The International Consortium on Agricultural Biotechnology Research (ICABR)
Impact of Terminator Technologies in Developing Countries. A Framework for Economic Analysis
C.S. Srinivasan, University of Reading
The appropriability of the returns to investment in plant breeding presents peculiar problems because of the self-reproducing nature of seeds. Problems in appropriation are likely to lead to market failure, which traditionally has been overcome by large-scale public investment in plant breeding. The terminator technology is not merely the outcome of scientific advancement; it is also an innovation induced in response to the problems of appropriability and weaknesses in existing intellectual property rights (IPR) institutions. There have been several attempts to tackle the weaknesses of IPR institutions and improve appropriability: the evolution and development of PVP and plant patent laws bear testimony to these efforts. Terminator technology may provide a technological solution to the problem of appropriability, but it must be seen as a culmination of these efforts.
The simple model used in the paper shows how appropriability of returns from investment in plant breeding is extremely sensitive to farmer seed replacement behaviour. Terminator technology, which is equivalent to the case in which farmers invariably replace seed each year, can bring about a dramatic improvement in the appropriation of returns. There is evidence from the US that research effort is related to the level of appropriability. Research investment in hybrid corn is four times that in wheat - this ratio is very close to ratio of appropriability between hybrids and self-pollinated crops. Terminator technology has the potential to significantly raise the level of research effort in self-pollinated crops - with attendant consequences for productivity. We support these observations with a review of the differential in growth rates between hybrids and open pollinating varieties over the last 50 years for a wide range of countries, which shows that the differences are significant.
By adhering to the TRIPs Agreement, developing countries have already committed themselves to provide IPRs for plant varieties to provide better returns for breeders. Terminator technology is only a better technique of enforcing IPRs; it does not involve a change in the principle of what is legitimately appropriable. But, developing countries face many difficult choices in responding to this technology. If a large part of varietal improvement in the future is going to be bundled together with terminator technology, then it may not be possible for them to ignore the technology altogether. Productivity is of even greater concern to them than it is to developed countries. Potential productivity gains will have to be weighed against the social costs arising from the coercive element of the technology. What they need at this stage is the capacity to evaluate its ecological, economic and social impacts, selectively apply it where appropriate and upgrade their regulatory system to deal with the technology. They will need to seriously think about appropriability and intellectual property rights.