ANNUAL REPORT 09/10 - Forest and Wood Products Australia

26 | OPERATIONS
STRATEGY TWO:
RESEARCH AND DEVELOPMENT
The projects and supporting processes that form FWPA’s
research and development program refl ect the corporate
vision to be the industry’s leading source of knowledge
and investor in innovation and promotion and the mission
to increase the industry’s sustainability and international
competitiveness.
During the past year FWPA has commissioned, continued
and fi nalised some 78 research projects.
Over the last 12 months, FWPA also played a key role
in coordinating the development of a national research,
development and extension (RD&E) strategy for the forest
and wood products sector. This strategy was endorsed
by the Primary Industries Ministerial Council in April 2010.
The process of developing the Research, Development
and Extension (RD&E) strategy for the forest and wood
products sector under the National Primary Industries
RD&E Framework provided an opportunity to gain
greater recognition for the challenges facing RD&E
capability in the sector and to develop a nationally
coordinated approach for industry to address investment
levels, sustain and develop research capability, improve
information sharing and ensure cost-effective and
effi cient RD&E.
This important activity is the beginning of a continuing
whole-of-industry process which will work to ensure that
the industry has the capacity, resources and information
to effectively invest in RD&E to meet the future needs
of the forest and wood products sector and the
Australian public.
The implementation of this framework will be a major
focus over coming years and FWPA is committed
to being a supportive and collaborative player in
this process.
Evaluation: Category level aggregation
Category Number Total value
invested ($000)
FWPA ANNUAL REPORT 09/10
Value of sample
projects ($000)
Delivering benefits to stakeholders
FWPA’s R&D investments are made on the basis that they
respond to industry and government needs to deliver
evident benefi ts to stakeholders (FWPA members, levy
payers and the Australian government).
Typical benefi ts include:
Contributing to the development or improvement of
new products matched to market needs.
Increasing the industry’s profi tability and effi cient use of
inputs throughout the value chain.
Improving the industry’s investment confi dence by
identifi cation and management of risk.
Increasing the industry’s economic, social and
environmental sustainability measures.
Showing excellent returns from R&D
In June 2010 an R&D Program Evaluation Report was
delivered by independent consultants, URS Australia.
Six projects from each of FWPA’s major investment
categories (growing, processing and marketing) were
randomly selected. These were then shortlisted to three
projects, which represented high, low and average cost
projects, all of which commenced after April 2002 and
which were completed and delivered before July 2009.
Benefi t cost analysis (BCA) was used to evaluate the
return from each project and calculate a Benefi t Cost
Ratio (BCR). The results were then aggregated and
extrapolated to show the R&D returns in each major
investment category. The BCR ranged from 14.8 in
the growing category, though 5.4 in processing to 2.4
for marketing. These fi gures show the value of R&D
investment outcomes to the industry and stakeholders.
Sample projects
as % of total
Weighted
average BCR
Estimated
benefi ts from total
investment ($000)
Growing 33 $16,694 $2,626 16% 14.8 $247,894
Processing 58 $35,150 $3,004 9% 5.4 $189,550
Marketing 47 $18,924 $594 3% 2.4 $45,061
Note that all BCRs are evaluated over 50 years, using a 5% discount rate. Values are reported in 2009 dollars.