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Agricultural Knowledge, Science and Technology: Investment and Economic Returns | 501

Box 8-1. Plant breeding and biotechnology research.

Trends in multinational plant and biotech research
One of the most rapidly growing areas of private sector agricul­tural research has been the plant biotech area. This research started in the 1970s, increased very rapidly in the late 1980s and 1990s to over a billion dollars of research in response to the tech­nological opportunities offered by the breakthroughs of cellular and molecular biology and also due to stronger intellectual prop­erty rights particularly in the US. Some of this change was due to companies shifting research resources from chemical research to biological research.
        Since 1999, several of the six largest biotech firms, which dominate private biotech research worldwide, have reduced their agricultural biotechnology research, and in the aggregate agricul­tural biotechnology research expenditures probably stagnated. Monsanto reduced its research expenditure, which is about 85% agricultural biotechnology and plant breeding, from US$588 mil­lion in 2000 to US$510 million in 2003 before increasing back to $588 million in 2005. Syngenta's plant science R&D expendi­tures declined from $161 million in 2000 to $109 million in 2003 and to $100 million in 2005 (Syngenta, 2006). In contrast Bayer and BASF seem to be increasing their investments in biotech. Bayer purchased Aventis Crops Sciences, which had a major biotech research program, in 2001. Bayer has made a substan­tial investment in Agricultural biotech R&D since then and now spends about $80 million on seed and biotech research expenses (Garthof, 2005). BASF spent approximately $82 million in 2004 (Garthof, 2005). They recently (2006) acquired the Belgium bio­tech firm CropDesign and have committed themselves to spend­ing $320 million on biotech research over the new three years (Nutra Ingredients, 2006).

 

Public sector investment in agricultural biotech growing rap­idly in some large developing countries

Despite the controversy about transgenic crops and generally sluggish investments in biotechnology, government investments in agricultural biotechnology research and development are grow­ing rapidly in some large developing countries. The most dramatic growth in public biotech investments is in China from under 300 million yuan in 1995 to over 1.6 billion yuan in 2003 (equivalent to US$ 200 million). This 1.3 billion yuan increase accounts for between 25 to 33% of the increase in all agricultural research in the same time period (Huang et al., 2005). In addition Chinese cities and provinces have announced major government programs to commercialize the results of public sector biotech research such as the new center in Beijing, which will invest US$160 million over the next three years to nurture 100 companies and 500 labs (Gong, 2006).
         National governments in Brazil, Malaysia, and South Africa are also making major investments in agricultural biotech research and some provincial governments such as Sao Paolo in Brazil and Andhra Pradesh in India are also making substantial investments. In July 2006 the Brazilian government announced that it would invest US$3.3 billion over the next 10 years to develop biotech­nology for health, industry, and agriculture (checkbiotech.org). Malaysia announced that it would invest US$3.12 billion in agri­culture in the next plan period and that agricultural biotechnology would play a major role (Government of Malaysia, 2006). Indian officials said in the spring of 2006 that it will invest US$100 million and the US will add US$24 million on agricultural biotechnology in India (Jayaraman, 2006). South Africa launched Plantbio (www. plantbio.org.za) in late 2004 to support the commercialization of plant biotech products.

 

public sector. In contrast, only 8% of total spending in the developing world was conducted by private firms with the remaining 92% by public agencies. In the developing world, private sector involvement in agricultural research was rela­tively higher in the Asia and Pacific region with an average of 11% in 2000 (Pardey et al., 2006b).
         Private   sector  involvement  in  agricultural  R&D   in OECD countries differs from one country to another. In 2000, more than 80% of total agricultural R&D spending in Belgium, Sweden, and Switzerland was done by the private sector. In contrast, private sector shares were below 25% in Australia, Austria, Iceland, and Portugal that same year. Private and public sectors are involved in different types of research. In 1993 only 12% of the private research in five industrialized countries (Australia, the Netherlands, New Zealand, UK, and the US) focused on farm-oriented technol­ogies compared to 80% in the public sector. Food and other postharvest accounted for 30 to 90% of agricultural R&D investments in Australia, Japan, the Netherlands, and New Zealand. Chemical research accounted for 40 and 75% of

 

 

private research in the UK and US, but was less important in Australia, and almost negligent in New Zealand (Alston etal., 1999).
          A survey of seven Asian countries during the mid-1990s showed that the share of private investments had grown in three countries (China, India, and Indonesia) even more than the increases in public sector investments (Pray and Fuglie, 2001). However, this growth was uneven across subsectors. Total investments in the agricultural chemical industry in Asia, which includes mostly pest control chemicals and, to a lesser extent, fertilizer and biotechnology, tripled during mid-1980s and mid-1990s. Private spending on livestock research also grew considerably, but growth was substan­tially slower in other subsectors such as plantation crops and machinery. Both locally-owned and multinational firms played similar important roles in agricultural R&D. Mul­tinational firms accounted for an average of 45% of total private research spending in the seven Asian countries, but with substantial differences among countries. Almost all re­search in China by truly private firms (rather than govern-

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