Insights into Agricultural Innovation: Global Evidence and Lessons for Pakistan

David J. Spielman

International Food Policy Research Institute

Drivers of agricultural innovation

• Long-term investment in public R&D

• Conducive policy environment, appropriate incentives

• Competitive markets that encourage innovation

• Farmers who can experiment, manage risk

• Social rates of returns on R&D: 40 to 78 percent

– High in relative terms – well above returns attainable from many

alternative uses of public funds

– Highest – in crop breeding and varietal improvement

– Varied – but with proven impacts on agricultural production,

poverty reduction, and food prices

Agricultural R&D spending in Pakistan

New ASTI survey covers 250 agencies in ag. R&D

• Federal agencies: PARC, NARC, other

• Provincial agencies: Punjab, Balochistan, Sindh, Khyber Pakhtunkhwa

• Higher education agencies

• Nonprofit agencies

• Private companies

Data analysis ongoing. All data presented here are preliminary

Agricultural Science and Technology Indicators (ASTI) Initiative

Source: M.A. Niazi, G.-J. Stads, and L. Gao, PARC/IFPRI

Total public agricultural R&D spending

8.0 billion rupees (2011 constant prices)

2012

95 million US$ (current prices)

Includes salaries, operating costs, and capital investments

Includes research on crops, livestock, fisheries, forestry,

postharvest, socio-economics, etc.

Includes PARC, NARC and all other federal and provincial

government, higher education, and nongovernmental

agencies

Preliminary data

Long-term stagnation in R&D spending

Preliminary data

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Mill

ion

Pak

ista

ni ru

pee

s

(in

flat

ion

ad

just

ed; b

ase

year

= 2

011)

PARC NARC Other federal

Balochistan Khyber Pakhtunkhwa Punjab

Sindh Higher education

Long-term stagnation in R&D spending

• Total R&D spending increased by just 36% in real terms from 2000 to 2012, but at an erratic pace

• Most growth in R&D spending was driven by higher education agencies

• Share of federal R&D spending has decreased by only 3% during 2000-12, and still represents >30% of total spending

• Share of federal spending has decreased only 1% since devolution under the 18th Amendment

Preliminary data

Relative underinvestment in R&D

0.18 0.28 0.40 0.40 0.50 0.51

1.10

3.07

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Ag

R&

D s

pen

din

g a

s a

% o

f A

gGD

P

Preliminary data

Federal government Provincial government Higher education

Signs of growth in research capacity

Preliminary data

2000: 3,401 FTE researchers 2012: 3,699 FTE researchers

Release of varieties and hybrids, 1933–2013

Source: Rana, Spielman, and Zaidi (forthcoming), based on FSC&RD data

0

5

10

15

20

25

30

35

40

45

50

No. o

f va

riet

ies

rele

ased

Wheat

Cotton

Sugarcane

Rice

Maize

Signs of innovation in the market

Seed producers registered with FSC&RD, 1981-2012

Signs of competition in the market

Source: Rana, Spielman, and Zaidi (forthcoming), based on FSC&RD data

6

56

229 257

312

103

0

50

100

150

200

250

300

350

Before1991

1991-95 1996-2000 2001-05 2006-10 (2011-12)

No.

of

regi

ster

ed p

roduce

rs

Signs of policy progress…

• 2015 Amendment to the Seed Act

– Recognizes the private sector in all aspects of the seed system: breeding, multiplication, marketing, distribution

– Extends regulatory control over private sector

– Extends regulatory control over hybrids as well as varieties

– Allows for farmer saved seed • Provision 2(f)(ia): “person means any natural or legal entity and includes an

association of persons, firm, partnership, society, group of persons, a public or private limited company, corporation, cooperative society or any other body corporate”

• Preliminary assessment:

– Slightly better than business as usual if there is federal, provincial implementation capacity

…and tough decisions ahead

• Draft Plant Breeders’ Right Act

– TRIPS and WTO membership requires plant variety protection

via patents or a sui generis system

– Variety registration only has to pass a novelty test (DUS), does

not have to be superior to existing varieties (VCU)

– Provides scope for rewarding public breeders

– Protects farmers’ right to save, use, sow, exchange and non-

commercially sell seed

– But otherwise, provides limited farmer protections when

compared to the 2001 Indian PPV Act

• Preliminary assessment:

– Judicial capacity to process infringements remains an unknown

Concluding thoughts

• There is significant scope for increasing public R&D

spending in line with global comparators

• There is a need to monitor and evaluate the impact

of public policies and investments that influence

technological change, especially in the seed system

• Evaluation requires a minimum dataset of

– High-res, long-term household data on production

– Industry performance: releases, sales, revenues

– Industry structure: competitiveness

– Innovation: Tools, methods, products

– Regulation: Costs of doing business

The end

Rate of innovation ≈ varietal release rate

19 8

82

16

98

0 0 2

118

0

20

40

60

80

100

120

140

Bangladesh,Maize (all),1994-2011

Indonesia,Maize

(composite),2006-2012

Indonesia,Maize (hybrid),

2006-2012

Pakistan, Maize(all), 1990-2013

Vietnam, Maize(all), 1977-2012

No. o

f re

leas

es

Country, maize type, years

Maize releases for selected crops, years and countries

Public Private Combined (public + private)

Sources: Authors, based on data from Bangladesh by Naher and Spielman (2014); Indonesia: Jamal (2014); Pakistan: Rana (2014); Vietnam: Mau Dung (2014).

Rate of innovation ≈ varietal aging

21 20 20 19

0

5

10

15

20

Marginal Small Medium Large

Years

Landholding size

Average age of top 5 rice varieties under cultivation, by farmers’ landholding size,

Bangladesh

Source: Naher and Spielman (2014) based on data from Ahmed (2013)

The top 5 varieties in Bangladesh account for 53% of area under rice cultivation

1,294

2,185 2,070

0

500

1000

1500

2000

2500

HH

Ind

ex v

alu

e

Paddy WheatMaize

Competition ≈ seed market

concentration

Authors, based on data for Nepal from Sah (2014).

Concentration in Nepal’s seed market, by crop, 2012

1,294

2,185 2,070

0

500

1000

1500

2000

2500

HH

Index

val

ue

HH index values (0-10,000)

64

87 82

93 91 99

0

20

40

60

80

100

CR4 CR8

Per

cen

t

CR4 & CR8 (%)

Competition ≈ innovation market

concentration

0

2000

4000

6000

8000

10000

12000

0

20

40

60

80

100

120

2006 2007 2008 2009 2010

HH

I

CR

4 (

%)

Concentration in India’s innovation market viz. transgenic R&D, based on field trial data,

1997–2008

Four-firm concentration ratio HHI

Innovation incentives ≈ IP protections

114 117

242

59 107 123

10

934

252 260

180

85 18 43

0

100

200

300

400

500

600

700

800

900

1000

No. o

f ap

plic

atio

ns

Applications for plant varietal protection, India, 2007-2014

Public

Private

Innovation incentives ≈ IP regime strength

Source: Author, based on data from Ginarte and Park 1997; Park and Wagh 2002; Park 2008

China India

Brazil South Africa

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Enforcement of

IPRs

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Coverage of IPRs