Benefit cost analyses of selected investments
GRDC undertakes benefit cost analysis (BCA) to demonstrate the outcomes of its investments and adopt an ex-ante and ex-post approach to predicting and measuring impact. Ex-post analyses use the framework developed by the Council for Rural Research and Development Corporations (RDC).
Adoption rates are calculated using the ADOPT tool developed by the Farming Futures Cooperative Research Centre and updated by CSIRO with our support. We use a 25–30-year investment period. Net present value (NPV) is calculated as the present value of benefits less the present value of the investments. BC Ratio is calculated as the ratio of benefits to cost of the investment. The present value of investment (PVI) is calculated as the value of the investment 25 years from today discounted to the present.
The following benefit cost analyses are those relevant for 2019–20 against each objective in the 2018–23 Research, Development and Extensions Plan.
Objective 1 — Improve yield and yield stability
Project title: Hyper yielding cereals
Collaborators/partners: Foundation for Arable Research (FAR) Australia
Background: Despite favorable climatic conditions, grain production in Tasmania was falling short of the needs of the dairy industry, particularly as large national and multinational dairy companies looked to expand operations.
To reduce reliance on feed grain imports and transport subsidies, the corporation collaborated with FAR Australia, investing in the assessment of new germplasm and agronomic packages. These are targeted at optimising flowering windows and environmental adaptation to produce and demonstrate opportunities for significantly higher farm productivity.
The new varieties were combined with modified agronomic practices suited for the local environment to demonstrate the application of hyper yielding cereal principles—suitable cultivars alongside management techniques, which are suited for local conditions.
The project also identified profitable control strategies for Ramularia in barley.
The findings on nutrition will also play an important role in future investments, with inherent soil fertility delivered by the farming system being crucial for high yields, contrasting to the limitations of artificial fertilisers.
Year of commencement | 2015 |
Year of completion | 2020 |
Present value of investment (PVI) | $2.4m |
Present value of benefits (PVB) | $13.0m |
Net present value (NPV) | $10.6m |
Benefit/cost ratio | 5.3 |
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Outcomes |
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Environmental benefits |
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Objective 1 — Improve yield and yield stability
Project title: Soil constraints
Collaborators/partners: Department of Primary Industries and Regional Development, Grain Industry Association of Western Australia (GIWA).
Background: When establishing the investment, GRDC assumptions were that soil acidity cost Australian agriculture more than $1.5 billion in lost productivity (Australian State of the Environment 2011). Furthermore, this loss was being carried by the Australian grains industry through lost yield and an inability to access crop species that are not tolerant to acid soils. In Western Australia, soil acidity was estimated to be costing growers $498 million per annum in lost productivity and contemporary soil pH surveys and analysis suggested that the situation could be worse, costing growers upwards of $1 billion in Western Australia.
Soil acidity can be managed through the application of agricultural lime. However, in order to invest in lime to manage soil acidity, growers need confidence in the likely economic and production responses in their situation.
The national soil acidity program and investigation of lime application rates have provided growers with greater confidence with respect to their use of agricultural lime to treat soil with low pH.
Through a greater understanding of their soil pH profile and of the benefits of managing soil pH, growers have been able to more effectively target their management practices. In particular, the application of sufficient lime to the right areas to achieve maximum effectiveness with increased yield and productive capacity.
Year of commencement | 2013–14 |
Year of completion | 2019–20 |
Present value of investment (PVI) | $2.7m |
Present value of benefits (PVB) | $22.9m |
Net present value (NPV) | $20.1m |
Benefit/cost ratio | 8.4 |
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Objective 2 — Maintain and improve price
Project title: Increasing the competitiveness of oats for export
Collaborators/partners: Australian Export Grains Innovation Centre (AEGIC)
Background: Australia’s exports of oats to China has been increasing steadily over time, with growth averaging 32.0 per cent between 2007 and 2017. However, for Australia to remain a key trading partner and meet the needs of its Chinese consumers, the corporation established this investment with Australian Export Grains Innovation Centre (AEGIC) to better understand customer quality requirements.
Additionally, this project also provided Chinese consumers with a greater understanding of the quality and functionality of Australian oats. To do this, the performance of Australian oat varieties for innovative Asian oat foods was explored and benchmarked against Chinese oat varieties. The project developed new methods to produce novel oat products such as oat rice and oat noodles.
