Examination of Witnesses (Questions 239
- 259)
TUESDAY 25 APRIL 2006
PROFESSOR KEITH
PALMER, MR
MICHAEL PRAGNELL
AND DR
ANDREW BENNETT
Q239 Chairman: Thank you, gentlemen,
for your patience. You see the way the Committee's minds are working,
although one or two members of the Committee may not be able to
stay the pace. Obviously, this section is looking at agriculture
and the role that agriculture can play. Not only DFID but other
agencies involved in development all tend to say the key is agriculture,
which is such a large part of the economy of developing countries,
or even potentially developing countries. That is the sort of
thing we would like to explore. As a starting point, it has been
said that the success of the Asian economies—latterly industrial
economies—is due to the fact that they have solved their
agriculture problems first. Can you give us a flavour of the extent
to which that has not happened in Africa, why it has not happened
and whether it could happen, and whether the Asian experience
could and should transfer to agriculture?
Mr Pragnell: That is an enormous
question, Chairman, but I will start to try and broach it. In
very simple terms we have seen three—if I contrast three
different approaches: what we have seen in China, what we have
seen in India and of what we have seen in Africa. Essentially
in China there is a communist government but in effect a capitalist
system, with which the administration has continued wrestling
given the enormous size of the population and the economy, or
potential size of the economy. What they did for many years was
to put self-sufficiency in food supply at the very top of every
five-year plan—until quite recently, when the Chinese Government
recognised something the rest of us could see, that actually that
was an unattainable goal. What it did was align a whole series
of activities and interests from attracting technology and attracting
investment to developing trading systems and supply systems—and,
dare I even say it, middle-class consumers in cities like Shanghai.
That brought with it a whole economic development, particularly
down the east coast and along the south. We see migration from
land into the cities of about 20 million populations a year. We
see, as a result, productivity improvements in agriculture, which
means employment in agriculture is going down, even though output
is going up; and the quality of output improves at the same time.
However, the key development is the release of the entrepreneur,
if I can put it in crude, unsophisticated terms. What we saw in
India was indeed a `green revolution' in the Seventies, with a
huge investment in technology inputs; and we are now starting
to see the benefits of that in terms of its impact on the potential
of the overall Indian economy. I would not totally separate from
that what we have seen in Pakistan, where there have been similar
improvements in agriculture. Again, it is lubricated essentially
by the availability of finance or money—I will not go into
where that comes from at this stage—and by the entrepreneurial
spirit and the freedom to do things on the ground that make things
work. We quite palpably have not seen that in Africa of course.
The reasons are many and varied. Other than the volatility of
rainfall, which clearly has an impact on harvest year to year,
there really is no reason why we should not have seen considerable
improvement in agricultural productivity, that in itself feeds
economic development. Why? I guess one has to say there are many
examples of poor governance; inadequacy of education and healthcare;
the inadequacy of the right sort of infrastructure development;
the absence of finance to lubricate all sorts of things that we
have seen examples of in India and China—not lack of interest
by corporations such as ours. We are the leaders in our industry;
we are the leading supplier in the African Continent—we
are active in over thirty countries and we employ over a thousand
people on the ground. Last year our sales were almost $160 million,
and of that over half was in sub-Saharan Africa. However, the
big problem we face is the lack of trickle-down. Lots of money
seems to find its way into government, but we do not see that
percolate through the economy. I do not know whether Andrew would
like to add to that, as someone who has lived on the ground for
many years in Africa.
Dr Bennett: There is the issue
of the small and medium size enterprises in Africa, which has
not taken off in the same way as it has in Latin America. There
are probably good reasons in terms of the climate in which one
tries to create some small and medium size enterprises. Some of
the actions of donors have on occasions not necessarily encouraged
SME development.
Q240 Mr Davies: Such as?
Dr Bennett: If you give things
to people, it does not create much incentive to people. If you
give seed away, people expect to be given seed and create a seed
industry, but it kills the seed industry. There is an importance
in relation to Africa of understanding the power of the donor
community in relation to the rest of the economy and the need
to make sure that what one does encourages small and medium size
enterprises, not necessarily creates a greater role for government
and others in that chain.
