Biotechnology for Developing-Country Agriculture: Problems and Opportunities -- The Role of the Private Sector, by Clive James and Anatole Krattiger

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2020 Focus 2 (Biotechnology for Developing-Country Agriculture: Problems and Opportunities), Brief 4 of 10, October 1999
THE ROLE OF THE PRIVATE SECTOR
Clive James and Anatole Krattiger
Until now developing countries have had free access to conventional, nonproprietary technology through public institutions and international institutes such as the international agricultural research centers (IARCs) sponsored by the Consultative Group on International Agricultural Research (CGIAR). The advent of modern biotechnology has changed this situation because most of the new biotechnology products are proprietary and largely owned by the private sector. How can the private sector contribute to sustainable economic growth in developing countries through the development and marketing of safe transgenic crops?

One of the important goals policymakers have for the next millennium is to develop a global food security strategy that harnesses the considerable potential offered by transgenic crop technology. One way they can achieve this goal is by establishing novel and equitable partnerships with the private sector. These partnerships must address three major global challenges: feeding a growing world population; reducing and ultimately eradicating poverty; and protecting the biodiversity and natural resources in tropical forests and fragile ecosystems by increasing food productivity in input-efficient, sustainable systems on the more fertile arable lands.

PRIVATE-SECTOR COMPARATIVE ADVANTAGES
Extensive consolidation in the 1990s within the private sector through takeovers, mergers, and alliances has resulted in an unprecedented concentration of agri-biotechnology research and development (R&D) resources in a small number of major multinational corporations. This situation has given the multinational private sector a number of comparative advantages: a critical mass of R&D resources for funding long-term and speculative projects; economies of scale in relation to global markets; development costs that can be amortized over the long term; and expertise in marketing and distribution of seed.

THE GROWTH OF TRANSGENIC PRODUCTION
Between 1995 and 1998 the value of the global market in transgenic crops grew from US$75 million to US$1.64 billion. A total of nine countries, five industrial and four developing, grew transgenic crops in 1998. The industrial countries— Australia, Canada, France, Spain, and the United States—contained about 85 percent of the 28 million hectares sown with transgenic crops. Argentina, China, Mexico, and South Africa cultivated the remaining 15 percent of land. Argentina devoted the largest area to transgenic crops in the developing world: 4.3 million hectares in 1998; 60 percent of its soybean area was sown with transgenic varieties.

The dominant traits in the transgenic crops grown in 1998 are listed in the table. The benefits of this first generation of crops are better weed and insect control, higher productivity, and more flexible crop management. These benefits accrue primarily to farmers and agribusinesses. The broader benefits—a safer environment through reduced use of pesticides—contribute to a more sustainable agriculture and better food security.

traits in commercial transgenic crops, 1998

THE IMPACT ON DEVELOPING COUNTRIES
After in-country evaluation, Argentina, Brazil, China, and Mexico are growing transgenic varieties of cotton, maize, soybean, and tomato for commercial purposes. The traits these new varieties confer are insect resistance (cotton, maize) herbicide resistance (soybean), and delayed fruit ripening (tomato). Combinations of traits and crops presently being field-tested in developing countries include virus-resistant melon, papaya, potato, squash, tomato, and sweet pepper; insect-resistant rice, soybean, and tomato; disease-resistant potato; and delayed-ripening chili pepper. Other desirable traits to be developed include greater efficiency in the use of fertilizers, pesticides, and water. Molecular hybridization could increase the productivity of several crops, including the two major staples, rice and wheat, by 15 to 20 percent. A World Bank panel has estimated that transgenic technology can increase rice production in Asia by 10 to 25 percent in the next decade.

The next generation of crops with improved output traits could confer nutritional benefits to millions who suffer from malnutrition and deficiency disorders. A gene encoding for beta-carotene/vitamin A has been incorporated into rice and can enhance the diets of the 180 million children who suffer from the vitamin A deficiency that leads to 2 million deaths annually. Similarly, a gene that increases iron levels in rice threefold is a potential remedy for the iron deficiency that affects more than 2 billion people and causes anemia in about half that number.

The Nuffield Council on Bioethics recently concluded that a compelling moral imperative exists to make transgenic crops available to developing countries that want them to combat hunger and poverty. Creative partnerships between developing countries, CGIAR centers, and the private sector could provide the institutional mechanism for sharing the new technologies.

