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Land and Environment : Agribusiness Assoc. of Australia

Agribusiness Review - Vol. 4 - 1996

Paper 6
ISSN 1442-6951

Research Funding for Australian Agribusiness: Some Empirical Evidence

S Nicholas Samuel, Brenda Anderson and Gavin Riggs
The authors gratefully acknowledge the funding from the Rural Industries Research and Development Corporation RIRDC), which made this research possible. Thanks to Dr Rini Budiyanti for competent technical assistance with computer manipulations.


The continuing decline in Australian protectionism, and the increasing need for international competitiveness, require Australian agribusiness firms to cope with increasingly dynamic marketing environments. For instance, the deregulation of statutory marketing arrangements has increased the exposure of agricultural industries to market forces ( Samuel and Ratnatunga 1993). Changes which expose firms to competitive pressures necessitate responsive agribusiness strategies designed to maximise opportunities and minimise threats ( Reeves 1991; Samuel and Gupta 1993, pp 103-7).

Australian agribusiness companies tend to be inward looking ( Samuel and Ratnatunga 1993; AhInadi-Esfahani and Jensen 1994), with capital investment being directed principally towards the production end of the agribusiness chain - thereby causing international growth to be inhibited ( Cameron 1996).

Investment in research would provide significant input into the competitiveness of agribusiness companies as they strive to adjust to the pressures of dynamic international marketing environments, as well as to structural changes in the food and fibre sector ( Hudson 1990). Significant marketing opportunities reportedly exist for agribusiness in Asia (eg. White 1992; DPMC 1994; Samuel 1994). Agribusiness relevant research would enable the adoption of better formulated business strategies for taking advantage of emerging market opportunities in agribusiness.

The overall objective of this paper is to analyse secondary and survey-derived information on the funding of agribusiness research in Australia. The specific objectives are to use the primary data to:

  • examine the sources and nature of agribusiness funding;
  • identify the recipients and users of agribusiness research funding;
  • evaluate the types of research being funded; and
  • delineate some policy implications for funding.

Theoretical factors


Research produces new knowledge, which becomes embodied in managerial decisions, innovative products, and production technologies and techniques. Such knowledge is designed to alleviate or solve problems defined as gaps between the positive (how firms are actually behaving) and the normative (how they ought to be behaving). A key element in a company's competitiveness is the degree of articulation between its research-produced information base on the one hand, and its profit generating process on the other. Thus, the ability of a company to efficiently change and innovate (a primary requirement for sustainable competitive advantage - see below), should be based on research. Hence, the critical role of research in business success.

Modern business management methods require planning for engendering a sequence of activities that could lead to a grand design for strategic competitive advantage (Dalrymple and Parsons 1992). In order that businesses may plan strategically, they will need to translate their business mission, which defines their domain of operation, into practical objectives, essentially maximising returns to shareholders. This is a process requiring information relevant to the formulation of marketing and other strategies. Such formulation requires information on strengths, weaknesses, opportunities, and threats.

Expenditure on research is an additional cost that can only be justified by enough additional benefits the theoretical maximum being at the point of equality between marginal research costs and marginal research revenues. The expenditure on research designed to create new knowledge constitutes an investment in intangible capital. This expenditure must be competitive in opportunity cost terms ie. with the profitability of expenditure on tangible capital ( Samuel and Gupta 1993, p.224).

However, some investment in research is not profitable to be undertaken by private companies acting individually. The general economic case for government funding of private research rests on the existence of market failure on the inability of market forces to deliver socially optimal levels of research. In circumstances of market failure, private firms acting individually would not be able to capture enough of the benefits of research because of the presence of externalities. Externalities would cause them to bear the costs of research but share the benefits with free-riding competitors; if the research benefit exists for one it also exists for others, in a situation where non-payers cannot be excluded. Schroder (1993) raises the question of whether there are unusual barriers to the appropriateness of research output of an agribusiness nature.

