Assessing Private Sector Agriculture Research
and Innovation in South Africa
By
Kirsten, Johann; Haankuku, Choolwe;
and Stander, Ruan
Contributed Paper presented at the Joint 3
rdAfrican Association of Agricultural
Economists (AAAE) and 48
thAgricultural Economists Association of South Africa
Assessing Private Sector Agriculture Research
and Innovation in South Africa
By:
Johann Kirsten, Choolwe Haankuku
1and Ruan Stander
Department of Agricultural Economics, Extension and Rural Development University of Pretoria, Pretoria 0002, South Africa
Office: Room 2.22, Agricultural Annex Phone: (+27-12) 420 3251 Fax: (+27-12) 420 3247
E-Mail: johann.kirsten@up.ac.za
May 2010
1
Abstract
Reliable data on private sector agricultural research and development is globally scarce, particularly in developing countries. In South Africa, it has been observed that research performance by the public sector via the Agricultural Research Council has declined in recent years and consequently, the private sector has embarked on a much larger role in South Africa’s agriculture research than before. However, the extent of this engagement remains unknown as data quantifying private sector agricultural R&D is limited. This study identified 51 private firms that perform agriculture related research activities and attempts to gather primary data to determine the nature and extent of private R&D in South Africa. However due to the large number of non-responses, the study covers only 19% of these firms. Nevertheless, the study found that the participation of the private sector in agriculture research in the past decade has increased; in terms of research expenditure by more than 100% and number of research personnel by more than 50%. It emerged that the nature of research done by the private sector locally is mainly adaptive research - focused on testing imported technology to ensure registration and certification for use on the local market as opposed to developing ‘own’ innovations. The most influencing government policy initiatives in the participation of the private sector in South Africa’s agriculture R&D have been deregulation of agriculture markets and liberalization of agricultural trade, which have increased the spill-in of agriculture technologies to South Africa. The study recommends that, in order to ensure sustainability and efficiency of private sector research, collaboration between the public sector and private sector as well as international organisations will be crucial.
1. Introduction
Globally there seems to be a scarcity of reliable data on private sector agricultural research and development, particularly in developing countries. As a result economists, policymakers and donors do not have the information they need to develop effective government strategies or policies for increasing agricultural productivity and reducing hunger, poverty, and resource degradation in developing nations. Studies of the impact of private sector research and innovation on farmer and consumer income and the environment are also limited (Pray, 2009). This is the context in which this study investigated the extent and nature of private sector agricultural research and development in South Africa. The results reported here are incorporated in a global project with similar investigations in the United States, Canada, Europe, and developing countries that will collect and analyze data on private sector agricultural R&D and innovation. The team also examined the policies that influence private investment in the research, development, and deployment of new technologies in South Asia and sub-Saharan Africa.
The ultimate objective is to improve decision-making on policies and investments that promote private investment in poverty reducing and productivity enhancing agricultural research, development, and innovation.
The paper first reviews the global trends regarding private sector engagements in the provision and funding of agricultural research and development. It then specifically considers the nature and extent of the private sector’s engagement in agricultural R&D in South Africa. South Africa has the largest research network in Africa but its once prestigious public research systems has come under extreme pressure as a result of funding shortages and poor management and loss of research expertise. Consequently funding of research and in some cases provisions of research has shifted more and more to the private sector – largely because the public system could not deliver on the demands of primary and secondary agriculture.
2. Private agricultural research and development
Global agriculture R&D has seen an ever increasing engagement of the private sector in funding and performing agriculture research. While this trend is relatively new in Sub-Saharan Africa (SSA), it has been ongoing in developed countries such as the United States, United Kingdom and Japan whose annual growth rate of private sector expenditure in agriculture R&D was well above 4.5% in the early 1990s (Kremer & Zwane, 2005:88). For a long time, private research has been concentrated in rich countries; in 2000, the total amount spent on agricultural R&D globally by the private sector was estimated to be US$12 577 million in rich countries and only US$869 million in developing countries (Naseem et al., 2006:7). The low level of investment in developing countries has been a result of significant failures in R&D markets and institutional inefficiencies, in particular, the difficulty of preventing the resale of seed and the ability for innovators to capture their returns on R&D investments (Kremer & Zwane, 2005:90).
Inevitably, private R&D investment trends in developing countries is now changing; as most of these countries are restructuring their economies and have introduced policies (liberalization, foreign direct investments and commercialization of agriculture) that favour private sector participation in agriculture R&D. Also, due to recent innovations and developments in plant sciences and biotechnology, it has increasingly become plausible for private sector companies to invest in agriculture R&D with opportunities to capture private rents through patents (Naseem et al., 2006:10).
