The Changing Global Private Funding
Landscape focussing on the roles of
Brazil, China and India
Carl E Pray
With lots of help from but no blame to Keith Fuglie,
Jose-Maria da Silviera and Latha Nagarajan
Outline
• Global trends in private agricultural research
• Trends in research expenditure in China, India, Brazil
• Impacts on agriculture in these countries
– Major impact in Brazil
– Some impact in India
– Limited in China
• Technology transfer from these countries
• Future trends
2
Private Ag R&D funding growing slowly in high
income countries and much more rapidly in
others
• Fuglie 2016
3
Much of the research of largest firms is focused
on low income agriculture
• Fuglie 2016
4
Chinese government agricultural research
expenditure biggest in world
China
USA
Brazil
India
R&D Expenditure Million US$ converted from local currency using 2009 PPP
exchange rates
1960
294
1,254
345
220
2011
4,723
4,403
1839
3771
2011/1960
16
3.5
5
17
Rank 2011
1
2
5
3
Philip G. Pardey, Connie Chan-Kang, Steven P. Dehmer and Jason M. Beddow Agricultural
R&D is on the move Nature September 14, 2016,
5
Private sector research not as large but growing
rapidly
China ---very limited in 2000 up to11% of total R&D in 2006
$244 million Chinese firms + pesticide and agricultural
machinery + a few foreign firms
(privatization and SOEs)
Brazil --- 20% of total public private R&D 2012
$50 million 1996 to $377 million 2012
Mainly foreign multinational
India --- 25% total public private R&D 2009
From $44 million 1995 to $271 million 2009
38% foreign firms
6
Chinese commercial enterprises’ R&D 2016
• Ag Machinery –
– First Tractor between US $51 million and 1,500 R&D personnel
– Foton–Lovol tractors don’t know expenditure by 1,400 scientists,
engineers and technicians in R&D
– John Deere engineering R&D
• Ag Chemicals
– ChemChina= Anhui Research Institute of the Chemical
Industry+ADAMA $33 million + Syngenta $1.38 billion
– SinoChem added the major government research institutes northern
research pesticide center.
• Livestock
– Chia Tai (C-P Thailand) animal feed, poultry breeding and aquaculture
– Ringpu Biologicals – veterinary pharmaceuticals and vaccines
• $13 million
7
In addition to research, private sector an
important importer of technology
• “Borrowing”
– India – late 1990s NavBharat brings in Monsanto’s Bt trait for cotton
– China –2016 Dabeinong’s seed company’s US director pleads guilty to
stealing proprietary maize lines from Pioneer and Monsanto
– Bt maize and RR soybeans in North China
• Imports of inputs and technology
– Seeds – vegetable seeds in India, sunflowers and grass seed in China
– Pesticides - all from active ingredients discovered abroad –some paid
for.
– Tractors – technical partnership with foreign firms (next slide)
– Biggest imports are fertilizer – not new tech – also import factories
• Purchases of companies
– India UPL (generic pesticide co.) buys Advanta (seed, biotech) in 2008
– ChemChina buys Makhteshim in 2011 and now Syngenta
8
Total Factor Productivity Growth in China,
India, Brazil
0.045
0.040
0.035
0.030
0.025
0.020
0.015
0.010
0.005
0.000
1961-70
1971-80
China
1981-90
India
1991-00
2001-13
Brazil
9
Imports and exports of fertilizer, pesticides and
tractors..
Table 1. Imports and Exports of Fertilizer,
Pesticides and Tractors
Fertilizer 2015
CHINA
Value in US$
INDIA
Value in US$
Global Imports of Fertilizers
67,151,565,274
67,151,565,274
Fertilizer imports by country
Share in global imports
3,928,515,015
5.9%
7,459,460,149
11.1%
Global Exports of Fertilizers
57,808,259,078
57,808,259,078.00
Fertilizer exports by country
Share in global exports
Pesticides: 2014
10,878,119,513
18.8%
Value in US$
96,877,924.00
0.17%
Value in US$
Global value of pesticide imports
Pesticide imports by country
% of share in global pesticide imports
34,959,370,800 34,959,370,800
770,625,960
990,318,950
2.2%
2.8%
Global value of pesticide exports
34,727,809,340
34,727,809,340
4,146,984,440
11.9%
Value in US$
1,939,991,000
5.6%
Value in US$
46,578,988,751
302,610,139
0.65%
46,578,988,751
34,487,518
0.07%
Pesticide exports by country
% of share in global pesticide exports
AgMachinery: 2015
Global value of ag tractors imports
Ag tractor imports by country
% of global ag tractor imports
Global value of ag tractor exports
52,373,540,320
52,373,540,320
Ag tractor exports by country
% share in global ag tractor exports
1,582,677,906
3.02%
10,001,841,820
19.10%
10
Chinese glyphosate exports
11
Chinese pesticide exports to Africa
12
Speculation about future
13
Factors determining growth of R&D
• Economic factors
– Crop prices drive R&D all countries
• Growth of private sector – China - officially private firms allowed in 2000; shifting government
research institutes to SOEs.
• Biotech + regulatory change + “intellectual property
rights(IPRS)”
– Brazil and India
– IPRs on biotech – Brazil and India
• Science and education --- MNCs’ R&D investments in India,
Brazil and China to access scientists
14
China example/puzzle
YTO (First Tractor) R&D Investment & R&D Intensity
58.52
60.00
58.45
5.00
4.66
53.92
51.24
50.81
4.54
50.00
4.19
43.29
39.39
50.80
3.42
3.17
30.00
2.05
3.00
3.16
2.50
2.62
24.18
4.00
3.50
3.64
40.00
Millions US$
4.50
2.00
1.96
20.00
1.50
21.72
1.07
1.00
10.00
4.00
0.00
10.10
0.50
0.58
2005
0.00
2006
2007
2008
2009
R&D Investment ($US)
2010
2011
2012
2013
2014
2015
2016
R&D percentage of operating revenue (%)
15
Future trends – indications from US VC
investments
Fuglie 2016
16
Industrial policies that affect agricultural inputs
• Quid pro Quo: technology for markets – foreign firms must
provide technology and be minority owners
– India and Brazil stop by 1990
– China continues to have them
• Consolidation of local industry
– China - “Grasp the Large, Let Go of the Small” policies 1990s. Large
SOEs buy small SOEs….
– India - Large Indian companies and MNCs buy smaller firms
– Brazil – MNCs bought local companies
• Developing global champions for export and outward FDI
– China – explicit in “Made in China 2025” policy
– India – encouraging private companies through financing and subsidies
17
Developing global champions using state
owned enterprises
• Agricultural chemicals dominated by SOEs
– ChemChina and SinoChem formed in early 2000s
– Government finances acquisition of Syngenta by ChemChina
– Talks to merge ChemChina and Sinochem
• Seeds/biotech –
– ChemChina purchase of Syngenta will create first modern Chinese seed
company
– China National Seed Group – owned by SinoChem, collaboration with
Monsanto on maize, HuaZhong Ag University for rice.
– Yuanlongping
• Tractors
– YTO – First Tractor
– Foton – Lovol
18