From Agriscience to Agribusiness

The future path and pace of agricultural productivity growth areinextricably intertwined with investments in food and agricultural research and development (R&D). Looking back over half a century of evidence, we find that the lay of the global food and agricultural R&D land is changing, with indications that we are in the midst of an historic transition. The more notable trends are as follows: (1) for the first time in modern history (in purchasing power parity, PPP, terms), the middle-income countries now outspend the rich countries in terms of public-sector investments in food and agricultural R&D; (2) the shifting public shares reflect a continuing decline in the rate of growth of food and agricultural R&D spending by the rich countries, along with a generally sustained and substantial growth in spending by the middle-income countries (especially China, India, and Brazil); (3) in PPP terms, China now spends more than the United States on both public- and private-sector food and agricultural R&D; (4) the global share of food and agricultural R&D being conducted by the private sector has increased, especially in the high- and rapidly growing middle-income countries; and (5) the low-income countries are losing ground and account for an exceptionally small share of global spending. The mean and median values of the reported rates of return to food and agricultural R&D based on the IRR are high and remain so, with no signs of a diminution in the payoffs to more recent (compared with earlier) investments in R&D. But the available evidence on the returns to food and agricultural R&D is not fully representative of the institutional (i.e., public versus private), locational, or commodity orientation of the research and the agricultural sector itself.

Over the past several decades, the private sector has assumed a larger role in research and development (R&D) for food and agriculture. Private companies fund nearly all food processing R&D and perform a growing share of production-oriented R&D for agriculture. The willingness of private companies to invest in agricultural R&D has been influenced by policies toward intellectual property rights, regulations, and antitrust. As private R&D capacity in food and agriculture has grown, so have institutional partnerships for public-private research collaboration. An important implication for public science policy is whether public R&D complements or competes with private R&D. This chapter reviews these developments and the major forces driving them.

Recent proposed mergers and acquisitions (M&As) in the agricultural input industry, especially among developers of crop protection products, seeds, and biotechnology, have attracted much attention. Vertical and horizontal consolidation in this sector has been ongoing, however, and such restructuring both makes possible and is driven by technical innovation. In this chapter, we review the emerging innovation and business model in the agricultural input sector and discuss the factors that have enabled it.

Canola has emerged as one of the world’s largest and most important edible oil crops through a mix of government action, private investment, farmer organization, and industry engagement. For the most part, the key activities have been led by or undertaken in Canada, not traditionally viewed as one of the agrifood innovation powerhouses. In many ways, this case represents the best of adoption theory in practice. Purposeful research partnerships and teams led to innovative product attributes that needed regulatory approval, then farmer acceptance, industry adaptation, and consumer demand. This has involved a nested set of investment and engagement processes that over the past 40 years have variously brought forth new varieties with improved agronomic and nutritional properties, new biotechnology traits, and a range of industrial and pharmaceutical attributes, all while maintaining both a role for producers in the research system and significant competition in the research, seed, marketing, and food processing sectors. Along the way, the industry has had to develop a range of new systems, including industry-managed identity-preserving production and marketing systems and strict segregation structures.

Much of the future quality of life will depend upon improved abilities to sustainably increase agricultural production while maintaining ecosystem services and supporting conservation of natural diversity. Some lessons for the future reside in an improved understanding of the factors that have contributed to increased agricultural productivity during recent past decades. Using US maize production as an example, we demonstrate the critical contributions of plant breeding using native maize germplasm and improved agronomic practices. We outline the policy instruments that condition successful plant breeding through determining access to plant genetic resources and by providing economic incentives for investment and innovation through intellectual property. Maximum progress in improving global agricultural production can only be made when potentially contradictory policies are implemented in a balanced fashion.

Fifteen years ago, the “tragedy of the anticommons” article warned that excessive patenting of biotech products and research methods could deter rather than stimulate invention, but little evidence was offered. Here, subsequent changes in patent law, public research support, and surveys of researchers are summarized. Results indicate the anticipated anticommons has not materialized significantly, and while ongoing monitoring is warranted, declining public research funding may necessitate more patenting to stimulate private investment.

