Farrer Memorial Trust Annual Report 2013 and …MEMORIAL TRUST ANNUAL REPORT 2013 1 The Farrer...

FA R R E R M E M O R I A L R E S E A R C H S C H O L A R S H I P F U N D

T H E 2 0 1 3 FA R R E R M E M O R I A L O R AT I O N

F A R R E R M E M O R I A L

T R U S TANNUAL REPORT

2013

TRUSTEES OF THE FARRER MEMORIAL RESEARCH SCHOLARSHIP FUND 1

The Farrer Memorial Trust was established in 1911 to perpetuate the memory of William James Farrer and to encourage and inspire agricultural scientists. Initially it awarded scholarships for 'study or research in agricultural problems'. Later it included the delivery of an annual oration and the presentation of the Farrer Memorial Medal to a distinguished agricultural scientist for service rendered in the fields of research, education or administration.

The Director General of the Department of Primary Industries, Mr Scott A Hansen, is the Chairman of the Trust. The other official Trustees are Mr M Bullen, Deputy Director General, Agriculture NSW of the Department of Primary Industries; Prof M Adams, Professor and Dean of the Faculty of Agriculture, University of Sydney; and Dr J C Radcliffe AM, CSIRO, Unley Park, South Australia. The non‑official Trustees, representing industry, are: Mr M J R Arnott AM, Boorowa, Ms R Clubb, Araluen, and Mr G Mason, Boorowa.

The 2013 Farrer Memorial Travelling Scholarships were awarded to:

• Mr Luke Holtham, University of Adelaide

• Mr Anthony Martin, University of Newcastle

• Mr Jonathan Powell, University of Queensland

• Miss Courtney Peirce, University of Adelaide

• Mr David Gale, Charles Sturt University

The Farrer Memorial Travelling Scholarship is designed to support overseas travel by post‑graduates enrolled for a PhD in any field of crop research.

The 2013 Farrer Memorial Medal was awarded to Mr Andrew R Inglis AM on 8 August 2013 at the National Library of Australia to coincide with Canberra’s centenary celebrations. Mr Inglis delivered the Farrer Oration entitled ‘A Farrer Legacy – Innovation through Collaboration’.

The text of the 2013 Farrer Memorial Oration is reproduced on page 15 of this report.

F A R R E R M E M O R I A L R E S E A R C H S C H O L A R S H I P F U N D

FARRER MEMORIAL TRUST ANNUAL REPORT 20132


STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2013

Note 2013 2012$ $

INCOME FROM ORDINARY ACTIVITIES

Interest Received 8,130 12,515

Dividends 18,839 13,051

Other Income 1(c) 9,174 9,110

Change in Fair Value of Financial Assets:

Unrealised 1(d), 1(g), 1(h), 2

51,247 35,510

Realised – 6,133

TOTAL INCOME 87,390 76,319

Less:

EXPENDITURE FROM ORDINARY ACTIVITIES

Cost of Scholarship 19,990 17,300

Oration Expenses 264 264

Bank Charges 38 33

Administration Costs 1(c) 9,685 9,110

TOTAL EXPENDITURE 29,977 26,707

NET RESULT 57,413 49,612

Other Comprehensive Income – –

TOTAL COMPREHENSIVE INCOME 57,413 49,612

The accompanying notes form part of these financial statements.


STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2013

Accumulated Funds

2013 2012$ $

BALANCE AT THE BEGINNING OF THE YEAR 471,902 422,290

Total Comprehensive Income 57,413 49,612

BALANCE AT THE END OF THE FINANCIAL YEAR 529,315 471,902


STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013

ASSETS Note 2013 2012$ $

CURRENT ASSETS

Cash and Cash Equivalents 3.1 34,708 24,665

Financial Assets Held to Maturity 1 (g), 4 75,277 72,772

Receivables 3,857 9,975

Inventories 1 (i) 2,371 2,635

TOTAL CURRENT ASSETS 116,213 110,047

NON-CURRENT ASSETS

Financial Assets at fair value through profit & loss

1 (h), 2 413,102 361,855

TOTAL ASSETS 529,315 471,902

NET ASSETS 529,315 471,902

EQUITY

Accumulated Funds 529,315 471,902

TOTAL EQUITY 529,315 471,902



CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2013

Note 2013 2012$ $

CASH FLOWS FROM OPERATING ACTIVITIES

Interest Received 5,953 7,890

Dividends Received 18,671 15,176

Scholarship Costs (19,990) (17,300)

Oration Expenses – –

Bank Charges (38) (33)

Other Income 4,928 –

NET CASH FLOWS FROM OPERATING ACTIVITIES

3.2 9,524 5,733

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from Financing Activities – –

NET CASH FLOWS FROM FINANCING ACTIVITIES

– –

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from Sale of Financial Assets – 6,132

Proceeds from Maturing Financial Assets 519 –

Purchases of Financial Assets – (48,952)

NET CASH FLOWS FROM INVESTING ACTIVITIES

– (42,819)

Net Increase/ (Decrease) in Cash 10,043 (37,087)

