1. INTRODUCTION
Efforts to improve the seed supply in developing countries have been in progress since the early 1970s, mostly through medium of projects financed by international agencies or bilateral aid agreements. These projects put in place the essential components of a national seed program such as processing, storage and quality control facilities. They also provided training in the associated technical procedures such as seed testing and certification.
Because of the nature of development assistance, these projects were invariably implemented through government agencies, either directly with Ministries of Agriculture or by parastatal seed corporations. This practice was entirely consistent with the policies of the time, which, in most developing countries, saw the Government playing a dominant role in social and economic development. Seeds were often regarded as a strategic input to agriculture and therefore naturally the concern of Government. At the same time, the private sector showed little interest in this business and in some countries was actively discouraged.
It was in this climate that many national seed organisations became established. They were generally run in a bureaucratic way to fulfil official planning objectives, with little concern for managerial or financial efficiency. They were also strongly production-oriented while marketing was neglected. National seed organisations were closely linked to extension programs and input credit packages in which the real cost of the seed was not charged and the real value to farmers not tested. If production exceeded requirements, the unsold seed could be easily diverted to the grain market and the government ultimately covered the losses incurred. On the other hand, if there was a shortage, the Government tried to arrange for importation, often from uncertain sources.
This pattern of development was observed in many developing countries, including those of the Near East and North Africa (NENA) region, which is the immediate concern of this paper. As a result, the first seed organisations established were generally large, monolithic institutions, closely tied to government policy and therefore lacking managerial flexibility. They had large numbers of staff, often well trained at the higher levels, but some key managerial procedures, particularly relating to planning, marketing and stock control were generally weak. A further complication was that these initial seed projects often combined the production and regulatory functions under one entity so that there was no independent quality control agency in the country.
This paper briefly outlines the recent developments, which have raised the profile of privatisation in national seed programmes, and explains the mechanisms by which this process can be advanced. It then considers a number of issues, which may affect the implementation of privatisation policies, and the likely consequences of privatisation on the overall seed supply system and the farming community, which it serves. The paper draws on the general experience of many developing countries and interprets this in the specific context of the Near East and North Africa.
2. CHARACTERISTICS OF THE NENA REGION
It is appropriate to consider the characteristics of this region, which may influence the development of national seed programmes and the prospects for privatisation. Two types of factors may be identified; first, those which relate generally to the agriculture and crops of the region, and second, those that are determined by the political and economic circumstances of individual countries.
The typical agro-ecology of the region is one of low total rainfall, which occurs almost entirely during the cool winter, while the summer is hot and dry. Therefore, only one crop can be grown per year under rainfed conditions, and that crop is often subject to risk due to variation in the timing and quantity of rainfall. Supplementary irrigation to guarantee the success of that crop is extremely beneficial if it can be provided. The traditional crops of the region are those that are naturally adapted to this seasonal pattern, namely wheat (bread and durum), barley, lentil, chickpea and faba bean.
Where sufficient water is available for irrigation throughout the year, a summer crop can also be grown, which is most commonly cotton, rice, maize or sunflower. Because of the large livestock population, fodder/forage crops play an important part in all production systems in the region; typically they are barley, oats and a range of legume species, depending on the availability of water and the local pattern of livestock management. Vegetable production is practised everywhere under irrigated conditions and sometimes in protected environments.
The region is not characterised by subsistence farming; and most producers are connected to the cash economy to a greater or lesser extent. Indeed, even in some areas when yields are low, the mechanised harvesting of crops by contractors is a well-established practice. There is a close relationship between crop and livestock production so that straw and stubble make up an important part of animal feed during the dry season. Likewise, the intensive production of fodder under irrigation for cash sale is a very active business in some countries.
Another feature of the region, which should be noted, is the importance of natural resource management. As a result of the dry environment, which in many areas cannot support crop production, raising of livestock, especially small ruminants, is an important part of the total agricultural output. Increasing livestock numbers have placed the environment under severe pressure and raised concerns about sustainability. Consequently, there is an interest in the introduction of improved management practices for natural and managed pastures. However, a secure seed supply is a common constraint in these efforts, both at the development stage and in the wider implementation of successful strategies. This is a topic in which ICARDA has had an active interest for many years and seed supply continues to be a recurrent issue in livestock management programs.
