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Message from the Chair

The very severe drought across much of the country has been the single most significant event for rural and regional Australia over the past year. The drought and associated bushfires have also had a serious impact on urban Australia, illustrating more than ever the need for a national approach to managing, preserving and prospering from our abundant but fragile land base and natural resources.

Fluctuating market and weather conditions are well known characteristics of our agriculture. Australian farmers and rural institutions have always displayed resilience and creativity to survive, recover and develop alongside these challenges. Each drought and market downturn, however, delivers new lessons for the future. The current drought has underlined again the importance of good land and risk management techniques; targeted and focused research goals and the necessity for the effective communication of research results leading to adoption.

RIRDC is arguably Australia’s most wide-ranging agricultural research and development corporation.  As in past years, we have managed a diverse mix of programs and projects designed to deliver practical contributions to meet our national rural and regional challenges and opportunities. These have covered:

• new plant and animal products which diversify our rural enterprise base
• expanding native and indigenous flora and fauna (including farm forestry) to achieve profitability and sustainability objectives
• improvements in nutrition, disease, pest management systems  and new varieties in established industries, to achieve better performance under production conditions and meet market demands
• research on multilateral and bilateral trade policies, international market opportunities and reports on productivity and competitiveness issues affecting Australian agribusiness
• multiple land use opportunities and the scope for environmental management systems
• improved communication, extension and training systems to further develop Australia’s agricultural potential.

This report elaborates the year’s achievements, but none of them would be possible without the close and productive working relations which RIRDC has with our industry representative organisations, research providers, funding partners and individual producers. Our industry advisory committees and consultative bodies are also essential to the achievement of well constructed goals, priorities and delivery systems.

Developments
The largely new Board, with five new members appointed in July 2002, has embraced its strategic governance, accountability and compliance responsibilities with alacrity and enthusiasm. Each Board is different and RIRDC’s current directors have a wide range of experience combining commercial, financial, research and managerial skills. Our new Managing Director, Dr Simon Hearn, took up his position at the beginning of the year.

Adding fresh ideas and skills to the leadership team provides a strategic opportunity for any corporation to review and renew the corporation’s role and performance.   In the past year the Board has worked with the new Managing Director to position the Corporation for the next five years in a rapidly changing research and industry environment.  In doing so we have sought to build on RIRDC’s past achievements and strengths.

Five year plan
During the year the Board approved a new five-year plan for RIRDC and an associated program structure. These have been endorsed by the Parliamentary Secretary. The plan establishes a strategic direction for 2003-2008 with four goals and related strategies, and builds on the achievements of earlier plans.  In approving this plan the Board actively considered the government’s national and rural research priorities, the research priorities of our various industry stakeholders, and how RIRDC will actively contribute to these requirements.

The new program structure is shown in this annual report.  The Corporation will retain a four program structure. We have streamlined the Prospective New Industries and Emerging New Industries into one program. This gives clarity for both stakeholders and managers and will ensure continuation of one of RIRDC’s core functions - investing in research to foster new and emerging industries.

The Established Industries Program will remain largely unchanged as a key element in RIRDC’s business. In future there will be greater interaction between new and established industries to encourage industry partners to proceed into the established category without disruption to their programs and priorities.

The Future Agricultural Systems program will be split into two separate but related programs, Sustainable Systems, and Capacity Building and Competitiveness. Our aim is to give added impetus to the cross-sectoral agricultural research responsibilities of RIRDC.  A new sub-program will address the important issues of Food Integrity and Biosecurity. The formation of these two programs will also allow greater emphasis to be given by RIRDC on collaborative research and the achievement of critical mass in research outlays. This is compatible with the government’s priority to achieve greater focus in research priorities at a national level.

Budget allocations
The Board and senior management also examined RIRDC’s program costs and resource allocations. This exercise is undertaken approximately every three years to achieve an allocation of core funds in line with the Corporation’s R&D priorities. Attention is also given to the level of third party financial commitments and the potential benefits and prospects for successful adoption in respective program agendas. Some modifications have been made between programs and sub-programs.  These will be applied under the new structure, taking care not to create unmanageable discontinuities for our research provider partners.

Board performance review
Each year the Board undertakes its own performance review. This process is structured to provide an overall Board assessment as well as individual assessments. With a predominantly new Board, the review helped engender a common set of purposes. Improved understanding of Board members’ strengths, skills and requirements in a team context was developed through a board member’s skills matrix.  The Board will use this matrix to guide and refine its own capacity, especially in relation to the continual review of policies and processes in all major areas of its responsibility.

Stakeholder and client survey
In 2002–03, RIRDC conducted its bi-annual, independent stakeholder and client survey. (The survey has been conducted several times previously, providing useful historical data for comparison.) Overall, the study shows RIRDC has been strongly commended for the quality of its research management and support services. Communication and consultation with the researchers and industry partners is highly rated and the continued improvement in the Corporation’s general operations is well acknowledged. In most areas the definitive excellent rating has either been retained or improved.

