November 2001
Margreet H. van den Berg
in collaboration with the Extension, Education and Communication Service
FAO Research Extension and Training Division
Part 2 of 3
Chapter 2 elaborated on the characteristics or criteria that are mostly used in theory to define a good or an institute as public or private. Economic concepts of rivalry and excludability related to appropriability were examined, as well as market failure and externalities. Appropriability is influenced by the type of research and the type of technology. All these aspects influence the question of who will provide and/or finance the good. Criteria as ownership and control and sources of funds were also covered. It concluded that, apart from theoretical, economical aspects, the characteristic of a good being public or private is not only a technical matter, but also a matter of political choice.
The main conclusion was that the distinction between "public" and "private" is not clear cut. Therefore, decisions that governments take in these matters, or the behaviour of the private sector, cannot be separated along strictly divided lines. Various and possibly contradictory reasons form the basis for changes in the field of the public and private sectors. This chapter aims at providing an overview of developments that take place in the field of public and private roles in the knowledge infrastructure. The case study of The Netherlands will further investigate these changes.
In the 1990s the environment became one of fiscal stringency. Besides this, demand has grown for more effectiveness, efficiency, accountability and responsiveness of the public sector.3 Alston et al (1999) state that in the area of research as well there is a need for public institutions to economize, a growing trend towards a smaller public sector role and for governments to reassess this role. However these changes often seem to be driven more by political fashion than by economics (Alston et al, 1999). Other developments in and around research which are related to these developments are a broadened research agenda, a higher demand for accountability and priority setting processes, and a greater demand for the assessment of R&D policy. In OECD (Organization for Economic Cooperation and Development) countries public support for agricultural research shows a downwards trend. Public institutions need to economize, the role of the public sector tends to become smaller and the role of government in general is being reassessed. Furthermore, a dramatic shift is taking place in industrial countries towards the importance of agricultural R&D in overall spending (Alston and Pardey in Persley, 1998).
Historically, after independence most developing countries followed state led models of development whereby the public sector controlled all key aspects of the economy. Since the 1980s a fundamental rethinking of the role of government has taken place (Carney, WB 1998). The underlying concepts were effectiveness, efficiency and accountability. In sub-Saharan Africa the national agricultural research institutes (NARIs) suffer from a general decline in operational resources and a deterioration of salaries and staff benefits. Finding a long-term solution has therefore become an important issue (Persley, 1998). Fiscal capacities are dwindling and most African countries are undergoing a structural adjustment of programmes. At the same time, there has been a fourfold increase in the number of scientists in times of decreasing resources, resulting in the decline of the expenditure per scientist. In addition, most NARS have developed acute dependence on external assistance (donor funding) while this is decreasing as well. Public budgets for extension are also decreasing and questions are being raised about the performance of public programmes due to poor formulation and implementation. Countries look for a more market oriented focus of programmes, a more efficient and effective use of advisory resources, more motivated staff and higher quality service and advice. Besides this, countries seek a higher degree of specialization and increasing professionalism in client-advisor relationship. Countries also want to stimulate innovative thinking leading to the development of new advisory packages and techniques.
At the same time, private sector investment increases in agricultural business including R&D (Persley, 1998). In OECD countries the increase has various reasons. USDA (in Fuglie et al, 1996) mentions government policies and market forces: government policies directed towards financing fundamental and pre-technological research aiming to create new commercial opportunities for private firms. Another policy affecting private sector investment is the increasing incentives for intellectual property rights (for biological inventions) and environment, health and food security regulations. Privatization of public goods, such as knowledge, is often a well intended policy choice. The intention of establishing intellectual property rights is to improve dynamic efficiency through greater innovative activity.
Reasons for the shift to more private sector extension do not originate only from public sector policies. A country's level of economic development determines the volume and the rate of growth of agricultural input and output demand and thus the demand for new technologies and related information (Umali and Schwartz, 1994). The demand for extension is greater for high value crops than for low value crops. High value crops require more specialized information. Private consulting businesses are increasing in strength in many countries because there is an increasing demand amongst farmers for more sophisticated and technically specialized information.
USDA (Fuglie et al, 1996) states that formal institutional linkages between public and private sectors in agricultural research is a relatively new undertaking. These linkages serve to link science oriented public research with technology oriented private research.
