Agency overview and resources
The Grape and Wine Research and Development Corporation (GWRDC) is a statutory authority established under the Primary Industries and Energy Research and Development Act 1989 (PIERD Act) and is also subject to the regulatory framework contained in the Commonwealth Authorities and Companies Act 1997.
1.1 Strategic direction
The 2009 season has continued to deliver some of the most difficult seasonal and business conditions that the Australian wine industry has ever faced. Record low inflows into the Murray-Darling Basin and continual dry conditions in many of the industry’s traditional cooler climate regions has meant that vignerons, now more than ever, are having to finely balance their volumes of water used with tonnes produced to maintain business viability.
Despite these conditions the Australian wine industry has continued to demonstrate how much fruit can be produced in times of low water availability. Following a national harvest of 1.8 million tonnes in 2008, Australian Bureau of Agricultural and Resource Economics (ABARE) estimates that the 2009 national crop will exceed 1.6 million tonnes. Production of this amount has been made possible by the use of water from low annual allocations in irrigated regions combined with the use of carry over water from the previous season and from purchases made on the open market. Available water has also been used with an efficiency that many in industry would not have thought possible just ten years ago.
The overall impact of the devastating bushfires that threatened areas of Victoria during the summer of 2009 is yet to be fully determined. While this event will not have a large impact on the size of the national crush, some vineyards were destroyed by fire and the overall effect of smoke on the use of the fruit harvested in the region this year will depend on the amount, timing and duration of exposure to smoke during the fires.
Even before the onset of current global economic difficulties it was clear that combined seasons of more than 1.8 million tonnes nationally would keep the Australian wine industry in a state of fruit oversupply, a situation that has been hampering the industry for a number of years and that is threatening the viability of many viticultural businesses. Perhaps one good outcome of the world economic crisis that is currently being played out has been a reduction in the relative value of the Australian dollar against the US dollar which is now trading at closer to 70 cents US to the dollar as opposed to the near parity in value reached in 2008. This has certainly helped the terms of trade of companies relying increasingly on export. That said, recent figures from the Australian Wine and Brandy Corporation (AWBC) indicate that overall, the value and volume of Australian wine exports remain under pressure.
One of the key aims of the Corporation following a drop in revenue after the low 2007 national crop was to strategically utilise reserves and draw on our working relationships with key Research and Development (R&D) providers to ensure that the capacity for this industry to perform Research, Development and Extension (RD&E) was not diminished. Having passed this period with the strong cooperation of providers, capacity intact, the Corporation now faces an operating environment over coming years where revenue is expected to be subdued and flat over the mid term. This will have significant consequences for the quantum of R&D that can be supported by the Corporation over coming years as the costs of doing research inevitably rise. Each dollar spent will be buying less R&D. The Corporation, in consultation with its peak industry bodies, the Winemakers Federation of Australia (WFA) and Wine grape growers Australia (WGGA), will have to go through a stringent process of prioritising and valuing on behalf of industry the R&D that is currently being undertaken. Increasingly the funding of new priorities will require the winding up of other programs of research and this is evident in the make-up of the list of funded projects for the 2009–10 financial year and beyond following strategic changes made to our investment portfolio as part of the Corporation’s recent annual call for applications.
A key influence on the activities of the Corporation in 2009–10 will be the clear strategy of the Australian government to aid primary industries to adapt to the challenges of climate change. This initiative is clearly in line with the priorities of the Australian wine industry in that it is time for industry to define how it will adapt to a changed climate and co-investments with this Australian government initiative will address these issues over the coming years. The Corporation will also continue to pursue opportunities for co-investment with other Rural Research and Development Corporations (RDCs) and state government agencies to further the aims of this initiative.
The emphasis by the Corporation on the communication and extension of the results of R&D funded by both industry and government through the Corporation and from other sources will continue in 2009–10. Given the current challenges facing the industry there has never been a greater need to ensure that industry receives value from its investment in R&D.
The recently announced ‘GWRDC regional-grassroots solutions’ program which will succeed previous regional investment schemes, will see the Corporation partnering directly with regional bodies to fund on the ground activities targeting specific regional needs. This program along with investments in the extension of knowledge through the Corporation’s national extension program, the ‘Innovators Network’, communication through industry press and redevelopment of the Corporations WEB based resources as a key industry source of information will ensure a greater level of access to the results of R&D than has previously been available. Our aim is to not only increase access but to also make our communication and extension efforts more efficient and effective. As always, the Corporations activities must make a difference to the Australian wine industry by promoting the role of innovation as a process of ensuring greater sustainability and competitiveness.
1.2 Agency Resource Statement
Table 1.1 shows the total resources from all origins. The table summarises how resources will be applied by outcome and by administered and departmental classification.
Table 1.1: CAC Act Body Grape and Wine Research and Development Corporation Resource Statement—Budget estimates for 2009–10 as at Budget May 2009
1.3 Budget measures
The GWRDC is not affected by any 2009–10 budget measures.
1.4 Transition from outcomes and outputs to outcomes and programs
From the 2009–10 Budget, all General Government Sector (GGS) entities will be reporting on a program basis. The table below outlines the transition from the 2008–09 Budget year (as at Additional Estimates) which was presented in administered items, outputs and output groups to the program reporting framework used for the 2009–10 Budget. The table also captures revisions made to GGS outcome statements under the Operation Sunlight Outcome Statements Review.
15 Sep 2009