Our Mission
RIRDC's mission is to make and manage research and development investments on behalf of government and industry for the benefit of the rural sector in:

Enabling Legislation
Section 9 of the Commonwealth Authorities and Companies Act 1997 (CAC Act) requires the Corporation to prepare this Annual Report in accordance with the Report of Operations Schedule of that Act for each financial year in accordance with the Finance Minister's Orders made under section 48 of the CAC Act.

RIRDC's enabling legislation is the Primary Industries and Energy Research and Development Act 1989 (PIERD Act).

Section 28 of the PIERD Act sets out further matters to be included in this Annual Report which are required under section 9 of the CAC Act.

Board Accountability
The RIRDC Board is accountable to the Parliament of Australia through the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry. RIRDC actively addresses the Government’s priorities while also addressing the future research and development objectives of our industry partners as detailed in the Review of Operations in this report.

The RIRDC Board of Directors
Ms Mary Boydell - Chairperson
Mr Steve Marshall - Deputy Chairperson
Managing Director
Dr Peter O'Brien
Non-executive Directors
Mr Robert Boshammer
Ms Lindy Hyam
Dr Andrew Johnson
Mr John Lawrenson
Mr Norman McAllister
Mr Simon Murnane (Government Director until 28/5/2007)

Accountability

Board Accountability
The RIRDC Board is accountable to the Parliament of Australia through the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry.

RIRDC actively addresses the Government's priorities while also addressing the future research and development objectives of our industry partners as detailed in the Review of Operations in this report.

Board composition
RIRDC's Board now comprises eight Directors: a Chairperson, an Executive Director titled Managing Director and six other Nominated Directors. One of the Nominated Directors is the Deputy Chairperson. The position of Government Director was abolished as of 28 May 2007

Board appointments
The Minister appoints Directors other than the Managing Director who is appointed by the Board.

The Chairperson is appointed by the Minister and is not a Nominated Director.

Six of the Directors are nominated by a Selection Committee established by the Minister in consultation with the National Farmers Federation and the

Freedom of Information
Australian Chicken Meat Federation (‘Nominated Directors').

The Minister appoints a Nominated Director as the Deputy Chairperson.

The Board appoints the Managing Director and may appoint an Acting Managing Director.

Board terms
Directors other than the Managing Director are appointed by the Minister and hold office for a specified term not exceeding three years.

The Government Director, a position abolished as of 28 May 2007, was appointed by the Minister and held office at the Minister's pleasure.

The Managing Director is appointed by the Corporation for a specified term. An Acting Managing Director may be appointed by the Corporation for a specified term.

Board expertise
The Directors are selected from a wide cross-section of the rural business community and offer expertise in production, processing, marketing, R&D administration, business management, technology transfer and environmental and ecological matters. (see page 5-7).

RIRDC did not receive any requests under the FOI Act in 2006-07.

RIRDC publishes or holds documents that are:

corporate documents such as the Annual Report, Corporate Plan, Annual Operating Plan and Research Reports which are free to the public, while stocks are available, and/or displayed on RIRDC's website (www.rirdc.gov.au)
industry specific publications which are free to the public, while stocks are available, displayed on the RIRDC's website (www.rirdc.gov.au) and/or sold to the public on a partial cost-recovery basis
general administrative documents—including project and personnel files
planning/reporting documents.

As required under the Freedom of Information (FOI) Act 1982 the Corporation submits an Annual Section 9 Statement to the National Archives of Australia outlining the documents and processes used to make decisions in relation to the funding of R&D Projects.

An up-to-date listing of projects funded by RIRDC in 2006-07 is detailed in Research-in-Progress documents and on the website. Funding information on individual projects is available, on request, from the Corporation.

Accountability Framework

Message from the Chair and Managing Director

It is a pleasure to report on the progress and performance of the Rural Industries Research and Development Corporation. RIRDC has made substantial contributions to the profitability, sustainability and resilience of Australia's rural industries and communities during 2006-07.

