Creating a new plan

The GRDC five-year RD&E Plan (the Plan) is a key document that guides investment by GRDC. It should be ambitious and contain clear objectives, strategic priorities and measures of performance to ensure targeted and impactful outcomes to deliver on our purpose: 
To invest in RD&E to create enduring profitability for Australian grain growers.

Major trends

This is an overview of 12 major trends expected to impact the enduring profitability of Australian grain growers. Read the detailed document (PDF 438.2 KB)

The GRDC RD&E Plan 2018-23 was framed around the drivers of profit, Yield, Price, Cost & Risk. The new plan will build upon this framework to deliver outcomes that have the biggest impact on growers’ bottom line.

A successful plan is one that will deliver on Australian grain grower priorities and requires input and ownership from across the grains industry. It should allow for a balance between responsive investments to address the priorities of today, and strategic investment to ensure growers can stay ahead of the game.

We would like to start this conversation with you about some major opportunities and challenges facing growers and the broader grains industry. Our goal is to identify and analyse priorities and promote discussion to shape a plan and portfolio of investments that delivers impact where it matters most.

What are the opportunities and challenges for growers today and in the future?

The Australian grains industry is dynamic and ever evolving. It is a major contributor to the Australian economy, representing 23% of gross agricultural production. Our growers are recognised globally as innovative, resilient, and highly efficient. Proven ability to adapt, economies of scale, reputation for safety and quality, and proximity to growth markets are strengths we want to build upon. The fundamental drivers of market demand present an exciting outlook for the Australian grains industry over the coming decades.

Our industry at a glance

Australia represents the following percentage of global exports7,8

industry at a glance

7. United States Department of Agriculture (USDA), 2021. Downloadable data sets. Foreign Agricultural Service. PSD Online.
8. Food and Agriculture Organisation (FAO) FAOSTAT (2020) Food and Agriculture Organization of the United Nations (FAO). FAOSTAT Database.

The industry isn’t without its challenges, perhaps the largest being the need to effectively mitigate grains enterprise production and market risk. Variable seasonal conditions and tight profit margins require effective cost management and business models that enable profit opportunities to be realised in the good years, whilst minimising financial loss in less favourable seasons. These factors, along with changing diets, consumer preferences and community expectations are likely to impact how growers farm in the future.

But we are up to the challenge. A swathe of new technologies present opportunities to discover and deploy new solutions to Australian grain growers. Biotech, fintech and agtech are moving forward at pace, having potential to deliver the next agricultural revolution. Realising these opportunities will require a problem focus (as opposed to a technology push), new partnerships and collaboration across organisations, disciplines and sectors.

The opportunities are endless but, to prioritise effort, we must consider the needs of today, whilst anticipating those of the future. An overview of 12 of the major trends expected to impact the enduring profitability of Australian grain growers are summarised above. We ask you to consider what implications these may have for future RD&E investment by GRDC.

Towards 2040

30.6m people living in Australia13

1.4 billion extra mouths to feed globally13

Electric vehicles to represent 32% new passenger vehicles sales globally by 203014

39% global population growth in Asia13

India will import between 6-11 million tonnes of pulses p.a. by 203013

Additional 13.7 million tonnes of wheat demand across Indonesia, Thailand and Vietnam13 by 2030

More people will die prematurely from over-consumption than perish from starvation13

Carbon intensity of ships to be cut by 40% by 203013

Additional 2.9 million tonnes stockfeed + 0.8 million tonnes grain for food required domestically13

13. Kingwell, R. (2021). Grains industry supply/demand drivers and trends: Considerations for Australian grains RD&E. Report to GRDC by the Australian Export Grains Innovation Centre (AEGIC)
14. Deloitte (2020). Deloitte Insights: Electric vehicles. Setting a course for 2030. Deloitte University EMEA CVBA, B-1831 Diegem, Berkenlaan 8b.

Where should GRDC focus its investment?

To balance the needs of today and tomorrow, it’s important to consider what we should start, accelerate, continue, or stop investing in. Investment by GRDC in grains RD&E is currently structured around the key drivers of profitability: Yield, Price, Costs and Risk, but a future focus upon completely new areas may be required to proactively address identified trends.

Enduring profitability: the profit equation

The key drivers of seasonal grain grower profitability are Yield, Price and Costs (on farm and post farm gate). These drivers can be expressed as follows:

Profit = (Yield x Price) – Costs

Risk, sustainability & enduring profit:

Management of production, market and institutional risk across seasons is key to ensuring enduring profitability. Qualitative characteristics such as growers’ risk appetite and management capabilities have a significant impact on profit. Business resilience and sustainability are important to profit delivery across seasons.

Read about our current Objectives and Key Investment Targets.

There are many areas in which GRDC could invest but, in order to ensure focus, priorities must be made. We ask you to consider and provide feedback on the importance to invest in new RD&E areas versus those that we are currently focused on:

Yield and yield stability

The old saying goes that ‘yield is king’ and while crop water use efficiency is still trending upwards in most key grain crops, further improvements in per hectare yield are increasingly difficult to find. Ability to build and protect yield to consistently reach economically attainable targets remains a challenge for growers, while opportunities to transform plant yield potential are an ongoing aspiration. RD&E priorities in this area could include:

Transforming yield potential through:

  • fundamental changes to plants
  • soil amelioration to address key constraints
  • protection from abiotic stresses such as drought, heat and frost

Building yield through:

  • adequate crop nutrition
  • soil water conservation
  • operational timeliness
  • varietal selection

Protecting yield through:

  • weed management
  • pest management
  • disease management

Price

Grain is an internationally traded commodity, presenting both risk and opportunity to growers. Prices fluctuate and are driven by exchange rates, tariffs, subsidies and regulation, and global supply and demand. Investment in opportunities to realise price and market opportunities are a focus for investment by GRDC. RD&E that maintains or enhances our position in current markets as well as creates or enables access to new markets will be important.

