Opening the GATE:
Moving R&D into the future

Michael Bullen and Carolynne James

The Global Ag-Tech Ecosystem (GATE) is a collaborative research and technology site specifically designed to cultivate and develop agtech ideas. The GATE is a NSW Department of Primary Industries (DPI) initiative to fast-track the development of agtech to increase productivity. It provides a unique opportunity for agricultural technology developers to access DPI Research and Development (R&D) expertise or bring their own, and to collaborate with technology providers, business services and investors to create commercialised products for the NSW, Australian and global agricultural sector.



DPI has been benchmarked in the top 1% globally of R&D organisations and this reputation has been built on the capability, the rigour and the focus of the R&D over the past 130 years. As one of Australia’s oldest and largest agricultural R&D organisations, how does DPI continue to meet its charter to drive the productivity and profitability of the agricultural sector in NSW and Australia?

The past 20 years has seen a marked shift in the funding, technology and emphasis in the R&D system within Australia. Numerous studies have outlined the reduced public funding to R&D, the opportunities that technology will bring and how farmers, organisations and governments should respond. In this paper, drawing from these studies, we will outline how NSW DPI more broadly and the recently established GATE connect the traditional R&D approach to the evolving ethos and the changes that have occurred over the past 20 years.

Trends in R&D funding

ABARES in their report into Rural Research, Development and Extension Investment in Australia (September 2017) outlined investment trends from 2005–06 to 2014–15. As Figure 1 illustrates, in real terms both the total level of expenditure and public-sector funding has increased: from $2.3 billion to $3.0 billion and from $1.4 billion to $1.5 billion respectively. However, state and territory funding declined in real terms from $330 million to $239 million over the same period.

Figure 1: Rural R&D expenditure 2006/7 to 2014/15.

Governments will continue to face the challenge of competing expenditure demand between sectors. For NSW, NSW Treasury modelled in their 2016 Intergenerational Report what the likely share of expenses by service area for the NSW Budget would be in 2055–56 compared to 2014–15 (Figure 2). Over the 40-year period the share of expenses for the Agriculture, Forestry, etc service area is predicted to decline from around 1.5% to 0.5%.

Figure 2: Share of expenses by service area, 2014/15 to 2055/56.

With the level of public funding for the agricultural sector in decline, ABARES concludes ‘the private sector is likely to be the main source of growth in funding for rural R&D in the future’ (p. 27).

Returns from agriculture R&D

While the demand for expenditure from other areas of government will draw funds away from public agriculture R&D investment, the general case for government intervention in agricultural R&D remains strong and largely uncontroversial. It rests on the existence of spillovers that would otherwise result in under-provision of R&D, because investors are not able to capture sufficient benefits to justify an investment. 

There is ample evidence that government investment in R&D has generally performed well. The following quote from the 2011 Productivity Commission Report into the Rural Research and Development Corporations (RDCs) (p. 46) provides a useful overview:

Much empirical work has attempted to quantify the returns from investment in rural R&D. One commonly cited source (Mullen 2007, 2010) indicates a rate of return in Australian broadacre farming of between 15% and 40%, with the Commission’s own assessments (PC 2007) suggesting potentially higher average returns. More recently, an evaluation of projects undertaken by Australia’s Rural Research and Development Corporations has estimated that for every $1.00 invested in R&D, the average return after 25 years is $10.51 (CRRDC 2010) – broadly equating to a rate of return of around 50%.

The Productivity Commission argued that, given the strong return on investment, there were sound reasons why the private sector should increase its level of investment and there was a case for government to limit its level of investment. While no major changes to the RDC model have been made since the Productivity Commission report, the ABARES study shows there has been a substantial increase in the level of private-sector investment in R&D.

Further, one area where the report recommended a change to the way ‘broader rural R&D’ should be managed has been the establishment of the Rural R&D for Profit program. This program encourages cross-sectoral collaboration in R&D and provides for funding that may not fit within the individual RDC investment parameters.

