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Agricultural R&D Policy and Institutional Reforms: Learning from the Experiences of India and China

There is a paradigm shift in the agricultural research and development policy of developing countries, primarily driven by scarcity of public funds. The countries with a strong research system like India and China have initiated a number of reforms with an objective to diversify the sources of funding and increase research efficiency. Competitive funding, commercialisation of technologies, strengthened intellectual property rights, facilitating regulations and flexible extension approach are some of the major reforms undertaken. This paper examines the outcomes of these reforms and draws lessons for other developing countries.

REVIEW OF AGRICULTUREEconomic & Political Weekly EPW June 28, 2008145Agricultural R&D Policyand Institutional Reforms: Learning from the Experiences of India and ChinaSuresh PalIndia and China have large agricultural research and develop-ment (R&D) systems with over a century of organised applica-tion of science to agriculture. Commitment of government funding for agriculturalR&Dhas developed a network of public research institutions. Both the systems have successfully addressed the nationalR&D needs of their respective countries. 1 IntroductionStudies have shown that agriculturalR&Dhas been one of the important sources of agricultural growth and also helped in reducing poverty [Alston et al 2000; Fan et al 1999 and Fan et al 2002]. In spite of these impressive growth and equity impacts, public funding for agriculturalR&D has come under scrutiny in recent past because of uneven performance of agriculture, as well as due to the factors relating to R&D.Inefficiencies of the public research systems manifested during protected socio- political environment are no longer affordable under the new economic environment. This coupled with incremental nature of technological advancements and their impacts raises the question of effectiveness and accountability of public research. Such pressures are mounting due to rising demands for public funds from rapidly growing sectors of the economy like industry, services and information communication. This is in addition to higher allocations required for the traditional claimers of public funds like agriculture and rural development, health, education and infrastructure development. These developments necessitate a more careful allocation and efficient use of scarce public funds. The need for review of agriculturalRD policy also arises from the fact thatRD systems in developed countries have under-gone major reforms due to rapid growth of private research [Alston et al 1999]. It is believed that a similar process has started in India and to some extent in China also because of commer-cialisation of agriculture and expansion of input markets. Both the countries are getting the increasing attention of global players in agriculturalRD as the potential market for their products is vast and cost-economies in establishing their units or outsourcing some of the activities are substantial. These changes are bound to affect the nationalRD organisations, both in public and private sectors. AgriculturalRD policy reforms therefore should guide these developments and align them with the ongoing macroeconomic reforms. These reforms should also help prepare the country to face the challenges arising from international agreements, especially those which arelikelyto influence technology flow (e g, protection of intel-lectual property, regulation of biotech products) and harness There is a paradigm shift in the agricultural research and development policy of developing countries, primarily driven by scarcity of public funds. The countries with a strong research system like India and China have initiated a number of reforms with an objective to diversify the sources of funding and increase research efficiency. Competitive funding, commercialisation of technologies, strengthened intellectual property rights, facilitating regulations and flexible extension approach are some of the major reforms undertaken. This paper examines the outcomes of these reforms and draws lessons for other developing countries.The author is grateful to P K Joshi, Jikun Huang, Shenggen Fan and Ashok Gulati for their valuable comments on an earlier draft of this paper. The views expressed in this paper are of the author and do not necessarily reflect the position of Indian Council of Agricultural Research.Suresh Pal (spl@ncap.res.in) is at the National Centre for Agricultural Economics and Policy Research, New Delhi.
REVIEW OF AGRICULTUREJune 28, 2008 EPW Economic Political Weekly146EPWRF
REVIEW OF AGRICULTUREEconomic Political Weekly EPW June 28, 2008147scientificopportunity to make the agriculture sector globally competitive. How far are agriculturalRD policy reforms in India and China guided by these forces and what are the imple-mentation experiences and outcomes? This paper addresses this question. Specifically, it compares agriculturalRDpolicy and institu-tional reforms in India and China in order to draw lessons. It also spells out the strategy for accelerating the reform process. Since both the countries together account for 37 per cent of total agricultural research investment made by all the developing countries [Pardey et al 2006] and support a variety of RD organisations, their experiences will be useful for other devel-oping countries in shaping the reforms. Keeping this objective in view, the paper first provides an overview of organisational structure and trends in public funding for agricultural research. This is followed by a discussion of the nature and impact of institutional reforms like organisation and management, commercialisation and privatisation of RD, and protection of intellectual property. Finally, the paper summarises important lessons learned and future challenges for accelerating the reforms. 2 AgriculturalResearchSystemEvolution of any system is primarily shaped by historical develop-ments and the changing socio-economic environment. Since both China and India followed the policy of economic growth with social justice, there was rapid growth of public sector organisations. Organisational StructureThe agricultural research system also evolved in the public domain and its expansion took place mainly in the second half of the 20th century. The Indian system followed a secular growth path with a focus on inter-institutional linkages, including linkages with international agricultural research centres (IARCs) like centres of the Consultative Group for International Agricul-tural Research (CGIAR). China, on the other hand, adopted a system of the former Union of the Soviet Socialist Republics (USSR) with the establishment of the Chinese Academy of Agricul-tural Sciences (CAAS) in 1957. The provincial academies were created thereafter. The system grew in phases coinciding with socio-political developments in the country and it remained in isolation from the rest of the worlduntil 1985 when the Chinese government initiated