding required to develop the next generation of improved machinery to support new cropping systems such as no-till or wide row spacing, or to meet new requirements such as spraying effectively into large leaf canopies. New GRDC investment in farm machinery research during will seek to enhance the pool of professional agricultural engineers in Australia who have the skills required to meet the grains industry s changing needs. Adapting to climate change Evidence is mounting that global climate change is occurring. Atmospheric carbon dioxide (CO 2 ) levels are unprecedentedly high and are continuing to rise. The impact of climate change on the Australian wheat belt is uncertain, but current trends and the best climatic models suggest that much of the wheat belt will become warmer and drier over the next 50 years. For graingrowers, a positive aspect of rising CO 2 levels is that plants use water more efficiently and produce more biomass under elevated levels of CO 2. In , a study supported by the GRDC in association with the Australian Greenhouse Office will examine the impacts of elevated CO 2 levels in the field and provide guidance on how crop plants might perform under elevated CO 2 levels in future. Validation and adoption The Validation and Adoption program within the Practices output group focuses on validating and integrating the outputs from the GRDC s investment in R&D into regional farming systems. Investments in this area aim to shorten the time between the development of new farming practices and their on-farm adoption. This is important because gains made in the early years of adopting new technology can give the Australian grains industry a competitive edge in the global market. Validation and Adoption investments have been established in the GRDC s major agroecological zones to develop better farming systems and practices tailored to the requirements of each local environment and reflecting regional priorities and needs. The projects all involve farmers and focus on developing viable farming systems, rotations and agronomic practices to better manage the resource base. 21

26 Better management of the resource base is especially important because, in addition to new farming systems becoming increasingly complex, growers are finding themselves under added pressure from the community, markets and governments to consider the environmental and social aspects of their operations as well as the production aspects. To assist growers to deal with such demands, the GRDC continues to invest in participatory projects involving representatives from a range of industry segments including growers, advisers, researchers and extension personnel all of whom play a role in regionally testing, and encouraging graingrower adoption of, better varieties and on-farm practices. In recent years, the expansion across Australia of the number of retail and agribusiness firms providing comprehensive advisory services has considerably broadened the range of services available to growers. Forming partnerships and building alliances with these networks will play an increasingly important role in integrating tactical crop production information that closely reflects seasonal input management decisions. New investments in the Validation and Adoption program during will largely focus on building stronger networks between growers and their service providers. Protecting the crop Improved understanding of pest (weed, disease and invertebrate) biology remains fundamental to the GRDC investment strategy for addressing both existing and emerging crop threats. Application of this knowledge in integrated management practices increases the efficacy of control and reduces reliance on single, reactive pest control options. Traditional biological control projects also fall within this strategic approach. The principal objective of this strategy is improved sustainability of farming systems. For example, certain herbicides have given farmers unprecedented control over the weed burdens that reduce yield. But biological systems do not forgive over-reliance on these management tools, and we are rapidly approaching the point at which diversity of weed management practices, rather than percentage weed control in any one year, will determine success. Understanding and manipulating the genetics of both pest and host continues to provide growers with crop varieties that are resistant to key pests and diseases, and, through gene discovery, promise new approaches to crop protection. Identification of plant genes that provide protection and identification of pest genes that provide targets for novel control technologies will together continue to account for around 40 percent of the GRDC s crop protection investment in The ability to respond rapidly to new and emerging pest threats is a key requirement of the Crop Protection Program. Incursions are a constant threat, and changing farm practices create new opportunities for existing organisms to flourish. Three GRDC projects now underway in collaboration with the Cooperative Research Centre for National Plant Biosecurity aim to enhance our capability to detect and respond to pest incursions. Notable among these is the threat presented by the Russian wheat aphid, which is widely distributed around the world. The potential spread and impact of the aphid within Australia, should it gain entry, are rated as high by Plant Health Australia. During long-term investments in major initiatives such as the Australian Cereal Rust Control Program, which brings together CSIRO, CIMMYT (the International Maize and Wheat Improvement Center), the University of Sydney and the GRDC in a combined effort to reduce the impact of cereal rusts, will continue. Investments in the Cooperative Research Centre for Australian Weed Management, the GRDC CSIRO joint venture Grain Protection Genes and the Crown Rot Initiative will also be maintained in Commercialisation Pastures continue to be of great importance to the Australian grains industry, as they provide a break in crop rotations and a source of nutrient input into mixed enterprise (livestock cropping) farming systems. The large number of pasture species and cultivars has provided challenges for the seed industry to supply seed and for growers to understand which is the best variety and cultivar for their needs. In , Pastures Australia, a joint venture between the GRDC, Australian Wool Innovation Limited, Meat and Livestock Australia and the Rural Industries Research and Development Corporation, will seek to identify commercialisation approaches that better match pasture seed supply and demand. On average between one and two new cereal cultivars bearing rust-resistant germplasm derived from the work of the Australian Cereal Rust Control Program have been commercialised each year since the program commenced. It is anticipated that this will continue in Commercialisation plans arising from patents lodged in for novel seeding machinery and novel agricultural uses for newly discovered insect genes will also be pursued in

