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THE SEED SECTOR IN DEVELOPING COUNTRIES: A FRAMEWORK FOR PERFORMANCE ANALYSIS. Elizabeth Cromwell, Esbern Friis-Hansen and Michael Turner

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0di Overseas Development Institute THE SEED SECTOR IN DEVELOPING COUNTRIES: A FRAMEWORK FOR PERFORMANCE ANALYSIS Elizabeth Cromwell, Esbern Friis-Hansen and Michael Turner Working Paper 65 Results of ODI
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0di Overseas Development Institute THE SEED SECTOR IN DEVELOPING COUNTRIES: A FRAMEWORK FOR PERFORMANCE ANALYSIS Elizabeth Cromwell, Esbern Friis-Hansen and Michael Turner Working Paper 65 Results of ODI research presented in preliminary form for discussion and critical comment ODI Working Papers available at July : European Community Trade Barriers to Tropical Agricultural Products Michael Davenport, 1988, 4.00, ISBN 0 85a) : Trade and Financing Strategies for the New NICS: the Peru Case Study Jurgen Schuldt L, 1988, 3.00, ISBN : The Control of Money Supply in Developing Countries: China, Anita Santorum, 1989, 3.00, ISBN : Monetary Policy Effectiveness in Cote d'lvoire Christopher Lane, 1990, 3.00, ISBN : Economic Development and the Adaptive Economy Tony Killick, 1990, ISBN : Principles of policy for the Adaptive Economy Tony Killick, 1990, 3.50, ISBN : Exchange Rates and Structural Adjustment Tony Killick, 1990, ISBN I 34: Markets and Governments in Agricultural and Industrial Aclfustment Tony Killick, , ISBN X 35: Financial Sector Policies in the Adaptive Economy Tony Killick, 1990, 3.50, ISBN I 37: Judging Success: Evaluating NGO Income-Generating Projects Roger Riddell, 1990, 3.50, ISBN : ACP Export Diversification: Non-lVadittonal Exports from Zimbabwe Roger Riddell, 1990, 3.50, ISBN : Monetary Policy in Kenya, Tony Killick and F.M. 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Tony Killick, Moazzam Malik and Marcus Manuel, 1991, 3.50, ISBN : Country Experiences with IMF Programmes in the 1980s Tony Killick with Moazzam Malik, 1991, 3.50, ISBN : Evaluating the Impact of NGOs in Rural Poverty Alleviation: India Country Study Mark Robinson, 1991, 5.00, ISBN : Evaluating flie Impact of NGOs in Rural Poverty Alleviation: Bangladesh Country Study Sarah White, 1991, ISBN WORKING PAPER 65 Overseas Development Institute THE SEED SECTOR IN DEVELOPING COUNTRIES: A FRAMEWORK FOR PERFORMANCE ANALYSIS Elizabeth Cromwell, Esbern Friis-Hansen and iviick Turner July 1992 ISBN OVERSEAS DEVELOPMENT INSTITUTE Regent's College Inner Circle, Regent's Park LONDON NW1 4NS PREFACE AND ACKNOWLEDGEMENTS This Worlcing Paper presents the results of the first phase of a three part study of seed sector re-structuring in developing countries undertaken under the auspices of the Overseas Development Institute as an Extra-Mural Contract for the UK Natural Resources Institute. Other Working Papers describe the results of country studies conducted in Malawi, Zimbabwe and Zambia in the second phase of die study, which used the analytical framework described here to assess the seed sectors in these three countries and, in particular, to assess the relative influence of organisational structure on performance. Thanks are due to die UK Natural Resources Institute for funding under the Agronomy and Cropping Systems Programme of die Resource Assessment and Farming Systems Strategy Area which fully funded the cost of the study. The authors also wish to thank the staff of all the many institutions involved in the seed sector in Europe, North America and the developing world who gave up time to provide valuable informadon and advice during the course of the study. At ODI, thanks are due to Virginia Ball and Geraldine Healy, who spent many patient hours preparing this Working Paper for publication. Elizabeth Cromwell is a Research Fellow at the Overseas Development Institute and research leader for this.study, Esbern Friis-Hansen is a Research Fellow at the Centre for Development Research, Copenhagen, and Michael Turner is a Senior Lecturer at the Institute of Ecology and Resource Management, University of Edinburgh and Director of the postgraduate course in Seed Technology. Esbem Friis-Hansen contributed to the study as part of his Ph.D. research on the contribution of seeds to food security and sustainable development in the Communal Areas of Zimbabwe. The views expressed in the report are those of the authors and do not necessarily reflect tho.se of the UK Natural Resources Institute, the Overseas Development Institute, the Centre for Development Research or the University of Edinburgh. Comments are welcome and should be addressed direcuy to Elizabeth Cromwell at ODI. CONTENTS Page ACRONYMS 1 INTRODUCTION 1 2 SMALL FARMERS AND THE SEED SECTOR The formal seed sector Traditional seed systems The market for improved seed Small farmers' seed needs 12 3 BIOLOGICAL AND TECHNICAL PRINCIPLES The nature of improved seed Breeding improved varieties Seed production for different crop species Generation control Technical and economic interactions 28 4 ORGANISATIONAL ISSUES Seed multiplication Seed processing Seed storage Seed distribution 45 5 ECONOMIC AND POLICY CONTEXT Seed Acts and statutory controls Price policy Agricultural services (,(, 