Increasing private investment in R&D

In late 2017, the Australian Farm Institute (AFI) released a research report Enhancing Private-Sector Investment into Agricultural Research, Development and Extension (R,D&E) in Australia. The report examines the current level of private investment in Australia, the barriers to further investment, and identifies policy measures that will assist in increasing the level of private-sector investment in agricultural R,D&E in Australia.

The AFI report used a qualitative approach by conducting interviews and surveys to identify the key issues around decisions that drive investment by the private sector in agricultural R&D. Respondents identified a number of issues that influence potential investment decisions by them in Australian agricultural R&D.

  1. The quality of the science and research service provision is high.
  2. Financial incentives such as the R&D tax concessions were important for smaller companies and welcomed by larger firms.
  3. Market size, global opportunity and applicability of the research given the diverse nature and scale of agriculture within Australia. This affects the opportunity to obtain a return on investment given the costs in undertaking the R&D.
  4. The necessity for effective partnerships between publicly-funded research organisations and the private sector.

Amplifying the last point, while most private investors had engaged in partnering with publicly-funded organisations for R&D, the partnerships had not necessarily been the best experience.

A common factor for organisations which raised collaborative partnerships as an issue, was the mismatch of commercialisation culture, administrative inefficiencies and different expectations around intellectual property management. (Keogh et al. 2017, p. 2)

It is likely that all publicly-funded R&D organisations can reflect on instances or examples where this has been the case and caused tensions in the partnerships. The opportunity presents for identifying ways to minimise this poor experience and the approaches undertaken by DPI, of which the GATE is one element, will be outlined later in the report.

Before moving to consideration of the future role of technology in agricultural R&D, it is worth highlighting two of the recommendations from the report.

Recommendation 2 refers to incentivising participation in programs that attempt to match innovation and commercialisation culture between publicly- and privately-funded organisations. The approach taken at the GATE and other initiatives in DPI attempt to address this recommendation.

There are two themes within Recommendation 4: the need by governments to continue the funding of public agricultural R&D, and the underpinning that publicly-funded R&D provides not only to the whole R&D landscape but also provides as the incentive for private investment. The challenges for funding publicly-funded R&D in the future have been outlined above. The role of the private and public sector in innovation and R&D is worth unpacking to some degree.

Public and private – a two-part show

Where were you guys [venture capitalists] in the 50s and 60s when all the funding had to be done in the basic science? Most of the discoveries that have fuelled [the industry] were created back then. (Paul Berg, 1980 Nobel Prize in Chemistry winner, quoted in Mazzucato 2015)

Mariana Mazzucato in her book The Entrepreneurial State – Debunking Public vs Private Sector Myths (2015) provides a series of examples of how the success of new technology companies have been built on fundamental R&D undertaken by publicly-funded organisations.

The perspective is that in looking at the success of the United States’ (US) economy, the most visible examples of the way the economy works are the high-profile companies such as Apple, where the state-funded R&D to develop the technology is invisible. This leads to an overemphasis on market-driven mechanisms being favoured in policy development, rather than consideration of the interaction of the two actors in the economy.

There are three opportunities that Apple availed itself of in establishing as a company and in product development. These include direct equity investment in Apple’s early stage, access to technologies from publicly-funded R&D programs, and the range of tax, trade or technology polices that supported companies to grow.

One example of the publicly-funded R&D that is key to Apple products – and ubiquitous in almost all IT products – is micro hard drive storage or hard drive disks. The 2007 Nobel Prize was awarded to two European scientists Albert Fert and Peter Grunberg for their work in the 20th century in developing giant magnetoresistance (GMR). Hard disk drives’ magnetic sensors utilise the quantum mechanical effect as a result of GMR in their thin-film layered structure. Beyond the R&D, the commercialisation of the micro hard drive brought together the two separate R&D teams in Europe as well as teams in the US. These affiliations provided critical support to the R&D, and also allowed companies such as IBM and Seagate to commercialise the new knowledge into commercial products.

