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Standing Committee on Agriculture and Industry
29/01/2016
Agricultural innovation

BLAKE, Dr Michael, National Programs Manager, AusBiotech Ltd

WOOD, Professor Paul, Chair, Ag and FoodTech Committee, AusBiotech Ltd

Committee met at 08:59

CHAIR ( Mr Ramsey ): Welcome. Although the committee does not require you to give evidence under oath, I advise you that this is a legal proceeding of the parliament and therefore has the same standing as proceedings of the House. I now invite you to make an opening statement, which we will follow up with some questions.

Dr Blake : First off, thank you very much for an opportunity to speak. AusBiotech very much welcomes these sorts of opportunities to present some of the views of our members. AusBiotech is a member based organisation. We have about 3,000 members of biotech organisations. Many of those, or a large portion of those, are agricultural organisations, or organisations that have an interest in agriculture. The way we put together our submissions—and this submission in particular—is that we seek the views of our members. So, the submission that you see here is a representation of our ag biotech members. We sought their input into it, and they had a large input into the materials that are in the submission.

So, thank you very much for an opportunity. Paul Wood heads up our agricultural biotech committee—Ag and FoodTech—so he is one of our members who volunteers his time to assist AusBiotech with its deliberations around ag.

Prof. Wood : Innovation is a lot more than just research, and many people in Australia unfortunately do not understand this distinction, and I think that is probably why we have a review like we are having—that important translation of an idea or invention to a service or a product, that creates value for customers. I will tell you a brief story—my own story—which probably illustrates some of this point. I have been a research scientist all my life. I was in university, and as university academics we thought we owned innovation. In 1985 I joined CSIRO on a project to develop a new way or a better way of diagnosing tuberculosis in cattle. This project was funded by the AMLRDC, which was the precursor to the current Meat & Livestock Australia. I was lucky early on in that project to head up into the Northern Territory and see the situation in which we were trying to diagnose TB, and that really changed the way I addressed that project. What I saw and heard up there made me think more clearly about the practical needs of a test. Rather than just something that worked well in my lab, it had to work in the harsh conditions of the north, where you were mustering large herds: if you could actually see your animals amongst the dust it was a pretty good thing.

So, it was a tough gig, and what I can say quickly is that what I did not realise I was doing at the time was developing a product profile. I was actually focusing on the customer, and that is an essential step in innovation. Obviously when I moved into industry eventually I realised that key issue, but at that stage I was just doing what seemed to make sense. We were very fortunate. We were able to come up with something. We patented an invention. We worked with CSL and actually got a product into the market in the early 1990s. By that stage Australia was well advanced, and we actually have eradicated this disease from this continent, along with brucellosis.

That work went on into the human field, and we developed a test that is now the standard of care. I think they sell about $120 million worth of product each year for human TB diagnosis. It was not even thought of when we started, but that work that was funded by rural industry went on to have enormous impact in human health. We won a lot of awards for this work. The most recent one was 27 years after the original patent. That also says something about how long it can take disruptive technologies or new innovations to get out there in the market and make a difference. The most important thing for me was the start of the journey into innovation and development of products. I have worked largely in the agricultural space.

From our submission, I will go to the things we believe are important in Australia. There is clearly a strong research foundation. We have the rural development corporations. They play a very important role. That gives Australia a real distinction. I have worked in the US and I have worked in Europe. Australia is quite unique—the fact that the rural industry funds its own future. That is really important and it is strongly supported by the federal government. It is a strong supporter of the RDCs, and of course that is where I started. Also, there is the CRC program—the concept of getting groups in Australia to work together and address serious issues. I was a deputy director of a CRC for a decade. Also, I think CRCs are more outcome focused. Departments of ag and universities—we need a healthy base in this country. I read through some of the submissions. You have numerous submissions from some of these research groups.

We need a focus on outcomes, not just publications. I was pleased to see in the innovation statement the proposal put up through ATSE to start to really measure outcomes rather than just publications. That is important. We publish well in this country; we just do not translate very well. You all know the figures on where we rank in the OECD rankings on translation. We need an environment that attracts commercial investment. The reality is that it is rather cheap to make an invention; it is quite expensive to take it through and turn it into a product. You need people who are willing to put the capital into that. So we do need an environment that attracts investment. It is fair to say that it is harder to get investment into the agricultural space than it is into other sectors. Hence, we often end up with overseas investment.

