Returns to New Technologies in the Australian Beef Industry: On-farm Research versus Off-farm Research

A multi-sectoral and multi-market model of the Australian beef industry is specified using an equilibrium displacement modelling framework. The model is implemented using average price and quantity data for the period 1991-1997 and market parameter values taken from the literature, derived from theoretical restrictions or from the authors’ subjective judgement. Total returns and the distributions among various industry groups from alternate R&D and promotion investments, which result in 1% shifts in the relevant supply or demand curves, are examined. In this paper, the implications for farmers from various on-farm R&D investments (genetic research and nutrition research in backgrounding cattle for grain-finishing and in grass-finishing) and off-farm R&D investments (nutrition research for grain-finishing, research for meat processing, and research for domestic and export marketing activities) are compared and contrasted. The results indicate that in general, on-farm research produces a larger share of total benefits to farmers than off-farm research. Comparison of the actual monetary returns from the different investment scenarios depends on the relative costs of achieving the 1% supply shifts.