We examine the effect of various patent characteristics on changes in patent ownership that occurred due to mergers, acquisitions, and spin-offs in the agricultural biotechnology industry in the 1980s and 1990s. Our goal is to shed light on the role certain patent qualities may play in the transfer of knowledge and technology that takes place through merger and acquisition activity. Specifically, we empirically measure the effect of patent value, scope/breadth, strength, and the nationality of the patent owner on the occurrence and frequency of patent ownership change in the agricultural biotechnology sector during the 1980s and 1990s. We find that the greater the patent breadth and the less valuable and “weaker” the patent, the greater the likelihood and frequency of patent ownership change. Also, the nature of patent ownership affects patent ownership change, with patents owned by multiple owners of different nationalities most likely to change hands.

Firms in the agricultural biotech and seed sectors have increased their R&D spending exponentially over the last three decades. The number of patents secured by major integrated biotechnology and seed firms also increased exponentially over this period. We find no evidence of strategic patenting to explain the increase in volume; the increased number of granted patents, therefore, most likely indicates accelerating product innovation in the industry. Technology transfer among private firms in this sector has been increasing as well, as reflected in a large number of licensing and cross-licensing agreements for the commercialization of patented biotech traits and seed germplasm across different suppliers. New product introductions and variety (new biotech traits and hybrids) increased significantly over the last two decades, while the average product life cycle of hybrid seeds declined. All these indicators point to accelerating product innovation and augmented product choices in this market segment.

The agricultural industries of the United States are a vital part of our economy, as are the land-grant universities that are inextricably tied to those industries. Given this importance, NIFA engaged TEConomy Partners, LLC, to categorize and describe the broad range of R&D and associated extension activity undertaken by the land-grant university system and supported by NIFA funding. The analysis in this chapter provides this evaluation and categorization and compares Capacity and Competitive funded research projects to the larger body of published agricultural research. We find that, compared to overall publications, Capacity projects are more focused on production-oriented areas than basic sciences, while Competitively funded research has its largest focus in basic sciences. Additionally, a number of areas that are small or missing from overall publications are present in notably higher concentrations in Capacity projects. The focus areas of both Capacity and Competitively funded research projects follow the goals of the NIFA National Challenge Areas and the 2014 Farm Bill. Finally, we find evidence of substantial return on investment for both forms of funding.

One of the major metrics of innovation in agriscience is intellectual property. Land-grant university innovation is documented as intellectual property in two main ways: patents and Plant Variety Protection certificates. To evaluate the innovation generated by NIFA Capacity Funds, TEConomy Partners, LLC, examined the patents and PVP certificates received by LGUs during a 7-year period (2010–2016). The results indicate substantial innovation occurring in LGUs. LGUs generated 4% of total patenting in agriculture and related fields in the study period. When broadened to include patents that cite prior LGU work, LGUs influence up to one in six patents in agbiosciences in the United States. Even higher impacts of LGUs are found in PVP certificates. Between 2010 and 2016, an average of 14% of PVPs were awarded to LGUs. This analysis further demonstrates that LGUs patent in cutting-edge applications of biotechnology and associated life and physical sciences. In PVPs, LGUs generated intellectual property in many crops that were not experiencing IP generation from other sources. Overall, we conclude that university-based research, especially research at LGUs, plays a substantial role in the US agriscience innovation ecosystem.

Reports from the past decade have indicated that Canada is a highly innovative country, but suffers from a bottleneck in technology transfer and commercialization. In fact, many of the reports give Canada a failing grade when it comes to the commercialization of innovation technologies. With substantial investments into public sector research, such a problem would reduce the public good from government funding of innovative research. This chapter assesses Canadian university technology transfer activities from 1998 to 2008, with a particular focus on the transfer of agricultural technologies.

Even though returns on R&D in agriculture are high, technology transfer from academia to industry is not strong in this field. In this chapter, we study what universities can do to strengthen knowledge transfer from academia to industry, specifically in agriculture. We use Wageningen University and Research (WUR), a leading institution in technology transfer in agriculture science, as a case study. We present a detailed historical account of technology transfer at WUR and follow with a set of interviews conducted with different stakeholders in technology transfer. The results from our interviews highlight that WUR has facilitated technology transfer through four mechanisms: (1) department independence to pursue different forms of technology transfer; (2) implementation of a general legal framework of technology transfer to unburden departments, scientists, and IP staff; (3) embracing a culture where the prime driver for technology transfer is a “responsibility to give back to society” rather than income; and (4) embedding itself in a location where ties with industry are the norm. Our work is timely because technology transfer to industry is increasingly pursued at universities across the globe. The success of those efforts is not always guaranteed. We inform stakeholders and researchers by presenting a better understanding of what works and what does not work in technology transfer in agriculture.