We need a more consistent and quality regulatory environment. We actually do have a good quality regulatory environment, but the consistency of it lets us down. You will see our statements in there. It is not across the board, but the organisation that does tend to get singled out is APVMA. I was the head of research for Pfizer Animal Health, which is now Zoetis, the largest animal health company in the world. When you are looking at investments, you not only line up the technical chance of the technology but you also look at the regulatory chance of success. The moratoriums that have come into Australia, particularly in the GMO area, are things that do not really encourage the investment. If we are going to have that, we need an environment where people who invest understand what the rules are and there is consistency. They also have to have a consistent time frame. At the moment, when you put a submission in to APVMA you are never really sure when or if it will come out the other end.

The final point would be training for producers. It is getting far more sophisticated out there. When you look at modern breeding technologies and what is available in the area of genetics and genetic selection, both in plants and animals, the fact is that you need to integrate all of the information. There are sensors for all sorts of things that you can do now. Integration of that information and how you manage your property is a big issue. We need to remember that. That is why the extension side gets a lot of debate. When you look at things like studies that have been done—I saw the ones for meat livestock and benchmarking—there is an enormous difference between the viability and the productivity of the top producers and the other 75 per cent. It is generally in the order of a 10-fold difference. It is not just all about capital; it is also about how they address their production systems. We need to keep that in mind and we need to make sure that we have systems that keep our producers at the forefront of the technologies and how they can be utilised. With those opening statements, we are very happy to answer any specific questions.

CHAIR: Thanks very much, Paul and Michael. I have a list of questions here, but I want to chase down some the things you raised, so I will ask a question and then we will go around the table. You say that we need an environment in Australia that attracts investment, and this is particularly so in the ag field, and that is why we turn to overseas investors. Why do you think that is? What mechanisms are different in Australia so that Australian companies do not want to invest?

Dr Blake : Australia is quite a small player in the world space, so, when the large organisations in particular are looking for places to commercialise products, they take into account a range of issues. Australia has many attributes—we have a good science base; we have good people; we have reasonable supports through some of our government rules and regulations that we have sitting over the space—but we have some major inconsistencies. So, at a federal level, our approach to GMO is excellent. Our FSANZ OGTR has a very well regarded approach to GMO, but, when you look at the state level and at the discrepancies between the moratoriums between the states, the views of particular members of parliament within government and the influence that that has over risk for an organisation like Monsanto or Syngenta or one of the large players who are looking to bring something in, they cannot afford to take that risk. We are looking at repealing the moratorium in WA at the moment, but the WA opposition have come out and said that they would rescind that if they get elected. That is a real risk. Even if it does get repealed, there is still that niggling doubt about whether it will be reinstated.

Prof. Wood : Let me give you another example. In my Pfizer days, we sat down and looked at where we were going to spend our money, and we had a lot of money to spend. We spent about $300 million per annum in the animal health space. I had one sheep project that I managed to keep alive—one. The primary market was Australia-New Zealand—because, when you sit down and look at a product for cattle and dairy and dogs and cats, it is really hard. I think we finally got that product registered here five years after we got it registered in New Zealand, largely because of the regulatory environment that we faced, the underresourcing and inconsistencies there. There are no projects there now for sheep because people remember that and they say, 'Okay, where are we going to get a return?' If it is three years out, that is money. It is a straight calculation of the size of the market, what it is going to cost to get there and the risk that you will get there.

CHAIR: To focus in on it with the APVMA, is there a simple solution there? I have done a bit work in past committees and whatever on the recognition or our recognition of overseas results being incorporated to streamline the APVMA so it is more business friendly and more investment friendly but still actually has the teeth to make sure that we are protected.

Prof. Wood : I think you are absolutely right—that use of overseas data—but I think the fundamental issue that they do not have is checks and balances on the time. When you submit in many other regulatory environments, there is a clock that starts. They have to respond in a certain time. That does not occur. I have friends who have been APVMA reviewers. They will pick up a file that was submitted a year ago and no-one has opened it.

CHAIR: If we put a clock on it, what happens to them if they do not meet the time frame?

Prof. Wood : Essentially, it is the feedback that is not happening. Is it a resource issue? I think there are some resource issues. There has been a high turnover of staff at times and the morale is not good. But, I think, without those measures of performance, things will not change—because I think the measures of performance were flagged as really an issue.

Dr Blake : That is exactly what has happened in the TGA. John Skerritt has been instrumental in trying to turn that around. They are now publishing times for reviews of submissions which have been made. It just puts the focus and the pressure on ensuring that these products get through and do not get left on—

CHAIR: I will not get started on genomes!

Ms O'NEIL: Stepping back from the innovation system, can you provide a bit more detail about what the big areas for innovation in biotechnology are likely to be over the next 20 years? How would you categorise them into groups?

