RIRDC Completed Projects in 2000-2001 & Research in Progress as at June 2001

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To Global Competetiveness Research in Progress

4.1 Global Competetiveness - Completed Projects
PROJECT No	PROJECT TITLE	RESEARCHER	PHONE	ORGANISATION

New Market Opportunities for the Food Sector
 

UQ-62A

Incongruity between perceptions and behaviours in agri-food marketing: Are perceptions alone a valid basis for policy formulation and research investment?

Dr Ray Collins

(07) 5460 1328

The University of Queensland

Domestic Impediments to Industry Performance
 

ACI-5A	Occupational licensing: impact on Australian agriculture	Mr Greg Cutbush	(02) 6249 8055	ACIL Consulting
BLC-2A	Study of regulatory cost methodologies for rural utility pricing and a guide to the utility regulatory process for rural Australia	Mr Bob Lim	(02) 9955 0169	Bob Lim & Company Pty Ltd

Trade Policy Reform
 

ABA-9A	Key domestic support issues for the next WTO negotiations	Mr Ivan Roberts	(02) 6272 2239	ABARE
ANU-36A	Issues, options and strategies for improving Japanese agricultural trade policies	Dr Ray Trewin	(02) 6125 0134	Australian National University
CIE-10A	The political economy challenge of agricultural trade reform	Dr Andrew Stoeckel	(02) 6248 6699	Centre for International Economics

