Towards an Integration of R & D and Marketing in Production Development

Abstract

In this paper, two approaches which are characteristic for Research & Development and Marketing departments are compared. First, R&D versus Marketing orientations are explained, then the major differences between them are presented. The integration of both approaches may improve competitive advantage of the food industry. Factors stimulating such integration are presented on the basis of data from real business circumstances. Innovation is regarded as a major source of competitive advantage of company. Therefore, integration in sensory methodology, that is commonly but differently used by R & D and Marketing departments, may contribute to the improvement of innovation practices and successful business performance. Finally, the role of consumer tests, oriented for marketing and product development, is illustrated.     

The importance of ecological and socio-technological literacy in R&D priority setting: the case of a fruit innovation system in Guinea,West Africa

The introduction of farmer participatory approaches over the past decades has to some extent improved the relevance and uptake of research results. While R&D prioritization increasingly involves more stakeholders, including the private sector, policymakers and civil society, building ecological literacy among all stakeholders is urgent, especially for sustainable agricultural development. A case study of an emerging fruit innovation system in Guinea, West Africa, highlights the challenges of supply- and demand-driven approaches to R&D prioritization. Shallow ecological knowledge and a blind faith in ‘modern’ technologies by scientists and farmers alike distort prioritization. Locally available, appropriate technologies are dismissed in favour of high technologies that are inaccessible to most smallholder growers. Strengthening the ecological literacy of all stakeholders may help to overcome this bias. On the other hand, building socio-technological literacy would allow innovation intermediaries, who typically act as brokers between the demand- and supply-side of technologies, to better understand the social and institutional contexts of technologies and how these affect potential uptake by poor farmers. Member centres of the Consultative Group on International Agricultural Research (CGIAR) could use the notion of ecological and socio-technological literacy to better understand supply and demand of technology and to work more effectively with their partners towards pro-poor and sustainable agricultural development.     

Beyond semi-dwarf wheat yield increases: impacts on the Australian wheat industry of on-going spillovers from the International Maize and Wheat Improvement Center

Wheat genetic materials developed from research at the International Maize and Wheat Improvement Center (CIMMYT) in Mexico for developing countries have provided spillover benefits to Australia. Varieties developed from those genetic materials have resulted in yield increases in Australia. While the initial impact came through the introduction of higher-yielding semi-dwarf wheat crops, those impacts have continued in the post-semidwarf period. CIMMYT's success in developing countries has also reduced the world price for wheat. While the lower prices affect returns in Australia, the increased yields in Australia from the CIMMYT spillovers from both the semi-dwarfs and the post-semidwarf phases have provided benefits to Australia averaging A$30 million per year.     

政府补助对企业研发投入与成长的调节作用

基于中国水资源企业2012—2020年的微观数据,对企业研发投入与企业成长的关系进行实证分析。为消除企业研发投入中存在的内生性问题以及跨期影响等特点,采用系统广义矩估计法(SYS-GMM)对政府研发补助、研发投入与企业成长之间关系进行了实证分析。结果表明:水资源企业成长与企业研发投入之间呈U形曲线关系；政府研发补助对企业研发投入和企业成长两者间的关系具有调节作用,使两者呈现出的U形曲线坡度变缓。     

The research cost of adapting agriculture to climate change: A global analysis to 2050

Investments in agricultural research and development (R&D) made over the next few decades will likely prove critical in offsetting adverse climate change impacts on the global food system. In this study, we offer cost estimates of public R&D-led adaptation to climate change grounded in an explicit framework relating the flow of annual R&D expenditures to building knowledge capital and thereby raising productivity in agriculture. Our research uses a comprehensive collection of historical public agricultural R&D expenditure and a literature review of elasticity estimates linking knowledge stocks to agricultural productivity growth for key world regions. Given climate-driven crop yield projections generated from extreme combinations of crop and global circulation models, we find that offsetting crop yield losses projected by climate and crop models over 2006–2050 would require increased R&D adaptation investments of between $187 billion and $1,384 billion (in 2005 $PPP) if we invest between 2020 and 2040. This is 16–118% higher than global R&D investment if present spending trends continue. Although these costs are significant, worldwide R&D-led climate adaptation could offer favorable economic returns. Moreover, R&D-led adaptation could deliver gains in food security and environmental sustainability by mitigating food price increases and slowing cropland expansion.     

Publicly-funded UK agricultural R&D and 'social' total factor productivity

Most studies concerned with measuring the rate of return to publicly‐funded agricultural R&D investment have found high returns, suggesting under‐investment, and calls for increased expenditure have been common. However, the evaluation of returns tends to measure the effect of research expenditure against growth in total factor productivity (TFP), based on market inputs and outputs. When compared against growing public unease over the environmental effects of pursuing agricultural productivity growth, TFP indices become a misleading measure of growth. This paper integrates some non‐market components into the TFP index. The costs of two specific externalities of agricultural production, namely fertiliser and pesticide pollution, are integrated in a TFP index constructed for the period 1948–1995. This adjusted, or ‘social’, TFP index is measured against UK public R&D expenditures. The rates of return to agricultural R&D are reduced by using the ‘social’ as opposed to the traditional TFP index. Whilst both remain at justifiable levels, previous studies appear to have over‐estimated the effect of agricultural R&D expenditures. Furthermore, with changes in policy towards more socially acceptable but non‐productivity enhancing outcomes, such as animal welfare, rural diversification and organic farming, the future framework for analysing returns to agricultural R&D should not be so dependent on productivity growth as an indicator of research effectiveness.     

