The benefit of intellectual property rights in agriculture

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12 October 2018

It is estimated that the world population will be close to 9 billion in the year 2050. That is an increase of 40% in the global population which will require a 70% increase in food production. This comes as a challenge, since climate change and population increase are reducing the availability of water and arable land. The world, therefore, needs to produce more with less which can only be done if agricultural innovation is maximized in the areas of seeds, biotechnology, crop protection, resource-saving agricultural practices, storage and transportation. This poses a major challenge in which intellectual property (IP) will undoubtedly play a role, but will it have a positive or negative impact on the future of the agricultural sector?

Plant science companies typically invest about 15% of their annual turnover in seed-related research, and the development of new varieties takes approximately 8-15 years before it is commercially viable. These companies are prepared to take these kinds of financial risks, because intellectual property rights (IPRs) are key to attracting investors and the return on investment makes it worth the cost of developing new technologies and varieties. IPRs are therefore an important mechanism to recoup the substantial costs of research and development in agriculture.

On the flip side, it is argued that IPRs increase the price of these crops meaning that the uptake into the market is slow and sometimes low. Short-term benefits to the farmers, consumers and other downstream users would probably increase by lower seed prices, but that would probably lead to a tapering off of innovation, since the inventors will not be able to recoup their investments or reinvest into new technologies. After all, innovation is ultimately driven by a promise of return on investments.

A study compiled by Steward Redqueen investigated a case of a patented hybridization technology by INRA to make oilseed rape hybrids producing higher yields. The study investigated the socio-economic impact of the hybrid oilseed rape on the farmers and downstream users and what influence IPRs had on them versus the benefits to INRA. INRA allowed their technology to be the subject of non-exclusive licensing.

Interestingly, it was found that non-exclusive licensing of the technology showed the most positive impact for both innovator and farmers. The patented oilseed rape was adopted by 83% of farmers and yielded € 1.2 billion over the patent life, whilst about 80% of this revenue accrued directly to the farmers and downstream users. The Steward Redqueen study further investigated the case of exclusive patent use and where no IPRs are involved and concluded the following: Exclusive patent use would result in about 20% less benefits to the farmers and downstream users for a somewhat higher probability that innovation will continue because of the return on investment for the innovator. Where no IPRs are involved, the total benefit to farmers and downstream users would have increased to about 90%, but it is unlikely that a patented technology would have been developed, because there is no incentive to the company developing the technology.

This study would then suggest that a balance can be achieved through non-exclusive licensing, which benefits both the farmers, downstream users and the innovators. Another benefit of non-exclusive licensing may be that the total time and cost the company has to undertake to get the patented technology to market, is shared and therefore these technologies may reach the market faster.

The optimal IPR use ultimately depends on the particular technology and the market it is intended for. What may work for Europe will not necessarily work in Africa and elsewhere, making it paramount that creative methods are developed and encouraged for the sharing of IPRs in technology and research if the agricultural sector is to keep up with the projected demand.

Christina Louw
Candidate Attorney
Patent Department
Tel +27 11 324 3167