a series of reforms aiming to reduce the dependence of the system on public funds through commercia-lisation of technologies for resource generation. Thus historical developments influenced the institutional set-up, which was dominated by government funded and administrated organisations. The growth of private research was rather limited, especially in China.Currently, the Indian system comprises the Indian Council of Agricultural Research (ICAR) and its network of about 100 insti-tutions at the national level, and 41 state agricultural universities (SAUs) at the provincial or state level and their 126 regional research stations working at the zonal level, comprising a few districts. Agricultural research outside the ICAR-SAU system is rather negligible, except that conducted by the Indian Council of Forestry Research and Education (ICFRE) and its eight institutes under the central ministry of environment and forest.1 There are close linkages betweenICAR andSAUs through ICAR grants to SAUs for developmental activities and research programmes like all India coordinated research projects (AICRPs) managed by ICAR. The Chinese agricultural research system by the turn of the century comprisesCAAS affiliated with the ministry of agricul-ture and its 40 research institutes, 19 institutes of other national academies, 429 institutes of 29 provincial academies and 608 institutes at the prefectural level, besides six key agricultural universities and several provincial agricultural colleges. In addition, there are other academies like the Chinese Academy of Science conducting agricultural research in the country. The Chinese system is thus more decentralised both in terms of struc-ture and funding. For example, the national (CAAS) institutes in China account for about 13 per cent of total scientists and 23 per cent of total expenditure, whereas ICAR institutes in India account for more than 33 per cent of total scientists and research expendi-ture [Fan et al 2006; Huang et al 2003 and Pal and Byerlee 2006]. The decentralisation of the Chinese system could be attributed to the transfer ofCAAS institutes to the provinces in the late 1950s and early 1960s and establishment of research institutes at the prefectural level to bring agricultural research close to peasants and to feed new technologies in extension programmes. However, coordination of a large and decentralised system was difficult, resulting in duplication of research efforts among the national and provincial institutes. Another notable difference between the two systems is that agricultural research and education are better linked in India inSAUs and deemed univer-sities (national institutes of ICAR), whereas these activities are under different ministries in China, making the linkage between them extremely weak. Research-extension linkages are weak in both the countries, in spite of the fact that both research and extension are under the ministry of agriculture and extension services are delivered by a decentralised system. To address this deficiency,ICAR established more than 500 agricultural science centres at the district level for refinement and dissemination of new technologies and training of farmers. 3 FundingforAgriculturalResearch Government funds in the form of block grants are major source of funding for agricultural research in both the countries. Funding SourcesThe Planning Commission and apex scientific bodies (ICAR in India and the ministry of science and technology or the former State Science and Technology Commission in China) play impor-tant roles in allocation of government funds. The central govern-ment funding is available for ICAR while the state governments supportSAUs of their respective states. Over the years, the share of the central government has increased and now it contributes nearly half of total public funding. The private sector contributes only a small fraction (about 10-15 per cent) of the total funding, mainly for in-houseRD activities. In China, however, funding for agricultural research is somewhat diversified and decentralised.
REVIEW OF AGRICULTUREJune 28, 2008 EPW Economic Political Weekly148The provincial and prefectural funds constituted as high as 85 per cent to the total government (fiscal) funding in 2000, and CAAS spent only 15 per cent of these funds. Government funding was about 61 per cent of total funding in China and the rest was raised by research institutes through commercial activities related or unrelated to research. These are called “development funds” and their share has increased since the mid-1980s due to the policy reforms to promote commercialisation of agricultural research for resource generation. Recently, however, it was realised that adequate government funding is essential to sustain research programmes of national importance and therefore its share increased substantially. For instance, the share of govern-ment funding for CAAS increased from 52.2 per cent in 1999 to 64 per cent in 2001 [Fan et al 2006]. Private research funding is at the margin in China, and only recently some private compa-nies (transnational and national) have established research programmes for plant breeding, pesticides, farm machinery, food processingDQGplant ELRWHFKQRORJy [Pray 2001 and Huang et al 2003]. Intensity of Research Expenditure Government budgetary support to agricultural research in real terms maintained a steady growth in India. Growth, however, was remarkably high in central funding during the 1960s and 1970s, while funding from state governments was high in the 1980s. Funding from both the sources grew at a reasonable rate in the 1990s, giving an overall annual growth rate of 4 per cent which is marginally lower than the growth rate (5.2 per cent) observed in the 1980s. The growth in public funding for agricul-tural research in China has been unstable for nearly the first three decades of the planning period. Funding soared to an unsustainable level during the period of the “great leap forward” and decreased dramatically thereafter, particularly during the period of the “cultural revolution”. Only after the revitalisation of CAAS, did funding maintain a steady growth [Fan and Pardey 1992 and Fan et al 2006]. Research expenditure in purchasing power parity (PPP) or international dollars, an index used to compare purchasing power of currencies rather than the conventional exchange rate, is used for international comparison of expenditure levels. Public expenditure measured in 1999PPP dollars indicates that China spent 2,578 million yuan annually on agricultural research during 1995-2000, which further rose to 4,329 million yuan in 2002. This investment is more than double that made by India (1,813 million in 2004). The expenditure per hectare of arable land is also higher in China (PPP 37.32/ha) in comparison to India (PPP 10.66/ha) Another indicator of research investment is the number of researchers converted into full-time equivalent (FTE) after taking into consideration the time spent on non-research (teaching and extension) activities. Comparison of FTE research-ers also indicates that China’s research