RIRDC Completed Projects in 2002-2003 & Research in Progress as at June 2003

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To Global Competitiveness  Completed Projects

4.1 Global competetiveness - Research in progress
PROJECT No	PROJECT TITLE	RESEARCHER	PHONE	ORGANISATION

Domestic Impediments to Industry Performance

BLC-4A	Advancing the securitization of Australian agriculture	Dr. Terry Dwyer	(02) 6286 5900	Bob Lim & Company Ltd
AEC-3A	Evaluating logistics chain technology: Australian farmgate to port	Dr. Bob Hawkins	(02) 6273 1222	Access Economics Pty Ltd

Trade Policy Reform

CIE-13A	Preferential access, trade reform, the US farm bill and bank debt for developing countries	Dr. Andrew Stoeckel	(02) 6248 6699	Centre for International Economics
CIE-18A	Challenging the formation of FTAs as a means of avoiding agricultural policy reform	Dr. Andrew Stoeckel	(02) 6248 6699	Centre for International Economics
ABA-16A	Agriculture in the current WTO negotiations: two critical facets	Dr. Vern Topp	(02) 6272 3823	ABARE
DAH-1A	Industry adjustment to support agricultural trade liberalization	Mr. David Harris	(03) 9889 9879	David Harris

Markets for Agricultural Products

ANU-51A	Global demographic and income trends: their impact on food consumption	Prof. Ronald Duncan	(02) 6249 4765	Australian National University
UM-60A	Generic promotion in the food marketing chain	Prof. John Freebairn	(03) 8344 6414	The University of Melbourne

Supply Chain Linkages

UQ-98A

Converting value chain information into producer-based action

Dr. Ray Collins

(07) 5460 1328

The University of Queensland

Policy and Institutional Analysis

AWT-1A

Economic effects of income tax-law on investments in Australian agriculture (with particular reference to new and emerging rural industries)

Dr. Alistair Watson

(03) 9370 7438

Alistair Watson


 
 
 

Project Title	Advancing the securitisation of Australian agriculture
RIRDC Project No.:	BLC-4A
Start Date:	5-Jan-02
Finish Date:	30-Sep-03
Researcher:	Dr. Terry Dwyer
Organisation:	Bob Lim & Company Ltd National Centre for Development Studies Room 130 Crawford Building ANU ACT 0200
Phone:	(02) 6286 5900
Fax:	(02) 6286 4981
Email:	Terry.Dwyer@anu.edu.au
Objectives	· This project will take forward RIRDC Project BLC 3A Efficient Equity and Credit Financing for the Rural Sector by researching in depth and developing a practical model for securitisation of Australian rural businesses. The Report will have a long shelf life as a major reference document for the progressive up-take of securitisation techniques in Australian agriculture.
Current Progress (200 words maximum)	The research program has proceeded in two streams.  Firstly, theoretical and practical issues in securitisation have been researched in depth and a draft model for securitisation developed.  A Reference Committee has been formed to assist in this stage of the research and development of the draft model, and to provide assistance throughout the project.  The second stream of research activity has been empirical testing of the draft model through a series of structured interviews and discussions covering the institutional, financial, legal/regulatory and farm sectors.  Refinement of the securitisation model is proceeding in light of feedback from the empirical testing phase of the research with issues and obstacles being progressively identified and addressed.  Further refinement and development of the model will be undertaken with issues and findings summarised and presented in the project final Report.


 

Project Title	Evaluating logistics chain technology: Australian farmgate to port
RIRDC Project No.:	AEC-3A
Start Date:	01-Apr-2003
Finish Date:	30-Apr-2004
Researcher:	Dr. Bob Hawkins
Organisation:	Access Economics Pty Ltd
Phone:	(02) 6273 1222
Fax:	(02) 6273 1223
Email:	bob.hawkins@accesseconomics.com.au
Objectives	1. An assessment of the nature and efficiency of current technology in the movement of containerised rural exports from farm gate to port; and the incentives and constraints to the uptake of further investment in technology. 2. Compare the use of technology in Australia against other selected, comparable countries in their application of relevant technology in the land-based export supply chain.
Current Progress (200 words maximum)	The project started in April has undertaken the literature review and especially established the project steering committee. A meeting of the steering committee is planned soon which will finalise the directions for the project. Background papers have been drafted for this meeting.


