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Policy Issues in International Funding of Horticultural Research

Michel Petit*
Director, Agricult Michel Petit*
Director, Agricultural Research and Extension Group (ESDAR)
World Bank
MC 4-113
1818 H. Street N.W.
Washington, D.C. 20433

*The views expressed are the personal view of the author and should not be attributed to the World Bank.

Rapid changes in science, technology and institutional arrangements are posing major challenges to agricultural research managers throughout the world. The existing mechanisms for funding international research efforts in particular are under threat. It is thus topical that the organizers of this congress have decided to devote one full session of the program to policy issues for horticultural research, and, within that session, to a discussion of the policy issues regarding international funding, the topic of this paper.

But first, what do we mean exactly by the expression "international funding"? Given that other papers in this session deal with university and national research, in addition to a synthesis by the chairman, it seems appropriate to define international funding as the funding of international efforts, i.e., activities involving actors from several countries, including sometimes international institutions such as the Consultative Group on International Agricultural Research (CGIAR) Centers. The scope of the topic so defined thus covers funding for the CGIAR itself, funding for centers non affis funding for the CGIAR itself, funding for centers non affiliated with the CGIAR, such as the Asian Vegetable Research and Development Center (AVRDC) or the International Centre of Insect Physiology and Ecology (ICIPE), but also multilateral funding such as those of DG 12 in the European Commission - which are specifically restricted to collaboration efforts between European institutions and research institutions in developing countries. Similarly, funding for the Collaborative Research Support Programs (CRSPs) in the USA or for the collaborative efforts of French institutions such as the Centre de Cooperation Internationale en Recherche Agronomique pour le Developpement (CIRAD) or the Institut Francais de Recherche Scientifique pour le Developpement en Cooperation (ORSTOM), working in developing countries are within the scope of this definition of international funding.

Note that the discussion so far has dealt with agricultural research in general, and not specifically with horticultural research. Several reasons explain this approach: Since the end of the colonial period, the international agricultural research community has devoted most of its attention to subsistence crops - notably cereals - and to subsistence agriculture, where horticulture plays only a limited role. The private sector plays a greater role in horticultural research - particularly for commercial crops and for some markets - thancommercial crops and for some markets - than in agricultural research generally, and the logic of these activities is different than that of publicly funding research. Finally, within the public domain, international funding of horticultural research - in the case of bananas, potatoes or even vegetables - is subjected to the same pressures as those which affect agricultural research broadly defined.

In order to understand the current policy issues affecting international funding of horticultural research, it is necessary to begin with a clear perception of the rationale which has inspired international funding for agricultural research in the past and led to the current situation. It is also necessary to understand major changes and trends which challenge past practices and make the status quo unsustainable. These two aspects will be the topics of the next two sections of this paper. Finally, we will review how the World Bank, the largest financier of agricultural research for developing countries and a key institution at the heart of the international funding mechanisms, is adjusting its own activities to respond to these challenges.

THE RATIONALE FOR INTERNATIONAL FUNDING

Rather than paraphrasing, it will be useful here to quote in extenso an excerpt from the recent World Bank's publication "Rural Development: From Vision to Action", which spells out the strategy of the Wortion", which spells out the strategy of the World Bank Group to support rural development, endorsed by its Board of Executive Directors in the Spring of 1997 (The World Bank 1997):