Many developing countries such as Brazil, India, Columbia and Mexico have experienced growth in private sector research engagement. Private sector research expenditure in India is reported to have grown rapidly (doubled) between 1985 and 1995 (Pray, 1998:35). The total expenditure by the private sector in agriculture research was higher in these developing countries compared to countries in SSA. In India, the private sector spent about US$ 56 million, accounting for 16% of the total funding of Indian research in 1998. In Columbia, it was estimated that the private sector spent approximately US$32.3 million in 1991 and in Brazil, the amount spent was about
US$24 million in 1996 (Naseem et al., 2006:9). In Africa, where private sector research has been most limited, it was estimated that only US$4.2 million and US$0.5 million was spent in 2000 by private sector in South Africa and in Kenya respectively (Naseem et
al., 2006:9).
Private firms in Brazil, India, Columbia and Mexico have been involved in a wide range of research activities including plant breeding, plant protection chemicals, fertilizers, food processing, agriculture equipment and livestock research. In India, food processing followed by the seed industry was the fastest growing sub-sector in private sector research (Pray, 1998). As stated above, the break-through in biotechnology sciences enhanced private sector research investments in developing countries. Pray, Oehmke, and Naseem (2005) pointed out that most of the biotechnology research was carried out by firms in developed countries; and through acquisitions and merging and the establishment of multinationals, private agriculture firms in developing countries tend to be conduits for transferring and adapting these technologies to local conditions.
Similarly, these global trends of increased participation by the private sector in agriculture research have also been observed in South Africa. The private sector plays a vital role in South Africa’s agriculture not only in terms of production, processing and marketing but also, in performing agriculture research. Previous studies estimating Agriculture Science and Technology Indicators (ASTI) for 2000 showed that the private sector contributed only 3% (approximately US$ 4.2 million) of the country’s research and development (R&D) spending. However, on account of the large number of non responses, the figures in these surveys indicating the private sector’s contribution to agricultural R&D spending in South Africa is to a large extent an undercount (Liebenberg
et al., 2004:8). It is well-known that private firms have taken on a much larger stake of
agricultural research in South Africa, but the extent of this engagement remains unknown as data quantifying private sector agricultural R&D is limited and often not shared due to its confidentiality. This study therefore endeavors to gather primary data to address three fundamental questions and these are: what is the nature of agriculture research by the private sector? What is the source of innovations? And what is the extent (funds and research personnel) of agricultural research involvement by the private sector? By
addressing these basic yet important questions, the outcome will be insightful and could provide a foothold for further decision-making by government, donors and investors as well as to develop effective strategies and policies for agricultural growth.
3. The private sector in the South African agricultural and food system
Unlike most countries in SSA, primary agriculture in South Africa accounts for less than 3% of the country’s Gross Domestic Product (GDP) and about 10% of employment. In spite of this, agriculture has significant backward and forward linkages into the economy and consequently a thriving agribusiness sector exists in which farm feeds, food processing, fertilizers, fuel and other agricultural chemicals are core (SA Info, 2009). In 2004, primary production, agro-processing and agriculture inputs together accounted for 15% of the country’s GDP (Liebenberg et al., 2004:2).
Farm feeds, seed, fertilizer and agro-chemicals are important intermediate inputs for agriculture production and are therefore big business in South Africa. Total expenditure on agriculture intermediate inputs and services has increased from approximately R36 billion in 2003 to R67 billion in 2008 (Esterhuizen, 2006:193; DAFF, 2009). In 2008, while farm feeds accounted for 22% of total agriculture input expenditure, fuel and fertilizer expenditure accounted for 20% and 13% of the country’s total agriculture input expenditure respectively; seed and agro-chemicals (dips and sprays) together accounted for 13% and farm services together with maintenance and repairs accounted for 19% of agriculture input expenditure. Private firms in these agriculture sub-sectors engage in agricultural related research and the other significant sub-sectors are agro-food processing, wines & spirits and forestry & fisheries; and more interestingly for this study, there are a couple of established private institutions in the business of agriculture research products and services.
We find it necessary at this point to first draw attention to the productivity trends in agriculture over the past few decades.