Due to political differences in the region, the economic picture is diverse. Similar to situations in much of the developing world, in the past, most countries had relatively controlled economies, often with strongly socialist policies. That has been changing in recent years, notably in Egypt, Turkey and Morocco, but in some other countries there remains a strong government presence in the traditional industries and services even though an active private sector is engaged in manufacturing and small business. Despite substantial oil revenues in some countries, the region is not characterised by vibrant economic growth. This is due in part to the many political tensions that exist. For political and/or economic reasons also, some countries are strongly supported by external donors while others are relatively isolated from that system. In general, one could say that the region is not as advanced in the process of economic liberalisation as are some other parts of the world. The region is also less dependent on foreign assistance. On the other hand, proximity to Europe and concerns about political and social stability may lead the European Union to maintain strong economic support to those countries in the Mediterranean region.
3. THE CHANGING ECONOMIC CLIMATE IN DEVELOPMENT
From about the mid-1980s, the climate of development began to change. In some countries, particularly in Africa, formal ‘structural adjustment’ programs were implemented to reduce the oversized public sector and to promote private initiatives. This was linked to the removal of price controls so that producers could sell in a free market; that was seen as a key step in promoting agriculture and increasing national food production. The philosophical basis of this move was that the efficiency and creativity associated with the private sector could not be realised while the Government occupied such a dominant place in the economy. However, it is also true that in many cases the government budget simply could not support the wide range of activities and responsibilities it had acquired. In the countries of the Near East and North Africa, structural adjustment was not a notable feature. In some countries, the same process of economic liberalisation began and was supported by foreign donors.
In the specific context of seeds, these policy changes naturally prompted a reappraisal of governments roles in seed supply and calls from development agencies for a progressive withdrawal from a direct role in production, thus allowing the private sector to take over the more commercial functions of production and marketing. The Government was expected to concentrate on creating a policy environment more favourable to the development of a more diverse seed supply system. The Government would of course retain responsibility for regulatory matters, but with the clear expectation that regulations would be consistent with a more liberal seed policy and not obstruct the entry of new participants in the seed industry, whatever their origins.
These changes became branded with the general title of ‘privatisation’ a term that carries some connotations from elsewhere which may be misleading. It may be more appropriate to regard the process as one of ‘diversification. That is the shift from one major supplier with a national remit to many different suppliers operating in selected crops or locations in which they could develop a viable business
4. MECHANISMS OF PRIVATISATION
There are several possible mechanisms by which the seed sector can be privatised or diversified, as summarised below:
(i) Transfer of ownership: The simplest approach is for existing government enterprises to be transferred to private ownership. This can be done through the creation and public offer of shares or by selling to an existing company or through a ‘management buy-out’. All of these mechanisms have been widely used in many countries in the privatisation of state enterprises, such as public utilities (Klenk, J. et al., 1995). This process began in the UK early in the 1980s and continues to spread around the world as Governments attempt to reduce their financial and management commitments, and raise a large amount of cash through the sale of state assets. Unfortunately, the outright disposal of seed organisations in this way is very difficult for a number of reasons. Seed organisations are generally over-capitalised, over-staffed, managerially complex and, most important, they seldom have a truly profitable product portfolio. While it is possible to offer inducements to buyers and to plan a phased transfer, this is a difficult road to follow. One example of this approach is the recent establishment of a commercial seed company designed to take over all the production operations of the National Seed Administration in Sudan. However, this company has substantial development investment and it is presently too early to assess its progress in commercial terms.
(ii) Restructuring existing units: An alternative approach is the gradual restructuring of existing government units to operate along more commercial lines so that they become viable enterprises with more managerial autonomy. They could eventually be sold off or continue to operate as suppliers of public sector varieties without direct subsidies which do not enable them to compete fairly with the true private sector. This approach is particularly suited to countries where there are a number of seed processing centres of medium size serving a limited geographical area. They can be made into autonomous units first, which is a more manageable process because the problems that arise can be addressed progressively. This approach is being implemented in Egypt through the GTZ project entitled " Improvement and Decentralisation of Governmental Seed Production and Marketing."