International and Institutional R&D Spillovers: Attribution of Benefits among Sources for Brazil's New Crop Varieties

Reported rates of return to agricultural R&D are generally high, but they are likely to be biased, particularly because of attribution problems—mismatching research benefits with costs. The importance of attribution biases is illustrated here with new evidence for Brazil. During 1981–2003, varietal improvements in upland rice, edible beans, and soybeans yielded benefits of $14.8 billion in present value (1999 prices) terms. Attributing all of the benefits to Embrapa, a public research corporation accounting for more than half of Brazil's agricultural R&D spending, the benefit-cost ratio would be 78:1. Under alternative attribution rules, the ratio drops to 16:1.     

Knowledge productivity and the returns to agricultural research: a review

This paper describes the identification, specification, estimation, and evaluation of econometric models of knowledge productivity and the returns‐to‐research. General issues related to these models are discussed and placed in context of the literature. The path from R&D investment to economic benefit is complex, convoluted, generally unknown and possibly misrepresented. The complexity arises from the intricate spatial spillover relationships and the very long time periods involved, which complicate any econometric analysis. The relevant R&D investment data are typically unavailable, incomplete and poorly measured (or approximated). The appropriate calculation of the financial benefit is not entirely clear. Some parsimonious suggestions for future research are presented.     

Payoffs from research and development along the Australian food value chain: a general equilibrium analysis

The payoffs and distribution of payoffs from research and development (R&D) along the food value chain depend on many interacting economic factors. To quantify these, we have developed a general equilibrium model of the Australian economy with detailed farming, processing and marketing information. We use the model to assess potential payoffs and distributions from various R&D scenarios that lead to demand expansion and productivity improvement. We find that productivity improvement caused by R&D is unambiguously beneficial to the whole economy while the benefits of export or domestic market demand expansion mainly accrue to the primary producers and processing industry, when the economy is at full employment. Also, productivity improvement from R&D on‐farm may benefit processors while improvements postfarm may benefit farmers.     

Synergies or Trade-Offs in University Life Sciences Research

Major legislative, legal, and technological changes paved the way for a period of remarkable growth in the patenting of life science research by U.S. universities in the 1980s and 1990s. Using a multiple-output cost framework and two decades of panel data on ninety-six universities, this article examines whether economies of scope and/or scale are present in university production of three major life science research outputs: journal articles, patents, and doctorates. The results show strong evidence of economies of scale in life science research production with mixed evidence of economies of scope between articles and patents.     

On the Adoption of Genetically Modified Seeds in Developing Countries and the Optimal Types of Government Intervention

Given the proprietary nature of most genetically modified (GM) seed technologies, the question arises as to how farmers in developing countries can gain proper access. Based on empirical observations, a theoretical model is developed, focusing on farmers' adoption decisions in response to pricing strategies of a foreign monopolist and a domestic supplier of conventional seeds. Government interventions, such as seed subsidies, encouragement of R&D, and intellectual property rights (IPR) enforcement, and their effects on GM coverage and national welfare are analyzed. The possibility of the government obtaining a license to distribute GM seeds domestically through a transfer to the monopolist is also considered.     

Short and long‐run returns to agricultural R&D in South Africa,or will the real rate of return please stand up?

This paper briefly presents the results of a total factor productivity (TFP) study of South African commercial agriculture, for 1947‐1997, and illustrates some potential pitfalls in rate of return to research (ROR) calculations. The lag between R&D and TFP is analyzed and found to be only 9 years, with a pronounced negative skew, reflecting the adaptive focus of the South African system. The two‐stage approach gives a massive ROR of 170%. The predetermined lag parameters are then used in modeling the knowledge stock, to refine the estimates of the ROR from short‐ and long‐run dual profit functions. In the short run, with the capital inputs treated as fixed, the ROR is a more reasonable 44%. In the long run, with adjustment of the capital stocks, it rises to 113%, which would reflect the fact that new technology is embodied in the capital items. However, the long‐run model raises a new problem since capital stock adjustment takes 11 years, 2 years longer than the lag between R&D and TFP. If this is assumed to be the correct lag, the ROR falls to 58%, a best estimate. The paper draws attention to the possible sensitivity of rate of return calculations to assumed lag structure, particularly when the lag between changes in R&D and TFP is skewed.     