..."One of the major achievements of the twentieth century has been the remarkable increase in world food productivity, resulting in remarkable growth in agricultural output and declining real prices of food. Between 1966 and 1990 cereal output rose by nearly 80 percent. almost 50 percent of the increase occurred in the developing world. Everyone agrees that the world's population will exceed 8 billion people by 2025, an increase of 2.5 billion in the next 30 years. Most of the increase will occur in developing country cities where urban populations will more than triple. Most agree that given moderate income growth, food needs in developing countries could nearly double. If supplies do not grow apace, world food prices will rise, making it even more difficult to eliminate world hunger. The challenge to world agriculture is therefore enormous. Most of the future increases must come from biological yield increases alone, not from area expansion or increased intensification through irrigation -- two major sources of growth in the twentieth century. Why? Because new lands are marginal and environmentally sensitive and may not make up for the land being removed from cnd may not make up for the land being removed from cultivation each year because of urbanization and environmental degradation. New irrigation projects are increasingly expensive and subject to much stricter environmental standards. Therefore, production on existing land will need to nearly double to provide a diversified, storable, and transportable food supply to an expanding urban population. Despite disagreements about the degree of difficulty in raising agricultural output, all agree that meeting global food demand over the next 30 years will require expanded investments in research and technology development, appropriate incentives to family farmers, and an enabling policy environment. The technological challenge is enormous, requiring the development of new, high-productivity, environmentally sustainable production systems. Private firms must be induced to develop and apply much of the new technology required. However, there are large areas of technology development that are of little interest to the private sector, including subsistence crops or truly public goods such as some aspects of natural resources management. It is here that public sector finance is critical -- at international, national, and local levels. The challenge is critical and immediate, requiring increases in research -- not reductions, as have been occurring. Globally, the World Bank Group is the largest financier of national agricultural research in the cier of national agricultural research in the developing world. The World Bank must continue to provide strong leadership in this area to meet its objectives of global, national, and family food security. Food security requires adequate world food supplies, but it also requires country policies that provide farmers with adequate incentives and consumers with prices reflecting market conditions. Governments cannot provide food security by discriminating against farmers, since this discourages production and investment in agriculture (McCalla 1994). Degradation of Natural Resources Must Be Reserved Hundreds of millions of private farmers, large and small, are the stewards of the vast majority of the globe's arable land resources. Of the world's fresh water used by people, agriculture uses more than 70 percent for irrigation. And unsustainable agriculture practices are significant sources of non-point source pollution. Deforestation remains a critical issue, with 25 hectares of forest lost every minute. The global challenges of desertification, climate change, and loss of biodiversity require major efforts. If production on existing lands is to be nearly doubled in the next 30 years, the negative impacts of agricultural and forestry production systems must be reversed, and sustainable production systems developed. Improved agricultural productivity also relieves pressure on fragile lands aoductivity also relieves pressure on fragile lands and forest margins. The Bank's commitment to environmentally sustainable development cannot be met without serious attention, through both lending and nonlending services, to the development agriculture and forestry systems that are more productive and protect natural resources. In sum, the Bank's, objectives of poverty reduction, sustainable natural resources management, and food security cannot be met unless rural development in general, and a thriving agricultural economy in particular, are nurtured and improved. This is at the core of the recommended strategy for improving the rural economy...."

 

A few additional remarks are in order after this long quotation. First note that support for agricultural research is only one component - albeit a key component - of a broader strategy. In addition to the adequacy of food supply, the need for adequate economic policies is equally emphasized if food security is to be ensured, and natural resources are to be protected. Secondly, the discussion deals with agricultural research, and nothing is said of horticultural research. This is consistent with what was discussed in the previous section of this paper. Finally the rationale given here is essentially the same as that which has led the World Bank to support the CGIAR for the last 26 years and to devote nearly 4 billion doll last 26 years and to devote nearly 4 billion dollars to the funding of National Agricultural Research Systems (NARSs) through loans and credits since 1981. This reflects the conviction that the past rationale remains essentially valid and that the Bank should not waver in its determination, whereas other aid agencies have drastically reduced their support to agricultural research. Yet there is no doubt that past practices are not sustainable. Current trends and pressures, as discussed below, challenge the status quo.

