ARE Research Development Corporations (RDC) investments for industry, a charity or a bit of both?
If the ultimate goal of compulsory agricultural levies is investment, then the bar for achievement must be set at delivering dollars in growers and producers pockets.
As a charity, public good, environmental outputs and other more nebulous, yet worthy, goals can be used to rate performance.
Fairfax Ag Media looked at how to compare apples with apples, or in this case, apples with lamb.
RDCs are not required to deliver a profit, unlike a listed shareholder company, therefore key performance measures should be reported to levy payers to assess whether the performance has been adequate.
Judging success in a commercial business will usually include reducing operating costs, while increasing revenue and return on capital.
Operating costs should be a headline figure for any business or charity, however in the case of RDC annual reporting the figures are almost impossible to compare.
Grains Research Development Corporation (GRDC) and Cotton Research Development Corporation (CRDC) at first seem straightforward, however then the reader comes across the cost allocation strategy.
Don’t let the government speak fool you.
The cost allocation strategy assigns some operating costs as contributing to research. This can include staff salaries and operating costs, so it has to be included with straight administrative costs.
The GRDC is running lean, with only 11 per cent of spend allocated in indirect and administrative costs, or $25 million against the $198.1m spent on research last financial year.
Horticulture Innovation Australia and the CRDC were estimated to require 14.5pc and 19pc of total expenditure, to execute $84.5m and $20.3m of respective research.
Meat and Livestock Australia (MLA) and Australian Wool Innovation (AWI) are more tricky.
Both attract levies spent on marketing as well as research and development.
Headline figures for MLA do not report on operating, instead they, too, use cost allocation, across both research and marketing spends, but do not disclose the figure.
The audit attached to the annual report reveals $31.8m listed as staff expenses and losses and a corporate administration figure of $12.2m, this however is not necessarily the total operating cost. AWI’s annual report is slightly more straightforward, with 25pc ($10.3m) of expenditure in support of $39.8m of research project spend.
For comparing apples with lamb, common financial key performance indicators may be a start.