Alexey Ivanov: Breeding Companies Should Receive Resources From the Market, Not From the State's Pocket

Alexey Ivanov: Breeding Companies Should Receive Resources From the Market, Not From the State's Pocket
Photo: pexels.com 14.10.2022 215

On October 13, as part of the international scientific conference "Problems of Breeding - 2022" held at the Russian State Agrarian University - MSKHA named after K.A. Timiryazev, Director of the BRICS Competition Law and Policy Centre Alexey Ivanov made a presentation "Introduction of Seed Import Quotas - Problem or Prospect for Russian Seed Breeding?"

Alexey Ivanov proposed to consider the problem of quotas through the prism of the broader issue of methods of regulation and development of the industry. Breeding and seed industry is the most important initial link in the chain of added value creation in the agro-industrial complex (AIC), he noted. This can be seen in the example of Russian wheat exports, which declined so much in the second half of the 20th century that the USSR was forced to import wheat, including from the United States. The reasons for the decline were the "Lysenkov attack" in the 30-50s on Russian genetic and agrarian science, as well as collectivization and administrative mechanisms of industry management. In contrast, at this time the U.S. was experiencing the so-called "Green Revolution," which dramatically increased the productivity of the U.S. agricultural sector.

Russia's normal level of grain production and a sufficiently large share of wheat exports occurred during the period of market reforms and transformations. Efficient market mechanisms transformed our agro-industrial complex from subsidized and costly to profitable and productive. At the same time, a demand for the work of breeding scientists was formed. 

"It would be impossible to do science in a subsidized AIC, simply because science still needs demand. The demand today is realized in the form of purchase of seeds by agricultural producers — this is the very driver that can further move science," 

Ivanov emphasized.

In this sense it is important that transnational corporations, which compete with domestic breeders and seed breeders, including in the Russian market, invest huge resources into their work, which they receive not from the state pocket, but from the market, from seed sales and in the form of royalties when they sell their seeds.

Quoting of seed imports will surely give some short-term positive effect, but we have to assess consequences of such measure, Ivanov is convinced. In his opinion, administrative quota system significantly narrows the space for market mechanisms of support and development of competition, which in the mid- and long-term perspective is unlikely to have a positive impact on the development of both selection and seed breeding industry and agriculture as a whole. In addition, the breeding and seed-growing industry in the world operates on market rather than administrative grounds. Such model of organization of market relations in Russia is not yet fully built. By the way, the formation of the market was largely the responsibility of the global corporations. They also help with the transfer of technological, managerial, infrastructural and conceptual solutions. 

"In this regard, quotas cannot be called an instrument of market support, because foreign companies will lose motivation and will stop investing in our market and will reduce localization and technological transfer in the sectors where it is carried out now," 

believes Alexey Ivanov. 

Market support and launch of this market may be an alternative to administrative restrictive mechanisms. For example, there is an initiative of the Ministry of Agriculture of Russia to create the "Agroexpert" platform, which will enable agricultural producers to be better informed about Russian seeds and breeding achievements. It is also necessary to build a system of royalty payments to breeders. 

Experts from the BRICS Centre and the HSE-Skolkovo Institute for Law and Development conducted an analysis of the breeding and seed industry in Russia as part of the "Selection 2.0" research project. The results of the study, published at the end of 2020, showed that the royalties received by Russian breeders are several times lower than those in countries with a developed market for intellectual property rights in agriculture. This reduces the opportunities for investment and return on investment in the domestic breeding industry.

Alexey Ivanov and the experts of the " Selection 2.0" project offered a target model for the organization of the selection and seed industry, which could make the technology line market work. Today there is no such market in Russia, there is an administrative exchange, Ivanov emphasized.

It is important that the Russian breeding and seed industry be supported through the creation of infrastructural market relations, which could allow this industry to become sustainable. However, for Russian breeders to see the prospects of commercialization of their varieties and receive a corresponding return on their investments from the market, a certain degree of integration into global exchange processes and global value chains is required. 

"The administrative cutting off of such opportunities, in our opinion, will rather lead to the deterioration and weakening of the Russian breeding market," 

Ivanov concluded.

agricultural markets  Russia 

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