Can Public and Private Sectors Work Together for the Poor?

Public research institutions and private industry are increasingly joining forces to pursue agricultural research directed toward meeting the needs of poor farmers and consumers. Are these public-private partnerships simply a new development fad or a promising approach to achieving agricultural advances for the poor?

Golden rice—a new type of rice with the potential to help alleviate vitamin A deficiency among millions of poor people—has been hailed as a breakthrough in agricultural biotechnology. By inserting three genes—two from a soil bacterium and one from a daffodil—into the genetic material of rice, Ingo Potrykus of the Swiss Federal Institute of Technology and Peter Beyer of the University of Freiburg succeeded in 1999 in adding beta-carotene to the endosperm, the part of the rice grain that is consumed.

This scientific advance, which came after 20 years of research, raised the promise of enormous nutritional benefits for those poor people who subsist largely on rice. There is another reason, however, that the golden rice project is of special interest to agricultural researchers. The creation and further development of golden rice required not only splicing together the genetic material of separate organisms, but also melding the efforts and resources of individuals from universities, public research institutions, and a major multinational corporation in a public-private partnership (PPP) designed to address a serious problem facing poor people.

After the initial breakthrough, Potrykus and Beyer entered a partnership with Syngenta (then known as Zeneca), an international agribusiness, to advance the research. The first line of golden rice Potrykus and Beyer developed contained relatively little beta-carotene—1.2 micrograms per gram of polished, uncooked rice. Critics of the project suggested that an adult would need to eat 9 kilograms of cooked rice each day to get the recommended daily allowance of vitamin A. Clearly, to make a dent in vitamin A deficiency, golden rice would need a higher concentration of beta-carotene. So Syngenta did the research to produce two additional lines with increasing amounts of beta-carotene. The second, Syngenta golden rice 2, containing one gene from maize and one from a soil bacterium, now produces up to 37 micrograms of beta-carotene per gram of polished, uncooked rice.

This combined effort shows how effective public-private partnerships can be in moving agricultural technology forward. By combining the strengths of the two sectors, says David Spielman, an IFPRI postdoctoral fellow, such partnerships can reap substantial rewards. “Different people and organizations have different assets, resources, and competencies,” he says. “For example, many of the tools of agricultural biotechnology are in the private sector, but many of the genetic materials for the crops of poor people are in the CGIAR [Consultative Group on International Agricultural Research] genebanks.” Public-private partnerships in agricultural research can take many forms. They may link universities with cooperatives of small producers, or local private companies with national agricultural research institutions. Some of the most visible, and sometimes controversial, partnerships are between the large, international life science companies and national or CGIAR institutions.

Besides offering the promise of technological advancement, public-private partnerships in agricultural research can present pitfalls, says Spielman. Public and private institutions often have conflicting incentives, given that they are each ultimately responsible to different stakeholders with often different aims. The cost of managing relationships and achieving joint learning in such partnerships can be high. And there are still few models of successful partnerships for others to follow.

Recently the CGIAR centers and a consortium of industries organized by the CGIAR’s Private Sector Committee took steps to set up a Scientific and Know-how Exchange Program (SKEP) that would transfer knowledge pertaining to research and development (R&D) between industry and the centers, in keeping with the CGIAR mission. Staff from industry would work on well-defined CGIAR center projects, and center staff would work in industry research programs. “Rather than just talking about PPPs, we need more experiences and experiments with PPPs in agricultural research serving the poor. SKEP should be established and put to the test,” says Joachim von Braun, director general of IFPRI.

Why This New Togetherness?

Over the past decade private companies have become a major source of innovations in agricultural research. Governments worldwide are feeling budget pressures, and as a result growth in public spending on agricultural research—through, for instance, public universities and research institutions—is slowing. Meanwhile, private companies like Syngenta, Monsanto, Pioneer Hi-Bred, Bayer, and BASF are spending hundreds of millions of dollars each year on R&D. Private interest in agricultural research has arisen in part because of the advent of biotechnology. Because many of the technologies used in biotechnology—including individual genes and the technologies used to transfer them to different plants—can now receive patent protection, companies are able to earn higher returns from their agricultural research than they could from conventional plant breeding.