intensity is more than double of that in India (see the table). While this broad conclusion about scientific manpower holds true, one should not overlook some qualitative differences in scientific manpower. For instance, Chinese scientists also spend their time on commercial activities for which reliable estimates are not readily available and therefore the strength of actualFTE researchers could be lower.2 The second major difference is that most of the Indian researchers hold a doctoral degree, while only a small proportion of their counterparts in China hold doctorates. In addition to active researchers, the Chinese system also employs a large number of other senior staff directly or indirectly associated with research and estimate for the total staff is as high as 92,349. This shows that the Chinese research system is over-staffed. Agricultural research intensity (ARI), defined as agricultural research expenditure as a percentage of agricultural gross domestic product (AgGDP), is consistently higher in China since the early 1980s. However, it declined overtime primarily due to more than proportionate growth inAgGDP, especially during the 1990s, but it was restored by the turn of the century. Currently, China spends 0.49 per cent of her AgGDP on agricultural research as against 0.33 per cent spent in India. This ratio is much lower than the average ratio for the developing countries as a whole (0.53 per cent). The gap is wider if the ratio is compared with the developed countries (2.4 per cent) [Pardey et al 2006]. Some economies of scale can be realised by both the countries due to the large agricultural economy, but given the diversity of produc-tion environments and number of commodities grown, there is considerable underinvestment in both the countries, especially when private research is in its embryonic stage.4 Resource Allocations and Research ImpactsThe mechanism for resource allocation affects effectiveness and efficiency of a research system. Important issues in this context include federal versus provincial institutions, basic versus applied and adaptive research, subsistence versus commercial commodi-ties, and favoured versus less-favoured regions. Paucity of data does not permit us to assess the allocations from these Table : Public Investment in Agricultural Research in China and India 1980-851991-941995-20002002 China Agricultural research expenditure (annual, million 1999 yuan) 2,232 3,808 4,667 7,837Agricultural research expenditure (annual, million 1999 international dollars) 1,233 2,104 2,578 4,329Agricultural research expenditure as percentage of AgGDP 0.42 0.39 0.34 0.49Number of FTE researchers 5,443 25,917 29,920 31,927Expenditure per FTE worker (000 1999 international dollars) 226 81 86 135 1981-83 1991-931997-992004 India Agricultural research expenditure (annual, million 1999 rupees) 5,214 9,513 12,339 15,691Agricultural research expenditure (annual, million 1999 international dollars) 603 1,100 1,426 1,813Agricultural research expenditure as percentage of AgGDP 0.22 0.28 0.29 0.33Agricultural research and education expenditure as percentage of AgGDP 0.36 0.44 0.42 0.53Number of FTE researchers 10,315 12,742 13,092 8884Expenditure per FTE worker (000 1999 international dollars) 58 86 109 2041 Agriculture includes crops (including horticultural crops), livestock, fisheries and forestry. The investment estimates are for the NARS and do not cover the institutes conducting research for agriculture but located outside of the NARS.2 Number of researchers includes active researchers only (excluding researchers associated with commercial activities, retirees and technicians).Source: India: Pal and Byerlee (2006); China: Qian et al (2003) and Fan et al (2006).
China India
REVIEW OF AGRICULTUREJune 28, 2008 EPW Economic Political Weekly150Besides economic benefits, there is a strong poverty alleviation impact of agricultural research in both China and India. It is estimated that a 1 per cent increase in expenditure on agricul-turalRD will reduce rural poverty by 0.065 per cent in India and 0.163 per cent in China. This is because research has been the most important source of agricultural growth (others being irrigation, rural infrastructure and education) in both the countries, which has a direct impact on reduction of rural poverty. Furthermore, agricultural growth has also reduced urban poverty through a decrease in food prices, benefiting the urban poor who spend a large proportion of their income on food items [Fan et al 1999 and 2002]. Poverty reduction benefits are, however, declin-ing over time, which can be reversed by increasing public invest-ment in research and targetting marginal production environ-ments. It may be noted here that the research impact is also affected by the policy and institutional environment which influ-ences the spread and absorption of new technologies. There is considerable scope for reforms in these areas, particularly for those relating to institutions for management of natural resources, management of intellectual property, regulation of private RD, markets and trade, etc [Pal et al 2003]. The idea is that we should put enabling institutions in place to accelerate the flow of technology to farmers, protect the interest of smallholders and accelerate overall agricultural development.5 Business Sector DevelopmentThe business sector is active in the provision of agricultural inputs and services to farmers in both the countries. India has both public and private sector enterprises, while public or state-owned enterprises (SOEs) had a near monopoly in Chinauntil the mid-1980s. The reforms of the 1980s forced public agricultural research institutes to diversify towards developmental activities for resource generation, and some of them emerged as independ-ent shareholding companies with their own research programmes [Fan et al 2006]. This led to the growth of private input compa-nies in China. The cross-province operations of these companies were allowed throughjoint ventures withSOEs.Private research activities remained at the periphery due a number of policy constraints and important among these are (a) restrictions on entry on foreign firms on production and supply of agricultural inputs, (b) weak enforcement of intellectual property rights (IPRs), and (c) quantitative and other restrictions on imports of inputs. As a result, the share of private research investment remained low, which might improve with better enforcement of IPRs and emergence of joint venture firms in recent years [Huang et al 2003]. In India, the business sector has been quite active in provision of inputs and other services to farmers. Both public and private companies emerged during the green revolution period dealing with agro-chemicals, fertilisers, farm machinery, etc. These companies did not participate inRD but promoted use of modern inputs by farmers. With the growth of the livestock sector, there is an increase in the demand for animal pharmaceuticals and feed and as a result, many private companies are now in this business. The seed industry is another sector where there