(iii) Encouraging new entrants: The pursuit of diversification by encouraging new seed enterprises to enter the market requires policy changes, which must remove regulatory impediments and create an open market free from price controls or other marketing restrictions. This enables companies to charge the full cost of their operations and to make a profit, without the fear of unfair competition from the public sector. This approach is complementary to the ‘restructuring’ approach mentioned above because the new entrants may be assured success by the ongoing changes in the public sector. Of course, the new entrants will enter the market cautiously and selectively, focussing on the more profitable crops and the most productive agricultural areas first.
(iv) Leasing public facilities: One other approach, which has been practised in some countries, is the leasing of existing government facilities to private companies. This may apply particularly to seed processing plants, which often operate well below their capacity, especially if the government program is the contracting agency. Plant can therefore be leased on a weekly or monthly basis to private companies. This approach allows companies to make good use of past investments. However, it may present management problems and it is probably only a transient solution until companies have sufficient confidence or resources to acquire their own facilities.
It is clear that there are various measures, which can lead to a diverse and financially viable seed industry. These approaches are not mutually exclusive. The outright transfer of existing assets may be the least promising for reasons already stated. The most attractive formula is the simultaneous restructuring of government and parastatal seed organisations to remove direct subsidies while providing encouragement to the emerging private sector through appropriate policy changes. However, there remains the question of how to test the real interest and commitment of the private sector, while the state is still the predominant player.
5. HOW TO PROMOTE PRIVATISATION
We may make the assumption that most countries of the region would express general support for the role of the private sector in their seed industry, although there are a few exceptions. Certainly those that seek foreign assistance are more likely to respond to pressure and open up the seed sector. We may then ask how this process can be assisted? There are two parallel approaches, first to remove all the official obstacles to the private sector participation and, second, to provide active encouragement. Obstacles that may need to be removed include restrictive procedures such as difficulty in obtaining basic seed of public varieties or in importing foreign varieties and delays in the certification of crops or seed lots. In addition, there are general issues related to price controls and subsidies, which have already been mentioned.
Equally important, but less tangible is the confidence among the private companies that its contribution to seed supply is recognised and ‘appreciated’ by the government. This is not simply a matter of instituting official procedures, but more a question of trust and access to senior people in the Ministry and can of course quickly change depending on the attitude of a few key individuals. We know that within Ministries there can be tension between those promoting reform and more conservative measures. This can apply to seed policy just as it does to matters of the national economy. There are also instances where the implementation of new procedures by middle ranking Ministry officials is not consistent with the declared policies of the Government. There may be due to conflict of interests and a desire to maintain the status quo. For example, institutions may try to retain existing work and staff. Of course, we understand why that occurs – self-preservation is a strong instinct, both for an individual or an institution.
Providing active support to the private sector may be problematic because the Government may find it difficult to reduce a subsidy to its own operations while offering direct assistance to private companies. However, there are however concessionary arrangements such as low interest loans for business start-up or expansion and tax holidays for new businesses. The risk always with such schemes is that they can be exploited by those who are already well-established in business rather than benefiting those who have a real short-term need.
Another indirect measure to support the private sector is giving access to an efficient quality control/assurance service. Establishing a seed testing laboratory and finding qualified staff can be a major problem for a new company. Therefore, the use an official laboratory and guidance on quality-related procedures can be a real benefit. However, this requires an open-minded attitude by the seed testing/certification agency, which was dedicated to official work in the past. These agencies may also need to adopt a more educational and supportive role towards the emerging private sector by providing assistance such as training. In contrast, in the past their role was primarily that of a policeman.
Ultimately, the progress of privatisation ultimately depends on the market, which when truly free, provides a robust test of financial sustainability. If the product offered is not sufficiently attractive to the farmers, they will not buy it and seed demand will remain limited. If circumstances change, such as output prices for agricultural products increase or new improved varieties become more available, then demand for seed may increase. It may be true that privatisation policies can create an ‘enabling environment’, but they cannot guarantee a certain market share or seed replacement rate, which was the case under the more managed supply system of the past.
