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Global Competitiveness R&D

Program 3.5 National Rural Issues

A report for the Rural Industries Research and Development Corporation

October 2007

RIRDC Publication No 07/020

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© 2007 Rural Industries Research and Development Corporation. All rights reserved. ISBN 1 74151 420 7 ISSN 1440-6845 RIRDC Completed Projects in 2006–2007 and Research in Progress as at June 2007 – Global Competitiveness Publication No. 07/020 The information contained in this publication is intended for general use to assist public knowledge and discussion and to help improve the development of sustainable regions. You must not rely on any information contained in this publication without taking specialist advice relevant to your particular circumstances.

While reasonable care has been taken in preparing this publication to ensure that information is true and correct, the Commonwealth of Australia gives no assurance as to the accuracy of any information in this publication.

The Commonwealth of Australia, the Rural Industries Research and Development Corporation (RIRDC), the authors or contributors expressly disclaim, to the maximum extent permitted by law, all responsibility and liability to any person, arising directly or indirectly from any act or omission, or for any consequences of any such act or omission, made in reliance on the contents of this publication, whether or not caused by any negligence on the part of the Commonwealth of Australia, RIRDC, the authors or contributors..

The Commonwealth of Australia does not necessarily endorse the views in this publication.

This publication is copyright. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved. However, wide dissemination is encouraged. Requests and inquiries concerning reproduction and rights should be addressed to the RIRDC Publications Manager on phone 02 6271 4165.

RIRDC Global Competitiveness Research Manager Jane Fisher RIRDC Level 2, 15 National Circuit BARTON ACT 2600 PO Box 4776 KINGSTON ACT 2604 Phone: 02 6271 4149 Fax: 02 6271 4199 Email: [email protected]

In submitting this report, the researcher has agreed to RIRDC publishing this material in its edited form. RIRDC Contact Details Rural Industries Research and Development Corporation Level 2, 15 National Circuit BARTON ACT 2600 PO Box 4776 KINGSTON ACT 2604 Phone: 02 6271 4100 Fax: 02 6271 4199 Email: [email protected]. Web: http://www.rirdc.gov.au Published in October 2007 Printed on environmentally friendly paper by Canprint

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Foreword

Research in Progress, June 2007, contains short summaries of continuing projects as well as those that were completed during 2006–2007 for all of the Corporation’s program areas. The complete report on all the programs is only available in electronic format on our website at http://www.rirdc.gov.au. The following report is a hardcopy extract covering Program 3.5. It contains all entries from continuing and completed Global Competitiveness research projects funded by RIRDC. This program aims to identify important impediments to the development of a globally competitive Australian agricultural sector and support research that will lead to options and strategies that will remove these impediments. This report is the newest addition to our extensive catalogue of over 1600 research reports, videos and CD-ROMs of projects supported by RIRDC. Please contact us for the latest publications catalogue or view it on our website. • downloads at www.rirdc.gov.au/fullreports/index.html • purchases at www.rirdc.gov.au/eshop Peter O’Brien Managing Director Rural Industries Research and Development Corporation

http://www.rirdc.gov.au/

http://www.rirdc.gov.au/fullreports/index.html

http://www.rirdc.gov.au/eshop

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Contents

3.5 Global Competitiveness – Completed Projects

Project No

Project Title Researcher Phone Organisation Page No

3. Trade policy reform AEC-5A Improving the GTAP database for

modelling agricultural trade liberalisation

Stephen Brown and Jiao Wang

02 6273 1222 Access Economics Pty Ltd

1

CIE-24A Liberalising world agricultural trade: an expert group’s report

Dr Andrew Stoeckel

02 6245 7800 Centre for International Economics

2

CIE-28A Role of transparency in liberalising agricultural trade

Dr Andrew Stoeckel


3

DAH-3A Food aid and agricultural trade reform

David Harris 03 9889 9879 David Harris & Associates

4

5. Supply chain linkages UQ-120A Unlocking successful new rural

industries: Monitoring three Australian native flower supply chains

Lilly Lim-Camacho, Tony Dunne, Ray Collins

07 5460 1328 The University of Queensland

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6. Policy and institutional analysis LWR-6A Rural industries and carbon

trading: opportunities, barriers and risk management (RDC collaborative)

New Forests Pty Ltd

02 6263 6088 (Laura Harris, Program Officer, LWA)

The paper was developed by Land & Water Australia

6

UTS-8A Managing intellectual property rights in plant varieties

Dr Rocque Reynolds

02 9514 3165 University of Technology, Sydney

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7. Communications UMO-34A Annual awards for excellence in

agribusiness III Dr Lawrie Dooley

03 9903 2757 Monash University 9

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3.5 Global Competitiveness – Research in Progress Project No

Project Title Researcher Phone Organisation Page No

1. New market opportunities for the food sector

CIE-25A Trends in world agriculture to 2030

Dr Andrew Stoeckel


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DFT-2A Agrifood globalisation and Asia (Final two volumes)

Judith Laffan 02 6261 2605 Department of Foreign Affairs and Trade

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2. Domestic impediments to industry performance ACI-11A The 2002/2003 drought: Part 2: A

review of information advice and producer responses

Mark Barber 02 6249 8055 ACIL Tasman Pty Ltd

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UQ-137A Current issues in intellectual property for the Australian Rural Sector

Brad Sherman 07 3365 6193 The University of Queensland

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3. Trade policy reform ABA-21A China agriculture and the WTO Neil Andrews 02 6272 2242 Australian Bureau of

Agricultural and Resource Economics (ABARE)

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CIE-30A Pursuing trade liberalisation by enhancing eh WTO’s transparency of trade policy