Opening Cash and Cash Equivalents 24,665 61,752

CLOSING CASH AND CASH EQUIVALENTS

3.1 34,708 24,665



NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.1 Purpose of Fund

The Farrer Memorial Research Scholarship Fund Act 1930 permits the Trustees of the Fund to use its earnings to assist study and research into agricultural problems, meet costs of the Farrer Memorial Oration and may provide an honorarium to the recipient of the Farrer Memorial Medal.

a. The accompanying financial statements are general purpose financial statements which have been prepared on an accrual basis and in accordance with applicable Australian accounting standards ( which include Australian Accounting Interpretation) and the requirements of the Public Finance and Audit Act (1983) and Public Finance and Audit Regulation (2010) and the Financial reporting directions published in the financial reporting code for NSW General Government Sector Entities or issued by the Treasurer.

b. Financial assets at 'fair value through profit or loss' are measured at fair value. Other financial statement items are prepared in accordance with the historical cost convention. Key assumptions and estimations management has made are disclosed in the relevant notes to the financial statements. All amounts are rounded to the nearest one dollar and are expressed in Australian currency.

c. All administration costs and audit fees (including salary and wages) are met directly from the Recurrent Appropriations of the Minister for Primary Industries. Such costs are estimated to be $9,685 excluding GST ($9,110 excluding GST in 2012) for the year and include audit fees of $5,600 excluding GST ($5,125 in 2012).

d. The Fund has designated Financial Assets upon initial recognition “fair value through profit and loss” per the requirements of AASB139. Realised and unrealised gains and losses arising from changes in fair value of these assets are included in the income statement of comprehensive income in the period in which they arise.

e. The statement of compliance The financial statements and notes comply with the Australian Accounting Standards, which include Australian Accounting Interpretation.

f. The financial statements for the year ended 31 December 2013 was authorised for issue by the Trustees on 30 June 2014. All amounts are rounded to the nearest one dollar and are expressed in Australian currency.

g. Investment revenue recognition Interest revenue is recognised using the effective interest method as set out in AASB139 Financial Instruments: recognition and measurement. Dividend revenue is recognised in accordance with AASB 118 when the entity’s right to receive payment established.

h. Held to Maturity Investments Investments in Term Deposits are valued at amortised cost using the effective interest rate method and are held to maturity. Investments currently held are Rabobank Term Deposits and a Macquarie Bank Term Deposit. They are not tradeable and not listed. These investments have fixed maturities, and it is the Trust’s intention to hold these investments to maturity.


i. Assets held at fair value through the Statement of Comprehensive Income. Investments in shares and income securities are valued at fair value and are listed on the Stock Exchange. Unrealised gains and losses arising from changes in the fair value are taken through the Statement of Comprehensive Income. Refer to note 2.

j. Inventories Inventories consist of Farrer Memorial Medals. Medals are valued at cost which approximates fair value.

2. CURRENT MARKET VALUE (FAIR VALUE) OF PORTFOLIO

The following summary shows the market values (fair value) of all shareholdings as at 31 December 2013.

Market ValueCOMPANY 2013 2012

$ $

FIXED INCOME SECURITIES

National Bank (NABHA) 27,598 26,825

Macquarie Bank (MBLHB) 28,811 24,894

Suncorp Metway (SUNHB) 30,053 24,416

TOTAL 86,462 76,135

LISTED TRUSTS

Dexus Prop (DXS) 12,149 12,270

Goodman Group (GMG) 6,693 6,127

Macairport (SYD), last year MAP 38,760 34,476

Duet (DUE) 26,400 27,456

SP AUSNT 18,053 16,095

TOTAL 102,055 96,424

TOTAL SECURITIES 188,517 172,559

GROWTH SECURITIES (SHARES)

National Bank (NAB) 40,055 28,750

Westpac Bank (WBC) 51,808 41,664

Leighton Holdings (LEI) 27,629 30,664

Westfarmer (WES) 51,438 43,557

Telstra (TLS) 53,655 44,661

TOTAL 225,585 189,296

PORTFOLIO TOTAL 413,102 361,855

The movement in the market value of financial assets at fair value through the income statement in 2012 was a loss of $35,510 (2011: loss of $33,195).


3. NOTES TO STATEMENT OF CASH FLOWS

3.1 Cash Balance Represented by Cash at Bank

2013 2012$ $

St George Bank Account 34,708 24,665

34,708 24,665

3.2 Reconciliation of Operating Result to New Cash Provided by Operating Activities

2013 2012$ $

Operating Surplus/(Deficit) 57,413 49,612

Gain on Sale of Financial Assets – (103)

(Increase)/Decrease in Receivables 6,118 (5,591)

(Increase)/Decrease in Inventory 264 246

(Increase)/Decrease in Fair Value of Financial Assets

(51,247) (35,510)

Non Cash Dividends received (2,505) (2,939)

NET CASH PROVIDED BY OPERATING ACTIVITIES

10,043 5,733

4. FINANCIAL INSTRUMENTS

Financial instruments give rise to situations that create a financial asset of the Trust and a financial liability (or equity instrument) of the other party, or vice versa. For the Trust, these financial instruments include cash at bank and financial assets such as fixed deposits and shares and accrued interest.