Prof. Wood : I think the whole genomics space is really expanding that. When I first looked at this area, there was one marker per trait. So, if you wanted carcass weight or marbling or something, there might have been one genetic marker. There are now 50 to 100 per trait, so our accuracy on that is enormous. If the breeder side would let us, we could actually tell them what their cattle are, rather than, 'It looks nice; it's probably a Brahman.' The genetics can tell you exactly what it is—and there is the quality of that, the cost of that. To use a human example, the Human Genome Project was hundreds of millions of dollars. Now the cost of a human genome is $1,000. We are doing that in the livestock space as well. So we understand a lot more about how those genetics relate to a production trait. That is revolutionising breeding selection of animals.

It also opens up new targets. What we know now with the new technologies, particularly for gene editing, is that we can make very subtle changes in genomes to introduce those traits. That has enormous potential. It is basically revolutionising the way we move. It is one of those technologies that are jumping the technology forward very quickly. So genetics is an enormous area.

Dr Blake : The rate of change in that space is astounding, even to the scientists who are involved in it. We are talking about genomics here, and genomics is already evolving into some of the next-gen sequencing technologies.

Ms McGOWAN: Where is that research happening?

Dr Blake : Where is it happening? Dairy Futures CRC, for example, is one of the leaders in this space; that is at La Trobe University. Armidale has a very strong program that is coming on—

Prof. Wood : CSIRO.

Dr Blake : in the beef space. Queensland are building up the capacities there. So it is reasonably well spread around the country.

We have been talking about the use of genomics in livestock, but that is also happening in the plant space. The University of Adelaide, who you will be hearing from later, have been doing quite a lot of work in this space.

Ms O'NEIL: What else are we thinking of with genomics?

Prof. Wood : Obviously, there is a lot of work around sensors. You can have a sensor for most things now—an in-ground sensor for moisture, for pH, for all sorts of things in that area. There are a lot of robotics being introduced—labour-saving ventures. If we actually had connectivity, as I read in the VFF submission, you could run your farm from your office, with automatic gates opening and water flow—

Dr Blake : One of the big things in this particular space is the integration of some of these technologies. We talked briefly about genomics before. One of the big hold-backs in the genetic space has been trying to get the phenotypic information: information about the animals, information about what is happening on the farm and all that other information. The ability to interrogate data and to bring data together is one of the areas that are revolutionising a lot of the work that is going on on-farm and in research labs—I think because they can access data.

Prof. Wood : I think an important thing for Australia is that we are not going to be the food bowl of Asia; we do not have that capacity. So we are going to stay in that middle ground, with that tradition of a quality, well-defined, traceable product. We do that very, very well. There is a lot of technology behind traceability. It is important to the integrity of our industry. We know that branded products, for instance, is the fastest growing space in the food sector. So there is a lot of technology behind just sticking that brand on.

Ms O'NEIL: Okay. Is there anything else that you want to mention?

Dr Blake : We did not specifically say 'genetic engineering', but, if we look at it more broadly, at some of the new breeding technology which is coming out, this is incredible technology. And our competitors are jumping on the bandwagon. We have given some statistics in the submission about where this technology is being used. We will be left behind if we do not embrace it.

Ms O'NEIL: Okay. I think the point you are making about the variability between farms is really crucial. It is a practical, solvable problem—which is great, because some of the innovation system problems are more complex. Can you tell me a bit more about why you think that variability is there.

Prof. Wood : Let us take genetics, for instance. In one of the surveys, we looked at the value that we know it has today, and, in the south of Australia, it was about a sixfold return on the investment; in the north, it was a wash. So there is something different happening in the north. As to exactly why, again, people speculate. No-one knows absolutely. A lot of the selection was done on southern breeds, so we need to do more that is suitable to the north and more on cross-breeding. Capital is one issue. Another issue that came out of some of those surveys is that, unfortunately, a lot of producers are not viable in the long run. They do not have what it is going to take to be successful when you look forward 10 years. That is a very sad thing to say, but that is what some of the studies are also saying. It is a challenge for the RDCs: do they focus their energy on keeping those people in the game, or do they focus their energies on the research that is going to make the top 50 per cent or the top 25 per cent even more productive?

Dr Blake : The skill base, for a farmer to be able to utilise a lot of the plethora of information that is coming in, is difficult. You need to have the financial skills. You need to have the ability to understand some of the technology that is sitting behind it, not in depth but to understand the benefits that this might be able to contribute to your particular situation on your particular farm or in your circumstances. There is a general skill level there that is important to ensure that we have that threshold of capability.