Dr Andrew Stoeckel


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DAH-4A Special safeguards and agricultural trade liberalisation

David Harris 03 9889 9879 DN Harris & Associates

16

DAH-6A Agricultural support – Implications for industry adjustment

David Harris 03 9889 9879 DN Harris & Associates

17

UQ-131A PDOs, PGIs and TSGs: Implications for Australian agriculture

A/Prof Paul Riethmuller and Philip Bodman

07 3365 6321 University of Queensland

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5. Supply chain linkages UQ-98A Converting value chain

information into producer-based action

Dr Ray Collins 07 5460 1328 University of Queensland

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UQ-128A Building effective Australia-China supply chains post-WTO: A Chinese perspective

A/Prof Ray Collins and Dr Tim Sun

07 5460 1328 University of Queensland

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6. Policy and institutional analysis MS067-07 The implications of changing

global animal protein demand for Australian farmers

Glenn Dalton and Mick Keogh

02 9690 1388 Australian Farm Institute

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Completed Projects – 3. Trade policy reform Project Title: Improving the GTAP database for modelling agricultural trade

liberalisation RIRDC Project No.:

AEC-5A

Researcher: Stephen Brown and Jiao Wang Organisation: Access Economics Pty Ltd

PO Box 6248 Kingston ACT 2604

Phone: (02) 6273 1222 Fax: (02) 6273 1223 Email: [email protected]; [email protected] Objectives

The main objective of this project is to critically review and re-estimate, where appropriate, the agricultural protection data in the GTAP database. This will greatly enhance the capacity of Australian trade researchers to analyse the economic impacts of international agricultural trade policy and, therefore, better informed policy making.

Background One of the standards to emerge in the area of international trade policy analysis is the global trade analysis project (GTAP) database. Following the release of the latest GTAP database (Version 6), it was felt appropriate to conduct a thorough review of a key area of the database: the estimates of agricultural protection by each country.

Research The review shows that the Version 6 GTAP database is an improvement on the previous release. However, there are still many potential pitfalls for trade modellers to over or under-estimate the impacts of agricultural trade reform, depending on how data are calculated.

Outcomes An inherent problem with detailed tariff rate databases such as MAcMap/GTAP is the use of import weights to average tariffs across products. As an example, Japanese imports of dairy are estimated to have a 46 per cent average of import value using simple import weights. However, using the reference group weighting, as suggested by MAcMap, produces a 73 per cent AVE. It was also considered that mixed or compound tariffs or TRQs are likely to be problematic.

Implications Based on this analysis, trade modellers are urged to go beyond the GTAP database for modelling trade policy. It is essential that, on a case-by-case basis, the import protection data be thoroughly reviewed, assessed, re-estimated where appropriate and sensitivity tests conducted.

Publications Hertel TW, eds (1997) Global Trade Analysis Project: Modelling and Applications, Cambridge University Press. Bouet, A., Decreux, Y., Fontagne, L., Jean, S. and Laborde, D. (2004) “Computing An Exhaustive and Consistent, ad-valorem Equivalent Measure of Applied Protection: A Detailed Description of MAcMap-HS6 Methodology,” World Bank (http://siteresources.worldbank.org/INTRANETTRADE/Resources/239054-1101918045494/Bouet-et-al(2004).pdf)

mailto:[email protected]


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Completed Projects – 3 Trade policy reform Project Title: Liberalising world agricultural trade: an expert group’s report RIRDC Project No.:

CIE-24A

Researcher: Dr Andrew Stoeckel Organisation: Centre for International Economics Phone: (02) 6245 7800 Fax: (02) 6245 7888 Email: [email protected] Objectives

To enhance liberalisation of world agricultural trade and represent Australia’s interests by participating in an international expert group on reform of the WTO trading system.

Background The Doha negotiations to liberalise trade is a ‘moveable feast’. Circumstances and the negotiating stance adopted by countries change over time as countries’ jockey for negotiating power. One of the most recent arguments blocking progress, advanced by developing countries, is that rich countries’ actions are hurting those of poor countries, therefore rich countries need to liberalise agricultural trade but poor countries need not do likewise. That argument is mostly not true: developing countries’ restrictions on trade primarily hurt themselves. This paper set out the arguments. It shows how the Doha Round of multilateral trade talks has been arduous. Talks were temporarily suspended in July 2006. Although talks have since restarted, the challenge remains to secure a good outcome for trade liberalisation. Developing countries now comprise over two-thirds of the WTO’s membership. Their greater presence and the continuing economic plight of developing countries have placed development issues at the heart of negotiations. However, a pro-poor outcome does not look likely. To achieve a pro-poor outcome the negotiating game needs to be played differently. This study goes back to basics — the fundamental case for free trade. The options for pursuing more liberal trade are explored. The best way forward for developing countries to achieve greater economic growth through trade liberalisation, is for them to win the argument at home that the gains come from unilateral liberalisation. If that is more widely appreciated, a better outcome from the multilateral talks is possible.

Research To investigate the size, potential and barriers to trade in Australian agricultural services.

Outcomes This publication was launched at a cocktail reception at the Westin Hotel, 3 July 2007. Honourable Warren Truss, Minister for Trade launched the publication. The paper was well received and noted by some of the senior officials and academics dealing with trade policy and agriculture today.

Publications Trade Policy and Developing Countries: Where to Now?


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Completed Projects – 3 Trade policy reform Project Title: Role of transparency in liberalising agricultural trade RIRDC Project No.:

CIE-28A


• Examine role of transparency in liberalising trade in agricultural commodities. • Prepare a paper for submission to the International Conference of Agricultural

Economists, August 2006.