All financial instruments, including revenues, expenses, or other cash flows arising from instruments, are recognised on an accruals basis.

4.1 Cash

Cash comprises cash at bank. The value of the cash as at 31 December 2013 was $34,708, ($24,665 in 2012).

4.2 Financial Assets held to maturity

As at 31 December 2013, investments amounting to $75,277, ($72,772 in 2012) were $16,000 held to maturity in Rabobank Bonds and a Macquarie Bank Term Deposit of $59,277.

The weighted effective interest rate as at 31 December 2012 was 2.5%. Refer note 1(g).

Other investments such as shares and securities are valued at fair value in the accounts. Refer note 2.

4.3 Accrued Interest

All accrued interest is recognised as amounts receivable at balance date. The value of receivables as at 31 December 2013 was $3,857, ($3,945 in 2012).


4.4 Financial Risk Management

The Fund’s overall risk management program focuses on the risk versus return feature of financial markets and seeks to minimise adverse effects on the Fund’s investment returns. The Fund currently does not use derivative instruments such as foreign exchange contracts and interest swaps to hedge its risk exposure. The Fund uses a variety of risk mitigation measures to manage the types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rates and other price risks.

The Fund maintains a number of investment portfolios to address a variety of objectives:

• A long term growth portfolio representing the Fund’s asset reserves and endowments and has a long term investment horizon. This portfolio has an investment profile oriented towards growth assets and is managed by external fund managers.

• A long term debt portfolio used to generate a fixed income stream. This portfolio invests in short to medium term fixed and floating rate securities.

a. Market Riski. Foreign exchange risk

The Fund has no exposure to foreign exchange risk because there are no foreign currencies and balances.

ii. Price risk

The Fund has exposure to equity securities price risk. This arises from investments held by the Fund and classified on the balance sheet as Assets held at fair value through the income statement, such as the impact of a change in value of the securities would be reflected as either an increase or decrease in fair value of the security through equity.

To manage its price risk from investments in equity securities, the Fund has contracted out the management of the portfolio to external fund managers, Macquarie Equities Limited. These fund managers are mandated to diversify the investments of the portfolio under their management. The quantum of funds under management per external fund manager and the investment objectives of each external fund manager are in accordance with policies set by the Trustees.

A majority of the Fund’s equity investments managed by external fund managers are denominated in AUD, are publicly traded and included in the ASX 300 Index. The impact of increases/decreases on the ASX 300 Index on the Fund’s equity would be increase/decrease of $41,310, (2012: $36,175). The analysis is based on the assumption that the ASX 300 Index increased/decreased by 10%, with all other variables held constant and the Fund’s equity portfolio moves according to the historical correlation with the index.

iii. Cash Flow and Fair Interest Rate Risk

The Fund’s interest rate risk arises from the cash kept in the bank account subject to interest bearing at variable average rate of 2.5%. At 31 December 2013, if interest rates decreased/increased by 1.00% with all other variables held constant, equity would have been $lower (2012: $247 higher/$247 lower) as a result of an increase/decrease in fair value of the debt security.


4.5 Sensitivity Analysis

The following table summarise the sensitivity of the Fund’s financial assets to interest risk and other price risk.

Carrying Amount

$

Interest rate risk Other price risk

‑1.00% 1.00% ‑10.00% 10.00%

Profit Equity Profit Equity Profit Equity Profit Equity

31 December 2013, Financial Assets

Cash & Cash Equivalents 34,708 (347) (347) 347 347 – – – –

Financial Assets Held to Maturity1 75,277 – – – – – – – –

Receivables2 3,857 – – – – – – – –

Fixed Income Securities3 86,462 – – – – (8,646) (8,646) 8,646 8,646

Listed Trusts 102,055 – – – – (10,206) (10,206) 10,206 10,206

Growth Securities 225,585 – – – – (22,559) (22,559) 22,559 22,559

Total increase/(decrease) (347) (347) 347 347 (41,411) (41,411) 41,411 41,411

31 December 2012, Financial Assets

Cash & Cash Equivalents 24,665 (247) (247) 247 247 – – – –

Financial Assets Held to Maturity1 72,772 – – – – – – – –

Receivables2 3,945 – – – – – – – –

Fixed Income Securities3 76,135 – – – – (7,613) (7,613) 7,613 7,613

Listed Trusts 96,424 – – – – (9,642) (9,642) 9,642 9,642

Growth Securities 189,296 – – – – (18,930) (18,930) 18,930 18,930

Total increase/(decrease) (247) (247) 247 247 (36,175) (36,175) 36,175 36,175Notes:

1. Held to Maturity Term Deposits are not traded and are not subject to interest rate variation during the term.

2. Receivables include interest due on Fixed Interest Securities and Term Deposits and dividends receivable. The value of these receivables will not change due to changes in market interest rates.