Supply Chain Linkages
 

GLL-2A/ IMS-2A

International trends in the structure of agricultural cooperatives

J O’Connor & G Thompson

(02) 9904 2923/ (03) 9629 6287

Global Linkages Pty Ltd/industry Management Services Pty Ltd

Policy and International Analysis
 

CIE-7A

Agricultural implications from knowledge replacing land as the scarce factor

Brent Borrell

(02) 6248 6699

Centre for International Economics

Completed Projects

New Market Opportunities for the Food Sector


Project Title:	Incongruity between perceptions and behaviours in agri-food marketing: Are perceptions alone a valid basis for policy formulation and research investment?
RIRDC Project No:	UQ-62A
Researcher:	Associate Professor Ray Collins, Ms Tamanna Monem (research scholar)
Organisation:	The University of Queensland School of Natural and Rural Systems Management
Phone:	(07) 5460 1328
Fax:	(07) 5460 1324
Email:	rcollins@uqg.uq.edu.au
Objectives	· Our objective is to develop a methodology to test the theory that in marketing Australian agri-food products to Asian customers, changing people's perceptions (the usual target of market research and promotion) may or may not change their actual behaviour (the desired outcome of promotion). Incongruity (misalignment) between perceptions and behaviours may indicate the need to change traditional ways of thinking about how marketing policy is formulated and how market research is focused. Specifically, we aim to case study two horticultural products to identify the degree of congruence between perceptions and behaviours relating to product quality, service and value for money along the marketing chain from Australian grower to Asian consumer.
Background	From the early 1990’s until the present, critical reviews of Australian horticulture have concluded that it has poor international competitiveness. Across most reviews, findings suggested that overseas importers viewed Australian horticultural suppliers as unreliable, inconsistent and not supplying what consumers wanted. Critics identified a ‘perception-gap’ among Australian exporters, Asian buyers and consumers about product quality, service and value for money. They concluded that Australian suppliers did not understand what buyers needed. This study has implications for horticultural marketing. Efficient chains can react quickly to changing customer demands and clearly identify areas for growth. Ineffective chains are associated with diminished competitiveness. In this case the chain will need to be more influenced by the ‘pull’ signals of consumers if it is to become more competitive. Here, and perhaps in many other cases, an industry-wide, whole of chain strategy focused on better consumer understanding and clearer communication is needed.
Research	Researching this problem requires an understanding of channel members’ perceptions and behaviours, an understanding that does not lend itself to traditional quantitative approaches. This study uses an inductive methodology to identify incongruities among channel members’ perceptions of consumers’ preferences for Australian fresh produce. Inductive methodologies allow the exploration of concepts from qualitative data without having pre-conceived ideas or hypotheses about the problem.  Data has been collected in two stages. Stage one documents grower-exporter-importer relationships and perceptions of what consumers want and what suppliers provide. Stage two involves looking backwards to see how consumer preferences translate to purchase behaviour. The two sets of results are compared using two relatively new analytical tools – NUD*IST (Non-numerical Unstructured Data Indexing Searching and Theorizing) and SOM (Self-Organized Maps). The objective is to examine whether consumer preferences are understood and effectively communicated back down the chain, and what communication roles are played by importers and exporters. A case study approach has been adopted. Malaysia was chosen because of its importance as one of the major export markets for Australian horticultural produce, in particular apples and broccoli. In stage one, most major exporters of apples and broccoli from four cities in Australia, and all their major importers in Malaysia, were surveyed by in-depth interviews. In stage two, 1 000 consumers were surveyed face to face at point of purchase in Kuala Lumpur, Malaysia, over a three year period from 1997 to 1999.
Outcomes	Preliminary results demonstrate that incongruities do exist between what channel members think of consumers’ preferences and what consumers’ preferences actually are. Overall, it appears that perceptions and behaviours among exporters, importers, retailers and consumers are not well aligned. For example, consumers in general seek long stemmed broccoli but get short stemmed broccoli because importers and exporters argue that there are packaging and transport efficiencies in short stemmed broccoli. Consumers want more variety in apples than importers and exporters say they do. Consumers are more concerned about country of origin of product yet importers and exporters claim this is not an issue.  Preliminary results point to importers playing a crucial role in the chain of communication. They appear to demonstrate either an imperfect understanding of consumers’ preferences, or at best a partial desire to accommodate these preferences. This may be because of the way they use their position in the chain to exercise power over both exporters and retailers. Australian exporters rely heavily on information they get from importers and Malaysian retailers rely heavily on their importers for ‘consumer intelligence’, rather than on data generated in-store.
Implications	These results may be very helpful in understanding why reviews of Australian horticulture generate critical responses from the overseas elements of our supply chain, and they may help in formulating appropriate trade responses to the current situation. Although the results are still preliminary, there is clear evidence of the need to question whether value is being created at every stage of the supply chain, and whether the value that is created, is shared equitably. Consumers are not getting what they want from the large multi-national retailers who are expanding their operations throughout Asia.  While consumers may not be unhappy with what they are getting, and their aggregate consumption may still be rising, they do have unfilled needs that others in the chain do not know about, or are not responding to. This means that Australian producers and exporters need to rethink how their supply chain is configured. Shortening the chain, for example by dealing more directly with supermarkets, may be one way to create more value for consumers and share that value more equitably.
Publications	Monem, T. and Collins, R., 2000, Incongruities in the fresh produce supply chain: Australia’s challenge in meeting Malaysian consumers’ needs, Proceedings of the World Food and Agribusiness Congress, Chicago, June 24-28. Monem, T. and Collins, R., 2000, The use of inductive methodology to understand incongruities in the Australian fresh produce supply chain, Proceedings of the Australian Food and Agribusiness Congress, Melbourne.

