Managing funds to grow Australian horticulture
Hort Innovation is one of Australia’s 15 rural research and development corporations, most commonly referred to as an RDC.
A number of primary producers of Australian agriculture pay an industry levy to the Australian government. The levy is taken as a percentage of their sales. So, for example, every time an apple grower sells an apple, they pay a percentage of the sale price to the Australian government as industry levy.
The government invests these levies in research and development for the key issues and areas in Australian agriculture. This keeps the industry healthy, and in turn benefits both our agriculture industry and Australia as a whole.
However, the government does not undertake the research and development itself, but rather allocates the funding, alongside its own financial contributions, to Australia’s rural research and development corporations. It is their role to then identity, broker, and manage investments on behalf of industry.
This system divides Australian agriculture into 15 individual RDC’s, each dedicated to a particular sector within the industry as a whole. For example, there is an RDC dedicated to meat and livestock, another for dairy, one for eggs, and even an RDC dedicated to Australian wine. Hort Innovation is the RDC tasked with investing in Australian horticulture – this includes fruit, vegetable, nuts, nursery and turf.
In fact, its one of the largest of RDCs – and for good reason. Horticulture makes up 18% of the Australian agriculture industry, with a GDP of $9.3 billion. It’s forecast to grow 8% from 2016 to 2020 –that’s 10 billion dollars growth in just four years.
Everything we do at Hort Innovation is ultimately to help continue the growth of this vital Australian industry, and ultimately support growers.
But how do we invest funding in the Australian horticulture industry? Via two different funding models:
Strategic Levy Investment
The first is called strategic levy investment. This is where invest the levy funds paid by growers, as well as additional government funding, in research and development projects that benefit the levy-paying horticulture sectors.
We also invest select levy funding that different sectors have nominated to be used for the purposes of marketing individual products – anything from a major ad campaign for bananas to international trade shows.
Hort Frontiers Strategic Partnership Initiative
Our more recent model is the Hort Frontiers strategic partnership initiative.
Here, we co-invest government funding in collaborative cross-sector R&D projects that aim to solve major problems facing the future of Australian horticulture. This model is divided into funds representing key areas, such as pollination or even urban green spacing.
How exactly does each model work?
The Strategic levy investment stream begins with Australian growers. They pay their levy to the Australian government who add their own financial contribution and allocate the total of this combined funding to Hort Innovation. We invest this funding in research and development. However, individual industries can also select to have their levy invested in marketing programs. The results of these provide return on investment back to the grower.
With the Hort Frontiers strategic partnership initiative, research and development projects are not financed by the horticulture levy. The funding instead comes firstly from the Australian government. We use this funding to invest in R&D addressing a specific range of issues, with individual projects also partly by a range of co-investors. These partnerships may be with a number of entities, such research institutes and universities, or from the commercial sector. However, the end result for Hort Innovation remains the same – with the benefits of the research ultimately going to the Australian growers.