3. Fixed Income Securities are composed of Listed Fixed Interest Securities which are not subject to changes in market interest rates.


a. Liquidity riskLiquidity risk is the risk that the Fund will be unable to meet its payment obligations when they fall due. The Fund continuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holding of high quality liquid assets. The Fund has no loans payable and no assets have been pledged as collateral. The Fund’s exposure to liquidity risk is deemed insignificant based on prior periods’ data and current assessment of risk. The Fund has no liabilities and the majority of the assets are cash, cash equivalents or tradable shares and securities.

Fair value recognised in the statement of financial position

The trust uses the following hierarchy for disclosing the fair value of financial instruments by valuation technique:

Level 1 – Derived from quoted prices in active markets for identical assets / liabilities.

Level 2 – Derived from inputs other than quoted prices that are observable directly or indirectly.

Level 3 – Derived from valuation techniques that include inputs for the asset / liability not based on observable market data (unobservable inputs).

There were no transfers between Level 1 and 2 during the period ended 30 June 2013.

2013

Level 1 $

Level 2 $

Level 3 $

Total $

FINANCIAL ASSETS AT FAIR VALUE

Listed Trusts 102,055 – – 102,055

Growth Securities 225,585 – – 225,585

327,640 – – 327,640

2012

Level 1 $’000

Level 2 $’000

Level 3 $’000

Total $’000

FINANCIAL ASSETS AT FAIR VALUE

Listed Trusts 96,424 – – 96,424

Growth Securities 189,296 – – 189,296

285,720 – – 285,720

5. COMMITMENTS FOR EXPENDITURE

The Trust has no commitments for expenditure.

6. CONTINGENT ASSETS AND LIABILITIES

The Trust has no contingent assets or liabilities.


7. AFTER BALANCE DATE EVENTS

The Trust has no after balance date events that need to be reported.

8. NEW AUSTRALIAN STANDARDS ISSUED BUT NOT EFFECTIVE

At reporting date, a number of Australian Accounting Standards adopted by the Australian Accounting Standards Board have been issued but are not yet operative and have not been adopted by the Trustee. NSW Treasury mandate precludes early adoption of these Accounting Standards.

The Trustee has reviewed the new Australian Accounting Standards and at this stage does not anticipate any impact on the figures reported in this financial report.

At the date of the financial report, the following Standards and Interpretations were on issue but not yet effective:

Accounting Standard

These Compiled Standards include amendments contained in AASB 2009‑11 to AASB 2010‑10, which apply to annual reporting periods beginning on or after 1 January 2013. All other aspects of each compiled standards apply to the annual financial reporting period ended 31 December 2013.

AASB Standards

AASB No. Title Notes Issue OperativeDate Date

13 Fair Value Measurement Extra Sep 2011 1‑Jan‑13

1053 Application of Tiers of Australian Accounting Standards

Jun 2010 1‑Jul

2013

END OF AUDITED FINANCIAL STATEMENTS

http://www.aasb.gov.au/admin/file/content105/c9/AASB13_09-11.pdf

http://www.aasb.gov.au/Pronouncements/IASB-support-materials.aspx

http://www.aasb.gov.au/admin/file/content105/c9/AASB1053_06-10.pdf

The 2013 FARRER MEMORIAL ORATION

A Farrer Legacy – Innovation through Collaboration

Mr Andrew R Inglis AM

R

FARRER MEMORIAL ORATION 2013 | MR ANDREW R INGLIS AM16

A Farrer Legacy – Innovation through Collaboration

Mr Andrew Inglis AMWilliam Farrer had a clear vision of the legacy that he wished to leave. In words recorded by his friend and colleague Dr George Sutton he expressed a very clear objective.

“Do you know why I commenced this work? It was because I wanted to think that when I died my life had not been wasted”.

It is self evident that Farrer achieved his goal. He left as a legacy a body of work that ensured that the Australian wheat industry grew and prospered. By the time of his death in 1906 the emerging industry was expanding its footprint from cool, higher rainfall, coastal regions into the drier warmer inland plains of eastern Australia. In an all too brief two decades Farrer and his collaborators had set in train changes that were to transform the fledgling industry and put it on the road to the dominant agricultural industry that it is today.

To some he was a genius, to others he was a saviour. His ground breaking cross bred wheats were legion and Farrer himself was a legend. Little wonder that he came to be recognised as the Father of the Australian wheat industry, little wonder that he was seen by his contemporaries as “Australia’s greatest benefactor”.1

In this oration I will briefly reflect on Farrer’s life and the contribution that he made to Australia and Australian agriculture. I will postulate that his legacy is even broader than the direct contribution that he made through his innovative approach to wheat breeding, and the array of wheat cultivars that laid the foundation for an industry of national and international significance. In particular I will consider the example he set by innovation through collaboration.

I will then examine collaboration in more recent times, looking at some of the contemporary collaborative models of which I have had some experience.

1 H.Wenholz, Director of Plant Breeding, Department of Agriculture, NSW. Australian Quarterly, Vol. 2. No.6 (June 1930)

In doing this I will examine challenges facing our agricultural science sector and consider how collaborative research can countervail some of these challenges.

