GRDC’s extensive consultation with industry combined with analysis of the trends and drivers helped identify constraints and opportunities that could be addressed through research development and extension (RD&E) investment. But determining how much to invest requires consideration of the value proposition of investing in different areas, the risk, return and potential impact to growers and industry.
At any one time, GRDC manages more than 500 RD&E investments. Responsible investment requires GRDC’s portfolio to be segmented in a way that allows the mix of investments to be monitored and managed not in isolation, but rather as part of a balanced portfolio – to ensure equitable benefit for all Australian grain growers.
The Strategic Pillars and Focus Areas in this plan provide a framework for investment that considers the estimated value that could be delivered to growers and logically groups individual projects and programs aligned to related outcomes.
Value may be created through ‘growth’ investments – that deliver improvement beyond current farm productivity levels – or ‘maintenance’ investments - protecting us from value loss if existing productivity levels are not maintained. Value capture considers both financial and non-financial factors – the economic, environmental and social benefits created. Under the RD&E Plan 2023-28 the four enablers are considered ‘foundational’ investments that deliver value through the broader portfolio.
Consideration of the relative economic benefit from addressing different constraints and opportunities enables the development of RD&E ‘value pool’ estimates that help inform proportionate RD&E budget allocation. Recognising the complexity in the assumptions required to develop estimates of future benefit from RD&E investment, considered along with other factors, this helps to inform portfolio balance across the RD&E Plan 2023-28 pillars and focus areas.
Business cases based on informed assumptions drive GRDC investment decisions, with three key areas of risk considered in portfolio assessment:
- Technical risk – is the research investment technically feasible?
- Delivery risk – how will growers access the research outputs?
- Adoption risk – will growers want to adopt the research outputs?
GRDC’s Statutory Funding Agreement with the Commonwealth requires a focus on the delivery of benefit to Australian grain growers and the broader community. In balancing the needs of all stakeholders, GRDC’s investment portfolio aims for a mix of investments that:
- Align to grower priorities
- Addresses government national science and rural R&D priorities
- Delivers on the objectives of the RD&E plan
- Assess and mitigate technical, adoption and commercial risks
- Deliver equitable impact across time, geography and crop
- Align to our agreed investment strategy.
R&D Budget allocation
Articulating what GRDC seeks to achieve through RD&E investment is a key part of the plan. Another equally important part of the investment strategy is how much we invest in each area.
Many factors are considered when determining allocation of RD&E investment, most notably grower priorities, value pool or ‘size of the prize’ estimates, where and when this value will be realised, the likelihood and cost to do so, and who else may invest to deliver the desired outcome.
Consultation to shape the RD&E Plan 2023-28 helped to validate proposed RD&E budget allocation with grain growers, revealing they want around 25-50 per cent of the portfolio invested in new areas plus those expected to deliver high growth (or step-change). What we heard confirmed grower support for GRDC to try new approaches that may come with higher risk but are aimed to deliver higher reward.
The forecast GRDC RD&E budget allocation for the 2023-28 plan period is summarised below. Whilst GRDC will maintain core investment to Harness existing potential, the ambition of this plan will see an additional $250M invested in growth and new areas; to Reach new frontiers, Grow markets and capture value and Thrive for future generations. Investment in the Reach new frontiers and Grow markets and capture value pillars will be more than double that invested under the previous RD&E plan, with an additional $46M planned for investment to Thrive for future generations.
It should be recognised that investment under the Thrive for future generations pillar represents only a small part of GRDC’s total investment in sustainability under the 2023-28 plan. Investment will build upon major investment in sustainability through the broader portfolio and leverage cross-sectoral activities.
The budget forecast considers the fact that RD&E is a long game and aims to ensure a responsible transition of the existing portfolio to the new strategy through portfolio re-alignment.
Annual investment planning and budget allocation will be reported through GRDC’s Annual Operating Plan and Annual Report and regularly reviewed and adjusted to reflect changes in assumptions, priorities of growers and other stakeholders.
Often called spill-over benefit, did you know that 29 per cent of GRDC projects deliver direct environmental sustainability outcomes?
This conservative assessment excludes the indirect environmental, social and economic benefits delivered by almost every investment GRDC make, eg. through more efficient use of arable land, water and other finite resources, supporting foundational industry capability and more resilient farm businesses.