Highlights
In 2006-07, RIRDC:

responded to serious potential threats to the Australian honeybee industry and the vital pollination services it provides for agriculture by facilitating the Honeybee Industry Linkages Workshop. This workshop brought together all affected parties and resulted in support for an alliance to plan for and manage a practical and collaborative approach to the industry's future
produced and released Biofuels in Australia—issues and prospects in partnership with the CSIRO and the National Farmers'Federation.This overview of the rapidly-growing biofuels industry, and the potential risks and benefits for Australian interests, provides a‘whole-of-agriculture'approach to inform policy development and investment decisions
established the Methane-to-Markets collaborative program, which seeks to lower agricultural greenhouse gas emissions by capturing and using methane from intensive livestock industries for energy generation. This program is under RIRDC management with significant funding from other industry organisations and the Australian Government Department of Agriculture, Fisheries and Forestry
completed a national pilot surveillance program for avian influenza H5NI, demonstrating Australian commercial flocks are currently free of the disease
conducted the Australian RIRDC Rural Women's Award 2007 and held a national reception at Parliament House, where the Australian 2007 RIRDC Rural Women's Award Winner, Deb Bain, and Runner-up, Abi Spehr, were announced by Deputy Prime Minister, the Honourable Mark Vaile, MP
published results of rice R&D showing that rice can be grown on raised beds with increased resource use efficiency, yield and profitability
released RIRDC's analysis of the composition of Australian extra virgin olive oil in three languages-English, Spanish and Chinese—which has assisted the Australian industry to increase international market access
substantially increased the Horse R&D Program with major contributions from the horse industry
published and distributed 177 research reports spanning rice seed storage and separation; synthetic seed for clonal propagation of Australian plants; potential new cut-flower species; taro production; medicinal herbs; rattles in horses; the impact of insects on eucalypt plantations; and the use of internet to provide career development for rural professionals.

Challenges and opportunities
Drought continued to have a major impact on RIRDC's industries and rural communities, particularly in irrigated agriculture. Drought has a compounding impact on innovation—reducing revenue to R&D investments and limiting producers'capacity to adopt innovation. RIRDC co-invested in a program with other R&D Corporations to help farmers respond to drought and climate change and will continue this work in 2007-08. We have also worked closely with industry to prudently manage reserves to sustain R&D during drought.

Multi-lateral trade liberalisation has been stalled in 2006-07, denying producers greater access to markets. RIRDC has produced targeted publications to support negotiations, including Technical Issues Affecting Trade in Agricultural Products and Trade Policy and Developing Countries: Where to Now?

Australia's honeybee industry contributes pollination services to agriculture valued at some $2 billion annually. That service is threatened by exotic pests—the Varroa mite has decimated honeybees in many parts of the world. In 2006-07 RIRDC organised a Honeybee Industry Linkages Workshop bringing together the wide range of stakeholders who depend on bee pollination. Acting on the results of the workshop the Australian Government has funded RIRDC to develop a plan for a national honeybee industry alliance in 2007-08.

RIRDC works closely with industry and government to deliver on their priorities. In 2007, Minister McGauran announced the new National Rural Research and Development Priorities. RIRDC has moved quickly to incorporate these new priorities into our planning process.

Strategy and planning
RIRDC developed a new Corporate Plan 2007-2012, which was approved by the Parliamentary Secretary, the Honourable Sussan Ley, MP in June 2007. Our plan sets out our goals, strategies and performance measures for the next phase of innovation and contribution by RIRDC.

By applying our new investment framework, RIRDC has allocated R&D resources to areas that will make the greatest contribution to Australia's rural industries and communities. We are initiating new work in biofuels and bioenergy, and phasing out of completed work in environment and farm management and wildlife and rangelands.

RIRDC bases its R&D investments around five-year R&D plans, which are developed in close consultation with industry and government stakeholders. RIRDC funds the plans for five years—subject to performance—and encourages co-investment from providers and others to implement the plans. This year, the Corporation developed plans for the Deer, Food Integrity and Biosecurity, Honeybee, Horse and Organics Programs.

Collaboration and evaluation
RIRDC manages a number of collaborative programs, including the Joint Venture Agroforestry Program, the Cooperative Venture for Capacity Building and the Collaborative Partnership for Farm Health and Safety.

RIRDC enhanced its collaborative activities during the year by working closely with research providers, industry and co-investors to deliver efficiently on shared objectives. Working through the Research and Development Corporation Council of Chairs, we are also developing potential new areas of coinvestment in trade and energy.

RIRDC has procured and implemented its new web-based project and application management system in 2006-07, working jointly with the Cotton R&D Corporation, National Water Commission and Land and Water Australia.

RIRDC's five-year R&D plans are evaluated in their fourth year to assess performance and guide future directions and investment. During 2006-07, we worked closely with the Council of Rural Research and Development Corporations to develop a new, comprehensive approach to evaluating our collective impact. Over time, the results will provide Corporations and stakeholders with reliable qualification of the return from R&D.