Finally I will address some of the impediments to collaboration and propose some remedies. That the establishment of collaborations and partnerships should so often be such hard work is an unflattering reflection on systems that can be antipathetic to co‑operation and unsympathetic to would‑be collaborators. As Australian’s we often take pride in a history of rugged individualism but, in today’s environment, we can no longer afford the luxury of always going our own way. If we are going to fully capitalise on our Farrer inheritance collaboration is more important than ever.

Farrer – a brief history

William Farrer arrived in Australia in 1870, a young man of twenty five years who had to give up his medical studies because of a personal health problem, tuberculosis. He came seeking a more suitable climate and the opportunity to establish a pastoral property. Unfortunately, like many before and since, he invested in mining ventures that failed.

As a consequence Farrer had to reconsider his immediate future. He studied and became a licensed surveyor in 1875. For the next decade he worked as a surveyor with the NSW Department of Lands, principally in the region of Dubbo. During this time he met and married Nina de Salis, daughter of the owner of Cuppacumbalong Station.

Farrer resigned from his position as a surveyor in 1882 and purchased a small parcel of Government land which he had selected from the Cuppacumbolang run. This property, named “Lambrigg” after his mother’s girlhood home in far off England, was to be the unlikely centre of breeding research destined to transform Australia’s wheat industry.

FARRER MEMORIAL ORATION 2013 | MR ANDREW R INGLIS AM 17

Although Farrer had no real farming experience he had spent time as a child with his tenant farmer father in northern England. His subsequent education, including mathematic studies completed at Cambridge, were a useful foundation for the demanding task that was to be his destiny. And, during his years as a surveyor, he had keenly observed the triumphs and tribulations experienced by NSW farmers.

So it was that, in 1886, he commenced the work for which he was to become renowned. In an all too brief career, firstly as a private wheat breeder, and later when employed by the NSW Department of Agriculture in 1898 as the first government Wheat Experimentalist, he laid down a legacy that continues to this day.

The Farrer influence

The impact that Farrer had cannot be understated. In 1897, on the eve of his move to his new departmental role and with the early Farrer cultivars gaining popularity, the area of NSW sown to wheat was just over 1,000,000 acres (400,000 hectares). In less than a decade the wheat area had doubled, and by 1914 the NSW wheat crop had doubled again to 4,000,000 acres (1,600,000 hectares). Because much of this exponential expansion was due to a shift of the wheat belt into drier regions it could have been expected that yields would fall. However, thanks largely to Farrer bred wheats, average yields had actually improved.

The remarkable influence of Farrer bred wheats such as Federation, Firbank Florence, Cleveland, Clarendon and Bunyip, Major, Rymer and Yandilla King was felt both within and beyond the borders of NSW. In 1914 twenty two of the twenty nine wheats recommended for growing across the differing regions of NSW were Farrer wheats and by the mid 20’s 60% of wheat grown in NSW was bred by Farrer. Even in my home state of South Australian, where the Mediterranean climate could be expected to be less suitable to these wheat cultivars, 20% of the crop was Farrer bred.

I was most surprised and delighted to find, upon checking some old farm records for my family property in the mid‑north of South Australia, that two of our preferred wheats in the 1920’s were Farrer bred – Florence and Major. According to those records, with wheat bringing seven shillings a bushel in 1920 and twenty two inches of annual rainfall (550 mm), my forebears enjoyed a bumper season.

The yield benefits that Australian farmers realised by growing Farrer’s wheats would have been value enough but he sought greater goals. Following the disastrous rust epidemic of 1889, which led to a series of inter‑colonial rust‑in‑wheat conferences, he busied himself with breeding more resistant wheat varieties. While the wheats he bred were not stem rust resistant, and whether they were rust tolerant or simply avoided the worst of rust outbreaks due to their earlier maturity, the fact is that they proved their worth with farmers voting with their fields and planting Farrer wheats. And as Farrer was wont to say “You can’t argue about a fact”.

But Farrer did much more than improve the yield and rust resistance of NSW and Australian wheats. Amongst a kitbag full of legacies he –

• applied a scientific approach to wheat breeding

• developed wheat cross‑breeding in Australia

• bred bunt and flag smut resistant wheats

• released drought tolerant wheats more suited to Australian conditions

• improved the milling and baking quality of Australian wheats

• was alert to the interests of all participants along the value chain – farmer, miller, baker, exporter and consumer

• pioneered green manuring in broad‑acre cropping

• experimented with alternatives to the fallow/wheat cropping system

• recognised the value of humus and nitrogen fixed by legumes

• and finally he was a great collaborator


Farrer the collaborator

As an Australian wheat breeder it is self evident that Farrer needed to collaborate with other breeders, both nationally and internationally. He drew on the work of early Australian wheat breeders who had selected wheats from Europe and South Africa. Many of these wheats were South Australian bred as, in the 1980’s , that state was the nation’s bread basket producing more than half of Australia’s wheat crop. One SA wheat, “Purple Straw”, bred on a property only 30 kilometres from Adelaide by John Frame, was destined to contribute to Farrer’s most famous cultivar, “Federation”.