Background This paper was presented at the 26th Conference of the International Association of Agricultural Economists (IAAE): Contributions of Agricultural Economics to Critical Policy Program on Wednesday, 16 August 2006.

Research The paper demonstrated the potential for better transparency of trade policy to liberalise world agricultural markets.

Outcomes The paper was well received and noted by some of the senior officials and academics dealing with trade policy and agriculture today.

Implications If countries adopted better transparency processes of their trade policies, protection would fall, trade would expand and incomes would rise, including those of Australian farmers. The ideas need promulgating widely and the specifics behind transparency of trade policy need developing. A follow up RIRDC project, CIE-30A: Pursuing trade liberalisation by enhancing the WTO’s transparency of trade policy, expands on this topic.

Publications CIE report Transparency, Australian Policy Processes and International Trade prepared for 26th Conference of the International Association of Agricultural Economists (IAAE): Contributions of Agricultural Economics to Critical Policy Program, Gold Coast, Australia, Wednesday, 16 August 2006.


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Completed Projects – 3 Trade policy reform Project Title: Food aid and agricultural trade reform RIRDC Project No.:

DAH-3A

Researcher: David Harris Organisation: DN Harris & Associates Phone: (03) 9889 9879 Fax: Email: [email protected] Objectives

To investigate the food aid activities of the major developed markets and examine issues related to the impact on global commodity markets, the effect on industry developments in LDC’s and the implications for WTO trade reform.

Background WTO notifications on export subsidy commitments suggest some countries are using food aid to support domestic market returns. There have been large fluctuations in the volume of food aid since the WTO Agreement on Agriculture was introduced in 1995. For some commodities, the supply of food aid coincides with periods of low commodity prices and high stocks in the major developed economies. Wheat, rice and skim milk powder (SMP) are three products often used as food aid. They are also products supported by Government policy interventions in some of the major donor countries. There are no international disciplines on the use of food aid and donors can distribute as much food aid as they wish. Concerns have been raised about the impact of fluctuations in food aid on commodity markets in the recipient countries.

Research Food aid is often seen to be a humanitarian response to food shortages or malnutrition. This view ignores the economic impact on market conditions in recipient countries and on world trade. Global aid flows were reviewed to establish the major donors and to identify linkages between domestic support policies and changes in the level of food aid. Three products by selected donors were analysed in some detail – US wheat, Japanese rice and US SMP. The effect of food aid on industry development in recipient countries was reviewed and a quantitative assessment of the impact of US wheat food aid on world wheat trade was prepared.

Outcomes The investigation revealed discretionary food aid for wheat, rice and SMP increased in periods of low prices and/or high stock levels. Changes in food aid were linked to market support activities and the competitive pressures of increased market access for imports. The US is the largest supplier of food aid and the major cause of global fluctuations in food aid. A lot of aid is provided in ways that distorts world trade and disrupts industry development in recipient countries. Monetized food aid is highly distortionary because it is sold commercially in the recipient countries. It reduces trade and works against the efforts of other aid measures to reduce rural poverty in developing countries.

Implications Donors will take advantage of the absence of WTO disciplines on the use of food aid if there are pressures on domestic market returns. WTO disciplines are required because of the potential for food aid to weaken the benefits of trade liberalisation in other areas. A WTO agreement will need to ensure humanitarian relief for legitimate emergencies is still provided. But rules are required to minimise the distortion effect on world trade and industry development in the recipient countries.

Publications Harris, D 2007, Food aid and agricultural trade reform, forthcoming report prepared for RIRDC, Canberra.


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Completed Projects – 5 Supply chain linkages Project Title: Unlocking successful new rural industries: Australian

wildflower chains to the Japanese market RIRDC Project No.:

UQ-120A

Researcher: Lilly Lim-Camacho, Tony Dunne and Ray Collins Organisation: School of Natural and Rural Systems Management

The University of Queensland Phone: (07) 5460 1025 Fax: (07) 5460 1324 Email: [email protected]; [email protected]; [email protected] Objectives

Evaluate three Australian native flower supply chains and identify how supply chain management strategies impact on the way these firms meet their customers' needs.

Background In ‘Unlocking successful new rural industries: Is supply chain management the key?’ three types of supply chains were identified – Achievers, Operators and Idealists. This research was based on data over an 18-month period, and was limited to firms within Australia. With major markets for Australian flowers located overseas, this research was not able to investigate the customer and consumer side of the supply chains. In addition, In 2004, preliminary research on new product development and market research in the Australian native flower industry showed that efforts in introducing new cut flowers are not in tune with what the market needs. New product development in the Australian native flower industry is relying on signals different to those that the market sends and is therefore not market-led.

Research Market segmentation of the Japanese floral market was conducted through florist surveys administered through auction markets and a wholesaler. Results were analysed using data mining and statistical packages investigating several variables that relate to their use of Australian products. In addition, three case study supply chains featured in a previous RIRDC study were revisited, this time identifying changes in supply chain management to include their customers in Japan. In depth interviews were used in data collection, with data analysed against an existing supply chain framework to identify their current supply chain type.

Outcomes Three segments of the Japanese market were identified on the basis of their purchasing behaviour. Auction loyals prefer to purchase through the auction. Nakaoroshi loyals prefer intermediate wholesalers. Trailblazers purchase from various outlets including the internet. The segments are further differentiated by several characteristics such as size of their business and where they purchase Australian flowers. On the other hand, supply chain analysis showed that the three chains have changed significantly since 2001.