The foregoing implies a need for public research funding to supplement unprofitable private research, on the understanding that the public funding role is residual in market economies. This is particularly relevant when, as in Australia, there is increasing commercialisation of research, and a likely divergence between private and social interests for certain types of research. Such commercialisation could be expected to increase the attractiveness of short-term research and development (R&D), which would provide information of more relevance to the financial interests of particular firms than to the economic interests of society. Such divergence will increase the need for supplementary government resources for undertaking research of a fundamental and strategic nature. Such funding would provide for the development of base knowledge on which applied agribusiness research of a short term and financial nature can profitably build.

The nature of Agribusiness

The answer to the question 'what is agribusiness?' has changed to reflect changes in the nature of world business environments, as well as the structure and organisation of agriculture. According to French (1993), the meaning and usage of the word 'agribusiness' has moved from being the noun to being an adjective. According to the same source, there is much to be done in building the definitions, analytical systems, and pragmatic research methods relating to agribusiness, for the purpose of achieving global relevance and applicability.

It seems generally recognised that 'agribusiness refers to a multidisciplinary area, which has evolved from having its roots in agricultural economics, to be increasingly based within the domain of the management sciences. In the early stages, agribusiness was largely fashioned by agricultural economics, specifically agricultural production, farm management, and agricultural marketing. Davis and Goldberg (1957 p.2) defined agribusiness as the sum total of all operations involved in the manufacture and distribution of farm supplies; production operations on the farm; and the storage, processing, and distribution of farm commodities and items made from them".

A somewhat different emphasis is given by Vogeler (1981), who defines agribusiness as the interrelated and coordinated food and fibre systems, dominated by large input and processing firms. This view has caused agribusiness to be regarded as referring to the activities of large corporations. In contrast, the Australian Agribusiness Association adopts the following definition:

Agribusiness is the food and fibre business. It includes all activities involved in the production, processing, and distribution of food and fibre products; input supply, agricultural production, marketing, and processing, together with related activities in government and education (eg Australasian Agribusiness Review, July 1996).

This above definition (a) moves away from the earlier emphasis on agricultural economics, (b) avoids describing agribusiness in structural terms (as involving the activities of large corporations), (c) is all encompassing, and (d) includes references to the government and education sectors. Yet it seems too broad to be useful.

For the foregoing reason it seems more meaningful to define agribusiness in marketing terms; as any agriculture-related business activity that is market driven. Thus, such activities as biotechnology development and farm production would be agribusiness activities if they were undertaken to meet the pre-identified needs of targeted market segments. Such a definition of agribusiness, while narrower than that adopted by the Australian Agribusiness Association, would cause agribusiness research to be broader than agricultural or rural research. This is because it would extend to encompass research relevant to the tertiary, food-manufacturing sector. More importantly, it would better reflect the increasing phenomenon of 'agricultural industrialisation' ( Schroder and Mavondo 1995).

Significance and background

This study analyses, for the first time, comprehensive empirical information on agribusiness research funding in Australia - agribusiness research being".. a relatively new field of activity" ( Schroder 1993, p.14). Such information is expected to contribute to more informed decisions on investment in research by both private companies and government agencies. This seems all the more important because of the (a) apparent low level of private sector research expenditure in Australia ( BIE 1990a), particularly in relation to Australasian agribusiness issues ( Schroder 1993; Zwart 1993), and (b) past approach to agribusiness research, which tended to be production focused rather than marketing focused, and technical rather than management oriented ( Schroder 1993, p.17).

Business R&D funding

Businesses in Australia apparently spend less on research and development than their counterparts in other developed economies ( BIE 1 990b). Towards the end of the 1 980s, research and development expenditures by Australian businesses constituted less than one per cent of GDP, as compared to around two per cent of GDP for businesses in the USA, Japan or Germany ( BIE 1990b). For the whole Australian nation, less than 2 per cent of GDP was spent on research and development in the early 1 990s, and this was smaller than the proportion spent by businesses alone in the USA, Japan or Germany (ABS 1992).