is tremendous growth of private sector because of an increase in demand for commercial seed and liberalisation of the seed sector during the late 1980s. All transnational, national large and small companies and unorganised seed agencies are active in the seed business of all crops but their interest is mainly in hybrid seed [Pal et al 1998 and Tripp and Pal 2001]. The government also provides tax incentives and applies low duty rates on imports of RD equipment. This has a positive effect on private research investment which grew at a rate in excess of 7 per cent per annum from the mid-1980s to the mid-1990s. Implementation and enforcement of newIPRs regime (patent act amendments and plant variety protection act) is expected to further attract private investment. It is also possible that there will be new alliances, mergers or acquisition of private companies under the new IPR regime and private RD in the country may be dominated by technology rich companies [for detail discussion, see Pal et al 2007].6 AgriculturalRDReformsAs seen in previous section, the agricultural research systems of China and India are dominated by public research organisations, which grew in their respective socio-political systems and inher-ited certain inefficiencies. In order to minimise these inefficien-cies and to align domestic RD policy with new economic policies and international agreements, a number of policy reforms were taken and some more are on the anvil. It is often suggested that developing countries now should enhance efficiency of public research organisations to make them more responsive to clients’ needs and improve sustainability of funding through appropriate policy, institutional and management reforms. We discuss the progress and prospects of RD reforms of China and India in this context. 7 Public Sector Reforms Public agricultural research organisations in China have under-gone several reforms to suit the changing needs and socio-political developments in the country. During the 1950s and 1960s,CAAS was reorganised and a number of institutes were transferred to rural areas to bring the system closer to the production environ-ment. The CAAS was reorganised and strengthened in 1978, followed by a reform process during the mid-1980s through the government documents of 1985 and 1987. This reform process continued in the 1990s also. The main objectives of these reforms were to liberalise and revitalise the research system by develop-ment of markets for technologies, changing the mechanism of research funding, and rewarding scientists based on their performance. The change in the funding mechanism included awarding core funding for salary and other overhead costs through block grants which is a small proportion of total funding. A large part of government funds were made available to various research institutes through some sort of competitive project-based funding. The research institutes were also encour-aged to establish close links with clients and commercialise technologies and services to augment research resources. Initially,therewere some inhibitions to these reforms, but impending financial constraints forced research institutions to embrace them.
REVIEW OF AGRICULTUREEconomic Political Weekly EPW June 28, 2008151There are some remarkable successes in terms of resource generation and diversification of sources of funding, but these reforms could not augment research resources in a real sense because of the following reasons. First, scientists were inexperi-enced in commercialisation of technology and in pursuit of resource generation research institutions also diversified into developmental activities unrelated to research. This led to diver-sion of research resources to some extent. Secondly, farmers were not willing to pay for services which were earlier available free of cost, thus limiting the scope to generate resources. Thirdly, since SOEs were already commercialising technologies earlier, entry of research institutes into this activity led to duplication of efforts among public institutions. Finally, some institutes tried licensing of technologies, but the country’s IPR and legal environment was not conducive for such arrangements [for a detailed discussion, see Rozelle et al 1997 and Fan et al 2006]. Notwithstanding these limitations, agricultural research moved away from a rigid and close system to a competitive and outward looking system with better linkages with clients and international research system. The second round of reforms, which are an extension of the reforms of the Chinese Academy of Science to CAAS, learned from the past experience and therefore focused on modernisation of public agricultural research. The new reforms envisaged selec-tive commercialisation of research products, rationalisation of staff strength, upgrading research infrastructure, etc. Agricultural universities and colleges which were under the ministry of agriculture were also transferred to the education system. However, evidence on the impact of these reforms is rather scanty.In India, relevance, accountability and efficiency of public research organisations have been at the centre ofRD reform process. Accordingly,ICAR has been subjected to several internal and external reviews over the last 10-15 years and several of their recommendations on decentralisation of the system, manage-ment of research institutes, streamlining functioning ofICAR headquarters, incentives system, etc, have been implemented. As a result, ICAR has become more decentralised and well-linked over time. The SAUs have, however, maintained their structure and functional modalities established at the time of their incep-tion, except that regional research stations were established under them during the 1970s and 1980s. Both the systems remained with organisational inefficiencies and therefore in the late 1990s, theICAR initiated a number of organisation and management reforms. These reforms entail decentralisation and devolution of administrative powers to ICAR institutes and scien-tists heading research projects, provision of consultancy and contractual research for better linkages with clients and develop-ment of management information system. Also, there was a move to shift to project-based budgeting for better financial manage-ment. The concept of research planning in a ecoregional and production system perspective in a “bottom up” approach was encouraged under the National Agricultural Technology Project with funding from the World Bank. It is visualised that institu-tionalisation of improved research planning in a system perspec-tive and multi-disciplinary mode would break the institutional and disciplinary boundaries and establish linkages among research programmes. The success of these reforms has been mixed and it is believed that concurrent reforms in financial management are necessary for accelerating the process and making a perceptible improvement in institutional efficiency. In India, there is a consensus for allocation of more resources through a competitive process and a number of competitive funds were established at the national and provincial levels. All public and private (for profit and non-profit) research organisations can compete for these funds. However, such funds constitute about 2-4 per cent of the total research funding and largely followed under externally-funded projects. On the other hand, in China, only a small fraction (10-15 per cent) of the total funding is allocated through block grants and a large proportion of the funds, marked as project funds, are allocated through a competi-tive process. The research institutes submit proposals to the Science and Technology Commission or the concerned ministry, and funds are allocated based on quality of proposal and capacity of host institute to conduct research. 