27 5 Planned outputs Output Group 3: New Products Investment budget for : $11.08 million Objective Develop and deliver new, value-added grain products and new farm products and services to growers. Identify and implement partnerships necessary to develop and deliver these products and services. Identify opportunities to help new technology reach the Australian grains industry sooner. Access intellectual property from Australia and overseas to apply in the Australian marketplace. Planned outputs An incorporated joint venture to introduce, test, distribute and market new soil inoculant technologies sourced from both Australian and international research programs. Extension of objective grain quality testing technology developed for wheat and barley to the stage at which it can be transferred to a commercial partner to enable the development of instrumentation capable of being used by grain majors. Development of near-infrared (NIR) and mid-infrared (MIR) technologies to enable the development of on-farm instrumentation packages to measure soil, plant and grain qualities. Assistance for industry and researchers in order to form a governing body that will develop and implement a post-harvest grain hygiene strategy covering a range of issues requiring further R&D effort prior to commercialisation. Case studies supporting the technology transfer and commercial evaluation of new measures of feed grain quality to demonstrate and promote the benefits of the Premium Grains for Livestock Program (PGLP). Investment in new grain food products that have the potential to improve many aspects of human health, for example by reducing cardiovascular disease, colorectal cancer, diabetes and obesity. Continued development of new industrial uses for grain crops and commercial partnerships through the Crop Biofactories Initiative with CSIRO, as well as identification of possible investment opportunities in new technologies in the biofuels area. Performance indicators for A new incorporated joint venture for soil inoculants established, with field trials undertaken and first product(s) released. Objective grain quality testing technology developed to the stage at which a commercial partner can take it forward to develop instrumentation. Development of a research, development and commercialisation plan for NIR and MIR technologies to measure soil, plant and grain qualities. Establishment of a governing body to develop and implement a post-harvest grain hygiene strategy. Completion of three or more case studies with different end-users to demonstrate and promote a rational basis for trading feed grains. Establishment of a new incorporated joint venture for high-amylose wheat, to deliver a non-gm breeding line with an amylose content in the order of 70 percent. Crop selection and identification of delivery channels for GM crops completed (with the Varieties output group) for the outputs of the Crop Biofactories Initiative. Identification of research opportunities for new technologies to produce biofuels from Australian grain crops. 23