Professor Palmer: As to your question,
the answer is very clear. Asia has succeeded in bringing together
the infrastructure, the supply industries to supply agriculture,
the technologies and the green revolution in a way that has been
quite spectacularly successful, despite some external disbenefits.
It should be regarded as a major triumph because we were predicting
massive starvation in India thirty years ago. I counterpoise that
with the experience over the last thirty years in Africa. It has
been one of decline, a reduction in real incomes in agriculture.
It has been an example of increasing poverty, as measured by the
international indicators. I am afraid the answer to your question,
what is causing it, is as ever that it is complicated. The reason
African farmers, small farmers are very poor, is because the inputs
they need to grow things—fertiliser, pesticides and seeds
they do not have access to generally at all; if they do have access
they are very expensive because of very limited distribution channels.
They sell their products to intermediaries. They usually have
only one or two people to choose from—take it or leave it—so
they do not get a very good price. When they finally harvest the
crop and find somebody to buy it, if they do not have storage,
they have to sell it immediately because otherwise it rots in
the fields. I think that agricultural development in Africa is
quite simple: it is simply a matter of bringing together the things
everybody knows you need. You need irrigation and electricity
to operate pumps because irrigation cannot work without it. We
need better transportation and storage facilities. We do not have
them, but if you provide those, even in the absence of the green
revolution type products, there is enormous potential to increase
the productivity of farmers and to increase their incomes. That
is the only way you can reduce poverty.
Q241 John Battle: If I remember rightly,
Syngenta sponsored a report on Africa recently on agriculture,
which was published in the John Smith Institute[3].
Mr Pragnell: Yes.
Q242 John Battle: I thought that
that was very, very encouraging, except the general tone and direction—if
I were to caricature it as top down—you used the trickle-down
model but I am speaking particularly about Africa, which is locked
out of the economy of the world really. What is going on in Africa?
I think there is still a mindset that you plough the land; you
plough until you water, and you hope something happens. You organise
the people to do it, or you collectivise the land to do it, and
it seems to me that it is still big-scale top-down. I want to
know what more can be done for agricultural businesses in the
plural, and in the plurality, and in their complexity. One thing
that strikes me, following some of the comments that Keith Palmer
has just made, is that the whole question of those input services,
what are called in the report "extension services"—who
provides them? Should it be governments, NGOs, DFID? Who should
get into that whole mess there and say that it simply is not going
to work to plough the land and get water to it; you need much,
much more? Who should provide the extension services? Should it
be NGOs; should it be SMEs, because even there, reports are saying
they are failing to get engaged at that kind of pitch? Where is
the balance—or rather it is not the balance, it is the catalyst.
Where will be the catalyst to make sure that agricultural businesses
start to work in the African context?
Mr Pragnell: That is an enormous
number of questions. If I can go back to the opening statement
of the Chairman, that getting agriculture to the top of the list
of priorities would help enormously. The circumstances in China
are very different, but if we were to see that as a diktat of
policy in an African state, that would be a start. But in the
sense that it had a goal—not just that agriculture is important
but that "agriculture is important because we want to obtain
self-sufficiency in food supply"; or "We want to develop
a major export business in these crops"; or "We want
to put all our rural populations to work much harder and that
will create markets for products that they produce", because
what agriculture can do is create a total business system. Product
is produced; it is high volume. You need infrastructure to handle
it—storage, the road systems, the communications systems.
You need technological inputs to improve the yields and to improve
the quality, but you cannot generate that until the farmers themselves
generate cash, so you need training systems. Training systems
spawn SMEs, small companies that act as retailers in both directions,
either bringing inputs to the farmer or by helping to trade what
they produce. Investment in infrastructure brings different industrial
investment into an economy, and that in itself brings the know-how
to enable local people to do these jobs. That in itself is a form
of education and training. There is a whole cycle of activities
which over time will have the sort of impact you refer to; but
for all that to take place we need a level playing-field; we need
a transparent regulatory system; transparent judicial systems;
we need to be sure, as Andrew said, that aid does not undermine
such activities. If it is to be sustainable, it demands private
sector involvement and giving people themselves a belief that
they can better their lot in a productive fashion.