The Board understands that despite this very positive feedback, it is essential to avoid any complacency.  We need to take action now to meet future expectations of our industry, government and research stakeholders. In the 2003–2008 plan, emphasis is placed on improved adoption measurements, commercialisation and IP management, communication and distribution mechanisms together with modernised databases, all designed to increase the impact of the research in which we have invested.

Work has already commenced in all these areas, including linkages with other agricultural and non-agricultural research agencies, to secure early results. A new Board Commercialisation Committee is oversighting  renewed efforts to implement our commercialisation policy, to achieve improved utilisation and adoption of R&D.

In conclusion
Finally, I would like to express my appreciation to the Corporation’s management and staff for their professional and diligent commitment throughout 2002–03. Simon Hearn had previous experience with RIRDC but the role of Managing Director was a new challenge.  He has maintained our established good relations with stakeholders while working with the Board and staff to set a series of new directions for 2003-08.  This will see RIRDC well prepared to stimulate future developments of agriculture and agribusiness.  I would also like to particularly thank Andrea Bryant, the Board Secretary, who has provided excellent continuity and support during the transition to a new Board and Managing Director.

RIRDC has a mix of internal and external staff who continue to deliver an enthusiastic and very professional approach to program management, and I would like to thank them for their consistent efforts throughout 2002-03.  They have displayed a readiness to acquire new skills and to fully meet the new research agendas.  Together our aim is to build onto RIRDC’s undisputed strengths and achievements, to deliver improved outcomes in all programs now and in the future.   And with the optimism typical of Australian agriculture, our hope is that 2003-04 will provide more amiable weather and more stable international market conditions for our industry stakeholders!

Beth Woods
Chair

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Commercialisation and intellectual property
The board and management recognise that the primary objective of commercialisation is to maximise the uptake and benefits flowing to industry and the community from its investments in rural research. These activities will therefore depend on clear understanding with key stakeholders in industry and government. A large percentage of R&D projects are not expected to be amenable to commercialisation and other adoptive pathways will also be engaged to meet particular circumstances. Commercialisation will work with other established methods of dissemination and utilisation including RIRDC’s well regarded publications and communications systems.

Improving the level and effectiveness of commercialisation of research has been a matter of attention and analysis in Australia over many years. Various reports have emphasised a lack of capital availability; a truncated or atomistic industry structure; problems of scale; an inappropriate research culture and rewards system; lack of interactions between researchers and industry users. RIRDC is working with our partners to achieve outcomes by addressing these impediments.

Within its areas of agricultural research RIRDC has commenced implementation of its new commercialisation principles in 2002/03. During the year progress was made in four main areas:

• a board commercialisation committee was appointed to work with management on the main challenges of commercialisation in terms of issues such as identification, funding and management of existing and prospective IP in RIRDC projects
• RIRDC has established a formal working relationship with the Australian Centre for Intellectual Property in Agriculture (ACIPA) including the funding of a fellowship at that centre. All general managers have undertaken an introductory training course at the centre as a forerunner to further formal and on the job training in the next year
• RIRDC’s IP register has been updated with follow up activities and monitoring with relevant research providers and partners
• management has undertaken an initial assessment and identification of existing and prospective IP in current projects

An action plan has also been designed for the next year to:
• form a clearer understanding of our IP asset base
• identify and research new IP assets
• identify material risks that apply to RIRDC’s actual and prospective asset base
• increase awareness by management and partners of IP principles and their practical application
• establish a sound basis for proceeding with commercialisation of projects in communication with government, industry and research partners.

10 principles  for commercialisation
Commercialisation is defined as the exploitation of the various forms of Intellectual Property together with product pricing and other arrangements to achieve utilisation and adoption of research and development.

1. In all cases, RIRDC will manage research outputs in such a way as to maximise the benefit to its stakeholders. In some cases this will be achieved through commercialisation of research results.
2. RIRDC will proceed on the basis that if research results are commercialised it will own a share of the IP. This share of IP ownership will be agreed by all parties when projects are contracted.
3. Commercialisation will be implemented when it provides faster, more sustainable or more practical avenues for making new products, processes and services available to RIRDC’s primary stakeholders.
4. The primary objective of commercialisation is not to raise funds for RIRDC. Rather RIRDC’s goal is to maximise the uptake and benefits flowing from its investments in rural research. The aim is to make new technologies available to stakeholders as quickly and as cost-effectively as possible.
5. Research must be managed on the basis that it may generate valuable intellectual property. That is, appropriate arrangements need to be made to ensure that the research is placed in a format so that it is capable of being protected.
6. RIRDC recognises that other organisations are often better placed to commercialise intellectual property than RIRDC. RIRDC will therefore not be directly involved in the process of commercialisation, other than in exceptional circumstances.
7. Decisions about the terms under which the commercialisation will proceed will be made on a case by case basis, drawing on the principles set out here.
8. When commercialisation is identified as the appropriate adoption mechanism prior to the execution of a Research Agreement, a process to define a strategy, a lead agent and a timetable for commercialisation will be included in the Research Agreement.
9. RIRDC undertakes to ensure that all staff who may be involved in the creation, identification, protection or management of intellectual property are properly trained.
10. RIRDC will ensure that its research partners have adequate intellectual property policies in place and that their staff have been properly trained.