In many industrialized and developing countries, new arrangements have emerged in the agricultural knowledge infrastructure between the public and the private sector. These arrangements are in the sphere of financing mechanisms, of provision of a good, or the rules, regulations and incentives by the public sector to stimulate the private sector to provide certain knowledge related goods. The following is a brief overview of the change in the public/private balance.
There are various ways in which the balance changes between public and private roles and goods in the field of research. These changes are partly caused by public policies and partly by semi-autonomous activity in the private sector. There appear to be three overall ways of dealing with a decreasing public budget for research and for dealing with the criticism about the performance of public research institutes: different finance mechanisms; stimulating intellectual property; and the creation of new public/private R&D institutions.
Persley's (1998) point of view is that governments should optimize total investment in the public mix of R&D, minimize the cost of raising revenues to finance the public sector, organize the public R&D institutions effectively and efficiently allocate and use resources. Persley argues that these four principles relate to the efficiency of R&D in terms of total funding, sources of funds, institutional organization and resource allocation and management. Alston et al (1999) mention four financing options: general tax revenues, tax breaks, commodity levies and matching grants. Echeverria et al(1995) mention, amongst others: commercialization of products and services; funding of research in universities; national competitive funds; research foundations; and financing by farmer organizations. Persley distinguishes three forms of funding: gifts or formula funds, competitive grants and contracts. Other funding mechanisms exist, but since they do not directly influence the public/private balance they will not be addressed in this study.
The public role in the case of commodity levies is to help the industry raise its own research funds and to give producers a statutory authority to set up an institution with powers to collect a levy or tax from producers to be used for funding research. The advantage of levies is to complement other sources of funding. Beside this, it is a fair tax base because people who directly profit from the investment of the levies pay taxes. It is also a way of providing incentives for the efficient use of levies. Farmer organizations that finance research through commodity levies can stimulate more demand driven research and link funding to output.
Echeverria et al (1995) plea for mixed private/public funding mechanisms. The objective is to leverage a greater total research effort from a given set of tax-payer based research resources and for assuring an equitable distribution of costs when research benefits are partially appropriable. He mentions matching grants, cost recovery and contract research, and tax concessions. Alston et al (1999) find that a significant proportion of the benefits accrue to an industry when research has both public good and collective private good characteristics.
Alston et al (1999) see matching funds meant for programmes funded through levies, to ensure that public interest is considered adequately in the way that government is involved in the administration, allocation and management of funds. Matching grants in general, according to Persley (1998) , are funds from selected sources that are matched on a certain basis with public funding to support agricultural R&D. The idea behind this is that the effects of the R&D spill beyond a specific industry that is actually carrying out or providing support for research.
In cost recovery mechanisms or contract research, a scientist's time or the results of research are sold. Results can be sold through collecting royalties from patent research results and licenses of technology. Echeverria et al (1995) mention the development of special units for commercialization of products and services within NARIs to expand the cost recuperation. This development depends on the degree of the appropriability of the technology and takes place in fields such as genetic improvement, seed production, plant propagation and veterinary products. The advantage of this mechanism is that it helps to spread overhead costs of capital such as research facilities, equipment and scientists. The advantage of tax concessions is that they are relatively inexpensive to administer.
The climate for R&D in the private sector is much more favourable today than a decade ago (Echeverria et al, 1995). Developments occur such as protection through trade secrets, liberalization of input markets and strengthening of intellectual property right (IPR) laws. There are new entrants of biotechnology firms from the industrial sector looking for opportunities in the agricultural sector. Many of these are multinationals.
Intellectual property regimes
Another way in which countries try to stimulate the private sector to carry out agricultural research is to enhance the appropriability of the results by changing the institutional environment. The inability to appropriate gains is a major reason why the private sector underinvests in research. Several intellectual property rights are particularly relevant to agriculture, like patents, plant breeders' rights, trademarks and trade secrets.4
There are various ways in which the problems of public extension can be addressed that affect the public/private balance. These problems include decreasing budgets, poor performance of public institutions on the public side, and externalities of private activities. Feder et al (1999) speak about privatization, institutional pluralism and fee-for-service public provision. Apart from changes in the balance between "public" and "private" to deal with these issues, there are other ways that countries have tried, or can try, such as improving management of institutes, decentralization, empowerment and participatory approaches. However this study will only concentrate on the shifts in the public/private balance and offer possible answers to the challenges mentioned earlier.