 

Project Title	Preferential access, trade reform and bank debt for developing countries
RIRDC Project No:	CIE-13A
Start Date:	31/05/01
Finish Date:	31/08/02
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	a. An appreciation of the potential dangers for Australian agricultural exports if preferential access is granted to developing countries. Encouragement for a non-discriminatory, open world trading system for agriculture. b. An appreciation of the changing influences on US Farm Policy that will allow a better strategic response by Australia and the Cairns Group as part of the ongoing WTO talks on agriculture, including the stimulus to the formation of a coalition of reformers in the US and active participation in an expert panel to draft a series of reports on agricultural liberalisation to go to policy makers. c. The advancement of ideas that will help break the current impasse in the WTO Doha round of trade talks. d. The encouragement of global banks and banks in developing countries to take a strong interest in promoting world agricultural trade reform, which is in Australia's interest.
Current Progress	Project (a) and (b) completed. Project (c) has been included to reflect the imperative of breaking the impasse of the stalemate in international trade negotiations and project (d) has been scheduled to start in 2004 and finish in 2005. Some preliminary work has been undertaken on project (d). A steering group meeting on project (c) has been held and background reading and research undertaken. Discussions are proceeding with the Cordell Hull Institute to participate in another follow-up meeting as was done for project (b) but this time surrounding the research in project (c). The meeting is called ‘Breaking the Impasse’.


 

Project Title	Challenging the formation of FTAs as a means of avoiding agricultural policy reform
RIRDC Project No.:	CIE-18A
Start Date:	10-Jan-02
Finish Date:	31-March-2004
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	· An examination of the trend for countries to form Free Trade Areas (FTAs) but which do not include agriculture in contravention of GATT rules. · The exposure of countries avoiding agricultural trade reform and hence the encouragement of the Cairns Group to mount a challenge against 'incomplete' FTAs or at least tighten the rules in the WTO.
Current Progress (200 words maximum)	Some background research material has been collected, but priority has been given to project CIE-13A, which will be used as the basis for an international meeting in Washington in October this year. Work will continue in earnest following that meeting.


 

Project Title	Agriculture in the current WTO negotiations: two critical facets
RIRDC Project No.:	ABA-16A
Start Date:	7-Jan-02
Finish Date:	31-Jul-04
Researcher:	Dr. Vern Topp
Organisation:	Australian Bureau of Agricultural and Resource Economics (ABARE) International Trade and Policy Branch BARTON ACT 2604
Phone:	(02) 6272 3823
Email:	vtopp@abare.gov.au
Objectives	· The outcome of this project will be better informed Australian negotiators and agricultural industry groups on a number of key WTO issues. There will be a range of deliverables from this work that will need to reflect/take account of timing and processes in the negotiations. We intend to disseminate a paper on the overlap between WTO and multilateral environment agreement rules; release a database on market access barriers; provide extensive briefing utilising analysis of said market access database; and attendance by an ABARE officer at critical meetings to provide technical back up on research outcomes from this research to negotiators.
Current Progress (200 words maximum)	The market access database has been developed for selected commodities and distributed to key industry contacts. It provides information on the magnitude of cut in bound tariffs that is required before any additional trade can occur. This database is available for distribution to any interested people from Australian industry. The information has been extensively used in the development of Australia’s position and for comparing alternate proposals in the WTO negotiations. In addition, a paper has been released using this information to assess some proposed tariff reductions in the negotiations. This paper Opening Agricultural Markets through Tariff Cuts in the WTO is available for free on the ABARE website. Two seminars have been held on the trade and environment inter-linkages and we are currently seeking additional input from RIRDC and key stakeholders on the form and content of this work.


 

Project Title	Industry adjustment to support agricultural trade liberalization
RIRDC Project No.:	DAH-1A
Start Date:	01-Apr-2003
Finish Date:	31-Dec-2004
Researcher:	Mr. David Harris
Organisation:	David Harris
Phone:	(03) 9889 9879
Email:	dnharris@hotkey.net.au
Objectives	Evaluate the policy options for managing industry adjustment pressures created by trade policy reform. Describe the principles of adjustment policy that facilitates change and promotes industry competitiveness. Influence the development of adjustment policy for industries with import protection and those competing on the export markets.
Current Progress (200 words maximum)	A literature search of recent industry adjustment programs in the Australian agricultural sector has been completed. The literature review was used to compile a selection of programs for initial evaluation. A conceptual framework for evaluating the selected programs has been developed. An overview of the key features of the adjustment programs and the issues behind the need for assistance has been completed. A summary paper of this initial research is being finalised. It includes a matrix that compares the key features of the selected programs and recommendations for case studies that will be evaluated in the second stage of the project.  Discussions with the DRDC on the design of a jointly funded survey of the response of Australian dairy producers to the dairy deregulation assistance package have commenced. Preparations for a meeting of the project advisory group involving key stakeholders in AFFA, DFAT, ACIAR, NFF and RIRDC are in progress. The initial meeting of this group will consider the findings of the preliminary review of industry adjustment programs and the recommendations for case study evaluations.