8 Reforms for Business RDThe performance of both the countries with regard to policy reforms undertaken to encourage business entities, particularly from the private sector, for agriculturalRD is quite uneven. Although both the countries provided fiscal and other incentives to attract research investment from the business sector, its growth was much higher in India. This is because of favourable industrial and regulatory policies, which allowed private input industries to grow and diversify into research to increase their market share. These policies were further liberalised and entry of fully foreign-owned companies was allowed during the economy-wide reforms of 1991. Imports of seed and planting material for horticultural crops were also allowed under the New Seed Policy of 1988. More importantly, India followed a policy of open access of private sector to public research products (e g, plant varieties and inbred lines) which has provided tremendous boost to the growth of private (seed) sector [Tripp and Pal 2001]. The private sector has a significant presence inRD for plant breed-ing, agricultural chemicals, animal health and biotechnology,and a dominant position in the delivery of all agricultural inputs. As noted earlier, China’s focus has been on the development of the public business sector for commercialisation of technologies and other services since the mid-1980s. Public research institutes diversified into development activities and in some cases the development unit of the institute was organised as a separate entity to minimise risk. However, some of the enterprises owned by research institutes or government successfully commercial-ised technologies and invested resources thus generated in agricultural RD. These enterprises eventually became share-holding companies, mobilising several hundred million yuan from shareholders. These firms also got some incentives from the government in the form of tax concession and low interest loans. However, most of the successful companies were dealing with high value commodities like livestock and fisheries, having a well established market for technologies and other products [Qian et al 2003 and Koo et al 2003]. These efforts succeeded in a few cases, but crowded out small SOEs and thus making only a
REVIEW OF AGRICULTUREJune 28, 2008 EPW Economic Political Weekly152marginal contribution to the business sector. Restrictions on the entry and operation of the private firms, perhaps to ensure quality of inputs and control prices, could not allow the growth of private RD. The Seed Administration Regulation (1989) and more recently the new Seed Law (2000) allowed imports of vegetable seeds, eased restrictions on the entry and liberalised operations of private seed companies. The private foreign companies, mostly seed companies, were allowed to commercialise their products through joint ventures withSOEs having majority ownership [Pray 2001 and Koo et al 2003]. Thus, SOEs and spin-offsof public research still dominate the delivery of improved agricultural inputs, and the recent reforms were largely confined to seed sector.9 BiotechnologyAnother major change inRD policy of both the countries is the decision to promote agricultural biotechnology.The governments have invested a good amount of resources in agricultural biotech-nology research, and the guidelines are developed for conducting research and evaluating its products (transgenics) for their economic, health, biosafety and other impacts. It is estimated that public investment in agricultural biotechnology in India was about 130 million 1999PPP dollars in 2000 and most of this investment was on crop biotechnology.4 China also made almost the same level of public investment (167 millionPPP dollars in 2000) on agricultural biotechnology and about 60 per cent of this is on crop biotechnology [Huang et al 2003]. This is in contrast to the developed countries where private sector is a dominant player in biotechnology research. Also, the focus of crop biotechnology programmes in the two countries is on tissue culture and crop improvement for tolerance to biotic (insects and diseases) and abiotic stresses (moisture, salinity, etc) and only a few programmes emphasise on improving quality and shelf-life of products. These initiatives indicate the intension of both the governments to harness biotechnology for strengthening house-hold food and nutritional security and welfare of the poor. However, the growth of private biotech research is restricted because of a lack of a comprehensive policy on development and use of transgenic crop varieties and prevailing uncertainty regarding future of transgenic food crops. Both the countries are still struggling with the issues of access to proprietary material, particularly from the developed countries and consumer safety and acceptance. A transparent policy addressing these issues will go in a long way to promote biotech research in the private sector.10 Research-ExtensionLinkagesAgricultural extension is highly decentralised in both the countries and there is extension machinery at different levels. In China, the reforms of 1980s reorganised and strengthened the township agricultural technology extension stations and the county agricultural technology centres, and also created agricul-tural technology demonstration households in the villages. The system was implemented by the state extension personnel and