In the case of a fee-for-service, farmers pay a portion and the government pays the remainder on a contract basis. Here the excludability increases and the service turns into more of a private good. Issues of fiscal sustainability and accountability are the primary generic problems addressed by this approach. Feder et al (1999) state that this is an approach some public extension services have adopted primarily as a cost-recovery strategy. Apart from cost recovery the fundamental effect of a fee for service is to bring about a more professional, client oriented relationship between the extension agent and the farmer. Increased activity of consultants improves performance and it may have a possible overall effect on coverage. In some cases the commercialization of extension is a transitional stage toward privatization. The public sector policy on extension in some countries can be seen as a gradualist approach to privatization (Carney, 1998). In this approach medium and large farmers are expected to purchase the extension service. It can become a strategy towards privatization when full cost recovery becomes possible.
In some countries the public sector tries to recover costs in an "informal" way: public agents "moonlight" as salesmen or act as demonstrators for private input suppliers (Umali and Schwartz, 1994). Anderson and Crowder (2000) use the term "contracting in": that is to say, when public sector extensionists are involved in contractual arrangements with the private sector. These authors state that the option of public delivery and private financing is generally neglected, though prevalent, in many developing countries. It has developed spontaneously and internally as a solution to extension problems at the local level. The reason for contracting public sector extensionists is their agronomic knowledge, which can complement the skills of NGO's. Besides these arrangements in which the for-profit sector is involved, there are many possible arrangements with the NGO's and the non-profit sector. Feder et al (1999)focus on the arrangements with NGO's as they represent a highly prevalent partner in agricultural extension in developing countries, frequently focusing on areas inadequately served by the governments.
Institutional provision mechanisms
Feder et al (1999) distinguish institutional pluralism from fee-for-service extension. They see fee-for-service extension more as way of co-financing the provision by public services. With institutional pluralism the emphasis is moving towards private provision: there can be public funding but the responsibility for the delivery is handed over to private sector entities. Institutional pluralism is used as an umbrella for various arrangements between public and private institutions. A fine line separates one arrangement from the other. Examples of these arrangements are subcontracting or contracting out, systems with coupons and vouchers, and co-financing, depending on the definition. A more pluralistic system of complementary extension services is supposed to reach and respond to diverse farmers and farming systems. Feder et al (1999) assert that pluralistic arrangements have the potential to help resolve two fundamental generic problems: linking cause and effect and accountability. When contracting out, extension remains a public good in the way that it is financed and controlled by the public sector but provided by the private sector. The excludability is relatively low as well as the rivalry. Umali and Schwartz (1994) argues that the motive behind subcontracting may be to get around institutional inefficiencies. It strengthens the provider's client orientation through the contracting process because of competitive bidding and direct input from farmers in the design of indicators. Coupons can be attached to agricultural bank loans committing a certain percentage of the loan for extension services.
Privatization in some form has taken place mainly in developed countries. An example of this is the case of The Netherlands, which will be described later in this report. Feder et al (1999) state that privatization tends to be a misleading term. In a pure sense, it means a full transfer of ownership from government to a private entity, with that entity meeting all costs and all benefits. In most cases governments have not actually completely privatized their extension services. Privatization will, according to Feder et al (1999), enhance accountability, its liability to other public service functions, operating resources and fiscal sustainability. Accountability is affected in a positive way in terms of client orientation and satisfaction. All privatized efforts report improved efficiency, thus overcoming problems of sustainability and dependence on fiscal allocations.
This chapter summarizes some of the considerations and implications concerning the changing balance between the public and private roles in research and extension. Firstly, it deals with considerations about specific mechanisms, financing and institutional arrangements.
Financing mechanisms
When making policy choices in the field of public and private research one should keep the distinction in mind of financing and provision of research. The issue of distribution is related to the criteria for selecting mechanisms for funding and the efficiency issue is about the selection of institutional mechanisms for executing research (Echeverria et al, 1995). Research funds should be raised in the least-cost manner whereas R&D financing arrangements are likely to influence and be influenced by the research agenda and the efficiency of resource allocation (Alston et al, 1999).
