Sustainable Productivity growth and Innovation

Frank van Tongeren

head of division Policies in Trade and

Agriculture

OECD-ASEAN Regional conference on agricultural policies to promote food security and agro-forestry productivity Seoul 12 – 13 October 2015

Sustainability and productivity are widely

shared concerns

2

• Innovation – widely defined – is key

• Need to look at comprehensive set of factors influencing

innovation, sustainability and productivity

TFP growth is the main source of global

agricultural production growth

Source: Data provided by Keith Fuglie, cf. Fuglie, Keith O.(2012). "Productivity Growth and

Technology Capital in the Global Agricultural Economy." In: Fuglie K., Wang, S.L. and Ball,

V.E. (eds.) Productivity Growth in an international perspective, CABI. 3

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1961-20091961-19701971-19801981-19901991-20002001-2009

Global production

annual growth rate %

TFP

Inputs/Land

Irrigation

New Land

Agriculture innovation

• The two sides of the coin

– it pushes out the production possibility frontier (innovators): Large returns to R&D, especially when accompanied with extension, but long time lags for basic research

– Better farm management practices to move closer to the frontier (followers)

• Innovation also helps improve sustainable use of natural resources,

– e.g. water management, no-till agriculture

– and adaption to climate change, e.g. drought or heat resistant varieties

• Innovation reducer losses along the food chain (storage, ICT, improved adaptation to demand),

• and helps improve nutritional attributes of food (GR) and ensure food traceability and safety (nano, ICT)

4

Impact of public investments in terms of:

Agricultural performance Poverty reduction

Returns to public investment are high

0 2 4 6 8

Electricity

Irrigation

Telecoms

Roads

Education

Agricultural R&D

CHINA

Rate of return

0 4 8 12

Irrigation

Poverty loans

Electricity

Telecoms

Roads

Agricultural R&D

Education

CHINA CHINA

Number of people (M)

5

The impact on performance is measured as returns to one monetary unit of different types of public

spending in terms of increased agricultural GDP. Poverty reduction is the reduction in the number of

poor people per 10 000 yuan spent.

Source: FAO, SOFA 2012.

… but most support to agriculture goes

directly to producers - not to long-term

investments

OECD Trade and Agriculture Directorate

Total Support Estimate 2012-14, percentage of GDP

Source: OECD (2015), "Producer and Consumer Support Estimates", OECD Agriculture statistics (database),

http://dx.doi.org/10.1787/agr_pol-2015-en

www.oecd.org/tad

Trade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

• OECD framework to review government role in

‘future-proofing’ of the sector

• Country reviews completed so far: Australia, Brazil,

Canada, The Netherlands.

• In the pipeline: China, USA, Turkey

www.oecd.org/tad

Trade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

Improving agriculture productivity and sustainability

www.oecd.org/tad

Trade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

Improving agriculture productivity and sustainability

Macroeconomic, governance,

regulatory, structural, capacity

building policies…

…are a major element of the

overall enabling environment for

businesses,

…creating incentives (and

disincentives) for investments

…that contribute to innovation and

sustainable growth in all countries.

www.oecd.org/tad

Trade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

Improving agriculture productivity and sustainability

Agricultural polices

Production linked domestic and

trade measures

…impede structural change and

…encourage intensive use of

resources.

Current policies seldom target

sustainability outcomes directly,

www.oecd.org/tad

Trade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

Improving agriculture productivity and sustainability

Agricultural innovation polices

Improve the governance of agricultural

innovation systems, and coherence

Invest in R&D with public good aspects.

Provide targeted incentives to private

investment in innovation (e.g. IPR, PPP).

Provide knowledge infrastructure and

facilitating knowledge flows.

Facilitate adoption through education,

training, and extension (and ensuring an

enabling environment).

Strengthen cross-country cooperation; share

costs, enhance knowledge flow

www.oecd.org/tad

Trade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

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Afr

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Mex

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Bra

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Farm finance Agricultural R&D Land market rights and access Agricultural infrastructure

Sources: EIU, IFPRI &

Millennium Challenge

Account

The enabling environment in the region lags behind some peers

Normalised difference to average index values (0=average, 1= 1 stdev from average, etc)

www.oecd.org/tad

Trade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

• Short term policy challenges: production and

farm income

• Long term policy challenges: improve

productivity, sustainably and facilitate structural

change

• Both challenges should be addressed coherently

• The ‘framework’ can help identify constraints and

actions

• At level of the region

• At level of individual countries

Challenges for ASEAN

www.oecd.org/tad

Trade and Agriculture Directorate

Organisation for Economic Co-operation and Development (OECD)

2015-16

• Application of OECD framework to review Agricultural

Innovation System in ASEAN countries in collaboration with

SEARCA

• Assessment of economy-wide enabling environment for

agricultural productivity growth

2016-17

• Application of OECD framework for a comprehensive policy

review to improve productivity growth and sustainability in

three ASEAN member countries

OECD Project: Sustainable productivity

growth and innovation in ASEAN

15 15 15

Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org

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