Open innovation and continuously evolving collaborative schemes of key actors along the innovation chain increase the complexity of technology transfer. University TTOs need to adapt to new challenges and therefore move from their traditional role of facilitating patenting and licensing activities to one of active engagement and deep involvement in supporting the different stages of research commercialization. Building successful TTO business models requires aligning the TTO service offerings with the characteristics of research produced in the parent institution and to the various forms of assistance needed by academic staff to commercially exploit their research results.

This work presents a method to assess and support commercialization proposals by university researchers. Although the intention is to choose projects with the highest exploitation potential, the objective is not to just have the top projects of an innovation contest, but rather select projects together with the support services and corresponding resources needed to enable them to reach their commercialization objectives. Moreover, it is shown that when available TTO resources are not enough to handle all projects with merit, a more formal approach can be adopted, involving the solution of a decision problem that may also serve as a planning tool for future TTO staffing.

Applied in an academic environment with limited technology transfer experience, the proposed assessment framework is used to develop a longer-term TTO strategy.

University technology transfer offices (TTOs) must make decisions about whether and how to commercialize university innovations and do so with little or no information about the ultimate market value of the products that might eventually be derived from those innovations. Using technology life cycle theory, we derive and assess the usefulness of metrics that could provide additional information to assist in TTO decision making. We find that being able to locate a given innovation along a life cycle progression can decrease the uncertainty inherent in technology transfer decisions.

Technology transfer (TT), or transfer of technology (TOT), is an integral part of the extension process involving the transfer and spread of technical innovation and know-how to the farming population. The TOT model of the research-extension-farmer linkage is based on the tenets of DOI theory, in particular on a description of the diffusion process as a normal bell-shaped curve with farmers being placed in one of five categories according to their appearance on the curve. However, this linear model has limitations and has been severely criticized on a number of grounds, especially its assumptions about the dissemination process which raise the “issue of equality” and contribute to the “agricultural treadmill.”

Furthermore, despite being dominant in agricultural development, on a worldwide basis, TOT has lost utility in understanding the sources of and thus the solutions to highly complex contemporary problems. As a result, alternative proposals have emerged, prominent among which have been systemic approaches such as systems of innovations (SoI). Therefore, there has been a shift of conceptual frameworks in the study of agriculture-related policy, research, technology, and rural development toward agricultural innovation systems (AIS) focusing on processes relevant to innovation networks as formed by heterogeneous actors with particular attention being given to social coordination. In this respect, a new species emerges, that of “intermediaries” (innovation facilitators/brokers) who take an independent systemic role in process facilitation rather than in the production or dissemination of innovation. New systemic extension approaches thus emerge, aiming at the role of co-learning facilitators to stimulate innovations.

The increasing rate of technological advancement across various disciplines, and in particular the agricultural sector, has resulted in increased efficiency and productivity. Recent advances in biotechnology research and development offer new prospects for increased food production and security in various jurisdictions. However, adoption and commercialization of existing and emerging technologies both at the farm and industry levels have been of great concern to governments and the food industry. This chapter provides a review existing literature on technology adoption in agriculture, explores different dimensions of technologies and factors influencing their adoption, and examines returns on investment in technological research and development.

Developing and marketing new varieties is essential for the long-term profitability of US crop producers. The ultimate goal of university breeding programs is to release improved plant varieties, either with superior quality or more efficient production management. For certain horticultural products, notably apples, plant breeders have developed several new differentiated varieties that have the capacity to be marketed with premium prices and that can compete on world markets. If these innovations are not commercialized or are commercialized in a suboptimal way, then the benefits of the research are greatly reduced. In this chapter, we use game theoretic analysis and an experimental auction to investigate the effects of contract exclusivity and payment structure on innovator and producer profits from a hypothetical new apple variety.

