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Insights from the ATO’s 2022-23 R&D Tax Transparency Report highlight encouraging levels of innovation activity across the sector. At the same time, the data points to a persistent gap between the R&D that many Agriculture, Food and Beverage businesses are already undertaking, and their understanding of how this activity may align with the R&D Tax Incentive (RDTI).
For many organisations, innovation is embedded in day-to-day operations, but not always recognised or structured as R&D.
By unpacking key trends from the report and sharing practical, industry relevant examples, this article explores where opportunities exist for Agriculture, Food and Beverage businesses to take a more deliberate and strategic approach to R&D. In doing so, it considers how the RDTI provides companies with the opportunity to improve cash flow, accelerate development, and drive competitiveness.
One of the most promising findings from the recent R&D Tax Transparency Report is the steady increase in R&D expenditure across the Agriculture, Food and Beverage industry.
More than 450 companies in the industry accessed the RDTI in the 2023 financial year, reporting almost $1b in R&D expenditure. This includes household names like Coles, Wesfarmers, Nestle, Teys, Bega Cheese and many more.
From paddock to plate, the report shows that Australian businesses are recognising the critical role of innovation in addressing challenges such as climate change, supply chain disruptions, food security, resilience, and shifting consumer preferences.
The gap between the mean R&D spend of $2.1m and the median of $380,000 highlights the influence of larger players. For mid-market businesses, this benchmark underscores both the scale of opportunity and the risk of falling behind if R&D investment is deferred.
While these figures point to growing confidence in R&D investment, the more interesting insight lies in where that investment is being directed.
Digital transformation is a standout trend across the Agriculture, Food and Beverage value chain. Businesses are investing in automation, data analytics, artificial intelligence, robotics, sensor technology, and Internet of Things (IoT) solutions to:
In the lead up to the 2032 Brisbane Olympics, sustainability expectations for Australian food producers are intensifying. This is driving R&D investment in carbon farming, regenerative agriculture, precision irrigation, alternative packaging techniques, and waste management technologies.
Faced with regulatory and consumer demands, companies are adopting eco-friendly technologies, packaging and practices to cut their environmental impact, without sacrificing productivity or profit. Food security is also a critical driver, as businesses develop innovations in crop resilience, product diversity, storage, and logistics to ensure consistent supply.
Consumer demand continues to shift towards health-oriented and functional foods, including high-protein, vegan, gluten free, dairy free, low-sugar, low-salt and fortified products. This is encouraging Agriculture, Food and Beverage companies to investigate new crop varieties, raw materials, product formulations, and processing techniques. This is further supported by the rise of alternative proteins to support vegetarian and vegan diets.
While the R&D Tax Transparency Report underscores many positive trends, it also highlights ongoing challenges. These include navigating complex regulatory requirements, securing skilled talent, and riding the wave of technology development. Addressing these barriers will be crucial to maintaining the industry’s momentum and ensuring that innovation benefits all participants in the value chain.
Ongoing global uncertainty and geopolitical instability are expected to place continued upward pressure on commodity, energy and logistics costs over the coming months. For Australia’s Agriculture, Food and Beverage sector, this volatility is likely to translate into higher input costs across the value-chain. These conditions reinforce the importance of a strategic approach to R&D.
Generally, businesses that invest in R&D and innovation to reduce input reliance, explore alternative inputs, improve efficiency, or diversify supply chains will be better positioned to manage cost volatility and protect profit margins.
As the 30 April 2026 RDTI deadline approaches for 30 June filers, the conversation is shifting from simply accessing the RDTI to how R&D (and in turn, the RDTI) can be used more deliberately to respond to cost pressures, supply chain volatility, sustainability demands and changing consumer expectations.
Businesses that embed R&D into their core strategy, whether through product development, process optimisation, digital adoption or input substitution, are likely better positioned to drive meaningful commercial outcomes and build long term resilience. In a sector where margins are often tight and external pressures are increasing, well considered R&D and innovation can be a powerful lever for creating competitive advantage.
At Grant Thornton, we work closely with Agriculture, Food and Beverage businesses to navigate the evolving R&D landscape, help get the most out of your R&D spend, and drive sustainable growth. If you would like to explore how the R&D Tax Incentive can support your innovation agenda and growth objectives, we encourage you to speak with our R&D Tax Incentive specialists.
Article contributed to by Katie Edwards - Innovation Incentives
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