Mazzucato identifies areas for reconsidering the role of the state in the economy (p. 5). The first is for government to ‘envision a direction for technological change and invest in that direction.’ This does not mean picking winners, envisioning the direction ‘requires that the State creates a network of willing agents … that are keen to seize this opportunity through public-private partnerships.’ The second is a reframing of the way public spending is evaluated such as how it has encouraged the development of new markets or existing products into new directions. ‘Third, it means allowing public organisations to experiment, learn and even fail!’ The final area is how to establish better upside opportunity for government for their investment.

Technology in Australia

As part of the Rural R&D for Profit program, all of the RDCs have collaborated on a project – Accelerating Precision Agriculture to Decision Agriculture (P2D) – with analysis and research leading to a series of reports to outline the key actions required.

The analysis has identified the opportunity for digital agriculture to add $20.3 billion to the gross value of agricultural production in Australia.

In the report Accelerating Precision Agriculture to Decision Agriculture – Enabling Digital Agriculture in Australia (CRDC 2017), seven key pillars for success for digital maturity have been identified and an assessment made of where Australia sits for the pillars identified (Figure 3). It is not the intent to detail each of these pillars in this report, however there are specific issues identified in the report that inhibit the investment in digital agriculture in Australia.

Figure 3: The current state of maturity of digital agriculture in Australia as outlined by the Data to Decisions CRC Report. The titles in brackets link their structure to the findings across the P2D projects.

The four issues identified are the high fixed costs of development caused by the diverse populations of potential customers, coarse spatial resolution of public environmental data compared to other OECD countries, high climatic variability, and the need for high quality user interfaces to support complex systems. These issues give guidance for publicly-funded organisations in developing their approach to a data and digital strategy. Further, they also provide support as to why publicly-funded organisations should play a critical role in supporting the development of a data and digital future for Australian agriculture.

Drawing it all together

While economic returns from agricultural R&D are clear and continue to be strong, the method of realisation of research and its delivery to industry is shifting. The traditional adoption mechanism of agricultural R&D institutions has been public dissemination and industry extension. This reflects the ‘public good and basic research’ charters underpinning most R&D institutions and is tied to the broader research ethos of open publication, peer review and academic recognition.

The emergence of new technologies and digital application has enabled new dissemination avenues for agricultural R&D. ‘Lean start-up’ business models associated with these technologies approach adoption differently from traditional extension and open publication methods. Digital agriculture product development involves commercial secrecy, rapid trialling and customer demand analysis.

At first glance, this seems the antithesis to traditional research approaches. For example, traditional scientific method involves a threshold of statistically valid trials or experiments, whereas digital agriculture development may involve small focus trials where ideas or products are reworked or pivoted after a few iterations.

Peer review appears to be incompatible with ‘commercial in confidence’ precepts of private business development and ‘evidence thresholds’ required in academia may be higher than that sought by or needed in the marketplace.

Nevertheless, digital agriculture applications can enable more rapid and comprehensive research adoption, and for this reason reconciling this new paradigm is essential for sustaining the overall R&D sector investment and the productivity benefits it generates.

The NOUS group in a report on The Future System for Primary Industries Research & Development in Australia, commissioned by the National Research and Innovation Committee, presented a schematic on the key trends in public administration over the past 40 years (Figure 4).

Figure 1: Key trends in public administration.

For NSW DPI, the changes made to the organisation – while not explicitly defined in this way when started – have been a deliberate strategy to move to the network governance model.

The GATE is symbolic of the approach and focus of DPI to prepare for the future and is designed to respond to the drivers mentioned above.

DPI recognises the need to maintain and grow R&D expenditure given productivity benefits, but acknowledges shrinking public expenditure. The GATE provides the opportunity to harness and cultivate private investment in new collaborations. Key to the success of the GATE will be the new partnership between SparkLabs Cultiv8 and DPI, linked to SparkLabs, Asia’s premier accelerator.

This partnership applies commercialisation opportunities across all the stages of pre- and post-research delivery by linking to the R&D outcomes from DPI and its traditional R&D partners, and providing a pathway and support through mentoring, incubation and acceleration.