4. Productivity patterns in South Africa’s agriculture
Liebenberg, Pardey and Khan (2010) provide an in-depth analysis of South Africa’s agriculture production and productivity trends over several decades and the authors found that agricultural output as a share of GDP has declined from about 10% in the 1960s to about 3% in 2007. According to development theories, this is a positive indicator of structural transformation. However, even though South Africa is still a net agricultural exporter, the ratio of agriculture exports to the country’s total exports is much lower in recent years than in the 1930s when agriculture exports as a proportion of the country’s exports accounted for more than 70%. In 1993 when the country was faced with international sanctions concerning apartheid, this share reached a low of 6.5% and slowly regained momentum averaging around 8.2% after the turn of the millennium (Liebenberg, Pardey & Khan, 2010).
In terms of production, there has been a significant shift in production from field crops to high value horticultural products (fruits & vegetables). While the share of production value of field crops has declined from 40% in the 1980s to 30% between 2000 and 2007, the share of production value of horticultural crops increased from 18% to 26% in the same period. This is perhaps due to increased trade liberalization and access to foreign markets for horticultural products. Wine, deciduous and citrus fruits have had remarkable growth rates above 4% in the past decade. Similar to field crops, the livestock share of production value is also estimated to have declined from 55% in the early 1900s to about 44% in 2007. Overall, the average annual growth rate of total agriculture output has been fluctuating from 1.86% in the 1940s, to approximately 3.58% for the period 1950s - 1970s. Between 1982 and 2000, the total annual agriculture growth rate then declined to 1.52% per year, after which it regained momentum and has been growing by about 2.1% per year since 2000. The increase in total annual agriculture growth rate since 2000 is mainly attributed to growth in horticultural products as opposed to field crops and livestock production that grew by only 0.9% per year and 1.2% per year respectively between 1982 and 2008 (Liebenberg, Pardey & Khan, 2010). Even though total agriculture growth per annum has improved since 2000, it is worth noting that it is much
less than the 3.58% per annum height reached in the 1950s, therefore the country is currently performing below its potential.
Despite the variation in total agriculture growth rate, crop yields in South Africa have been increasing. Between 1990 and 2008, maize yields increased by 4.58% per annum while wheat and sorghum yields increased by 3.34% per year and 3.03% per year respectively. The growth in yields is mainly attributed to increased mechanization and a significant increase in the use of fertilizers, improved seed and other chemical inputs. However, in terms of multifactor productivity (MFP) - which measures the changes in output per unit of combined inputs, South Africa has had a declining MFP growth rate from 3.98% per year between 1971 and 1989 to 0.01% per year for the period between 1990 and 2008. The lack of growth in MFP in recent years is reason for concern and demands putting in place worthy investment options for agricultural R&D that ensure sustainable productivity growth (Liebenberg, Pardey & Khan, 2010:20).
5. Study design and Research Methodology
The study identified 51 private firms that perform agriculture related research activities. These firms are categorized under eight major sub-sectors namely: feed & livestock, seed & fertilizer, pesticides, forestry & fisheries, agriculture machinery, food processing & manufacturing, wines & spirits and privately funded research institutions. A survey was then conducted during 2009 in which a semi-structured questionnaire was administered in order to gather data pertaining to research personnel, research expenditure, and sources of innovations and technology licensing by these private firms as well as make suggestions regarding government policies. Table 1 below shows the number of firms contacted from each sub-industry.
Table 1: Number of firms contacted by sub-sector
Agriculture sub-sector No. of firms contacted
No. of firms with R&D and to whom questionnaires were distributed No. of questionnaires returned
Feed & livestock 6 5 2
Seed & fertilizer 10 10 8
Agricultural chemicals 10 5 4
Forestry & fisheries 5 5 0
Agriculture machinery 2 0 0
Food & manufacturing 5 4 0
Wines & spirits 2 1 0
Research institutions 5 4 4
Agricultural cooperatives 7 1 1
Total 51 35 19
Source: Source: Own compilation from survey
In addition to collecting data through interviews and mail, information was also obtained from publicly available sources such as government reports and web sites. However, out of the 51 institutions that were identified and contacted, of which 35 firms participated in the survey, only 19 firms returned complete questionnaires therefore the proportion of industry covered was only 37%.
