INTERNATIONALBANK FOR WORLD BANK R E T C N O E N STRUCTION PM AND DEVELO May 2006 No. 90 A regular series of notes highlighting recent lessons emerging from the operational and analytical program of the World Bank's Latin America and Caribbean Region INSTITUTIONAL REFORM OF AGRICULTURAL RESEARCH AND EXTENSION IN LATIN AMERICA AND THE CARIBBEAN Johannes Roseboom, Matthew McMahon, Indira Ekanayake, and Indu John-Abraham The push towards institutional reform was stimulated by numer- Background ous external factors, forcing this evolutionary process (See Box The Latin America and Caribbean region (LAC) has been 1). After a period of strong support in the 1960s and 1970s, undergoing an evolutionary process in its agricultural re- public funding for research and extension activities in LAC search and extension systems in recent years. This transfor- began to wane in the 1980s and 1990s. The strained economic mation of agricultural innovation systems has been explained context for many countries required the search for more cost- metaphorically as following the nature of an "intelligent living effective and efficient strategies for producing, disseminating organism" that must learn and adapt to changes in its environ- and applying new knowledge and information in agriculture. At ment in order to be successful. What was once a linear the same time, the demand for innovation became all the more process, driven by a top-down action plan where research and pressing, as increased global competition required improve- advisory services were dominated by government agencies, is ments in agricultural productivity. Consequently, many coun- slowly being transformed into a network of diverse stakehold- tries in the region in recent years have sought to revitalize their ers influencing the process of agricultural innova- agricultural research and extension systems through a series of tion. Traditionally, the unidirectional process of research and extension has been initiated by an Box 1: Drivers of Reform agricultural agenda defined by the central govern- ment, for which the national agricultural research The 1990s was a period of significant transition for LatinAmerica and the institutes (INIA for its Spanish acronym) were tasked Caribbean (LAC). After leaving behind authoritarian rule, many LAC with identifying strategies to address these priori- countries were embarking on a process of democratization and trade ties. The research was then implemented and finally liberalization. These systemic changes resulted in dramatic repercus- its results disseminated to the farmers for adoption. sions in the development of agricultural research and extension systems The current incarnation of agricultural innovation in the region. Most notably, agricultural innovation systems were systems have been typified by the engagement of a impacted by: wider set of actors, including universities, farmers, Free trade and globalization, which increased competition and input suppliers and other private sector interests, demanded producers to maximize their true comparative advan- who offer their unique insights to feed the process of tage; innovation in a practical and demand-driven manner. Fiscal restraints, due to economic crises, that reduced and de- As such, the concept of "innovation" extends be- manded more efficient use of public resources; yond the formal research and development (R&D) to Greater role of the private sector in the provision of specialized more effectively incorporate learning through experi- services; ence, which has proven more circular in nature, with Decentralization, with increased responsibilities and resources the intention of more directly contributing to im- being devolved to the local level; and, proved rural livelihoods. On the institutional side, Civic participation in decision-making processes at all levels. these reforms have led to greater specialization, with These factors stimulated the reform process in the region to allow the policy formulation, financing and implementation agricultural sector to keep pace with the changing demands of its new being increasingly separated from one another. environment. 1 institutional reforms, with particular attention given to the researchers, which has resulted in a greater diversity of actors sustainability of funding for these services. Reflective of the (from both the public and private sectors, including universi- drivers of reform, the focus has been on the following prin- ties, non-governmental organizations (NGOs), producer orga- ciples: i) diversification in execution and funding; ii) allocation nizations and other organized village-level communities includ- of funding on a competitive basis; iii) demand-driven financ- ing women's' groups) competing for these resources. By ing; iv) empowerment of local communities; and, v) increased opening the pool of possible candidates, the awareness and private sector participation in implementation of the reform competition for these grants has become more intense, creating agenda. greater specialization among institutions based on compara- tive advantage. As seen in Table 1, the INIAs have faced A series of case studies from the LAC region, including Brazil, growing competition from other research institutions, muster- Chile, Colombia, Ecuador, Mexico, Peru and Venezuela, were ing only about half or less of the competitive funding available. conducted to review these institutional reform experiences in agriculture and dis- till lessons learned to further advance agricultural innovation systems in the region. The following summarizes some of the key trends in both agricultural research and extension based on the analysis of these varied country experi- ences. Innovations in Agricultural Research Improved Client-Orientation and Participation In recent years, competitive science and technology (S&T) Many of the competitive S&T funds have incorporated in- funding schemes have transformed the traditional practice of creased participation of beneficiaries, namely farmers, includ- lump-sum government grants for publicly-funded research into ing women farmers who are often underserved, and other a more robust and demand-driven system. The competitive producer organizations, in various aspects of agricultural re- S&T funding schemes have improved the incentive structure search, especially in the identification of priorities and sources of grants for potential grantees, thereby