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Australian Cattle Council : Yearbook 2009
CA TTLE COUNCIL OF AUSTRALIA YEARBOOK 2009 SECTOR On-farm Feedlotsb Northern beef Southern beef Totalc TOTAL BENEFITS ($M) TOTAL COSTS ($M) BENEFIT–COST RATIO IRR (%) 762 1287 2 049 67 411 414 825 8 Table 2 – Results summary from CIE analysis of benefits derived from RD&E over the period 2001 to 2015a (CIE, 2009) a Net present values calculated over the 2001 to 2015 with a discount rate of 5 per cent, 2007-08 dollar equivalents. b Program benefits include both increased productivity and issues management. c Aggregate benefit–cost ratio excludes expenditure by other industry stakeholders. Source: Agtrans (2008a), Agtrans (2008b), Agtrans (2008c), Integrated Framework and CIE calculations. Looking at RD&E activities implemented between 2000 and 2007, and specific to northern and southern grassfed beef and feedlot sectors, the evaluations are based on levels of observed total factor productivity (TFP) compared to a ‘without RD&E scenario’. Table 2 summarises the outcomes of the CIE analysis and highlights: • The benefit:cost ratios (BCRs) across the three beef sectors were positive and significant from all contributors; • The overall BCR of RD&E investment in southern beef was higher (3.1%) than that for northern beef (1.9%), a factor related to the assumptions made about the higher contribution of RD&E to TFP in this sector. The CIE 2009 analysis also assesses the combined contribution of all RD&E provider investments to the overall TFP outcome. With predicted results modelled through to 2019-20, the report indicated that on-farm total factor productivity would have been 2.6% higher for northern beef and 2.9% higher for southern beef with RD&E than without. An important consideration to note here is that these estimates do not include any returns to investment in eating quality RD&E, which have been evaluated as having significant positive returns and having contributed to the rise in real prices observed for Australian beef over the period since 1996 (Figure 5). Figure 5. Real Price trends for Australian Beef, 1980-2008 the inCreasing importanCe of rd&e investment in australian agriCulture While the adequacy and origins of beef RD&E investment have long been debated within and beyond RD&E providers and the broader beef industry, it is difficult to argue that the importance of productivity enhancements underpinned by RD&E – and the RD&E itself - will only increase for all agricultural sectors in the future. Similarly, the positive contributions by the beef industry to natural resource management and the social infrastructure of rural and regional communities are largely underpinned by maintaining and bolstering industry competitiveness through increased productivity on and off-farm. Suffice to say, RD&E investment targeted to address the variety of triple bottom line issues and challenges facing the beef industry has been, and will increasingly be, fundamental to its viability and prosperity. 1.9 3.1 2.5 8.2 27 43 36 62 John Cox Chairman North Australia Beef Research Council referenCes ABARE, 2008. Australian Commodities Report. December Quarter 2007 ABARE, 2009a. Australian Commodities Report. December Quarter 2008 ABARE, 2009b. Australian Commodities Report. March Quarter 2009 ABS, 2007. Experimental estimates of industry multifactor productivity, Australia 2007 PC (2005). Trends in Australian Agriculture - Productivity Commission Report, Australian Government 76 Keating, BA and Carberry, PS. Emerging opportunities for Australian Agriculture, Agricultural Sustainability Initiative, CSIRO Sustainable Ecosystems Angus Hobson Executive Officer Southern Australia Beef Research Council Keogh, M. (2008). Global issues affecting the operating environment of the meat and wool sectors. Proceedings of the MLA/AWI R&D Insights Forum, 3 - 4 March 2009, Melbourne Airport, Australia. Knopke, P., O’Donnell, V. and Shepherd, A. (2000) Productivity growth in the Australian grains industry ABARE research report, 1037-8286; 2000.1 MLA / ABARE (2009). National Livestock Reporting Service, Australia 2008 Mullen, J. (2007). The importance of productivity growth in Australian agriculture. Australian Agricultural and Resource Economics Society 51st Annual Conference, February 13 – 16, 2007, Queenstown, NZ. 1117_CCA Yearbook 2009.indd 76 5/5/09 8:01:37 PM