The GATE is addressing the concerns raised by industry about the lack of agility in public R&D institutions by developing a commercialisation culture and expertise; both within the programs of the GATE as well as in the broader DPI. Examples include the use of design thinking to approach challenging policy issues. Design thinking involves considering the likely impacted effect of the policy and undertaking a series of iterative research and policy options to develop the final approach.

DPI is also examining what is needed from a business entity or structure to further ensure there is the ability to interact in the best possible way with the private sector. This includes the opportunities to better match funding for traditional R&D projects, as well as being able to form appropriate business structures for particular areas of co-investment. Perhaps most importantly, the structures will be considered around the potential for better aligning the commercialisation strategies from DPI’s R&D, as well as the public/private partnerships in the future.

The GATE, as a publicly-funded institution, aligns with Mazzucato’s recommended roles of government in innovation. DPI through the GATE are actively envisioning a direction for technological change and investing in that direction. The intent is not to pick winners, but to offer ‘a network of willing agents’ new opportunities through public/private partnerships. The measure of success of the public investment will be via the development of new markets or entry in new directions.

The GATE builds on the investments made by DPI over the past decades, whether in traditional R&D, or in technology that can improve the returns to farmers. Work has commenced with non-traditional partners such as Cisco to focus on connectivity and how data from sensors located across the farm can be calibrated using long-term R&D trials to provide information for farmers to make more timely and improved decisions.

It is recognised that this new approach needs to complement the traditional strengths of DPI around focused R&D that drives the productivity and profitability of agriculture within NSW. For the future, specific directions will be envisioned and investments targeted to these directions, as well as identifying the opportunities to invest to ensure the infrastructure and facilities meet the future R&D directions. This direction will include blue sky experiments, new learnings and even prospective failures.


ABARES (Australian Bureau of Agricultural and Resource Economics and Sciences) (2017), Rural Research, Development and Extension Investment in Australia, Millist, N, Chancellor, W & Jackson, T.

NSW Treasury (2016), Budget Paper No. 5 Intergenerational Report,

Productivity Commission (2011), Rural Research and Development Corporations, Report No. 52, Final Inquiry Report, Canberra.

Keogh, M, Heath, R, Henry, M & Darragh, L (2017), Enhancing Private-Sector Investment in Agricultural Research, Development and Extension (R,D&E) in Australia, Research Report, Australian Farm Institute.

Mazzucato, M (2015), The Entrepreneurial State – Debunking Public vs Private Sector Myths, Public Affairs.

Leonard, E (Ed), Rainbow, R (Ed), Trindall, J (Ed), Baker, I, Barry, S, Darragh, L, Darnell, R, George, A, Heath, R, Jakku, E, Laurie, A, Lamb, D, Llewellyn, R, Perrett, E, Sanderson, J, Skinner, A, Stollery, T, Wiseman, L, Wood, G & Zhang, A (2017), Accelerating Precision Agriculture to Decision Agriculture: Enabling Digital Agriculture in Australia, Cotton Research and Development Corporation, Australia.

Nous Group (2016), The Future System for Primary Industries Research & Development in Australia, Research and Innovation Sub-Committee of the Agriculture Senior Officials Committee.

About the authors

Michael Bullen is Deputy Director General Investment & Business Development in the NSW Department of Primary Industries (DPI), having recently taken on this role after nearly six years leading DPI Agriculture. He has had a diverse career with senior roles in the forestry, water and agriculture sectors. He chairs the National R&I Committee. Michael has a forestry degree from ANU and an MBA from UNE.

Carolynne James is Manager, Investment and Business Development, DPI and has over 20 years experience in strategic and policy advice to state and local government with management roles in the NSW Cabinet Office, the NSW and Northern Territory Parliaments, and the City of Sydney Council. Her current role with DPI involves developing agtech initiatives and long-term business strategies and draws on her qualifications as an agricultural economist (Syd Uni). Carolynne also holds a Masters of Administrative Law and Policy (Syd Uni) and is a Fellow of the Governance Institute of Australia.

Image:  Lucy Darragh