The most common form of change is that of a new customer or supplier, which results in a shift in the type of relationships in the chain. One of the chains maintained their status as Achiever, continuing to sustain their competitive advantage with the assistance of good relationships. Another chain had split into two channels, one of which was an Idealist while the other an Operator. The third chain had the same typology. Idealist chains are characterised by having a supply chain orientation, but lacking the ability to implement. Operator chains are made of firms who do not intend to collaborate because there is no need to do so.

Implications The study shows how each chain featured is able to meet the needs of their markets, given the level of supply chain management practices they have in place. It illustrates the importance of information management, relationship management and creating value in meeting the needs of the market. It also supports the idea that the Japanese market can still be developed by meeting the needs of the different segments within it.

Publications Final report submitted to RIRDC.

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Completed Projects – 6 Policy and institutional analysis Project Title: Rural industries and carbon trading: opportunities, barriers and risk

management (RDC collaborative project) RIRDC Project No.:

LWR-6A

Researcher: New Forests Pty Ltd Organisation: The project was coordinated through Land and Water Australia (LWA). Phone: (02) 6263 6088 (Laura Harris, Program Officer, LWA) Fax: (02) 6263 6099 Email: [email protected] Objectives

1. To review and provide a synthesis of relevant existing literature, studies, reports and

models in the form of a Background Paper identifying key issues for consideration at a workshop

2. To design a workshop of relevant experts and stakeholders, structured around the key issues in the Background Paper and identification of appropriate participants;

3. To facilitate the conduct of the workshop over 1 day with appropriate presentations and discussion inputs, and to make record of the discussions and key outcomes, including identification of key knowledge gaps;

4. To draft a possible submission to the Prime Minister’s Task Group, addressing key issues flagged in the Task Group’s Discussion Paper, drawing on the project Background Paper and discussion at the Workshop. This will be for consideration and any necessary approvals by the individual participating organisations;

5. To prepare a final report of the project, including a preliminary research agenda drawing on the above inputs, as the basis for a possible ongoing program of research for investment consideration by LWA and its partners.

6. Background The project was commissioned by Land and Water Australia (LWA) in partnership with

other Research and Development Corporations (RDC) and non-government organizations (NGO) to inform the work of the Prime Minister's Task Group on Emissions Trading. Agriculture and rural industries in general, including forestry, as suppliers of carbon credits, have the potential to participate in an emissions trading market. This opens up a potentially new income stream for farmers and other landholders as well as potentially significant risks. The short time frame did not permit the commissioning of any new research at this stage, so the focus was on the synthesis of existing knowledge and identification of knowledge gaps.

Research As above, under ‘Objectives’, based on a literature review and workshop processes involving selected research experts and RDC representatives.

Outcomes A range of RDCs, including RIRDC and NFF, participated in the workshop and review of the report and R&D needs. An Emissions Trading Scheme Issues Paper was forwarded to the Prime Minister’s Task Group on Emissions Trading, on behalf of a number of RDCs. This paper focused primarily on the issues concerning agriculture and forestry.

Implications An emissions trading scheme would have major implications for agriculture and forestry in Australia. If they were left out of such a scheme, their costs would still rise through the increase in energy prices that would be expected from such a scheme. Only by their inclusion in any emissions trading scheme could their potential to deliver low-cost abatement be identified and maximised. However, significant research and development of standards, methodologies, protocols, and management practices are needed before agriculture can engage fully with an emissions trading scheme. A phased approach which included the development and implementation of the necessary research program could allow agriculture and forestry to


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become full participants in an emissions trading system over time to ensure the continued sustainability of agriculture and forestry in Australia. This will require business, government and the research community working together.

Publications Issues paper: ‘Agriculture, Forestry and Emissions Trading: How do we participate?’ The paper was developed by Land & Water Australia and released on behalf of the following RDCs: • Australian Pork Limited (APL) • Cotton Research and Development Corporation (CRDC) • Forests and Wood Products Research and Development Corporation (FWPRDC) • Grains Research and Development Corporation (GRDC) • Horticulture Australia Council (HAC) • Land & Water Australia (LWA) • Meat and Livestock Australia (MLA), and • Sugar Research and Development Corporation (SRDC)

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Completed Projects – 6 Policy and institutional analysis Project Title: Managing intellectual property rights in plant varieties RIRDC Project No.:

UTS-8A

Researcher: Dr Rocque Reynolds Organisation: Faculty of Law, University of Technology, Sydney Phone: (02) 9514 3165 Fax: (02) 9514 3400 Email: [email protected] Objectives

The objective of this project is to prepare a report on the management of intellectual property rights in plant varieties, including plant breeder's rights, patents, trade marks, copyright, passing off and confidentiality agreements in the grain and seed industries. In particular the report will focus on the incidence, status and content of IP contracts and licensing agreements, including growing agreements, and the exhaustion of IP rights under IP sales agreements. The report will analyse existing standard contracts in these industries and comment on the legality of effectiveness of existing industry practices.

Background This research grew out of a paper presented at the 2003 Agribusiness Conference, which looked at strategies for managing plant breeders’ rights (PBR). It considered cascading royalties whereby breeders would seek royalty payments not just from growers but also from seed conditioners, retailers, exporters and storage facilities. It considered how end point royalties were being introduced and urged conference participants to look to the Copyright Act (6th) 1968 as a possible template for the future management of PBR. On the basis of this paper and my past work in managing intellectual property rights, RIRDC provided funding to consider how intellectual property was being managed in the pasture seeds industry. The research was to focus on the impact of plant breeders’ rights on growers.

Research From the beginning the research took a very clear direction. From discussion with industry leaders, growers, breeders and the Steering Committee, it quickly emerged that from the grower’s point of view, the most important issue to consider in relation to managing plant breeder’s rights in the pasture seeds industry was contract growing. We therefore sought to establish how contract growing was related to the introduction of plant breeders’ rights; the role which contract growing played in managing intellectual property in pasture seeds; grower attitudes to contract growing and whether, from a legal point of view there were particular problems with growing contracts.