promoting the im- of financing. The greater attention given to the opinions and proved quality of research. The competitive funds for agricul- involvement of clients in research projects has contributed to a tural research have contributed significantly to: i) improved more responsive and pragmatic agenda to address key needs governance; ii) greater diversification of research suppliers; iii) of the producers. In order to more effectively reach their target improved client-orientation; and, iv) increased cross-institu- beneficiaries, many countries, including Brazil, Chile, and tional collaboration. Mexico, have adopted more demand-driven approaches for their funding structures (See Table 2). Improved Governance New rules and norms have taken shape with the introduction of Increased Cross-Institutional Collaboration competitive funding schemes in agricultural research and tech- Many competitive agricultural funding schemes have encour- nology transfer activities. Rather than the research priorities aged greater collaboration among research institutions by being defined almost solely by the national research agencies, favoring joint proposals and innovative strategies for partner- the increased participation of other key stakeholders has ships with other key stakeholders, such as farmer associations, expanded the decision-making role of private research entities NGOs, as well as relevant international counterparts. in defining priorities. Researchers and research agencies also Agricultural research systems have made strides in the right have had to adapt to the competitive grant process, and as a direction to be innovative and produce demand-driven re- result, the quality of research proposals and the management search, but the need to keep pace with advancement in related of the resources have improved. This increased competition sciences, such as information technology and communica- also has caused national agricultural research organizations to tions, has lagged. The increased involvement of the private become more agile and results-oriented in order to effectively sector could facilitate this process, and consequently, requires compete for these limited resources. The competitive funds particular attention. also have increased the level of transparency and objectivity in the selection process, by requiring that all proposals be re- Innovations in Agricultural Extension viewed by external, technically competent reviewers, and the final selection is made public. Such processes, however, come The failures of agricultural extension services in the Latin with a price as they require a larger overhead to manage and America and Caribbean region during the 1980s resulted in monitor the grants systems. dramatic changes in the nature of the extension business. The lack of active involvement of farmers, coupled with ineffi- Greater Diversification of Research Suppliers ciency, due to excessively bureaucratic procedures, poor plan- Competitive funds allow for the expansion of the supply of ning and low capacity levels of human resources, yielded 2 limited returns. Consequently, the institutional reforms pur- wards market opportunities in response to greater trade liberal- sued in the region essentially dismantled existing structures, ization. In Chile, for example, extension agencies offer each and rebuilt new models to support technology and knowledge farmer assistance in developing a business plan to support the diffusion among economic viability farmers. of their farm. Over the course of ap- Decentralization proximately four to Common to the ex- five years, that perience of most farmer will receive countries in LAC continuous and in- has been the trend tensive assistance towards decentrali- to facilitate this tran- zation, including sition. that of agricultural extension services. Co-financing By bringing advi- Co-financing of ex- sory services closer tension services is to its clients, infor- becoming more mation is readily and commonplace in the easily accessible to LAC region, yet farmers and be more there are important tailored to their spe- distinctions that de- cific needs (See Box fine what should be 2). However, the levels of decentralization vary widely from paid for and who should pay. For example, specific advice country to country. Asingle extension model does not work in provided to individual clients would suggest that the service is all instances and for all countries, and the country context a private good. At the same time, the adoption of environmen- defines what works best. tally-friendly technologies may be more in the common good, suggesting the need for public financing. The ability to pay also should distinguish the level of co-financing. Poor Box 2: Civil Associations for Extension in farmers may still receive advisory services for free, at a Venezuela nominal fee or through in-kind contributions, while wealthier producers may be requested to pay a substantial Venezuela has introduced a new decentralized system of agricul- portion, if not all, of the cost of the service. Through the tural extension through the creation of locally managed Civil Peruvian Agro-Innovation and Competitiveness project Associations for Extension (or ACEs for its Spanish acronym). (INCAGRO), for example, the Government has sought to The ACEs are legal entities comprised of representatives from the create or strengthen an agricultural advisory services mar- municipal governments as well as beneficiaries of the extension ket by paying up to 75 percent of project costs through services. The responsibilities have gradually increased from competitive funds, while requiring the direct beneficiaries participating in the preparation of the municipalities' annual exten- to pay or mobilize the remainder, thereby creating a culture sion plans, approving these plans, evaluating the performance of of payment for demanded services. Payment, at least in the implementing agencies, to finally selecting and directly con- part, by farmers to receive advisory services, will likely tracting the implementing agencies. With their increased respon- make services more client-oriented, and better identify sibility in extension activities, the ACEs have become more em- demand and manage quality control of services. powered and a valuable resource, as demonstrated by their dis- cussions with high level officials in the Ministry of Agriculture Outsourcing and the National