6. IMPACT OF THE CROP PORTFOLIO ON PRIVATISATION PROSPECTS
We know that crops vary greatly in their potential for profitable seed marketing. Factors favouring seed marketing include low sowing rate, production under high-input conditions, high output value of the crop and technical complexity in the seed production process. Conversely, attributes such as low-output value, high sowing rates, unspecialised seed production practices and extensive low-input production systems are unfavourable to seed marketing. At one extreme there are hybrid vegetables such as tomato and pepper and at the other there are grain legumes and barley. Horticultural crops, which are already in the private sector domain, fall outside the scope of this paper; only cereals, legumes and forages will be considered.
Traditional field crops of the region offer limited possibilities for commercialisation of the seed supply because they are mostly self-pollinated cereals and legumes, or forages. Climatic factors, which affect rainfed crop production, are a further constraint to regular seed sale/purchase since investment in inputs may be a complete loss in the event of crop failure. Likewise, favourable climatic conditions at harvest enable farmers to store their own seed successfully from one season to the next without serious loss of quality. Only the irrigated summer crops such as maize and sunflower regularly attract private sector interest. However, they are only grown in limited areas. Cotton is a crop in which the private sector takes an active interest, for example in India and Pakistan, but in the NENA region there is usually a strong government involvement in all aspects of cotton production and marketing, including in the seed supply. Of course, areas of intensive irrigated crop production such as the Nile Delta are intrinsically more favourable to commercial seed supply because farmers are buying other input and are well connected to the cash economy.
While we all understand the technical basis of these differences between crops, the implications for privatisation are rather serious. For example, national research services may be under pressure to make their material available to the private sector, which is a very desirable move. However, it may also mean that the government seed organisations are left with only the ‘residual’ unprofitable crops, which do not provide a viable crop portfolio. This raises a rather difficult question – " If governmental seed organisations must continue in business to supply the unprofitable crops – should they be allowed to handle the profitable ones as well so as to improve their commercial prospects?" Are they able to maintain diversity in order to secure their income?
7. THE ROLE OF PUBLIC RESEARCH
There is much evidence that the main reason that farmers buy seed of self-pollinating crops is for variety replacement (Jaffee and Srivastava, 1992; Heisey, 1990). Therefore the availability of a steady flow of new material from research into agriculture can greatly improve prospects for a profitable seed business. This has been the experience in Europe and other countries, which have benefited from a highly competitive plant breeding sector following the introduction of Plant Variety Protection. Even with the stringent requirements for variety registration, there are still new varieties coming on to the market every year that stimulate great interest among farmers. In general, we can say that there is a strong link between the productivity of plant breeding research and the success of the commercial seed industry.
When considering privatisation we therefore have to look at the dynamics of varieties in the market, which are affected by two factors. First there is the absolute productivity of the public sector research programs - how many varieties are being produced? Second, there is the effect of the variety assessment/registration system, which in some countries is still very lengthy and restrictive. It is unrealistic to expect a dynamic private sector to emerge under circumstances where there are only a few crop varieties, most of which are old and well-known to the farmers. Companies may also look for promising varieties to introduce from overseas, but still the registration system may delay actual commercialisation. This can have a very negative effect on the private sector.
This issue is fundamental to the liberalisation of the seed sector. In the past, governments were content if there were a few reliable varieties from national research stations cultivated in most of the area for the main crops. With liberalisation, one would expect to see much greater diversity in varieties, and since there is much breeding work in progress in the world, it would be unlikely that varieties from one source would dominate the market. However, the Agricultural Research Services may see their position as vulnerable in the face of open market competition and may seek to retain a major influence on variety release. While their position may be viewed as defensive, their concerns may be legitimate. The public sector may have the responsibility to breed for all environments, whereas the private sector could concentrate on areas of high potential within which it can achieve regular seed sales.