Government R&D funding

General R&D

The Australian Government funds research expenditures of Australian businesses both directly through expenditures (ie. actual budgetary outlays) and indirectly (by foregoing tax revenue, mainly under the 125 per cent tax concession for industrial R&D). The Industry Commission (1995) classifies government research as:

  • support provided directly to industry (eg. the income tax concession for industrial
  • R&D);
  • support for public research bodies that provide research that is likely to directly
  • benefit industry (eg. certain activities of the CSIRO); and
  • support for public bodies that provide research that is likely to further knowledge and indirectly benefit industry (eg university research).

About two thirds of Commonwealth funds are channelled into research agencies (Table 1). According to the IC (1995), the funding in these programs is directed at the maintenance of an R&D capacity within a particular public or educational institution. The main agencies receiving funding include the CSIRO, Australian Nuclear Science and Technology Organisation (ANSTO), the Australian Geological Survey Organisation (AGSO), and the universities through block funding.

Table 1: Commonwealth R&D funding of industry, 1991/92 and 1992/93

Research type 1991/92 ($ million) 1992/93 ($ million)
Public research agencies and universities 1439.3 1494.3
Granting and other public programs 535.8 604.9
Business R&D 439.2 467.8
Total 2414.3 2566.9

Source: IC(1995).

Over one-fifth of Commonwealth funds are allocated through granting and other public programs (Table 1). Under these programs, government provides funding to particular R&D objectives, rather than to particular institutions. These include ARC Large Grants (about $50-$60 million) and the NHMRC medical research endowment (about $90-$100 million). The Business R&D component covers programs that provide finance to business to undertake R&D or to contract with specialist research units, including government organisations (IC 1995 pp 9-10). The dominant program in this group, accounting for about $350 million (or three-fourths of the component), was the 150 per cent (now 125 per cent) income tax concession. R&D eligible for the concession includes systematic, investigative, or experimental activities carried out in Australia which involve innovation or technical risk. The purpose of the R&D should be to acquire new knowledge, or to create new or improved products or methods.

For primary industries, research and development corporations and councils (ie. industry R&D agencies) are the main focus of the Federal Government's R&D activities. They have taken the place of previous research funding directly disbursed by government entities. These industry R&D agencies have been established to secure greater returns from industry research levies by providing a mechanism for research administrators to work with agribusinesses and the research community, including university researchers. According to the Government, the arrangements are designed to increase the interaction between agribusiness firms and research providers ( DPIE 1992). R&D corporations and councils are meant to have the effect of increasing contestability of funding among research providers. This is expected to have made the research efforts more cost-effective and more oriented to the priorities of such funding agencies - and theoretically at least more conducive to the welfare of society.

The Government and agribusiness industries combine to engender research funds through dollar-for-dollar matching of industry levies up to a maximum of 0.5 per cent of the gross value of production of the agribusiness industry. In 1991/92 agricultural industries committed $77 million to research through statutory levies deducted from the gross value of farm product at the point of sale (NFF 1993).

The Government also provides funds through the Rural Industries and Land and Water Resources R&D Corporations, which are predominantly funded through Commonwealth appropriation for research into smaller, emerging, and new agribusinesses. These corporations and councils are said to allocate a substantial proportion of their funds to research related to value adding in a wide range of areas, including the development of improved and new food products, improved processing procedures, development of plant and animal varieties, quality and safety of food products, and development of products to better meet consumer preferences ( DPIE 1992).

Agricultural R&D

Agribusiness research was previously shown to be broader than agricultural or rural research. However, because of the classifications currently adopted, the best available secondary evidence on agribusiness research relates to rural research.

According to Table 2, more of the research sponsorships of rural industry R&D agencies (ie. corporations and councils) go to government research bodies (43 per cent) than to universities (24 per cent). The funding sources favouring government research (with 60 per cent or more sponsorships), are the tobacco industry, the national soil conservation program, the horticultural industries, the grains industries, the grape and wine industries, and the dried fruit industries.