Professor Palmer: I am interested
you have asked about extension services because it is a really
problematic area. In this country, in the United States and in
developed countries generally in the early stages, agricultural
development was strongly supported by government funding and government-provided
services; extension services were an important element of it,
but a whole range of services including credit support, and there
are government programmes even today in the US. That approach
in Africa over the last thirty years has been a dismal failure.
National governments and donors have made things much worse. A
real challenge for donors interested in supporting small farmers
on the ground—and I agree it cannot be top-down—is
to find mechanisms for targeting donor funding in an intelligent
way so that that role of providing essential services and supporting
small farmers can be done by non-conventional providers. NGOs
certainly have a role, and a couple of NGOs would do it very well.
The SMEs, the national private sector, has a role. It is not easy
to get them to do these things, but an intelligent approach to
structuring partnerships is probably the only way donor support
in Africa can work.
Q243 John Battle: I will try and
draw out a practical example. Our Committee has visited Malawi
twice in recent years. The first time we went, DFID were providing
seed packs for farmers after the drought, to get them going again.
That was literally a hand-out programme, and then that dried up
and stopped. Who should be providing those seed packs now; should
it have been DFID in the first place; did they undermine private
sector development by doing it; and in the meantime, given the
dearth of private sector development in Malawi, who is going to
jump-start future development?
Dr Bennett: The starter-pack programme,
as you know, was much criticised, but it was there to respond
to a particular need, an immediate need; farmers were not getting
the necessary inputs to produce enough food at a time when Malawi
seemed to have gone from a position of surplus. Where criticism
might be levelled is the way we think about the sustainability
of that activity. How do you get out of it? It needs a strategic
approach. It is great to respond to misery and we must do it,
but one also needs to understand that there was an embryo seed
industry in Malawi. There was a very effective input supply system,
run by Admark, which is now defunct. There was a view that inputs
were not necessary to promote farming; that you could do it by
some form of self-generating lower input system. That has not
worked particularly well either. There are very poor soils in
Malawi from which you do not get anything unless you put something
in. Bad years will happen; that is the reality of agriculture;
but it is when you respond in the short term without thinking
long-term that you need the benefit of hindsight.
Professor Palmer: There are two
things you have to do at the same time, and it is very difficult.
The first thing that you must do in Africa is develop a national
seed industry; you have to get people creating seeds and getting
them distributed to people who will benefit from them. At the
same time you have a concern obviously to help immediately, but
the trouble is that if you give seeds free to people, then you
tend to destroy the seed industry because you take away the marketplace
because it is supplanted by giving free seeds. It is the food-aid
syndrome except further down the agricultural chain. There are
ways of squaring that circle, and it is really important that
donors learn the lesson of how they destroyed the seed industry
in Africa. It is very, very weak, and rebuilding it must be a
priority, but rebuilding it in a way that very poor farmers can
afford to get their hands on those seeds.
Q244 Joan Ruddock: Obviously Andrew
Bennett has a familiarity with Malawi and Africa generally. It
seems to me that there is some evidence that the new farmers'
clubs are working, where people acting collectively have more
buying power and can share expertise, and perhaps have the capacity
to respond more effectively to donors and to the private sector
working in partnership. Is that your experience?
Dr Bennett: Farmers working together
I think is very sensible and absolutely necessary. When we have
defunct national extension services it is the only alternative.
The question is, how they connect up. Often they are clubs that
are brought together around inputs, not necessarily around outputs.
Increasingly, farmers are producing for markets. The happy days
of subsistence farmers producing surplus and then must go to market
have gone; they all need cash. Therefore more and more farmers
are looking at how to produce income. Food crops are not hugely
rewarding because in many cases food prices are not very high.
Some of the most successful farming clubs are around vegetables
and small-stock, where they have been tied into a market chain.
Very often, the producer gets less than 15% of the consumer price.
Unless you can extend your reach into the market trail and collect
more from either the processing or marketing process—and
let us face it, most of Africa is about serving local markets.
We heard earlier about the export markets, but the great demand
is to feed the cities, and to do so when you are facing HIV, which
is reducing your labour force in rural areas and reducing your
capacity to respond—if you do not plant early you do not
get a crop.
