“Overview of Key Policy Issues Impacting the

Adoption of Bio-technology in Africa ”

José Falck Zepeda
Research Fellow
Co-Leader Genetic Resources Policies Project and
Leader Policy Team Program for Biosafety Systems (PBS)
IFPRI

Presentation made at the African Development Bank, Tunis, Tunisia April 14, 2011
Outline
Policy Issues
 Investments in R&D
capacity
 Legal issues: Liability and
redress
 Markets and trade:
Labeling
 Socio-economic issues
assessment
 Experience with
assessments
 Tool supporting decision
making
1. Investments in R&D capacity
 Investments in priority setting
 Sub-regional priority setting exercises completed,
mostly based on expert opinion
 Approaches used to date may have not lead to
the identification of best portfolio of activities
 Priority setting require a robust quantitative and
qualitative foundation
 Proposal:
 Collect more and better regional and national data

 More systematic analysis

An example for biotechnology
prioritization from ASARECA
Constraints*
Commodity Intervention
I F V W P D S B N Q G
Maize GM MM s m l
Beans GM MM m l l
Sorghum GM MM m m l
Banana TC GM MM s m s m
Wheat GM MM s,l s,l
Potatoes GM, TC m s s s
Coffee MM F GM, TC m s l s
Cotton GM, MM m,s s m s
Rice GM MM s s s m s
Cassava GM MM D s s,m s,l
Groundnut MM GM l m l
Sweet potato GM MM m s,m m,l s
Crop plants D, F s,l

Key to interventions:
GM = genetic modification
F = fingerprinting
D = diagnostics
TC = tissue culture
MM = molecular marker

Key to priorities: red = first , blue = second , yellow = third , green = fourth

Key to time-frame: s = short term (technology transfer) , m = medium term (genes known)
l = long term (genes to be cloned)
IFPRI‘s prototype economic evaluation and priority setting
approach for informing biotechnology strategy and investment
decision making processes
Production, Trade, Prices
(levels, trends, projections) Current & Future Commodity 1. Commodity
Agroecological Zones Regional Prioritisation
Crop diversity Importance? Screening

Compile available data on

Type and impact
the location, magnitude and Constraint 2. Constraint
of major production
economic consequences of Prioritisation
major production constraints
constraints? Screening

Stakeholder Dialogue
Payoff
Payoffmatrices
matrices Economic Design scenarios
3. Potential Payoffs:
by Payoff
crop and
Payoffmatrices
country
matrices
by
bycrop and country payoffs to constraint for assessing effects of Commodity/
bycrop
cropand
andcountry
country
mitigation? mitigating constraints Constraint-Scale

Likely regulatory regimes

4. Potential Payoffs:
Existing, emerging or Payoff
Payoffmatrices
matrices Technology-
Technology-Specific
Payoff matrices governing R&D, technology
potential biotechnology by
bycrop and country
options bycrop and
Payoff
crop country
matrices
and country use, marketing & time lag, Scale
(Crop/Country/Region) and adoption implications

Policy and Investment

5. Strategy/Policy
Implications for
Biotechnology Processes.
R&D and Regulation Investment Decision Source: Wood, Zambrano,
Making
You, Falck Zepeda, Sichra,
2008
 Investments in R&D capacity
 1990s under investment in R&D activities
 2008 improving but still lagging
 Concentration in a few countries
 Many countries, especially Francophone Africa, face
fundamental capacity and investment challenges
 Without appropriate funding the innovation system cannot
address effectively SSA productivity constraints
 Our experience is that biotech R&D also under invested
 Proposal:
 Systematic and focused capacity assessments
 Alleviate the constraint – political will

Source: partially based Beintema and Stads, 2011, IFPRI / ASTI

Food Policy Report 24
 Plant breeding investments by crop in Kenya
(As a percentage of total breeding budget)
 FAO study on
40 plant breeding
35
30
and
25 biotechnology
20
15
 Compare /
10 contrast with
5
0
national
priorities
sorghum millet

other small grain

veg & fruits

other legumes
maize
wheat

misc.
oilseed

fiber crop

Forages
rice

root & tubers

 Identify
outputs from
research - ROI
1985 1990 1995 2001
 Contrast to
other sector
investments‘
Source: Falck Zepeda et al. 2007
 IFPRI matrix of policy status and
policy objective based investments
Policy Status Policy Tools – plant Tools – Plant Tools – Tool – Cross
Objectives genetic Breeding Biotechnology Cutting
resources
conservation
and
enhancement
(1) Setting the stage Development Invest in Support for Development of Promotion of
for using biotech of conventional germplasm NARS applied operational agricultural technical
products capacities bank and adaptive biosafety services industry
Establishment Characterizati research in frameworks Support entry of
of a regulatory on of plant agronomy and Support for NARS private sector into
system to genetic conventional applied and seed and R&D
facilitate access material plant breeding adaptive research in systems
to (infrastructure and molecular biology
biotechnology human resource and associated
products development) sciences within
Improvement Development of innovative cluster
of the operational IPR (infrastructure and
technology regulatory human resource
delivery system frameworks development)
Design of seed
legislation

