World Food Production

1
AGEC/FNR 406
LECTURE 40
do new seeds meet farmers needs?
Incentives for Innovation (W.A. Masters)
2
Technological innovation often drives social
change
What determines which innovations we get, and how
fast they spread?
3
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 .
4
Do poorer people on smaller farms adopt slowly?
5
The latest wave of ag research is biotechnology
6
But so far, GM crops offer only two main features
Global Area of Biotech Crops, 1996 to 2007 By
Trait (Million Hectares)
80
70
Herbicide Tolerance
Insect Resistance
60
Both together
50
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.
7
The new GM traits are good for just a few crops
Global Area of Biotech Crops, 1996 to 2007 By
Crop (Million Hectares)
Source Reprinted from Clive James (2008),
Global Status of Commercialized Biotech/GM
Crops 2007. ISAAA Briefs No. 37.
8
so, why no green revolution in Africa?
9
Fertilizer use is not converging to world levels,
as it did in Asia
10
One reason for Africas lag is that its soils and
moisture are unusually difficult
Selected Soil Fertility Constraints in
Agriculture (as percent of agricultural area)
Note Constraints characterized using the
Fertility Capability Classification (Sanchez et
al., Smith). Source Stanley Wood (2002), IFPRI
file data.
11
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.
12
A key reason for slow innovation is simply that
Africa has had little local research
Source Calculated from IFPRI and FAOStat file
data
13
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
RD." Australian Journal of Agricultural and
Resource Economics, 44(2) 185-215.
14
To meet farmers needs, crop improvement involves
multiple innovations
Genetic improvement
Agronomic improvement
(by scientists, using controlled trials)
(by farmers, using land labor)
15
Successful techniques are often surprising
traditional flat planting
labor-intensive Zai microcatchments
For these fields, the workers are
16
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

17
How can societies promote innovation?

• Patents and other intellectual property rights
• in 1787, patent law written into Article 1 of the
  U.S. constitution
• works well for marketable innovations
• 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
• 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 ( ? )