Farrer was in regular contact with wheat breeders around the world, including breeders in the United States, Canada, India, England, France and Sweden. Of particular note was his relationship with Professor Blount from Colorado, USA, with whom he was a prolific correspondent. Archer Russell, author of the definitive biography of Farrer’s life described them as “the perfect collaborators – a golden example of unselfish co‑operation in the name of science”. 2

Another great collaboration arose as a result of Farrer’s interest in improving the milling and baking qualities of the wheats that he released. When he wrote to the NSW Department of Agriculture in 1891 seeking assistance Farrer struck up a critical relationship with the Department’s chemist, Fredrick Guthrie, which enabled him to address the quality deficiencies of his wheat varieties. As Dr Walter Waterhouse observed in his 1938 Farrer Oration “Farrer… worked in close co‑operation with that great chemist, the late F.B.Guthrie, and it was this teamwork that made possible the striking quality improvements that were affected”. 3

And so it was, through his collaboration with wheat breeders around the world, and in co‑operation with his friend and colleague, Fredrick Guthrie, and many others, that William Farrer was able to achieve his dream.

2 P.46 “William James Farrer – a Biography”3 Dr W.L.Waterhouse, Farrer Memorial Oration, 1938

Contemporary Collaborative Models

There are many good examples of collaborative research in the Australian agricultural research sector and I will refer to two models in particular ‑ Research and Development Corporations (RDCs) and Cooperative Research Centres (CRCs). As an example of each I will instance the Grains Research and Development Corporation (GRDC), the Future Farm Industries CRC, and the Plant Biosecurity CRC.

The GRDC was established in October 1990 under the Primary Industries & Energy Research & Development Act 1989, and replaced fourteen commodity research councils and state research committees. Despite the fact that the Grain Council of Australia (GCA) Executive had supported the move industry representatives initially rejected the proposal at the 1989 Annual Grains Conference. Fortunately industry leaders prevailed and one of most significant grain industry research funding bodies was established.

Two decisions taken early in the life of the GRDC were to have an enduring impact on grains research and research funding. The first was the ground breaking decision of the GRDC Board to move away from the traditional state based structure to a structure based on more logical geo‑climes. The separation of Australia’s grain growing area into three regions, while resisted by some, set the scene for a national and regional focus on collaborative research and development.

The other fundamental change was a decision taken by the GCA at its 1991 Annual Conference to move to a common levy basis for funding grains research and a shift from a rate per tonne basis to an ad valorem rate. The industry ultimately settled on a rate of 1.0% of farm gate value which essentially continues today (currently 0.99% of farm gate value). The substantially uplift avoided a serious shortfall in research funding and put grains research funding on a sound and enduring footing. In conjunction with Australian government dollar for dollar matched funding up to 0.5% of gross value of product the industry has had the resources to become a leading funder of Australian grains research.


Another GRDC initiative, the establishment of one national and three regional panels, has strengthened the collaborative nature of the model, with joint researcher and stakeholder expertise incorporated on the panels. These advisory panels contribute to the direction and relevance of research investment and involve growers, agribusiness and researchers.

Today the GRDC is a fine example of innovation through collaboration. In the Corporations 2012–2017 Strategic Research and Development Plan the objective is a highly efficient national grains research sector that works with partners to:

• “build on existing national collaborations

• develop effective relationship models for private‑public collaboration

• develop and implement the national RD&E framework for the grains industry”4

Further, as part of the national RD&E framework, the National Grains RD&E Strategy provides a structure that encourages industry and government priority setting partnerships, more continuity in investment, and greater efficiency in delivery. Through these collaborative arrangements the GRDC invests about one third of the $400 million dollar annual expenditure on grains‑related RD&E. I am sure that Farrer would approve.

Another collaborative research model that typifies the co‑operation necessary to maximise innovative outcomes is the Co‑operative Research Centre program. This collaborative model was the brain child of former Chief Scientist, Professor Ralph Slatyer, who proposed the idea as means to encourage collaboration between the private sector and public sector research bodies, to establish world class research teams, and to increase the opportunities for PhD graduates.

One of the great strengths of the CRC program, which has now been in place for two decades, is that it links researchers and end‑users. It also brings together a range of disciplines and research bodies from universities and government research agencies.

4 GRDC Strategic Research & Development Plan 2012–17. Page 38

The benefits of this collaborative approach to innovation have been frequently measured and extensively examined. The program has been reviewed eight times with the most recent being the 2012 Allen Review. The Allen Consulting Group was tasked with determining the economic, environmental and social impact of the CRC program from commencement in 1991 through to 2017. The Review concluded that the program had delivered an estimated direct economic benefit of $8.6 billion up to 2012 with a further $5.9 billion estimated to be realised through to 2017, resulting in a total $14.5 billion impact.5 On the basis of these figures every dollar invested by the Australian Government has realised a return of three dollars.