 

Project Title	Global demographic and income trends: their impact on food consumption
RIRDC Project No:	ANU-51A
Start Date:	01/07/01
Finish Date:	31/07/04
Researcher:	Prof. Ronald Duncan
Organisation:	Australian National University The National Centre for Development Studies CANBERRA ACT 0200
Phone:	(02) 6125-4765
Fax:	(02) 6125-5448
Email:	ronald.duncan@anu.edu.au
Objectives	· Assessment of global and regional demographic projections, yielding a set of projections of population by age group, with error margins indicated. · Projections of global and regional income changes and of income distribution within regions. · Projections of trend changes in the pattern of global and regional food product demands, by commodity, as driven by changes in income and its distribution on the one hand and the size and age structure of population on the other.
Current Progress	1. Demographic forecast errors: The paper prepared in 2002 by the demographer, Dr Chris Wilson, on errors in global population forecasts is under revision by Professor Ron Duncan. It is now very near ready for widespread circulation and to serve as background for the model projections of food demand in the light of future population and income changes. 2. Analysis of food consumption patterns: Good progress is now being made on our econometric analysis of Chinese consumption data to see how diets have been changing in that country as people age and as their incomes have increased. This work exploits very detailed panel data uniquely available in China. Dr Xin Meng of The Australian National University has joined the project to assist with the analysis of these data. The parameters estimated for China will also be credible to apply for other countries that have experiencing or can be expected to experience the same income level changes. 3. Simulations and forecasts: After significant delays due to the loss of capable technical staff, good progress has recently been resumed. Dr. Qun Shi joined the project early in May with the specific task of completing the preparation and adaptation of the simulation model. Already, new simulations have been completed and work continues apace.


 

Project Title	Generic promotion in the food marketing chain
RIRDC Project No.:	UM-60A
Start Date:	1-Oct-02
Finish Date:	30-Nov-03
Researcher:	Prof. John Freebairn
Organisation:	The University of Melbourne Department of Economics PARKVILLE VIC 3010
Phone:	(03) 8344 6414
Fax:	(03) 8344 6899
Email:	j.freebairn@unimelb.edu.au
Objectives	· The project outcomes will be a detailed review of the generic promotion literature, a new theoretical framework for examining issues of generic and brand advertising in agricultural industries, and an assessment of whether and under what conditions generic promotion would be successful in some case study agricultural industries.
Current Progress (200 words maximum)	A major task has been to bring together issues associated with (a) international trade of Australian agricultural products and the effect of trade on farm prices received, (b) in the case of many products to include the effects of market power exercised by processors and retailers of agricultural products, including the extremes of monopoly and monopsony, and more generally oligopolistic games between processors and retailers, (c) the development of retailer and processor brands as one of their marketing strategies, and (d) the price taking behaviour of a relatively competitive farm production sector. We have found elements of the story in the literature of agricultural economics, industrial organisation and marketing. A principal task has been to integrate the different threads of this diverse literature to understand the effects of generic advertising funded by farmers on the farm price and on farm returns. Investment in advertising by farmers will improve their returns only if it leads to higher farm prices. Clearly farm funded advertising is not warranted for agricultural products where the farm supply curve is highly elastic, or where Australia is a small country exporter or importer in which farm price is the world price. Where generic product advertising and processor/retailer brand advertising primarily affect market shares and have little effect on aggregate sales, farmers gains from advertising will be small.