Another relevant variety issue is that of specific versus general adaptation. Multi-locational testing systems tend to favour widely adapted varieties and commercial companies also prefer those varieties, which can be marketed to a large area. On the other hand, in more difficult environments, varieties with specific adaptation may be required. The varieties will not be favoured by the private sector and therefore so public breeders will have to maintain an interest in environmentally difficult areas, possibly using participatory approaches and farmers involvement in variety selection.
A further issue, which may arise as the private sector develops, is the procedure by which public sector varieties are made available for use by private companies. Should there be open access to all companies, or limited release, or even exclusive release, which may offer better prospects for effective commercialisation? These are clearly very sensitive issues for an emerging private sector.
8. THE IMPACT OF PLANT VARIETY PROTECTION (PVP)
Before leaving the question of plant breeding and varieties, it is appropriate to consider the possible impact of PVP legislation, which may be introduced in several countries of the region within the next year or two. In principle, such legislation is intended to stimulate private sector breeding by enabling breeders to collect a royalty on the use of their varieties. This has been an extremely effective stimulus to competitive plant breeding in Europe in the past 30 years. However, there is reason to be cautious about the effect of such legislation in the countries of this region, at least as far as non-hybrid field crops are concerned. Investment in plant breeding is a long-term process and returns depend not only on having the ‘rights’ for a variety but also on the effectiveness of the royalty collection system. Given the high percentage of farm-saved seed and the sensitivity to price, it seems unlikely that the availability of variety protection would provide sufficient incentive to promote substantial investment by the local private sector. However, PVP be useful for imported varieties of outstanding merit and certainly for some perennial crops such as tree fruits in which the propagation system can be controlled better.
9. ROLE OF MULTI-NATIONAL COMPANIES
One dimension of privatisation, which arouses interest in many quarters, is the role of multi-national companies. Indeed, some believe that privatisation will lead to a major penetration of the market by such companies. In reality, these companies continue to consolidate and to dominate some sectors of the seed industry, but as already explained, they are highly selective. They operate only in the most profitable crops and in areas where they expect to recover sufficient profits from the regular sale of hybrid seeds to justify their investment. Therefore, they may contribute to increasing productivity in the high potential areas, and that may significantly improve national production, but they may have no impact at all on marginal crops and low potential areas. If this is accepted, it provides the fundamental justification for the continued investment in breeding for the ‘public good’ by the IARCs and NARS.
The extent of investment and commitment by such companies can vary widely. They may engage in a breeding program ‘to meet local needs’ while in reality they concentrate on costly research efforts in a small number of locations around the world. Therefore national subsidiaries and agents of multi-national companies will more likely be involved in the evaluation and marketing of varieties developed elsewhere. The question of whether the company carries out local production, or only import seed, is also sensitive. This will depend on a number of factors including production costs, local climatic conditions, management capabilities and the size of the market. For the higher value seeds, there is probably a tendency, as with the research effort, to concentrate production in a few well-managed locations and then to distribute regionally from the areas.
From a host country perspective, multi-national companies offer a source of high quality varieties and rapid improvement. However, there are also concerns that their entry may jeopardise local breeding efforts, which are less well-resourced. Furthermore, changes in the market or in the global strategy may cause these companies to leave a country if the market is no longer profitable, which may create a gap in the supply. As already noted, the existence of plant variety protection may encourage international companies to enter a market, while lengthy variety testing and release procedures have the reverse effect.
10. THE ROLE OF SMALL SEED ENTERPRISES
One of the problems faced by the governmental and parastatal seed corporations was their relatively large size. This was a consequence of their project origins, which normally favoured large capital investment, particularly in processing plants. Consequently, by serving a large area, the transport costs of raw seed these plants from growers and of clean seed out to farmers become very high. This adds to the total production cost and presents a serious burden if privatisation is considered.
These problems of scale prompt consideration of small seed enterprises as a more effective way of meeting local seed demand. They may also cope with local variety preferences in a way that a national organisation could never achieve. The problem with small seed enterprises is the lack of information on and experience in running these activities in developing countries. The Seed Unit at ICARDA has taken a special interest in this topic; we organised a workshop in 1998 to gather experience and discuss the issues, which arise in the establishment and management of such enterprises.