6. Findings
6.1 Research expenditure and personnel
This study defined total research expenditure to comprise of staff remuneration, operating expenses, registration fees and capital expenditure. It can be observed from Table 2 below that aggregate total research expenditure from the five sub-sectors increased consistently from R80 million (U$8 million) in 2001 to R322 million (US$32million) in 2008, indicating more than 100% increase over the seven-year period. On average, total annual expenditure by the private sector for the period under consideration (2001-2008)
was estimated to be R180 million (US$18 million). This is much higher than the US$ 4.2 million figure estimated in the 2000 survey. Despite such an impressive growth, the 2008 total expenditure (approximately US$ 32 million in table 2 below) is still lower than what India spent in 1998 and nearly as much as what Columbia spent in the early 1990s1. Therefore, even though South Africa’s private sector research expenditure has grown, it still lags behind other developing countries.
The bulk of total research expenditure emanated from the seed & fertilizer sub-sector2 while co-operatives accounted for the least share of total research expenditure. Studies (cf. Pray, 1998) in India have also shown the seed industry to be at the top for private sector research expenditure.
Table 2: R&D expenditure by sub-sector and year
Sub-sector Total research expenditure - Rand’ million (2001-2008)
2001 2002 2003 2004 2005 2006 2007 2008 Seed and fertilizer 50.6 73.2 89.5 99.2 104.5 117.3 139.1 149.5 Pesticides 13.5 14.8 20.4 22.0 22.5 23.8 23.9 25.5 Feed and Livestock 4.5 8.3 8.2 9.1 11.2 10.7 11.3 13.1 Private Commodity Research Institutes 11.3 10.8 13.9 17.9 17.7 94.0 105.3 133.0 Agricultural Cooperatives 0.6 0.6 0.8 0.8 0.8 0.9 1.0 1.0 Total 80.4 107.8 132.7 149.0 156.7 246.7 280.7 322.1 Source: Own compilation from survey
The number of research staff (in terms of head count) increased by more than 50%, from 118 in 2001 to 185 in 2007 (Table 3). However, the number of research personnel decreased between 2007 and 2008 from 185 to 146 researchers3.
1 Data on private expenditure for recent years is not yet available for these countries
2 It was difficult to do a comparison across sub-sectors as the number of returned questionnaires (and firms)
in each sub-sector varied.
3 One firm did not provide the total number of researchers in 2008. Assuming this firm’s total number of
Table 3: R&D personnel by sub-sector and year
Sub-sector Number of research staff by Year (2001-2008)
2001 2002 2003 2004 2005 2006 2007 2008
Seed and fertilizer 66 67 70 74 78 79 96 78
Pesticides 6 6 6 6 7 7 6 6
Feed and Livestock 5 5 5 5 8 8 8 9
Private CommodityResearc h Institutes 38 24 25 27 81 66 72 50 Agricultural Cooperatives 3 3 3 3 3 3 3 3 Total 118 105 109 115 177 163 185 146
Source: Own compilation from survey
An important aspect that should be covered here to add to the extent of privately funded research is the extent to which farmers and commodity organizations in the agricultural industry in South Africa is funding agricultural research. This seems to have been borne out of the acceptance of limited government funding allocated to the major research provider, the Agricultural Research Council. These funds are extracted from the food supply chain via statutory levies paid by producers on each unit of a commodity delivered. The National Agricultural Marketing Council (NAMC) regularly conducts an annual review of all statutory levies implemented in terms of the Marketing of Agricultural Products Act, No 47 of 1996, (MAP Act). In their 2006 survey, they reviewed ten industries (citrus, cotton, dairy, deciduous fruit, dried fruit, potato, red meat, sorghum, wine and winter cereal) that collected statutory levies. In 2006 these industry bodies collected a total of R149.1 million in statutory levies. The NAMC report shows that R60.4 million was spent on research by these organisations during 2006 (Preliminary figures for 2008 suggest that the amount spent on research by these organisations is approaching R70 million. These funds were allocated to private and public research providers to do research on themes and programmes prioritised by the industry and producer organisations. The spending on research by these producer organisations should be seen in the context of a total government allocation of R380 million to the Agricultural Research Council.
By way of illustration we show how the Winter Cereal Trust is distributing its levy income for agricultural research for the 2009/10 financial year. The trust has allocated
R23 390 295 for wheat research, R2 262 874 for barely and R318 182 for research on
oats. The institutional allocation of this funding is documented in Table 4 below. The table suggests an interesting mix between private and public research. Private funds generated by commodity organisations are in this case used to fund research in public as well as private institutions. This obviously complicates the picture about privately funded research in South Africa somewhat, but also largely because not all commodity organisations are as transparent with their information as illustrated here. It should be remembered that the money invested in research reported here originates from investment and levy income and therefore the research expenditure by commodity organisations is considerable more than the R70 million reported earlier. For example, between 1997 and 2010, the Maize Trust alone has spent around R192.4 million of its investment income from their trust endowment on maize related research.
