Knowledge for Development

Financing ARD

This dossier contains over 200 annotated links to information on innovative funding strategies and organizations that provide funding for agricultural research in ACP countries. These links are intended for policy makers and managers of research institutes who are confronted with restrained budgets and need to reorganize the institutional frameworks through which their research can be funded. The first section of this dossier feature links to web resources that outline new approaches, trends and developments in financing agricultural research. The second and third section contain links to information on two main institutional innovations in financing agricultural onderzoek, i.e. Public Private Partnerships (PPPs) and competitive research grant schemes. The remaining sections provide directions to a great number of organizations and programmes that finance agricultural research projects.

Visitors who wish to engage in discussions on the issues raised here and in other dossiers can post comments in the relevant section of the S&T Forum on the home page. We welcome your comments and encourage you to contribute articles.

Late February 2012, the European Commission unveiled its plans for two new European Innovation Partnerships (EIPs) that will go some way to meeting the environmental and social issues facing Europe in the near future. The EIP that focuses on agriculture will deal with the increasing challenges food security poses for Europe, where, in this century, there will be a sharp rise in demand for feed, fibre, biomass, and biomaterials. This demand will come at the same time as a slow-down in production, due to cuts in agricultural research and the effects our actions have had on the environment and natural resources. This new partnership will seek to encourage innovations for sustainable food security. (CORDIS, 01/03/2012) 01/05/2012
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Encouraging private investment in agricultural research: Myth or necessity for developing countries

by Joshua Ariga , Economist with the International Fertilizer Development Center, Alabama, USA
The focus for many developing countries is on increasing both public and private investments for improving the performance of the agricultural sector; an issue that is being pursued at national, regional and international levels. Identifying the right technologies, developing output and input markets, prioritizing agriculture in national development strategies, and private-public partnerships are important aspects for a successful research and development (R&D) and technology adoption framework. Agricultural R&D has the potential to reduce costs and/or raise output and therefore to shift the supply curve to the right. The InterAcademy Council and other public and private agencies have recognized the critical role of S&T in economic and social development and have recommended a doubling of public agricultural R&D funding by 2015. 31/08/2011
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Investing in Agricultural Innovation: A Market Economy Perspective (Part 1)

by Johannes Roseboom, Innovation Policy Consultancy, The Netherlands
In the first lead article, Roseboom explores how the adoption of a market economy perspective is affecting/ redefining the role of government in agricultural innovation. He focuses on two key questions that policymakers investing in agricultural innovation are struggling with in a market economy, namely: (i) what should be the role of government and how much should be invested in agricultural research, extension and other innovation stimulating measures and; what is the optimal level of public and private investment? According to Roseboom, in an ‘ideal’ market economy, the business enterprise sector takes care of its own innovation activities and the government only plays an enabling and stimulating role by: (i) supporting education and basic research; (ii) creating the right incentives for the private sector to invest in innovation e.g. IPR and anti-trust policies and regulations; and (iii) coordinating the country’s innovation capacity strategically. He suggests that market failure should be eliminated or at least reduced and the responsibility for agricultural innovation handed over to the economic actors in agriculture but notes that this process does not happen overnight. 11/01/2012
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The optimal level of investment in agricultural innovation (Part 2)

by Johannes Roseboom, Innovation Policy Consultancy, The Netherlands
Roseboom notes that although benchmarking is the most common way of evaluating the level of government investment in agricultural innovation, it is a rather poor tool because it lacks the theoretical underpinning and tends to reinforce the status quo. For example, many economists have argued that there is serious underinvestment in agricultural innovation based on ex post rate of return studies of agricultural research and extension projects. He suggests that using a three step approach based on a standard cost-benefit analysis technique to calculate the expected rate or return (ERR), provides the theoretical answer for establishing the optimal level of investment in agricultural innovation. However, such a rational economic approach is not common practice for investing in agricultural innovation projects either in developing or developed countries. The size of the optimal investment in agricultural innovation and as such the overall productivity depends on the country’s level of economic development, its agricultural innovation capacity and various structural factors such as the level of technological capacity and risk and uncertainty. 11/01/2012
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Optimizing Public and Private Investments in Agricultural Innovations: Policy Implications (Part 3)

by Johannes Roseboom, Innovation Policy Consultancy, The Netherlands
In the final lead article, Roseboom explores the policy implications of the various options for optimizing public and private sector investments in agricultural innovation. In a market economy, the responsibility for agricultural innovation lies principally with the private sector and the public role is very limited. It is only when markets fail that the government should step in; either by trying to resolve the failure or by assuming responsibility for certain agricultural innovation activities. He opines that it is important to understand the cause and depth of the market failure in terms of horizontal and vertical spill over losses to be able to resolve or moderate it. These losses seriously undermine the expected profitability of private investment in agricultural innovation in general and hence have a negative impact on the economically optimal volume of investments. He recommends differentiated support strategies and developments in public management namely; performance-based budgeting, competitive funding schemes and greater involvement of the ultimate beneficiaries for ensuring that available public resources are invested in the most promising agricultural innovation opportunities. 11/01/2012
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The countries of Latin America and Caribbean (LAC) represent a wealth of natural resources; the world’s greatest agrobiodiversity; and immense economic, social, and environmental diversity. As an example, the region is home to Brazil—the world’s fifth-largest country in terms of both area and population—yet it also comprises numerous Caribbean island nations populated by fewer than 100,000 people. Nonetheless, LAC countries exhibit much ommonality, including significant urban populations, high ethnic diversity, and increasing inequality and poverty. Another shared factor is that many LAC countries have reformed or are in the process of reforming their economies through structural adjustment programs. Agriculture faces many challenges in LAC, especially in the context of development. Rising food prices are a growing policy concern for both low- and middle-income countries, and, whereas the region as a whole is a net food exporter, poor consumers suffer the negative impacts of food-price inflation on their incomes and thus on their health and nutrition. In addition, international value chains and supermarkets are transforming domestic food markets, thereby posing serious challenges to smallholders in their ability to remain competitive. As commercial agriculture expands, the agricultural labor market and rural nonfarm economy become vital if resulting productivity gains are to have a beneficial effect on rural poverty.Authors: G.-J. Stads & N. Beintema, IFPRI, 2009 08/12/2009
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A competitive grant scheme (CGS) constitutes a tendering process where providers of research resources bid for research contracts within pre-defined programmes or specific calls for proposals.A CGS is simply one mechanism for allocating resources. Competitive grant schemes may be completely open for global competition, have national or regional limits, or require particular combinations of partners in a bidding consortium (e.g. private sector and NGOs and universities and partners from several countries). 19/08/2005
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Tabor S.R., Janssen W., Bruneau (1998), 387 pages in PDFIn spite of a high payoff, agricultural research in many developing countries faces severe financial difficulties. Research leaders need to improve policies, to increase resource mobilization, and to upgrade the management of scarce financial resources. Financing Agricultural Research: A Sourcebook weaves together an assessment of the current research financing situation with a review of available policy options, strategies for improving resource mobilization, and means of enhancing financial management. Donwload the report. 09/03/2005
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