Working with industry and government
RIRDC worked closely with our industry and government stakeholders to ensure that our R&D investments delivered on their priorities. Our R&D Advisory Committees are a critical link to producers, ensuring that our R&D is relevant and adopted. These strong relationships are critical when difficult circumstances like drought demand cuts to research programs with diminishing resources. In 2006-07 we conducted a stakeholder survey which has given the Corporation constructive feedback on relationships with industry, government and research clients. Respondents were generally positive about their working relationship with RIRDC, their awareness of RIRDC's business and results, and their appraisal of RIRDC's performance. The survey is discussed in detail on page 6.

The Corporation's excellence in governance and reporting has also been recognised in 2006-07. We are pleased that the Annual Report 2005-06 was awarded a Silver Medal and was finalist for the prestigious Public Sector Corporate Governance Award in the Australasian Reporting Awards. RIRDC's Annual Report 2005-06 also received a Silver Medal from the Institute of Public Administration Australia.

In 2007, as part of the Government's response to the Uhrig review of governance arrangements, the Parliamentary Secretary, the Honourable Sussan Ley, MP provided an initial Statement of Expectation to RIRDC. RIRDC responded formally with a Statement of Intent, setting out how the Corporation would respond in terms of our role, government policies, performance reporting, communications and accountability. This Annual Report describes how these expectations have been reflected in RIRDC's operations.

The position of Government Director was abolished in May 2007. RIRDC thanks Mr Simon Murnane for his contribution in that capacity. To ensure close, responsive communication between RIRDC and the Government, RIRDC has routine formal and informal communications with the Parliamentary Secretary and officials. We have now augmented those contacts with additional regular meetings and Board briefings by a Senior Department of Agriculture official.

RIRDC continued its formal engagement between the Board and the Chairs of Advisory Committees, and meetings with key research providers. These fora ensure that RIRDC is alert and responsive to emerging issues for our sectors and providers.

Our people
RIRDC's staff exemplified our values of professionalism, innovation, responsiveness and inclusion in 2006-07. Organisational change is especially demanding in an already busy organisation. RIRDC's staff have engaged with and‘owned'the new organisational directions with typical energy and commitment. We now see strong alignment between individual and corporate objectives-evidenced in our recent staff survey by the high level of understanding of how staff efforts contribute to RIRDC's outcomes. Our thanks to them all.

Our thanks also to our fellow Directors. RIRDC has benefited strongly from the strategic input and governance oversight of our expert Board in 2006-07.

Mary Boydell
Chairperson Peter O'Brien
Managing Director

Financial Overview
Financial and Operational Summary

Financial Snapshot

Returns on Investment

Triple Bottom Line

RIRDC's Evaluation Program
RIRDC has an ongoing program to evaluate the impact of its research investments using benefit-cost methodology developed in 1997 by the Centre for International Economics in a joint project for RIRDC and the Grains Research and Development Corporation. More recently this program has been adapted to take a triple bottom line approach, assessing the economic, environmental and social impacts of its research investments.

The results of the evaluations are used in various ways:

to track progress against target rates of return and reported on in the Annual Report
integral to the development of RIRDC's five-year R&D plans which set forward priorities for individual programs
taken into account when annual research priorities are determined
provide RIRDC's Advisory Committees with critical information when they consider program and project performance
inform investment decisions through the investment framework

A detailed report for each evaluation stage is published and highlights are included in RIRDC's Annual report.

In the first four years of the program each of RIRDC's portfolio areas was successively evaluated, with benefit-cost analysis of a selection of projects from the component programs. Subsequently a range of individual programs have been assessed. The key results from these evaluations were summarised in RIRDC's 2005-2006 Annual Report.

Evaluating the impact of its R&D investments is an integral part of RIRDC's new investment framework. It will involve a review of each program's R&D Five-Year Plans in the final year of the plan using benefit-cost analysis, impact cost analysis and the annual stakeholder survey.

Evaluations in 2006-2007
During the past year two programs in the National Rural Issues Portfolio have been evaluated as part of a process of reviewing their strategic directions.

Farm Health and Safety Joint Venture
RIRDC manages the Joint Venture Farm Health and Safety Program on behalf of a number of funding partners and contributes to the program itself. The program's mission is to coordinate and support R&D to develop, implement, monitor and evaluate safe systems of work on farms across all rural industries. Key impacts of the program are likely to be:

reduced risk of death and injury on-farm, to workers, residents and visitors (including children)
more efficient allocation of resources for public policy and research efforts aimed at reducing risk of death and injury on farms.

The program evaluation was undertaken by Agtrans Research. The completed projects funded by the program during the five-year period 2001-02 to 2005-06 were identified and their objectives and outputs scanned in a benefit-cost framework. Three projects/groups of projects were identified (five projects in all) where costs and benefits could be quantified and a benefit-cost analysis was undertaken. Principal investigators for each project were contacted in order to assist with identifying outcomes and benefits.