Domestic Impediments to Industry Performance


Project Title:	Professional regulation: its impact on rural Australia
RIRDC Project No:	ACI 5A
Researchers:	Greg Cutbush and Greg Martin
Organisation:	ACIL Consulting Pty Ltd GPO Box 1322 CANBERRA ACT 2601
Phone:	(02) 6249 8055
Fax:	(02) 6257 4170
Email:	g.cutbush@acilconsulting.com.au or g.martin@acilconsulting.com.au
Objectives	· To undertake a scoping study on the impact of occupational licensing in rural Australia to aid a decision on whether (and if appropriate, how) to proceed to more in-depth investigation.
Background	The absence of some professional services outside the metropolitan areas is capturing attention at a time when the future viability of many rural communities is being questioned. Some blame has been directed at ‘red tape’, but the link between professional regulation and service gaps in the bush has gone largely unnoticed.  The subject arose pointedly in an ACIL consultancy in 1998 on radiology services in Victoria. It found that tight regulations were causing an undue shortage of radiology services in country areas. This in turn was leading country breast cancer patients to opt much too frequently for mastectomy procedures ahead of relatively less invasive radiation therapy options. ACIL’s report showed that for Victoria as a whole, the costs of the regulations far outweighed any benefits.  Research on the locational dimension of professional regulation is rare, but the potential of such laws to affect the competitiveness of rural-based industries such as agriculture is evident.
Research	The report briefly reviews the literature, indicates the extent of occupational licensing that is in place and looks specifically at two situations – (1) government efforts to deal with the shortage of medical services in regional Victoria and (2) the general situation with professional regulation in a representative non-metropolitan location, namely Dubbo, NSW.
Outcomes	The study confirms that despite the repeal (or dilution) of a few significant forms of professional regulation in recent years, professional regulation remains widespread. Virtually all of it is raising service costs, and even in the rare cases where it increases service quality, the returns to society are unclear.  The study found that the cost raising effects of professional regulation are likely to be especially harsh in places going through hard times and in areas where there are fewer opportunities for professionals to advance. Much of regional Australia is vulnerable to these harsh impacts.  Professional regulation affects the international competitiveness of rural-based industries such as agriculture at two levels – directly, by reducing the availability of purchased inputs such as veterinary services, motor repairs and kangaroo harvesting - and indirectly, by making life more expensive for the people who live on farms and operate agricultural enterprises by raising the cost or reducing the availability of personal services. The indirect impost of professional regulation on agriculture in remote locations could be more R00/159 significant than the direct, and could be costing farm businesses several thousand dollars a year.
Implications	One useful follow-up research project to the present study would be an audit of the extent to which the regional consequences of professional regulation have been pursued in NCP reviews of professional regulation. However this is not the first priority. A more pressing need is a specific research project which reviews the many rules and regulations, some introduced to contain the Health budget, that are contributing to the shortage of GPs in rural Australia. The law-by-law NCP review process currently under way will not get to the heart of the matter; a more comprehensive research project should be undertaken.
Publications	Professional Regulation: its Impact on Rural Australia, G Cutbush & G Martin, RIRDC Publication No. R00/159

Project Title:	Cost Methodologies and Processes in Infrastructure Regulation
RIRDC Project No:	BLC-2A
Researcher:	T M Dwyer & R K H Lim
Organisation:	Australian National University Bob Lim and Company Pty Ltd
Phone:	(02) 2649 5111 (02) 9955 0169
Fax:	(02) 6286 4981 (02) 9955 2275
Email:	terry.dwyer.phd@post.harvard.edu; boblimco@ozemail.com.au
Objectives	· To explain and analyse the numerous cost methodologies which underpin the infrastructure pricing decisions of Commonwealth and State regulatory agencies.
Background	Decisions about the pricing of infrastructure services such as electricity, gas, telecommunications, roads, railways and water have a significant impact on the international competitiveness of Australia’s rural and regional industries. An earlier RIRDC Report: Infrastructure Pricing, Provision and Process: Implications for Rural Australia found that it is important for rural and regional Australia to engage actively in the process of infrastructure price determinations. This Report deals with the crucial cost methodologies on which Commonwealth and State regulatory agencies base their infrastructure pricing decisions.
Research	All major regimes, determinations and codes of Commonwealth and State Regulators have been researched. Surveys and discussions were undertaken to illuminate key issues and illustrate for rural and regional Australia how infrastructure pricing decisions are made.
Outcomes	Research findings are summarised under four headings: pricing principles, costs allowed by regulators, treatment of externalities and procedure/processes. Complex theoretical and practical issues in infrastructure pricing and processes are de-mystified and explained.
Implications	This project provides the essential theoretical and practical knowledge for rural and regional Australia to engage actively in infrastructure pricing decisions by Commonwealth and State regulators.
Publications	R K H Lim and T M Dwyer: Infrastructure Pricing, Provision and Process: Implications for Rural and Regional Australia, RIRDC Publication 99/162.