(2) Improving the efficiency and products of (3) Building capacities to develop
agricultural research through increased used of biotechnology based innovations
biotechnological tools Source: Falck Zepeda et al. 2007
2. Legal issues: Liability and redress
What is liability and redress?
 Liability: ―refers to the obligation of a person or
institution to provide compensation for damage it
is deemed to be responsible for.‖ (Boadie 2007)
 Redress: risk mitigation procedures
 Possibility of transboundary movements of GMOs
opened the possibility of international liability
management regimes
 Consider concepts such as significant damage,
likelihood, comparison to baseline, attribution to
operator, compensation, restoration,
environmental biodiversity (human health)
 Strict liability and innovation
 Countries may implement civil liability systems with
strict liability clauses
 Strict liability refers to those systems where
 Imposition of liability on a party without a finding of
fault
 Neither good faith nor the fact that the defendant took
all possible precautions are valid defenses
 Strict liability often applies to those engaged in
hazardous or inherently dangerous ventures
 Innovators and product developers may not invest
in those countries with strict liability clauses
Nagoya Supplementary Protocol on
Liability and Redress
 Supplement to the Cartagena Protocol on Biosafety
 Guides parties to implement administrative procedure
where competent authorities require operators to take
response measures in the event of damage
 Allows parties develop in their national laws civil
liability procedures
 Requires building/strengthening capacity to
 Define and assess damage
 Enforce response to damage
 Establish financials security mechanisms
 Establish risk management systems and instruments
3. Market and trade issues: Labeling
 Labeling of GM crops
 Labeling viewed as way of addressing some
consumer concerns including safety, religious,
ethical and the ―right to know‖ about foods
 Decision points for designing labeling systems
 Mandatory vs. Voluntary
 Product vs. Process
 Coverage
 Thresholds
 Decision options have a cost/benefit and
enforcement implications especially in developing
countries
Mandatory vs. Voluntary labeling of
GE food
 Voluntary systems preferred as only those truly
interested and willing to pay are targeted for
implementation
 Mandatory systems increase cost to society
without any consumer group discrimination
 Some studies show an increase of 10% of food
prices
 Complication: analytical methods to test for the
presence of GM products are not completely
reliable, lack sensitivity and are expensive
 Developing countries issues
 Many foods are sold unpackaged – labelling is
impractical
 With high illiteracy levels – labels are ineffective
 Where communications are poor and people are
uneducated raising public awareness about GMOs
is more difficult – question value of label
 Many countries often do not have the infrastructure
or financial capability to implement adequate
record keeping - controls
 Major issue: enforcement
4. Socio-economic issues
Motivations for the assessment of
socio-economic considerations

Technology approval
Technology
within biosafety
assessments regulatory processes

 For biosafety regulatory purposes one needs to

understand:
 the impact of the inclusion of socio-economic issues in
decision making
 The relationship /interaction with the risk assessment process
 Consider technology flows, opportunities lost due to
additional regulatory hurdles and who is impacted more
 Important distinction

An impact assessment For monitoring or

during the biosafety standard technology
regulatory stage needs evaluation purposes this
to be ex ante is a conventional ex-
post assessment

 What are the goal and objectives for socio-economic

assessments as related to biosafety or technology decision
making?
 Democratic societies‘ right to know vs. Freedom to operate
vs. Freedom to choose
What do we know from the economic impact
assessment literature to date? –

 A review of 187 peer

reviewed studies
 Different impact domains
 Farmers, household and
community
 Industry and markets