Water Efficient Maize for Africa (WEMA) is a public-private partnership working to improve food security and rural livelihoods among smallholder farmers and their families in sub-Saharan Africa by developing and deploying new drought-tolerant and insect-pest-protected hybrid maize (corn) varieties. Maize is the most widely grown staple crop in Africa, where more than 300 million people depend on it as their main food source. Droughts, foliar diseases, and insect pests are intensifying food production problems in Africa, which makes for a vulnerable food security situation. Smallholder farmers in Africa, like farmers everywhere, want the choice to use the best tools and technologies available to minimize their risks and improve their lives.

Agriculture has been of fundamental and growing importance from the earliest days of human society. Over millennia, farmers have domesticated and improved a wide array of crops and livestock and passed their knowledge and experience down over generations. As the challenge to feed an ever-growing world population has increased, however, so has the need for ever greater levels of production. The latest science and technological advances undergird the success of modern agriculture. Virtually every item in a typical meal is available, at least in part, because of scientific and technological advances that have led to increased production, protection from pests or disease, or enhancements to their nutritional value. This vast array of research activities can be clearly seen in the story behind the daily Western breakfast table.

The public sector played a pivotal role in transforming a traditional agriculture in Brazil into a modern one by leading the agricultural research and development (R&D) network in the country and by providing the majority of funds to R&D activities. The spillover effects arising from agricultural R&D were not restricted to the primary sector. A vibrant agricultural sector creates sizable markets for industrial and service sectors if they can deliver quality products at competitive prices. More broadly, the success of this science-based agriculture in Brazil provided the means for ample improvements in food and nutritional security; expanded opportunities for employment and income generation in agricultural (and associated) value chains; a more positive balance of trade; and a substantial attenuation of inflationary pressures. In the coming decades, the value of Brazilian agriculture to society will eventually be even bigger, as the so-called bio-economy gets strengthened. However, it is imperative to encourage a more intense engagement of the private sector in agricultural R&D activities in Brazil.

Successful technological scaling-up will depend upon multi-stakeholder approaches. Knowledge exchange, capacity development and strengthening, technology transfer, extension services, and well-functioning input and market chains, to minimize detrimental effects of market imperfections on technology adoption, are key components to foster the adoption of technologies. In particular, a more widespread and inclusiveness technological adoption in Brazilian agriculture will depend on successful approaches to minimize market imperfections’ effects.

There is broad agreement about the importance of investments in public agricultural research and extension in the United States, but there is less agreement about the exact methods to be used in data collection, variable definitions, econometric model specification, and benefit-cost comparisons. This chapter reviews these issues and presents a summary and comparison of recent estimates of the rate of return to investments in US public agricultural research and extension. This chapter will be useful to graduate students, researchers, university administrators, and agricultural science policy advisors.

We use Bayesian probability theory to develop a new way of measuring research productivity. The metric accommodates a wide variety of project types and productivity sources and accounts for the contributions of “failed” as well as “successful” investigations. Employing a mean-absolute-deviation loss functional form with this new metric allows decomposition of knowledge gain into an outcome probability shift (mean surprise) and outcome variance reduction (statistical precision), a useful distinction, because projects scoring well on one often score poorly on the other. In an international aquacultural research program, we find laboratory size to moderately boost mean surprise but have no effect on precision, while scientist education improves precision but has no effect on mean surprise. Returns to research scale are decreasing in the size dimension but increasing when size and education are taken together, suggesting the importance of measuring human capital at both the quantitative and qualitative margin.

The authors in this book have described and analyzed a complex, dynamic system of agricultural innovation and technology transfer that has produced food in unprecedented quantity and quality, enhancing economic and food security worldwide. The agricultural innovation system has been in a near constant state of flux as fundamental technical discoveries, institutional adjustments, and increasing public and private investments have fueled the ongoing transformation. If societies are to meet the challenges of the future and promote both food security and environmental sustainability, they will need to adopt long-term approaches to building and maintaining innovation systems that can nurture innovations from original concept through development to the end user. Given the changes that we have seen and the further change that the future likely holds, research into the effective transformation of agriscience into agribusiness will continue to be important for many years to come.