CHALLENGES TO PAST (AND STILL CURRENT) PRACTICES

Here again, rather than paraphrasing, long excepts from a recent Bank publication written by the author and members of his group will be appropriate (Petit et al. 1996):

"... A global agricultural research system is emerging. The scientific components which form the mainstay of this global research system are the same as in the past: Advanced Research Organizations (AROS), International Agricultural Research Centers (IARCs), and National and Agricultural Research Systems (NARSs). Each of these components has been undergoing change, sometimes radical, which is forcing them to move away from traditional roles, to evolve new mechanisms and new partnerships for agricultural research. The partners and clients of agricultural research are undergoing a similnd clients of agricultural research are undergoing a similar evolutionary process leading to an increased role in shaping the research agendas of scientific organizations and thus an increased role in shaping the global agricultural research system. For example, Farmers and communities are more organized, enabling them to have a greater voice. The boundaries between public and private sectors have shifted, allowing the private sector to assume more of the research responsibilities previously shouldered by a large public sector. NGOs are increasingly recognized for their strength in technology transfer and implementation at the farm and community level. Greater understanding and appreciation of women's roles in agriculture and in poverty alleviation are changing traditional perspectives. Several major long-term trends are responsible for creating multiple opportunities for new synergies and partnerships and contributing to the emergency of the global system. These trends are evident when comparing the situation in the world today with what it was when NARSs in developing countries began to emerge and when the first international agricultural research centers were created about 30 years ago (CIMMYT and IRRI). These trends will likely continue through the next decade and include: A True Scientific Revolution in the Biological Sciences Since the beginning days of the Green Revolut Since the beginning days of the Green Revolution more than 30 years ago, progress in molecular biology and other basic biological sciences has been staggering. Agricultural research has benefited from new knowledge and new technology developed by advanced biological research teams, including those in private enterprise. However, this revolution, and the speed with which it has advanced, has continuously widened the technological gap between North and South. Agricultural researchers in the North and South, but most essentially in the South, must now face the challenge of forging partnerships with both public and private sector advanced biological research teams in order to fully capitalize on these developments. The potential of the biological revolution is enhanced by the accompanying revolution in information technology and transfer (telecommunications, computer technology, digital information transfer, etc.) which provides a powerful tool to access and share scientific knowledge and to build new linkages and partnerships. The Broadening of the Agricultural Research Agenda Growing environmental concerns and an awareness of the necessity of protecting and conserving our natural resource base for future generations have been set squarely at the center of the agricultural research agenda. New fields outside traditional agriculture now play a critical role in agricultural research. For example, the CGIAR has bicultural research. For example, the CGIAR has broadened its mandate from research to enhance productivity to include research for the management of natural resources. Social and cultural perspectives are being incorporated into agricultural research objectives to a greater degree and with a greater realization of the critical role of women in agriculture. Thus, a new paradigm for agricultural research is developing and being adopted by agricultural research institutions in both developed and developing countries. A major consequence of this broader agenda is the need to include new partners in the research process. Increasing Numbers of Well-trained Agricultural Scientists working in Developing Countries Over the last thirty years the number of developing country scientists has increased by several orders of magnitude creating a reservoir of human resource capacity where it is most needed. For example, the number of persons engaged in agricultural research increased from about 60,000 in the 1960s to almost 140,000 in the 1980s, with over fifty per cent of those researchers in developing countries. China alone has over 30,000 agricultural researchers. But in order to be effective in creating and/or applying science and technology-based solutions to agricultural problems, and in capitalizing on the biological science revolution, this expanded human resource capacity must be effectively mobilized and skills must b must be effectively mobilized and skills must be continuously upgrade. The Financial Crisis in OECD Countries The current public finance crisis in OECD countries affects agricultural research at all levels. Tremendous expertise and experience in agricultural research exists in OECD countries, but the present financial crisis is forcing major changes. Many research organizations are finding it difficult to fund their activities, to recruit good scientists and to offer them promising career opportunities in agricultural research. As a result, these organizations have become less engaged in the global agricultural research agenda as they concentrate more on domestic issues to generate support for their programs. The funding crisis, combined with donor fatigue, has resulted in lessened support for IARCs, triggering their own financial crisis. It has also resulted in lessened bilateral support for developing country NARSs which, combined with their incipient financial problems and their own inability to adequately fund agricultural research, places increasing pressure on their ability to address their agricultural production and natural resource management constraints through research. Liberalization of International Trade and Privatization of Public Sector Activities Trade liberalization--through GATT, regional trade agreements, and the structural adjustment programs al trade agreements, and the structural adjustment programs underway throughout the developing world--has created new opportunities for global trade expansion enabling countries to realize their comparative advantages. Research, including a greatly expanded private sector component, must now provide the technology for farmers and agri-business to respond to new opportunities and generate increased employment and incomes possible in the liberalized trade environment. These trends, occurring simultaneously, have significant consequences for international agricultural research and the emergence of a global system. The most important consequence is the necessity for agricultural researchers to work in partnerships: more numerous, more diversified, more innovative, and more substantive than in the past. Trained scientists in developing countries must be paired with advanced biological research teams in the North and in the South and with individual and collective natural resource users. Opportunities for greater synergies, complementarities, and closer working relationships will lead to less overlap, less redundancy, more efficient and effective use of scarce resources and finally to a more integrated global research system and agenda...."

