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Agricultural biotechnology arises from advances in science,
particularly molecular biology. But transforming science
into marketable products involves many factors, including
the nature of research organizations, the strategic behavior
of research firms and the organization
of the industry, the rigor of intellectual
property rights, and the appropriate roles of public
and private research institutions.
Many studies on the returns to
agricultural research focus on the amount spent on research
and on the public-sector allocation of funds to different activities
and institutions. Other public policies, however, strongly influence
the scope and direction of agricultural research, particularly private-sector
research. Among these policies are those that focus on intellectual
property rights (IPR), such as plant varietal protection and patent
policies, and those that address market concentration, such as antitrust
policies.
Both public and
private R&D have contributed to the development of biotechnology.
The public sector has conducted research with limited private incentives,
i.e., areas where private sector firms may be unable to recover
the research costs. The results of such research may not be fully
appropriable because the research focuses on social goods (such
as nutritional or environmental benefits) or because the research
is too long term or risky for the private sector to pursue. Historically,
the public sector has conducted basic research with no immediate
commercial value, and public sector research has laid the groundwork for much of modern biotechnology.
However, the division between basic and applied research has shifted
as the cost of using research tools such as genetic engineering
or DNA sequencing has declined precipitously. Some molecular biology
techniques like genetic engineering now yield more immediate financial
returns. Because the private sector pursues research that results
in marketable products, it has rapidly embraced agricultural biotechnology.
Key advances in molecular biology indicated marketable products,
particularly genetically engineered crops, early on. Therefore,
public sector research institutions such as USDA's Agricultural
Research Service have increasingly shifted their plant breeding
research toward conservation and characterization of plant
genetic resources, and certain forms of breeding relatively
neglected by the private sector.
As a result of numerous mergers and acquisitions, the agricultural
inputs (seed, pesticides, etc.) industry has become highly concentrated.
This trend and the dominance of private sector R&D investments
relative to the public sector raise questions about the nature and
direction of future agricultural research. In some cases, concentration
realizes economies of scale, which can improve market efficiency
by driving down production costs. The protection of intellectual
property rights is integral to the agricultural biotechnology marketplace,
stimulating both R&D and investment and the development of substitute
markets. However, excessively broad intellectual
property rights can hinder the market for innovation.
Also, because of the ownership of key technologies, further biotechnology
developments will likely require partnerships
among firms as well as public private-partnerships. Such joint
research—eg., patent licensing, research consortia, contracted
research, and Cooperative Research and Development Agreements—can
promote the use of public-sector research results while providing
additional resources for public research.
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