FOSTERING AGRICULTURAL INNOVATION SYSTEM: TRENDS AND BEST PRACTICES

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1 FOSTERING AGRICULTURAL INNOVATION SYSTEM: TRENDS AND BEST PRACTICES Catherine Moreddu Trade and Agriculture Directorate Policies to Enhance Agricultural Innovation and Productivity: Focus on China - Workshop Beijing, 24 October 2013

2 Multiple benefits of agriculture innovation Innovation is key to improving productivity growth in the agriculture and agri-food sectors, thus contributing to production growth, higher competitiveness and farm family income, and ensuring lower food costs for consumers in the long-term. Innovation also help improve sustainable use of natural resources, e.g. water management, no-till agriculture, and adaption to climate change, e.g. drought or heat resistant varieties. Innovation reduce losses along the food chain (storage, ICT, improved adaptation to demand), and help improve nutritional attributes of food and ensure food traceability and safety (Nano, ICT). 2

3 Government role in improving innovation and productivity growth A wide range of policies affects the creation and adoption of innovation in agriculture General policies Agricultural policies Agricultural innovation policies They support innovation directly (R&D funding) or facilitate response to market incentives (regulations) OECD developed a Framework to review incentives and disincentives in those three areas 3

4 Pay attention to the general policy environment Stable macro-economic conditions Good governance (e.g. contract enforcement) Financial markets: access to credit Infrastructure investment: roads, ports, ICT, etc. Competition policies, business environment Well functioning trade and markets Tax policy: e.g. R&D tax rebates Regulations, e.g. food safety, environment Health and education policies Information systems 4

5 Allow farmers respond to market demand Clear agricultural policy and regulation framework Facilitate access to information Remove obstacles to structural change (e.g. land sale and lease) Allow farmers to exercise choice of input mix, production systems and output (remove distorting support) Provide an effective framework for risk management Move away from market and income support to invest in innovation, e.g. R&D, education, extension, rural and marketing infrastructure (roads, ICT) 5

6 Composition of support to agriculture Total Support Estimates as a % of GDP ( ) 2.5% Most distorting producer support Productivity enhancing services Other producer support Other support to agriculture 2.0% 1.5% 1.0% 0.5% 0.0% Source: OCDE (2013), Agricultural Policy Monitoring and Evaluation. 6

7 Agricultural innovation challenges Agricultural innovation systems (AIS) are being reformed to: Improve responsiveness to demand Increase diffusion and rates of adoption Better use human and financial resources OECD Trade and Agriculture Directorate 7

8 R&D main features and trends Stronger and more inclusive co-ordination within AIS Stronger integration of agriculture in general innovation Stronger governance mechanisms More project-based, competitive funding More private sector involvement, including through PPPs But public funds still dominate Harmonisation of Intellectual Property Rights (IPR) rules and standards Development of cross-country co-operation OECD Trade and Agriculture Directorate 8

9 Agricultural R&D intensity varies across countries, no common trend Budget expenditures on agricultural R&D as a share of agricultural value added % Source: OECD R&D indicators. 9

10 Agricultural R&D intensity lower in most developing countries Public expenditures on agricultural R&D as a share of agricultural value added % Argentina Brazil Chile China Colombia Costa Rica Source: ASTI database. India Indonesia South Africa 10

11 Foster national AIS (1) Define clear strategic priorities to guide public and private investment; Develop and facilitate access to information systems: databases, modelling tools, gene banks, etc. Focus public R&D funds on basic research and public good issues and increase private sector involvement Improve regulations to facilitate innovation (such as IPR, standards, SPS) 11

12 Foster national AIS (2) Facilitate the development of partnerships between public and private research, including with food companies Provide platforms for partnerships Use a combination of institutional and project funding Introduce some competition and output-driven projects Make agricultural education more relevant Foster competition in extension services and focus public efforts on public goods aspects, smaller farmers 12

13 Strengthen cross-country co-operation Global challenges (food security, climate change, price volatility, water scarcity) require international cooperation Regional co-operation also important, in particular for cross-boundary issues such as pests and diseases, an technologies adapted to a region. Increase national participation in and support to existing international efforts Facilitate international exchange of and access to information and knowledge (banks of research results, gene, data etc.) 13

14 Improve policy coherence and governance Align incentives for the agricultural sector and the innovation system to policy priorities Pay more attention to framework conditions Improve the governance of AIS need for better information on innovation efforts and outcomes (research results), and impact, and on agricultural performance develop longer term perspective on policy priorities and forward looking analytical tools to guide decisions Develop evaluation methods 14

15 Further reading OECD Trade and Agriculture Directorate 15

16 For more information Visit our website: Contact me: Follow us on Trade and Agriculture Directorate 16