In a system of commodity levies there are certain issues which must be dealt with such as how to collect the levy (voluntarily or not), the free rider's problem, the danger that basic research might remain underfunded, questions about governance of funding, and how to share the funds that are paid among different levels in the market chain. The difficulty in designing a scheme for matching grants is to determine the rate of support and the appropriate role in the allocation of the pooled public and private funds (Persley, 1998). The question with cost recovery strategies, however, is whether this will stimulate total research or undermine private incentives. Another question is how to distribute funds from royalties and joint ventures between the institute, the department conducting the research and scientists developing the innovation. Cost recovery mechanisms are inefficient for pure public goods and complications arise when research starts a joint venture with government and industry. One should avoid investments that are demonstrably profitable for the public R&D institution (such as costs that can be recovered from the sale of results) because in that case there should be incentives for private investment. Apart from this, the costs of collecting revenues from contracts and royalties are an issue. Tax concessions or tax breaks for private research are a blunt instrument, making it difficult to discriminate among alternative forms of research.
Intellectual property mechanisms
To stimulate the provision of knowledge governments can either increase the degree of appropriability of returns to knowledge or support research directly. A dilemma occurs between access to knowledge versus appropriability of knowledge. One can argue that there is tension between two types of market failure: the inappropriability of research results versus the social value of the invention (Fuglie et al, 1996). Initial knowledge is a key input in the production of further knowledge. Should the objective of governments be facilitating access to knowledge aiming to stimulate further inventions or should it reward successful innovation by generating revenues? The design of a patent system - to make research results more appropriable - can dramatically affect the overall pace of innovation. Persley (1998) mentions that the risk of privatization in the sense of property rights can involve losses in economic efficiency because it does not address the other characteristic of public goods: non-rivalry in consumption. Privatization can frustrate competition and have the effect of underuse of protected knowledge. According to Stiglitz (in Kaul et al, 1999), however, the strategy of an intellectual property regime is preferable to that of government subsidization. It provides a strong incentive and a selection mechanism: only those who are convinced that they (or others) have a good idea will invest their money in it. To prevent underutilization of knowledge, the public sector can limit the duration of a patent and/or take into account the breadth and scope of a patent claim. Complete appropriability of research results is never likely to be possible. The real issue is the appropriate form and the degree of partial correction for problems arising from incomplete appropriability (Alston et al, 1999). The concept of an intellectual property regime, the breadth, scope and applicability of patent protection, is not just a technical matter. There are judgement calls, trade offs with different people and countries and all are affected differently by alternative decisions.
The benefits of basic research are too widespread and too diffuse to attempt to appropriate it. This will slow the overall pace of innovation too much, particularly in developing countries, because innovations are concentrated in advanced industrial countries. Many of the advances in less developed countries consist of adapting the technologies of more advanced countries to the circumstances of developing countries. A key part of successful development is combining global knowledge with local knowledge. Much of the knowledge required for successful development is fundamental knowledge and therefore not patentable. So the intellectual property regime affects both how gains are stored and the pace of development. Another issue in the design of an intellectual property regime is the question how much the returns should be credited to the use of global commons. Every innovation makes use of previously accumulated knowledge.
General considerations
Underinvestment in research combined with a high rate of return has been mentioned as a reason for the public sector to invest in agricultural research and to stimulate private sector research. This was followed by the description of several mechanisms, both financial and institutional.
When considering public intervention, no action is often the best policy, Persley (1998) states. This applies even when the free-market mechanism leads to disappointment in outcomes. Intervention is only justified when it improves the situation by reducing the costs of market failure. Persley warns that government intervention might crowd out private research. Alston et al (1999) use a decision tree for the decision making process of intervention or not. Persley also states that in the end it is difficult to judge the pay-off to new policies and practices because of the long time lag between changes in the research environment and the effects of research. Many of the issues are subtle and complex and they go well beyond considerations regarding the size of respective public and private commitments to funding R&D. Policy options should be assessed carefully and monitored regularly (Persley, 1998). When choosing the policy it is important to be aware of the fact that solutions or arrangements must deal simultaneously with several sources of market failure. Stiglitz (in Kaul et al, 1999) says that the nature of a good largely determines the best method for supplying the good. The USDA report (Fuglie et al, 1996) states that to determine the appropriate design of science policy requires analysis of the relative size and significance of the trade off.