Table 2 : Sponsorship by rural R&D agency and type of researcher

R&D Corporation

Government %


Universities %

Other %

Total %

Australian Wool Research and Promotion Organisation 30 36 31 4 100
Chicken Meat R&D Council 42 24 33 0 100
Cotton R&D Corporation 37 33 23 6 100
Dairy R&D Corporation 54 12 27 6 100
Dried Fruits Research Council 60 20 20 0 100
Egg Industry R&D Council 25 15 39 2 100
Fisheries R&D Corporation 57 17 15 11 100
Grains R&D Corporation 61 12 21 6 100
Grape and Wine R&D Corporation 63 16 21 0 100
Honeybee R&D Council 27 9 45 18 100
Horticultural R&D Corporation 70 7 10 13 100
Land and Water Resources R&D Corporation 35 19 36 10 100
Meat Research Corporation 35 20 11 35 100
National Soil Conservation Program 89 0 8 3 100
Pig R&D Corporation 42 14 42 2 100
Rural Industries R&D Corporation 42 15 27 16 100
Sugar R&D Corporation 20 13 19 48 100
Tobacco R&D Council 95 0 5 0 100
Wool R&D Corporation 26 32 33 9 100
All 43 20 24 13 100

Source: IC (1995).

The above distribution of sponsorships provides a context for examination of the evidence on the funding of agribusiness research, which follows.

Data and methodology

A mail survey of likely sources of agribusiness-relevant research, including follow-up action, was undertaken between April and August 1995. The overall objective of the survey was to identify the nature, funding, and pattern of research of relevance to agribusiness in Australia. The specific objectives were to identify:

  • the subject areas of agribusiness research in Australia;
  • the persons in organisations undertaking such research;
  • the source of funding for such research;
  • the extent of collaboration in agribusiness; and
  • the knowledge gaps in agribusiness.

The population surveyed was broadly defined to include all organisations, which might have some interest in agribusiness-relevant research. These were: State and Federal government departments; university departments of agricultural economics, economics, commerce, farm management, business and management; agricultural science research institutions; private consultants; and statutory research corporations.

A screening question was used to exclude those not involved in agribusiness-relevant research over the relevant period (since January 1994). Three types of information were gathered from the questionnaires as follows:

  • Quantitative information: Structured questions amenable to computer analyses focused on research organisations, research methods, products, industry benefits, and collaboration.
  • Descriptive information: Information gathered from questions focused on respondent details, research project title, descriptions of research aims, up to six key words describing the major facets of the research project, and up to three key phases describing the research methodology.
  • Optional information: Key phrases or sentences summarising knowledge gaps relating to the respondent's project, but not addressed by the particular project.

A pilot survey of nine respondents in March 1995 enabled fine-tuning of the final questionnaire. A covering letter and copies of the questionnaire were sent to 173 addresses. As a number of addressees were large organisations, they were sent more than one copy of the questionnaire. Over 800 questionnaires were distributed. The deadline for responses was May 19, 1995. In late June a follow-up letter was sent to non-respondents.

By the end of August 1995, of the 187 responses, some 141 completed questionnaires were received from 49 of the 173 addressees. Because of the wide distribution of the questionnaires, even to organisations that had a low probability of undertaking agribusiness-relevant research, this response cannot be regarded as necessarily indicating the degree of non-response bias.

A broad spectrum of research areas was covered in the information received, varying from genetics to agribusiness marketing.

Survey results

Sources and nature of R&D funding

Most of the agribusiness-relevant research undertaken in Australia involves both internal and external funding (Table 3). In fact, only a small proportion of projects are funded exclusively from within the Chief Investigator's organisation (20 per cent), and even fewer exclusively from outside the Chief Investigator's organisation (2 per cent). Most projects (78 per cent) are collaborative, with the organisation undertaking the research typically contributing in terms of personnel and facilities.

Table 3 : Sources of fundin2 for a2ribusiness-relevant research projects

Funding source




Internal only 27 19.5
External only 3 2.2
Both internal and external 108 78.3
Total 138 100.0

Industry R&D agencies (corporations and councils) are the most important sources of funding for agribusiness-relevant projects, accounting for 42 per cent (Table 4). This reflects the importance placed on the R&D corporations and councils by the government as mechanisms for the channelling of public funds on the basis of dollar-for-dollar matching of industry levies. It appears that such industry R&D agencies account for a larger proportion of sponsorships of agribusiness-relevant research projects undertaken by universities (42 per cent) than they do of just rural research projects (24 per cent - see Table 2). In contrast, as in the case of just rural research, the industry R&D agencies play a dominant role in the funding of agribusiness-relevant research undertaken by State and Federal government bodies, accounting for 50 per cent and 75 per cent, respectively.