11. THE ROLE OF NON- GOVERNMENTAL ORGANISATIONS
In some countries, notably in Sub-Saharan Africa, international NGOs have played a significant role in the seed supply. This usually follows relief interventions during times of emergency as a result of natural disasters or civil conflict (Cromwell et al., 1993). NGO activities are typically community-based and may have strong interest in local issues such as the conservation of genetic resources and participatory crop improvement. Their contribution to the privatisation process may be positive or negative, depending on their production and pricing strategies. In the Near East and North Africa, NGO activities have not generally played a significant role in seed supply. This is probably due to a different political climate, which does not encourage such uncontrolled interventions.
12. THE IMPORTANCE OF A NATIONAL SEED POLICY
When government agencies were the dominant players in the seed system, seed policy was essentially an internal business of the Ministry of Agriculture and could, within reason, do as it wished. Since main activities were under its control, the Ministry of Agriculture did not have to define or declare a policy. With the prospect of more diverse seed industries emerging, policies assume much greater importance because they may, or should, define the spheres of activity of the participants. In fact, the existence of a policy may be considered a pre-requisite for diversification, since new entrants need reassurance that activities and responsibilities are well-defined and not subject to sudden change for political reasons. Therefore, if a Government is planning a new policy, there are benefits in publishing this as a written document. A classic example of this was the ‘New Seed Policy’ published in India in 1989, which aroused a lot of controversy at the time but which dramatically changed the face of the Indian seed industry in just a few years (Turner, 1994).
The importance of stability in the seed policy cannot be over-emphasised since it is fundamental to the issue of confidence. The private sector may be reluctant to become involved if it fears, on the basis of past experience, that the government may intervene without consultation. The most likely intervention is the distribution of cheap (or even free) seed for reasons of emergency relief or sometimes for political advantage.
13. THE NEED FOR REGULATORY REFORM
One major aspect of policy is the reform of seed legislation and regulations. In many countries, these regulations were devised in the 1970’s often as project activities and they were tailored to serve the needs of government system. That is now often unsuited to the needs of a more diverse seed industry and may be a deterrent to the participation of new companies. This subject has been comprehensively reviewed by Tripp (1997). The revision of legislation and regulations should also be viewed in a regional context since it would be extremely beneficial to achieve some harmonisation. This is mentioned again in section 16 below.
14. THE NEED FOR A NATIONAL REPRESENTATIVE FORUM
Diversification of the seed industry through privatisation creates a strong need and justification for a national representative body in the seed sector. In fact, the concept of an ‘apex body’ such as a National Seed Council is already well-known and these councils exist in many countries already. However, it is common to find that these bodies are partially or completely inactive, and that their membership does not reflect changes in the structure of the seed sector. If the private sector is to play a larger role it is absolutely vital that it is represented at such a high-level and that the body has the status to influence government policies and decisions. For example, it should be a formally constituted and recognised committee within the Ministry of Agriculture with a duty to meet and report on a regular basis to a designated senior official, ideally at the Minister or Vice-Minister level.
The question of representation is often difficult in an emerging private sector which may be fragmented have varying opinions and interests. The key step in the development of the private sector is the formation of a National Seed Association that represents the interests of commercial seed companies. Discussions with Government are more easily conducted by such an association than by a few companies, which have their own specific agenda. Recently, we have seen the establishment of seed associations in a few countries of the region, which is a very positive step. This emerged as a major topic of discussion in the recent meeting of the WANA Regional Seed Network Council organised by ICARDA and GTZ in Cairo. Of course, it is also important that these associations are given due recognition by Government and are seen as legitimate representatives and not merely as irritants!
15. EFFICIENCY VERSUS EQUITY CONSIDERATIONS
Many of the issues raised in this paper relate to issues concerning efficiency and equity, which are generally difficult to reconcile and optimise. The justification for privatisation is largely based on the pursuit of increased efficiency in the commercial seed supply, which we recognise will benefit the more profitable crops and regions. However, the Government my also have social obligations to the population in less favoured areas. In the NENA region, the generally low and variable rainfall makes crop production risky over large areas and as a result the benefits gained from efficiency measures may then be limited.
