Innovation In Food Systems: Challenges And Opportunities

Generated Summary

This background paper, prepared for the Food System Economics Commission, explores the challenges and opportunities in agricultural innovation systems. The study assesses the current state of agricultural innovation, focusing on expenditures, priority setting, and areas for strengthening the system. The research delves into the magnitude and allocation of expenditures on agricultural innovation, examining the roles of various funders, including governments, development partners, and the private sector. It analyzes how innovation priorities are determined and discusses key aspects of agricultural innovation systems. The research uses a combination of approaches, including a review of existing literature and data analysis, to assess the current state and future potential of agricultural innovation. The scope includes the identification of areas where innovation can be strengthened, such as modernizing plant and livestock breeding, developing digital agriculture, enhancing value chains, and scaling up innovations. The paper also examines the challenges related to the adoption and scaling up of digital technologies, emphasizing the need for incentive policies and collaboration between stakeholders. The analysis includes the examination of the role of private investment, and the challenges of scaling agricultural innovations.

Key Findings & Statistics

• The estimated average total annual funding for agricultural research and innovation in the Global South between 2010 and 2019 was around $60 billion per year.
• Traditional public and private R&D accounted for 33% of the total innovation funding.
• Marketing of technical innovations, along with extension services and training programs, accounted for 37% of the total innovation funding.
• Innovations that aimed to create or enhance institutions or infrastructure accounted for 26% of the funding.
• Funding for new policies and subsidies to encourage innovation adoption represented less than 5% of the overall spending.
• Global South governments were responsible for approximately 60-70% of the total innovation funding.
• The private sector contributed 15-30% of the funding.
• Development partners accounted for about 8% of the funding.
• Startups funded by PE/VC represented 2-3% of the total funding.
• Funding for innovation in food commodity value chains increased by roughly 50% over the decade.
• Crops received 50-60% of the funding within value chain-related funding.
• Livestock received less than 20% of the funding within value chain-related funding.
• Fisheries and aquaculture received approximately 5% of the funding within value chain-related funding.
• The remaining 20% of funding was dedicated to cross-cutting themes.
• In 2014, total CGIAR spending reached its peak at $1,089 million (constant 2016 US dollar values).
• In 2018, CGIAR spending declined to $824 million (constant 2016 US dollar values).
• When it was first established in 1971, CGIAR represented only 0.52% of the world’s public-sector spending on agricultural R&D.
• By 2015, this figure had increased to 2.1%.
• BCRs of 10:1 are very high compared to other public investments.
• On average from 1972-2005, 45% of funding went towards “productivity,” 21% to “NARS strengthening,” 8% to “biodiversity,” 15% to “environment,” and 11% to “policy-related activities.”
• In the early 1970s, almost 75% of spending focused on improving (crop) productivity, but by the early 2000s, this decreased to under 33%.
• CGIAR reduced spending on cereals (56% to 33%) while investments in livestock dropped from 20% in the 1980s to 12% in the early 2000s and legumes fell from 18% to 11%.
• Based on expenditures for the 2021 CGIAR Research Programs, staple crops (rice, wheat, maize) accounted for 21% of expenditure and non-staple crops (roots, tubers, bananas, grain legumes, and dryland cereals) account for 17%.
• Resource management accounted for 15%, fish and livestock accounted for 11%, climate change for 10%, agriculture nutrition and health for 10%, policy for 7%, and cross cutting platforms for 9%.
• The number of people affected by hunger globally rose to 828 million in 2021, an increase of about 46 million since 2020.
• The proportion of people affected by hunger is also increasing, to 9.8% of the world population, compared to 8% in 2019 and 9.3% in 2020.
• The private sector invests mainly in commercially important commodities, mostly maize and soybeans.
• The CGIAR has set broad strategic goals: (1) nutrition, health, and food security; (2) poverty reduction, livelihoods, and jobs; (3) gender equality, youth, and inclusion; (4) climate adaptation and mitigation; and (5) environmental health and biodiversity.
• Between 2010 and 2019, Global South governments were responsible for approximately 60-70% of the total innovation funding.

