Market Regulation Dissonance: The Architecture of Pakistan’s Seed System

Ahsan Rana,a David J. Spielman,b and Fatima Zaidib

a Lahore University of Management Sciences, Lahore, Pakistan

b International Food Policy Research Institute, Washington, DC, USA

Presentation at a panel discussion on

“Addressing the Needs for Sustained and Rapid Agriculture Sector Growth in Pakistan”

International Food Policy Research Institute

Washington, DC, October 22, 2014

Green Revolution in the 1960s – 1970s

Introduction of high-yielding, fertilizer-responsive, semi-dwarf rice and wheat cultivars

Complementary provision of inorganic fertilizers, irrigation, advisory services

Production incentives through price supports

Slow Revolution in the 1990s – 2010s?

Concerns about slow varietal change between modern varieties

Cf. Heisey 1990; Heisey et al. 1997; Farooq and Iqbal 2001; Khan et al. 2002; Battese et al. 2014

Concerns about greater vulnerability to new pest and disease threats

Frequent weather shocks, climate volatility, long-term climate change

Diminishing natural resource base; unsustainable soil nutrient, groundwater extraction

Changing demand from farmers and consumers

Background

Supply-side challenges

Complex legislative framework governing cultivar improvement, seed provision

Weak regulatory system governing varietal release, biosafety, IP use

Insufficient investment in plant breeding, agronomy, biological/molecular sciences

Poor policy support for private enterprise development and seed marketing

A summary of the problem

Release of varieties and hybrids, 1933–2013

Source: Authors, based on FSC&RD data

Crop Pre-1970 1970–1979 1980–1989 1990–1999 2000–2009 2010–2013 Total

Wheat 0 13 20 35 44 22 134

Cotton 2 9 11 28 32 27 109

Pulses 0 0 8 26 32 6 72

Oilseed 0 0 8 31 15 6 60

Vegetables 3 2 2 30 15 5 57

Sugarcane 0 0 3 15 15 6 39

Fodder and forage 0 0 10 6 14 7 37

Rice 5 3 10 8 8 1 35

Fruit 0 0 0 7 20 8 35

Maize 0 5 2 9 5 4 25

Barley 0 0 3 3 2 2 10

Total 10 32 77 198 202 94 613

Phase I (1947 - late 1950s): Small-scale research and development in the public sector

and focus on a few major crops primarily in Punjab and Sindh

– Pakistan’s first research center: Punjab Agricultural College and Research Institute, Lyallpur

Phase II (1950s-1970s): Development of an elaborate network of public-sector

organizations designed to develop and deliver improved cultivars

– Pakistan’s first seed SOE: West Pakistan Agricultural Development Corporation, 1961

– Pakistan’s first seed law: The West Pakistan Seeds and Fruit Plants Ordinance, 1965

Phase III (mid 1970s-mid 1990s): Legal and institutional development

– WPADC wound up, seed production assigned to provinces (Punjab, Sindh)

– Seed Act, 1976 specifies procedures for varietal registration, seed certification; creates

Federal Seed Certification and Registration Dept (FSC&RD)

Phase IV (mid 1990s to date): Rapid private sector growth

– Estimated seed market value in 2008-09: US$845 million (Hussain 2011)

Pakistan’s seed industry: A stylized history

Seed producers registered with FSC&RD, 1981-2012

Source: Authors, based on FSC&RD data.

Notes: “GB” denotes Gilgit Baltistan; “Ibd” denotes Islamabad.

Type of company Punjab Sindh KPK GB and Ibd Balochistan Total

Public sector 1 1 1 – 1 4

Private (national) 621 98 23 3 5 750

Private (multinational) 4 1 – – – 5

Total registered 626 100 24 3 6 759

Deregistered 182 23 5 – 3 213

Total 808 123 29 3 9 972

Before 1991 1991-95 1996-2000 2001-05 2006-10 2011-12

No. of companies

registered by period 6 56 229 257 312 103

The Seed Act, 1976

Seed (Registration) Rules, 1987

Seeds (Truth-in-Labeling) Rules, 1991

Fruit Plants Certification Rules, 1998

Biosafety Rules and National Biosafety Guidelines, 2005

The operative governance framework today

Legal reforms aimed at archaic regulations are at the center of conflict between

government and entrepreneurs

• Draft bill from FSC&RD (2009)

• Draft Punjab Seed Act (2011)

• Plant Breeders Rights Act (under development)

THE RESULT?

A vibrant, unregulated, informal seed market serviced by the formal sector

Recent efforts to reform the legal framework

Source of seed, by crop, 2012

Source: Authors, based on data from IFPRI/IDS (2012).

Note: Figures may not to 100 percent due to rounding.

The statistics are fairly constant across landholding sizes – see annex slides for details

Source Wheat (%)

n= 414

Cotton (%)

n= 266

Maize (%)

n= 54

Rice (%)

n= 261

Punjab Seed Corporation 2 3 0 0

Agriculture extension department 2 0 7 0

Research institute 1 1 3 0

Private seed company 33 28 46 24

Input dealer 38 55 27 32

Landlord 12 7 0 35

NGO/ Relief agency 2 0 11 0

Cooperative society 0 0 0 1

Friend/relative/neighbor 11 6 6 7

Formal sector

Informal sector

Formal/Informal

Research Institutes Seed Company

Seed Council FSC&RD

Seed Corporation

Agri-input Dealer

Seed Company

Sale Point Sale Point

Farmer

Own Seed Other Farmers

New cultivars New cultivars

Seed production

Seed certification

Seed production

Informal sector

Informal sector

Registered growers

Registered growers

R&D R&D

International Sources

Exotic germplasm

Seed provision in the formal and informal sectors

“The informal market”

Bt cotton adoption, 2003-13, as reported by respondents

95.5

50.3

85.1

0

10

20

30

40

50

60

70

80

90

100

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Rat

e o

f ad

op

tio

n (

%)

Punjab Sindh Overall

First Bt cotton varieties approved by NBC

Source: Spielman et al. (forthcoming)

Farmers’ beliefs about whether their cotton variety is Bt or not

Source: Spielman et al. (forthcoming)

83

9187

60 63

77

0

67

100 100

20

80 79

12 9 8

33

0

24

14

27

0 0

50

2014

0

10

20

30

40

50

60

70

80

90

100

MN

H-8

86

IR-3

701

FH

-142

NE

EL

AM

-121

Z-3

3

TA

RZ

AN

-1

NIA

B-7

8

Ali

Akb

ar-7

03

BT

456

SG

-1

CIM

-506

Ali

Akb

ar-8

02

A-5

55

% o

f fa

rmer

s

Yes Do not Know

Mistrust between FSC&RD and private companies leading to growing

dissonance between the law and the market

Inadequate legislative and institutional framework (technical and resource

capacity issues with FSC&RD and NBC)

Limited access to breeder seed from public research institutes for

companies that multiply and market public varieties

Relatively small domestic market size disincentivizes to investment, esp.

given barriers to seed trade with India

Absence of intellectual property rights (IPR) protection; reluctance of

private companies to handover germplasm for testing at competitor

institutes

Constraints for private seed industry development

Four pronged approach to reform the legal and institutional regime

Formalizing the informal

Redesign the regulatory framework

Re-evaluate the role of seed

certification and replacing with a truth-in-labeling

regime

Simplify variety release

procedures

Position farmers at the center of policy debates

Encourage competition on genetics, quality

of service and other

dimensions

Thank you