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Is research a global public good?
Director General, International Food Policy Research Institute
(IFPRI) 2033 K Street, N.W.
Washington, DC 20006-1002 USA(This article was originally published
by Entwicklung + Lšndlicher Raum, 34 Jahrgang, Heft 2/2000, and has
been reprinted with permission.)
Research, and in particular biological research, today is very likely
to be patented and thus may not benefit the poor in the developing
countries. It is no longer a public good. This conflicts with the
initial objective of biological or agricultural research to
contribute to food security and poverty alleviation. This situation
calls for new initiatives to fund public research in general and
national and international agricultural research systems in
Public goods have two characteristics: First, the consumption of the
good by an individual does not detract from that of another; and,
second, it is impossible or at least very difficult to exclude
anybody from consuming the good. Most knowledge derived from research
fulfills the first condition: whether or not I know something does
not detract from the ability of others to have the same knowledge.
However, generators of knowledge, e.g., research institutions, or
distributors of knowledge, e.g., scientific journals or newspapers,
may attempt to limit access to specific knowledge to those who are
willing to pay. Thus, the second condition may not be fulfilled,
although the Internet makes it more difficult to limit knowledge
dissemination to those who are willing to pay.
Furthermore, while those who are not willing to pay may be excluded
from access to new knowledge initially, it is very difficult for the
original owner of the knowledge to get around the fact that the
knowledge flows from the initial buyers to others, precisely because
the initial buyers do not use up the knowledge. Also, once the
knowledge is obtained, whether it was purchased or obtained for free,
it can be used over and over again without paying the original owner.
New knowledge about agronomic practices would be an example of such
knowledge. Some knowledge is only of interest locally or nationally,
e.g. optimal planting time for teff in a particular region of
Ethiopia, while other types of knowledge are of interest and benefit
globally, for example, knowledge about international economic trends
and certain health, food, and agricultural issues including knowledge
from certain kinds of agricultural research.
Are computer chips and improved seed public goods?
Knowledge may be embodied in physical technology such as computer
chips or improved seed. Is such technology a public good? It depends.
If the use of the technology by one person precludes its use by
another or if certain individuals or groups can be prohibited from
obtaining benefits from the technology, the technology is not a pure
public good. Thus, neither computer chips patented by Intel nor Round
Up Ready soybean seed patented by Monsanto are public goods. Each of
the companies has exclusive rights to the technology protected by
patent laws. The intellectual property rights are clearly defined.
However, enforcement of these rights is likely to be much more
difficult in the case of biological technology such as improved seed,
because, contrary to computer chips, seeds multiply and the farmer
may use his own seed in future planting without paying the original
owner, e.g. Monsanto. Although farmers may enter into contracts with
seed companies agreeing not to use their own seed, such contracts are
difficult to enforce. Therefore, while the benefits to society,
including farmers and consumers, may be large, private corporations
may be unable to capture enough of these benefits to warrant
investment in the research needed to develop the technology.
The importance of property rights
The development of hybrid seed helps the seed company recuperate the
research and development costs because, contrary to open-pollinated
seed, farmers need to buy new seed every season to maintain the
improved traits of the original seed. The much discussed terminator
gene, if ever commercialized, would be another way for the seed
company to assure that the farmer buy new seed every season because
his production is sterile. While the notion that the seed produced by
the farmer is sterile is ethically unacceptable, at least for small
farmers in developing countries, because of the associated risks and
dependency, a more ethical approach involving the ability to turn on
specific new traits in a seed is currently being developed. Using
such an approach, farmers would have the choice of buying the
chemicals needed to activate the improved traits embodied in the
seed, e.g. insect resistance, or plant the seed with the original
traits. Farmers who choose not to buy the chemicals would presumably
be no worse off than before trying the improved seed.
But even if the private research agency could enforce property
rights, for example through hybrid seed or built-in gene switches
such as those mentioned above, research investments by the private
sector would be less than socially optimal. The reason is that groups
other than farmers, e.g. consumers, would benefit through lower
prices. Since the private research agency does not have the right to
tax consumers, the benefits derived by the farmers will set limits
for how much the agency can capture. Therefore, relying on the
private sector for agricultural research is likely to result in under
investment from the point of view of society.
