Rural Industries Research & Development Corporation

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5. Tracking Performance

Performance versus Plan  Corporate Performance Indicators Performance against Five Year Plan    Returns on Investment

Addressing Government  Priorities  Market access and investment  opportunities Productivity  Quality products  Competitiveness  Natural resources

 

Performance versus Plan

Corporate Performance Indicators – Performance against Five Year Plan
 

Performance Target	Performance in 1998/99
Involvement of end users in all aspects of R&D investment program	Our end users are rural industries. During 1998/99 we put maximum focus on our communication efforts and making our operations/output more transparent and consumer friendly. Corporation communications expenditure in 1998/99 was $766,975, up from $658,144 in 1997/98. We issued 15 short reports and nearly all our final reports are accessible on our Website. Most of our programs now have newsletters issued to key stakeholders. A RIRDC Communications Plan was developed and issued in May 1999.
Translation of research outputs into industry benefits.	Our strong policy on accessibility to research outputs means that industry has the opportunity of building new technologies into future investments. An example of a product designed to integrate/facilitate is the publication The New Rural Industries – Financial Indicators which builds on our earlier work The New Rural Industries – A Handbook for Farmers and Investors.
Review of programs on a four-year rolling evaluation basis	Projects in Program 3 were reviewed in 1998/99. All but two of the reviewed projects were found to have provided a rate of return in excess of the strategic plan performance target of 25 per cent. The equivalent range for the benefit–cost ratios was 0.8 to 120 (discount rate of 5 per cent) and again all but two were greater than the performance target of 10. The information on projects with rates of return lower than the target rates is being used by the sub-programs to support future funding decision considerations.
Expansion of the gross value of production of new and emerging industries supported by RIRDC programs	Most of our new industries exporting to Asia were adversely affected by developments in that region in 1998/99 . Most of these markets are now recovering. The market for 'organics' is expected to grow strongly with the debate over GM foods. Tea tree oil prices are expected remain under pressure because of the sharp expansion in output. Our latest farm-gate GVP estimates for RIRDC related industries in Programs 1 and 2 (1997/98) are as follows:   Sub-program Area Farm-gate 1997/1998  GVP ($ million) Anticipated short-term  GVP trend Asian Foods 89.0 increase Cashews 0.17 increase slowly Deer 5.4 Stable Essential Oils & Plant Extracts 36.5 Increase Organic Produce 122.5 Increase Rare Natural (Animal) Fibres 2.3 stable/increase Tea Tree Oil 16.2 stable/increase Wildflowers & Native Plants 46.0 Increase

 

Performance Target	Performance in 1998/99
Strong partnerships with stakeholders in new, emerging and established industry programs	Our relationships in industry specific programs continue to be underpinned by our industry advisory committees, active information distribution mechanisms and by a close relationship between representative industry bodies and the Corporation.
Strong partnership with stakeholders in Future Farming Systems program	This is a difficult area for the Corporation. Program 4 is cross sectoral in nature and it is difficult for the Corporation to identify key stakeholders. Our primary relationship continues to be with the National Farmers' Federation, on behalf of all sector interests.
Progressive reduction of corporate and administrative costs to keep these below 6 per cent of total budget expenditure	Our 1998/99 Budget was premised on a 'corporate' and 'administration' vote of 5.9 per cent of anticipated expenditure. Actual expenditure on these two items in 1998/99 was 7 per cent of total expenditure. This increase was due to an underspend in Sub-programs 2.2, 3.1 and 3.2. RIRDC’s 1999/2000 Annual Operational Plan has been structured for 'corporate' and 'administration' expenditure to be 5.8 per cent of outlays.

