Agriculture Reference
In-Depth Information
1.4 Roles of the Public Sector and the Private Sector
Both publicsector (government or non-profit) and private-sector (business) enti-
ties—as well as publicprivate partnerships between the two—are deeply engaged
in R&D for crop improvement and in the commercialization of new varieties. The
history of public support to crop breeding is primarily due to the genetic nature of
such innovations. Seeds or other planting materials historically have been easily
replicable, and therefore entrepreneurs have had little assurance, regardless of crop,
that a genetic innovation they might introduce would not become widely copied at
merely the cost of reproduction and transportation. Such imitators, because they
invest nothing into R&D or breeding programs, can undercut the prices that the
innovative entrepreneur must charge to recoup the value of his initial R&D invest-
ment plus interest (Baumol
2010
).
Even when private entrepreneurs can manage to appropriate at least some re-
turns above the marginal costs of reproducing and reselling a crop variety, they
inevitably calibrate their levels and types of R&D efforts based only upon their
expected profits from those appropriated returns: They are thus not induced to take
into consideration any other benefits that their innovations might bring to others
within the society. Such R&D can include the benefits of improved nutrition or food
security that accrue to food consumers, improvements in environmental quality or
public health, or technology spillover effects improving and accelerating the inno-
vation efforts by other breeders or seed companies. For these reasons governments,
non-profit philanthropies, and aid agencies have taken the lead and intervened in
the missing or underperforming markets for innovation in agriculture (Sunding and
Zilberman
2001
).
The first real increase in private sector involvement in crop genetics began in the
1930s with changes initiated by the development of hybrids. The fact that hybrids
would not breed true variety, introduced a physical mechanism of appropriability
into the market for improved seeds. Breeders would only release seed for the hybrid
progeny on the market while holding their foundational or parental breeding lines as
trade secrets. As hybrid corn became commonplace in the 1930s and 1940s, private
investment in corn breeding and the improvement of hybrid corn genetics took off.
At roughly the same time, in 1930, a new legal mechanism was introduced in
the US: the '
plant patent
'. It was intended to enhance the appropriability of genetic
innovations in asexually propagated crops, in order to encourage more privatesec-
tor investment in varietal improvement. Later, by the 1960s, yet another form of
intellectual property over crop genetics—plant variety protections (PVP) or plant
breeders' rights (PBR)—began to be developed in Europe and elsewhere, and was
later coordinated internationally under the International Union for the Protection of
New Varieties of Plants (UPOV) convention (Lesser
2007
).
Much more significant privatization of crop genetics has come with the rise,
since the 1980s, of recombinant DNA, cell and tissue culture, and plant transforma-
tion technologies. With the tools of biotechnology, the cost of making genetic im-
provements increased, while at the same time the potential value of (at least some)