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Managing Director's Report

We live in an age of rapid economic, technological and social change. Agricultural research must contribute to and actively participate in this change process. The changing context in which agricultural R&D is conducted as well as changes in the broader economy and in the scope for scientific research more generally have important implications for the funding, organisation and management of RIRDC’s future research portfolio.

The reappraisal of RIRDC’s strategic directions in 2002–03 was designed to enhance change and to take early action to address the government’s national and rural research priorities, released in December 2002 and March 2003 respectively.

Full consideration was also given to developing strategies with industry to provide a basis to pool resources to achieve common objectives. For example, five year plans were completed for the pasture seed, olive and coffee industries during the year. The strategies in these plans include short, medium and long term priorities with a high level of stakeholder involvement providing an increased potential for the adoption of results.

These strategic directions are critical, but it is the implementation and management of the goals and strategies which delivers the results. During the last year considerable attention was given to operational imperatives and results. These included:

• the production of some 150 quality publications and reports on completed research projects. RIRDC’s publications have been assessed to improve the identity and dissemination of information. Without any particular weightings on importance, the following titles are examples of recent environmental, economic and social reports:
• Trees for shelter: a guide to using windbreaks on Australian farms–windbreaks can deliver significant increases in farm productivity while also providing multiple environmental benefits.
• Benchmarking technology on the Australian waterfront–the introduction of new technologies has resulted in further efficiency gains in the handling of rural commodities across the Australian waterfront.
• Options for change: costs and benefits of diversification–whole farm case studies–Diversification is often promoted as a way of protecting against economic downturns and low commodity prices, which are rarely low across all sectors at the same time. This report includes 10 case studies that offer valuable insights.
• Farmed rabbits in Australia–Australians have spent more than 150 years trying to control or eradicate rabbits but this report shows farmed rabbit is now a commercially viable new livestock industry.
• Integrated agri-aquaculture systems: a resource handbook for Australian industry development–Multiple use of water is achieved through its use in fish or crayfish production and the water is then used to irrigate a crop traditionally grown on the farm.
• during 2002–03 RIRDC has maintained and enhanced its website as a leading functional tool for stakeholders and the wider community. The RIRDC website has had over 600,000 ‘hits’ per month last year, demonstrating the strong interest in our research operations and outputs
• the Corporation received 526 R&D proposals during the year and initiated 282 new projects encompassing a broad spectrum and levels of magnitude. The average investment per project during the year for RIRDC and its partners was $73,200
• RIRDC is giving fuller attention to the management of intellectual property and commercialisation of research results to achieve wider adoption where this is advantageous to our industry stakeholders. All managerial staff commenced training to acquire improved commercialisation skills during the year. This is an ongoing process, along with an improved IP register and asset database. The Corporation will progressively advance this agenda with our industry and research partners

An important challenge for RIRDC is to contribute to an improved level of critical mass and to leverage higher levels of funding for agricultural R&D. Clearly, the new and emerging industries which are an essential component of our core business often do not have the capacity to raise levies or large scale voluntary contributions. That is an objective as they mature and grow in size. Notwithstanding this financial constraint, the Corporation achieved close to $2.50 from external sources for every $1.00 of government and levy sourced funds that it committed in the financial year. We have started to build on this base through improving both our agricultural and non-agricultural research funding networks.

As an element of accountability RIRDC undertakes an external evaluation of a program or sub-program each year. In the last financial year an evaluation of the benefits and costs of the rice sub-program was prepared. Both economic and non-economic returns were evaluated wherever possible.

The results have shown that the rice sub-program has been highly successful with net benefit to investment ratios well above our benchmark of ten times research costs for established industries and an internal rate of return consistently well above the 25 per cent target. These results are further outlined in this report.

Other program developments included the transfer of the operations and legal ownership of the Egg Sub-program to the Australian Egg Corporation Limited on 1 February 2003. The close partnership between the egg industry and RIRDC ensured a smooth transition with minimal disruptions. We wish the new Egg Corporation well for the future and look forward to ongoing joint research ventures in the years ahead.

Over the past year the RIRDC staff have much appreciated the partnerships, advice and contact with all our working partners and stakeholders. We look forward to a continuation of this combined effort for the year ahead.

Simon Hearn
Managing Director
September 2003

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