According to the Allen Review the program has had its greatest impact on agriculture with a total estimated benefit of $6.15 billion over the review period. This represents an average annual economic benefit of $237 million to the agricultural sector. Furthermore the Allan Review estimated that, in the period from 1991 to 2010, 2200 research post graduate degrees were supported through CRCs in the agricultural sector.6

Regrettably the investment in the CRC program has fallen from a peak of $216 million in 2007 to $145 million in 2013/14. Fortunately this decline in investments has stabilised in the past few years but there has been a concerning fall in the number of CRCs being established in the agricultural sector with only two being funded in the fourteenth Selection Round, none in the last Round and only 8 agriculture sector CRCs still being extant. Several of these CRCs are in their final year, including the CRC with which I am associated – the Future Farm Industries CRC (FFI CRC).

The FFI CRC is a good example of collaboration, both through cross commodity and cross discipline research involving sixteen participants in a seven year co‑operative research initiative. Over the life of the CRC we expect to direct, in cash and kind, $179 million to develop new farming systems and products to deliver total net benefits of $2.5 billion in commercial and industrial growth by 2030.

5 Executive Summary, The Allen Consulting Group Review 20126 The Allen Consulting Group Review 2012 Page 27


Research outcomes include crop production systems better adapted to soil and climatic constraints, grazing systems based on novel and/or native plants better adapted to climatic variability, and new woody cropping options.

Another good example of the value of collaboration between the public and private sectors and researchers and end users under the CRC model is the Post Harvest Grains Biosecurity Program managed by the Plant Biosecurity CRC. This initiative has attracted $5.56 million of cash contributions from the three largest grain companies operating in Australia, along with a $12 million investment from the GRDC to support a six year stored grain research program. With additional support from the CSIRO, state research agencies and universities this collaboration will help maximise the value, integrity and competitive advantage of Australia’s post‑harvest value chain.

Productivity and investment

As encouraging as the contributions of these research collaborations are there remains a challenge to sustain productivity improvements and to maintain and preferably increase investment in agricultural research. In both respects Australian agriculture is experiencing negative trends. ABARES analysis indicates that broad‑acre productivity improvement is falling, and reduced resourcing of public research agencies is impacting on capacity. According to an ABARES report –

“Recent ABARES research suggests that a slowdown in productivity growth since the mid‑1990s has been associated with diminished public R&D intensity since the 1970s”.7

Productivity growth in the broad‑acre cropping sector is influenced by a number of factors including seasonal conditions, soil fertility and farm scale. However, as ABARES notes, “changes in the level of productivity growth over the long term are more likely to reflect technological progress.” 8

7 Dahl, A. Leith, R. Gray, E. 2013 Productivity in the broadacre and dairy industries ABARES Agricultural Commodities March Quarter Page 2058 Dahl, A. Leith, R. Gray, E. 2013 Productivity in the broadacre and dairy industries ABARES Agricultural Commodities March Quarter Page 202

Figure 1: Innovation through collaboration


While Australia has generally maintained productivity and competitiveness relative to some of our main competitors in the world marketplace the current downward trend will need to be arrested if we are to retain our market position. This means that we must reinvest in technology and lift our commitment to research. Equally we must ensure that we maximise the efficiency of our research assets. More collaboration is one answer.

Improving collaborative arrangements

A recent Australian Farm Institute Conference took up this challenge and addressed the subject of the Australian Agricultural Innovation Systems at the Crossroads.9

Speakers from industry, government research agencies and universities presented a common message – the rate of productivity growth is declining, public investment in agricultural research is falling, and more effective use of finite resources is critical. More collaborative research was one of the solutions widely recommended.

However, for all the merits of collaborative research establishing new arrangements is no simple matter. In order to set up a new collaborative venture aspirants must take into account some or all of the following –

• institutional self interest

• governance and compliance issues

• access, ownership and protection of IP

• investment time and decision frames

• divergent interests

• availability of discretionary funds

The commitment of researchers is something that I have always admired and respected. Collaboration amongst scientists is intrinsic. Similarly the interest of agency and institutional leaders in the greater good of our national research effort has continued to be a strength of the Australian agricultural research sector.

It is therefore puzzling and perplexing to have to face the frustrations of dealing with structural impediments and institutional self interest. While competing interests can add value in many walks of

9 Australian Agricultural Innovation Systems at the Crossroads Conference, Canberra, 29–30 May, 2013

life these interests should not override and compromise the greater ambition of meeting national and international research challenges. A collaborative culture must be nurtured and promoted, and this requires vision and leadership.

Good governance and sound compliance arrangements are essential elements of any modern business or body, be it public or private. Accountability, transparency and prudence are non‑negotiable requirements. However best practice in these respects can be adopted without unreasonably constraining business operations. Too often barriers to collaboration are raised where bridges should be built. The focus should be on how cooperative activities can be undertaken, rather than why they cannot.

One of the more difficult, time consuming and resource hungry activities is the management of intellectual property. While there are good grounds for protecting intellectual property these need to be weighed up against costs and benefits to overall research objectives. That there are excessive constraints and unreasonable costs is self evident. While it is only with the benefit of hindsight that the real value of intellectual property protection can be known with certainty there are arguments for adjusting the balance.