All these pressures directly impact international funding for horticultural research. Trade liberalization has greatly renewed th research. Trade liberalization has greatly renewed the debate on cash crops vs subsistence crops. It is now clear that comparative advantage considerations should, will, and already do, play a much greater role than in the past in the choice of an economic development strategy. As a result, the development of horticultural crops, which are generally labor intensive, is now recognized as having a much higher priority than in the past in many developing countries. The examples of Chile, Colombia and Kenya, among many others, have become very well-known and provide powerful empirical support to this vision of the potential role of horticulture. Besides, horticulture is an area where the critical importance of technology, throughout the production and marketing chain, i.e., from farmers' fields to the supermarket, is easily understood. But it is also widely recognized that technology spill-overs across borders are probably the most important sources of technological change, and that the private sector plays a key role in that process. Thus public research institutions face yet a greater challenge to forge innovative partnerships with the private sector in the case of horticulture than in the case of agriculture generally.

Coming back to agricultural research, if one accepts the need for the multiple, new or renewed partnerships, called for to take advantage of the opportunities offered by the emergence of a truly global agricultural reseaergence of a truly global agricultural research system, it is clear that past and even current practices of doing business have to be profoundly reformed. This has important consequences for international funding, as will now be illustrated in the new strategy of the World Bank in this domain.

CONSEQUENCES FOR THE WORLD BANK

The World Bank, like any organization, is constrained in its actions by a multitude of restrictions related to its mission as a financial institution, its "constitution"(formally the "Articles of Agreement" establishing it), its resources which are significant but of course limited - particularly its human resources - and many other factors (political, institutional, cultural, ideological, etc...). Yet it is an institution which has demonstrated remarkable resilience, creativity and a surprising degree of flexibility given its size and the breadth of its activities. For the purpose of this paper, the best way to describe the practical consequences for the Bank of the preceding analysis is to examine how it can modify the use of the instruments available to it. In this perspective, obviously the most important instrument is represented by its lending operations (more than $20 billion annually in recent years, of which more than $200 million directly in support of agricultural research). Loans and credits are extended to borrowing countries, more precisely t extended to borrowing countries, more precisely to governments or to organizations within the country, but in this latter case with a government guarantee of repayment. Thus in the field of agricultural research, the most important instrument of the World Bank is made up of lending operations in support of NARSs. The second most important instrument is the Bank support to the CGIAR. That support is both financial (an annual grant of $45 million) and institutional (the World Bank provides the CGIAR Chairman and Secretariat; it is one of the four international agencies sponsoring the group; and in recent years the Bank representative has chaired the CG Finance Committee). In addition to these traditional instruments, the Bank in recent years has facilitated and supported several institutional innovations to promote a more effective global research system (i.e., the establishment of a Global Forum for Agricultural Research, the promotion of new and innovative partnerships, the launching of a new Global Program, and the "animation" of the international debate on key strategic and sensitive issues). We will briefly review how the use of each one of these instruments has evolved recently and will continue to evolve.