There is another way in which changing government policies can affect seed supply for the less profitable activities. In the past, parastatal organisations, which had a developmental role, would implement programs in line with government policy, even if they were clearly not profitable. This was seen a part of their social function. However, with the restructuring process and with greater managerial autonomy, such companies are being forced to follow more stringent financial criteria. This may cause them to look much more critically at their portfolio of activities, and especially at those, which are largely developmental in character.
The production of forage and pasture seeds may be cited as an interesting example. On the one hand, the importance of managing livestock is constantly emphasised as a key element in improving natural resource management. Livestock management systems in turn usually create a demand for seed of the particular species upon which the improved fodder/pasture system is based. Within the NENA region this typically involves species of medic or vetch. However, despite the substantial social and environmental benefits of better livestock management, it is very difficult to develop a commercial market for these seeds. This is mostly because the benefits of seed purchase are expressed indirectly through animal production and may benefit the community as a whole rather than individuals. Therefore, such seeds are generally unattractive to a commercial seed organisation, even one which is owned by the government. This again brings attention to consideration of the ‘social role’ of seed supply in non- commercial crops. It is still possible for parastatal organisations, or indeed commercial companies, to implement development activities. However, this should be done on the basis of an agreed contract, rather than simply imposing unprofitable activities on the enterprise.
16. REGIONAL DIMENSIONS IN PRIVATISATION
Government seed organisations and parastatals are designed to serve the farmers of their country and are usually not concerned with exports, except for the occasional disposal of surplus stocks to international organisations. In marked contrast, private companies have to consider and develop any market opportunities that may exist, either internally or in nearby countries, to maximise their business. They may also develop special expertise or have a favourable production environment, which enables them to exploit a comparative advantage in an export market. That is very much the pattern of development we have seen in the international seed trade over the past 50 years, and it is completely contrary to the idea of national self-sufficiency. This may lead some governments to consider classifying certain crops as ‘strategic’ in terms of the national economy and may affect they way they are handled within seed policy.
Due to the dominant role Governmental agencies have played in the seed supply sector, trade within the NENA region is relatively undeveloped. As a result, there are many examples of countries importing seed from suppliers far away and at great cost. Given the similarity of environments across much of the region, and certainly within sub-regions such as Near East or North Africa, there should be a market for regional trade, and this is likely to be exploited more in the future as the private sector becomes more active. Of course we also recognise that for cereal and grain legume crops, the high costs of transport are a significant constraint to long distance transportation.
Regulatory issues including the testing and registration of varieties are critical to the subsequent physical movement of seeds. The WANA Seed Network, for which ICARDA provides the Secretariat, regards these regional dimensions as a major concern. Harmonisation’ efforts should be applied to seed standards, certification procedures and perhaps ultimately to seed laws
17. SEED SECURITY ISSUES
In some countries of the region, erratic rainfall may lead to unexpected demand for seed due to crop failure. Farmers living in regions prone to such climatic uncertainty adopted traditional strategies to cope with these situations. However, with the entry of government organisations into the seed system, issues of national seed security naturally became part of their mandate. Approaches designed for disaster situations included holding a regular carryover stock to respond to unexpected demand or mounting campaigns to procure uncertified ‘commercial seed’ from farmers in seasons when there was a substantial crop failure in one part of the country. Given the variable climate of the region, these continue to be important activities for some government agencies. Such government involvement echoes the long established statement that seed is a ‘strategic input’ to agriculture in which government must play a role.
18. FORMAL AND INFORMAL SEED SECTORS IN RELATION TO PRIVATISATION
There is much interest nowadays in the ‘informal seed sector’, particularly among donors who see this as a way to assist farmers more directly rather than supporting national institutions, which are perceived to be inefficient. In fact, the analysis of seed systems on the basis of their formal or informal elements has been a notable feature in development in recent years. It is appropriate therefore to consider how this analysis relates to the issue of privatisation.
