11Impact of ICARDA Research on Australian Agriculture

Executive Summary

The project, "Impact of ICARDA Research on Australian Agriculture", was developed with the Australian Centre for International Agricultural Research (ACIAR), the International Center for Agricultural Research in the Dry Areas (ICARDA) and NSW Agriculture. The aim of the project was to investigate and document the impact of ICARDA’s plant genetic research on Australian agricultural productivity and to evaluate those gains in relation to the world market price impacts of ICARDA’s research.

The first task in the analysis was to identify the links between ICARDA and the relevant Australian research programs for each of the mandate crops (barley, durum wheat, chickpeas, faba beans and lentils). The linkages differed for each crop, but there are indications of good collaboration between the Australian programs and their ICARDA counterparts. There was regular exchange of germplasm between Australia and ICARDA, and there has also been a regular interchange of personnel between Australia and ICARDA since ICARDA’s inception.

A large amount of ICARDA material either has been used in the past or is being used at present in Australian breeding programs. In addition, there have been some direct acquisitions of material from countries in Central and West Asia and North Africa (CWANA), often made available via the ICARDA germplasm exchange distribution system. Because the impact of this material is likely to occur over the next 20 years, the analysis is based on future benefits to these crops.

There were relatively strong links with ICARDA for the five main mandate crops. In barley, durum wheat, kabuli chickpea, faba bean and lentil there are both strong links and a substantial Australian industry to provide the necessary conditions for a significant benefit flowing back to Australia from germplasm obtained from ICARDA. In particular, the Australian faba bean and lentil industries have relied heavily on germplasm from ICARDA. However, for forage legumes, while there was evidence of interactions between Australia and ICARDA, the data available were insufficient to enable a quantitative analysis to be carried out for the impacts of those interactions on Australia.

In addition, there are benefits to Australia other than those obtained through germplasm. The collaborative arrangements, including screening for pests and disease resistances, training, regular visits and the availability of regular reports and evaluations, were all of value to Australia. However, while these benefits are recognised in this study, we do not attempt to place an economic value on the benefits of each of the strands of cooperation and collaboration involved. Only the benefits from germplasm flows were valued in this analysis. In addition, the flow of benefits from Australia to ICARDA from both the flow of genetic material from Australia and the other collaborative arrangements are not incorporated into the analysis.

For barley, the benefits are expected to come from higher yields in the drier regions of South Australia and Victoria with alkaline soils, as a result of the improved drought tolerance obtained from ICARDA germplasm. The benefits are valued at A$4.91 per tonne, but are likely to be slow to impact fully, because the materials need to be adapted to Australian conditions and to malting quality varieties. At the same time, ICARDA’s research is estimated to bring about a cost reduction in the Rest of the World of A$1.45 per tonne. The increase in production causes a world price fall of A$0.55 per tonne. The net result for Australia is the equivalent of an average annual benefit of A$2.4 million over the next 20 years.

For durum wheat, the contribution of ICARDA has been to provide a range of genetic materials that are incorporated into the Australian durum program, and which are likely to contribute to improved varieties released over the next 10-12 years. The impact of that ICARDA contribution is estimated as a cost reduction of A$2.04 per tonne, while for the Rest of the World the cost reduction from ICARDA in durum is projected at A$10.47 per tonne, resulting in a A$6.20 per tonne reduction in price. The net effect for Australia is a small net loss of welfare averaging A$0.9 million per year, as the negative world price effects outweigh the value of the productivity increases.

For chickpeas, the main benefit of the germplasm obtained from the ICARDA program is the incorporation of ascochyta blight resistance into Australian kabuli chickpeas. For kabuli chickpeas, the cost reduction in Australia is estimated to be 27%, or A$189 per tonne. However, the kabuli chickpea industry is very small, with only 22,000 tonnes produced in 2001. Globally, ICARDA is estimated to reduce costs in the Rest of the World for kabuli chickpeas by 8.7%, and world prices are estimated to fall by A$28 per tonne. The net effect for Australia is an estimated average welfare gain of A$1.2 million per year from ICARDA’s chickpea research over the next 20 years.

For faba beans, the major benefits likely to be obtained from ICARDA germplasm are expected to come from a saving in spray costs for fungal diseases such as chocolate spot. At present, repeated applications of fungicide are necessary for faba beans, and the resistance being obtained from ICARDA will lead to a reduction in the use of fungicides. The value of that saving is equivalent to a cost reduction in Australia of A$54 per tonne. ICARDA is estimated to have made only small gains for the Rest of the World to date, with an estimated cost reduction is A$8.17 per tonne. The increases in production lead to an estimated world price reduction of A$7.00 per tonne. The net effect for Australia is equivalent to a gain of A$6.1 million per year, on average, for the next 20 years.