A second group of seven projects were identified where final reports were available. The outcomes and benefits from these projects were assessed in a qualitative manner. Again, in some cases principal investigators were contacted in order to assist with impacts and potential impacts. The remaining eight projects were addressed only briefly, but again in a benefit-cost framework.

The benefit-cost analyses were conducted for the following three projects/groups of projects:

National Farm Machinery Safety Program and regulatory review
effective safe play area fencing options for rural properties
national farm injury data collection.

The evaluation results are summarised in the table below.

The projects/groups of projects evaluated show estimated internal rates of return ranging from 1.8 per cent to 178 per cent. It is noted, however, that the evaluations necessitated conservative and unsupported assumptions in some cases due to data limitations.

The overall conclusion of the evaluation is that the program has largely met the objectives identified in its Strategic Plan (2002-2006).

Evaluation results for three Farm Health and Safety projects

Given the assumptions made, the projects for which benefits have been valued show that the potential returns in this area are likely to be significant. Reducing the probability of death or injury by only a small amount can result in extremely high benefits.

Human Capital, Communications and Information Systems Program

The objective of RIRDC's Human Capital, Communications, and Information Systems (HCC) Program was to enhance human capital and facilitate innovation in rural industries and communities.

The program comprised these components:

the core research program addressing communication and information systems, rural and regional development issues and policies for innovation
the Cooperative Venture for Capacity Building for Innovation in Rural Industries
the Joint Research Venture for Farm Health and Safety

education, training and leadership initiatives, which include postgraduate scholarships, the Rural Women's Award, Nuffield scholarships, the Australian Rural Leadership Program scholarships, and the Heywire youth program.
The HCC program was reviewed as part of a process to develop a Five-Year Research and Development Plan for future RIRDC investment in these areas. The review involved:

a qualitative assessment of past investment: This assessment focused on the first and fourth components (above). The two joint ventures (components two and three) were reviewed through other initiatives¹
^{an
examination of initiatives being undertaken by other research funders and
providers whose area of interest overlaps to some degree with that of the
HCC}
^{an
assessment of the environment for investment that HCC faces over the next
five years}

^{a
consultation process on future priorities for the HCC program.}
^{Overall
the review concluded that the past investment in the core research component
of the HCC program had been innovative and had produced significant outcomes
and impacts. However, the review recommended that in the future a more
strategic approach should be taken to support education, training and leadership
programs and would involve:}

^{greater
attention to analysis of needs in the rural sector}
^{more
specific targeting of initiatives to identified groups}

^{a
closer alignment of support initiatives to other RIRDC programs. Other
recommendations related to providing a better focus to RIRDC's
postgraduate scholarship program, moving from an objective of building
human capacity to building social capacity and creating a separate program
for the education, training and leadership component.}

^{Following
this review the HCC Program was discontinued. It has been replaced with
four programs covering:}

^{rural
people and learning systems}
^{the
RIRDC leadership program}
^{capacity
building}
^{farm
health and safety}

^{Each
of these has their own set of strategies and expected outcomes.}

^{Council
of Rural Research and Development Corporation Chairs Evaluation Guidelines}
^{During
the past year the Council of Rural Research and Development Corporation
Chairs (CRRDCC) has been working to develop a consistent and coordinated
approach amongst the Rural Research and Development Corporations and Companies
(RDCs) for evaluating the impact of their R&D investments. In May 2007
the Council issued a set of guidelines for evaluation that contain these
basic elements:}

^{representative
sampling of R&D projects in each RDC, to build a pool of consistent
benefit-cost analysis studies that can be used to provide an indication
of the range and trends in returns from the total RDCs investments over
a three year period}
^{analysis
of a sufficient number of significant, successful, large scale projects
or programs to demonstrate that the entire RDC portfolio is producing positive
private and public benefitsl;}
^{an
annual analysis of two early stage collaborative R&D projects, which
are expected to have major areas of public interest. The aim is to measure
the value of work in progress and the private and public opportunities
early stage research creates.}

^{The
CRRDCC evaluations will cover economic, social and environmental impacts.}

^{Each
year the CRRDCC Secretariat will analyse the pool results and prepare a
report on the overall performance of the RDC program. In drawing together
the results the Secretariat will:}

^{examine
the distribution of the returns (public and private) of the pooled CBAs
and infer the likely range of returns from the total portfolio of RDC investments}
^{collate
the results of the large scale successful projects undertaken by the RDCs
to report the 'lower bound' returns from the entire RDC portfolio}

