Hort Innovation update

Hort Innovation consumes a lot of my time and effort and the reason it is so important is that it is the single greatest resource available to support the ongoing development of the industry. In the next five years, Hort Innovation will spend about $32 million of your hard-earned levies in avocado R&D and marketing and about $13 million taxpayer funds in avocado R&D. Therefore, it is important that they get it right.

 

Increased R&D funding due to GVP adjustment

In the last The Avo Insider I outlined the concerns around the allocation of matching Commonwealth funding for avocado R&D through Hort Innovation.  The new Hort Innovation policy, effective from 1 July this year, will cap the amount of Commonwealth funds allocated for industry R&D based on the value of the individual industry.  ABS data is used to calculate the three-year average Gross Value of Production (GVP) and, due to the poor quality of this data, using this data would result in about $1m less funding per year for avocado R&D.

I have been working with Fresh Logic (the company that prepares the Australian Horticulture Statistics Handbook) using Infocado data and other sources to develop a robust model to estimate the GVP for avocados.  We have developed a model that has now been accepted by Hort Innovation.  Unfortunately, Hort Innovation has now decided to apply the new capping policy using a farm gate value (instead of GVP), which is about 10-15 percent lower than GVP. Although they have given with one hand and taken with the other, the net outcome will mean only $300,000 per year less funding (or an extra $700,000 per year than would otherwise have been available) for avocado R&D.  So it was worth the effort.

 

The advice for avocado levy investment

It is interesting that there are still some growers who think the avocado levies come to Avocados Australia.  They don’t and they never have.  The levies are collected by the Australian Government and are sent to Hort Innovation to manage.  You can read more about that process here.  Avocados Australia is a service provider for some projects where we have the appropriate capability.  We need to compete just like any other service provider for project funding by submitting project proposals in response to open tenders commissioned by Hort Innovation.  When we are awarded projects, we then enter into a legal contract with Hort Innovation that sets out what will be delivered, time frames, milestone funding amounts etc.

Hort Innovation manages the levies and in doing so seeks advice from industry about how to invest these levies.  However, at the end of the day, it is up to Hort Innovation to decide what advice they want, who they seek advice from and how they use that advice.

Avocados Australia has been working with Hort Innovation over the past few years to establish an effective advisory mechanism for the expenditure of the avocado levies.  It has been a long and frustrating journey, but we are gradually moving towards something effective.

In the early days, Hort Innovation held the view that the advisory mechanism should be fluid and that Hort Innovation would seek advice in a very ad hoc manner from whomever, whenever they saw fit.  Eventually, they were convinced that they needed a group of people with the appropriate knowledge and skills to provide continuity of advice, largely due to the lobbying work of Avocados Australia.  Different people providing advice at different times without an understanding of the overall program was destined to lead to poor decisions.

Hort Innovation has now established Strategic Industry Advisory Panels (SIAPs) for each industry.  Expressions of interest were called and Hort Innovation selected and appointed the avocado SIAP members who are:

• Daryl Boardman, Sunnyspot Farms, QLD
• Kylie Collins, Blushing Acres, QLD
• Jennie Franceschi, Avocado Export Company, WA
• Simon Grabbe, Simpson Farms, QLD
• Stewart Ipsen, West Pemberton Avocados, WA
• Jim Kochi, Tinaroo Falls Avocado Pty Ltd, QLD
• Simon Newett, Queensland Department of Agriculture and Fisheries, QLD
• Cormac te Kloot, Costa, VIC
• Neil Delroy, Jasper Farms, WA
• John Walsh, Simpson Farms, QLD.

The SIAP is chaired by an independent chair (Peter O’Brien), selected by Hort Innovation.

We lobbied hard to ensure Avocados Australia was appropriately represented on the SIAP.  Our Directors understand the issues and are well connected to the levy payers across the various regions.  Hort Innovation eventually conceded and now allows up to three members of the SIAP from Avocados Australia; currently these are Jim Kochi, Daryl Boardman, John Walsh.  I am not part of the SIAP.

The SIAP members provide strategic advice.  They don’t develop project briefs or approve projects, this is managed by Hort Innovation.  Sometimes they are asked to comment on details and sometimes they are not.