28 Achieving the objectives Scope The New Products output group targets opportunities both pre-farm gate and post-farm gate by investing in research, development and commercialisation of new grain products and new farm products and services, providing growers with additional options in farm management and marketing. However, the output group recognises that in many of the areas in which it operates there are few potential research and commercialisation partners within Australia, and that products developed in the sophisticated markets of North America and Europe will often not reach Australia until larger markets have been satisfied. This makes it necessary to identify opportunities to form partnerships not just in Australia but also internationally, in order to help new technology reach Australia sooner. The New Products output group will therefore identify and implement Australian and international partnerships necessary to: develop and deliver products and services to growers access and exploit intellectual property to help speed the delivery of new technology to the Australian grains industry grow and leverage the resources available by using structures and partnerships that are suitable to attract third-party investment develop robust business cases that demonstrate market demand and value to support any product or service that the GRDC and its partners propose to invest in researching, developing and commercialising. Investment priorities New farm products and services New investments in the New Farm Products and Services research area are divided between: farm inputs (goods and services) grain handling and storage. It is likely that the majority of investments in this area will result in the development of commercial products, and it is anticipated that any major investment will require the preparation of a business case as part of the pre-investment process. This may require the allocation of resources to develop a quality business case prior to the research investment decision being taken. The three key investments to be commenced or further developed by the farm inputs area in are to establish a joint venture with Philom Bios of Canada to test, develop and introduce new soil inoculant products for Australian farmers; to develop a strategy to invest in and deliver NIR and MIR soil, plant and grain on-farm testing technology; and to undertake the further development and commercialisation of new objective grain quality testing instrumentation. New grain products The New Grain Products portfolio is divided between: new food products new feed products new industrial products food safety and grain hygiene. New food grains Pursuing a series of investments related to food grains, such as the development of high-amylose wheat and novel grains containing omega-3 fatty acids, will remain fundamental to the strategy of the New Grain Products program of the New Products output group during Robust business cases will be central to any future investment decisions in this research area. Business cases will establish the basis for sound research, identify the competitive position of overseas operators and markets, and identify potential collaborators and target markets. Investments in food grains will also consider specific marketing concerns, for example: establishing the incidence of lupin allergies among the target population; ensuring that the health benefits of grain foods continue to be promoted and remain on the national public health agenda; and facilitating new investment in innovative value-adding opportunities. 24

29 New feed grains In , a key objective will be the development and application of a series of case studies involving feed grain user organisations. Building on the work of the PGLP, the case studies will validate the science behind PGLP, as well as the commercial application of its technology outcomes. In essence, the work will address the links between the science and the potential market application in order to determine a rational basis for trading feed grains. New industrial grain products As noted in the Varieties output group section, Australian research organisations and the GRDC together invest millions of dollars each year in research projects that aim to develop GM crops and derived products, despite the fact that the delivery channels for GM products are still uncertain. The New Grain Products portfolio, in conjunction with the Varieties output group and industry partners (such as Single Vision Australia), will invest in the development of a comprehensive report to guide future investments in relation to the development, production and processing of GM crops in Australia. Commercialisation It is proposed that the results of the research from the Objective Grain Quality Testing program will be commercialised during , to help deliver the benefits to industry. The research has led to a number of successful outcomes that could substantially alter the way in which a number of quality attributes are measured when grain is received. However, for this technology to have any chance of being delivered, it will be necessary to engage a commercial partner that is willing to undertake the necessary product development. As anticipated in , the Biological Inputs for Profitable Farming project will see an incorporated joint venture established to test, formulate, distribute and market new soil inoculant formulations to the Australian grains industry. During the first products will be sold to farmers. Post-harvest grain hygiene Freedom from insect infestation is a major criterion of quality in stored grain. Current insect pest management systems rely heavily on the use of chemicals in particular, the fumigant phosphine. One unfortunate side effect of heavy industry reliance on phosphine is that increasing insect resistance to this fumigant has become a serious threat. A major objective for will be to collaborate with industry to develop a national strategy and establish a governing body that will develop, implement and monitor a post-harvest grain hygiene program. It is recognised that the strategy should include a substantial research program into pest management technologies, a technology transfer activity, and a training element to build industry capability. Ongoing activities in the area of grain hygiene, such as the national phosphine resistance monitoring and management program, the coordination of registration of grain storage chemicals, and efforts to optimise grain yield and quality by exploring the use of integrated high-moisture strategies, will continue. 25