Other Important Findings

• Agricultural innovation, such as improved seed varieties, has played a major role in improving food security, reducing hunger and poverty, and improving rural livelihoods.
• An innovation paradigm shift is necessary, where productivity growth remains essential, but other critical objectives such as poverty reduction, promotion of healthy diets, mitigation of the climate and biodiversity and extinction crises, and building resilience must also be accommodated.
• Achieving such a transformation will require huge investment in innovations for sustainable agriculture intensification.
• The definition of agricultural innovation has broadened with the adoption of a food systems approach.
• This note discusses keys aspects of agricultural innovation systems including the magnitude and allocation of expenditures on agricultural innovation and how innovation priorities are determined.
• Total agricultural innovation expenditures funding in low- and- middle-income countries are assessed.
• CGIAR’s new Accelerated Breeding Initiative is seeking to achieve this modernization of breeding and improved partnerships to streamline breeding across CGIAR and NARS to bring better results, faster, in farmers’ fields.
• Innovative farming systems can generate high returns, but improved farm technologies and systems are more complex and difficult to adopt than seeds for improved crop varieties.
• Current policies have hindered the adoption of climate-smart and resource-saving technologies and diversified cropping by small-scale farmers.
• Correcting government policies that discourage the adoption and upscaling of innovations is crucial.
• Policy innovations are needed, integrated with farming systems innovation to facilitate the effective adoption of such new technologies with balanced incentives that do not disadvantage small farmers.
• The policies to sustain intensified agriculture while protecting the environment need to create a level playing field across the agriculture sector.
• A key priority for farming systems management should be development of advanced digital technologies.
• Innovations are needed to better integrate small scale farmers into modernized input and farm to market value chains.
• Effective and accessible value chains are essential in low- and middle-income countries (LMICs) to give small-scale farms entrees to markets and access to inputs and technology at reasonable prices.
• The scaling literature distinguishes different periods in the innovation process: “(1) problem identification (2) proof of concept with evidence generated to convince stakeholders that the innovation is worthy of investment, (3) piloting of the innovation and (4) scaling, with emphasis on dissemination of the innovation to specific target groups”

Limitations Noted in the Document

• The estimates are subject to a significant degree of uncertainty, as some agricultural innovation funding categories lack easily accessible data.
• Several countries or organizations do not report such information with sufficient detail.
• The study acknowledges the complexity and interconnectedness of agricultural activities, which poses a major barrier to scaling innovation.
• Linear approaches to scaling up innovation have achieved successes but have also often led to failures.
• The study recognizes the limitations of the “push” approach and emphasizes the need for participatory approaches.
• The study does not provide specific data on the environmental impact of innovations.
• The study notes that the costs of digital technology adoption can be a barrier for small farmers.
• The study acknowledges that the impacts of policy reforms may take time to materialize.

Conclusion

The document underscores the importance of agricultural innovation in addressing food security, poverty, and environmental sustainability challenges. It emphasizes the need for a transformative shift in agricultural practices, requiring significant investments in sustainable agriculture intensification. A key takeaway is the need for a balanced approach to innovation, which includes not only productivity gains but also attention to social and environmental objectives, such as poverty reduction, healthy diets, and climate change mitigation. The study emphasizes the need for the modernization of crop breeding programs in LMICs should be implemented in close partnership among CGIAR, NARS, universities worldwide, farmer-led breeding initiatives, and the private sector where appropriate. A greater push should be made both within CGIAR and through capacity building for NARS in low-income countries to increase research efficiency through development an application of modern data collection, digitalization, and information management systems that can revolutionize breeding. It also emphasizes the role of digital agriculture and the necessity of improving value chains to link small-scale farmers with markets. The document highlights that cutting across these areas, innovation is more likely to be successful with a strong focus on enabling conditions and strengthening capacities in innovation systems where scientists, governments, the private sector, civil society organizations, donors and investors, and farmers, can effectively collaborate. Stakeholders in the innovation process can help ensure that the innovation is aligned with the needs and interests of different actors and supported by relevant policies and institutions. The study acknowledges that despite the significant progress made in digital agriculture, challenges remain in scaling digital technologies for small farmers. Successful agricultural innovation requires sustained investment, collaboration among diverse stakeholders, and supportive policies. The paper concludes by emphasizing the importance of global multistakeholder platforms to support scaling innovations.