It should be appropriate for a private agribusiness firm to fund its own research, provided if doing so was sufficiently profitable. However, it appears that most of the research projects by private firms (83 per cent) are funded from sources external to them (Table 5). Also, it appears that universities fund a larger proportion of projects from internal sources than do private firms.

The CSIRO is an independent statutory agency required to carry out scientific research to assist Australian industry. However, it is also required to contribute to the national and international objectives of the Federal Government. Since only about 27 per cent of its projects are sponsored by private businesses, most of its research can be said to be of a public good nature. In any case, the CSIRO is only a small player when it comes to research of an agribusiness-relevant nature (with 7 per cent of projects).

Table 4 : Research organisations and funding sources

Incidence of sponsorship of research projects
Organisation undertaking research Internal source only % Industry R&D agency % State Govts. % Federal Govt. % Educational instit. (a) % Business organisations % Other % Total %
Universities 24.39 41.46 7.32 8.54 1.22 4.88 12.20 100.00
CSIRO 2.70 35.14 8.11 8.11 8.11 27.03 10.81 100.00
State Govts. 13.33 50.00 - 3.33 6.67 16.67 10.00 100.00
Federal Govt 12.50 75.00 0.00 - 0.00 12.50 0.00 100.00
Business organisations 16.67 16.67 16.67 16.67 0.00 0.00 33.33 100.00
All 16.56 42.33 6.13 7.36 3.68 12.27 11.66 100.00

Note: The sponsorship may be partial when two or more organisations sponsor a research project - the same project will be reflected under more than one category. (a): Mainly universities.

Table 5 : Projects receiving some external funding

Funding source




Industry R&D agencies (a)



State governments



Federal government



Education institutions (b)



Business organisations









(a): Typically R&D councils and corporations. (b): Mainly universities.

Non-business sources account for the majority of the external funding for agribusiness-relevant research, with R&D agencies dominant, accounting for over 50 per cent of the projects (Table 5). Business organisations account for a mere 14 per cent. While the reasons for the generally low level of expenditure on research by agribusinesses are not certain, various possible reasons have been adduced ( Samuel and Gupta 1993 p.225; Samuel and Ratnatunga 1993). These can be summarised as follows:

  • the government protection historically afforded some primary and food processing industries would have reduced import competitive pressures, and rendered it unnecessary (ie economically irrational) for relevant firms to seek the achievement of best practices through socially optimal research expenditure;
  • the structural concentration at the retail and processor levels in Australian agri-food industries would operate to increase entry barriers, reduce competitive pressures, and thereby cause these industries to be inward-looking and lacking in research expenditures for greater innovativeness;
  • the small size of the Australian market, and the mature stage in the life cycle for most food products, would make it unprofitable for Australian agribusiness to spend more on R&D because high overhead costs of research deny sufficient economies of size;
  • the high level of foreign ownership in processed food industries (firms that are partially or wholly owned by foreign interests account for well over half of Australian turnover according to Morison (1993)), could make it possible for Australia-based companies to purchase the benefits of research from overseas parent companies without incurring research expenditures in Australia; and
  • the very nature of agribusiness is not likely to require R&D expenditures that are as high as, for instance, the electronic equipment industries, for the achievement of best practices.

Table 6 : Funding in relation to research organisation(a)

Funding sources

Organisation undertaking research Projects % Internal source only % Industry R&D agency(b) % State Govt. % Federal Govt. % Educational inst.(c) % Business organisations % Other %
Educational institutions (c) 53.00 74.07 49.28 60.00 58.33 16.67 20.00 52.63
State Govt 21.00 14.81 21.74 8.33 33.33 25.00 15.79
CSIRO 14.00 3.70 18.84 30.00 25.00 50.00 50.00 21.05
Federal Govt. 7.00 3.70 8.70 0.00 0.00 5.00 0.00
Business organisations 5.00 3.70 1.45 10.00 8.33 0.00 - 10.53
All 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

(a): Mostly partially funded - see footnotes to Table 4. (b): Typically R&D councils and corporation mostly partially funded - see footnotes to Table 4. (c): Mainly universities.