30 5 Planned outputs Output Group 4: Communication and Customer Services Investment budget for : $10.14 million Objectives Increase the adoption of research outcomes and innovations that improve the economic, social and environmental performance of the grains industry, through the development and targeted delivery of imaginative products and services. Communicate and promote the GRDC s achievements to stakeholders. Turn research outputs into relevant information, products and services that are delivered to meet stakeholder needs. Support the capacity building of growers, advisers and researchers, through professional development. Support studies related to agriculture and science in secondary schools, in order to encourage students to consider them as possible career paths. Planned outputs A segmented customer database with enhanced functionality to deliver relevant information to identified stakeholder groups. This includes the capacity to meet current information needs as well as respond to emerging issues in a timely way. Improved exchange of relevant research information among our government, industry and research partner stakeholders. Mechanisms put in place to build the capacity of growers, advisers and researchers. Faster adoption of research outcomes and innovations through delivery of information, products and services. Raised profile of agricultural science among secondary school teachers and students. Performance indicators for Customer segmentation categories identified and strategies implemented to deliver tailored information. Organisational performance surveys carried out to measure the relevance of information, products and services delivered by the GRDC. Increased participation by growers, advisers and researchers in the GRDC s capacity-building program. A range of educational packages available for teachers and secondary school students. Achieving the objectives Scope The Communication and Customer Services output group focuses on streamlining the collection and distribution of information from R&D outputs and positioning the GRDC as a credible source of technical and industry-specific information. Success in this area will achieve a key GRDC priority of Australian graingrowers achieving benefits through faster adoption of R&D outputs. Graingrowers in particular are a diverse audience. Their information needs and preferred delivery mechanisms vary according to production region, enterprise mix and other personal circumstances. Accordingly, the output group packages and delivers tailored information that is regionally specific to ensure that it meets grower needs. The GRDC recognises the important role that research providers, government agencies and industry bodies play in influencing on-farm decision making, and collaborates with them in a range of R&D communication and extension activities. The output group also offers a range of mechanisms to help build industry capacity. This includes a visiting fellowship program, PhD and post-doctoral research scholarships, grains industry training and development awards, short-term courses and conference sponsorship. Grains industry stakeholders are supported to attend national and international conferences, while secondary school students are encouraged to undertake tertiary studies in agricultural science through the provision of agricultural training awards. 26

31 Investment priorities Communication Through the GRDC s communication approach, key strategies have been developed to engage governments, grains industry bodies, internal audiences, research partners and other industry and corporate stakeholders. For example: when the high incidence of stripe rust in wheat was identified by the GRDC s regional panels as a major emerging issue in 2005, the GRDC responded by collaborating with plant pathologists from various state departments of agriculture to produce an advice sheet for farmers that has been distributed nationally through Ground Cover newspaper to more than 44,000 industry participants the GRDC has met demands from growers for accurate, independent advice on the performance of crop varieties by establishing a web-based searchable database showcasing the results of over 500 NVT trials from across Australia. In pursuing this approach, the GRDC recognises that it is one of a large number of organisations seeking to influence, advise on and promote change among graingrowers, governments and other stakeholders involved in grains R&D. During , investment in communication will provide a range of options to engage key stakeholders by analysing their needs and delivering research outcomes through the electronic media, publications (online and printed) and other communication channels. Customer service The one size fits all approach to customer information needs, no longer accurately reflects how the GRDC s customer segments want to receive information. In , the GRDC will adopt a more targeted customer service focus that recognises the need to increase knowledge among graingrowers, advisers and other industry stakeholders by building strategies that package relevant information effectively. This will be achieved by working with industry and research partners to develop and deliver targeted information when and where it is required. A focus on establishing stronger linkages with grower and industry groups, agribusiness, consultants and advisers will assist in delivering relevant information in the year ahead. This is a core element of the GRDC s new approach to customer service. Capacity building The GRDC s investment in capacity building offers skills development opportunities for researchers and industry participants, including graingrowers, across the Australian grains industry. During the GRDC will continue supporting individuals to undertake research, travel, attend or present at national or international conferences, develop leadership and business skills, obtain experience through a visiting fellowship program, or progress from secondary into tertiary studies in the fields of science and agriculture. The long-term capacity of Australia s graingrowers to remain competitive and profitable will be determined by their ability to recognise changing consumer preferences, adopt new technologies and production practices, and maintain the sustainability of their operations by protecting their production environment. The Communication and Customer Services output group will also continue to ensure that information on market signals, availability of new technologies and production methods, and natural resource management is made readily available to growers. Commercialisation Ground Cover Direct commenced operations in March 2003 as the marketing and distribution arm for the GRDC s suite of products and publications. As detailed in the GRDC annual reports since its commencement, the Ground Cover Direct catalogue has reached a large and continually expanding customer base through its online and hard-copy distribution mechanisms. Ground Cover Direct makes the outcomes of GRDCsupported research readily accessible in a variety of formats, including books, videos and CDs. For example, the convenient and inexpensive booklets in the Ute Guide series have been extremely popular, providing practical information on topics such as weeds, insects, maize disorders, field crop herbicide injury or winter cereal nutrition. The National Farm Groups Manual (GRIST) provides an annual summary of the results of GRDCsupported research across Australia, as well as contact details to facilitate cooperation and collaboration between groups. Other publications focus on key R&D topics such as the management of various crops, weeds, insects or soil types; the use of tools and techniques, such as precision agriculture or raised-bed farming; or the nutritional values and market opportunities of particular crops. In the GRDC will continue to maintain and update its catalogue, to help realise the commercial value of and promote GRDC-supported R&D outcomes, and to ensure customers have the benefit of the best and latest information. 27