Rural Development Institute during national A characteristic of recent agricultural extension reforms in budgetary crises. Not only that, they have been able to access the LAC region has been the outsourcing of advisory additional funding from other government programs. services to NGOs, farmer organizations, private busi- nesses, etc. Generally, public resources are used to fund competitive contracts of local service providers of exten- Client-Orientation sion services. This requires the transition from a highly central- In order to better meet the needs of farmers, extension services ized and integrated structure to a clear separation among the in recent years, have adopted a more demand-driven approach policy, priority setting, and implementation entities within the by incorporating farmers as active partners in identifying the government. Venezuela has demonstrated a new model for priorities for advisory services. As such, extension services decentralized and demand-driven extension services. The have extended beyond technical information on agricultural municipalACE offices contract extension services, mainly from production to also include guidance on a wider range of issues, private firms and NGOs, which has increased the ability of such as financial and economic concerns, among others. In beneficiaries to choose service providers that best meet their fact, most countries have geared advisory services more to- needs. Other countries have followed similar models with 3 increased private sector participation. Consultations with ers towards a demand-driven way of thinking about agricultural farmers as well as the use of market mechanisms have sup- innovation systems. The agricultural institutional reforms ported the definition of service priorities by users of advisory discussed above are sustainable only when there is broad services. Outsourcing also demands considerable organiza- participation and investments from both the private and public tional and managerial capacity within the government. Clear sectors. The roles of the various stakeholders must be clear and and transparent procedures and regulations governing the concretely defined in order to secure their effective engage- bidding and selection process, as well as monitoring and ment. evaluation of the contracts, are critical to successful outsourcing schemes. Policy and Institutional Framework Agricultural research and extension systems have had to adapt Future Trends and Challenges and modernize to confront the challenges of rapidly changing agricultural markets, and turn them into opportunities. To Trade Liberalization achieve institutional and technical innovations, concurrent and The rise of free trade agreements in the region has stimulated supportive modifications in the policy framework are needed in greater demand for agricultural innovation. Agricultural re- the national context. For example, countries must establish search and extension services are increasingly shaped by proactive policies to capture potential "spill-ins", in order to market demands for improved quality, cleaner or more special- facilitate the adaptation of technology and information devel- ized (e.g. ­ organic, eco-friendly) production. Producers are oped elsewhere in the world. more market-oriented, and consequently, are requiring the same of national innovation systems, and consequently, put- Amongst those challenges mentioned above and the lessons ting more demands on national innovation systems. learned from two decades of reforms in agricultural research and extension is that institutional Fast Pace of Technology experimentation and change is Science and technology are a permanent fixture. The pro- rapidly evolving, particularly cess of innovation has in the areas of telecommuni- evolved from a linear to a cir- cations and biotechnology. cular approach, where the New information and research "feedback loop" encourages quickly replace the knowl- learning from various sources edge of yesterday. As such, and through all stages of the countries face increased pres- process. To meet the overall sure to stay on the cutting challenges posed by these edge of innovation to remain changes, new partnerships, competitive. The develop- rules and regulations, and new ment of human capacity forms of innovation are re- proves paramount to staying quired, and the adoption of an ahead of the curve. innovative system perspec- tive is the way forward. Sources of Funding Traditional funding sources for public research and extension Notes systems have a continued and well-justifiable role to play to meet the needs of the rural poor. The competitive grant This article is based on the report ­ World Bank. 2005. Institu- schemes, which have proven to be efficient funding instru- tional Innovation Experiences in Agricultural Innovation ments in the LAC region, need to be complemented with a Systems in Latin America and the Caribbean. Washington, DC: sustained level of public funding, as they generate innovation World Bank, which was supported by FAO-OTT funds and of a public good nature. At the same time, there are various WB-LCSES rural funding. Additional support for the produc- opportunities to explore alternative or additional sources of tion of this En Breve was provided by the WB-FY06 ARD TG funding. For example, resources generated through the use of grant, theARD SASKI Thematic Group, LCSES Rural Unit and intellectual property rights, such as patents, trademarks, or the LAC Knowledge Management Group. plant breeders' rights, could be reinvested into the public research system. Not only that, as agriculture has demanded a broader range of innovations, resources from other sector About the authors ministries invested in innovation has impacted on agriculture. This, in turn, has resulted in greater integration of agriculture Johannes Roseboom is an Innovation Policy Consultant; Mat- into the broader national S&T system. thew McMahon is a Lead Agriculturalist and Indira J. Ekanayake is a Senior Agriculturalist in the Agriculture and Sustainability of Agricultural Institutional Reform Rural Development (ARD) Group of the Environmentally and Conceptually, the sustainability of agricultural institutional Socially Sustainable Development Department (LCSES). Indu reform has to be driven by a concerted effort by all stakehold- John-Abraham is a Consultant in the Latin America and Carib- bean Region of the World Bank. 4