 

Addressing Government Priorities
 

Market Access and Investment Opportunities Identify strategic market access and investment opportunities based on improved access to international markets and then develop strategies to take advantage of these opportunities.
Priority identified in  Minister’s letter*	How RIRDC is addressing the priority	Pages  (in hard coipy)
Identify new market opportunities and support strategies to take advantage of the contribution to Federal Government’s 'Supermarket to Asia' strategy	Innovative products associated with new industries Market prospects for emerging plan and animal products Export prospects for food and agriculture in a range of Asian markets	36, 39, 43 36, 36, 38, 49, 51, 58, 64 43, 83, 83
Productivity Increase productivity of land, labour and capital in rural industries.
Priorities identified in Minister’s letter	How RIRDC is addressing the priorities		Pages
Raising the productivity of farming systems in a sustainable manner	Improving animal and plant health Improving animal nutrition Improving on-farm input use Reducing the impact of pests Improving farmer health and safety Agroforestry to improve farming systems	39, 53, 54, 67, 69, 75, 75, 79, 88 42, 42 61, 71 40 90, 90, 90 49, 49, 50, 50, 50
Adoption of technology	Producing industry focused newsletters Developing innovative technology transfer systems	47, 52, 52, 54, 55, 60, 62, 75 49, 57, 90, 90
R&D to secure genetic resources in the livestock and cropping sectors	Evaluating plant breeding and varieties Improved animal breeding techniques and genetic material	40, 60, 61, 62, 72, 72, 73, 78, 79     42, 42, 57, 58

Quality Products Encourage the investment in and uptake of high quality Australian products.
Priorities identified in Minister’s letter	How RIRDC is addressing the priorities		Pages
Removing red tape and simplifying the process of doing business; minimise government decision making at all levels	Trade policy reform Policy reform to support structural change Identifying of impediments to farm forestry development	86 86, 86, 90     49
Promote new and emerging industry developments	New plant products New animal products Development of pharmaceutical and nutraceutical properties of animal and plant products	38, 38, 38, 38, 39, 39, 39, 39, 39, 39, 55, 61, 62 39, 42     60, 60, 60, 71, 71
Maintain and improve Australia’s reputation for food quality and safety	Improving food quality	42, 69
Maintain status of being relatively disease-free and non-polluted	Disease control Chemical residue reduction	39, 39, 54, 58, 61, 67, 71, 88 53, 88

Integrated approach to food safety, quality assurance and animal and plant health	Food safety and quality control for plant products Food safety and quality control for animal products	60 68, 69, 69, 69, 71
Co-investment with industry in integrated management programs and quality assurance standards and introduction of ‘through chain’ product certification	Quality assurance for animal products Quality assurance for plant products	41, 47, 52, 52, 52,  71, 71, 78, 79
Competitiveness A competitive Australian export and import replacement sector based on increasing the value from production through increased processing and the delivery of value-added production to market.
Priorities identified in Minister’s letter	How RIRDC is addressing the priorities		Pages
New processing technologies that are efficient, safe and environmentally friendly	Developing new processing technologies for animal products New processing technologies for plant products	41, 42, 52     42, 54, 61
Value-adding to processing industries and producers (risk of under-investment in this area without research and development corporations)	Value-adding to plant and animal products	39, 39, 52, 52
Identify limiting factors to value-adding and identify market opportunities for value-added products	Identification of potential Asian food processed products Identification of efficient methods for processing new animal products	47, 47         42
Investment across entire production – marketing chain including timely delivery, quality and integrity of product	Integrated animal production processes Integrated plant production processes	39, 41, 57 39, 52
Lifting performance of transport, storage and distribution systems (often compare poorly with competitors)	Not specifically covered in the outcomes for 1998/99; however, several ongoing projects cover these issues.	-
Systems that are innovative, cost-effective and integrated into the production phase	Developing regional communications systems Integrated meat processing systems for new animal products	90     42

 
 

Natural Resources Protect and enhance Australia’s natural resource base.
Priorities identified in Minister’s letter	How RIRDC is addressing the priorities		Pages
Accredited sustainable production systems producing clean, quality products to give a marketing edge	Organic produce	56, 56, 56, 56
Catchment and regional natural resource management plans	Catchment management modelling	49, 49
Agrochemical residues, salinity, soil erosion and problems associated with irrigation systems	Improved efficiency of water use Minimising chemical residues in crops Windbreaks for soil erosion control	39, 53, 72 72 49, 49
Co-operative approach by industries, commodities and governments	Rural communities and social issues	90, 90, 90, 90
Better understanding of the complex interactions between the natural processes controlling sustainability and modern farming practices in different environments	Farm forestry for regional development and more flexible farming systems Access to natural resources for agricultural production Control of odour emissions in agriculture Managing animal welfare issues	49     71, 71     67 67
Develop better baseline information and analytical frameworks and better methods to audit sustainability of practices and systems	Improved information on biodiversity Agroforestry as part of sustainable systems in agriculture	49, 49, 49, 54     49

 

Returns on Investment

Stakeholders in any investment activity are interested to know what the rates of return are to this investment. In recognition of this, RIRDC identified in its Corporate Strategic Plan quantitative rate-of-return targets as one of its performance indicators.