5.4 Macro-economic poucy 71 6 A FRAMEWORK FOR PERFORMANCE ANALYSIS The organisation and structure of the formal seed sector Defining seed sector functions Primary indicators for performance assesment Secondary factors influencing performance 76 Page 6.5 Methodology for performance as.se.ssment Data need.s Data collection Data interpretation Seed sector dynamics Conclu.sion **6 BIBLIOGRAPHY 8«APPENDICES 100 LIST OF TABLES, BOXES AND FIGURES Page Diagram 2.1 The seed sector - a framework approach 7 Box 3.1 Strategy for farmer participation in rice breeding in rainfed areas of India 23 Table 3.1 Important biological features of major crop species 24 Table 3.2 Major nomenclatures for seed generation control 27 Table 3.3 Minimum grain:seed price ratios for different crops 28 Table 3.4 Source of seed for communal farmers in Zimbabwe 29 Table 3.5 Source of seed for major food crops in India 29 Diagram 4.1 Models of organising seed multiplication 32 Box 4.1 Comparative experiences with decentralised seed multiplication in Malawi and Nepal 35 Box 4.2 Decentralised seed processing in Asia and Africa 38 Table 4.1 Processing and storage facilities in SADCC countries 40 Box 4.3 Comparative experiences with organising seed storage in Tanzania, The Gambia and Kenya 43 Table 4.2 Distribution structure for improved seed in Pakistan, Sierra Leone and Tanzania 47 Table 4.3 Typical delivery structures for improved seed 48 Box 4.4 Four alternative approaches to seed delivery for small farmers 51 Box 5.1 Comparative experiences with maintaining quality standards in Mozambique and Nepal 54 Box 5.2 Components of seed legislation in developing countries 57 Table 5.1 Comparative status of seed legislation in SADCC countries 58 Table 5.2 Comparative seed nomenclatures in Asia 59 Table 5.3 Price ratio for grain versus se.ed in different African countries 64 Box 5.3 Seed pricing in Pakistan, India and Zimbabwe 65 Table 5.4 Source of information about new wheat varieties among adopters in Pakistan 68 Table 5.5 Seed costs as proportion of total variable costs in Kenya 69 Box 5.4 Kenya 'maize diamond' experiments showing relationship between husbandry, physical inputs and yield 70 Table 5.6 Growth in private sector seed sales in India Box 6.1 Seeds as an economic good Box 6.2 Tracing the build-up of costs through the seed sector 80 Box 6.3 The formal seed sector in Bolivia 85 Box 6.4 Private, public and donor involvement in the seed industry of Thailand 86 Appendix Table 1 Punjab Seed Corporation composition of retail seed prices for wheat Appendix Table 2 PSC wheat seed sales l(k) Appendix Table 3 Zimbabwe maize seed cost calculations Appendix Table 4.1 Partial budgets for seed users by crop in Nepal 105 Appendix Table 4.2 Partial budgets for seed producers by crop in Nepal 106 Appendix Table 4.3 Seeds programme costs and benefits in Nepal 107 Appendix Table 4.4 Example calculation of improved.seed area coverage 103 ACRONYMS ADD ADMARC AFC AOSCA ARPT ASAR CDC CGIAR CIAT CIP CMB CIMMYT DUS EEC ENDA FAO GMB larc ICD ICRISAT IDS ILEIA IRR IRRI ISNAR IVO JAICA KSC KGGCU MBCR MIND Agricultural Development Division (Malawi) Agricultural Development and Marketing Corporation (Malawi) Agricultural Finance Corporation (Zimbabwe) Association of Official Seed Certifying Agencies of the USA Adaptive Research Planning Team (Zambia) Association of Rural and Artisan Services (Bolivia) Commonwealth Development Corporation (UK) Consultative Group on International Agricultural Research International Centre for Tropical Agriculture International Potato Centre (Peru) Cotton Marketing Board (Zimbabwe) International Maize and Wheat Improvement Centre Distinctiveness, Uniformity and StabiUty European Economic Community Environment and Development Activities Zimbabwe UN Food and Agriculture Organisation Grain Marketing Board (Zimbabwe) International Agricultural Research Centre Industry Council for Development (US) International Centre for Research in the Semi-Arid Tropics Institute for Development Studies (UK) Institute for Low External Input Agriculture (Netherlands) Internal Rate of Return International Rice Research Institute International Service for National Agricultural Research Development Research Institute (Netherlands) Japanese International Cooperation Agency Kenya Seed Company Kenya Grain Growers Co-operative Union Marginal Benefit-cost Ratio Mindoro Institute for Development (Philippines) MLARR MNC MOA MRR NGO NPV ODA ODI OECD OECF PBR PRONASE PSC SADCC SEFO SSC SSMS STIP SIDP TOSCA TVC USAID VCU Ministry of Lands, Agriculture and Re-settlement (Zimbabwe) Multi-national Corporation Ministry of Agriculture Marginal Rate of Return Non-Governmental Organisations Net Present Value Overseas Development Administration (UK) Overseas Development Institute (UK) Organisation for Economic Cooperation and Development Overseas Economic Cooperation Fund (Japan) Plant Breeders Rigbts National Seed Company (Mexico) Punjab Seed Corporation (Pakistan) Southern Africa Development Co-ordination Committee Forage Seed Company (Bolivia) State Seed Corporation (India) Smallholder Seed Multiplication Scheme (Malawi) Seed Technology and Improvement Programme (Nepal) Seed Improvement and Development Programme (FAO) Tanzania Official Seed Certification Agency