 Consumers
 Trade

Citation: Smale, Melinda; Zambrano, Patricia; Gruère, Guillaume; Falck-Zepeda, José; Matuschke, Ira; Horna, Daniela; Nagarajan, Latha;
Yerramareddy, Indira; Jones, Hannah. 2009. Measuring the economic impacts of transgenic crops in developing agriculture during the first
decade: Approaches, findings, and future directions. (Food policy review 10) Washington, D.C.: International Food Policy Research Institute
(IFPRI) 107 pages
IFPRI Food Policy Review
conclusions
 On average, profitable—but averages mask
variability by agro-climate, host cultivar, trait,
farmer
 Too few traits, too few cases/authors—
generalizations should not be drawn yet...need
more time to describe adoption
 Next decade
 Cross cutting issues for further study including
impacts of poverty, gender, public health,
generational
 Need for improved methods
 Bt cotton in the U.S. – First estimates
Total benefit estimates
(Millions US $)
300
Consumers
250
63 Industry 19%
200 36%
93
85 US Farmers
150
141 45%
Industry
100
80 97 US Farmers
50 Consumers
58 37 37 Foreign Farmers
0
-22 -12 -14
-50 1996 1997 1998
Falck-Zepeda, Traxler & Nelson 1999, 2000
Black Sigatoka Resistant Bananas in
Uganda
 If approval delayed,
forego potential annual
(social) benefits of +/-
US$200 million
 GM crops (food) with
tangible benefits,
increases consumers‘
acceptance of GM Photos copyright: Kikulwe 2009

banana for 58% of the

population
 Higher negative
perceptions amongst the
urban elite as compared
to rural producers
Kikulwe, E.M., E. Birol, J. Wesseler, J. Falck-Zepeda. A
latent class approach to investigating demand for genetically
modified banana in Uganda Agricultural Economics.
Publication Forthcoming 2011.
Bt cotton in Uganda
 Positive yield impacts on
net benefits
 Smaller IRR probably
explained due to low
initial yields – need to
improve overall cotton
productivity
Photos credit: © Horna 2009
 Probability of a negative
return can be as high as
38% with a technology
fee as charged in other
countries
Ex ante studies at a regional level

Country Crop/Trait Representative findings

West Africa Bt cotton • Countries are worse off by not adopting

• Smaller net benefits and returns than other
studies
• Negotiating downward the technology fee is key

India, China, Bt rice • Adoption gains are up to 10 times the level of

Philippines losses due to potential closing of export market to
and other trade sensitive countries
Asian

Falck Zepeda, J.B., D. Horna, P. Zambrano and M. Smale. ―Policy and Institutional Factors and the Distribution of Economic Benefits and Risk from
the Adoption of Insect Resistant (Bt) Cotton in West Africa.‖ 2008. Asian Biotechnology Development Review 11(1):1-32.

Falck Zepeda, J., D. Horna and M. Smale. ―Distribution of economic benefits and risk from the adoption of insect resistant cotton in West Africa‖
2008. African Journal of Agricultural and Resource Economics.
 Bt maize in the Philippines
 Growing Bt maize
significantly increases
profits and yields
 Significant insecticide
use reductions
 Adopters tend to be
larger, use hired labor
Change in economic surplus
are more educated,
(mill pesos)
have more positive Producer Surplus 7906
perceptions of current Seed Innovator 703
Total Surplus 8609
and future status Producer Share (%) 92
Innovator Share (%) 8

Bt maize studies in Philippines led by Dr. Jose Yorobe Jr. with 466 farmers in
16 villages Isabela Province, Luzon, So. Cotabato Province, Mindanao
 Bt cotton in Colombia
 Evidence of yield
enhancement rather than
pesticide reductions
 Bt farmers benefited
where the target pest is
economically important
Photos credit: © Zambrano 2009
 Sampling bias
important: adopters were
better– off farmers
 Institutional context
crucial
Source: Zambrano, P., L. A. Fonseca, I. Cardona, and E. Magalhaes. 2009. The
socio-economic impact of transgenic cotton in Colombia. In Biotechnology and
agricultural development: Transgenic cotton, rural institutions and resource-poor
farmers, ed. R. Tripp. Routledge Explorations in Environmental Economics 19.
London: Routledge. Chapter 8. Pp. 168-199
 Bt maize in Honduras
 Excellent insect control
 Bt yield advantage was
24-33%
 Bt maize yields preferred
even by risk averse
producers
Photos credit: © Sanders and Trabanino 2008
 100% higher seed cost
than conventional hybrid
 Institutional issues
important
―Small ―Resource-Poor‖ Countries Taking Advantage of the New Bioeconomy
and Innovation: The Case of Insect Protected/Herbicide Tolerant Maize in
Honduras.‖ Jose Falck Zepeda, Arie Sanders, Rogelio Trabanino, Oswaldo
Medina and Rolando Batallas-Huacon. Paper presented at the 13th ICABR
Conference ―The Emerging Bio-Economy‖, Ravello, Italy June 17-20, 2009.
Institutional and productive issues that
can define adoption and its impact
 Information about the technology
 Information about marketing and other consumer
issues
 Extension services
 Credit
 Productive inputs (fertilizer, pesticides,
herbicides..)
 Technology fees and seed prices
 Intellectual property issues
 Seed systems and competition
 IFPRI/PBS socio-economic research
and policy making
Uganda oBt cotton study
o Presentation of synthesis of cotton impact
studies globally
Philippines o Bt maize studies
o Cost of compliance and discussions on the
system‘s efficiency
Kenya and Malawi o Ongoing/planned Bt cotton studies
o Planned synthesis presentations/seminars

