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Extension, CSIRO and the New Economy

Shaun G Coffey

CSIRO Livestock Industries, 120 Meiers road, Indooroopilly, Qld.
Email:
shaun.coffey@li.csiro.au

Abstract

Owing to the importance of agricultural extension in the history of the CSIRO, this paper gives some detail about current CSIRO policy and its ramifications. The major points are:

  • A division of labour was established in 1927 between CSIRO’s predecessor, CSIR and State departments of agriculture where CSIRO was responsible for conducting strategic research in agriculture and the State departments for applying it in the field (extension).
  • This policy, while it allowed the fledgling CSIR to develop, had implications for the culture of CSIRO until the 1980s. A very strong strategic focus in agricultural research, the major component of the organization’s activities, resulted in less attention on adoption than was appropriate given the provisions of our Act.
  • There have been many structural changes in agribusiness systems, both in Australia and globally, and the local extension system serving them since 1927. These changes led the CSIRO Board in 1990 to endorse a modified policy to advocate that CSIRO ‘has primary responsibility to facilitate or encourage the application of the results of its research’ and ‘that scientists who are responsible for managing research are also responsible for ensuring that the appropriate extension links for their results are in place’.
  • Since 1990 we have gained further experience in technology adoption either as commercialization through companies, policy advice to government departments or public-good work. As a result of this experience, and of dramatic changes in the agribusiness environment, it is not appropriate to have a policy devoted to this topic alone, isolated from technology adoption in general. The policy was also somewhat unusual for Board endorsed initiatives in being prescriptive about how we should operate rather than what we should do.
  • In June 2000 the Board noted the involvement of CSIRO in a wide range of activities aimed at achieving higher levels of technology adoption in Australian Agribusiness that have been developed since the adoption of the CSIRO extension policy in 1990. The Board endorsed these, now widely accepted, activities and considered that a specific policy dealing solely with extension is no longer necessary. This reflects the pluralism that now exists in the funding, process and delivery of extension.

Introduction

The History of Extension in CSIRO

CSIR was established in 1926. Earlier initiatives to set up a Federal research agency failed because of suspicion of the States about a Federal body duplicating the research work they were already doing in their departments of agriculture. Thus one of the first tasks facing the Chief Executive, David Rivett, was to define a role for the new organization in agricultural research, and in particular the relationship with State departments of agriculture.

These bodies were established at the end of the last century, principally to counter the ‘pastoral hegemony’ and serve the small but growing crop production sector (NSW was a net importer of wheat until the dying days of the 1890s). In contrast to the Universities, which largely neglected research owing to their emulation of the UK system and its deficiencies, these departments conducted some agricultural research under difficult conditions: At a conference in March 1927 of academics and heads of departments of agriculture, convened by Rivett, a territorial division of labour was agreed; ‘Investigations …which are of a more or less fundamental character and which are national in scope should be conducted by the Commonwealth, whilst problems of a more or less local character and which involved the applications of existing knowledge (extension) should be undertaken by the State Departments of Agriculture.

This policy agreement persisted through the life of CSIR, survived its transition to CSIRO, and as far as current records indicate was last reaffirmed, with some qualifications and developments, by the CSIRO Board in 1990. Given the changes in the last century in industry structure, to CSIRO and the way it conducts its technology adoption, and new scientific developments, the Board in 1999 recognised the legitimate role of CSIRO in extension.

What is Agricultural Extension?

Discussion of extension is often free of definitions and precision but it is generally agreed that extension has four facets. I draw freely on Jeff Coutts' work in this regard, and recognise that extension involves technology transfer, problem solving, education and human development.

In its early days, extension arose as a problem-solving enterprise, based on existing knowledge. As research began to be used to increase the knowledge base, technology transfer became more important, especially as the political advantages in rural electorates became apparent; there is however a very strong element of technology push and a spirit of ‘we know what is good for you’ in this approach. The latter two, softer aspects are relatively recent developments.

The Assumptions behind Extension

In my experience several assumptions underpin this process.