Q245 Joan Ruddock: Is there any significance
in the fact that the majority of farmers are female?
Professor Palmer: There must be,
yes!
Dr Bennett: In many places the
tenure issues are major. In many cases traditionally women have
been the producers and managers of household budgets. In many
countries migration of male labour has been a major factor. If
you go to Malawi, huge numbers used to go to work in the mines
in South Africa. I do not know whether there is any indication
that the dynamic has changed since the tragedy of HIV. I think
many young children are heading households rather than very old
people who are beyond the capacity to work fully for a day in
the field. Most extension programmes or rural development programmes
learned very early on that actually in many of the issues it was
women who made the decisions. That is a fact of life.
Q246 Chairman: You said all markets
tend to be local; presumably you mean local or regional. In Malawi
there was the issue that there was maize around neighbouring countries,
but the cost of getting it was very high and there were other
food products that were regarded as irrelevant and therefore were
not effectively marketed. What are the mechanisms one needs to
make markets work effectively and what is the role of donors?
Is that something national governments can sort out? How can we
remove the obstacles?
Professor Palmer: Growing markets
means putting in two things: transportation systems and better
telecommunications systems. Markets are just the abstract concept;
what we have been trying to do is join up the producers. It is
not currently an effective marketplace serving an effective market
because Sub-Saharan Africa does not have the low-cost transportation
links to get things to market and still be profitable. The first
thing you have to do is identify situations where simply bringing
down costs and improving the access to infrastructure will, in
and of itself, not only increase markets but also farmers' incomes
without any increase of production on the land simply because
people have less expensive inputs and get more for their outputs
because they pay less away to intermediaries.
Q247 John Barrett: Turning to private
sector investment in agriculture, it seems to me that there are
opportunities there in transport, infrastructure and storage,
which would dramatically increase agricultural production and
the results that flow from that. It does not seem as though the
private sector, either from outside or from within sub-Saharan
Africa is responding. What do you think are the blockages; or
is it that there are better opportunities elsewhere?
Professor Palmer: This is exactly
the challenge we are grappling with, as I mentioned in my note
to you. The problem is that there is almost no irrigation in Africa.
Actually, today there are literally millions of Africans who are
dying because we have a drought, and this is quite apart from
anything else; this is something that should be at the top of
everybody's agenda—but you are right, it is not happening.
In Africa we have been looking at situations in Zambia and Mozambique
and Tanzania to see why the potential is not being exploited.
It is quite straightforward in a way. There is great potential
if you put the irrigation in; agricultural activity will go up
because you can control water flows and use modern seeds and get
a better modern agriculture, and incomes will go up. However,
if you invest in irrigation and that does not happen, then you
lose all your money. The challenge is to find a way of creating
the infrastructure ahead of it being proven to be the right thing
to do. Somebody has got to take the risk that it is a good thing
in principle, but it may turn out bad in practice, because things
do go wrong. It is particularly difficult in these parts of Africa
because the farmers who may or may not respond are very poor people
for whom absence of infrastructure is not the only constraint
on responding. They need access to credit so they can buy the
input to put the fertiliser down and buy the seeds. You have a
very complicated situation where the irrigation investment will
either be a sensationally good thing and reduce poverty immensely,
if all the other things necessary happen, or it will be a complete
waste of money if they do not happen. That is what Infraco is
trying to do, to use donor money to take some of the early risks
and put the infrastructure in place, and then to try and arrange
the other complementary things that have to happen. So the governments
in the rich countries are taking the risk, and if it happens it
will be a jolly good thing for poor farmers. My view is and has
always been that unless donors are prepared to provide that sort
of support it [pre-emptive irrigation investment] will not happen.
The private sector will not take the sorts of risks involved,
investing tens of millions in irrigation, only to see a low supply-response
in terms of that particular scheme of agriculture. It is therefore
very important that donors do give resources to do that, and do
it in a way—and this is important—that if rich farmers
benefit, they end up paying back some of that money so that it
can be used for other development needs. If the benefits are to
go to very poor people, they should be allowed to keep those benefits.
This should not be a case of wholesale subsidy of infrastructure
necessarily, because some of the beneficiaries will always be
to afford to pay for it.