SUPPORT TO NARSS

Excerpts from another recent Bank publication clearly express what the Bank intends to do in this area during the next few years (Byerlee and Alex 1998):

....´The World Bank has been an active participant in the growth of national agricultural research systems (NARSs), lending nearly $4 billion for their support since 1981. The emphasis in these projects has steadily evolved from one of investment in research infrastructure and human resources development to improving research management and institution building within a pluralistic national research system. Recent Bank lending programs have often included downsizing and consolidation. This is a sharp departure from the agricultural research policy approved by the Bank in 1980, that emphasized quantitative targets for expansion of research systems. NARSs have evolved rapidly over the past three decades, especially in the quantitative dimension. In aggregate, public research systems in the developing world employ over 100,000 scientists and manage an annual investment of over $8 billion. This investment now exceeds that in industrialized countries. But over the past decade, public research systems almost everywhere have faced a crisis of confidence reflected in stagnant or reduced funding and severe restrictions on operating costs. The private sector has potential to fill some of the gap and has expanded rapidly from a very small base to account for about 10-15 percent of resources invested in agricultural research in developi invested in agricultural research in developing countries. The increasing demands on research systems contrast with the lack of institutional innovation in research-system management and organization and the stagnation or decline in funding for agricultural research. The substantial investment in NARSs over the past two decades, although providing high payoffs, has not yet resulted in the institutional capacity to sustain those payoffs in a rapidly evolving technical and policy environment. Many systems are suffering a crisis of management, with top-heavy bureaucracy, centralization of decisionmaking, and lack of incentives for the innovation process so essential for research. Emphasis on building agricultural research capacity has now shifted from exclusive attention to developing national agricultural research institutes (NARIs) to strengthening national research systems, broadly defined to include the NARI, universities and the private sector (both for profit and nonprofit). The challenge is to develop a well-articulated research system to meet national objectives for the sector by developing innovative institutional models that encourage participation of alternative research funders and suppliers, bringing more resources into the research system, and exploiting complementarities among various participants at the national and international levels.

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SUPPORT TO THE CGIAR

The Bank is committed to continue supporting the CGIAR. Under the dynamic leadership of its then new chairman, Bank Vice President Ismail Serageldin, a major renewal was launched in 1994. It stemmed the financial crisis which was threatening the overall effort; it rededicated decision makers at the highest level to support international agricultural research as a key instrument to fight poverty, increase food security and protect natural resources. It streamlined research programming and financial management within the system; and it has begun to reposition the Centers (the IARCs) to play a greater catalytic and convenor role within the Global Agricultural Research System. Practically this means research work undertaken as support to, and partner of, the NARSs, greater interaction with basic research in biology - i.e, greater use of biotechnology, closer partnership with the private sector, greater involvement of farmers' organizations, NGOs and other institutions of civil society at the local level. Undoubtedly, the Bank has not brought about these changes single-handedly. Indeed, attempting to do so would have been self-defeating for an international effort uniquely successful because it constantly depends on, and at the same time fosters, consensus among many extremely diverse institutions. On the other hand, the real leadership role played by thher hand, the real leadership role played by the Bank is unanimously recognized. Thus the future direction of the Bank's approach vis a vis the CGIAR is very clear. The Bank will continue to push the changes it has promoted in recent years.

FACILITATING THE DEVELOPMENT OF A MORE EFFECTIVE GLOBAL AGRICULTURAL RESEARCH SYSTEM (GARS)

In 1994, the Bank initiated the creation of a small, multi-institution group for Agricultural Research and Extension in its Environmentally Sustainable Development Vice Presidency (hence its acronym ESDAR). The role of this small unit is catalytic, to facilitate the emergence of a Global Agricultural Research System, as discussed above, which would be as responsive as possible to the needs of the poor in developing countries. This group has worked with others towards the establishment of a Global Forum for Agricultural Research, which as the word Forum indicates, is intended to foster greater synergies among the many actors involved through information exchange, debate, consensus building and thereby facilitating greater coordination among the various actors. The ESDAR Group provides the secretariat of the Global Forum.

