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Rural and Regional Affairs and Transport Legislation Committee
09/02/2016
Estimates
AGRICULTURE AND WATER RESOURCES PORTFOLIO
Cotton Research and Development Corporation

Cotton Research and Development Corporation

[11:48]

Senator CAMERON: Welcome, Mr Finney. The cotton industry has faced some difficult seasonal conditions. Can you outline the research priorities for the CRDC?

Mr Finney : Our research priorities are set within our five-year strategic plan. We have five high-level program strategy objectives. The first one is around making cotton the most profitable crop of choice for farmers. That is all based on the on-farm operations and improving efficiencies around water use, energy use, fertiliser use and the things that you would expect in terms of driving productivity and yields on farm. Our second program is about industry. It is around being world leaders in global sustainability. We have a range of things around stewardship, best management practices and global initiatives on sustainability. Our third program is around the supply chain and the product in terms of not only differentiating our product but also transforming our product into other uses other than apparel. Our fourth program is around people and ensuring that we have capable people leading in research and leading the industry. Our fifth program is around performance, which is internally focused on our own organisation's performance—the performance and R&D we invest in and the performance of the industry. In this season, right at this moment, we have a priority for extending information on nutrition and we have a team of 10 researchers visiting five cotton regions this week extending current research knowledge on fertiliser and crop nutrition.

Senator CAMERON: I suppose that, given the amount of water that the cotton industry uses, the issue of climate change is a significant factor in the future of the industry?

Mr Finney : Yes, it is, and it is one that we have invested in since inception some 25 years ago. I am proud to report that over the last 10 years we have seen a 40 per cent improvement in crop water use efficiency and our yields are now three times the world average. It is a remarkable achievement. There was a 10 per cent yield gain just last year and there are reports that crops this year look like being similar to last year. The water use efficiency is obviously absolutely paramount to the industry's sustainability. It is focused on through yield, the crop scheduling and the infrastructure. So it comes at a number of angles. Equally, our industry identifies significant growth opportunities in dry land, so we are focused on that from a research and development perspective.

Senator CAMERON: Your research and development is done in collaboration with scientists and others. Have you had much collaboration with CSIRO?

Mr Finney : Yes, we have had a longstanding collaboration. I think in the order of 25 to 30 per cent of our projects are with CSIRO. We have a very good understanding of each other's capabilities and strategic interests and a commitment to grow that partnership. It has been very successful. Certainly, if you look to one of the biggest success stories in rural R&D, you cannot find a better one than the CSIRO-bred Australian cotton varieties. I think in 2004 there was a cost-benefit analysis that showed $86 for one, which at that time was a $5 billion return to the Australian industry and community.

Senator CAMERON: So that is through CSIRO?

Mr Finney : Yes, it is done in partnership with Cotton Seed Distributors—an industry organisation—and we have provided a lot of the foundational research investment as well.

Senator CAMERON: What work have you done with CSIRO on climate change?

Mr Finney : Quite a lot, because with the plant breeding program in particular there have been trials over regions from central Queensland—Emerald—all the way to, I guess, Mildura in southern New South Wales. So the adaptation of growing cotton across that range of climates is quite remarkable already. We have certainly got programs of research with them and, through the cross-sectoral program on climate change or climate research to improve, I guess, the heat tolerance, cold tolerance and water use efficiency. They are the key things. Interestingly, cotton is one of the few crops that actually increases in yield as carbon dioxide increases in the atmosphere—not that we are promoting that by any means. But it is an interesting—

Senator CAMERON: Scientific fact. So what have been the implications of the job losses in CSIRO for your collaboration, especially in the recent announcement of over 300 in the climate change area?

Mr Finney : At this stage we are awaiting communication. We have had some initial communication from CSIRO about the announcement, obviously. But we are still to have a conversation about implications for our specific cotton research. We have had no impact from previous changes in CSIRO strategy and we have been very positive to the focus on innovation and commercialisation of research outcomes for the benefit of industry. We think that offers a lot of complementary benefits to what we already do in rural R&D.

Senator CAMERON: So have you approached CSIRO as to what the implications are?

Mr Finney : I have already received a communique from them saying that they will be in touch with us soon to discuss the changes.

Senator CAMERON: Can you table that communique?

Mr Finney : It was an email. I can, if you wish.

Senator CAMERON: Okay. That would be good. You can do that on notice.

Mr Finney : Sure.

Senator CAMERON: Has your organisation given any consideration to how you would fill the gap of scientific knowledge given the cuts to CSIRO?