32 5 Planned outputs Key operational activities The strategic planning review conducted by the GRDC in 2004 identified the key operational activities that equip the organisation and its individual output groups to deliver their agreed outcomes for stakeholders. Those operational activities are: Business Strategy and Planning Information Management Systems Corporate Communication Risk Management Quality System Human Resources Finance and Administration These activities provide essential support for all the corporation s responsibilities under the Primary Industries and Energy Research and Development Act 1989 (PIERD Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act). Figure 3 summarises the GRDC Value Chain, including the key operational activities and core business processes. The business processes will be further refined in , with a view to achieving best operating practice by the end of The following section sets out the objectives and aims related to each key operational activity for Corporate Governance. Figure 3: Value Chain FEEDBACK LOOP Graingrower levies and Federal Identify and prioritise R&D requirements Design, procure and contract required R&D Manage the R&D portfolio through pathway to market Deliver outcomes of R&D in products and services Evaluate the impact of R&D for stakeholders Better varieties faster Graingrowers compete effectively in Government global grains matching funding Business Strategy Information Management Systems Better practices adopted market Corporate Communication faster Risk Management Quality Systems Human Resources Finance and Administration Corporate Governance KEY OPERATIONAL ACTIVITIES VALUE CREATION 28

33 Business Strategy and Planning Objective Implement the corporate strategy that is aligned with the GRDC s mission, vision and values; is owned by the Board, management, staff and panels; addresses the needs of the Australian Government and Australian graingrowers; and is understood and supported by research partners and other key stakeholders. Plan for Maintain high-level support for the GRDC s strategic business plan, The Way Forward, and the Five Year Research and Development Plan , Driving Innovation. Monitor the GRDC s immediate and broader business environment, present information on key changes in the business environment to the Board, and modify the business plan if needed. Implement the strategic business plan by ensuring ownership of the strategies by the Board, management, staff and panels. Conduct ongoing monitoring of progress relative to the strategic plan and an annual review to identify any need for change. Conduct value driver analysis to assess the key drivers of on-farm profitability and productivity, with the aim of having an investment portfolio balance in the GRDC. Information Management Systems Objective Support R&D management and the business requirements of the organisation. Plan for Introduce a new project management system and align GRDC business processes to the new system. Develop, implement and maintain an effective records management system. Complete and implement an information technology business continuity plan (to guard against loss of information technology systems). Upgrade the GRDC website. Provide business systems that meet the requirements of the corporation. Corporate Communications Objective Inform all customers of the corporation s goals, strategies and achievements. Plan for Through the GRDC s regional panels, identify and prioritise grains industry issues for potential research investment. Improve corporate communications to increase the grains industry s awareness of the GRDC s R&D activities. Improve internal communication within the GRDC. Develop integrated campaigns (involving all business units) to deliver information to external stakeholders. Deliver information, products and services to the GRDC s customer segments to assist industry development by supplying current information on R&D activities and results. Through customer feedback, measure the GRDC s effectiveness and performance. Risk Management Objective Ensure risks are identified, assessed and appropriately managed. Plan for Manage risks at the project, business unit and strategic levels of the organisation. Maintain an effective risk management system. Continually monitor and update the risk management plan and the fraud control plan, to reflect changes in the operating environment. Include risk management in performance measures for all staff. 29