The group also promotes innovative partnerships, particularly with the private sector, in the conviction that such partnerships will be critical in the future. For instance, the Bank is now currently exploring the feasibility of establishing a murrently exploring the feasibility of establishing a multi-institution consortium, including private firms, to fund research to introduce disease resistance in bananas through genetic engineering.

Finally the ESDAR Group conducts collaborative "studies"on controversial issues, such as genetic resources policies, impact assessment.... The controversies on such issues are such that the lack of an international consensus hampers collective actions, which, however, would be necessary to enhance synergies and increase the effectiveness of the global effort.

THE FUTURE OF THE INTERNATIONAL FUNDING

Rapid changes in science, technology and institutional arrangements are posing major challenges to agricultural and horticultural research managers throughout the world. Meeting global food demand over the next 30 years will require expanded investments in research and technology development. However, the existing mechanisms for funding international research efforts are under threat. Many aid agencies have drastically reduced their support to agricultural research, despite the recognition that there are large areas of technology development that are of little interest to the private sector.

The current public finance crisis in OECD countries affects agricultural research at all levels (and has a direct impact on international funding for horticultural research). The funding crisis has rng for horticultural research). The funding crisis has resulted, among other things, in lessened support for IARCs and in lessened bilateral support for developing country NARSs.

In this situation of scarce funds, the challenge of doubling production on existing lands in the next 30 years can only be met in an environmentally sustainable way by creating new partnerships among the various components of a global agricultural research system (advanced research organizations, international agricultural research centers, national agricultural research systems). The practical consequences for the World Bank of the preceding analysis is to examine how it can modify the use of the instruments available to it. In the field of agricultural research, the most important instrument of the World Bank is made up of lending operations in support of NARSs. The World Bank has been an active participant in the growth of national agricultural research systems, lending nearly $4 billion for their support since 1981. The emphasis in these projects has steadily evolved from one of investment in research infrastructure and human resources development to improving research management and institution building within a pluralistic national research system.

The second most important instrument is the Bank support to the CGIAR. It has launched a major renewal of the CGIAR in 1994, stemmed the financial crisis which at that time was threatening the system anwhich at that time was threatening the system and rededicated decision makers at the highest level to support international agricultural research as a key instrument to fight poverty, increase food security and protect natural resources. The future direction of the Bank's approach vis a vis the CGIAR is very clear - it will continue to push the changes it has promoted in recent years.

Furthermore, the Bank has facilitated and supported several institutional innovations to promote a more effective global agricultural research system. In 1994, the Bank initiated the creation of a small, multi- institutional Group for Agricultural Research and Extension with the role to facilitate the emergence of a Global Agricultural Research System. The Group has worked with others towards the establishment of a Global Forum for Agricultural Research and provides the secretariat of that Forum; it promotes innovative partnerships, particularly with the private sector; and it conducts collaborative studies on controversial issues, the controversies on which hamper collective action needed to enhance synergies and increase the effectiveness of the global effort.

Literature Cited

Byerlee, Derek and Gary E. Alex. 1998. Strengthening National Agricultural Research Systems: Policy Issues and Good Practice. Environmentally and Socially Sustainable Development Series - Rural Development. The World Bank, Washington, D.C. Rural Development. The World Bank, Washington, D.C.

McCalla, Alex F. 1994. "Agriculture and Food Needs to 2025: Why We Should be Concerned." Sir John Crawford Memorial Lecture. Consultative Group on International Agricultural Research, Washington, D.C.

Petit, Michel J., with Gary E. Alex, Harvey Blackburn, Wanda Collins, John J. Doyle, Russell D. Freed, Franz Heidhues, Uma J. Lele, Gabrielle J. Persley and Henri A. Rouille D'Orfeuil. 1996. The Emergence of a Global Agricultural System, The Role of the Agricultural Research and Extension Group (ESDAR). Environmentally Sustainable Development Agricultural Research and Extension Group Report 1. The World Bank, Washington, D.C.

The World Bank. 1997. Rural Development - From Vision to Action. Environmentally and Socially Sustainable Development Studies and Monographs Series 12. The World Bank, Washington, D.C.