For lentils, the entire Australian industry is based on materials obtained from ICARDA. As a result, the value of the lentil program is the additional income that Australian farmers receive over and above that which they would have received if lentils had not been available in the Wimmera and Mallee regions of Victoria and South Australia, where lentils are grown. The estimated increase in gross margins of lentils over the crops that it has replaced is equivalent to a cost reduction of A$61 per tonne for lentils. In the Rest of the World, ICARDA is estimated to have led to a yield increase of 2.1%, equivalent to a cost reduction of A$7.71 per tonne. As a result of these productivity gains, the world price is estimated to fall by A$6.82 per tonne. The net effect for the Australian lentil industry is a gain of A$4.9 million per year from using the material provided from ICARDA.

As mentioned in the discussion of each crop, the economic analysis assesses the impact on Australia of ICARDA’s research in terms of the impacts on world prices as well as on the costs of production. To the extent that ICARDA’s research has increased world production, there will be a downward impact on price. Given finite supply and demand elasticities, any increase in production will mean a decline in price within the traded goods sector. Recent work at ICARDA has led to development of estimates of the likely impacts in the future of ICARDA’s research. The increases in the world’s production of each of the mandate crops are likely to have a downward impact on prices for the related predominantly export-oriented industries in Australia.

On that basis, the Australian industry faces lower prices as a result of ICARDA’s research, at the same time as they were experiencing yield gains from the germplasm obtained from ICARDA. The economic analysis of those spillover impacts in an economic welfare framework revealed that the overall aggregate net effect for Australia was a small negative impact from lower prices that was more than offset by the increased productivity. Only in durum wheat was the estimated increase in productivity too small to outweigh the price decline. For durum, these losses occur because Australian producers are unable to make use of the productivity gains from ICARDA research to the same extent as producers in the Rest of the World, and hence cost reductions gained by other producers are larger than those gained by Australian producers. For the other crops, Australian producers are obtaining productivity gains from ICARDA large enough to increase their incomes, in spite of the lower world prices.

It should be noted that Australian producers are enjoying productivity gains from domestic research programs unrelated to ICARDA that have not been considered in this study. No attempt has been made to assess whether Australian producers are becoming more or less efficient than producers in the Rest of the World.

The average estimated net gain to Australia as a result of the overall research effort at ICARDA is A$13.7 million per year (in 2001 Australian dollars) over the period to 2022 (see Table). Most of those gains are achieved in the faba bean and lentil industries. Producers receive most of the welfare gains in Australia, amounting to A$12.6 million of the total. On the other hand, Australian consumers of these crops will make gains of approximately A$1.1 million per year. Consumer gains in Australia are relatively small because domestic consumption of several of the ICARDA mandate crops is modest.

Summary of Benefits to Australia from ICARDA Research

This study has produced significant findings at two levels. The first level has been the identification of anticipated spillover benefits in terms of cost reduction for producers of ICARDA mandate crops, barley, durum wheat, kabuli chickpeas, faba beans and lentils. Those cost reductions are expected to result from yield increases attributable to germplasm developed at ICARDA or collected by passing through ICARDA and incorporated into genotypes that will be grown in Australia.

The second level at which significant findings have emerged is in the incorporation of the price effects of international agricultural research for these crops. In several industries, the price effects resulting from successful ICARDA research were found to be significant. The lower world prices for Australian producers were generally more than offset by the increased yields or cost savings from improved germplasm. The gains for Australian consumers were less than the losses from price effects for Australian producers, because the significance of exports meant that consumption in Australia is less than production. In most cases, the price effects for producers are offset by lower costs of production.

These findings have some important implications for Australian agriculture:

(a) International Centres such as ICARDA remain a source of materials for potential yield gains for Australian crops, even those crops grown in systems and environments significantly different from those targeted by the international centres.

(b) Australian producers will be affected by the price implications of the successful research that is undertaken by the international centres such as ICARDA, whether or not they take advantage of the possible yield gains spilling over.

(c) Consumers are likely to be significant beneficiaries of any research advances in the grains industries, although where Australia exports a large proportion of production, most of those consumers are overseas.

(d) Australia’s gains from international spillovers are likely to be greatest for those industries where there are significant links between Australian researchers and the researchers and programs being undertaken in the international research centres.

(e) Australian researchers need to maintain their vigilance over international agricultural research developments. Because of the contributions of the international centres, producers throughout the world are becoming more efficient and prices are falling below what they would otherwise have been. There is a need for a strong domestic research program, partly to maximise benefits from international spillovers, to ensure that Australian producers achieve gains similar to those of their competitors.

Recognition of these factors can assist in leading to better-informed decision-making for research resources, and is likely to lead to a more efficient and more cooperative research system worldwide. That improved system will provide improvements in the efficiency of production and in the delivery of appropriate food cheaply to the consumers most in need.