When talking about the public/private balance, Falconi (1993) states that public and private sector should have complementary roles in agricultural research with respect to their division of labour. There should be a better understanding of the comparative advantage of each component. One should go beyond the simplistic dichotomy between public and private funding and also look for combinations (Echeverria et al, 1995). One institutional model does not fit all needs. In the case of institutional restructuring, there is a need for pluralist funding and a more diversified research base. Stiglitz (in Kaul et al, 1999) underlines that a public goods strategy needs more differentiated roles: who has what role in relation to whom will vary from issue to issue.
The growth in agricultural research conducted by the private sector has implications for the agenda of public research. The public sector should focus on fundamental and pre-technology research to release the underlying scientific constraints to technological advances (USDA in Fuglie et al, 1996). The USDA report recommends government policies such as financing fundamental and pretechnological research to create new commercial opportunities for private firms and an increase in incentives for IPR, such as for biological inventions. USDA claims that an effective research system should be organized in a way that closely links basic and applied research. Linkages are necessary between public and private research to prevent R&D efficiency from declining and to stimulate economic competitiveness.
Even though the role of the private sector will continue to increase, a strong public sector role in agriculture will be necessary in the foreseeable future. According to Echeverria et al (1995), the public sector in Latin American and Caribbean countries will remain the main source of funding and the main executor of research. He adds that there will be slow change in the foreseeable future which implies that the search for alternative institutional models and funding mechanisms remains relevant.
Financing mechanisms
The willingness of farmers to pay a fee depends strongly on the net expected benefits and primarily on their ability to pay for it (Umali and Schwart, 1994). This willingness and ability varies according to the type of farmer: the larger the farmer the lower the costs for extension services, relatively speaking. Market oriented farmers will .almost exclusively be asked for a fee for service. The more commercialized the farmers become, the more the need for extension as a private (excludable and rival) good. The level of private sector supply of extension is therefore a function of the level of effective farmer demand. This can imply that the private sector will neglect subsistence farmers and farmers with small marketable output values. That is why there is only a limited possibility for fee for service in developing countries. Not only do farmers lack the money to pay fees, but difficulties will be encountered such as collecting the fees, establishing cost accounting procedures to set charges at appropriate levels, but also reorienting and retraining extension staff. Pooling agricultural extension can make small farmers interesting consumers for the private sector because of the economies of scale. For subsistence farmers the public sector can create an extension safety net.
"Contracting in", contracting public servants to deliver private goods, can be seen as a transitional phase towards ideal extension coalitions, according to Anderson and Crowder (2000). It is a way to develop a non-public sector with an adequate pool of technical skills in the long run. Anderson and Crowder state that the arrangements for contracting in might not be perfect: downsizing of public staff is not stimulated; the contracted-in extension programme may not be compatible with the public extension programmes and a duplication of client groups might occur.
Institutional provision mechanisms
The difficulty of institutional pluralism is for central government to adjust to a position of reduced direct control over either programme or staffing. Besides that, financial and administrative management may increase in complexity, at least initially. Pluralism implies a change in governance. A key governance principle is to open and democratize extension control so that all stakeholders may express their perspectives and interests and play appropriate roles in extension design, implementation and evaluation (Feder et al, 1999). Anderson and Crowder (2000) call for a government role to control quality, to provide oversight functions and to provide training and technical information. In advancing pluralization, the role of ministries of agriculture changes significantly from service delivery toward providing an enabling policy environment, coordinating and facilitating the work of other players (and assisting farmers in negotiating terms of contracts, monitoring quality, and exercising financial control). The government recognizes that to meet the diverse needs and conditions in the farming sector it should invest more broadly in the whole agricultural and knowledge system (AKIS) rather than in public extension alone.
Feder et al (1999) state that the impact of privatization is mixed with regards to certain areas. Private companies will neglect less commercial farmers and lower value crops. Privatization does not deal with the complexity of providing a socially and environmentally optimal service. Therefore, a cautious, evolutionary approach toward privatization is suggested. Privatization of extension should take place within a clearly formulated mission and strategy with open communication among all stakeholders (Feder et al, 1999).