Trade Policy Reform


Project Title:	Reforming Domestic Agricultural Support Policies through the World Trade Organisation
RIRDC Project No:	ABA-9A
Researcher:	Ivan Roberts, Troy Podbury & Mike Hinchy
Organisation:	ABARE PO Box 1563 CANERRA ACT 2601
Phone:	(02) 6272 2239
Fax:	(02) 6272 2320
Email:	iroberts@abare.gov.au
Internet:	www.abareconomics.com
Objectives	· The objectives in this study are: 1. to provide information and analysis resulting in more informed and effective policy development in Australia and elsewhere on domestic agricultural support measures for the current multilateral agricultural trade negotiations; and 2. To better inform the Australian community concerning domestic policies pursued in other countries and their links to trade policies that will affect the competitiveness of Australian agricultural industries
Background	WTO negotiations on agriculture commenced in early 2000. Since the Uruguay Round there has been a move in Europe and the United States toward forms of domestic support that are exempt from domestic support limitations under the present WTO Agreement on Agriculture. To the extent that these policies maintain production and trade distortions, there is a potential for further erosion of the competitiveness of Australian agricultural products internationally. Australian negotiating positions will benefit from identification of threats and opportunities, providing a potentially more advantageous negotiated outcome.
Research	Some of the key findings in the report are that; · the European Union obtained large exemptions from agreed cuts to domestic support by changing the forms of support for a few major commodities. This enabled support to be maintained for those commodities while virtually no reforms were made for others; · US domestic support has risen sharply since 1998 to record levels. The increases were made possible by very generous base levels in the WTO agreement and subsequent exemptions through changes in forms of support for a few commodities; · Japan’s actual price support has risen sharply in recent years at the same time as it has complied with agreed ‘reductions’ in domestic support. The reason is that commitments in the WTO agreement are determined from measures that are not linked directly to actual market variables such as world prices. To overcome the weaknesses through the current negotiations in order to ensure actual reductions in market distortions would require: · all forms of distorting support to be subject to commitments; · commitments to be based on measures that represent actual levels of distorting support, not as at present, an unrepresentative proxy; and · domestic support to be subject to commodity specific commitments, not, as at present, to commitments for agriculture as a whole.
Outcomes	The outcomes from this study should be more informed Australian and other negotiators who should be better placed to reach agreement in WTO negotiations that will reduce distortions in agricultural markets due to agricultural protection around the world and enhance the competitiveness of Australian agriculture. The Australian community should also be better informed about important issues affecting the competitiveness of Australian agricultural industries.
Implications	The findings of this report provide material that needs to be considered in the formation of Australian and Cairns Group negotiating positions and strategies in the current WTO negotiations on agriculture.
Publications	Reforming Domestic Agricultural Support Policies through the World Trade Organisation, ABARE Research Report 01.2, RIRDC Publication No.01/07.