Outcomes We determined that the introduction of PBR had facilitated the separation of farming and marketing in the pasture seeds industry; that this new specialist marketing industry relied on contract growing to supply its distribution networks; that growers who had experience of contract growing were, on the whole, favourably disposed towards it but that growers who did not have contract growing experience were suspicious. We determined that existing contracts were poorly drafted and that the introduction of a standard contract would be desirable.

Implications The report has challenged the popular view that contract growing is oppressive, and instead suggests that the enterprise of contract growing is a joint venture between marketing and growing partners who together are creating a modern pasture seed market.

Publications R Reynolds, ‘Plant breeders, growers and the transformation of a market’, Conference Paper, 2006

Cornwall J, Nature’s Capital. The history of pasture plants in Australia, 2005, (forthcoming).

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Completed Projects – 7 Communications Project Title: Annual awards for excellence in agribusiness III RIRDC Project No.:

UMO-34A

Researcher: Dr Lawrie Dooley Organisation: Department of Management

Monash University PO Box 197 Caulfield East VIC 3145

Phone: (03) 9903 2757 Fax: (03) 9903 2718 Email: [email protected] Objectives

The Agribusiness Awards for Excellence were established to recognise and reward companies and individuals with outstanding achievements in Australia's Agribusiness industry. Award sponsorship provides the Rural Industries Research and Development Corporation (RIRDC) with an opportunity to present their corporate image to the Agribusiness industry. By supporting this prestigious event RIRDC is able to show its commitment to promoting excellence in the Australian Agribusiness industry.

Background In 1996 the Faculty of Business and Economics at Monash University, initiated the first national awards in excellence for Australian Agribusiness. Since their inception, the awards have grown and are now nationally and internationally recognised as the premier awards in Australian Agribusiness, with sponsored support for awards in leadership, export, value adding, technology and innovation, environment and energy management, rural enterprise, primary production, employer of choice and risk management.

Research Members of the Australian Agribusiness community are invited to nominate organisations or individuals for awards in the various categories. We currently have a mailing list of 5,000 companies and organisations and conduct mass marketing through advertisements in selected media including electronic newsletters and web pages of supporting organisations. Telemarketing is conducted to invite companies to consider applying for the awards. Prospective applicants are obtained from sponsors and articles of interest collected from BRW, Financial Review, The Age, The Australian, Stock and Land, Weekly Times, Australian Farm Journal and Queensland Country Life. Applicants have to address key selection criteria and the winners are selected by a judging panel with representatives from all sponsors and chaired by Dr. Lawrie Dooley, Food and Agribusiness Programs Director, Monash University.

Outcomes Winners for the last three years of the RIRDC Value Adding Award are presented as case studies of Sunrice, Australian Agricultural Company and Bellata Gold. These case studies illustrate that it is possible to successfully compete through adding value to Australian agricultural commodities.

Implications Australian agriculture has developed an internationally competitive production base for agricultural commodities. The future challenges us to add value to these commodities in global markets for food ingredients, food service inputs and branded food products. These case studies of successful Australian agri-food companies demonstrate the potential to value add to our commodities if we can maintain a strong customer focus, produce differentiated branded products and develop partnerships and traceability throughout the supply chain.

Publications Agribusiness Award Winners Booklet 2005, 2006.

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RIRDC Research in Progress – 1 New market opportunities for the food sector Project Title: Trends in world agriculture RIRDC Project No.:

CIE-25A


To analyse the major trends in world agricultural production and consumption to 2030.

Background The objective of this project is to gain a better understanding of the global forces during major work agricultural markets to 2030.A key component of this research was to review the work already undertaken by institutions such as the Food and Agriculture Organisation (FAO) and devise a methodology to cover the deficiencies of this work. This project was jointly funded with ACIAR.

Research The main purpose was to review the FAO’s extensive research on this subject put out in their publication World Agriculture: Towards 2015/2030, An FAO Perspective. Extensive notes were prepared. The main finding was that the FAO’s methodology was flawed. They took a partial view of agricultural markets and they did not allow for the competition for resources from other sectors such as manufacturing or transport. Their logic was that countries, such as China, would grow through population increases and higher incomes and that would lead to higher demands for food. In their projections the FAO takes the price of oil (and other things like steel) as given. The shortcoming in their analysis was that the income and population growth in countries, such as China, led to increased demand for food and also led to higher demands for other things like motor vehicles, which use oil and steel. The price of oil and iron ore has more than doubled in real terms over the last four years. Yet agriculture uses oil for transport, cultivation and fertiliser manufacture and agricultural machinery uses steel. These changing prices will also have an impact on agriculture yet the FAO did not consider this.

Outcomes A report was written to articulate what a correct methodology might consider and why it would matter. A proposal to implement the correct methodology is being prepared for ACIAR.

Publications World Agriculture to 2030: A Scoping Study


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RIRDC Research in Progress – 1 New market opportunities for the food sector Project Title

Agrifood Globalisation and Asia (final two volumes)

RIRDC Project No.:

DFT-2A

Start Date: 05-Jan-2005 Finish Date: 30 Jan 2008 Researcher: Judith Laffan Organisation: Department of Foreign Affairs and Trade Phone: (02) 6261 2605 Fax: (02) 6261 1858 Email: [email protected] Objectives

To provide useful and accessible, detailed information and analysis about the rapidly changing landscape of Asian agrifood markets, to the Australian agrifood sector, from farmers and fishermen, agribusiness and food companies, exporters, investors and policy-makers.