34 Quality System Objective Be recognised as a quality-driven organisation, through quality leadership, continuous improvement and appropriate accreditation. Plan for Maintain ISO 9001:2000 accreditation with no major non-conformances and with any minor nonconformances closed out in agreed timeframes. Demonstrate clear leadership on quality and the benefits to be derived from continuous improvement. Raise business improvement forms for all areas of quality failure, including customer complaints and process failures. Promote quality assurance to ensure that it is effectively used for continuous business improvement. Evaluate the alignment of the Policies and Procedures Manual with the quality format. Human Resources Management Objective Have best practice human resources management, clearly focused on delivering business objectives. Plan for Ensure GRDC positions are correctly graded and remunerated. Continue competency-based performance appraisals. Ensure all staff have clearly defined management objectives, critical success factors and performance indicators. Ensure reward systems are clearly linked to management objectives, critical success factors and key performance indicators. Conduct training skills needs analysis. Continue a formal succession planning process. Achieve a performance-driven and customer-focused culture. Develop a staff career management plan. Develop staff retention strategies, including a long-term incentive plan. Finance and Administration Objective Have accounting and investment functions managed in accordance with board and statutory requirements. Plan for Maintain a monitoring system through the Finance, Risk and Audit Committee and the internal audit program. Develop a budget and reporting framework to foster financial responsibility at the business unit level. Ensure that the corporation is able to meet the funding requirements of the Annual Operational Plan. Ensure effective financial management. Further improve financial management reports. Further improve formats for budgets and variance analyses. Continue to encourage staff involvement leading to greater awareness of budget setting, compliance and variance analysis. Corporate Governance Objective Maintain a robust system of governance. Plan for Develop a business reporting and responsibility framework to enhance organisational performance. Meet statutory requirements in relation to annual operational plans, annual reports and investment plans. Ensure the Operating Manual reflects the requirements of the Board and the Executive Management Team and is understood and implemented by staff. Manage compliance through appropriate control systems and an ethical business culture. Continue to ensure compliance with reporting requirements under the PIERD Act and the CAC Act. Maintain an effective risk management system. Ensure that planning and reporting documents (the annual report, annual operational plan and portfolio budget statements) are published and submitted on time. 30

35 6 Summary of Income and Expenditure Estimates Estimates of income The GRDC s total income in is forecast to be $ million. Figure 4 shows the sources of the GRDC s forecast total income for , in percentage terms. In dollar terms: Australian Government contributions are expected to be $43.67 million levy contributions from graingrowers are expected to be $67.28 million other income, which includes interest on investments and royalties, is expected to be $8.24 million. Figure 4: Forecast total income Graingrower levy 56.4% Australian Government 36.6% Interest, Royalty & Other 6.9% Figure 5 shows the sources of the GRDC s forecast levy income for , in percentage terms, by leviable crop. The forecast is based on several assumptions, including that: wheat production will be 24.5 million tonnes the average price of Australian Premium White (APW) wheat will be $205 per tonne free on board the gross value of grains production will be $8.67 billion levy rates will continue in Figure 5: Forecast levy income Wheat 61.7% Coarse Grains 24.5% Oilseeds 7.3% Pulses 6.5% The GRDC looked at the following two key income scenarios for : Scenario 1 is the baseline case, which is based on the current grains production forecasts by the Australian Bureau of Agricultural and Resource Economics (ABARE), and AWB Limited s estimated price range for APW wheat for , as at 27 March AWB Limited s forecast price for APW wheat is lower than ABARE s forecast price. The baseline scenario indicates that GRDC s gross reserves would be $62.77 million in , below the lower prudential limit of the current reserves policy, which is $69.78 million. 5 Scenario 2 projects an optimistic case with wheat, barley and canola production set at 10 percent above ABARE s March 2006 forecasts for , and prices of the three major crops up 5 per cent on the baseline scenario to reflect a weaker Australian currency throughout translating into higher grain prices. Scenario 2 shows that the projected income in would be $ million, which is about 7.6 percent higher than the baseline. The optimistic scenario indicates that GRDC s gross reserves would be $71.88 million in , or $2.1 million above the lower prudential limit of the reserves policy. Estimates of expenditure The GRDC Board has approved the maintenance of annual expenditure of $ million (based on real dollars). This implies that annual expenditure will be $ million (based on dollars of the day) in , increasing at 3 percent per annum thereafter. The Board has adhered to this position for the following reasons: Over many years, industry forecasters have consistently underestimated the growth and robustness of the grains industry. This has resulted in a history of excessively pessimistic reserve forecasts, consequent conservatism in expenditure, and failure to bring the reserves into the prudential range. There is upside potential, not only in terms of production, but also in terms of exchange rate and price. 5 Gross reserves are total assets (including current and non-current assets) less total liability. 31

