Rethinking South African Agricultural R&D: Contemporary Changes in a Long-Term Context

1. Rethinking South African Agricultural R&D:Contemporary Changes in a Long-Term Context Philip G. Pardey Department of Applied Economics, University of Minnesota 45th Annual Conference of the Agricultural Economics Association of South Africa, Indaba Hotel, Fourways, Johannesburg, September 27, 2007 www.HarvestChoice.org

2. Collaborators • Frikkie Liebenberg, Agricultural Research Council, Pretoria • Michael Khan, South African Human Sciences Research Council, Cape Town supported by Jason Beddow, Dirk Blignaut, Steven Dehmer, and Kate Sebastian

3. Outline • General R&D Expenditure Trends—Global Overview • South African Agricultural R&D • Long-run trends • Contemporary trends • In a national science spending context • In an international context • Selected Policy Matters • R&D spillovers • Re-financing South African R&D

4. Gross Expenditures on R&D (GERD) Source: Pardey and Dehmer (forthcoming)

5. Middle East and North Africa Latin America Other Asia China Sub-Saharan Africa Developed Countries Global Public Agricultural R&D Expenditures 2000 $23.1 billion 1981 $15.3 billion Source: Pardey, Beintema Dehmer and Wood (2006)

6. Global Slowdown in Growth of Public Ag R&D Spending Source: Pardey, Beintema Dehmer and Wood (2006)

7. Total Agricultural Research Intensities, 2000 Source: Pardey, Beintema Dehmer and Wood (2006)

8. South African Agriculture, 1910-2004 Panel a: Number Total Area and Average Size of Farms, 1918-2003 Panel c: Sector Shares FY 1911 Panel b: Gross Value of Agricultural Production by Sector, 1910-2004 FY 2001

9. South African Public Agricultural R&D Spending Trends, 1910-2005 Expressed in 2000 prices using implicit GDP deflator

10. South African Public Agricultural R&D by Performer, 1910-2005

11. Public Funding Trends for Agricultural R&D and Technology Related Services Panel a: Spending by Service Category Panel b: Research Focus Panel c: Regulatory Services

12. GERD as a Share of Total GDP

13. South African GERD and Agricultural R&D Spending, 1966-2005

14. GERD Spending by Field of Science, FY 2002 and 2006

15. Agricultural Output and R&D Spending – South Africa vs United States vs Australia Panel a: Agriculture as a Share of Total GDP Panel b: Public Agricultural Research Intensities

16. To Recap • RSA GERD and Ag R&D small share of world total, dominant share of SSA total • RSA’s GERD as a share of GDP well below high-income country intensities, comparable with low-income country intensity • Public agricultural research intensities were similar to U.S. and Australian intensities until early 1970s, now well below • Appropriate amount , intensity and mix of public agricultural R&D involves consideration of • Cost vs benefits of public investments in agricultural R&D • Private R&D roles (shaped by regulatory and other policies that affect innovation incentives, e.g., IPRs) • Spill-in potential

17. Measures of Technological Distances (Agro-Ecological and Agricultural Output Similarity) • Data • Share of cultivated land in each of 26 agro-ecological zones (AEZs) • Share of the value of agricultural production for each of 185 products • Goal: use a single metric to indicate • the degree of agro-ecological proximity • the degree of similarity in output mixes • for pairs of countries or regions • Jaffe’s (1989) “angular separation of vectors” metric suits this purpose

18. Jaffe’s Omegas -- A Simple Example • where: • i and j index countries or regions • m indexes agro-ecological zones or agricultural outputs • fim is country i’s share of land in agro-ecological zone m or output m’s share of the value of ag production in country i Using Jaffe’s formula, wab = 0.86

19. Agro-climatic Zones (within the extent of agriculture)

20. Technical Distances from South Africa to the Rest-of-World Panel a: Agricultural Output Measure Panel b: Agcoecological Attributes Measure

21. Technological Distances between South Africa and High-Income Countries

22. Cumulative Distribution of Agroecological and Output Value Technological Distances

23. Global Agricultural Land & Labor Productivity (Ruttanogram)

24. 400 250 150 90 55 34 20 12 7.5 400 250 150 90 55 34 20 12 7.5 400 250 150 90 55 34 20 12 7.5 Western Africa (excl. Nigeria) Western Africa (excl. Nigeria) Western Africa (excl. Nigeria) Eastern Africa Eastern Africa Eastern Africa Western Africa Western Africa Western Africa South Africa South Africa South Africa Central Africa Central Africa Central Africa Nigeria Nigeria Nigeria Southern Africa (excl. SA) Southern Africa (excl. SA) Southern Africa (excl. SA) 150 250 400 650 1,100 1,750 3,000 5,000 8,500 150 250 400 650 1,100 1,750 3,000 5,000 8,500 150 250 400 650 1,100 1,750 3,000 5,000 8,500 Sub-Saharan Africa Agricultural Land & Labor Productivity

25. Agricultural R&D as a Percentage of Agricultural GDP, circa 2004

26. Achieving Parity with Australian and U.S. Agricultural Research Intensities, 2004

27. Summing Up • RSA’s agricultural economy has some important structural similarities and dynamics in common with developed countries, not rest of sub-Saharan Africa • RSA’s agricultural R&D intensity drifted well below the developed country average • Trends revealed by these data raises concerns about prospects for RSA to achieve productivity improvements that sustain a profitable and internationally competitive agriculture, particularly given • the more limited spill-in potentials compared with many other countries • the social goals of empowerment and small holder support in addition to productivity and efficiency concerns that affect agricultural R&D priorities in South Africa

28. Thank You Contacts: www.InSTePP.umn.edu www.HarvestChoice.org