Ms PRICE: It is nice to see you guys here; thank you. We know that there is a lot of public money sloshing around the system—state ag, fed ag, CSIRO and CRCs, which we have talked about. What is the federal government or state governments to do to get more private money into ag research?

Dr Blake : This is what we were referring to in terms of attracting investment. To us, this is one of the major issues. It is important that the feds do contribute. It is important that government, or governments, do contribute, particularly to that science base. But, if we really want to be competitive, we must attract private investment. I think what you are really asking me is what are the big hurdles and the barriers to that, and those barriers particularly are things like regulation. Inconsistent regulation or inconsistencies between the regulators are a key issue, particularly for some of the large organisations. We do tend to focus on the larger organisations because they bring in the big chunks of dollars. We must not forget the smaller guys. There are smaller organisations in the ag space. I was dealing with an organisation that is trying to develop a safflower product. They are looking to Queensland. They are after infrastructure support. They are after an ability to approve a product quickly. This was part of the reason for our request for some sort of recognition of fast-track approval for some of these technologies coming through.

Prof. Wood : I think the other reality is tax incentives to invest here. That is the reality when these companies do their sums. There are things like the MLA Donor Company, where you can partner with them, and 50 per cent of the funds are covered by the MLA Donor Company and 50 per cent by industry. Those things are attractive, and the industry has a good take-up of those. But, when it comes to small start-ups, it is getting that first couple of million dollars to get going. How do you make it attractive to investors? If you go and sit in front of them now and put an ag case on the table versus anything, to be honest, in the medical research field, it is like, 'Oh, guys, we're going to go with that one.' So there are going to have to be some incentives there to encourage that investment for the small start-ups.

Mr ZAPPIA: Thanks for your presentation. I noticed that most of your commentary surrounds research into sheep, cattle and grain growing. Do you pay much attention to, or spend much time or money on, horticultural products?

Prof. Wood : It is not personally my space. There is obviously a horticultural RDC. It is a very broad grouping. From where you are looking at it, I think almonds are about 70 per cent of the horticulture space in Australia. There are a number of groups who are getting in and looking at the genetics of all of these. The technology is there now, so anyone who has been in this space is now looking at the genetics behind what they are doing. There is that happening in the horticultural space. But, again, from an investment point of view it is probably further down the tree than is rice, wheat—

CHAIR: That is basically because the market—

Prof. Wood : The market drives it, yes. It is not surprising.

Dr Blake : They are exactly the same principles though. The very same technologies are relevant for both animal and plant—we are getting into a space where a living thing is a living thing. We are using very much the same techniques of marker assisted selection using genomics, using next-generation sequencing to try and look at how we can either select or manipulate some of these plants or animals to better suit our farming conditions.

Prof. Wood : One of the encouraging ones is disease resistant strains. Most of these plants will have one or more pathogenic viruses—we know a lot more about that. We know how to examine those things a lot faster and ways to manipulate, to knock out—to introduce resistance. I think that the fastest area where we can help is going to be to take some of those things that really cost the producer in spoilage and loss of productivity.

Mr ZAPPIA: Is there any country that you can identify that is a role model for government and industry working together to improve their ability to grow food?

Dr Blake : I have had this very same conversation with some of our members, trying to look at what we can do to understand some of the best practices overseas. I get the feedback that Australia's regulatory environment is an excellent regulatory environment. We have a gold-standard regulatory environment. It is actually difficult to find better standards in other places. We do not want to detract from the fact that we have an excellent regulatory environment. What we do want to do is say that there are tweaks which can be made and there are some areas that we can identify that need improvement. I would be hesitant to say, 'Look to the US, look to the EU, however.'

Prof. Wood : I worked in the US. The USDA is pretty good to work with. You go and have a conversation with them and say, 'This is what we are trying to achieve,' and you sit down, you have a plan and then they stick to that plan. When you get a piece of the puzzle worked out they review that data so they do not wait to the very end. Step-by-step, you have an agreement: 'This is what we will present to you, on what date.' Then they review it and you know exactly when your registration is going to hit. You plan for it. It is a beautiful system. But that is one piece of the puzzle. Regulatory is not the only piece of the action.

CHAIR: So by comparison, here in Australia you would drop the whole finished product—

Prof. Wood : Yes.

CHAIR: in front of whoever it may be.

Prof. Wood : It is hard to go and have a conversation that says, 'Okay, we run these sorts of studies to this sort of size. Will that be okay?'

CHAIR: Will that tick boxes?

Prof. Wood : Probably, but it will tell you when you can meet your data. Whereas you have every study approved in advance. So if you run that study you have the statistical analysis agreed in advance. There is a certainty there that allows you to make those investments.