University agribusiness-relevant research

As evident in Table 6, educational institutions ("primarily universities) account for 53 per cent of the agribusiness-relevant projects, of which only 20 per cent are at least partially funded by business organisations. The rest of the funding evidently goes to government entities. Since the late 1 980s, Australian universities have increasingly adopted business management concepts in their curricula. Yet, agribusiness research by universities does not seem to attract the sponsorship of agribusiness constituents. There are three possible reasons for this:

  • the agribusiness research projects of universities have market failure associated with them;
  • the agribusiness research projects of universities have significant private appropriateness, but funding from business organisations has been 'crowded out' by funding from other sources, especially the industry R&D agencies;
  • the agribusiness research by universities is of limited relevance to agribusiness companies.

All of these possible reasons probably contribute in some degree to the disproportion, which is evident. According to Sonka and Mazzocco (1996), there exists a "gulf' between potential users of academic research (managers) and those university suppliers of agribusiness research. This gulf is said to exist because of a lack of sufficient congruence between the needs of business managers and the needs of academics. Academics are said to have (a) too long a response time frame, (b) aim more for peer recognition than for relevance in managerial decision-making, and (c) have a research focus that is too general to be useful to a particular company.

However, the relevance of the forgoing to the particular circumstances affecting agribusiness-relevant research by Australian universities is not clear. The dominance of research sponsorship by industry R&D agencies means that the research output would need to have collective industry relevance, rather than individual firm relevance. Relatedly, it is possible that industry R&D agencies have had the effect of 'crowding out' research of relevance for individual business organisations. Further research on this aspect is needed before universities should be required to develop a research capacity more suited to individual private sector firms, on the lines suggested by Sonka and Mazzocco (1996).

Effects of funding

Examined here, in the light of the foregoing analysis, is evidence from the survey data on whether the source of funding has a bearing on the nature of agribusiness research undertaken. Specifically examined are whether the survey data reveal relationships between funding sources and:

  • the research methodology adopted,
  • the benefits and foci of research, and
  • the time frame of research projects.

Research methodology

Generally, experimentation seems to be preferred over desk studies and surveys, much of it attributable to the funding of industry R&D agencies (Table 7)

While State and Federal government bodies are associated with desk studies more than the other agencies, they are least associated with experimentation. On the other hand, educational institutions and business sources seem heavily (over 70 per cent) into experimentation.

Table 7 : Projects receiving some external funding classified by funding source and research method

Research method(a)

Funding source Desk study % Survey % Experimentation % Other % Total %
Industry R&D agencies (a) 18.29 25.61 42.68 13.41 100.00
State Governments 33.33 33.33 26.67 6.67 100.00
Federal Government 27.78 33.33 27.78 11.11 100.00
Educational institutions (c) 14.29 14.29 71.43 0.00 100.00
Business organisations 4.35 13.04 73.91 8.70 100.00
Other 16.67 37.50 37.50 8.33 100.00
All 21.74 27.83 38.26 12.17 100.00

(a): Almost all research projects were associated with more than one method. Hence a single project could be associated with more than one entry. (b): Typically councils and corporations. (c): Mainly universities.

Benefits and foci

It was previously stated that there is a need for articulation between the R&D performed and business strategy improvement. Hence, the incidence of benefits of R&D can be expected to be realised at some point within the range of business activities, from input supply to target market selection.

The following analysis is in terms of R&D outputs identified as business benefits, rather than in terms of benefits to business groups. For example, although an R&D program to improve meat processing may really be intended to benefit graziers, the benefits are expressed in terms of the former rather than the latter. In other words, the benefits are identified as the likely future use of the R&D output.