The outcomes of this investment will see the Australian oats industry well positioned to breed, grow and supply oats that meet China’s market requirements.
Year of commencement | 2015 |
Year of completion | 2018 |
Present value of investment (PVI) | $1.7m |
Present value of benefits (PVB) | $20.7m |
Net present value (NPV) | $19.0m |
Benefit/cost ratio | 12.3 |
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Outcomes |
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Social |
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Objective 3 — Optimise input costs
Project title: National crown rot management program
Collaborators/partners: NSW Department of Primary Industries, Department of Jobs, Precincts and Regions, South Australian Research and Development Institute, Department of Primary Industries and Regional Development, University of Southern Queensland.
Background: Crown rot is an economically important disease of winter cereal crops across Australia, which was recently estimated to cost wheat growers $404 million annually (Murray and Brennan 2019). This national crown rot epidemiology and management program was a 6-year (2013–2019) collaborative project.
A national approach was adopted to ensure the development of regionally focused and proven management strategies to reduce yield and quality losses from this disease. At least 185 replicated field experiments were successfully conducted across all GRDC regions.
This project’s multi-faceted approach delivers new knowledge to growers on the potential economic impact of crown rot on commonly grown and newly released wheat and barley varieties. Additionally, robust integrated disease management (IDM) strategies that incorporate crop rotation, varietal selection and fungicide seed dressing were developed and provided to Australian grain growers to effectively manage the disease.
An improved rapid pre-planting test (PreDicta B) for growers to assess the risk of crown rot infection was also developed.
Year of commencement | 2013–14 |
Year of completion | 2019–20 |
Present value of investment (PVI) | $6.9m |
Present value of benefits (PVB) | $67.8m |
Net present value (NPV) | $60.9m |
Benefit/cost ratio | 9.85 |
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Objective 3 — Optimise input costs
Project title: Analysis of canola disease investments
Collaborators/partners: University of Melbourne, NSW Department of Primary Industries, University of Western Australia
Background: Canola has the potential to deliver farming system benefits across all regions of Australia, except for northern NSW and Queensland; however, disease can make canola unprofitable relative to other crops. Canola can be infected by a number of pathogens in Australia that cause root rot, leaf diseases and crown to stem infections. Their presence and severity are dependent on plant susceptibility, presence of the pathogen and favourable climatic conditions.
Historical evidence indicates significant yield and profit loss from these diseases due to poor plant growth and increased input costs to manage the disease.
The corporation has invested in a range of initiatives—from pre-breeding and identifying genetic markers for disease resistance through to management techniques and surveillance programs suited for regional conditions—to minimise yield losses and optimise input costs.
Year of commencement | 2011–12 |
Year of completion | 2019–20 |
Present value of investment (PVI) | $13.8m |
Present value of benefits (PVB) | $78.5m |
Net present value (NPV) | $64.7m |
Benefit/cost ratio | 5.7 |
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Objective 3 — Optimise input costs
Project title: Russian wheat aphid (RWA)
Collaborators/partners: University of Western Australia, South Australian Department of Research and Development, CESAR Pty Ltd. Peratco Pty Ltd. AgCommunicators Pty Ltd. Reconstruct Consulting, Janine Vitou, Murdoch University, CRC for National Plant Biosecurity.
Background: Russian wheat aphid (Diuraphis noxia) is one of the world’s most economically important pests of wheat, barley and other cereal grains. RWA causes losses through direct feeding and damage caused by the injection of toxins.
GRDC continually invests in preparedness activities including pre-breeding, emergency response plans and emergency permits. Following the incursion of RWA in 2016, we invested in several initiatives. Through collaboration with breeders and researchers, we investigated the biotype of aphid found in Australia and evaluated the susceptibility of current commercial wheat and barley varieties to this biotype.
We also investigated genetic, chemical and biological control options to minimise the economic impact of RWA infestations in Australia. These investigations lead to the delivery of an integrated pest management framework for growers for the sustainable control (or management) of RWA.
Year of commencement | 2008 |
Year of completion | June 2018 |
Present value of investment (PVI) | $41.4m |
Present value of benefits (PVB) | $126.8m |
Net present value (NPV) | $85.4m |
Benefit/cost ratio | 3 |
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https://www.transparency.gov.au/annual-reports/grains-research-and-development-corporation/reporting-year/2019-20-9