Mr Finney : For us, a strategic issue has always been not only the amount of investment in R&D but also the capability to do R&D in Australia. So, broadly, we have been expanding our collaborations—I think we have 56 research partners at this stage. We have been expanding over the last three or four years with the university sector and internationally with Cotton Incorporated, just looking to ensure that stability into the long term. Another way we have gone is to work with some of these open innovation companies that have global pools of inventors to broaden, I guess, the supply chain of research capability as much as we invest in future research capability ourselves.

Senator CAMERON: With this work that has been done with CSIRO, given that there has been an 80 to 1 return on some of the work that you have done in your CSIRO collaborations, what have those collaborations done for total factor productivity in the industry?

Mr Finney : That is a really good question. Certainly, the physical yield is remarkable when you look at the growth. In the early 2000s it would have been around eight bales per hectare and now the industry average last year was 11. The profitability in terms of price has been quite stable. In recent years it has averaged around $500 a bale Australian and the exchange rate obviously pays a big part in the prices received. We certainly work with CSIRO on a range of productivity projects. We also work at the supply chain end on the product. We have everything from how can you improve the fibre quality for spinning mill processing right through to can you transform cotton's use—could you dissolve cotton, which is the purest form of cellulose, and use it in a totally new use, whether it is flexible batteries or whatever. So we have those transformational type outcomes in mind as well as continuous improvement. But to actually measure the change in price, I think, is very difficult from the research outcome. What is clear, though, is the productivity gain in terms of yield and that has been tremendous.

Senator CAMERON: Can you provide the current statistics on your total factor productivity for the cotton industry?

Mr Finney : Yes.

Senator CAMERON: Do you have them now or will you take that on notice?

Mr Finney : I will take that on notice.

Senator EDWARDS: I would like to just run through a couple of things. Before I do, I am trying to get a handle on all of the RDCs. Where are you located?

Mr Finney : We are located in Narrabri in north-west New South Wales.

Senator EDWARDS: Have you always been in Narrabri?

Mr Finney : Yes.

Senator EDWARDS: Why are you there as opposed to Canberra or Sydney?

Mr Finney : I am sure our growers would like us to be based in Coogee at times, but we are based in Narrabri because that was historically where cotton research and cotton growing commenced in terms of the modern industry from the 1960s.

Senator EDWARDS: There has been a fair bit of discussion about where everything should be located. You sound like you have always been somewhere where it is eminently sensible to be located. Does it compromise you in any way—and in your operation—compared to your peers who are located in Canberra?

Mr Finney : We love being based in Narrabri. There are certainly strong advantages in terms of connections with industry and research. Equally, we do struggle with some of the logistics. For us to get here it is a two-hour drive to Tamworth or an hour's drive to Moree to catch a plane. But you can live in Sydney and have to drive an hour to get to a plane. So there are some infrastructure challenges.

Senator EDWARDS: But in comparison to the operating efficiencies?

Mr Finney : No, we are very comfortable being in Narrabri and we enjoy the benefits of those connections.

Senator EDWARDS: You should never ask a question that you do not know the answer to and that is exactly what I am doing, of course. So you could not do it here in Canberra?

Mr Finney : I am sure we could do it in a lot of locations, but we would be very happy to stay in Narrabri.

Senator EDWARDS: Okay.

Senator WILLIAMS: Can I just commend you on your industry. I remember in my last job I would drive out to Narrabri and Wee Waa and all I would see was aeroplanes—ag planes in the air—spraying, spraying, spraying. You have reduced spraying from 20 times a year a crop down to one or two?

Mr Finney : Yes, the statistic is a 95 per cent reduction in pesticide use.

Senator WILLIAMS: That is a huge saving for the cotton growers.

Mr Finney : I do not think we would have an industry today if we had not gone through that change.

Senator WILLIAMS: And your yields—what are you averaging now? I remember when three bales to the acre was a huge crop. Now you are talking eight bales per hectare average?

Mr Finney : It is closer to 11 bales per hectare—that was what the industry average was last year, which would be a world record.

Senator WILLIAMS: That is about five bales to the acre—that is almost doubled your yield.

Mr Finney : Yes.

Senator WILLIAMS: Well done—you are a good mob and doing a great job.

Senator CAMERON: Can I just ask if Cargill is still operating their processing plant in Narrabri?

Mr Finney : Yes.

Senator CAMERON: I used to be the organiser responsible for it. So I have been in Narrabri on many occasions.

Senator WILLIAMS: You got lost there up there once, didn't you?

Senator CAMERON: I got lost up there at one time, yes.

ACTING CHAIR ( Senator Sterle ): I thank the officers. We will move to grains.