Insights and Inspiration on Agricultural Innovation

Posted by Dan Broderick on 1 February 2012 | 5 Comments

Tags: agtech, innovation

In this post, I want to talk about a couple of interesting letters and articles that address the need for agtech innovation.

The first, and most important, is Bill Gates’ annual letter that addresses, in a keen fashion, the importance of agtech innovation to the world’s poor. He opens with the following:

“[T]he private market does a great job of innovating in many areas, particularly for people who have money. The focus of Melinda’s and my foundation is to encourage innovation in the areas where there is less profit opportunity but where the impact for those in need is very high. That is why we have devoted almost $2 billion to helping poor farm families, most of which are led by women, boost their productivity while preserving the land for future generations. Those funds are invested in many areas of innovation, ranging from sustainable land management, to better ways to educate farmers, to connecting farmers to functioning markets.”

He goes on to discuss the rising price of food, the decline in the number of farmers around the world, especially in the developed world, and the erosion of the amount of money spent on ag aid. He makes the following comment on the post-Green Revolution period:

“But the world’s success in warding off famine led to complacency. Over time, governments in both developed and developing countries focused less on agriculture. Agricultural aid fell from 17 percent of all aid from rich countries in 1987 to just 4 percent in 2006. In the past 10 years, the demand for food has gone up because of population growth and economic development—as people get richer, they tend to eat more meat, which indirectly raises demand for grain. Supply growth has not kept up, leading to higher prices.”

This reduction in spending impacts GAIN’s members, as well. We have less nascent technology to follow for a potential commercialization opportunity. Fewer scientists are choosing plant and other agricultural sciences as a career, which lessens the number of minds working on problems (opportunities) and the number of collaborators.

As ag innovators, investors and stakeholders, we can use this letter as a call to action. We need to innovate and get innovation to the market in a cost-efficient and profitable manner. This is no small task. GAIN is contemplating hosting a symposium on the topic of profitably innovating while affordably feeding the world. Comments are welcome and encouraged.

Mr. Gates goes on to discuss the threat of crop disease and how some are trying to address that threat, the importance of global health and U.S. education. The full letter can be found here. I encourage you to take the time to read it.

The second article, rather a series of articles, appears in Science Progress. It discusses the need for innovation in a less ag-specific fashion, but the points they make can easily be applied to agriculture along with the observations and examples. The articles are U.S.-centric, but again, the points made can apply to many other countries, governments and university systems. The opening paragraphs set the tone. You can read the full series here.

“Innovation is and always has been the engine that drives economic growth in the United States. Economists believe that innovation—new technologies, products, processes, and the industries they create—is responsible for between half and 80 percent of all economic growth.

Indeed, U.S. companies and industries, with the help of federally funded research, have invented many things that the world wants to buy—think light bulbs, assembly line automobile production, computers, Internet applications, handheld wireless devices, photovoltaic solar cells, Global Positioning System satellites, and the list goes on. This innovative spirit of the American people, protected by the rule of law, keeps us in the world’s top position in innovation, and subsequently ensures we are home to the world’s best-paying jobs and highest standards of living.

But in the 21st century our lead is beginning to erode. It’s not that we’ve started doing anything wrong—we are still home to the world’s most productive workers and innovative companies. Rather, it is because others have followed in our footsteps, and in some cases gone even further to invest specifically in the interrelated building blocks of a high-performance innovation engine. Across a spectrum of metrics—from education and workforce readiness, to research and development, to manufacturing, to infrastructure—our nation’s competitive position is slipping relative to other countries that are investing more in the driver of economic growth and prosperity. This slippage costs us jobs, investment, and wage growth.”

The overview of the five articles ends with a call for the establishment of a bipartisan congressional commission to study and make recommendations for government to help spur innovation and innovative companies. GAIN agrees with this recommendation, but doubts that the Washington has the political will to make the changes. This usually means less government (repeal SOX, long term capital gains tax rates to provide certainty, relax small company reporting requirements, rule 409a relaxation etc.), which is hard for Washington to actually execute.  Strengthening IP law and encouraging countries that are weak on IP to do the same would be welcome government additions.