^{use
additional sources of information and analysis to link the results of the
evaluation process to measures of productivity}
^{report
on the value of the work in progress of the RDCs and the opportunities
this work creates for future innovation.}

^{The
guidelines also contain a governance framework to ensure consistency in
the application of the methodology in the guidelines and transparency of
the analysis, including independent oversight.}

^{RIRDC
welcomes the Council's initiative and will adapt its impact evaluation
program to integrate the CRRDCC methodology and contribute to the combined
RDC assessment.}

^{1The
evaluation of the Joint Venture for Farm Health and Safety is reported
on above. The evaluation of the Cooperative Venture on Capacity Building
is still in progress.}

^{Environment
Protection and Biodiversity Conservation}
^{How
RIRDC practices relate to S.516A of the Environment Protection and Biodiversity
Conservation Act 1999}

^{RIRDC's
new Corporate Plan 2007-2012 has been developed in the context of the Government's
National and Rural Research Priorities. A key priority is an environmentally
sustainable Australia. RIRDC's strategies are to invest in R&D
that addresses natural resource management and sustainability issues of
national importance including investments in environmental farm management,
agroforestry systems, organic farming systems, farming systems that integrate
rangelands and wildlife, changing energy supply and demand, water resource
issues, and the impact of climate change and variability. All RIRDC programs
incorporate sustainability in their five-year R&D plans.}

^{The
RIRDC project selection process specifically requires an assessment of
whether prospective projects are likely to have a negative impact on sustainability
or biodiversity. This criterion is second in a set of eight criteria the
Corporation uses to assess project applications and can lead to the rejection
of a project if the research objectives, methodology and/or outcomes in
the application are judged to have adverse environmental consequences.}

^{RIRDC's
contributions to ecological sustainable development (ESD)}

^{RIRDC's
overall outcome is for a more profitable, dynamic and sustainable rural
sector. It contributes to ESD by recognising the need for research
outputs that integrate economic, environmental and social objectives.}

^{The
effect of RIRDC's actions on the environment}

^{The
Corporation's charter is to make and manage research investments.
Impacts of this activity on the environment are sometimes difficult to
attribute and may be subject to long response times. Some key impacts are
the following:}

^{the Joint Venture Agroforestry Program's (JVAP) R&D investments
help improve tree management practices, by quantifying land, water, biodiversity
and social responses to agroforestry systems, by developing new products
from trees in low to medium rainfall areas, by addressing landholder decision-making
needs (economic and management), and by enhancing landholder knowledge
and capacity to farm trees}

^{recent
outcomes achieved by the JVAP include wider consideration of the potential
for broadscale planing of woody perennials in low to medium rainfall zones,
greater awareness of the potential for trading ecosystem services provided
by trees and continued improvement in management of existing vegetation
and plantations to enhance biodiversity, water use and economic considerations}
^{during
the past seven years RIRDC's investment in the research aspects
of the application of environment management systems (EMS) in agriculture
has assisted farm businesses to identify and manage their impact on the
environment and improve production efficiencies}
^{the
Rangelands and Wildlife Systems Program has developed successful collaborative
decision making frameworks to progress sustainable wildlife enterprises}
^{the
Organic Systems Program has provided new guidance on managing the change
to organics in the form of decision support tools for converting high-input
farming systems to commercially viable organic systems}
^{new
rice varieties and other technologies developed with the support of RIRDC's
Rice Program have enabled the rice industry to improve yields per megalitre
by 87% while simultaneously reducing water use by 5%. The industry has
also developed more effective ways of applying fertiliser and improved
its weed control methods}
^{a
number of RIRDC's industry programs have developed more environmentally
safe mechanisms for controlling pests and diseases}

^{Measures
RIRDC is taking to minimise impacts on the environment}
^{RIRDC's
research and development project agreement requires a specific assessment
of the potential for environmental damage to result from a project. Applicants
must alert the Corporation to any proposal that may be considered an“environmentally
significant action.”}

^{Mechanisms
for reviewing and increasing the effectiveness of the above measures}

^{The
Corporation reports to the Australian Government after each Board meeting,
conducts regular stakeholder surveys and publishes most final reports.
This transparency facilitates stakeholder input to our operations and the
application of ESD principles. In addition, the Corporation has a regular
program of evaluating the impact of its R&D investments, using a triple
bottom line approach by assessing economic, environmental and social impacts.}

2006-07 ANNUAL REPORT

Accountability

Message from the Chair and Managing Director

Returns on Investment