Current Progress

Following publication of the first four volumes of the DFAT SSII Agrifood Globalisation and Asia project* over 2001-2004, as well as a stand-alone China report in 2004, the project’s principal analyst and coordinator, Judith Laffan, is working to complete the final two volumes in the series:

• Volume V: Asian Agrifood Supply Trends, and Asian Agrifood Companies (release 2007/08)

• Volume VI: Australia’s Outlook and Opportunities as an Agrifood Supplier to Asia (2008)

The current project work is focused on: drafting overviews of the main production trends of the key agrifood sectors, globally and in Asia; drafting overviews of the agrifood sector of each Asian economy (covering the whole agrifood chain from agriculture through processing to distribution and trade); and revising and updating earlier drafts of Asian agrifood company profiles for the leading Asian economies (Japan, China, Korea [ROK], Taiwan, Hong Kong, Singapore, Malaysia, Thailand, Indonesia, Philippines, India, Sri Lanka), plus drafting overviews of the main corporate agrifood sector trends and leading agrifood companies in each leading Asian economy. Research trips to China (4 weeks in 2005) and India (2 weeks in 2006) have been undertaken to interview local and foreign agrifood companies operating in those markets. * Summary details of the project and the series volumes can be found at <//www.dfat.gov.au/publications/agrifoodasia>. Further enquires can be made to Judith Laffan, Principal Analyst, Agrifood Research, AGB/OTN, DFAT, by email ([email protected]) or telephone (02-6261-2605).

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RIRDC Research in Progress – 2 Domestic impediments to industry performance Project Title

The 2002/2003 drought: Part 2: A review of information, advice and producer responses

RIRDC Project No.:

ACI-11A

Start Date: 01-Jan-2004 Finish Date: 15-Jun-2007 Researcher: Mark Barber Organisation: ACIL Tasman Pty Ltd Phone: (02) 6249 8055 Fax: (02) 6249 7455 Email: [email protected] Objectives

The aim of this research project, the second of a two stage review of the 2002/03 drought, is to reduce the impact and economic severity of drought on dry land farming by improving the understanding of how decisions are made by farm business managers and their advisors during periods of significantly below average rainfall. Stage one attached (early draft) reviewed the 2002/03 drought on a monthly basis and showed that its evolution was volatile and differed for crops and livestock.

Current Progress

The results of stage one of the report also clearly demonstrates that agricultural drought is the combination of climate, production and prices not just climatic variations and that farm businesses must respond to the prevailing range of conditions not single factors. The results of stage one points to periods of highly increased activity where farm businesses were responding to a range of indicators including climatic circumstances and media reports. This volatility occurred at different times and amplitude for different broad acre enterprises. The volatility and market responses to drought and international supply and demand factors create opportunities for farm businesses to minimise the impact of drought. The objective of this report, stage two is to analyse how farm businesses respond to drought and how the decision making processes can be improved to reduce the impact of dry periods. The aim of this project, stage two of the drought review, is to understand what farm businesses were responding too at these periods of identified activity, what information was contributing to the decisions being made and how these decisions can be improved to reduce the economic impact of drought on farm businesses. Against this background three broad hypotheses will be tested: 1. How farmers responded to this drought, particularly in terms of strategies

and information used to help in the development of those strategies. 2. Whether the level, nature and access to information for farmers, livestock

producers in particular, was sufficient to enable informed decisions to be made regarding drought strategies; if not what were the gaps and how might these be addressed before or during the next drought.

3. Whether the formal analytical 'real options approach' to on-farm decision making during drought has merit and how might it be developed and applied to assist advisors, farmers and policy makers.

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RIRDC Research in Progress – 2 Domestic impediments to industry performance Project Title

Current issues in intellectual property for the Australian Rural Sector

RIRDC Project No.:

UQ-137A

Start Date: 10-Jun-2007 Finish Date: 30-May-2008 Researcher: Prof Brad Sherman Organisation: The University of Queensland Phone: (07) 3365 6193 Fax: (07) 3365 1466 Email: [email protected] Objectives

This project will examine two important and related issues that currently, or in the future are likely to, impact upon Australian rural industries, namely: 1. Management of Intellectual Property for the Benefit of Australian Rural

Industries; and 2. The Impact of Plant and Animal Patents on Australian Rural Industries.

Current Progress

This project commenced in June 2007.

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RIRDC Research in Progress – 3 Trade policy reform Project Title

China agriculture and the WTO

RIRDC Project No.:

ABA-21A

Start Date: 1 May 2006 Finish Date: 30 May 2008 Researcher: Mr Neil Andrews Organisation: ABARE Phone: (02) 6272 2242 Fax: (02) 6272 2346 Email: [email protected] Objectives

• Assess China's experience in implementing its WTO accession

commitments for agriculture. • Analyse the potential trade impacts of further multilateral agricultural

liberalisation for China. • Identify priority areas for further WTO reforms for agriculture.

Current Progress

The first part of the project is an assessment of the implementation of China’s WTO accession commitments for agriculture. This assessment was undertaken in terms of three broad policy areas – market access, domestic support and export subsidies. A draft report has been completed. The second component involves a quantitative analysis of the impacts on both China and Australia of further WTO agricultural trade liberalisation. A reference case using ABARE’s GTEM model has been established. The first meeting of the project advisory committee was held on 23 November 2006. A key outcome of the meeting was that a decision to proceed with the regional modelling (third component of the project) will be made after consideration of the simulation results at the global level. A second meeting of the project advisory committee will be held to assess the preliminary results once the model simulations have been completed.

