2000 ANNUAL REPORT - Contents Page

Message from the Chair
RIRDC’s mission is to create a more profitable, dynamic and sustainable rural sector. In the past year we have focused on how we can improve the Corporation’s performance and better align our program with both industry and government priorities.
Building our stakeholder relationships
RIRDC’s stakeholder constituency is very diverse – including industries which are large and small, new and well established, and extending across food, fibre and forestry products ranging from staples such as rice and eggs to luxury products like crocodile skins and truffles. We handle this diversity by structuring our operations on both an industry and a theme basis, and by making use of the R&D advisory committee mechanism authorised under the PIERD Act (Section 89). The Corporation had more than 600 projects under management at the end of June across our diverse program, in which the committees form a vital part of our operations. Within specific industry programs, the committee’s considerations include the specific strategic priorities of the Government.
Committee membership carries significant responsibilities because these people are both "officers" under the Commonwealth Authorities and Companies Act 1997 and a key source of innovation and creativity in planning how R&D can support future development of the rural sector. The special governance obligations of Corporation decision makers (members of the board and advisory committees, as well as managers) are now clearly codified in the Board’s resolution on Management of Conflict of Interest in RIRDC (54-2000-4), adopted at our May 2000 Board meeting. To improve the effectiveness of our research investments, the Corporation’s R&D investments include a project exploring the ways in which creativity can be enhanced in agricultural research.
Broader portfolio linkages
RIRDC is one of 20 statutory authorities in the Agriculture, Fisheries and Forestry (AFFA) portfolio headed by Minister Truss. The portfolio agenda consists of ten strategic priorities identified in the Portfolio Budget Statement (PBS). These are the basis for the Corporation’s priorities identified by the Minister in his letter to us on 14 December. This report outlines our achievements and activities addressing the Minister’s priorities and clearly demonstrates the close alignment between the Corporation’s mission and the portfolio’s identified outcome of "…more sustainable, competitive and profitable Australian agricultural food, fisheries and forestry industries".
In addition, the Board has ensured that the Corporation’s planning framework establishes links between the directions and priorities set through the processes of our Advisory Committees, and those of the Portfolio. The planning documents are readily available to all stakeholders.
Reviewing funding allocations
In November and again in February the Board workshopped the central question of research funding allocations between our areas of endeavour. It remains a very difficult question for our non levy operations but our 2000/2001 Annual Operational Plan does reflect our decisions: more resources, in relative terms, to the new and emerging industries’ agenda, and within the new and emerging industries, more resources to agroforestry where we see large community benefits and less to some of our more mature smaller industries where a higher industry contribution is expected.
Commercialisation: Many roads
As an R&D Corporation, a critical step to a more profitable, dynamic and sustainable rural sector is to ensure that every project has identified pathways to communicate results and support their adoption. To ensure that the key outputs can be accessed easily we have increased our investment in a strong communications program, including publications in hard copy and electronic form.
The internet is increasingly our information hub, both in the public domain and for greater efficiency in our internal communications. Publication of research results is only one step towards commercialisation. In the coming year the Board will be driving the further development of mechanisms like licensing, to foster commercial incentives towards adoption. Our current commercialisation policy will be reviewed during 2000/2001. A first step towards the review was the development of a royalty register in 1999/2000.
Governance
Four new Directors joined the Board in July 1999 and participated in an induction program with continuing Board members. By the end of the year all Board Directors were value-adding to the strategic directions of the corporation through participation in workshops revising our funding allocations. In November 1999 the Board set up a Performance Committee to strengthen the performance function of the board, ensuring it matches our commitment to conformance and regulatory functions. In May 2000 four directors undertook training through the Australian Institute of Company Directors. Added to earlier participation by Board members in this training, the Board is now well equipped. In the next months, the Board will develop indicators as a means to improving its contribution to the Corporation’s performance.
My Thanks
In February 2000 the Government Director, Ms Virginia Greville, was replaced by Dr Simon Hearn. Ms Greville took up an overseas posting for the Federal Government. I would like to put on record my sincere thanks to Ms Greville for the outstanding contribution that she made to the Board’s work.
I would like to congratulate the Managing Director – Mr Peter Core – and staff for their contribution to the Board induction program which allowed the new Board to quickly develop its capacity. Finally, on behalf of all the Directors, I would like to thank all RIRDC staff and advisory committee members for their efforts and dedication during 1999/2000.
Beth Woods
Chair

The Managing Director's Review
A lot of words have been written about the new millennium and its agenda. Rural industries do not score well.
What is referenced is the new economy, the knowledge society, biotechnology, but with next to no explicit reference to the part that our rural industries will play in that agenda.

In my view, this millennium agenda is as applicable to our rural industries as the other parts of our economy. And arguably it could be more applicable to rural industries as these input industries – IT, knowledge, gene technology – help strengthen the competitive position for agriculturally based exports.
Time will show that the ‘new economy/old economy’ debate is sterile. Agriculture, like all other sectors, will transform with ‘new economy’ technologies and will be more competitive as a result. It is and will happen in all parts of the economy, agriculture included.
This Annual Report is not the place for an extensive debate but the reality is that rural industries are positioning themselves to be more profitable, dynamic and sustainable. And, in a small way, this Corporation helped rural industries in that journey during 1999/2000.
This Annual Report covers a very wide range of industries, reflecting our three core businesses:

new and emerging industries;

those established rural industries covered by the Corporation; and

future agricultural systems.