General considerations
Traditionally, extension is the domain of the public sector. Nevertheless, it is important to attribute a selective role to the private sector in agricultural extension. A public monopoly is no longer feasible and sustainable in many countries. There is always a role for the public sector, but not as monopolist. A pluralist approach with various institutions is needed. Umali and Schwartz (1994) call for a structural transformation from an exclusive public sector to a multi-organizational extension system. Ideally, there needs to be a private agricultural extension sector and, if that sector is not present, it needs to be promoted. This promotion, however, needs to be guided by a general promotion of the private sector in a specific country and is a matter of enabling the environment. It calls for the existence of public goods such as macro-economic stability, essential infrastructure, a functioning legal system and competitive markets. Furthermore, the existence of a private extension sector requires a critical mass of clients, in this case organized farmers. They need to be able to select the right provider, to decide upon the value of the information and to influence the price and quality of the information.
In an ideal situation of pluralism there is still a role for the public sector in determining the appropriate type of information and the delivery of public good information.
The Netherlands, a country of 4.15 million hectares, is densely populated: 450 persons per square kilometer. Despite this high population density, 60 percent of the available land is used for agriculture (Voedsel en Groen, 2000). Agricultural production is intensive and output per hectare as well as per unit of agricultural labour is amongst the highest of the world. (Roseboom and Rutten, 1998). The sector is highly specialized and productive and is the world's third largest exporter of agricultural products in terms of value. The competitive position of Dutch agriculture is based on a combination of specialization in production (vegetables, flowers, dairy and intensive livestock), marketing and transport. The agrifood complex constitutes about 10 percent of the gross domestic product (GDP) (the agrifood complex is defined as all economic activities related to production, processing and distribution of agricultural products, food and non-food, of national and foreign origins). Seventy five percent of the production is exported, of which approximately 80 percent to about 370 million consumers in the European market (Voedsel en Groen, 2000).
For a long time in The Netherlands the concept of a triad of research, extension and education was seen as the explanation for the Dutch agricultural success. Doorman (1999) describes the triad as intensive and open communication between farmers, farmers' representatives, agricultural research in various forms, extension agents, and education and training institutes. But the openness of the knowledge system has changed significantly. Many changes occurred, especially in the balance between public and private roles in the system. These changes in the agricultural knowledge infrastructure came about for various reasons and this chapter describes the reasons for the change in the balance between the public and private sectors, how the changes took place and the effects of these changes. Primary sources were the written and verbal opinions of a cross-section of people who emphasized different reasons for the changes. That might give the impression that changes like the ones in The Netherlands are for the greater part ad hoc and are not always a product of a complete rational, step by step process. Roseboom and Rutten (1999), for instance, state that the Dutch agricultural research system developed through a large number of ad hoc initiatives. Wielinga (2000a) considers the process as an autonomous rather than ad hoc process in which every actor has its own response. This limited description cannot do justice to all the changes and reasons for changes that have taken place in The Netherlands. It is an attempt to provide an overview from a certain perspective. It would be very interesting to conduct further analysis of the way in which the balance between public and private goods and roles has changed in The Netherlands.
General policies in the Netherlands, apart from specific agricultural policies, have had their effects on the agricultural knowledge infrastructure. In the 1980s and 1990s there was a need to scrutinize and prioritize expenditures. This resulted in less public financial input in the knowledge infrastructure and in the expressed need for more effectiveness, efficiency and accountability of public institutions. Besides this, views changed about the way the public administration should function: the government needed to concentrate on its core tasks and began "steering from a distance". By the early 1980s there was a consensus that ministries should concentrate on policy formulation and that they should delegate the implementation of policies as much as possible to semi-public entities or the private sector (Roseboom and Rutten, 1999). This was followed by the belief in "less government and more market". One of the general principles in Dutch politics in the 1990s became the "user-pay" principle. Responsibilities of the private sector needed to be more heavily stressed. He who profits from a certain good or service should, in principle, be the one who takes up the financial responsibility (Van der Meer, 1999).