REVIEW OF AGRICULTUREEconomic Political Weekly EPW June 28, 2008153technicians paid by farmers. In 1999, China spent about 0.49 per cent of herAgGDP on agricultural extension and engaged about one million extension workers and two-thirds of these were technicians.5 India employed about 90,000 extension workers and spent 0.17 per cent of her AgGDP on extension [Pal 2003]. Except subject-matter specialists in India, educational qualifica-tions and skills of extension workers are extremely low in both the countries. This coupled with lack of operational funds constrained effectiveness of the extension system. To augment resources China allowed extension stations, particularly at the township level, to undertake marketing of agricultural inputs and charging of fee-for-extension services [Yinghui 1993]. Diver-sification towards input marketing, however, diluted the priority for extension work. In India also, since agricultural extension is with the line departments of state governments, extension workers were burdened with various kinds of agricultural devel-opmental responsibilities. Thus, the extension system in both the countries remained weak and ineffective because of lack of funding, inadequate professional skills of staff, operational rigid-ities, and excessive burden of non-extension responsibilities. Since agricultural research and extension systems are under separate administrative control, they work in isolation. Revitali-sation of agricultural extension system in both the countries is critical to sustain technology flow to farmers. Strengthening the extension system and fostering research-extension-farmer linkages gain importance in view of the increas-ing participation of private sector in plant breeding and biotech-nology. This is because the dissemination of information and skill development for use of modern technologies, particularly for management of natural resources and environmental protection, may not get adequate attention of the private sector and it may remain a responsibility of the public sector. In China, the problem may even continue for the delivery of embodied technologies like seeds to farmers because of the fact that research organisations have hardly any incentive to promote a product being sold by another competitor firm and the firms commercialising a techno-logy have no incentive to provide feedback to research institutes about performance of the technology. This trend of research and extension systems working in isolation must be corrected. There should be an institutional mechanism and incentive system to foster research-extension-farmer linkages in a sustain-able manner. India has taken some initiative by establishing the Agricultural Technology Management Agency (ATMA) at the district level for coordination of extension efforts of all agencies, including frontline extension efforts of research institutions. The agency can develop demand-driven extension programmes in consultation with farmers and other stakeholders and implement them in a flexible manner. Although this experiment is in an early stage of implementation and upscaling, it is too early to expect some visible impact. However, there are signs of revival of the extension system, increasing coordination between different line departments, and making space for farmers’ participation [Pal 2003]. Charging fee-for-extension services and privatisation of agricultural extension is another option often suggested, but a replicable model is yet to emerge. China allowed cost recovery through clinical services and “technology contract”, and collective financing of extension services by townships, villages and farmers during the reforms of 1980s. In India,ATMA is allowed to gener-ate resources by charging fee-for-service and there are several examples of private extension, mostly focusing on high value commodities like poultry and vegetables, which are operating in contract farming mode. Although one can learn from these initia-tives and replicate the success stories, but it is unlikely that such private efforts would address extension needs of small holders in marginal environments. Therefore, strengthening of the public extension system is a must to address sustainability and equity concerns of agriculture.11 Protection of Intellectual PropertyLike other developing countries, life forms including plants and animals were outside the purview of protection of intellectual property and therefore products of agricultural research largely remained in the public domain. There was full freedom in exchange and use of intellectual property. In India, however, process patents were allowed for agro-chemicals, animal pharma-ceuticals and food processing under the Patent Act (1970). China enacted the patent law in 1984 and amended it in 1992 and 2000 to expand its scope and period of protection, provide more retail regulations, and improve enforcement. In compliance with article 27.3(b) of the international agreement on trade-related aspects of intellectual property rights under the World Trade Organisation, scope of the protection of intellectual property is now extended to agriculture and a sui generis system for protection of plant varieties was adopted. China has enacted the plant variety protection (PVP) act in 1997 and implemented it since 1999. India enacted the legislation in 2002 and established an authority in 2005 which has started variety registration process in 2007. Both the acts provide protection of new varieties of plants, trees and vines which are distinct, uniform and stable (DUS). The acts also provide exemptions for the use of protected varieties for research and breeding purposes (breeders’ exemption), and farmers’ exemption to save and reuse seed of protected varieties. The Indian law has gone further to protect farmers’ rights by recog-nising them as breeders and conservators of plant genetic resources (therefore benefit sharing for use of farmers’ varieties and land races) and allowing them to exchange farm-saved seed with fellow farmers. BesidesPVP act, there are other acts like biological diversity, geographical indication, trademark, design, copyright, and patents act, to protect intellectual property. India has also extended the scope of patenting to biotechnological and biochemical process (Patent (Amendment) Act, 2002) and may eventually adopt product patents in this field also. In terms of the impact of strengthenedIPRs regime in India, there is an increase in patenting activity, especially of private research.6 The Indian seed industry has become more vibrant and new forms of alliances, partnerships and takeovers are taking place. In general, there is a move towards market based transactions between seed companies which shall be further streamlined. The Public Seeds Corporations have lost a signifi-cant part of their hybrid seed business to private seed companies and these are now concentrating largely on seeds of open-pollinated varieties. However, it would be wrong to attribute
REVIEW OF AGRICULTUREJune 28, 2008 EPW Economic Political Weekly154these changes entirely to the change inIPRs regime, as market opportunities and liberalisation policy also played an important role in the development of private seed industry [Pal et al 2007]. The impact in terms of the intensity of private RD and diversifi-cation of plant breeding to non-hybrid seed crops is rather diffi-cult to speculate at this early stage.Effectiveness of LegislationChina is ahead in implementation of itsPVP act and a large number of varieties have been protected and the success rate of applications has been moderate (about 50 per cent). However, a majority of these were hybrids of food crops developed by public research institutions at the provincial and prefectural levels and shareholding companies. There were relatively fever applications fromCAAS which is comparatively better funded [Koo et al 2003]. This shows that public research institutions having scarcity of resources opt for protection of their varieties for resource genera-tion. However, there was no major difference in the performance of the protected and non-protected