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Pursuing trade liberalisation by enhancing the WTO's transparency of trade policy

RIRDC Project No.:

CIE-30A

Start Date: 31-Aug-2006 Finish Date: 31-Jul-2007 Researcher: Dr Andrew Stoeckel Organisation: Centre for International Economics Phone: (02) 6245 7800 Fax: (02) 6247 7484 Email: [email protected] Objectives

To enhance transparency of trade policy in the World Trade organisation (WTO).

Current Progress

This study expands on RIRDC project CIE-28A, which led to a conference paper being presented to the 26th Conference of the International Association of Agricultural Economists (IAAE): Contributions of Agricultural Economics to Critical Policy program on transparency, Wednesday, 16 August 2006. A paper titled Services trade: the need for better transparency on the same subject was presented to the Lowy conference on Enhancing Transparency in the Multilateral Trading System on Wednesday, 4 July and the author is a member of the Tasman Transparency Group, which has its own website. Drafting is underway on the main report, taking all the above preliminary work into account.

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Special safeguards and agricultural trade liberalisation

RIRDC Project No.:

DAH-4A

Start Date: 1 Jan 2006 Finish Date: 30 Jul 2007 Researcher: Mr David Harris Organisation: DN Harris & Associates Phone: (03) 9889 9879 Fax: Email: [email protected] Objectives

To investigate how special safeguards (SSGs) affect agricultural trade and examine issues related to the protective effect of higher import duties, the design of safeguard trigger mechanisms and the implications for market access improvements in the major developed economies.

Current Progress

A review of WTO SSGs in the major developed economies has been completed. A database of imported products with SSG status was complied for a range of countries. A number of products have SSG status but the safeguards have not been activated. The research was focused on the major developed economies. The analysis was extended to review the type of safeguards that have been used. A comparative analysis of selected SSG formulas and import duty conditions was undertaken. An assessment of how much trade is affected by SSGs was completed with an extensive review of WTO SSG notifications since 1995. Data for a case study of a product regularly affected by SSG actions was collected. The case study will be used as an example of how SSGs affect market access conditions The Doha proposals for SSGs, special products and sensitive products when the talks were suspended, were reviewed following discussions with DAFF and ABARE. An update of more recent WTO notifications was undertaken. These extra tasks have delayed work on the case study analysis and the assessment of implications for trade policy. Discussions with ABARE have required the proposal for a model based assessment of a selected SSG action to be modified.


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Agricultural support – Implications for industry adjustment

RIRDC Project No.:

DAH-6A

Start Date: 1 Jan 2007 Finish Date: 31 Jul 2008 Researcher: David Harris Organisation: DN Harris & Associates Phone: (03) 9889 9879 Fax: Email: [email protected] Objectives

Compare structural adjustment and economic performance in highly protected industries in the developed economies to industry performance in countries that do not provide support. Investigate the distribution of financial transfers from policy support measures between small scale family farms and large scale commercialised farming operations.

Current Progress

The approach to the project has been discussed with ABARE and some industry representatives. A proposed project meeting was replaced by individual discussions because of scheduling difficulties. There will be further discussions with interested parties as the project is progressed. The initial discussions identified three issues that would need to be the focus of the preliminary research in Stage 1 of the project: • defining appropriate indicators of differences in industry performance under

alternative policy environments; • the availability of data to allow comparisons of industry performance in

different countries; and • the selection of suitable industry case studies. A review of highly protected industries in the major developed countries has commenced. OECD estimates of agricultural support for selected industries have been collected and are being assessed. Initial results suggest sugar, dairy, rice and cotton are the industries where countries have taken contrasting approaches to fostering industry development (i.e. protection versus undistorted market forces). A review of research on performance indicators and studies that make international comparisons of industry performance has been completed. A preliminary set of performance indicators have been identified. An investigation of data availability for the industries identified is underway. Industry case study selections will be finalised when this process is completed.

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PDOs, PGIs and TSGs: Implications for Australian agriculture

RIRDC Project No.:

UQ-131A

Start Date: 1 Jul 2006 Finish Date: 31 Oct 2007 Researcher: A/Prof Paul Riethmuller, Philip Bodman Organisation: School of Economics, University of Queensland Phone: (07) 3365 6321 Fax: (07) 3365 7299 Email: [email protected]; [email protected] Objectives

1. Assemble information on the types of products affected by PDOs, PGIs and

TSG regulations. 2. Assess whether these forms of regulation constitute a non-tariff barrier. 3. Evaluate what implications these forms of regulation/intervention might

have for Australian agriculture. 4. Identify other related areas where further research may be warranted.

Current Progress

This study sets out to investigate a set of regulations introduced in the EU that allow products to be certified as coming from a particular geographic area. Products gaining this certification are able to claim that they possess certain unique characteristics differentiating them from competitor products. Most of the research that has been conducted into the issue of geographical indications has been by lawyers and there has been limited economic analysis of the issue. Progress in the study has been delayed due to the illness of one of the principal investigators and certain other events largely beyond the control of the research team. In light of this, RIRDC has indicated that it is willing to extend the project until December 2007.


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RIRDC Research in Progress – 5 Supply chain linkages Project Title

Converting value chain information into producer-based action

RIRDC Project No.:

UQ-98A

Start Date: 01-Jul-2001 Finish Date: 30 May 2008 Researcher: Dr Ray Collins Organisation: The University of Queensland Phone: (07) 5460 1328 Fax: (07) 5460 1324 Email: [email protected] Objectives

Working in partnership with the Queensland Farmers' Federation and the Agricultural Business Alliance of Queensland, this project aims to research, develop and implement the most effective strategies to: 1. Raise producer awareness of the role of value chain alliances in improving

farm competitiveness (the outcome will be a very large number of producers across most primary industries exposed to generic information about value chains).