Project Title:	Issues, options and strategies for improving Japanese agricultural trade policies
RIRDC Project No:	ANU-36A
Researcher:	Dr Ray Trewin
Organisation:	Australian National University Australia-Japan Research Centre (AJRC) Building 13 CANBERRA ACT 0200
Phone:	(02) 6249 0134
Fax:	(02) 6249 0767
Email:	ray.trewin@anu.edu.au
Objectives	· The key outcomes and deliverables will be the publication and broad presentation of a RIRDC report, including at public symposiums, involving Australian and Japanese researchers covering issues (eg. food security, environment), options (eg. more open trade and investment) and strategies for improving Japanese agricultural policies which affect an important agri-food export market for Australia.
Background	Japan is a key market for Australian agricultural products. It is currently undergoing adjustment in response to economic pressures. Businesses and government agencies need up-to-date information on these developments, their implications, the challenges and opportunities. These economic pressures are being experienced at a time when the next agricultural WTO negotiations are getting underway. The key focus of the project was trade liberalisation of what has been a highly protected sector – the form and its speed. Such liberalisation will bring large benefits to Australian industry. The project built on an extensive base of previous successful work in this area and took advantage of Professor Honma being a visitor to the Centre from late 1999 throughout 2000 on a strongly related study.
Research	The research was undertaken in inter-linked stages starting with a review of existing source material. The research strategies utilised a network of Japanese experts, in Australia, Japan and elsewhere in the study to achieve its objectives. A high powered Research Advisory Group in each country assisted in this process. These Groups had a number of working meetings in both countries, including discussions of the results. The final meeting in Japan was hosted by the Australian Ambassador and involved a mix of key industry and government officials as well as researchers. Analysis included that of data obtained from the IEDB and Nikkei databases (eg. trade intensities and measures of trade impediments), as well as qualitative (eg. the political economy) and quantitative aspects (eg. using the GTAP model). The research methodology was oriented towards the production of a RIRDC report for publication and dissemination, including at workshops in both countries and public symposiums (eg. Keidanren seminar). This report incorporates research that builds on an extensive base of relevant previous research and study tours of Japan.
Outcomes	The key outcomes and deliverables have been the publication and presentation of research making up a RIRDC report, including at public symposiums such as the Seattle WTO meetings. These involved Australian and Japanese researchers covering issues (eg. the New Basic Law, food (rice) security, multi-functionality, SPS arrangements, land reform and the political economy), options (eg. more open trade and investment), and strategies for improving Japanese agricultural policies which affect an important agri-food export market for Australia. The papers provide measures of the benefits of alternate policies to Japanese processors, consumers, taxpayers etc, Australian industry and government, as well as Australian and international bureaucrats. They also develop policy approaches to help overcome obstacles and achieve the benefits of trade liberalisation. This research, which has been widely distributed by the A-JRC and others (eg. on RIRDC and NFF websites), should assist international, Australian and Japanese government agencies and businesses to develop strategies for improving Japanese agricultural trade policies. The main strategy was to incorporate the analysis into policy processes, for example through targeted publications, which involved Japanese researchers, and targeted presentations, including in Japan. The research was released at a time when governments were preparing for the 2000 agricultural WTO negotiations. Milestones were changed to accommodate the changed circumstances following failure of the Seattle WTO meetings.
Implications	The report covered the following issues: economic update and outlook; changing government policies; structure and developments in agriculture; opportunities and constraints; policy options and strategies. For example, the importance of land reform and the impact of the agricultural arrangements on processing were identified as issues and strategies to address these were put forward. The report showed the need for such information that leads to a more informed and effective development of policies and trade negotiation positions, especially for Australia. Industry will benefit from the project through: · an improved understanding of the key issues in Japanese agriculture, options and strategies for reform, and an opportunity to project its interests in Japan and international forums; and · increased opportunities for competitive trade access, making use of comparative advantage. Reform will not occur rapidly but pressure needs to be continually asserted, especially now given the need for structural adjustment in the Japanese economy. One of the implications of the project has been the identification of areas requiring more research, for example on Japanese FDI in agri-foods in developing Asian economies.
Publications	Has Japanese agricultural protection had its day? Policies for the new millennium, R Trewin et al, RIRDC Report, Publication No. R00/176. "Some key issues for the East Asian food sector", Pacific Economic Papers 305 (M. Honma, R. Trewin, Y. Huang, M. Bosworth, L. Holmes, R. Stringer and Y. Godo). "Issues, options and strategies for Japanese agriculture going forward", Policy Brief for release at meetings, Tokyo, June 2000. (R. Trewin and M. Bosworth) "East Asian approaches to food security and implications for the next WTO Round", proceedings of XXIV International Conference of Agricultural Economists, Berlin, August 12-19, 2000. (R. Trewin and Y. Huang) "Has Japanese agricultural protection had its day: Policies for the new millennium", Policy Brief for release at WTO meeting, Seattle, November 1999. (R. Trewin and M. Bosworth) "Improving Japanese agricultural trade policies: issues, options and strategies", Pacific Economic Papers 300 (M. Honma, R. Trewin, J. Amyx and A. Rae).

