Access Issues for Plant Breeders in an Increasingly Privatized World
There is a growing trend to widespread privatisation of crop breeding, and there are grounds for expecting this trend to continue and even to accelerate. Possible consequences for Australian grain growers and the national interest of much greater private sector involvement in plant breeding are explored. Growing privatisation and commercialisation of plant breeding will lead to increased competition between plant breeders. While this increased competition has been at least partly driven by the potential for value creation, it also is likely to enhance value creation from plant breeding so long as there is adequate continuing investment in the capacity for plant breeding, and more particularly in productivity enhancing enabling technology. In the event of monopoly provision of such enabling technology, an important policy issue will be access to what might be termed essential plant breeding infrastructure. For any access regime to essential infrastructure, the core issue is to select terms and conditions for access that promote full and efficient competition in upstream and downstream markets (e.g. plant breeding) while preserving the incentive for adequate levels of investment in the ongoing development, maintenance, and provision of such essential infrastructure. A key, perhaps pivotal issue will be pricing policy and practice. Because EPBI has the public good characteristic of being non-rival in use, price discovery by market processes can not be expected to produce the desired outcome. Moreover, even if an access regime mandated that EPBI be made available to all plant breeders at a uniform price, the imbalance in market power between the monopoly provider of EPBI and plant breeders seeking access would almost inevitably result in both under-production of EPBI, and in under-utilisation of any produced EPBI due to price rationing. Such outcomes would severely undermine the competitive position of Australian grain growers in international markets. Results from the literature on what are called excludable public goods are used to analyse the impact on the incentive for adequate investment in EPBI under an access regime mandating uniform pricing.
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- Geoffrey Brennan & Cliff Walsh, 1985. "Private Markets in (Excludable) Public Goods: A Reexamination," The Quarterly Journal of Economics, Oxford University Press, vol. 100(3), pages 811-819.
- Anonymous, 1999. "Impact of Competition Policy Reforms on Rural and Regional Australia," Inquiry Reports 31892, Productivity Commission.
- Thirtle, Colin G. & Srinivasan, Chittur S. & Heisey, Paul W., 2001. "Public Sector Plant Breeding In A Privatizing World," Agricultural Information Bulletins 33775, United States Department of Agriculture, Economic Research Service.
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