ALLIANCE WITH THE PRIVATE SECTOR
Developing-country governments could provide incentives to public institutions, nongovernmental organizations, and local private companies in developing countries to acquire appropriate biotechnology applications from external private-sector sources. This technology could be used to meet the needs of both the larger commercial grower and the resource-poor farmer. Several technology transfer organizations and development agencies already have facilitated donations of proprietary products by multinational companies to increase the productivity of subsistence crops. Much more is possible.

Equitable joint ventures between public- and/or private-sector entities from developing countries and private-sector entities in developed countries should be assigned high priority. These ventures can accelerate the adoption of tested technologies by farmers. Developing countries typically will contribute adapted germplasm and the external private sector will provide the proprietary gene that enhances the product. Building trust between parties to ensure equity remains the key challenge. Independent, honest-broker institutions can help build trust to achieve the mutual objectives of both the developing countries and the private sector. Both parties can make in-kind contributions to initiate projects and they can agree on their respective returns after the economic value of the enhanced product has been evaluated in the field. Similar strategic alliances could also apply to germplasm developed by the IARCs.

Joint ventures with multinational agri-biotechnology companies also have great potential for both the public institutions and local private companies in developing countries. They are particularly attractive to the latter, which normally lack the R&D and capital investments to develop their own technology. Joint ventures offer the opportunity to license the technology and gain experience with its use and distribution. The latter activity is one of the weakest links in the chain of crop production in developing countries. Development agencies should also consider participating in more joint-venture pilot projects.

THE ROLE OF GOVERNMENT
Governments must provide the enabling environment for local and international companies to operate competitively in a transparent and effective regulatory system that instills confidence and trust through the participation of the science, public, and business communities. The role and responsibility of government fall into four areas:

Government Incentives for R&D. Government should develop a national strategy for biotechnology, with specific priorities for crop biotechnology. These priorities should include the development of applications that will improve the productivity of the orphan crops of resource-poor farmers that the private sector normally does not invest in because of inadequate returns. Investment incentives, such as favorable tax consideration for R&D, venture capital, and repatriation of foreign exchange, are needed to expedite an effective national strategy. A national strategy should also include support for local public- and private-sector capacity in biotechnology; a vigorous program for acquiring and transferring technology from external sources; and commodity prices and an orderly market that provide incentives for farmers to adopt new technologies in order to enhance productivity and sustainability.

Public Awareness. Crop biotechnology directly affects nutrition, the food that consumers eat, choice and labeling of products, the environment, and the ethical concerns of special interest groups. Governments must establish a public awareness program from the outset that effectively communicates with citizens about the rationale for decisions and the risks and benefits of crop biotechnology. The program should also encourage public participation in the decisions regarding the use of transgenic products.

Regulation of Biosafety and Food Safety. Regulations should be science-based; transparent; harmonized with international protocols, domestic legislation, and import-export requirements; and implemented by credible institutions.

Intellectual Property (IP). This issue affects patents, plant variety protection, seed certification, and access to biodiversity. Protection of IP provides the economic incentive to the private sector. With appropriate antitrust laws, enforceable IP protection encourages competition and leads to more products for farmers. More than 140 countries have already signed the TRIPs (Trade Related Intellectual Property Rights) agreement, which is intended to harmonize global seed-related IP issues. IP is often the major constraint to technology transfer. Honest-broker institutions can assist developing countries in this area.

For further information see Clive James, Global Review of Commercialized Transgenic Crops: 1998, ISAAA Brief No. 8 (Ithaca, N.Y.: International Service for the Acquisition of Agri-biotech Applications, 1998); Clive James, Progressing Public-Private Sector Partnerships in International Agricultural Research and Development, ISAAA Brief No. 4 (1997); and AgBiotechNet, CAB International, http://www.cabweb.org (then click on the AgBiotechNet link).

Clive James is chair of the Board of Directors of the International Service for the Acquisition of Agri-biotech Applications (ISAAA) (e-mail: cjames@candw.ky); Anatole Krattiger is executive director of ISAAA, c/o Cornell University, U.S.A. (e-mail: A.Krattiger@isaaa.org).


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