The Australian New Crops Newsletter


Issue No 1, January 1994.


NOTICE: Hard copies of the Australian New Crops Newsletter are available from the publisher, Dr Rob Fletcher. Details of availability are included in the Advice on Publications Available.


4. Success Factors in the development of new agricultural industries

Peter Chudleigh and Katrina Bond, Agtrans Research PO Box 385 Toowong, Q 4060 and
lan Wood, I M. Wood and Associates 258 Bielby Rd Kenmore Hills Q 4069

A recent RlRDC-funded study (CSC-49A) examined the historical development of 35 Australian crop industries which had become established since 1950. The objective was to identify the factors that contributed to, or constrained, the growth and development of these new agricultural industries. The success of each industry was measured on the basis of the latest gross value of production and the simple average rate of growth of the value of production.

To compile an account of the development of each industry, information was extracted from published literature and from discussions with producers, researchers, research administrators, extension officers, input suppliers, processors and marketeers. The important factors that influenced development of each industry (either positively or negatively) were then identified and grouped into production, processing, marketing, government R and D or 'other' factors. These factors were classified as being of high, medium or low importance with critical factors (either positive or negative) designated as key factors. The frequencies of high and key factors and their association with industry success were examined.

A number of industry characteristics were tested for their association with successful crop industries. These included crop type, whether the crop was an indigenous/native or introduced species. the age of the industry, the pattern of growth, the industry structure, geographical location, the degree of integration of production, processing and handling, the labour intensity, the export orientation, the import replacement orientation, and the degree of processing involved.

Where adequate information was available from the case studies, additional analyses examined the time from the initiation of R and D to significant impact on commercial production. For those industries, piecewise linear regression analyses were used to fit trend lines to historical time series of production and yield data. The timing of the turning points in the trend lines was compared with the stated timing of the impact of R and D and other important factors identified from the case studies.

For most industries examined in this way, the important factors identified in the case studies were able to explain the trends in production and yields, thus providing confidence in the effectiveness of the case studies in identifying the key factors affecting industry growth.

Results

The full results of the study are reported in RIRDC Research Paper Series No. 94/1 (available in two volumes from RIRDC, PO Box 4776, Kingston ACT 2604 for $60). The first volume deals with the various analyses that were undertaken, the results and conclusions. From the conclusions, a set of guidelines was developed which could be used to assist RIRDC officers with decision-making and identification of those industry initiatives offering the best prospects for economically viable and sustainable operations. The second volume contains the case studies of the 35 new crops that were examined in the study.

A summary of the findings and of the suggested guidelines for assessing the likelihood of success of any potential new crop were also given in a paper presented to the 1994 RIRDC/ABARE symposium conducted in conjunction with the 1994 Outlook Conference (Chudleigh, Bond and Wood, Proceedings 1994 Outlook Conference, Australian Bureau of Agricultural and Resource Economics).

The most important factors identified In the case studies were related to production and marketing. Factors related to processing did not feature as prominently, probably because many of the industries studied involved minimal amounts of processing within Australia. There were also relatively few factors relating to government involvement, other than government contributions to R and D.

The most important criteria that need to be considered in deciding whether resources should be allocated to any new crop industry appear to be:

- the nature of current and latent market demand for the product

- the opportunities for market development and product quality improvement,

- the expected profitability given existing technology, and

- the opportunities for productivity enhancement through improved technology.

In comparing industries for the purpose of allocating R and D resources, the relative ease of overcoming industry constraints and the relative benefits that would be expected to accrue from overcoming constraints, need to be assessed. It is particularly important to identify the most limiting constraint to growth at the time of setting R and D priorities.

Other recommendations and conclusions arising from the study included:

  1. There should be increased efforts in locating and monitoring new crop technology developed overseas.
  2. Government support for new crop R and D has been extremely important in the past and such support is likely to be critical for new crop development in the future.
  3. Where a crop can be readily incorporated into existing farm systems there is an improved chance that the new crop industry will grow quickly and result in a sizeable new industry.
  4. Although the involvement of large companies can be important in the growth and development of new crop industries, it is not always necessary for the successful growth and development of an industry.
  5. Although a long payback period can constrain the development of some new agricultural industries, other factors are generally more critical in determining success.
  6. Increased attention to the identification of market opportunities and the development of markets (including development through promotion) is likely to bring improved growth and development.
  7. More attention should be paid to existing and potential competition on the demand side when assessing the potential of a new crop industry.
  8. Industries have the potential to grow large and quickly regardless of the type of crop.
  9. Industries that are geographically concentrated, and have a greater degree Of integration of production and marketing are not likely to grow more quickly or become larger than industries that are geographically dispersed and dominated by individual producers.

One of the most interesting results from she study was that in the period 1950 - 1992, new crop industries had, on average, contributed $37 million per year of the $55 million per year increase in the value of total crop production during the period.


Any claims made by authors in the Australian New Crops Newsletter are presented by the Editors in good faith. Readers would be wise to critically examine the circumstances associated with any claims to determine the applicability of such claims to their specific set of circumstances. This material can be reproduced, with the provision that the source and the author (or editors, if applicable) are acknowledged and the use is for information or educational purposes. Contact with the original author is probably wise since the material may require updating or amendment if used in other publications. Material sourced from the Australian New Crops Newsletter cannot be used out of context or for commercial purposes not related to its original purpose in the newsletter


Contact: Dr Rob Fletcher, School of Land and Food, The University of Queensland Gatton College, 4345; Telephone: 07 5460 1311 or 07 5460 1301; Facsimile: 07 5460 1112; International facsimile: 61 7 5460 1112; Email: r.fletcher@mailbox.uq.edu.au


[New Crops Home Page] [New Crops Program] [Australian New Crops Newsletter] [New Crops Publications] [Order Form] [People] [Crop Profiles] [Other Resources]


originally created by: GK; latest update 6 June 1999 by: RF