Overview

The need for collective R&D
The Australian wine industry does not have the ability to privately or commercially meet all of its R&D needs. Even Australia’s large, corporate wineries do not have the capacity to fund more than relatively straightforward problem-solving R&D. Strategic and major problem-solving R&D is therefore most effectively undertaken on behalf of the entire industry by suitable R&D providers.

The GWRDC’s role is to manage the allocation of industry and Australian Government funds to ensure maximum benefit is returned to the industry and community.
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Collection of levy funds
Grape and wine research and development work is funded by all eligible members of the grape and wine industries, via a statutory levy on tonnage grown and delivered to wineries (the Grape Research Levy), and on the tonnage converted to wine (the Wine Research Levy).

Upon collection of these funds by the Levies Revenue Service of the Department of Agriculture, Fisheries and Forestry (AFFA), the funds are transferred to the GWRDC for investment in appropriate grape and wine R&D.
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Funding
About 7,000 grapegrowers and more than 1,800 wineries actively support the R&D program through a commitment to the levy system. Generally, even in larger businesses, there is inadequate capacity to internally fund more than the relatively straightforward problem-solving R&D. The wide range of partnerships with R&D providers developed by the Corporation enables a sound combination of operational and strategic R&D to be undertaken for industry. All eligible members of the grape and wine industries pay a statutory levy on tonnage grown and delivered to wineries (the grape research levy) and on the tonnage converted to wine (the wine grapes levy).

Upon collection of these levies by the Levies and Revenue Service of the Australian Government Department of Agriculture, Fisheries and Forestry (the Department), payments are then made to the Corporation for investment in appropriate R&D in the grape and wine sectors. These producer levies receive matching Australian Government funding once R&D investments are undertaken.

Funds are allocated to selected projects and programs which meet the Corporation’s R&D priorities and guidelines. These priorities were developed after wide-ranging and in depth consultation with all stakeholders.
In 2005-06, this process will continue to include a high level of involvement by national and regional industry associations in identifying R&D priorities. The WFA Strategic Directions Group (SDG) is also anticipated to provide a shared vision for R&D that will be addressed to all potential parties who might see the opportunities arising from investments in R&D for and with the grape and wine industry.

As a statutory body, the Corporation utilises its flexibility to ensure interactive, professional responsiveness to industry objectives, issues and priorities and is committed to ensuring projects are outcome-oriented and process-driven.
Accountability to Parliament, the Minister and industry within this framework is of prime importance.

Grape R&D Levy
Grape producers contribute to grape research and development by means of a levy on fresh and dried grapes and grape juice used in the manufacture of wine and delivered to an establishment for processing. Wineries which grow their own grapes for winemaking are also required to pay this grape research levy.

This levy is not payable on grapes and juice delivered to an establishment which processes less than 20 tonnes (fresh grape equivalent) in a year. The levy system for grape research is regulated by the following legislation:

Primary Industries (Excise) Levies Act 1999
Primary Industries (Excise) Levies Regulations 1999
(Schedule 13)

The operative rate of the grape research levy is currently $2.00 per tonne, the maximum rate permitted under the legislation.

For the purpose of setting grape research levy rates the relevant industry organisations which may make recommendations to the Minister are the Wine Grape Growers of Australia Incorporated (WGGA) and the Winemakers’ Federation of Australia Incorporated (WFA). These two organisations are in discussions to determine if a single industry body might provide the best structure for the future needs of the industry and government
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Wine R&D Levy
Winemakers’ contributions to fund wine research and development are derived from a specific component of a levy on fresh grapes, dried grapes and grape juice used in the manufacture of wine (the remaining component of this levy finances the Australian Wine and Brandy Corporation). Wineries using less than 5 tonnes (fresh grape equivalent) for this purpose in a year are exempted from levy payment. The relevant legislation for this levy system is:

Primary Industries (Excise) Levies Act 1999
Primary Industries (Excise) Levies Regulations (Schedule 26)

Changes to the legislation were passed by Parliament in early 2004 to increase the maximum rate permitted under the legislation to $10 per tonne. The operative rate of the wine research component of the levy (the wine research levy) is now $5.00 per tonne (fresh grape equivalent).

The WFA is the peak wine industry body and may make recommendations to the Minister concerning the operative rate of the wine research levy.
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Australian Government Matching Funds
The Australian Government matches the expenditure of the Corporation on grape and wine R&D activities limited to no more than either the total of industry levy contributions to eligible R&D activities or to 0.5% of the gross value of production, whichever is the lower amount.

Interest from the investment of Corporation funds, sales of assets and produce, money collected as penalties imposed in regard to the collection of levy charges, and any other income generated by the Corporation are also available to fund R&D activities.

Two separate accounts are maintained by the Corporation for ‘grape’ research and development activities and ‘wine’ research and development activities reflecting the two separate levies sourced. While this assists with transparency of reporting, in many cases investments will draw on both grape and wine levies. This is based on the premise that outcomes from R&D success will generate commercial success that contributes to ongoing growth and development of the grape and wine industry as a whole. The challenge in all investments is to demonstrate how various contributors gain equity and value from the flow of benefits that arise from effective R&D and innovation throughout the value chain.
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Other Funds Available
Investment interest from the fund, sales of assets and produce and money collected as penalties imposed in regard to collection of levy charges are also paid to the Corporation. Provision exists for other income generated by the research projects, and any additional income other than levy charges, to be paid to the Corporation.
Two separate sub-accounts are maintained by the Corporation for the grape and wine research and development programs.
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Investment management
The GWRDC manages funds sourced from statutory levies collected from winegrape growers and winemakers, and from matching Australian Government funds supplied after expenditure has been made by the Corporation.

The GWRDC is committed to optimise the return on its limited funds. In response to this commitment, a set of investment criteria has been developed to be applied in all funding decisions:
• Scope for the proposed work to be funded privately or commercially;
• Potential for industry to adopt and benefit from the research;
• Scope for research to lead to a preferred approach or outcome;
• Prospective high benefit-cost of proposed research;
• Likelihood of substantial progress in the research field and potential for further gain should further investment be recommended;
• The extent to which research proposed has been thoroughly reviewed in terms of the results, uptake and impact of previous research in that field;
• Potential for coinvestment; and
• Scope for broad national industry impact, rather than a flow of benefits to a small number of individual enterprises
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Allocation
Funds are allocated to selected projects and programs as identified in the GWRDC’s Annual Operational Plan and the Five-Year R&D Plan. The GWRDC aims to ensure interactive, professional responsiveness to industry problems and priorities, and is committed to ensuring projects are outcome and output-oriented, but process driven. Accountability to industry and the Parliament and Minister within this framework is of prime importance.The grape and wine R&D portfolio operates across five program areas.

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