Table 4: Institutional allocation of small grains levy income to different research providers (2009/2010)
Institution Amount
Wheat research
ARC Small Grains Institute R11 856 420
University of Stellenbosch R1 090 730
Department of Agriculture: Western Cape Province
R608 913
University of the Free State R70 1655
SA Grain Laboratory R1 505 510
Pannar R1 425 558
Sensako R4 796 882
ARC Plant Protection Research Institute R275 872
University of Johannesburg R111 200
University of North West R36 000
Cen Gen R26 010
Barley research
ARC Small Grains Institute R940 853
University of Stellenbosch R235 700
SA Barley Breeding Institute R1 187 262
Oats research
ARC Small Grains Institute R256 982
University of Stellenbosch R61 200
A new development is the entry into agriculture research of Consultative Group on International Agriculture Research (CGIAR) and donor funding. This collaboration is essential for the sustainability of agriculture research and it is also likely that as institutional arrangements that affect agriculture research continue to transform, the CGIAR will collaborate not only with the ARC but also with universities and the private sector. It is also worth noting that there is collaboration within the private sector itself. More recently, Monsanto and BASF announced a collaboration project integrating Monsanto’s DEKALB maize seed to BASF’s stress resistant AgCelence crop protection concept in order to increase effective yields and at the same time make use of available production capacity more effectively (Hofmeyr, 2010:22).
6.2 Innovations
Table 5 below shows the diverse number of innovations and patents as indicated by the respondents from the represented industry groups. It was found that the majority of the ‘innovations’ in South Africa by the private firms are either imported or adapted and distributed under license from international firms. This is largely because most private agriculture firms in South Africa operate as subsidiaries of foreign multinational companies such as Monsanto, Bayer crop science and Dow agro-chemicals. This is not surprising as earlier studies in other developing countries also found similar organization arrangements and also due to the fact that most innovation break-throughs originate from developed countries (Pray, 1998:42; Pray et al., 2005). This study also found that most of the agricultural research done by the private sector in South Africa is largely adaptive or done for testing purposes and to comply with the regulatory authorities for foreign innovations to be released on the South African markets. It is worth mentioning at this point that this emerged as a major constraint in the data gathering process in that most firms (including and especially those that did not respond to this survey) operate under international agreements and could not make available the requested data.
Table 5: Number and source of innovations See notes on hard copy Industry New product/process No. of specific
innovations Source of innovation
Seed industry Sunflower 2 Licensed
Maize 2 Licensed
Oats 1 Licensed
Reygrass 2 Licensed
Seed processing 1 Own R&D
Bird seed 1 Own R&D
Barley variety 1 Own R&D
Butternut N/A Licensed
Tomatoes N/A Licensed
vegetable species 40 Own R&D, licensed
Wheat cultivars 30 Own R&D
Squash F1 Atlas & Pluto 2 Imported
Pumpkin F1 hybrid 1 Licensed
Sweet corn F1 hybrid 1 Licensed
Tomato F1 hybrid 1 Imported
Wheat and maize cultivars N/A Own R&D
Maize hybrid 1-5 5 Own R&D
Agrochemicals
Insecticide 1 Imported
Mosquito net 1 Imported
Plant growth regulator 2 Imported
Animal feed growth
regulators 1 Imported
Pesticide 1&2 2 Contract R&D
Food & feed processing
Animal feed 1 Licensed
Amino acid 1 Imported
Oil (Soya) 1 Imported
Enzyme 1&2 2 Imported
Processed food 6 Own R&D
Pelleting 1 Imported
Feed mixers 1 Imported
SKOV equipment (Automatic bird and feed weigher)
1 Imported
SKOV equipment (Setting
climate controllers) 1 Imported
Processing chicken 5 Own R&D
7. Government policies that affect research and innovation
The South African agriculture sector has undergone a series of policy reforms since 1994 when the country had its first democratic election. Apart from the continued effort in redressing the effects of discriminatory legislation, some of the major policy shifts that have occurred include (OECD, 2006): deregulating the marketing of agricultural products and liberalizing agricultural trade; enacting land reform policies and programmes; eradicating certain tax concessions and reducing direct subsidies; and the introduction of a minimum wage for farm workers.