Apart from general policies related to the way public administration should function, changes in Dutch agriculture had their effects on the knowledge system and the balance between public and private roles. This section describes the developments in agriculture as seen by Wielinga (2000a). Wielinga divides the Dutch agricultural sector into phases to explain the way in which the concept of knowledge changed.
After the second World War Dutch agriculture started to perform significantly better than before. During the first period of reconstruction of The Netherlands, food security was one of its main goals. Before the war there had been a Ministry of Agriculture for only a few years. After the war a Ministry for Agriculture was established that still exists today. The government developed a strong network together with the agricultural society, including farmers' organizations and farmers' leaders and associated knowledge institutes. The overall national agricultural goal was to create conditions for all farmers to increase their production.
Wielinga (2000a) calls the phase from 1956 to 1975 the "flourishing" of Dutch agriculture. In the early fifties prices of products decreased and the income of farmers did not grow as much as other incomes in the Dutch society. This changed when European agricultural policies provided a stable internal European market and guaranteed prices. The internationalization process provided an opportunity to increase the prices of agricultural products. The Netherlands earned an international position. Sound economic farm management was an additional goal to the already existing goal to increase agricultural production. Increase in the size of farms and decreasing labour intensity were seen as the reasons which forced the closure of smaller farms.
Between 1975 and 1984 uncertainty grew: the boundaries of production started to show. Europe encountered surpluses of milk, butter and other products. In The Netherlands there was an excess of manure and other forms of pollution due to chemicals alongside an increasing awareness in society of the environment and animal welfare, which raised questions of sustainability (Peper, 1996). Public opinion concerning Dutch agriculture shifted from positive to critical. Environmentally concerned movements emerged and claimed greater protection of natural areas. Until then the politicians, the Ministry of Agriculture, farmers' organizations and their leaders had formed a powerful network and primary producers were the most powerful. The network had acquired such a strong position that it was able to exclude deviating opinions and interests. Tensions increased with the decrease in budgets and real choices were not made. The method of the cheese slicer was used - a little bit of everything. Also the international, global market started to influence market prices and agribusiness grew more dominant. To face all these challenges the agricultural network chose to stick to a policy of modernization and to cut down the number of enterprises.
Diverging interests emerged in 1984 and 1985. The European agricultural policy could not be maintained and restrictive measures were taken, such as the milk quota. In 1984 the Ministry of Agriculture gained responsibility for nature and outdoor activity, thereby representing broader social interests instead of identifying itself exclusively with production interests. Instead of a policy aimed towards the growth of agricultural production, its policy started to be restrictive. For the first time the Ministry constructed a proposal for a law to restrict intensive livestock production without the involvement of the farmers' organizations. The discrepancy between farmers' goals and government objectives increased. Detailed rules and regulations accumulated.
Wielinga (2000a) describes 1989 to 1995 as a period of detachment. The organizational fabric of the agricultural civil society changed drastically. Agricultural organizations and the Ministry were under criticism. A report was discussed in Parliament about the disturbed relations within the Ministry and the need for a more open minded Ministry was expressed. It was recognized that government and the agricultural sector could no longer solve the existing problems together. Conflicts arose about the extent of damage caused by intensive agricultural production and about the reality of norms for production. The number of detailed rules and regulations increased. In order to survive, farmers needed to increase their investments even though margins in the market reduced.
The market was emphasized from 1995 onwards. For the first time the Ministry of Agriculture, Nature Management and Fisheries was led by a minister who did not originate from agricultural circles. He announced that he "would not make his policies together with the agricultural farmers' organizations underneath a warm blanket". Interest groups were consulted but decisions were taken by politicians. It was the period of the "primacy" of politics and the market mechanism prevailed.
Wielinga (2000a) uses the same phases mentioned ealier to describe the way the concept of knowledge changed. When food security was the main goal after the second World War, the development and transfer of technology were key. The instruction of farmers, plus the social aspect of sharing knowledge amongst farmers were pivotal. When Dutch agriculture flourished, the aspect of choice emerged. Farm management and the search for economic return necessitated an approach that helped farmers in their decision making skills. Not every farmer needed the same kind of knowledge. In the period of growing uncertainty between 1975 and 1984 the power aspect of knowledge was emphasized. Knowledge became a tool in negotiations, for instance in discussions about what norms for use of fertilizers and pesticides would be reasonable. Another important aspect of knowledge in that period was the search and learning aspect of knowledge. Knowledge needed to be developed when it was not available through research. This developing process was generated between the researcher and his/her environment, including farmers. Extension then played an intermediate role between research and practice.