Dr Bennett: Chairman, it is also
useful to look at some of the success stories. I think some of
the most successful micro or small irrigation schemes have been
where they have been producing high-value produce for a close
market and responding quickly. Producing carrots 300 miles from
the market is not going to work. Historically there was a huge
investment in irrigation in Africa, in the 60s and 70s; and there
is a famous World Bank report that says most of them are operating
below 20% efficiency. That is because the social model was wrong.
They went for a large blueprinted irrigation scheme with clever
reticulation and beautiful engineering without asking who were
the people who were going to farm it and what was the market for.
The Gazera worked extraordinarily well when it was run like a
military operation; but the moment it became a democratic society
it did not do quite so well. We need to learn the lessons of the
past before increasing investment in irrigation. Small-scale irrigation
is where there has been the greatest success—little stop
dams, small vegetable schemes, good for nutrition as well as good
for income generation. Once you start putting water on food crops,
then the rate of return starts to look somewhat less than able
to pay the investment back because food crops have a pretty low
value, and transporting them long distances does not pay for it.
Q248 Chairman: Many of the schemes
have been destroyed of course in Zimbabwe, but you did have large-scale
farms there which did invest. Interestingly enough, when we were
in Malawi the President said he had invited Zimbabwean farmers
to undeveloped tracts of Malawi to see how they would apply their
techniques. I think we all agree and understand the need for small-scale
farming, but is there scope for both? Is there indeed a need for
both?
Professor Palmer: The answer is
definitely "yes". At this moment the agribusiness ventures
that are being developed in southern Africa are being spawned
out of emigration by white farmers who have been expelled [from
Zimbabwe] and have been invited into Mozambique and Tanzania and
Zambia to deploy their expertise. The whole concept is to create
new nuclei where local farmers rely on the expertise of these
farmers, but to build a scheme so that the benefits are extended
out to a very large number of very poor farmers who would not
be able to do this without somebody providing the nucleus of services
required to make these profitable ventures. It is very interesting
that governments are understanding this time around, for example
the importance of giving secure land tenure, long leases or freehold;
that they are creating the conditions to allow people to do farming
on a commercial basis and then asking donors to support the outgrower
schemes around those, which will benefit poor farmers.
Q249 John Barrett: Will there always
be that conflict though between keeping relatively large numbers
of smallholders working in agricultural areas as against that
drift of people towards the city, which would relatively increase
productivity on the land and tackle the poverty there, because
if donors are too heavily focused on supporting smallholders it
may well be they will never deal with the poverty they are trying
to tackle?
Mr Pragnell: You touch on an extremely
good point because if agriculture is to play the role it can play
as a catalyst in economic development overall, improving productivity
has got to be priority number one. Having made the commitment
to agriculture, it is then productivity improvement, and that
means progressively less employment. As family members go off
to do other things and participate in other parts of the economy,
whatever they may be—even if it is only opening a trade
store at the end of the road to sell produce, at its simplest—that
demands input technology. To imagine we can hold smallholders
forever in, dare I call it, a form of economic Utopia, i.e., where
things do not change, would not be right.
Q250 Richard Burden: This follows
the same discussion and it is about the role of public/private
partnerships in terms of small-scale farmers. Can you point to
some examples of good practice whereby those sorts of partnerships
have been able to intervene in situations where the scale of involvement
is not really attractive to large multinational companies—but
also the farmers themselves not necessarily having the technical
expertise to move forward?
Mr Pragnell: The way I would think
of public/private partnerships is slightly different. For a company
such as ours, investing in excess of $800 million a year in R&D,
in many areas at the leading edge of technological development
at one extreme, and at the other extreme our products finding
their way into the activities of subsistence farming in some of
the poorest parts of the world, you can consider that there is
quite a gap in terms of our core expertise and what ultimately
our products are used for. We have experimented with, or had some
experience of public/private partnership in Africa—most
recently the seeds venture with a Zimbabwean seed company. I have
to say that unfortunately for all the sorts of reasons that you
can imagine we have had to shut that down at the end of February
this year. It was going nowhere, as were many other things associated
with agriculture and other activities in Zimbabwe. In China, on
a much larger scale, we have had a much happier experience. We
partnered with two or three other producers to invest in a major
herbicide manufacturing plant, which we commissioned in 2001.
