Agricultural innovation in Latin America: Understanding the private sector's role

Conventional thinking has it that private sector investment in agricultural innovation is not sufficient to stimulate new knowledge and technologies that contribute to rural development and poverty alleviation in Latin America. As such public agencies and aid organisations have initiated and subsidised agricultural research and innovation to supplement the knowledge and technology produced by private entities. This brief questions these assumptions. It argues that many publicly generated improvements have not been useful to farmers, processors, and agribusiness or have not been successfully transferred to them. Meanwhile production and marketing technologies for the fastest-growing products, such as fresh fruits and vegetables, have been introduced mostly by the private sector.

In this context, the brief revisits the role the private sector can play in generating knowledge and technology for agricultural development. It examines the demand for agricultural innovation in Latin America and the opportunities and constraints for private sector investment in innovation in the region. The authors call for more flexible government funding schemes and more open structures for partnerships between scientists, private knowledge providers, and private users of knowledge to improve engagement in the innovation process. They further argue that to energise poverty alleviation efforts in developing countries’ agriculture, pro-poor technologies need to be complemented with an enhanced focus on the demands of private, small-scale producers. To this end they recommend:

• engaging them in generating and expanding technological innovations initiated by public institutions and the commercial sector
• disseminating and promoting information on providers and clients of knowledge and technology services
• strengthening competitive grants programmes that provide private-sector agencies with access to technological goods and services and foster strategic alliances among users and providers of technologies
• ceasing government “give-away” programmes for technological goods and services that distort competition and discourage small entrepreneurs from investing in innovation
• promoting opportunities to invest in innovation in the country’s agriculture
• helping producers and their organisations to identify their “real demand” for technological goods and services as part of a business development and management support programme
• reorienting the role of the national agricultural research organisations away from the exclusive generation of public goods (such as seeds for small-scale farmers) toward the production of appropriate technologies and knowledge that provide innovators with an innovation rent and thus foster innovation