The Role of the Public and Private Sectors in Agriculture and Natural Resources Research

The Role of the Public and Private Sectors in Agriculture and Natural Resources Research This unpublished prĂŠcis excerpts selected arguments put forward toward the definition of the Asian Development Bank's policy on agriculture and natural resources research, dated 1995.

Olivier Serrat 06/03/1995

1 1.

The role of the public sector in agriculture and natural resources research is less subject to controversy than its role in other areas of agriculture. For example, most would agree that the public sector should not be involved in agricultural production and that its role in areas such as agricultural mechanization should not be great. At the same time, there is a general agreement that a large proportion of agriculture and natural resources research must be looked upon as a public good. This is because: (i)

Most types of agricultural innovations, i.e., new cropping systems, new seed varieties, changes in cultivation practices, adaptations to implements or buildings using local materials, are in the public domain once released and cannot be effectively protected by patent or copyright laws;

(ii)

The private sector usually invests in applied research that lends itself to patent or copyright protection, i.e., branded inputs or machinery, and this is only a fraction of the agriculture and natural resources research required to achieve goals such as growth or poverty alleviation;

(iii)

Farmers, who are one of the two main groups of beneficiaries from agriculture and natural resources research, cannot individually organize and finance the scale of research required for widespread advances in farm technology;

(iv)

Consumers, who are the other main group of beneficiaries from agriculture and natural resources research, would not of their own will organize and finance such research;

(v)

Agriculture and natural resources research involves long lead times, for example in developing new plant types of minor staples; and

(vi)

Agriculture and natural resources research is risky, particularly when focused on heterogeneous environments that are subject to high climatic or other variability, and is consequently less attractive to private interests.

2.

This does not mean that the private sector does not carry out agriculture and natural resources research. Through large agribusiness corporations, the private sector undertakes formal research in much the same way that the public sector undertakes research within national or international research institutes. The private sector also undertakes informal research, which consists of experimentation and innovations by the farmers themselves, and includes adaptation by farmers of innovations emanating from the formal research system.

3.

However, the scope and functions of private research agencies differ from those of the public research agencies. Private research tends to focus on product innovation rather than on process or farming innovations. This is because it is much easier to capture privately the returns to product innovation than to do so for process innovation. This explains, for example, why private research tends to be concentrated in input supply industries and pays less attention to, say, crop or livestock productivity improvements.

4.

The funding mechanisms used by the Asian Development Bank to support agriculture and natural resources research are of three types. Regional technical assistance grants are used to finance research, extension and training projects involving more than one country and are often channeled through international research institutes. National technical assistance, also on a grant basis, covers similar activities but is confined to one country only; it comprises advisory technical

2 assistance and project preparatory technical assistance. Third, loan funds are used to finance physical facilities such as buildings and equipment, as well as services. For greater effectiveness, research actions call for private sector involvement and more interaction between the private sector and national and international research institutes. However, Bank assistance for agriculture and natural resources research can in the first instance only be extended to public sector counterparts and direct Bank support for private sector involvement in agriculture and natural resources research would be limited to encouraging the national research institutes concerned to subcontract research components to private research institutes and universities. Possibilities for direct lending to the private sector would be developed by the Bank's Private Sector Group.

5.

Given the shortfall in funding and the poor prospects for a full recovery in the foreseeable future, calls have been made for the establishment of self-sustaining mechanisms in international research institutes. However, members of the Consultative Group on International Agricultural Research have a policy that their research should only be supported by donors and that their products and genetic materials should be exclusively in the public domain and not be used as a source of financial income. In its assistance for agriculture and natural resources research, the Bank would therefore encourage national research institutes and, where appropriate, nonmembers of the Consultative Group on International Agricultural Research, to gradually put their operations on a more self-sustaining basis through undertaking contract research assignments and through establishing fees for the use of the products of their research in commercial applications.

The views expressed in this prĂŠcis are those of the author and do not necessarily reflect the views and policies of the Asian Development Bank, or its Board of Governors or the governments they represent.