We coupled that then with training programmes for very small farmers
on the south-eastern coastal rim of China, where the average farm
size was about half an acre. We put energy into training the farmers,
and partnered in the establishment of a manufacturing venture,
which has proved to be successful. We have got the system running.
Now, instead of hand-weeding, they are using a herbicide which
enables them to repeat the crop, whereas before they could only
have produced a single crop—now they have a double or even
a triple crop.
Q251 Richard Burden: How far was
that experience specific to those particular circumstances?
Mr Pragnell: The way I described
it, it was very specific, but the skills that we drew on were
skills we deploy in many countries in the developing world in
terms of training. We have active training programmes going on
throughout central America and many of the countries in South
East Asia. Indeed, we have training programmes in some of the
most sophisticated markets as well. We regard that as part of
our mandate of driving sustainable agriculture so that as we are
introducing products we also ensure that farmers understand how
to use them and the benefits that they can bring. The investment
in the manufacturing plant in China was a major investment but
it meant that we brought the whole political system at the provincial
and national level into what we were trying to do, with a lot
of encouragement from both.
Professor Palmer: It is an important
question. We should not be trying to invent new things when there
are examples of successful partnerships in existence. I have already
referred in the evidence I submitted[4]
to an NGO called Technoserve America, an agricultural focused
NGO that is extremely effective in understanding that what you
are trying to do is create sustainable business ventures and then
access government donor grant money to specifically make them
affordable for the group of people who cannot afford to pay the
full cost. They have recently produced a report that I referred
to. In Uganda there is a fishing industry that is now well developed
where Technoserve were the glue, the integrator on the ground,
that got all the parties together in a business sense and made
it a great success. There are a number of other examples. They
show very consistently that if these are set up as aid projects,
they are almost always unsustainable; if they are set up as facilitating
small business development, African national private-sector people
working with and with funding from donors, you can create over
time, with a lot of commitment and effort and getting all the
infrastructure in place as well, a really thriving industry. These
are the models I think that are the only way to do this. Some
bits and pieces without all the other bits and pieces does not
work.
Q252 Joan Ruddock: I wanted to take
up on up the issue of the Zimbabwean seed company. Obviously,
it has failed but it is a model that you might want to replicate
elsewhere. Is this not a problem as much as donors giving out
free packs, in terms of the development of the local seed companies,
because once multinationals get involved the criticism is that
often the indigenous varieties are lost and the farmers then cannot
replant seeds from their own crops because they move into the
ownership of the multinational companies? Prices inevitably become
such that local farmers may not be able to afford those particular
seeds. You say this is a successful potential partnership, but
there are many criticisms, as I am sure you are aware, of why
that is not so. In your evidence you wrote about the Burkina Faso
and how you were engaged there in trials that required a new regulatory
process, and I would like to know what those trials were trying
to achieve.
Mr Pragnell: If I take the seeds
question: seed varieties vary enormously within any geography,
and of course they have been developed over many generations—in
some instances hundreds of years quite literally. This is for
quite simple reasons. You want the right seed in the right soil
in those specific climatic conditions. Imagining that it would
be advantageous to ride roughshod over indigenous seed varieties
probably would not work. However, imagining we might we be able
to introduce technology in a nearby area in the form of new seed
varieties can help in terms of enhancing yield. If you look for
example at the yield curve of maize or corn, as the Americans
call it, and you go back to 1900 and finish in 2000, the yield
curve makes a steady improvement in terms of productivity of the
order of 2 percentage points every single year. That progress
is to be encouraged rather than discouraged. As far as saving
seeds is concerned, nowhere in the developing world would we ever
discourage farmers from saving seeds if that is what they wanted
to do. However—
Q253 Joan Ruddock: You do when it
is GM.
Mr Pragnell: We do not. If however
we want to see productivity improvement of the sort I have just
described in the example, which I admit is the best example of
the lot—but you see it in other crops as well—then
saving seed, you go in the opposite direction—because actually
what happens is that yield progressively degrades if you operate
exclusively on saved seed. Not saving seed is another way of enhancing
value on a per-unit area, and therefore output and therefore revenue.