ECOWAS/WAEMU oPlanned study on impact of harmonization

efforts in COMESA
o Potential impact of Bt cotton introduction in
West Africa (WB discussions)
APEC/ASEAN Trade studies – rice
India o Labeling and trade work
o Farmer suicides discussion paper
Protocol level o Mexico expert meeting to discuss socio-
economics in 2008…..
o Supported survey
 Socio-economic considerations and the
Cartagena Protocol on Biosafety (Article 26.1)
SOCIOECONOMIC CONSIDERATIONS • Relate to import
1. The Parties, in reaching a decisions
decision on import under this • Domestic laws
Protocol or under its domestic and regulations
measures implementing the
Protocol, Voluntary …it is
may take into account, not
mandatory
consistent with their international
obligations,
Especially WTO
socio-economic considerations
arising from the impact of living
modified organisms on the Strictly a
conservation and sustainable narrow scope
use of biological diversity,

especially with regard to the value Impact

of biological diversity to parameter??
indigenous and local communities. Focus??
 Another important distinction
 Article 26.1 of the  National laws,
Cartagena regulations, policies
Protocol and and implementing
(future) derived regulations
agreements
Limitation is the text Relatively few
of Article 26.1, other limitation except
international binding binding
international international
agreements (WTO) agreements (WTO)
and existing laws,
regulations, policies
 Practical structural and governance decision for
socio-economic inclusion in the decision making
processes
Issues Options
Type of inclusion • No inclusion vs. Mandatory vs. Voluntary

Scope • Narrow interpretation article 26.1

• Narrow set of socio-economic issues
• Broader set of assessments (SIA or SL)

Approach • Concurrent but separate vs. Sequential vs. Embedded

• Implementation entity

Assessment trigger • Each submission vs. Event-by-event

When • Laboratory/greenhouse vs. CFTs vs. Commercialization

• For post release monitoring
• At all stages?

How? • Choice of methods for ex ante assessments is much more limited than for
ex post
• Decision making rules and standards
• Method integration, standards, tolerance to errors
 Potential implications from the inclusion of
socio-economic considerations into decision
making
 Regulatory costs will increase
 Potential regulatory delays can reduce
 Number of technologies
 Number of technologies released by the public sector -> crops
and traits of a public good nature
 Potentially introduce more uncertainty to the process
 May lead to an unworkable system if rules and
standards are not clear
 Society gains information on technology impacts

What will ‗society‘ do with this information?

What can a decision maker do with
the results a socio-economic
assessment?
SEA Negative Socio –
Economic Not approval
Assessment
+
Biosafety
assessment
BA renders product
Require more
as safe
information

 What is the decision making rule and the standard by which to

guide such decision?
 Who is the best person to make this decision? Is it a regulator,
decision makers, or the persons who will endure the risk and the
benefits of the technology…farmers?
What can a decision maker do with the results
a socio-economic assessment?...continued
Not approve
Negative Socio –
Economic
SEA Assessment due
to institutional
issues

+ Require more
Biosafety information
BA assessment
renders product
as ―safe‖

Approve after
resolving
institutional issues

Considering that….
 Socio-economic assessment include quite a bit of art in a process that
uses science and scientific tools
 Lots of uncertainties and subjectivities
 Key Messages
 Robust evidence based priority setting and R&D
capacity analysis are critical for decision making
 Adoption of GE biotechnologies has been overall
positive, but results are variable…no different than any
other past technology release
 Benefit variability significantly influenced by market,
management and institutional issues
 Systematic understanding of all potential implications of
issues impacting GM crop adoption and diffusion in
SSA is critical
 Prudent to judge technology by its own merits
 Think about crops and traits of interest to developing
countries
Key messages
 Article 26.1 of the Cartagena Protocol
 is not mandatory
 has a very specific scope, target and objectives focused on
biodiversity
 National laws and regulations may incorporate socio-
economics
 If decision is inclusion then need to focus on
 Implementing regulations and consequences from inclusion of
socio-economic
 Addressing transparency, feasibility, decision making
standards
 Ensure capacity to conduct feasible socio-economic
studies in a cost efficient and timely manner