Private Investment in Agricultural Research and Technology Transfer in Africa

ASTI/IFPRI-FARA Conference Working Paper 13

Imported innovations in machinery, pesticides, fertilizers, poultry, and plant varieties have been very important to the development of modern agriculture in Africa. These technologies are now primarily brought in by private agricultural input industries and by some processing industries. Private-sector R&D is still quite limited in Sub-Saharan Africa with the exception of South Africa. It is concentrated in the maize seed industry and in the processing and plantation subsectors. There is also significant research in livestock inputs in Eastern and Southern Africa, fisheries and fish processing in Senegal, and cultivated forestry in South Africa.
Quantitative evidence on the impact of proprietary technology on smallholders in Africa is limited. There is evidence that adoption of proprietary hybrids of maize increased yields by almost 60 percent in Tanzania, and that poultry productivity in Nigeria increased when imported poultry stock and medicines were allowed. Another study shows large returns to sugarcane research in South Africa. Finally, many studies show that proprietary genetically modified maize and cotton can improve the yields, incomes, and health of smallholder farmers in South Africa and Burkina Faso.
The evidence presented above suggests that governments can encourage the introduction of more private technology by continuing to liberalize: allowing local and foreign firms to enter; providing firms with a stable policy and regulatory environment; strengthening IPR; and not taxing agriculture. When barriers to investment, importation, and the introduction of technology fall, private firms will introduce appropriate technology even to the smallest markets. Kenya illustrates partial liberalization. Although Kenya does not tax agriculture, has effective IPR, and has allowed competition in the maize seed industry, the Kenya Seed Company remains a government corporation, which limits private firms’ share of the hybrid maize seed market and suppresses seed prices. Six of the seven sugar mills in Kenya are owned by the government. The parastatal Central Artificial Insemination Station (CAIS) has a de facto monopoly on the cattle semen market (sustained by regulations limiting who can extract semen, and what foreign bulls are approved). The Pyrethrum Board controls the pyrethrum supply chain.
Other factors that could increase markets and stimulate research are the reduction of barriers to regional trade in fertilizer, seed, and other agricultural inputs, and badly designed input subsidies that channel input trade through government tenders rather than markets. Further relaxation—or, as a second best, regional harmonization—of technical regulations on agriculture could have a big impact on the pace of cultivar introduction. Many of the surveyed companies commented on this.
Biosafety regulations that allow the use of safe genetically modified organisms could induce research in some countries. In the case of the seed industry, one of the major stimulants to research in India, Pakistan, and South Africa has been the introduction of genetically modified technology. In the study countries, genetically modified plants are only permitted for use by farmers in South Africa.
Public research to overcome market failure to produce enough public and quasi-public goods can stimulate R&D and the introduction of private technology. Shortages of well-trained scientists are a major constraint to the growth of private R&D in all countries in Africa (even South Africa). In SSA, this is a constraint not only on research, but also on the technology regulatory system and on science policies. Thus, continued expansion of higher education and PhD training is necessary.
Public–private partnerships, such as DTMA and WEMA could stimulate innovation and R&D by small and medium-sized maize seed firms in Africa and encourage multinational corporations like Monsanto to focus more research efforts on Africa.
African government and donors could do more to encourage South–South technology transfer. China and India are already large suppliers of generic pesticides and agricultural machinery. Vegetable seeds from Indian companies are sold throughout Africa. Chinese and Indian seed companies are just beginning to explore the possibilities of entering Africa markets for hybrid seeds of field crops, such as rice (from China) and maize, millet, and sorghum (from India).Technology can come from many other countries at similar latitudes, such as Bangladesh, Brazil, Mexico, and Thailand. Programs to encourage South–South contacts could have major payoffs.

Author: 
Carl Pray, David Gisselquist, and Latha Nagarajan
Published date: 
2011
Publisher: 
International Food Policy Research Institute (IFPRI); and Forum for Agricultural Research in Africa (FARA)
PDF file: 
application/pdf icon
pray.pdf(1.6MB)