It is something that I recognise is said, but the reality is slightly
misunderstood. The reason the Zimbabwean venture failed was, as
you can imagine, nothing to do with that; there were all the sorts
of reasons we read about in the newspapers. The trial in Burkina
Faso was an insect-resistant cotton with a gene introduced into
the cotton.
Q254 Joan Ruddock: It was GM.
Mr Pragnell: A GM cotton. Regulation
is extremely important in our industry, be it in use of chemicals—for
obvious reasons—or the toxicological environment where considerations
have to be taken account of, and of course we were introducing
a GM product. There is a similar frame that has to be created
nationally, and what we did was help the Burkina Faso Government
to set up a regulatory system which would enable them to control
what may eventuate, and it was very satisfactory. You may well
then ask, should not somebody else do that—"don't you
have a vested interested in all of this—you are the supplier?"
In some senses that is true. However, we are also the developers
of the knowledge in this area and we work with regulators all
over the world, when asked, to help them move their regulatory
processes and rulings forward. Seventy per cent of agricultural
research now is in the private sector, so it is logical that the
know-how will come from the private sector in the development
of these regulations.
Dr Bennett: The conservation of
indigenous planting material is a key issue for everybody. That
is why the Global Crop Diversity Trust was set up, of which Syngenta
is one of the sponsors of the endowment fund and which the Foundation
is working on. There will be accidents. The Consultative Group
on International Agricultural Research has many of the gene banks,
and there have been occasions when local varieties have disappeared
not simply because the seed industries but because of civil war
and various other problems; and maintaining these collections
around the world in the public domain under the auspices of the
International Treaty on Plant Genetic Resources for Food and Agriculture
is an essential issue that the public and the private sectors
need to collaborate on.
Q255 Mr Davies: I am certainly intrigued
by Syngenta's interest in Africa. As I understand your market,
you are in the business of producing high-margin crop protection
agents—fungicides, herbicides, insecticides and so forth.
Since the marginal productivity of these chemicals has been falling
rather dramatically in the United States and the EU, you have
increasingly got into developing new, also high-margin, cloned
seed types, which obviate the need for these chemicals. But these
things are all high margin, and you have just said you have a
very high R&D budget and have to reclaim that in the high-margin
products that you are marketing. In Africa—at least north
of the Limpopo and south of the Sahara, you have, it seems to
me, very little in the way of a realistic market for high-margin
products of this kind. You have small farmers with no capital
and usually no title to the land that they are farming. Therefore,
while I can see that Africa is attractive as a regulatory environment
for running trials on new crop types, such as in Burkina Faso,
in terms of your mainstream business I do not quite see what the
prospect is. It may well be that theoretically you could get very
substantial increases in yields by applying massive amounts of
agricultural chemicals in Africa, but not surely on the present
structure of African agriculture and with the present purchasing
power of African agriculture?
Mr Pragnell: Approaching 30% of
our sales are to emerging markets, which is a very high proportion
of our sales, and this is because agriculture in many emerging
markets is a very dynamic activity.
Q256 Mr Davies: You are including
Asia there, which is very different.
Mr Pragnell: I am including Asia,
Latin America, central America—
Q257 Mr Davies: Very different—different
land title and, as you rightly say, in China proximity to—
Mr Pragnell: The herbicide example
in China is a product that was developed 40 years ago; it is not
one of your leading-edge very high-margin R&D-intensive that
we have invested 200 million to bring the product to market et
cetera. Many of the products we sell in Africa are extremely
easy to use. It is not that they are—
Q258 Mr Davies: What proportion of
your sales is in Africa?
Mr Pragnell: Approximately $160
million.
Q259 Mr Davies: North of the Limpopo!
Mr Pragnell: I cannot give you
the exact number but it is of the order of around $80 million
in sub-Saharan Africa. We are the largest single supplier and
very long-established. We have got people on the ground—
3 The Smith Institute, Going for Growth: Science,
Technology and Innovation in Africa, Edited by Professor Calestous
Juma, 2005 Back
4
Ev 187 Back
|
