Transcript AGEC/FNR 406 LECTURE 40 do new seeds meet farmers’ needs? Incentives for Innovation (W.A.

AGEC/FNR 406
LECTURE 40
do new seeds meet farmers’ needs?
Incentives for Innovation (W.A. Masters)
Technological innovation often
drives social change
Percent of U.S.
households
New technologies in the United States, 1900-2005
What determines which
innovations we get, and
how fast they spread?
1900
1915
1930
1945
1960
1975
1990
Source: Reprinted from W. Michael Cox and Richard Alm, “You Are What You Spend”, The New York Times 10 February 2008.
Graphic by Nicholas Felton.
2005
The timing and speed of new technology adoption is
particularly important in agriculture
Reprinted from Zvi Griliches (1957), “Hybrid Corn: An Exploration in the
Economics of Technological Change”. Econometrica, 25(4, Oct.): 501-522 .
Do poorer people on smaller farms adopt slowly?
The latest wave of ag research is biotechnology
GLOBAL AREA OF BIOTECH CROPS
Million Hectares (1996 to 2007)
140
Total
Industrial
Developing
23 Biotech Crop Countries
120
100
80
60
40
20
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Reprinted from Clive James (2008), “Global Status of
Commercialized Biotech/GM Crops: 2007.” ISAAA Briefs No. 37.
But so far, GM crops offer only two main features
Global Area of Biotech Crops, 1996 to 2007:
By Trait (Million Hectares)
80
70
60
50
Herbicide Tolerance
Insect Resistance
Both together
40
30
20
10
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Reprinted from Clive James (2008), “Global Status of
Commercialized Biotech/GM Crops: 2007.” ISAAA Briefs No. 37.
The new GM traits are good for just a few crops
Global Area of Biotech Crops, 1996 to 2007:
By Crop (Million Hectares)
70
60
50
40
Soybean
Maize
Cotton
Canola
30
20
10
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Reprinted from Clive James (2008), “Global Status of
Commercialized Biotech/GM Crops: 2007.” ISAAA Briefs No. 37.
…so, why no green revolution in Africa?
Slide
8
Fertilizer use is not converging to world levels,
as it did in Asia
Fertilizer Use (N+P+K), 1961-2002
100
SSAfrica
SouthAsia
10
E&SEAsia
RestWorld
1
19
61
19
65
19
69
19
73
19
77
19
81
19
85
19
89
19
93
19
97
20
01
kg per ha of arable land .
1000
One reason for Africa’s lag is that its
soils and moisture are unusually difficult
Selected Soil Fertility Constraints in Agriculture
(as percent of agricultural area)
SSA
Southeast Asia
South Asia
East Asia
Global Total
Low
Low
Cation
Moisture
Exchange Holding
Capacity Capacity
15.9
23.2
2.3
6.0
0.7
7.9
0.1
1.8
4.2
11.3
Note: Constraints characterized using the Fertility Capability Classification (Sanchez et al., Smith).
Source: Stanley Wood (2002), IFPRI file data.
But crucially, most African farmers still use old
seed types; new seeds are coming out now
Source: Calculated from data in Evenson and Gollin, 2003.
A key reason for slow innovation is simply
that Africa has had little local research
Public Research Expenditure per Unit of Land, 1971-91
(1985 PPP dollars per hectare of agricultural land)
4
3
2
1
0
Sub-Saharan Africa
All Developing Countries
All Developed Countries
Source: Calculated from IFPRI and FAOStat file data
Payoffs from agricultural research are high
everywhere, and for most kinds of research
There are many
studies, because
payoffs are
measurable and
important
Payoffs are
compared using
return on
investment
(annual percent
rate of return)
Which targets
give the highest
payoffs? Why?
Source: Alston, J.M., M.C. Marra, P.N. Pardey, and TJ Wyatt. 2000. "Research returns redux: A meta-analysis of the returns
to agricultural R&D." Australian Journal of Agricultural and Resource Economics, 44(2): 185-215.
To meet farmers’ needs, crop improvement
involves multiple innovations
Genetic improvement
Agronomic improvement
(by scientists, using
controlled trials)
(by farmers, using land &
labor)
Successful techniques are often surprising
traditional
“flat” planting
labor-intensive
“Zai” microcatchments
For these fields, the workers are:
Slide
15
Obtaining appropriate innovation is difficult
– Research, development and dissemination is often…
• a natural monopoly
“non-rival” in production (once made, easily replicated)
• a public good
“non-excludable” in consumption (beneficiaries cannot be made to pay)
• of unknown value until after adoption
a “credence good” for funders and adopters (no one is willing to pay)
– These market failures ensure that…
• free markets provide too few appropriate new technologies
• government or philanthropic intervention is needed
How can societies promote innovation?
1) Patents and other intellectual property rights
– in 1787, patent law written into Article 1 of the U.S. constitution
– works well for marketable innovations
2) Public research and education
– in 1869, founding of Purdue University and others in the U.S.
– works well when research institutions are trusted by taxpayers
3) Innovation contests and prizes
– e.g. British reward for computing longitude at sea (1714-1773)
– works well when sponsor can specify the target
The limitations of (1) and (2) have led to a boom in (3)
– $10 m. X Prize for civilian spaceflight (1995-2005), then others
– $1.5 b. Advance Market Commitment for vaccine ( ? )
– ????? Prizes for Innovation in African Agriculture ( ? )