The major policies influencing participation of the private sector in South Africa’s agriculture research and development have been the deregulation of the agriculture input and product markets as well as the liberalization of agricultural trade. Since the deregulation of agriculture markets that entailed state withdrawal from and dissolving government marketing boards, the private sector has taken over the marketing of agriculture inputs and outputs and consequently, this active role of the private sector has attracted Foreign Direct Investment (FDI) from several multinational companies that have formed partnerships with local companies in manufacturing and distributing agriculture inputs (Seed, fertilizer, agro-chemicals and machinery) and outputs. The merging of local companies with foreign multinationals has increased the role of South Africa’s private companies in performing agriculture research, particularly involving trials and testing the suitability of new technologies to the local conditions since the development of technology occurs abroad. Similarly, the progress made towards liberalizing agricultural trade through replacing direct controls over imports by tariffs, eradicating state controls over exports and the establishment of preferential trade agreements has enhanced private sector involvement in agribusiness. Such new trade arrangements have increased South Africa’s access to foreign markets – exporting sugar, citrus, fresh grapes, wines, maize and other agricultural products. On the other hand, this has permitted the presence of foreign products on the domestic market. These are mainly agriculture inputs such as agriculture machinery & equipment, fertilizer components and agro-chemicals; some of which enter the country free of duty. Therefore trade liberalization has increased the spill-in of agriculture technologies in South Africa, and
has resulted in research that is biased towards testing suitability of foreign products as opposed to developing new products.
However, despite the remarkable progress made by government through these policy initiatives, a couple of impediments still exist that also call for government attention. Most of the firms that participated in the survey cited the need for government to ease the stringent phyto-sanitary restrictions for shipment of maize seed from South Africa to the USA and other foreign destinations in order to facilitate easier access of local seed to world-class laboratories so that faster genetic progress is attained. Also, most firms pointed the need for government to revise and update its policies regarding Genetically Modified Organisms (GMOs) in order to enable local research firms to adopt GMO technologies and hence, operate at the same level as their foreign counterparts. Other initiatives that the government could consider in order to encourage agricultural R&D by private firms include tax incentives on research expenditure, ease bureaucratic hurdles pertaining to registration of new products and tighten measures to shield local researchers/breeders against generic competitors. Some of these suggestions have been tabulated below:
Table 6: List of policy suggestions by the private sector
Number Policy suggestions
1 Tax incentives on research expenditure
2 Lifting phyto-sanitary restrictions for shipment of seed samples
3 Improve efficiency of current systems, maintaining regional departmental infrastructure, assistance in quality standards
4 Research grants to private institutions as public research institutions become obsolete
5 Improved investment confidence in South Africa - low crime, low tax, low bureaucratic hurdles
6 Encourage private-public partnerships as well as partnerships with universities 7 Increase fines drastically for farmers that do not obey the Plant Breeders Rights
Act.
8 Implementation of the Forest Act and Forest Sector Charter 9 Encourage adoption of the latest GMO technology in South Africa 10 Better protection against generic competitors
11 Duty-free imports for research purposes Source: Own compilation from survey
8. Conclusions
Our endeavours to establish the extent and nature of the agricultural research by private sector firms proved to be difficult given the limited responses provided. Out of the 51 institutions that were identified and contacted, 35 firms participated in the survey and only 19 firms returned complete questionnaires. We nevertheless manage to draw insightful conclusions. It is evident that the participation of the private sector in agriculture research in the past decade has increased – this is illustrated by the increase in research expenditure and number of research personnel. However, the share of this stake in relation to the country’s total agriculture research expenditure is still indeterminate as a couple of studies to complement our findings are still underway.
It was found that most private agriculture firms in South Africa have formed partnerships with foreign multinational companies and operate as subsidiaries of these overseas companies. Therefore, in most cases local firms import technology developed by these foreign companies as opposed to being innovators of their own local technology. Consequently, the bulk of research being done locally is focused on testing this new imported technology both in laboratories and on-farm in order to ensure registration and certification for use on the local market. The most influencing government policy initiatives in the participation of the private sector in South Africa’s agriculture R&D have been deregulation of agriculture markets and liberalization of agricultural trade, which have increased the spill-in of agriculture technologies to South Africa.
Expenditure by the private sector has increased and will remain important in performing agriculture research. However, in order to ensure sustainability and efficiency of this framework, collaboration between the public sector and private sector; between international organisations and the private sector; as well as between private firms will be crucial. The government must also play its role in providing an enabling environment for private sector research by addressing some of the policy concerns encountered by the private sector.
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