RD&E priorities in this area may include opportunities to:

  • Grow more high-value crops to boost average per hectare revenue and farming system profit
  • Support and enhance Australia’s position in existing grain markets
  • Explore new products, uses or differentiators to help realise new market opportunities for Australian grain
  • Support implementation of best practice grain storage and marketing strategies
  • Balance yield and grain quality to realise market opportunities that growers get paid for.

Cost

Australian grain growers are recognised globally in terms of efficiency. While the cost of farm inputs are largely driven by global demand and production influences beyond growers’ control, exploration of lower cost alternatives and greater efficiency of input use may present opportunities. Similarly, RD&E that supports the efficient allocation of plant, equipment and labour would assist to reduce production costs.

Beyond the farmgate, efficient storage and transport infrastructure that supports grain flows is critical to the competitiveness of the Australian grains industry. Costs associated with getting grain to domestic customers and ports in Australia is higher than our competitors, representing 25-35 per cent of the total cost of delivered wheat in WA and Eastern states respectively12. R&D focused on the variables that drive supply chain costs, to inform policy and government and industry decisions could provide value.

RD&E priorities in this area may include opportunities to:

  • Reduce the impact of variable production costs
  • Reduce the impact of fixed production costs
  • Improve efficiency of grain storage on-farm to reduce storage and handling costs
  • Support research to advise policy and trade approaches, infrastructure investment, logistics and distribution models to ensure efficient grain flows and put more dollars in growers’ pockets.

12. Grain Growers Limited (2021). State of the Australian Grains Industry 2021. Grain Growers Limited.

Risk

Growers’ risk appetite and management capabilities can have a significant impact on farm profit. Strategies that help mitigate production, market and institutional (policy/regulatory) risks are critical to ensure resilient and sustainable farm businesses. High up-front costs of production combined with the unpredictable and variable nature of primarily rain-fed cropping systems exposes growers to significant financial risk.

Comparative risk scores for Australian agricultural subsectors

When comparing volatility across Australian agricultural sectors, production volatility for wheat is considered extreme, representing almost 70% of the associated risk, and market risk high.

graph

15. Australian Farm Institute, April 2019, Research Report – Australian agriculture: an increasingly risky business, ‘Risk scores (/10) for Australian agricultural subsectors’, p28.

Grain growing is a constant game of risk:reward trade-offs. Could investment in RD&E do more to meet the evolving needs of growers and expectations of society? Below are some areas we are currently investing in as well as others that may present broader opportunity to build enduring farm business resilience and ensure long-term sustainability:

  • Support growers to make sound business decisions and take calculated risks
  • Address biosecurity threats, through preparedness, surveillance and management
  • Adapt to the impacts of climate change on production and markets
  • Support grower stewardship to address the environmental and social impacts of Australian grains production, and support social license and access to capital
  • Adapt to the impacts of changing policy and regulation.

Making investment decisions

GRDC investment decisions consider a broad range of factors and are informed by analysis and consultation, including advice from GRDC’s three Regional Panels. Decision-making starts with understanding the problem, present and future situations, and the value proposition of various possible solutions.

Responsible investment requires active management of a portfolio of investments aligned to an agreed overall investment strategy. Consider for example your investment in superannuation. You are typically presented with a range of investment options or strategies and given the choice to select your preferred option considerate of risk and expected return (or benefit creation).

We take this responsibility seriously at GRDC and aim to ensure a balanced investment portfolio that considers both risk and return. Three key areas of risk are broadly considered in portfolio risks assessment by GRDC, these being:

  1. Technical risk – is the research investment technically feasible
  2. Delivery risk – how will growers access the research outputs
  3. Adoption risk – will growers want to adopt the research outputs.

Whilst it is recognised that a combination of multiple, incremental (or small) changes can result in significant improvements in profit, consultation by GRDC with grain growers during the development of the 2018-23 RD&E plan confirmed an increased desire for investment to deliver transformational impact. Higher risk, higher reward investments often come with higher failure rate, but this can be mitigated through portfolio management, including the number of investments GRDC makes in a certain area. Transformational approaches often take longer to deliver tangible grower outcomes and may be less visible versus local development or extension projects.

Unlike your super fund, in the context of GRDC’s purpose, return is not focused on direct return on investment to GRDC, but the delivery of benefit to Australian grain growers and the broader community. We are focused upon impact and hence consider the quantum (how much?), speed (by when?) and beneficiaries (who, where?) of impact from RD&E investment.

Our investment portfolio aims for a mix of investments that:

  1. Align to priority grower need
  2. Deliver upon the objectives of the RD&E plan
  3. Assess and mitigate technical, adoption and commercial risks
  4. Deliver equitable impact across time, geography and crop
  5. Align to an agreed investment strategy.

How to contribute

We want to understand what is challenging you, what excites you, the issues facing the grains industry and where you believe grains research and development should be focused to deliver greatest impact.

We value your time and feedback and encourage you to contribute to help shape the Plan.

Feedback from surveys and interviews undertaken during Phase 1 will be collated and help inform deliberation during Phase 2, including virtual roundtable discussions scheduled for July 2022. The GRDC RD&E Plan Exposure Draft (or draft plan) will be released to the public in January 2023, with final feedback closing February 2023.

steps steps steps steps

#grainstorming

You are encouraged to contribute in shaping the plan primarily through completion of the online survey

Complete survey | Register for an interview

Alternatively feedback can be provided through:

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We encourage all stakeholders to contribute new ideas and opportunities for investment throughout the life of this plan by contacting GRDC staff based in our regional offices or Canberra.

Download a PDF version of the Deliberative Guide

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