Nearly all the R&D conducted by these companies goes to improve the crops and technologies important to developed-country farmers. Adding traits like drought resistance, insect resistance, and nutritional improvement to local varieties of the crops subsistence farmers rely upon, like cassava and millet, simply does not have the profit potential created by improvements to the soybeans, cotton, and corn planted by rich-country farmers. As a result the private sector tends to ignore crops important to poor farmers. Partnerships between private companies and publicly funded research organizations are arising as a way of getting the technological advances in agriculture to benefit poor farmers and consumers in developing countries. Industry may also seek to improve its image by sharing know-how that improves poor farmers’ productivity, as well as entertaining the long-term hope of developing products that are of interest to the millions of small farmers in developing countries, who are currently not among the clients of industry.

Are these partnerships essential to getting new agricultural technologies to poor farmers? Not necessarily, says Howarth Bouis, director of HarvestPlus, an international alliance coordinated by IFPRI and the International Center for Tropical Agriculture (CIAT) to develop micronutrient-rich staple crops. “The public sector can make important progress on its own if PPPs cannot be worked out. But private companies tend to have better equipment and facilities than the public sector, and the private sector controls some important intellectual property. The work will go much faster and the results will likely be more powerful—in our case, the crops will have higher nutrient levels—if the private sector is involved.”

Andrew Bennett, director of the Syngenta Foundation for Sustainable Agriculture, says, “Many of the technologies—particularly the ‘process’ technologies—are owned by or have a commercial interest from the private sector. Much of the expertise and experience in managing biosafety, dossier development, and regulatory processes and standards lie in the private sector, as well as much of the experience in delivery and seed systems. PPPs are a good way to assemble the necessary technologies and expertise to build the critical mass needed.”

The Syngenta Foundation is working in partnership with the Kenya Agricultural Research Institute (KARI) and the International Maize and Wheat Improvement Center (CIMMYT) to develop insect-resistant maize for Africa, using both transgenic and traditional breeding approaches. After five years of laboratory research, the project has just begun field trials of maize varieties expected to be resistant to the stem borer, a pest that causes 15 percent losses in maize yields in Kenya. So far, says Bennett, the Syngenta Foundation has contributed more than US$7.25 million to the insect-resistant maize project, as well as expertise in bioregulation and business planning. KARI houses the project and offers its experience in genetic modification and extensive systems for research, testing, and extension to farmers. CIMMYT provides its insect-resistant maize to be used in the research and its scientific and training expertise.

IFPRI research fellow Frank Hartwich, who has studied more than 100 partnerships between national research organizations and various private sector entities in Latin America, says, “By pooling resources, the two sectors can form critical masses in research capacity and resource endowment that enable relevant and successful R&D. But it is important to assure that the public interest does not get watered down by scientists’ zeal for technological advancement.”

Hartwich’s research shows that partnerships work best when the parties have a shared goal or interest in a particular outcome and when the benefits of working together outweigh the costs of conducting and collaborating on the research. For example, in 1976 Chile’s national agricultural research institute signed an agreement with the country’s largest beer-brewing company to breed and distribute high-quality, high-yielding barley varieties to about 500 Chilean barley producers. In this case, the public sector held the research expertise, and the private sector communicated the needs of an industry, and by extension, the farmers supplying that industry. The goals of the two sectors converged: The brewery had an interest in maintaining a constant supply of high-quality barley from local producers, and the research institute wished to support barley production as a source of income for farmers—though these were not the country’s poorest farmers. Thus the brewery paid about US$15,000 a year to fund the operational costs of the program, which resulted in four new barley varieties created and distributed to farmers between 1978 and 1999.

Overcoming the Hurdle of Intellectual Property Rights

From 1995 to 1998, ICI Seeds, an American seed company, joined in a partnership with Indonesia’s Central Research Institute for Food Crops (CRIFC) to develop insect-resistant tropical corn. The partnership succeeded in training the Indonesian researchers in biotechnology techniques like genetic engineering and molecular mapping, but when it came time to transfer the company’s technologies to CRIFC for use in the institute’s breeding programs, the partnership foundered. Given Indonesia’s lack of patent protection for the technologies, as well as lack of biosafety regulations for field testing genetically engineered plants, ICI ultimately rejected the idea of transferring them.

The lesson of this episode is clear: partners must work out the terms of intellectual property rights in advance. These up-front negotiations can take time, but they can also mean the difference between a partnership that results in tangible benefits for developing-country farmers and one that does not. Unsurprisingly, companies that have spent millions of dollars developing new agricultural technologies can be reluctant to share those technologies with public entities at no cost. But in some cases and under certain specified terms, private companies are quite willing to license intellectual property to the public sector or to poor farmers.

