funding innovation mechanisms · 2013. 4. 8. · 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09...

Funding Innovation Mechanisms

The case of URUGUAY

Diego Risso - CEO

April, 2013

› Founded in 1994

› Association with 42 members

› Main activities:

› Represent Members

› Collect royalties

› Enforcement

› Communication

› Advise and support

3

30/35°

Location in the world

Gateway to the Region

Uruguay

A safe, reliable and competitive location,

providing an ideal logistics base in the heart

of the wealthiest region of South America

4

0

2000

4000

6000

8000

10000

12000

14000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Exports of goods and services (US$ million)

Strong Growth of Exports

Source: Uruguay XXI

69% Agribusiness Products

Uruguayan GDP (annual growth %)

7.5%%

4.1%

6.5%

7.2%

2.4%

8.9%

5.7%

4.0%

2005 2006 2007 2008 2009 2010 2011 2012J

6,3% average annual growth

Main production goods:

Beef

Dairy

Grain

Wool

Seed

Uruguay & Agribusiness

1st Rice exporter

2nd Beef exporter

3rd Wheat exporter

4th Soybean exporter

One of the most powerful agribusiness countries in South America

7

pastures

Agribusiness in figures

85% of total land usage

10% of the country’s GDP

69% of total country exports

3 million hectares crop production

5 million hectares potential

US$ 130 million seed market value

8

Legal framework (seed and biotech)

Member of ISTA, UPOV, OECD, AOSCA, IPPC

Strong institutions «Institutionality» : INASE, INIA, CUS, ANAPROSE, URUPOV

Affiliations: ISF, SAA

Uruguay:

“A seed overview” 1

Business under expansion

“High Tech Farmers”

Technical expertise

Agricultural Conditions

Temperate weather conditions

Storage and conditioning infrastructure

Uruguay:

“A seed overview” 2

Seeds Market U$D million

To d a y : U $ D 1 3 0 m i l l o n

Legal Framework & Seed Regulations

Origin and development of PBR

UPOV – ´78 Act 1994

TRIPs / GATT - (WTO) 1995

Seed Act - 16.811

Seed Act - 18.345

Since1982

1997

2009

Regulatory Decree – 438

Regulatory Decree – 385

2004

2009

UPOV 1978 Act

+

UPOV 1991

Some definitions

Provisional protection

Extension of PBR to harvested material

All genera and species

Farmers privilege definition

20-25 years of protection

Exhaustion of PBR

E.D.V X .

X .

X .

. .

.

.

.

UPOV 1978 Act ++

According to the official 2008 definition by the govenment, a Family Farmer is a

person who meets the following requirements simultaneously:

- Farms with a maximum of two fulltime salaried workers or their equivalent in

part-time workers (500 workdays annually)

- Cultivates an area up to 500 hectares, according to a productivity index,

under any form of tenure

- Earns his/her main income from cultivating/producing the land.

- Lives on the farm or no more than 50km away.

- Registered at the Ministry of Agriculture

Small Farmer definition

1912 – Public breeding – German Breeder invited by the government of Uruguay

1961 – Public research institute under the Ministry of Agriculture

1989 – INIA Public-Private initiative (government + farmers)

1990 – Seed companies screening and testing varieties to release

2003 – Second wave of privates companies and new models of licensing varieties

Plant breeding timeframe

Licensing:

Examples in Uruguay

“Coexistence” of models

The case of wheat:

› INIA

› Seed Co.

› Growers Cooperatives'

› «Multi-parties»

Main crops area

(Ha)

-

200

400

600

800

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

Wheat Barley Corn Sunflower

Sorghum Rice Soybean

Thousands Ha. Leading

cases

Where the seed

comes from?

Some figures…

Population (million) 3,3

Surface (Km2) 177.410

Potential Cultivable Area (ha) 4.000.000

Current Cultivable Area (ha) 2.000.000

Total # of Farms 50.000

# of farms - Crops 6.500

Soybean (ha) 1.300.000

# Growers - Soybean 2.300

Wheat (ha) 500.000

# Growers - Wheat 2.500

*

*

Pareto's Principle… The 80/20 Rule - Wheat

* 1.700 Growers < 100 ha

"vital few and trivial many"

Buy

Seed Sowing Harvest FSS

Seed Planted

as FSS

May June Dec. May – Jun. Oct - Dec.

Invoice &

Payment

Signature of

Contract

The “Technologic Value System” (ERS)

Outline

› Payment of the Extended Royalty

Invoice & Payment

The “Technologic Value System” (ERS)

› At sowing time

Inform the sowed Kg. (as FSS) and location of sowing area.

› At harvest:

Declare the quantity of grain harvested + FSS + place of storage.