Valuing seasonal climate forecasts in a state‐contingent manner

We applied state‐contingent theory to climate uncertainty at a farm level to assess the value of seasonal climate forecasts in the Central West region of NSW. We find that modelling uncertainty in a state‐contingent manner results in a lower estimate of forecast value than the typical expected value approach. We attribute this finding to a more conservative long‐term farm plan in the discrete stochastic programming (DSP) model, which is better balanced for climate uncertainty. Hence, a climate forecast, even though it still revises probabilities held by farmers, does not call forth such large changes in farm plans and associated farm incomes. We then use the DSP model to assess how attributes of a hypothetical forecasting system, particularly its skill and timeliness, as well as attributes of the decision environment, influence its value. Lastly, we assess the value of current operational forecast systems and show that the value derived from seasonal climate forecasts is relatively limited in the case study region largely because of low skill embodied in forecasts at the time when major farm decisions are being made.     

Exploring the impact of R&D and climate change on agricultural productivity growth: the case of Western Australia*

This article empirically examines the impact of R&D and climate change on the Western Australian Agricultural sector using standard time series econometrics. Based on historical data for the period of 1977–2005, the empirical results show that both R&D and climate change matter for long‐run productivity growth. The long‐run elasticity of total factor productivity (TFP) with respect to R&D expenditure is 0.497, while that of climate change is 0.506. There is a unidirectional causality running from R&D expenditure to TFP growth in both the short run and long run. Further, the variance decomposition and impulse response function confirm that a significant portion of output and productivity growth beyond the sample period is explained by R&D expenditure. These results justify the increase in R&D investment in the deteriorating climatic condition in the agricultural sector to improve the long‐run prospects of productivity growth.     

Public Investment and Industry Incentives in Life-Science Research

Life-science research has shifted rapidly from the public to the private sector, raising questions about government's remaining role. We shed light on the issue by employing a dynamic investment-response model to examine the public's impact on industry life-science research effort and success. We find that government expenditures in both basic biological research and agricultural and medical science create substantial spillovers for private firms. The spillovers are, unfortunately, partly nullified by government competition for scarce research inputs. Yet even after accounting for such competition, public investment has been strongly complementary to private investment. Indeed, opportunities created through public research are the principal source of growth in industry life sciences.     

R&D and Innovation in Food Processing Firms in Transition Countries

We examine the implications of the liberalised economic conditions associated with the economic transformations in the transition countries of Central and Eastern Europe (CEE) and Commonwealth of Independent States (CIS) for R&D and innovation in the food processing sector. We use a dataset derived from the World Bank's Business Environment and Enterprise Performance Surveys (BEEPS) database to examine the relationships between R&D/innovation activities in food processing firms in transition countries and (i) privatisation, (ii) foreign direct investment, (iii) trade activities, (iv) market competition pressure, and (v) economies of scale. The empirical analysis is implemented through: (i) a double‐hurdle model for R&D participation and expenditures, and (ii) a bivariate probit model for product and process innovation. We find that these economic transformations generally promote R&D/innovation activities in the food processing sector. Our results suggest that broadened and deepened economic liberalisation policies would improve the innovation performance of the food processing sector in transition countries, and would enhance competitiveness in domestic and foreign markets. They also indicate that innovation policies may need to be tailored to market and industrial characteristics of different transition regions.     

Crop research,biotech canola,and innovation policy in Canada: Challenges,opportunities, and evolution

Increased investment in agricultural research could contribute to sustainable development goals and benefit farmers, consumers, the environment, and the economy. This paper provides recent evidence and a critical assessment of the evolving Canadian canola crop development and innovation policy and compares it to the wheat and pulse sectors that differ in degree of biotechnology adoption, seeded acreage, intellectual property rights, and private sector involvement. This study also assesses how crop characteristics and technological changes affect future optimal public policy. A number of innovation policies are discussed that could stimulate further growth within the crop sector.     

The benefits from public agricultural research in Uruguay

We use newly constructed data to model and measure agricultural productivity growth and the returns to public agricultural research conducted in Uruguay over the period 1961–2010. We pay attention specifically to the role of levy‐based funding under INIA, which was established in 1990. Our results indicate that the creation of INIA was associated with a revitalization of funding for agricultural R&D in Uruguay, which spurred sustained growth in agricultural productivity during the past two decades when productivity growth was stagnating in many other countries. The econometric results were somewhat sensitive to specification choices. The preferred model includes two other variables with common trends, a time‐trend variable and a proxy for private research impacts, as well as a variable representing the stock of public agricultural knowledge that entailed a lag distribution with a peak impact at year 24 of the 25‐year lag. It implies a marginal benefit‐cost ratio of 48.2, using a real discount rate of 5 per cent per annum and a modified internal rate of return of 24 per cent per annum. The benefit‐cost ratio varied significantly across models with different lag structures or that omitted the trend or the private research variable, but across the same models, the modified internal rate of return was very stable, ranging from 23 per cent per annum to 27 per cent per annum. These results suggest that the revitalized investment in research spending under INIA has been very profitable for Uruguay and that a greater rate of investment would have been justified.