The term of membership on the SIAP is proposed to be for three years, with a maximum of two terms.

More recently, it became clear that Hort Innovation needed to establish a sub-committee to provide advice in relation to the marketing program which is managed very differently from the R&D. A similar expression of interest process was undertaken and the Marketing Sub-committee members are:

• John Tyas, Avocados Australia
• Astrid Hughes, Hort Innovation
• Clair Tindale-Penning, Hort Innovation
• John Walsh, Simpson Farms
• Antony Allen, The Avolution
• Jennie Franceschi, Advance Packing and Marketing
• Russell Delroy, Delroy Orchards
• Comac te Kloot, Costa Group.

The Avocados Australia Board is not directly involved in the advisory process.  This makes it very difficult for us to influence the direction of the program and to have full knowledge of the program.  There is extra work that I do outside the formal process to try and make the system work effectively.  This includes regular meetings with Hort Innovation staff to provide information and the industry knowledge they don’t have and to seek updates on the program.

Besides these two formal committees, there are other mechanisms such as Project Reference Groups which provide input to specific projects.  These can involve other people who have knowledge and expertise relevant to a specific project.

Recently, Hort Innovation called for expressions of interest for an ‘Industry Representative’ to represent the industry at international trade shows relevant to avocado export priority markets.  Hort Innovation selected two people; myself and Andrew Serra, a grower from Tolga, Queensland.

It is important that the investment program seeks the best advice from the best people.  However, there is a risk that, if it is not well managed, we can end up with silos, the left hand not knowing what the right hand is doing and fragmented decision making.  To be honest, there has been evidence of this and we need to keep working with Hort Innovation to make the system as effective and efficient as it can be.  We have a fair way to go.

 

Push for changes to the Hort Innovation constitution

It is clear that the Hort Innovation constitution is seriously flawed and needs to change as it doesn’t give levy payers the ability to influence the company.  With the formation of Hort Innovation, the intention was for levy payers to have a greater say but, in fact, evidence shows the reverse is true.  The only real influence levy payers can have is in the election of the Hort Innovation Board.  However, it is quite odd how this works, and levy payers have very little influence.

Each year, a Director Nomination Committee selects a number of director applicants to be voted on by the members.  The Director Nomination Committee is made up of the Chair of Hort Innovation, a representative from the Department of Agriculture and Water Resources, and an independent person selected by Hort Innovation (no levy payer input).  Then, levy payers can vote on the selected candidates (up to four directors to be elected by levy payers).  However, the Hort Innovation Board is able to appoint directors (up to five directors to be appointed by the Board).  As you can see, the incumbent board directors have the majority of control over the members of the Board.

I have raised my concerns with Hort Innovation, the Federal Department of Agriculture and Water Resources and have have pushed for action via the Voice of Horticulture. It appears there is a groundswell of support building for these changes.

There are moves afoot by a group of levy payers to amend the constitution at the Hort Innovation AGM in November.  Any resolutions for the AGM need to be approved by the Hort Innovation Board, so there is likely to be some resistance to this.

If you are interested in supporting this initiative, please contact Daryl Boardman who can provide more information (0427 151 033, daryl@sunnyspot.com.au).  It is important to note that Daryl is doing this as an individual levy payer, not on behalf of Avocados Australia.

 

Four-year review of Hort Innovation

There is a requirement in the funding deed between the Australian Government and Hort Innovation for an independent review of Hort Innovation to be undertaken within four years of its establishment.  This review is due to be completed in the next 12 months.  The review will be commissioned and funded by Hort Innovation, so there is some risk that it may not be as ‘independent’ as some may like.

I have met with senior staff in the Federal Department of Agriculture and Water Resources to impress upon them the importance of this review and the need for it to include in depth consultation with stakeholders.  Feedback from the department is that they expect the same and although they are not involved in the review per se, they will be articulating their expectation to Hort Innovation.

I would hope, as levy payers, you will be given adequate opportunity to provide input to the review. If this opportunity exists, Avocados Australia will ensure you know about it and encourage you to provide your feedback and thoughts.

 

This article was produced for the August 2017 edition of the Avo Insider.