To develop golden rice, for instance, Potrykus and Beyer used proprietary technologies belonging to half a dozen different companies (not the 32 different institutions widely reported at the time). After the initial research, therefore, the first step was to arrange for free licenses for these technologies so that Potrykus and Beyer could use them to further develop golden rice varieties. Syngenta then made legal arrangements giving the intellectual property rights associated with golden rice to a group called the Golden Rice Humanitarian Board, chaired by Potrykus and made up of individuals from various public and private organizations. The Humanitarian Board grants royalty-free sublicenses to the golden rice technology to public research institutions so they can develop locally adapted varieties in places like Bangladesh, China, India, and the Philippines. For developing-country farmers who generate more than US$10,000 a year from farming, a commercial license from Syngenta is required. Otherwise, the technology is free for use by farmers in developing countries. Working out such an arrangement took considerable time.

Biosafety issues related to genetic engineering can also present roadblocks. “There is a growing constraint arising from the provisions of the Cartagena Protocol on Biosafety, which add stewardship responsibilities and liability and risk considerations that the technology ‘giver’ must take into account when entering into a partnership or granting licenses,” says Bennett.

Managing Partnerships for Success

In spite of their apparent potential, successful public-private partnerships in agricultural research, says Spielman, are still somewhat rare, especially compared with the fields of health and infrastructure, where hundreds of such partnerships have been launched in recent years. In agricultural research, public entities and private companies are often constrained from joining forces by their different objectives, by the high costs of collaboration, by mutually negative perceptions, and by a lack of information on successful partnership models. The private sector can be frustrated by the slow pace of decisionmaking and action in the public sector, whereas the public sector sometimes distrusts the motives of those in the private sector, even when a private company is operating through a philanthropic arm.

Some nongovernmental organizations claim that the large corporations are engaging in public-private partnerships in developing countries merely to help open the regulatory door for their other transgenic products. Others are concerned that the new interest in public-private partnerships will last only until the companies’ next downturn. “What is the agenda driving the philanthropic intent?” asks Raymond Offenheiser, president of Oxfam America. “Is it a real concern for the welfare of the poor? Or is it about market share and share value? We understand that for corporations, it is difficult to disentangle these two sets of goals, and market share often dominates. Corporate foundations are not profit centers, and funding is cut when share value declines. We have lived this reality before so we are wary.”

“Syngenta and Monsanto can engage in partnerships because there is demand for their products, but they can also generate controversy,” says Spielman. Sometimes partnerships work better when they include a civil society organization to help increase transparency and legitimacy, he points out. In other cases, he says, partnerships can be more effective when they involve locally owned private firms, farmers’ organizations, or processors’ and marketers’ associations, rather than large multinationals.

But partnerships with local private companies depend on the existence of local markets and companies that are healthy and competitive. In the Syngenta Foundation–KARI–CIMMYT project to develop insect-resistant maize for Africa, says CIMMYT economist Hugo de Groote, local seed companies will be needed to distribute seeds to farmers. The difficulty is that in much of East Africa, many of the private seed companies that arose in the wake of economic liberalization in the 1990s have limited capacity to distribute seeds or have collapsed altogether.

In China the situation is quite different—investment in agricultural research by the Chinese private sector is growing at a breakneck pace, and the question is how to manage and guide this research through public-private partnerships for the benefit of poor farmers. Shenggen Fan, incoming director of IFPRI’s Development Strategy and Governance Division, suggests that one approach is to target public agricultural spending on basic, or upstream, research, which can then be released to private firms for further development of crops and technologies and for distribution to poor farmers. “The government can use tax incentives, credit subsidies, and intellectual property rights to help promote certain agricultural research in the private sector and then target public investment to complement private research instead of competing with it,” says Fan.

If partnerships in agricultural research can be managed successfully, says Spielman, the next step is to increase the impact on poor rural people by going beyond just developing new crops. “Even if you improve a crop, it won’t help farmers if there is no one to process it and no market for it. Now we need a lot more focus on food processing and other ways of adding value to agricultural products. This is an area where public research facilities can work with private firms to come up with new approaches.”

Reported by Heidi Fritschel