  • ‘The aim of having the greatest possible outcome in terms of raising the competitiveness of the rural sector’. The emphasis is on rural sector AS A WHOLE, or discrete components of it such as wool, meat, grains etc, rather than the needs of specific BUSINESSES in it.
  • The principal reason for this sectoral, rather than industry focus, is that most growers (at least historically) produce a commodity that is traded up the pipeline to the end user through intermediaries; there is little differentiation in product attributes, but there are significant differences in the efficiency of individual growers in meeting the commodity standards.
  • The research is usually commissioned by a particular rural R&D corporation, funded by a levy on producers of the commodity, on behalf of the sector as a whole, and in most cases the outcomes are available to all levy payers. The continuing importance of the R&D Corporations is reflected in CSIRO’s external earning, where they account for about half of our external earnings in Sectors like Meat, Dairy and Aquaculture.
  • There is a linear chain in which the research, carried out by the researchers, is passed on to others to apply it more widely in the commissioning sector. CSIRO’s role in that chain is to do the research in response to a request from the R&D Corporation, usually at marginal cost.

The cultural implications of the last point, the ‘theoretical’ basis for Rivett’s pragmatic policy, have been particularly important, especially during the 60s and 70s at the zenith of rural industry funding from commodities such as wool. Some scientists in CSIRO Divisions undertaking commodity or agricultural-related research until recently have chosen to focus almost exclusively on strategic research, and to publish it; little direct attention was given to the adoption of the work. Extension agencies could read the papers, perhaps do some work to adapt it to their requirements, and then transfer the technology in the normal way through their departments. We all know how radically that situation has changed since 1990.

What has changed in the Business Environment?

All agribusiness enterprises are exposed to long-term trends that present challenges and opportunities; for simplicity these trends are analysed as elements of a Porter diamond, and are detailed later. The key points are

  • The emergence of vertically integrated, supply chains, usually coordinated by a retailer, domestic or offshore, or a food service operator. Primary producers are required to supply a product for a particular customer to a unique specification detailing product attributes, cost and logistics. The production-based commodity culture shifts to a more end-user, demand-driven, differentiated-product focus.
  • The emergence of biotechnologically transformed crop varieties strongly facilitating this focus.
  • The introduction of precision agriculture techniques to give primary producers more control over their farming systems.
  • A reducing role of government in more traditional areas of intervention (marketing, statutory R&D bodies, State departments) but a stronger role in food safety and sustainability.

These trends reflect a move away from a factor-driven economy, where the strength of this sector is drawn from basic production factors to an investment-driven one where agribusinesses invest to construct modern, efficient, large-scale facilities equipped with the best technology available on the global market. Some of the most advanced companies are innovation-driven through sophisticated consumer demand as described above. There are nevertheless different segments in agribusiness; the industry dimension sets the rules of the game, and it is difficult for firms to show superior performance in ‘unattractive’ industries (such as beef over the last five years or wool). However to perform well even in an ‘attractive’ industry (cotton) requires superior activities at the firm level; with these superior attributes, a firm can cut itself off from the fortunes (or lack of them) in the industry by being part of a coordinated agribusiness where cooperation and alliances are an integral part of doing business.

A brief comparison with the assumptions section above indicates that much extension policy is focussed on commodity agriculture, based on low-cost firms with high-cost linkages. The profitability of individual firms is constrained by links in the supply chain and as the commodity is purchased on price, firms can only reduce cost; the gains are invariably passed on to the customer (the wool industry is an excellent exemplar).

What have we learnt from our experience in technology adoption and what do we propose to do in the future?

The state of the industry; a textile contrast

In our adoption practice, one of the lessons we have learnt is the importance of the competitive context and the ‘rules of the game’. The contrast is at its most glaring in comparing our two textiles industries, wool and cotton. CSIRO’s role in the cotton industry, through the Divisions of Plant Industry and Entomology (with support from the Australian Cotton Growers’ Research Association) assisted Cotton Seed Distributors (CSD) to build an internationally competitive business through the exploitation of conventional and transgenic cotton varieties. In our experience, in those industries which have undergone a major restructuring such as wine and dairy, technology uptake is much faster and more extensive, than those where the restructuring has yet to take place (wool) or is still underway, a point we have made strongly in various submissions to recent wool task reviews.