In the second half of the 1980s it was recognized that knowledge was not neutral but generated through interaction. The theoretical development of knowledge thinking in The Netherlands moved from knowledge transfer to knowledge systems thinking. The next aspect which transpired was the persuasive aspect of knowledge. The divergence in goals between the Ministry and farmers put extension workers in a difficult position, in a conflicting role of promoting government policy and supporting farmers. Public extensionists were caught in the middle. A conflict between different realities grew which disturbed the balance between the stakeholders in the knowledge network (Becker, in Kickert, Becker, De Bruijn et al, 1993 ) . The aspect of persuasiveness became more and more apparent between 1984 and 1995. The growing conflict in realities resulted in the growing conviction that science could not bring a neutral solution anymore.
In the 1990s the market aspect of knowledge became more important. Knowledge was and is seen as a competition element in agriculture. The market mechanism and the "user pay" principle prevailed. Peper (1996) recorded a different need of farmers for knowledge: a need for less collective knowledge. Growing competition between farmers and growing professionalization meant that farmers needed more specialized, tailor made information. Peper explained this by emphasizing the high level of education of the farmers, an "adult entrepreneurship".
The knowledge system thinking resulted in the aim to have one knowledge policy including research, extension ánd agricultural education. The transformation from linear thinking (from research via extension and education to the farmer) to knowledge systems thinking took place, but with difficulty. How innovation takes place and how to stimulate innovation processes became pivotal questions in the late 1990s.
In 1993 the Ministry of Agriculture, Nature Management and Fisheries (MANF) presented an agricultural knowledge policy memorandum: it was the first "one knowledge" policy. The reason for adoption of this policy was that rapid changes had occurred between the components of the knowledge system; this meant that links between those components were becoming increasingly problematic. The traditional cohesion and division of labour within the knowledge system had disappeared. This new knowledge systems approach formed a basis in 1995 for a merger of the Directorate for Agricultural research and the Directorate for Education and Extension into a single Directorate for Research, Extension and Education. For the first time all components were integrated into one directorate. This new directorate produced an agricultural knowledge policy plan in 1996. Besides that, the National Council for Agricultural Research (NRLO) became the advisory board in 1995 with responsibilities for conducting science and technology foresight studies.
The Peper report "Sustainable knowledge, sustainable agriculture ("Duurzame kennis, duurzame landbouw, mei 1996) formed the base for many changes in the agricultural knowledge infrastructure in The Netherlands. The report was discussed in parliament and the cabinet reaction resulted in a whole process of change. The Peper report was partly an elaboration of the general policy paper of the Ministry: "Dynamiek en vernieuwing" (Dynamics and innovation). The starting point of this report was that agriculture would keep on playing a significant role in the Dutch economy and culture. It called for strong competitiveness and enhanced dynamism which could only be achieved by stimulating knowledge and innovation processes. Three pivotal elements in the paper were the recognition of the special role of the public sector for fundamental basic research, the long-term knowledge development and the functioning of the knowledge infrastructure as a whole. The government should invest in long lasting research themes and in the education of people. Furthermore, the role of the government should be to maintain a knowledge buffer and to select themes that would imply opportunities in the long term for knowledge development.
Besides this, the Peper report stressed the necessity of the consequent adoption of the user-pay principle and the need for a demand driven knowledge infrastructure. Knowledge development for short-term returns should be the primary responsibility of the user. The principle also implied that farmers were responsible for research aimed at short-term results, such as applied and adapted research. At the same time, when the Ministry moved away from merely representing production interests, it started distinguishing two types of research (Roseboom and Rutten, 1999). The first consisted of basic research and research on environmental issues, food safety and nature conservation. For these types of research the Ministry was the primary client. The second was more production oriented research with more appropriable benefit, to be (co-)financed by agricultural producers and industries. The Ministry would act as a sponsor in certain cases. The user-pay principle related to research as well as to knowledge activities, for example extension and agricultural courses.
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