In 2010, global private sector investments in research and development to improve agricultural inputs hit $11 billion, nearly double the $5.6 billion spent in 1994.
Crop improvement R&D accounted for most of the spending during the period, according to a new report by the USDA’s Economic Research Service. The most rapid growth in agricultural R&D was for crop seed and biotechnology traits.
“Seed biotechnology research expenditures grew particularly fast in the 1990s, and between 2007 and 2010,” note the authors, Keith Fuglie, Paul Heisey, John King, and David Schimmelpfennig. “By 2008, they had surpassed research expenditures in crop protection chemicals for the first time.”
Farm machinery R&D also increased substantially, with much of the growth occurring after 2006. Part of this change reflects rising demand for farm mechanization, they note, and part has been in response to more stringent regulatory requirements on exhaust emissions from farm machinery in the U.S.
Among all countries, the U.S. was the leader in private agricultural R&D during the period, accounting for over one-third of the global total.
“U.S. companies were particularly dominant in the crop seed/biotechnology and animal breeding/genetic sectors, where they made up about half of global private R&D investments,” the authors report. “European firms accounted for about half of total R&D across all agricultural input industries.” Worldwide, Japanese firms were among the leaders in crop protection chemicals and farm machinery R&D.
Private sector firms “have become major players in developing new innovations worldwide,” the report notes. “The emergence of biotechnology and other scientific developments, the strengthening of intellectual property rights over agricultural innovations, the global expansion of markets for agricultural inputs, and changing government regulations are some of the factors driving private companies to invest in agricultural research.”
Private sector spending in the seven input industries — crop seed/biotechnology, crop protection chemicals, synthetic fertilizers, farm machinery, animal health, animal breeding/genetics, and animal nutrition increased by more than 40 percent during the period.
Average annual growth in sales was highest for fertilizer, 8.3 percent, mainly due to higher prices; followed by crop seed/biotech traits, 6.9 percent, in the period after widespread adoption of genetically modified seed in the late 1990s; farm machinery, 4 percent; animal nutrition, 3.3 percent; and crop protection chemicals, 1.8 percent. The latter grew more slowly as the introduction of genetically modified seed increased demand for some herbicides, but reduced demand for other herbicides and some insecticides. Producers of crop protection chemicals with expiring patents also faced greater competition from generic products.
How does private sector R&D spending stack up against public sector/government R&D? Figures from year 2000 indicate that the private sector accounted for 45 percent of total global food and agricultural R&D, the rest public and government.
A trend in the 1994-2010 period is that private sector agricultural R&D become increasingly global, with all of the leading firms in agricultural input industries, and many second tier firms, being multi-national.
See the full report at http://www.ers.usda.gov/AmberWaves/June12/Features/PrivateIndustry.htm .