The ‘Summary of Operations’ gives the detail of the results of our partnerships with industry and research providers for each of the RIRDC industries in 1999/2000. For each, there are exciting discoveries coming out of the more than 600 projects funded by RIRDC. Each and every one of these is important and, in 1999/2000, the Corporation continued to ensure that the outputs were accessible and that industry players and research providers were networked strongly.
But, sometimes, our reporting of this diverse agenda can mask some central messages that I now want to highlight.
New and Emerging Industries are profitable
Almost everyone can recall a new enterprise with a volatile track record – where significant investor funds have been lost. This is not something special to new industries but, putting that aside, the Corporation has now produced two investor guides covering nearly 20 new enterprises which seek to help the investor address the question – does it make sense to get involved?
Clearly there are no guarantees but what these guides show is that new enterprises can be profitable, provided you do it right. All the ‘guide indicators’ have to be validated by building in the factors that are specific to the investor, farm and region. But, the figures show that there are good prospects provided the
initial investment entry values are not over-inflated and the enterprise is supported by strong technical and financial management.
No single one of these enterprise options is better than the other – it depends on too many factors but there are new enterprises for new entrants and existing farm businesses seeking to adjust their enterprise mix that can be profitable.
R&D investments produce returns better than mainstream investments
This Corporation expects significant returns on its investment which, in 1999/2000, was around $24 million. We know from working with our industry partners that there are investment opportunities and it is our job to tailor these into practical, deliverable R&D outputs that will foster innovation.
As part of our rolling evaluation program we now have data on the returns from our investments in Program 1 'New Industries'. This evaluation demonstrated that the returns from well targeted R&D are consistently above the benchmarks set out in the Corporation's Five Year Strategic Plan.
This rolling evaluation program has now been completed for all three industry programs oversighted by the Corporation – new, emerging and established – and the message is the same. Investing in R&D pays, provided it is targeted at industry priorities and is backed up with technology transfer. And these returns multiply as the industry base expands – from new to emerging to established.
In a narrow sense, it is clear that the returns of some projects can exceed costs of the overall program but, for the Corporation, that is not enough. The challenge is to continue ensuring that the average return on all projects produce high-level pay-offs for both our principal stakeholders – industry and government.
Our millennium agenda is one of opportunity. An example is the rapidly emerging market for functional foods – like products for the cardiovascular health market – which is being driven by fundamental shifts in demand for improved health and quality of life.
Our rural industries have the resources to supply new pharmaceutical and nutraceutical products. It will need greater supply chain integration. It won't just happen by itself but this Corporation has the R&D building blocks to help put it together.
Emerging forces
Our rural industries are part of tomorrow’s agenda but there are no guarantees in a world without borders. Central will be our capacity to accept change in an era where:

markets and influential manufacturers will demand more differentiated products for more sharply segmented markets;

strategic alliances, partnerships and joint ventures will increasingly dominate supply chain activity;

there is an increasing application of industrial principles to our rural industries (the end of the agrarian dream);

there are serious questions about the sustainability of our present agricultural and grazing practices; and

lifelong learning and continuous change will be the norm for profitable, dynamic and sustainable industries.

A strong network of highly capable leaders from rural Australia will be required to husband ongoing change and that is the reason why the Corporation continues to be a strong supporter of the Australian Rural Leadership Program, the Nuffield Foundation and the Rural Women's Awards. These are small steps but the participants are giving rural industries the chance to change.
Getting research investors ready
An uninformed market is an inefficient market and, in 1999/2000, the Corporation continued to make its research outputs accessible. More than 150 final reports were published, all of which our accessible at www.rirdc.gov.au. And, close to $200,000 in publications sales were made in 1999/2000.
But there is a big gap between the accessibility of research outputs and commercialisation. To catalyse this process the Corporation launched, in May 2000, its Business Plan Competition with prize money of $200,000. It’s a start in signalling to our partners the importance of making research work. In that process, we will continue to push our research partners towards the Federal Government’s new $18m Farm Innovation Program where the focus is on the adoption of innovative practices.
Post 1999/2000 developments
This Annual Report is structured around the Five Year Strategic Plan and Annual Operational Plan that operated in 1999/2000. From 1 July 2000 we have a new Strategic Plan. This new Plan runs until 30 June 2002 and is, in reality, similar to the previous 1997–2002 Strategic Plan. What has changed is its reporting framework with a stronger focus on outputs and outcomes and closer alignment to the AFFA Portfolio reporting framework.

The Year Ahead
We will continue to serve the Board so that it can carry out its governance responsibilities.
We will continue to ensure that our key stakeholders – industry and government – remain pivotal to our strategic directions and individual decisions that support those directions.
As a service provider we will operate as a commercial entity, not an institution. Our headquarters is the hub of a network, not the top of a hierarchy. It will be a rapid response clearing house that delivers.
In signing off this part of the report, I would like to thank the Board for its support and all the staff for their commitment in contributing to our successes in 1999/2000. It is the inherent quality of our people that enables us to pursue a more profitable, dynamic and sustainable rural sector.

Peter Core
Managing Director

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