A primary problem in discussing this issue is the definition of these sectors. In the view of the authors, the entire seed requirement of the country, or of any particular crop, is satisfied through formal or informal channels. That part of the seed supply, which is planned and organised by public or private sector organisations, comprises the formal sector, while the remainder is regarded as the informal sector. This is made up mostly of seed, saved on the farm, exchanged at the community level or traded in local markets without any official control. For the major field crops in the NENA region, and in most developing countries, the informal sector accounts for the great majority of the seed supply. The original objectives of most seed projects were to increase the formal sector contribution of seed by aiming for very high seed replacement rates, but this was seldom achieved.
The impact of privatisation on this picture may be expressed in various ways. For example, it may:
- shift the balance of the formal sector activities from public to private,
- decrease the total formal sector by removing the artificial demand created by subsidies on public sector seed, or
- increase the total formal sector by encouraging many new entrants into the seed business who are successful in expanding the market by providing better services and products. These new entrants may be ‘recruited’ from the informal to the formal sector, as local traders and entrepreneurs become more regular and experienced seed suppliers.
19. THE CONTINUING ROLE OF GOVERNMENT
Despite the strong pressures towards privatisation from donors, individual Governments may wish to tread this path with caution. They will of course maintain their role in regulation and quality assurance and they will probably continue as the major breeder of the self-pollinated crops in association with the International Agricultural Research Centres such as ICARDA and CIMMYT within this region. Because the private sector is not interested in less profitable crops, governments may also be obliged to retain their role in these crops. While most of the seed supply for such crops is applied through informal sources, there is still a need to have some seed production capability to ensure the effective delivery of new materials from research into agriculture.
Thus we may say that continued government research has to be linked to some seed production, at least to the foundation seed level, and probably to certified seed for new varieties to ensure rapid diffusion. The governments’ involvement may be seen as a secure ‘formal’ channel for the primary diffusion of high quality seed, which can then be more widely diffused by the informal sector. If the Government has no such channel available, it must devise and carefully monitor a collaborative relationship with the private sector to ensure that the products of public research, from both the IARCs and National Research Services, are fully utilised and achieve maximum impact.
If this role is recognised and understood, then the Government must to tread a rather difficult path. It must provide a secure diffusion channel for new varieties coming from research, while not disturbing the commercial market in a way that could discourage any potential new participants who may wish to enter.
20. CONCLUSIONS
Privatisation and diversification of the seed supply is one of the main themes in seed programme development, which is likely to remain on the agenda. It is a consequence of national economic policies and of the world-wide trend towards globalisation, and it will also be reflected in the seed policies and laws which countries devise in the future. However, it is clear that technical and economic constraints, which apply to seeds may restrict the extent to which privatisation can be implemented. It must also be accepted that this process cannot be ‘driven’ in a top down manner to a determined goal. Governments may create a favourable environment and may provide limited support but they cannot guarantee the response of the private sector. That will be determined by the economics of production and by the marketing system and ultimately by output prices on which farmers depend.
It is also necessary to consider the continuing role for Government in those crops and areas, which are unattractive to the established private sector. This in turn invites consideration of alternative solutions to seed supply, which may offer a useful service to farmers at minimum cost.
21. REFERENCES
Heisey, P.W. 1990. Accelerating the Transfer of wheat breeding gains to farmers: A study of the dynamics of varietal replacement in Pakistan. CIMMYT Research Report No 1.
Cromwell, E., S. Wiggins, and S. Wentzel. 1993. Sowing Beyond the State: NGOs and Seed Supply in Developing Countries. Overseas Development Institute, London, UK.
Jaffee, S and J. Srivastava. 1992. Seed System Development: The Appropriate Roles of the Private and Public Sectors. Discussion Paper, 167. World Bank, Washington, D.C., USA.
Klenk, J., C. Philipp, R. Reineke, and N. Schmitz. 1995. Privatisation in Transforming and Developing Economies. Gabler GmbH, Germany.
Tripp, R. 1997. New Seeds and Old Laws: Regulatory Reform and the Diversification of National Seed Systems. Intermediate Technology Publication. London, UK.
Turner, M.R. 1994. Trends in India’s Seed Sector. Paper presented at 1st ASIAN SEED Conference, 27-29 September 1994, Chiang Mai, Thailand.