› When purchasing seed:

Signature of the contract Information of the general terms of the system.

› Agreement between parties (Breeder / Grower)

› System based on Mutual Trust

› FSS right is not affected, grower does not need to ask for

permission to do so.

› Since 2009/10: Farmers Privilege

Highlights

«Numbers & Figures»

Wheat area evolution

8% --------------------------------- Área ERS-------------------------------- 92%

Fuente: DIEA/URUPOV

0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009 2010 2011

He

ctar

eas

(e

n m

iles)

Total

New varieties

Certified seed vs. FSS

Fuente: DIEA/URUPOV

Evolution of royalties paid vs. area planted

Wheat

32

Evolution of royalties paid vs. area planted

Wheat

0%

20%

40%

60%

80%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011

Royalties collected No royalties collected

95% Royalties

collected

33

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Royalties collected No royalties collected

Soybean 94% Royalties

collected

95%

› Information: Licence; Contracts and Audits

ENFORCEMENT

Control System

«Tag and stamp in the bag»

Software Mobile


› Key role INASE

› Task Force – interaction w/INASE

ENFORCEMENT

Gentileza: MAPA Brasil

› Key role INASE



› DNA Techniques (microsatelites)

ENFORCEMENT

Field testing “post-control”

Cultivar Porte Color Pub.

Abullo Tamañofolíolo

Intensidadde Color

Forma Semilla Color de Flor

Denuncia Semierecto Gris Medio medio Oscuro Esférica Violeta

Caso 1 Semierecto Gris Medio Medio Oscuro Esférica Violeta

Caso 2 Semierecto Gris Medio Medio Oscuro Esférica Violeta

Declarac. Erecto Castaño Débil Pequeño Medio Alargada Blanca

Cultivar Peso(MS gr.)

Denuncia 222

Caso 1 227

Caso 2 220

Declarac. 180

Genotipo 30 70 175 226 534

Microsatélites analizados

Denuncia AB BB AA AB AB

Caso 1 AB BB AA AB AB

Caso 2 AB BB AA AB AB

Declarac. CD AA BB A BC

DNA fingerprinting testing

› Key role INASE




› “The Black List”

ENFORCEMENT

IN

OUT

«The List»

› Key role INASE





› Satellite images - under developement -»

ENFORCEMENT

Enforcement by GPS

ENFORCEMENT

› Key role INASE





› Setellite images

› Communication

› Interaction with neighbour countries (same associations)

Key factors for SUCCESS !!!

Commitment among «seed stakeholders»

Farmers receptiveness

Specific tax benefit: Growers can deduct 1.5 times the cost of

the seed in their balance sheet

Updated legal framework and Contracts

Scale and «face to face» visits

Signed declarations

Key factors for SUCCESS

Government role

Comunication and outreach

Enforcement (effective tools)

New varieties released every year

Royalty level & Value (1% of total crop cost) – 4,5 U$D/Ha.

Software: robust and «customized»

Possible Threats to the System…

Lack of support from farmers

Lack of union among Breeders

Government interference: system that is “an agreement“ between private parties

Weak regulatory framework

Lack of enforcement (Breeders and Government)

Lack support of URUPOV members with the association (financial &

information)

Royalty pricing (Cost/Benefit of the technology)

A successful story

Balance and effectiveness on PBR

Protection Access

An incentive for innovation Promotes breeding & licencing

05

10

15

20

25

30

35

40

45

50

55

60

65

1989 1991 1993 1995 1997 1999 2001 2003 2005 2008 2010

Year

nu

mb

er

of

ap

plic

ati

on

s

Foreign National

UPOV ´78 Act

# of applications for PBR National and Foreign varieties

Source: INASE 2010

Protected varieties by origin

100% = 454

Source: INASE 2010

0%

10%

20%

30%

40%

50%

60%

70%

80%

National Foreign

27%

73%

# of Seed Co. same %

Farmers

Breeders

Seed Producers

Retailers Government

- INASE

URUPOV

Institutions

A platform that ensures genetic

progress and profits

# of Varieties (w/PBR)

# Breeders Farmers

Breeders

Seed Producers


- INASE

URUPOV

Institutions

Wheat

Soy

Yield evolution (Kg/ha)

Farmers

Breeders

Seed Producers


- INASE

URUPOV

Institutions

We have succeeded in

generating a culture for the

payment of royalties and respect

for PBR…

And now, is time to work

towards …

… a system for Value Capture for

biotech traits & plant varieties

› URUPOV Position paper on value capture

› Work in progress

Thank you all !

www.urupov.org.uy

funding innovation mechanisms · 2013. 4. 8. · 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09...

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