Table 8 : Projects receiving external funding classified by R&D benefit and funding source

R&D benefit

Funding source

Input supply and quality

Farm product development

Processed product development

Distribution improvement

Marketing strategy improvement

Total number of projects

Industry R&D agency 39 21 20 9 24 113
(34.51 (18.58) (17.70) (7.96) (21.25) (100.00)
State & Federal governments 19 8 6 6 9 48
(39.58 (16.67) (12.50) (12.50) (18.75) (100.00)
Educational institutions (a) 7 4 2 0 1 14
(50) (28.57) (14.29) (0.00) (7.14) (100.00)
Business organisations 24 13 4 2 3 46
(52.17 (28.26) (8.70) (4.35) (6.52) (100.00)
Other 15 6 2 5 3 31
(48.38 (19.35) (6.46) (16.13) (9.68) (100.00)
All 104 52 34 22 40 252
(41.27 (20.63) (13.49) (8.73) (15.88) (100.00

Note: percentages shown in brackets. (a): Mainly universities.

Australia has already developed leading edge technologies in numerous areas, which are linked to agribusiness. These include biological control and integrated pest management systems, animal and plant production technologies, and improved approach to quality measurement in relation to grain protein and meat evaluation ( DPIE 1992). Within the foregoing context, Schroder (1993) has identified issues of current agribusiness marketing relevance in Australia as including consumer preference, retailing, industry structure, globalism, and sources of international competitiveness.

Most of the research funding (62 per cent) appears to be for benefits to inputs and farm products (Table 8). This is consistent with the evidence that most new investment in agribusiness has gone towards the production end of the agribusiness chain ( Cameron 1996). The results are also consistent with the historical focus of agribusiness research on production-oriented projects, rather than on marketing-oriented products ( Schroder 1993, p.17). Even projects having funding from business organisations (80 per cent) identify benefits mainly in relation to inputs and farm products.

University funding (79 per cent) tends to reflect the foci of R&D benefits on inputs and farm product. The evidence does not show whether the likely more production-oriented preferences of non-university funding sources cause university funding to be similarly focused. But it does serve to raise the question of whether university preferences for more marketing-orientated agribusiness research are unfulfilled on account of the more production-oriented preferences of funding sources. This is clearly an important area for further research.

Nevertheless, a significant 38 per cent of projects identify R&D focussed on off-farm benefits, with 16 per cent of projects directly focussed on marketing strategy improvement (Table 8). The latter is due mainly to industry R&D agency funding and state and Federal government funding, which together account for over 80 per cent of the projects focussed on marketing strategy improvement. This contrasts with the evidence that business organisation fund less than 7 per cent of projects having benefits to marketing strategy improvement. This may however be explained by the likelihood that the undertaking of such research tends to be confidential or in-house for the various reasons previously identified by Sonka and Mazzocco (1996).

Of the 195 prospective benefits identified, less than a third (31 per cent) apply to domestic marketing, the majority (69 per cent) having international marketing relevance (Table 9). This shows an outward orientation to the research foci, with a significant 27 per cent of the benefits that are international applying to projects associated with offshore investment.

Industry R&D agencies dominate the incidence of benefits, accounting for around 40 per cent of domestic as well as international benefits. Business organisations account for a significant 25 per cent of the incidence of domestic benefits and 17 per cent of the international benefits.

Project duration

It was previously argued that the increasing commercialisation of research could be expected to have the effect of reducing the duration of projects. As Sonka and Mazzocco (1996) state, private firms generally have a "very short window of opportunity in which to gather necessary information and make a decision". The example is cited of a food processing company having one month or less to make a plant location decision.

There is no evidence that government entities and industry R&D agencies fund projects that are of longer duration than do business organisations that are expected to look for quick solutions. In fact, the opposite appears to be the case, with the average project duration for business organisations (57 months) being over 21 months longer. The average duration of agribusiness-relevant projects receiving some external funding is about 39 months. But this is misleading, as more recent projects have been of a much shorter duration than those of the past.