2. Transform generic awareness of value chains into applied knowledge that is specific to individual enterprises in individual industries (the outcome will be a large number of producers actively involved in transforming value chain information into knowledge that is specific to their own circumstances).

3. Create a small number of best practice (role model) examples of how to use this knowledge to develop and implement chain based strategies to improve competitiveness (the outcome will be a smaller number of producers actively involved in transforming value chain knowledge that is specific to their industry and their personal circumstances into actual chain building activities).

4. Monitor and evaluate the effectiveness of this approach to engaging producers with their value chains (the outcome will be a formally researched process whereby value chain information is turned into producer based commercial action - a process that can be applied in other Australian primary industries.

Current Progress

Continuing problems have hampered the conduct of this project over the last 12 months. The citrus case study supply chain is overcoming the effects of citrus canker, but the cotton case study is still severely affected by on-going drought and some uncertainty as to future ownership of the company. Monitoring of both case studies has continued, though no data collection has been possible. A picture of the relationships between the information needs of chain members and improving the performance of the supply chain has emerged since the project began, and the interruption to the research should not impact negatively on final outcomes, provided work can recommence in the next year. It is hoped that one successful season of monitoring and assessment will enable final conclusions to be reached and results released.

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RIRDC Research in Progress – 5 Supply chain linkages Project Title

Building effective Australia-China supply chains post WTO: A Chinese perspective

RIRDC Project No.:

UQ-128A

Start Date: 1 Jul 2006 Finish Date: 30 Nov 2007 Researcher: A/Prof Ray Collins, Dr Tim Sun Organisation: University of Queensland Phone: (07) 54 60 1328 Fax: (07) 54 60 1324 Email: [email protected] Objectives

The aim of this research is to produce a unique blend of Chinese and Australian insights into the building of effective supply chains between the two countries in a free trade agreement (FTA) environment. The objectives are to: 1. Identify potential post-FTA opportunities for Australian agribusinesses to

access Chinese markets. 2. Analyse existing approaches to supply chain management (SCM) between

firms in chains that span developed and developing countries. 3. Identify drivers of successful SCM from the approaches and examples

analysed in (2) above. 4. Taking a Chinese perspective, evaluate these drivers for their relevance,

effectiveness and ability to be implemented in building effective agribusiness supply chains between Australia and China.

5. Using the range of opportunities identified in (1) above, propose supply chain building approaches for Australian agribusinesses.

6. Validate these approaches with Chinese researchers, Australian firms and their potential Chinese customers.

Current Progress

• An industry by industry analysis of potential opportunities to build supply chains with China has been completed.

• Literature relating to supply chain management between developed and developing countries has been reviewed and drivers of successful SCM identified.

• A survey instrument based on the findings from the stages above was developed and tested with importers and wholesalers in China.

• Following testing, surveys of importers, wholesalers and retailers in Shenzhen, Guangzhou and Wuhan were carried out. Results are being analysed.

• Based on preliminary findings from surveys in China, the survey instrument was modified for use with Australian exporters. The modified instrument is currently being pilot tested.

• One potential case study with an Australian fruit exporter has been identified.


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Research in Progress – 6 Policy and institutional analysis Project Title: The implications of changing global animal protein demand for

Australian farmers RIRDC Project No.:

MS067-07

Researcher: Glenn Dalton and Mick Keogh Organisation: Australian Farm Institute Phone: (02) 9690 1388 Fax: (02) 9699 7270 Email: [email protected] Objectives

The broad aim of the project is understand the impact of changing global diets and energy use on Australian agriculture and predict the likely changes in demand for agricultural products that will arise as these changes occur. The project also aims to identify the strategic policy steps that Australian agriculture should take in order to prepare for these changes.

Background Growing wealth in developing nations is leading to increased demand for animal protein – specifically poultry, pork, red meat, dairy and fish products. This, in turn, is leading to changes in the nature of agriculture imports by developing nations, depending on the make-up of agriculture in those nations and the availability of natural resources such as land and water.

Research The research involved a relatively small-scale ‘desk study’ of official reports and information drawn from a variety of government and commercial sources. The research also involved an analysis of a large body of peer-reviewed papers and publications on these and related issues.

Outcomes The most compelling need identified by this study is the urgent need for Australia to build up maize and oilseeds production capacity to underpin expanded livestock production and contribute to the production of fuel from crops. The study also concluded that the Australian Government should tread carefully in expanding a crop-based ethanol-production industry in Australia. At best, crop-based ethanol could only provide a small part of the answer to future energy needs for a limited period. As a fuel, biodiesel appears to have a much better long-term future than ethanol, and its development should be encouraged, as it will provide a suitable alternative fuel for heavy haulage and agricultural purposes. The study also highlighted that Australia needs to develop closer trade links with the group loosely known as the Tiger II countries in order to increase exports of animal protein – specifically red meat, dairy products and live cattle and sheep exports.

Implications For Australia to take advantage of this future demand for animal protein, a greater focus on research and development will be required of suitable maize and oilseed varieties and associated production technology. Of the countries under review, Australia has a long-term trade agreement with Thailand and is in negotiations with China and Japan, which have every prospect of being successful if based on mutual self interest. Australia needs to develop closer trade links with the group loosely known as the Tiger II countries, including Malaysia, Thailand, the Philippines, Vietnam and Taiwan to take advantage of changes in demand for agricultural products.

Publications Dalton, G & Keogh, M 2007, The Implications for Australian Agriculture of Changing Demand for Animal Protein in Asia, Research Report, Australian Farm Institute, Surry Hills, Australia.


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