Project Title:	The political economy challenge of agricultural trade reform
RIRDC Project No:	CIE-10A
Researcher:	Dr Andrew Stoeckel
Organisation:	Centre for International Economics Ian Potter House Cnr Marcus Clarke & Edinburgh Avenue CANBERRA ACT 2600
Phone:	(02) 6248 6699
Fax:	(02) 6247 7484
Email:	astoeckel@intecon.com.au
Objectives	· Better chance of Australia gaining a successful outcome from the next round of trade talks on agriculture. Key deliverable's are a booklet updating and developing ideas on the political economy issues to be addressed in agricultural trade and a strategic plan for Cairns Group Farmers to follow.
Background	Agricultural trade negotiations were scheduled to start by the end of 1999 and were part of the built-in agenda of the Uruguay Round. But negotiators were never going to take the talks seriously without a comprehensive round. Some political will needs to be created from domestic constituencies so that ministers are motivated enough to want to be seen to do something.  This proposal is aimed at enhancing and refining the strategy by the Cairns Group who are the major force in world politics pushing for a better deal on agriculture. And behind the Cairns Group Ministers lies the farmers who stand to gain a lot or continue to lose. But the Cairns Group Farmers need a clear vision and prioritisation of the actions they can take if they are to receive maximum benefit from their efforts. Australia is the leader of the Cairns Group and it is important that Australia provide the leadership in developing a strategic vision for the Cairns Group Farmers.
Research	A highly readable background paper on the state of play and the political economy impediments to be overcome to see trade reform will be produced. It will bring Cairns Group Farm leaders up to speed on the challenges to overcome. This paper will be used as background to the development of an action plan by Cairns Group Farmers to lower agricultural trade barriers.
Outcomes	A better understanding of the political economy constraints facing agricultural trade reform. An internal action plan for the Cairns Group Farm Leaders to follow has been developed that will enhance the prospects for a successful outcome for Australia’s agricultural trade access under the next round of trade talks.
Implications	Far more concerted action at building coalitions within countries to reform agricultural trade needs to be developed. These coalitions will have to come from food manufactures, consumers, treasuries and environmental groups who ‘pay the price’ for the expensive and often environmentally damaging policies. Any internal pressure for reform developed by building coalitions will be complimentary to external pressure for reform through the WTO negotiations on agriculture.
Publications	Solving the Problem. A Look at the Political Economy of Agricultural Reform, Banff 2000, prepared for Cairns Group Farms Leaders meeting, Banff 2000, RIRDC Publication No. 00/124.