36 Table 2 summarises the GRDC s estimates of expenditure for The total forecast expenditure on new investments for is $26.01 million, while forecast expenditure on ongoing commitments is $96.86 million. These figures are indicative only. Changes in the GRDC s operating environment may require the corporation to vary the total expenditure or specific allocations to secure its objectives. Table 2: Estimates of expenditure Budget allocation $m % R&D investments 1 Varieties Practices New Products Communication and Customer Services Strategic investment a Management Employees Suppliers b Total Notes: a Strategic investment includes investments in the Global Crop Diversity Trust, emerging issues and Single Vision Australia. b Supplier costs include depreciation and amortisation. Australian Government Research Priorities Table 3 summarises the expected total expenditure allocated against the Australian Government s National and Rural Research Priorities within the financial year. The allocation of funds is shown in both dollar and percentage terms for each output group. Consultation and projects with the Grains Council of Australia The GRDC s proposed payment to the Grains Council of Australia (GCA) for its participation in consultations with the corporation during is $210, These funds will be used to meet the GCA s costs in preparing for and attending consultative meetings with the GRDC to assess the GRDC s performance against the industry s expectations. The GRDC will also continue to invest in the project National Partners in Grain, in which the GCA acts as the lead agency. The proposed investment for is $190, This project will provide a nationally coordinated, strategic approach towards increasing the technical knowledge and skills of women and young people in the grains industry. The GRDC will also continue to provide financial support for the Grains Week Conference coordinated by the GCA. Figure 6 shows the break-up of the proposed expenditure, in percentage terms. Costs of employees and suppliers account for 9.3 percent of the forecast expenditure in Figure 6: Forecast expenditure Commitments 71.5% New Investment 19.2% Employees 4.2% Suppliers 5.1% 32

37 Table 3: Government Research Priorities ($ and % values) National An Environmentally Promoting and Maintaining Good Health Frontier Technologies for Research Sustainable (strengthening Australia s social & Building and Transforming Safeguarding Priorities (NRP) Australia economic fabric) Australian Industries Australia Maintaining & Improving Confidence in the Integrity of Rural Research Sustainable Competitiveness Australian Protecting & Development Natural through a Whole Agricultural, Improved Creating an Australia from Priorities Resource of Industry Food, Fish and Trade and Use of Frontier Innovative Invasive Diseases (RRDP) Management Approach Forestry Products Market Access Technologies Culture and Pests GRAND TOTAL $117.11M 100% Total GRDC expenditure on Government Research Priorities ($ & % values) $M % $M % $M % $M % $M % $M % $M % $M % Total Total Output group expenditure on Government Research Priorities ($ & % values) $M % $M % $M % $M % $M % $M % $M % $M % Varieties Practices New Products CCS * does not include investments in the Global Crop Diversity Trust, Single Vision Australia and emerging issues. 33

38 List of Abbreviations ABARE APW BBA Australian Bureau of Agricultural and Resource Economics Australian Premium White Barley Breeding Australia CAC Act Commonwealth Authorities and Companies Act 1997 CIMMYT CSIRO EPRs GCA GCDT GM GRDC MIR NIR NPBP NVT PA PGLP International Maize and Wheat Improvement Center Commonwealth Scientific and Industrial Research Organisation End Point Royalties Grains Council of Australia Global Crop Diversity Trust genetically modified Grains Research and Development Corporation mid-infrared near-infrared National Pulse Breeding Program National Variety Trials program precision agriculture Premium Grains for Livestock Program PIERD Act Primary Industries and Energy Research and Development Act 1989 R&D research and development 34

39 Key contacts Chairman Mr Terry J Enright Managing Director Mr Peter Reading Executive Managers: Varieties Mr John Harvey Practices Mr Greg Fraser New Products Mr Vince Logan Communication and Customer Services Mr Victor Dobos Corporate Strategy and Program Support Dr Iftikhar Mostafa Corporate Services Mr Gavin Whiteley

40 GRDC Grains Research & Development Corporation