The importance of basic research
So far, the discussion has focused on applied research leading to
knowledge and technology of direct utility for farmers. But applied
research depends on the availability of results from basic research,
the latter being more likely to be a public good. Private research
agencies including the large life science corporations have benefited
greatly from past university and other public sector research. Will
the public continue to invest in such basic research? If not, will
the private sector provide the funding and will that imply that
results from basic research be more likely to be patented? Recent
partnerships between life science corporations and universities
indicate that the former recognize the importance of continued basic
science, even if they have to cover at least some of the cost and
even if they are not assured exclusive rights to the resulting
knowledge. However, continued public funding of basic sciences
underpinning the development of improved agricultural technology is
essential for continued technology development.
Implications for poor countries and poor people
What does all this mean for small farmers and poor consumers in
developing countries? First of all, a great deal of evidence shows
very severe under-investment in agricultural research in developing
countries. The economic returns from past agricultural research for
developing countries are very high and the potential benefits from
additional research by far exceed the expected costs. Private sector
research relevant to small farmers in developing countries is very
limited even in the larger middle-income countries. It is almost
non-existent in the poorer developing countries, including most of
the African countries. The public goods nature of the technology
needed by small farmers in developing countries along with lack of
rural infrastructure, lack of access to credit among farmers and
traders, and poorly functioning markets for seed, fertilizers, and
agricultural output account for the limited private investment.
Furthermore, although early adopters of new technology may gain, most
of the economic gains are likely to be captured by consumers through
price decreases resulting from productivity gains and expanded
As countries liberalize trade, the domestic price decreases may be
less and farmers may capture a larger share of the benefits.
Furthermore, consumers in other countries may benefit. In the case of
small countries producing for effectively functioning export markets,
the producers may capture almost all of the benefits. In such cases,
producer groups may be willing to pay for productivity-increasing
research and the private sector may be able to capture sufficient
economic gains to warrant the research. Coffee producers in Colombia,
who are mostly small farmers, and producer levies on export
commodities in Australia, are illustrations. However, for most food
commodities in most developing countries, a large share of the
benefits from productivity-increasing research will accrue to
consumers. The social gains may be large but private research
agencies will not be able to
capture a large enough share to justify the research. Furthermore,
gains to society from improved management of natural resources may
not be captured by the private research agency.
The importance of publicly funded research
Such a situation calls for publicly funded agricultural research.
Strong national agricultural research systems (NARS) focused on
solving problems facing poor farmers and consumers are likely to make
major contributions to both efficiency and equity goals. These
contributions would be significantly enhanced if the NARS have access
to results from international research aimed at the creation of
knowledge and technology relevant to many countries, i.e. global
public goods, such as that currently produced by the centers
sponsored by the Consultative Group on International Agricultural
Research (CGIAR). The impact of NARS may also be enhanced through
innovative partnerships with private sector research agencies in
which non-exclusive rights to processes and traits are transferred
from the patent holder to NARS for restricted use in research to
develop technology for eco-regions and commodities of little or no
commercial interest to the patent holder. The private research agency
holding the patents would, in turn expect to improve public relations
and develop new markets as poor farmers who benefit from the
technology become customers. The former would be of particular
interest to the large life science companies suffering from bad
publicity related to genetically modified seed. The CGIAR might be an
appropriate broker and participant in such partnerships.
As globalization proceeds, benefits from agricultural research
applied in one location would be more widely distributed. With fully
liberalized trade, the benefits from, say, productivity increasing
technology applied to maize farming in Uganda resulting in reduced
maize import or expanded export would no long be limited to Ugandan
consumers. Outside Uganda, maize consumers and consumers of livestock
fed with maize could benefit. This justifies a sharing of research
costs across country border.
Is agricultural research a public good?
As illustrated above, agricultural research is neither a pure private
nor a pure public good. However, the public goods characteristics of
much agricultural research, particularly that needed by small farmers
and poor consumers in developing countries, together with poorly
functioning markets in most developing countries results in very
limited investment by the private sector in agricultural research.
Low priorities for agricultural development and improved food
security among many developing country governments along with lack of
knowledge about how powerful agricultural research can be to
achieve economic growth and reduced poverty and many governments'
short planning horizon relative to the time lag between the
investment in agricultural research and the resulting benefits are
the main reasons for the serious under-investment of public funds.
Failure by the public sector to expand investment in agricultural
research will result in lost opportunities for increased economic
growth and reduced poverty and food insecurity. This, unfortunately,
is the current prognosis for most developing countries.
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