Ms McGOWAN: Thank you, Professor, for telling us about that story about TB. I have followed that from afar and I just love it. Congratulations on your work with all of that. It is huge.

I wanted to pick up on transfer. You say the research is cheap, the translation is expensive and the pickup of adoption by our farmers—I have to say take I umbrage when people talk about 'the farmer'. The days of 'the farmer' have gone. We have farming businesses; we have got a lot of people. Yesterday we spent a fantastic day looking at that complexity of the people who run our dairy farms. If I could put that into your language I would be really grateful, because it is exactly what you say. It is the complexity of skills to run a farming business that we need to talk about. I would love two minutes of your time to talk about skill sets into the future that we need to fast-track. What can we recommend that we need at that level in the system—and then the players? How do we do it without getting ourselves caught in the whole bureaucracy of the education system and everything that goes with that.

Prof. Wood : There are a couple of different steps. Let's take the university system first. One of my issues there is we need a university system that is engaging actively with industry. We do not have a system that is like this at the moment—so things like what ATSE has proposed in how we look at outcomes from the universities. Remember, our university system is about getting an international ranking to attract overseas students. That is what drives it. It is not innovation. They will dress it up, but let's be honest. It is about: 'How do I get into those rankings and how do I attract overseas students?' I am not sure the local students really worry too much about what the ranking is. So we need to change that, and there are various people involved.

One of the things I run with ATSE is a mentoring program to get industry people mentoring PhD students. We graduate 7,000 PhD students a year and 4,000 of those are in STEM. Many of them would never have even talked to industry or know how to talk to industry. So we need to change that at the universities so that they know how to interact with industry. One in 10 PhD students today will get an academic job. Where are the other nine in 10 going? We are losing many of them, after seven years of training. We are losing some of our best minds. So that is one area.

Then you go out to the producers. The beauty when you go out and talk with producers is they are really keen for technologies, but they need help. A lot of the extension work out of state governments has disappeared. It has now been pushed to the private sector. It is piecemeal. I was pleased to see when I was at MLA that there is a plan now to partner with some of these groups and have training and also certification of people who are doing that communication. So I think that is something that every sector should be looking at. Let's not complain about where the resource went; let's look at where it is going to come from and how we certify so that, when the producer is talking to an adviser, they know that they are not just selling them the product that they are getting the biggest mark-up on.

Michael talked of the fact that it is about integration. So it is not just what fertiliser. It is: 'What am I going to grow it in? What does my soil look like?' All of those issues need to come together, so there needs to be training on that. How do we make it easy for producers? They are on a farm, running a property day to day, yet they will give up their time on weekends to go to meetings. We know that producer demonstrations are a really effective way of communicating to farmers—50 farmers sitting there looking at a neighbour's property and saying, 'I get why you're doing that.'

Dr Blake : I very much take your point about farms being a business. They are a business. I talked about the farmer, but really what we are looking at is that a farm business must have that broad range of skill sets. There has to be someone. It does not matter whether it is the husband, the wife, the son—

Unidentified speaker: Or the consultant.

Dr Blake : or the consultant, but there has to be an ability. Well, it needs to be more than the consultant, because the actual business itself has to be able to make a decision about whether or not to use the set of genetics or whether to put that money into some other part of the business. So there has to be some level, some threshold, of skill base in things like financial planning, where you can quantify the impact of a particular technology, be it a breed or a variety of grass. There has to be an ability to quantify that and say, 'Is that going to be good for my business? Is this a sound decision? Is this a sensible thing to do?' That then flows back through to supporting things like genomic breeding programs—new varieties of grass. If the farmer can understand the benefit of that to their particular situation, then that fosters the acceptance of products.

CHAIR: Gentlemen, we are going to have to wind this up, unfortunately. I suspect we have more ground we could cover, but we have a schedule to stick to. Thank you very much for being here today. If you have been asked for any additional material—I do not think you have—could you please forward it to the secretary. You will be sent a copy of the transcript of your evidence and you have an opportunity to request corrections, if that is what is needed.

Prof. Wood : We would be very happy to provide any further information as you think of questions, or information you would like on some of this.

CHAIR: I would have liked to have a discussion about GMOs, but we do have the Australian Genomic Research Facility coming in a little bit later today.

Prof. Wood : The one thing I would say is that the biggest issue for us—it is a personal choice—the only annoying thing is when people say, 'Oh, but it's not safe.' I mean, you can argue that you do not like the business model and you want to go another way, but with 2,800 submissions to regulatory agencies for approval, it is really hard to argue that one. That is from a scientific point of view.

CHAIR: Thank you very much.