Rolling Four Year Evaluation
Public good R&D, the focus of RIRDC’s programs, is one of the more complex types of investment and therefore it is difficult to quantify rates of return. Despite this RIRDC has developed a systematic program for regular quantification of the returns to the funds it invests on behalf of the Government and industries. The program involves evaluating a sample of completed projects in one of the four major R&D programs each year.

This four year cycle commenced in 1997/98 with the ‘Emerging Industries’ program, continued in 1998/99 with the ‘Established Industries program and in subsequent years will cover ‘New Industries’ and ‘Future Agricultural Systems’. In addition to this well-defined program, evaluations will often be undertaken as part of the decision-support requirements specific to sub-programs.

The Emerging Industries evaluation in 1997/98 and the Established Industries one in 1998/99 adopted the approach outlined in the Guidelines for Economic Evaluation of R&D developed for RIRDC and GRDC. This approach includes two stages:  first, development of a qualitative overview of all completed projects and, second, undertaking a detailed evaluation of a sample of these projects.

First stage – qualitative overview
Up to 1998/99, 431 projects had been completed in the Established Industries program. The first stage of the evaluation developed a systematic overview of all projects and preliminary assessment of their impact. This overview has proven very useful in looking at the focus and direction of each of the sub-programs.

Second stage – detailed evaluation
In the second stage, 14 of the 431 projects were chosen for detailed evaluation. These 14 projects were selected to ensure at least one from each sub-program was evaluated. In addition, they were selected with the evaluation cost in mind given the relatively limited budget. The sample cannot therefore be considered random.

The results indicate internal rates of return to the investment ranging from:

• 1 percent for a project testing the effectiveness of progestagens in maintaining pregnancy in mares:
• 18 percent for the development of techniques for the prevention and contr9l of American foulbrood in bees:
• 26 percent for the development of new temperate pasture seeds varieties;
• 93 percent for an assessment of the digestible amino acid content of feed for poultry;
• 117 percent for lucerne hay management technology extension;
• 189 per cent for rice harvester efficiency research; and
• over 200 per cent for research on diets for moulted laying hens.

Rates versus performance targets

All but two projects were found to have provided a rate of return in excess of the strategic plan performance target of 25 per cent. The equivalent range for the benefit–cost ratios was 0.8 to 120 (discount rate of 5 per cent) and again all but two were greater than the performance target of 10.

The results of the analyses have been published in two detailed reports, one covering each stage of the evaluation process:

• Impact Evaluation of RIRDC's Established Industries Program: An Overview of all Projects (Stage 1) Pub no. 99/90

• Impact Evaluation of RIRDC's Established Industries Program: Specific Project Evaluations (Stage 2). Pub no. 99/91

Phone 02 6272 4819 for a copy.

By comparison, most projects in the Emerging Industries evaluation in 1997/98 were found to have provided a rate of return in excess of the 20 per cent target. The equivalent range for the benefit–cost ratios was 0 to 11.8 (discount rate of 8 per cent) and the majority were greater than the performance target of 5. (Results are detailed in our report Benefit-Cost Analysis of RIRDC’s Emerging Industries Program, Pub no. 98/104, $10.  Phone 02 6272 4819 for a copy).

Assisting future funding decisions

The information on projects with rates of return lower than the target rates is being used by the sub- programs to support future funding decision considerations. In addition during the year further detailed evaluations of projects in the Asian Foods sub-program were commenced. These will be used, in early 1999/2000, as an input to the development of a five year plan for this program.
 

Last updated: 1 October 1999
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http://www.rirdc.gov.au/pub/anrep99/trackperform.htm