Supply Chain Linkages


Project Title:	International trends in the structure of agricultural cooperatives
RIRDC Project No:	IMS-2A & GLL-1A
Researcher:	John O’Connor & Glen Thompson
Organisation:	Industry Management Services Pty Ltd Global Linkages Pty Ltd Level 2, 470Collins Street PO Box 466 MELBOURNE VIC 3000 CLAREMONT WA 6010
Phone:	(03) 9629 6287 (08) 9319 8998
Fax:	(03) 9629 2289 (08) 9319 8998
Email:	johnoconnor@access.net.au robglen@wantree.com.au
Objectives	· To examine international trends in the structure of agricultural cooperatives with a view to assisting Australian cooperatives to adjust to current market circumstances.
Background	This report has arisen from a tour of agricultural cooperatives in the USA and Europe in May-June 2000. Half of the participants were directors of dairy industry cooperatives and the remainder were from the rice, horticulture and egg industries. The objectives of the tour were to examine trends in cooperative structures and developments in the food industry. The report that comprises this project was confined to structural issues.
Research	Global trends to less regulation and more competitive markets is changing the environment in which agricultural cooperatives operate. Particular areas in which typical cooperative practices are inconsistent with current business practice are in the management of capital and in corporate governance, particularly the composition of boards of directors. Cooperatives visited on the tour and reported through this project illustrated the range of problems in this area and the responses of some cooperatives to those problems.
Outcomes	Three major conclusions were drawn. Firstly, that many cooperatives need to manage their capital resources more efficiently, both in raising capital and investing it. Secondly, corporate governance and control need to be improved, with the priority change being to increase the proportion of outside (non-member) directors. Finally, cooperatives need to be more careful and more flexible in developing their growth strategies. Too often mergers are entered into when the business is already under pressure, and with other cooperatives with similar problems.
Implications	It remains to be seen whether the tour and the report result in better performance from Australian cooperatives. However, all the indications are that the participants in the tour benefited greatly from the experience.
Publications	O’Connor, John and Thompson, Glen. International Trends in the Structure of Agricultural Cooperatives, RIRDC Report, Publication No. R01/06.

Policy and Institutional Analysis


Project Title:	Agricultural implications from knowledge replacing land as the scarce factor
RIRDC Project No:	CIE-7A
Researcher:	Mr Brent Borrell & David Pearce
Organisation:	Centre for International Economics Ian Potter House Cnr Marcus Clarke & Edinburgh Avenue CANBERRA ACT 2600
Phone:	(02) 6248 6699
Fax:	(02) 6247 7484
Objectives	· Better understanding of how Australia's comparative advantage in agriculture may be changing as knowledge replaces land as the scarce factor.
Background	Australian agriculture is often considered to be part of the so-called ‘old economy’ and its growth is bounded by its complement of land and water resources. By comparison, many people regard certain industries of the so-called ‘new economy’ as having almost unbounded capacity for growth because of the escalating accumulation and application of knowledge. For the economy generally, knowledge is being recognised as an increasingly important factor of production. For agriculture there remain many questions about the importance of knowledge.
Research	This study examines and measures how knowledge affects agriculture, identifies factors favouring or discouraging the generation of knowledge and assesses whether there are constraints to generating or uptaking knowledge.
Outcomes	Knowledge has long been the most important factor affecting economic growth of agriculture. The application and uptake of knowledge in agriculture may be greater than in the economy generally. Agriculture’s high rate of productivity growth is mostly the result of ‘knowledge’. The development and uptake of knowledge has been encouraged by the competitive nature of agriculture and by government funding of R&D. However, the development and uptake of knowledge has been biased toward commodities and production related matter that provide big economies of scale for knowledge. But most of the benefits are captured by consumers overseas. The development and application of knowledge relevant to differentiated products, and demand related matters has received less attention, yet the benefits of such knowledge may be easier for producers to capture than from production related knowledge.
Implications	Australia’s comparative advantage in agriculture may be shifting toward the production of sophisticated, highly differentiated and branded products. To exploit this may require more intensive development and application of specialised knowledge to niche products, rather than development of generalised commodity focussed knowledge of the past. This may mean fewer economies of scale in knowledge development and application and the need for more and more highly specialised knowledge workers in agriculture in the future. However, at the same time, agriculture will increasingly have to compete with other industries for such workers. The role of government should be to find institutional arrangements that support a high level of applied and commercially relevant research in the private sector
Publications	A draft report titled ‘Appreciating the role of knowledge in agriculture’ has been submitted to RIRDC