varieties and hence no differ-ence in prices of their seeds. The second important lesson is that getting protection for plant varieties and maintaining is a costly business. The cost is $2,450 which is twice the cost in the US at the nominal exchange rate and about 10 times inPPP dollars terms. Some researchers are of the opinion that a lack of appre-ciation for IPRs, high cost of getting protection, and complicated and weak enforcement processes may discourage many breeders to seek legal protection for their material [Qian et al 2003].Enforcement is critical for the effectiveness of IPR legislations and this requires building capacity of the enforcement mecha-nism (i e, legal system) as well as of the right holders. In the absence of such capacity, plant breeders, especially in the private sector, may continue to rely on biological and other means of protection like trade secrets. One example of this is hybrids which provide effective protection to inbred lines. This is successfully followed all over the world, but this mechanism also became weak in China as parental lines need to be shared with seed production entities like state seed farms working as joint ventures for production and distribution of seeds. It is quite likely that private companies may also opt for other protection mecha-nisms like contracts for not disclosing parent lines or trade secrets. Therefore, government policy should aim at balancing public and private interests by providing adequate protection to intellectual property, whilst making available the protected material for research and local adaptations. Success on this front would go a long way in developing a pluralistic RD systemandcompetitive market for agricultural technologies and inputs like seed. 12 Conclusions Innovations in funding and use of available resources have been central to agriculturalRD policy reforms with an objective to increase effectiveness and efficiency of agriculturalRD system. Of late,IPR policy and legislation were enacted to diversify funding sources. The focus of reforms and progress however differed in the case study countries. China has made considerable progress in commercialisation of public research products for resource generation, while India has taken the lead in encouraging private research. However, there is still considerable scope for balancing the roles of public and private sectors, improving efficiency of public RD organisations, and mobilising additional research resources both from public and private sources. Both the countries can learn from each other’s experience in shaping reforms, particularly for evolving a strategy to enhance small farmers’ access to modern technologies in the era of IPRs. Since both China and India are pursuing similar research objectives with a strong presence of public RD, there are opportunities for cooperation in science and technology, especially in the area of biotechnology to control increasing dominance of a few large companies. Research for increasing agricultural productivity in marginal areas (dry and inaccessible hilly areas) – a dominant ecosystem in both the countries, would be another potential area of mutual interest and cooperation. To make this happen, public policy and institutional environment should embrace the emerg-ing trend of research partnership. There are some lessons which can be generalised for developing countries. It is clearly shown that an enabling policy environment and attractive market opportunities play an important role in diversification of RD through participation of the private sector. This is essential for enhancing research intensity and making the system more demand-driven. At the same time, it is important to recognise the fact that private research is unlikely to bridge the gap in research intensity in the near future and whatever private funding will come will be mainly for in-house RD. Therefore, the presence of strong public RD is a must. The need for public RD is also justified for conducting research to enhance the sustainabil-ity of natural resources and agricultural production systems which is unlikely to get private attention. Even for the area where private sector is active (e g, seeds), public research will be required to promote competitiveness of technology markets. Commercialisation of agricultural technologies originating from the public sector is another option often mentioned to augment research funding. The Chinese experience has, however, shown that there is a limit to commercialisation and overempha-sis sometimes could be counterproductive. Products and services of applied research are easy to commercialise, but it requires (a) building skills for commercialisation of technology, (b) well-defined mechanisms for commercialisation, and (c) a developed market for technologies. The public research system should also keep a balance between upstream strategic research and applied research, and the former should not be a victim of the process of resource generation. Nevertheless, public research organisations can use commercialisation processes for fostering linkages with end-users of technology and other clients and thereby make the research agenda demand driven.Decentralisation of administrative responsibilities, upscaling of competitive funding, strengthening the peer review process, and use of management tools like priority assessment and informa-tion system development were encouraged to increase efficiency of public research. In particular, project-based, competitive funding was instrumental in bringing transparency and objectivity in award-ing research grants and granting functionalautonomy for success-ful implementation of research projects. The apex research
REVIEW OF AGRICULTUREEconomic Political Weekly EPW June 28, 2008155system has played an important role in institutionalising these reforms in the system. Notwithstanding these positive develop-ments, there are some areas like human capital development where progress is rather limited. Adequate incentive and reward for productive scientists to retain them in the system, checking inbreeding in education, maintaining cadre strength and sustain-ing international linkages are extremely important to improve research quality and attain global competitiveness in agricultural science. China has taken a major step to improve the incentive system and even to attract Chinese scientists working abroad during the reform process of the 1990s. The Indian system has also allowed additional financial incentive to scientists for resource generation through commercialisation of technology. It will take some more time to realise the impact of these policy changes. There has been some experimentation to strengthen research-extension-farmer linkages but there is no tangible success in this area. Extension continues to remain the sole responsibility of the government and there are concerns about funding and accounta-bility. Institutional innovations for diversification of funding, methodological innovations, incentive for stronger linkages with research organisations and farmers, development of skills of