The timeframes for decisions on establishment of collaborative arrangements are excessively long and concomitantly costly. For example a CRC bid requires at least twelve months preparation and, even if a bid is successfully shortlisted and ultimately approved, the process is likely to take two years from the first step to final establishment. And of course if a second bid is necessary, as can be the case, another year is added. This process consumes large sums of finite cash and kind, not to mention equally valuable time.

Conversely the investment periods are often too short. At the recent Australian Farm Industry Innovation Conference Professor James Rowe, CEO of the Sheep CRC, branded three year funded projects as “useless”.10 While

10 “The role of universities and government research organisations in the agricultural innovation system”. Professor James Rowe, Australian Agricultural Innovations at the Crossroads Conference, 30 May, 2013


every research proposal should be judged on its merit there has long been recognition that funding timeframes are often out of alignment with research time frames. Even the original seven year life of a CRC has proven to be inadequate to address some of the big research questions and ongoing challenges facing Australian agriculture.

The divergent interests of some research providers bring both benefits and handicaps. Given the complexity of many research challenges the potential to have access to a range of disciplines can be very beneficial, provided that these assets are actually available. And bringing education and training interests into a collaborative venture such as a CRC can be particularly useful. However, if the research area is not part of an institution’s core interests, or these interests change over the life of a particular collaboration, the venture can be disadvantaged. Changed funding circumstances may contribute to interests diverging.

The lack of discretionary funds can also create difficulties in a collaborative arrangement. One of the great strengths of the CRC program has been the availability of Commonwealth funding, the additional dollars that are often referred to as the glue that binds CRC parties together. Without some discretionary funding to direct and support research initiatives collaborative bodies can be at risk of duplicating management rather than adding value. Unless there is trust and commitment from participating partners some of the joint value of collaboration may be compromised.

Solutions to these challenges are at once simple and challenging.

• Institutional interests need to be addressed by ensuring that there is a collaborative culture at all levels.

• Governance and compliance arrangements need to be soundly applied without unnecessarily impinging on collaboration.

• Intellectual property management should be structured to enhance rather than hinder innovation.

• Research funding should be aligned with research challenges.

• Decision making timeframes needs to be tightened to reduce costs and hasten establishment of structures and programs.

• The interests of partners in research must be strong and consistent with objectives and capabilities.

• Finally, collaborative bodies need to have sufficient funding discretion to add value to research activities

Steps are being taken, albeit slowly. The National Primary Industry Research, Development and Extension Framework is being developed to encourage a more co‑ordinated and collaborative approach to rural research, development and extension. Governments, CSIRO, the fifteen RDCs and the Australian Council of Deans of Agriculture have recognised that fragmentation and duplication must be overcome if the $1.6 billion invested annually in agricultural research is to be effectively directed to improve the productivity and sustainability of Australian agriculture. As the Department of Agriculture, Fisheries and Forestry (DAFF) records the objective of the Framework initiative – “Research capability will be more collaborative, specialised, have larger critical mass, and will be less fragmented across the nation.”11 The argument for a greater commitment to collaborative research initiatives is compelling. In a recent interview broadcast on the ABC’s Country Hour Australia’s Chief Scientist, Professor Ian Chubb AC, supported an increased emphasis on collaboration on the grounds that finite research resources needed to be better aligned, more focused, and to have appropriate scale. As Professor Chubb succinctly said – “It’s all about aligning, it’s all about focussing, it’s all about scale” 12

While I agree with Professor Chubb I think that it is also about culture. Unless individuals and institutions have an embedded culture that seeks out opportunities for collaboration we will not realise the true potential of our research capabilities and will not optimise our

11 National Primary Industry Research Development and Extension Framework DAFF Website August 201312 Chief Scientist, Professor Ian Chubb AC, ABC Country Hour, Tasmania, July 18, 2013


capacity to meet the research challenges that lay ahead. If we are to follow the example set by William Farrer, if we are to build on one of Farrer legacies, the seeds of collaboration need to be sown on fertile grounds.

“Where grows? Where grows it not? If vain our toil We ought to blame, the culture, Not the soil.” 13

REFERENCES

Dahl, A. Leith, R. Gray, E. (2013) Productivity in the broadacre and dairy industries ABARES Agricultural Commodities March Quarter pp 200–220

Australian Agricultural Innovation Systems at the Crossroads Conference (Canberra, 29–30 May, 2013)

Chubb AC Professor Ian, Chief Scientist (Tasmania, July 18, 2013) ABC Country Hour

DAFF Website (August 2013) National Primary Industry Research Development and Extension Framework

GRDC Strategic Research & Development Plan 2012–17. P 38

Pope A, An Essay on Man

Rowe Professor James (30 May, 2013) The role of universities and government research organisations in the agricultural innovation system Australian Agricultural Innovations at the Crossroads Conference

Russell A (Melbourne 1949) William James Farrer, a Biography

The Allen Consulting Group Review (2012) Executive Summary, P x

The Allen Consulting Group Review (2012) P 27

Waterhouse Dr W.L (1938), Farrer Memorial Oration

Wenholz. H, (June 1930) Director of Plant Breeding, Department of Agriculture, NSW. Australian Quarterly, Vol. 2. No.6

13 Alexander Pope, An Essay on Man

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