 
 

Project Title	Converting value chain information into producer-based action
RIRDC Project No:	UQ-98A
Start Date:	01/07/01
Finish Date:	31/12/04
Researcher:	Dr. Ray Collins
Organisation:	The University of Queensland School of Natural and Rural Systems Management GATTON COLLEGE QLD 4345
Phone:	(07) 5460 1328
Fax:	(07) 5460 1324
Email:	rcollins@uqg.uq.edu.au
Objectives	Working in partnership with the Queensland Farmers' Federation and the Agricultural Business Alliance of Queensland, this project aims to research, develop and implement the most effective strategies to: · Raise producer awareness of the role of value chain alliances in improving farm competitiveness (the outcome will be a very large number of producers across most primary industries exposed to generic information about value chains). · Transform generic awareness of value chains into applied knowledge that is specific to individual enterprises in individual industries (the outcome will be a large number of producers actively involved in transforming value chain information into knowledge that is specific to their own circumstances). · Create a small number of best practice (role model) examples of how to use this knowledge to develop and implement chain based strategies to improve competitiveness (the outcome will be a smaller number of producers actively involved in transforming value chain knowledge that is specific to their industry and their personal circumstances into actual chain building activities). · Monitor and evaluate the effectiveness of this approach to engaging producers with their value chains (the outcome will be a formally researched process whereby value chain information is turned into producer based commercial action - a process that can be applied in other Australian primary industries.
Current Progress	Alliances have been formed with three agribusiness organizations in the cotton, citrus and aquaculture industries in order to conduct action learning case study research on their respective supply chains. The case studies are being developed as a means of influencing the conversion of value chain information into producer-based action in real time. Continual observations are being made as to how knowledge is developed and managed within each of the supply chains in order to innovate and create addition value for chain partners. Workshops have been conducted to identify the key strategic drivers of each of the supply chains and to develop strategies for initiating and enhancing supplier and buyer relationships. Discussions have been held with some of the downstream and upstream partners in the supply chains in order to engage them in the projects. Downstream supply chain partners include both Australian and overseas businesses. Theoretical literature is being reviewed and compared with ‘real-world’ observations within the case study supply chains to ensure that action learning is informed by existing theory and principles, and to identify those gaps in the literature to which this research will make a contribution.


 
 

Project Title	Economic effects of income tax-law on investments in Australian agriculture (with particular reference to new and emerging rural industries)
RIRDC Project No.:	AWT-1A
Start Date:	7-Jan-02
Finish Date:	31-Aug-03
Researcher:	Dr. Alistair Watson
Organisation:	Alistair Watson 403/147 Beach St PORT MELBOURNE VIC 3207
Phone:	(03) 9370 7438
Fax:	(03) 9326 1218
Email:	aswatson@bigpond.net.au
Objectives	· Improved understanding of the way taxation affects the growth of new agricultural industries, the economic efficiency and equity implications of recent tax law changes and their likely impact on new agricultural industries. Development of ideas concerning taxation policy for agriculture.
Current Progress (200 words maximum)	Work in the last twelve months has concentrated on elaborating conceptual and empirical aspects of the effects of income-tax law on investment in Australian agriculture. At a conceptual level, major issues identified include: · A seeming disconnect between the economics of investment and risk sharing and the application of tax law and regulation. · The impact of tax law and regulation on the organisational form of investment in agriculture – particularly new and emerging industries. · Potential to better address important informational asymmetries in both the investor market and the tax ‘market.’  Data on managed investment schemes (MIS) have been collected from several sources – the Australian Security and Investment Commission (ASIC), ‘Product Rulings’ by the Australian Taxation Office (ATO), inquiries by the Australian Senate, industry organisations and from prospectuses published by promoters of MIS. This data further demonstrates the serious problems in the quality of information available to investors. Already there have been changes in regulatory arrangements and procedures of the ASIC and ATO. A major thrust of future research will be examining ways that the quality of information can be improved through market and regulatory means. Despite well-documented deficiencies (including high charges and commissions by promoters), MIS unlike company structures have the desirable feature that losses in early years that are characteristic of agricultural investments can be passed back to investors.  This feature assumes greater significance with the Division 35 – non-commercial loss provisions introduced in 2000 – which limit the ability of natural entities to claim losses against income earned elsewhere. Division 35 has substantial implications for many actual or would be direct investors in new and emerging industries and also appears to have questionable consequences for farmers wishing to diversify into new agricultural enterprises. Aspects of these issues are being explored through development of spreadsheet models that trace economic effects of schemes on investors, promoters and the community (as revealed by initial taxation costs and subsequent benefits). The models investigate the effects of different business structures on costs, benefits and risks.