exten-sion workers, increasing use of ICTs for greater reach and cost-effectiveness, and privatisation of some of the extension services are some of the issues often suggested for revitalisation of the extension system [Anderson and Feder 2003]. There are tremendous oppor-tunities for public-private partnership in increasing extension efficiency. There are examples of public funding and private deliv-ery of extension services and this trend is expected to increase in future. A prerequisite for the success of such an experiment is that there is enough capacity in the private sector to compete for public funds and there is an effective mechanism for monitoring the performance of private extension services. Concerted efforts in this direction would go a long way in addressing some of the immediate concerns of extension and other technology delivery systems.Notes1 ICAR does not have a mandate for forestry research, and its programmes include only agro-forestry research. Therefore, several institutes were established under the ministry of environ-ment and forest for forestry research, education and training, and most of them were brought under ICFRE in 1986. 2 However, even if we consider total number of scientists working for research and education in India, the number (21,000) is considerable lower than that for China (31,927).3 Based on the data reported in the sources mentioned in footnote of Table 1. 4 Estimate based on information compiled by the author. It includes the expenditure on agricul-tural biotechnology by all ICAR institutes and the department of biotechnology. 5 Source: Ruifa Hu and Jikun Huang, personal communication.6 Number of patents granted to Indian inventors has increased from 654 in 2001-02 to 1,396 in 2005-06. The patents granted in the area of food and biotechnology were 191 in 2005-06 (Source: Indian Patent Office).ReferencesAlston, J M, C Chan-Kang, M C Marra, P G Pardey and T J Wyatt (2000): ‘A Meta Analysis of Rates of Return to Agricultural RD: Ex Pede Herculem’, Research Report 113, International Food Policy Research Institute, Washington DC. Alston, J M, P G Pardey and V J Smith (eds) (1999): Paying for Agricultural Productivity, Johns Hopkins University Press, Baltimore. Anderson, J R and G Feder (2003): ‘Agricultural Extension: Good Intentions and Hard Realities’, Agriculture and Rural Development Deaprtment, The World Bank, Washington DC (mimeo).Fan, S, L Shang and X Shang (2002): ‘Growth, Inequal-ity and Poverty in Rural China’, Research Report 125, International Food Policy Research Institute, Washington DC . Fan, S, P Hasell and S Thorat (1999):Linkages between Government Spending, Growth and Poverty in Rural India, Research Report 110, IFPRI, Washington DC.Fan, S and P G Pardey (1992): Agricultural Research in China: Its Institutional Development and Impact, International Service for National Agricultural Research, The Hague.Fan, S, K Qian and X Shang (2006): ‘China: An Unfinished Reform Agenda’ in P G Pardey, J M Alston and R R Piggott (eds),Agricultural RD Policy in the Developing World: Too Little, Too Late, International Food Policy Research Institute, Washington DC.Huang, J, R Hu and S Rozelle (2003): Agricultural Research Investment in China: Challenges and Prospects, China’s Finance and Economy Press, Beijing.Jha, D (2001): ‘Agricultural Research and Small Farms’,Indian Journal of Agricultural Economics, 56(1), pp 1-23. Joshi, P K, Suresh Pal, P S Birthal and M C S Bantilan (2005): Impact of Agricultural Research: Post-green Revolution Evidence from India,NCAP/ICRISAT, New Delhi.Koo, B, P G Pardey, K Qian and Y Zhang (2003): ‘An Option Perspective on Generating and Maintaining Plant Variety Rights in China’, Staff Paper P03-8, College of Agricultural, Food and Environmental Sciences, University of Minnesota.Pal, S (2003): ‘Evaluation of Initial Experiences with Agricultural Extension Reforms in India’, paper presented at 25th International Conference of the International Association of Agricultural Economists, Dubon, South Africa, August 16-22.Pal, S and D Byerlee (2006): ‘India: The Funding and Organisation of Agricultural Research in India: Evolution and Emerging Policy Issues’ in P G Pardey, J M Alston and R R Piggott (eds), Agricultural RD Policy in the Developing World: Too Little, Too Late, International Food Policy Research Institute, Washington DC.Pal, S, Mruthyunjaya, P K Joshi and Raka Saxena (2003):Institutional Change in Indian Agriculture, National Centre for Agricultural Economics and Policy Research, New Delhi. Pal, S, R P Singh and M Morris (1998): ‘Chapter on India’ in M Morris (ed),Maize Seed Industries in Developing Countries, Lynne Rienner Publishers, Colarado.Pal, Suresh, R Tripp and N P Louwaars (2007): ‘Intellectual Property Rights in Plant Breeding and Biotechnology: Assessing Impact on the Indian Seed Industry’,Economic Political Weekly, Vol XLII (3), pp 231-40.Pandey, S and S Pal (2007): ‘Are Less-favoured Environments Over-Invested? The Case of Rice Research in India’, Food Policy, 32(5-6), pp 606-23.Pardey, P G, N M Beintema, S Dehmer and S Wood (2006):Agricultural Research: A Growing Global Divide? International Food Policy Research Institute, Washington DC. Pray, C (2001): ‘China’ in C Pray and K Fuglie (eds), Private Investment in Agricultural Research and International Technology Transfer in Asia, AER-805, USDA, Washington DC.Qian, K, B Koo and P G Pardey (2003): ‘The Reform of Agricultural Research System and Intellectual Property Rights Protection in China’, paper presented at the JNU-IFPRI workshop on‘The Dragon and the Elephant: A Comparative Study of Economic and Agricultural Reforms in China and India’, held at India Habitat Centre, New Delhi, March 25-26.Rozelle, S, C Pray and J Huang (1997): ‘Agricultural Research Policy in China: Testing the Limits of Commercialisation-led Reform’,Comparative Economic Studies, 39(2), pp 37-71. Traxler, G and D Byerlee (2001): ‘Linking Technical Change to Research Efforts: An Examination of Aggregation and Spillover Effects’,Agricultural Economics,24, pp 235-46.Tripp, R and S Pal (2001): ‘The Private Delivery of Public Crop Varieties: Rice in Andhra Pradesh’, World Development, 29(1), pp 103-17.Yinghui, Y (1993): ‘China’s Extension Reform’, National Agro-Technology Extension Centre, Beijing, available at www.joe.org/joe.Open Review Several international journals are moving away from closed Peer Review of research papers, towards an Open Review process. In open reviews anyone can com-ment on a paper submitted for publication. This will increase transparency in reviews as well as enhance participation and involvement of the research community. EPW occasionally posts a submission on its web site and invites comments. Visitors to the EPW web site and readers of the journal are encouraged to offer detailed comments. EPW will discuss the comments with the author and a revised version will be processed for publication.Please visit the Open Review section on our web site (www.epw.in) to read and comment on the paper currently submitted for Open Review.

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