A holistic approach to a customer’s customer

We are increasingly making R&D investment decisions in a total industry context with a strong end-consumer focus as adoption decisions made by individual firms are largely influenced by the firm’s relationship with buyers and suppliers in the chain. A particularly topical example is the Graingene project, incorporating the end-user AWB Ltd, with its supply-chain links, with GRDC and CSIRO. The unincorporated joint venture model lends itself to expansion to include other companies in the consumer supply chain. Another example of supply chain demand is our research into the use of mechanical harvesting and pruning of vines, based on the need for the wine industry to be internationally competitive. The combination of these technologies in wine grape production has led to the widespread growing of premium varieties that could not be grown commercially without mechanisation, and so allowed the major vintners to build strong links with retailers in export markets in the UK and US. With 65% of the industry adopting mechanical pruning at a cost saving of $800 per hectare, the annual benefit to the industry is at least $28 million; additional benefits flow through improved productivity and quality and reduced diseases incidence. The successful 'Food into Asia' is another example.

Demand-pull as a facilitator

It is essential to tailor our adoption procedures to specific groups, and we have also found that our best uptake comes from a strong demand-pull. This pull can come in different ways; a good recent example is the work Food Science Australia conducted to advise the then National Food Authority so they could produce an amendment to the Food Standards Code in April 1995 in response to the Garibaldi food poisoning problem in South Australia. The ‘demand’ was the need to develop a ‘licence’ to operate and remain in business, and the project was a collaborative one involving major firms throughout the supply chain. The Code of Hygienic Production Uncooked Fermented Comminuted Meat Products was drawn up based on technical work from CSIRO and a special issue of Food Safety and Hygiene titled ‘Mettwurst and Escherichia coli 0111’ was disseminated May 1995 to help industry make the necessary changes. Based on this work and a number of recommendations on challenge studies for safe production of salami, Frigoscandia (Italy) have installed a pilot cell at Food Science Australia, Brisbane in which salami and other dried meats can undergo challenge testing. This means that smallgoods manufacturers can avoid introducing pathogens into their premises when developing new products.

It is often in areas affecting the sector as a whole, or where no one firm can appropriate the technology without assistance from others that the technology transfer and education aspects of extension are most appropriate. In the case above, all companies in the industry needed to comply with new legislation for any of them to survive, and cooperated to develop the assistance they needed. In some cases start up companies, such as the Brisbane-based Genetic Solutions, can fill an important gap in the chain.

The need for complementary skills

An additional issue for us is the need to work with other research partners with complementary skills to provide an integrated solution to an industry problem. Nemesis is a national technology project established by CSIRO Animal Production in 1994 with the University of New England and Agriculture WA as collaborators on the project. The project was begun because research outcomes demonstrated the potential to improve worm resistance through breeding and because industry requested methods for applying the technology.

By placing advertisements seeking participants (early adopters) the methodology was individually adapted to a number of studs in problem worm areas. At the same time, a number of meetings and field days were held in strategic areas across the country, supported by media releases and a regular Nemesis newsletter.

In 1997, a survey was conducted to determine the effectiveness of the Nemesis activities. 83% of the 564 producers contacted responded to the survey, as did 75% of the 206 advisers, researchers, veterinarians and sheep classers. Among the Producer Group the Nemesis newsletter is ‘moderately’ to ‘very’ useful to 95% of Nemesis producers, is read in detail by 50% of Nemesis producers and is considered an important source of information. Personal contact with the Nemesis team and with lab and genetic services are the biggest influences in adoption of the technology. All Nemesis producers were moderately (40%) to very (60%) satisfied with responses to enquiries to the Nemesis team.

The challenge of SMEs; demand-pull, co-investment and tight project management

SMEs pose a particular challenge for CSIRO in their need for safe, reliable, fast and preferably cheap assistance in developing their business. The current Supermarket to Asia Initiative has prompted a number of companies to examine export opportunities, and we have provided assistance under our Food into Asia program to meet their needs in the premium fresh and value-added processed foods areas. Currently there are about 20 projects in progress with over 22 Australian-based companies with a total value of $8.8m, reflecting an investment of CSIRO appropriation dollars of $4.4m. The industries’ estimated value of increased and improved exports contributed by successful completion of the projects described above is $73.6m per year, increasing to $358m per year after 5 years.