Table 9 : Prospective benefits from domestic and international marketing for projects receiving some external funding

International marketing

Funding source

Domestic marketing

Fully owned subsidiary

Joint venture


Industry R&D agency





State/Federal governments





Educational institutions (a)





Business organisations















(a): Mainly universities.

There is strong evidence that the average duration of projects has shortened (Table 10), probably because of the increasingly commercial orientation of research. In fact, the projects commencing in the pre-1991 period (which was essentially before the industry R&D agencies were fully operational), had an average duration of about 92 months - some 64 months (over three times) longer than those commencing in 1995. Project duration has also markedly shortened (by 64 months) for projects funded by business organisations.

Projects receiving funding from industry R&D agencies, the foremost source of funding for agribusiness-relevant research, show a marked shortening in their duration over the period (Table 10). Even if the evidence on the pre-1991 period (when most industry R&D agencies were incipient) is not considered, project duration averaged 51 months in 1991 and 1992, but had declined to 27 months (by 24 months or 47 per cent) in 1995. The shortening of project duration for industry R&D agencies is graphically depicted in Figure 1.

Summary and Conclusions

Most agribusiness-relevant research (80 per cent) receives some form of external funding, with industry R&D agencies (typically, councils and corporations) accounting for 51 per cent of projects receiving some external funding. These agencies have taken the place of funding by Federal Government entities, which continue to account for the funding of 9 per cent of projects. Thus, the Federal Government and industry R&D agencies combine to engender funds for about 60 per cent of the externally funded projects of surveyed researchers. Industry R&D agencies, the main focus of the Federal Government's R&D activities, are mechanisms for making agribusiness and other research more industry-relevant, and by implication, more commercially oriented.

This may have implications for the type of research projects in agribusiness (see below).

Table 10 : Relationships among projects receiving some external funding, funding sources, and average project duration

Year of commencement of project

Funding source


1991 + 1992


Projects No

Average duration (Months)

Projects No

Average duration (Months)


Average duration (Months)

Industry R&D agency







Federal government

(May be included in the preceding estimates)



State governments







Educational institutions







Business organisations






















Year of commencement of project

1994 1995(c) All
Funding source Projects No Average duration (Months) Average No Projects duration (Months) Average No Projects duration(a) (Months)
Industry R&D agency 23 18.10 7 27.33 64 35.69
Federal government 4 26.02 1 23.01 8 30.26
State governments 3 11.02 0 0.00 7 29.59
Educational institutions(b) 1 17.03 3 43.37
Business organisations 4 37.53 16 56.79
Other 5 23.41 2 35.03 15 45.70
Total 40 20.94 10 28.44 113 39.45

(a): Significantly different to each other within the column at the 10 per cent level. (b): Mainly universities. (c): Incomplete; survey was midyear.

Figure 1: Average project duration in relation to commencement year, for projects receiving some funding from industry R&D agencies

Figure 1

Most of the agribusiness-relevant projects (53 per cent) are undertaken by universities, of which only a fifth are funded by business organisations. While there is no strong evidence that industry R&D agencies have 'crowded out research for business organisations, the evidence does nevertheless serve to raise the question. This is an area warranting further research.

While two-thirds of the agribusiness-relevant research projects are associated with a methodology involving surveys and experimentation, most of the prospective benefits from the research (62 per cent) are identified as accruing to inputs and farm products. While this suggests a production-orientation, it is not conclusive that the dominance of industry R&D agencies may have led to a relatively low proportion (38 per cent) of projects directly focussed on off-farm benefits (with 16 per cent of projects directly affecting marketing strategy improvements). The majority of projects (69 per cent) have relevance for international marketing, evidencing an outward-looking orientation for agribusiness research.

A major finding is that the average duration of projects undertaken has significantly shortened, raising the likelihood that this is the result of the increasing commercialisation' of the funding process for agribusiness-relevant research. In fact, it appears that, compared to the pre-1991 period, average project duration has shortened by as much as 64 months (ie. 70 per cent). This trend is particularly pronounced for industry R&D agencies, raising the question of whether there may be an increasing dearth of funding for agribusiness research of a strategic and long-term nature.


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