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This pre-study on the "Status of Innovation in Nicaragua's Agrifood Sector: Opportunities for Subsector Development" contributes to the existing information on agricultural innovation in Nicaragua. It thus aims to broaden the knowledge base for policymaking towards enhanced performance of the country's agricultural innovation system. Adopting the perspective of the innovation system, the study analyzes agents involved in agricultural innovation activities, their interactions and the institutions and policies guiding their behavior. Innovation is understood as any novelty successfully introduced in productive processes of agriculture or in the processing of agrifood products.

The scarce data on the status of agricultural innovation in Nicaragua provide only anecdotal evidence and some general tendencies. Nicaragua has many institutions and an important infrastructure for agrifood research, but those institutions appear under-funded and insufficiently connected with one other and to the productive sector, both small-scale farmers and larger-size entrepreneurs. The government extension and technology transfer system seems overburdened by the task of reaching the main portion of producers, and development cooperation projects and NGOs are taking over part of this role. Little information is available about the role of the private sector in innovation, whether producer, input provider, processor or buyer.

To complement the limited secondary information in this area empirical information was collected in interviews with key actors in government, research centers and universities, primary production and processing. With this information, twelve agricultural subsectors could be analyzed. The sample included innovative and noninnovative, traditional and non-traditional subsectors with special emphasis on the participation of poor farmers, and ascertained sources of funding, sources of knowledge and technology1, level of interaction and the status of innovation. The qualitative information collected was then analyzed by means of descriptive procedures, graph theoretical methods and social network analysis. Major findings include:

• Institutions and policies: Various institutions 2 promote innovation in the agricultural sector in the context of agricultural and rural development, economic development, or science and technology and higher education policies. These policies do not provide a common framework for agricultural innovation and there is no common source for funding of innovation activities. In part, INTA, NITLAPAN and IDR foster research and, less prominently, extension in the more traditional sectors, while CPC, MIFIC and some development cooperation programs are the leading promoters in the less traditional sectors. This fragmentation of responsibility has led to gaps in the promotion of innovation in primary production in non-traditional sectors, and especially in processing and post-harvest in traditional sectors.
• Sources of funding: Few subsectors have sufficient support from the public sector for innovation development. Funding is primarily from development cooperation or drawn by the Government from the budgetary aid provided by international development banks. The private sector is an important source of funding for innovation when it imports technologies, commissions consultancies that provide access to knowledge from abroad, and travels to foreign countries and learns about new ways of doing business, although this holds only for the more advanced subsectors studied. However, the private sector does not only invest in nontraditional sectors, such as shrimp and peanuts, but also in traditional sectors such as dairy and coffee.
• Sources of innovation: Important agents who generate innovations and likewise help in the diffusion and development of joint learning spaces are development and international research agencies, consultancy companies, followed by input providing companies (seed, feedstuff, machinery), enterprises that import technologies, and to a less extent, agricultural producers and local research centers and universities. This is in contradiction to the government's emphasis on certain research and technology transfer centers, such as INTA, IDR, INATEC and some universities. INTA plays a substantial research role in some traditional subsectors with many resource-poor farmers. It appears that producers have insufficient access to the primary and complementary sources of knowledge and technology needed to develop innovations, either because access is monopolized or unavailable, or because the source is simply not known.
• Linkages between innovating agents: International research and development agencies and their consultants dominate agricultural research and technology development in Nicaragua; they also enable connection among various agents. Within such projects efforts are made to reach out to agricultural producers. In fact, today many internationally funded technology transfer, research and development projects require strong participation of the private sector and connection with local research and development agencies. National research centers and universities tend to have weak links with the productive sector, whether small-scale producers or, even more so, commercial farmers and processors. These types of links continue to follow the linear model of technology transfer, which suggests that inventions generated by researchers can be easily handed to the producers. They provide only for sporadic exchange of information and do not allow for mutual learning. Some subsectors, in fact the more innovative ones, are characterized by much stronger linkages among the various agents, including international and national research, policy environment, development cooperation and the productive sector.
• Innovation: Many agricultural subsectors in Nicaragua still do not have sufficiently adapted and modern knowledge and technology to enable producers and processors to reach sufficient levels of income, improve their livelihoods and compete regionally and internationally. However, different subsectors vary greatly, which in part can be explained by: (1) the availability of suitable innovative solutions that fit producers' absorptive capabilities, (2) the connectedness of productive agents to knowledge and technology providers, to markets, and to other (innovative) producers, and (3) the availability of support from government and particularly development agencies.

These findings are preliminary in nature; a more in-depth analysis of innovation processes in the various subsectors is required to understand which organizations have contributed in what way to innovation, and how innovation processes can be fostered in the different subsectors. However, some general recommendations can be drawn from this analysis of interactions:

The government and development organizations should foster more prominently network-like interactions in which complementary sources of knowledge, including producers, engage in priority setting and development of sector-specific innovations enabling dynamics of joint learning. The shrimp sector offers a good example of this kind of networking, which, however, can probably not simply be copied due to the special characteristics of the sector. Innovation networks help guarantee that productive agents participate in the development of the innovation, that the technological solutions it generates respond to market conditions and demands, and that the various options available on the national and international level are taken into account. Networks can also enable the diffusion, adaptation and adoption of technologies through a larger number of innovative producers, a function that the current extension system is not sufficiently fulfilling.

1. Knowledge here is understood as an organized set of data and information, which aims at resolving a determined problem, not necessarily of a technological nature. Technology is understood as the set of knowledge, capacitities, and means applied in production, mechanics, and industry. [Back]
2. Institutions here are understood as both a) formal and informal organizations, which use human and other resources to achieve their goals and objectives and b) norms and rules that influence the behaviour of actors. [Back]