The spectrum of projects range from processed foods including beverages to fresh foods and from short term (18-month projects) to longer term (5-year projects). The Australian based customers range from small to medium sized companies (with an annual medium turnover of $100m) to multinational companies (with an annual turnover of $3.9b). Also included are Australian private companies, publicly listed companies, cooperatives and rural funding bodies.

The program has a number of features to ensure adoption

  • The demand-led projects require participating companies to co-invest 50% of the project cost, including a substantial cash component.
  • The program is focussed on one particular activity, namely the export of food to Asia.
  • The projects are managed within a tight discipline of a staged innovation process, from conception to product launch (adoption), based on a specific launch date for a particular company with the ability to stop projects should they fail to meet one of the milestones or for some other reason.

The Food into Asia team was last week awarded a Business Excellence Prize for its success in bringing Australian companies closer to their customers in Asia.

Working with RDCs

Whilst Australian agribusiness research has been a beneficiary of the Rural Research and Development Corporations scheme, the successful extension of innovation to industry has been patchy. Many of our most important lessons lie in this area, especially since RDCs are still a large contributor to our external earnings.

The general disappointment of the Fututech initiative shows the importance of a clear route to market, thorough financial analysis, good project management and risk assessment, and critical milestones or go/no go decision points (no ‘open’ cheque book).

A more positive example is the experience in developing a very high-speed card to update the ‘industrial revolution’ processing of wool by doubling its speed. The route to market was clear at the outset, as the equipment manufacturer was a partner in the project and a team was set up, using the R&D body as a co-investor but ensuring supply chain links incorporated the eventual end-user, G.H. Mitchell, where the trials were conducted. Analysis by the Australian Bureau of Agricultural Resource Economics in 1992 showed that the net present value of the technology at the world level was $515m with $152m returning to Australia through increased wool demand and royalties.

Large Corporates; the attraction of internationally excellent science

Our experience with large corporates emphasizes the need for international scientific excellence to attract their support, which might otherwise go elsewhere in the world. A good example is the work that CSIRO conducted for Unilever on the substantiation of health benefits of tea. CSIRO Human Nutrition had shown that and found that both black and green tea were protective for skin cancer against UV light in mice. The initial studies showed that the consumption of black tea significantly reduced the number of sunburnt cells and that black and green tea delayed the length of time that it took tumours to develop in rodents compared to those drinking water. Further studies showed a dose-response relationship between the consumption of tea flavanoids and skin cancer prevention in mice, albeit with a threshold of effect. Nevertheless, it does appear that, in this model, the more tea consumed the better.

Final Comments

Extension in the state departments of agriculture has been transformed over the past decade, as a result of two concurrent forces. The first has been recognition that participation rates have been low and that more effective methods of delivery of extension outcomes were needed. The second has been declining government expenditures resulting in a drive for efficiency, downsizing and a growth in private sector provision of some services. This decline has also reflected an overemphasis, even in major primary producing countries, on the farming sector at the expense of manufacturing and service industries in general, and downstream members of the supply chain, in particular. After various attempts around the world to privatize extension, in most countries a pluralist approach is now favoured, with a mix of private and public sector provision. Where there has been privatisation, there has been either a significant public expenditure (through the UK privatised agency) or facilitation of provision (as in NZ) in recognition that extension is a key policy instrument, which helps to achieve government goals, especially in areas of public good. Even the introduction of competitive neutrality to extension requires continuing funding for public good work, and for CSIRO means a continued need to work with a range of public and private sector providers, and leaves open the option of undertaking extension itself.

There have also been changes to the Rural R&D Corporations and their role in extension, but it is fair to say that they too are trying to marry the universality of the levy to fund research with the subsector that actually benefits from it. Common criticisms of agribusiness CEOs are

  • The projects are too broad not focussed on commercial outcomes that individual companies can appropriate.
  • The projects are funded from levies paid by larger operators but focus on raising the performance of smaller farmers to allow them to compete more effectively by the very operators that paid for that technology.

Planning for the delivery of technology is now a key component of all CSIRO research project preparation. Elements such as path to market represent critical go/no decision points in project selection. So do questions such as the most appropriate agent to transfer the technology, who our customer will be, and when is it best to enter a formal arrangement to ensure uptake of the technology. This means that we now operate in a range of different arrangements designed to reflect individual project or technology development needs, rather than a more philosophic choice of a single mode of operation.

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