Total Variable Costs United States Agency for International Development Value for Cultivation and Use 1. INTRODUCTION During the last decade, many developing countries have initiated programmes of structural reform in order to correct the severe macro-economic imbalances that developed during the 1970s and 1980s. The content and consequences of diese reform programmes have been explored in a large and growing literature including, for example. Commander, 1989; Mosley, Harrigan and Toye, 1991; Kikeri, 1990; and Bourgignon and de Melo, An important pan of these programmes has been a reduction in the role of the state in economic activity in general and, given the dominance of the agricultural sector in developing country economies, in agricultural produce marketing and input supply in particular. This has already directly affected the seed sector in a number of countries, including Chile, The Gambia, India, Malawi, Mexico and Nepal, and there is likely to be further re-organisation elsewhere, including in Ghana, Cole d'lvoire and Nigeria, in the near future. The pressure for market liberalisation is based on the belief that economic growth can best be restored by increasing competition in product and factor markets through opening diem up to the private sector. However, results so far have been mixed, causing the assumptions on which this belief is based to be questioned. In particular, there are doubts as to whether the private sector is willing and able to fill Uie gap left by departing state enterprises; whedier, in the absence of sufficient competition, die old state monopolies are in danger of being replaced by new private ones; and whether past problems with state participation in markets are more to do widi die way government bureaucracies have developed tiian with the principle of economic regulation itself. At the same time, there is concern that, in the short- and medium-term, the pursuit of increased macro-economic efficiency does littie to solve the problems of the poor, rural majority of the population in developing countries. With the margin of cultivation now approaching in many countries, future agricultural growth must increasingly come from intensified land use, but this cannot happen on any widespread scale until more successful efforts are made to meet the specific needs of resource-poor, small-scale farmers with respect to agricultural technology and supporting agricultural services. Improved seed is often considered to be one of the most important technologies in this regard [ICD, 1987; Rajbhandary et al., 1987; Worid Bank, 1984]. On the one hand, as long as other factors are non-limiting, it is die genetic quality of seed that places the upper limit on crop yields and therefore on die productivity of other agricultural inputs and cultural practices within the farming system. On the odier hand, improved seed can make a substantial contribution to productivity independent of other purchased inputs, which is of particular benefit in resource-constrained small farm environments. Of all die agricultural services, however, die difficulties with organising effective seed delivery, particularly for poor small-scale farmers, have been under-estimated in comparison with the attention devoted to, for example, agricultural produce marketing, fertiliser delivery, credit and extension services. And within the seed sector itself, more attention has been devoted to the physical aspects of production, processing and storage than to the difficult organisational issues which it is essential to address if the sector is to function well. As a result, many developing countries have persisted, in the apparent absence of alternatives, with loss-making parastatal seed companies, despite the failure of these companies to meet die needs of small farmers effectively. For example, the Tanzania Seed Company recently made losses of around TShs 5.8 million ( 14,000) in die process of supplying less Uian 15 per cent of Tanzania's estimated seed requirements [Budden, 1986]. Similarly, the Seed Multiplication Unit of die Department of Agriculture in The Gambia recorded a turnover of less than 10 per cent of its D400,000 ( 25,000) expenditure in 1985 whilst having 'a very limited impact on the national seed supply position' [Republic of The Gambia, 1987], For these reasons, a number of countries are now embracing privatisation and/or seed market liberalisation as potential solutions to under-performance in die seed sector. But it is by no means certain that this will produce a practical improvement in the efficiency and equity of seed sector performance, any more than it has for die other parts of the economy that have been targeted for this type of re-organisation. This highlights the importance for successful reform of fully investigating the organisation and structure of the seed sector, and the way this influences performance, in order that the investments already made in capital equipment and human resources can be used to best effect in the changing economic circumstances. This is die background to die research project of which this Working Paper is the first product. The overall aim of the project is to advance understanding of the structure and performance of the seed sector in developing countries - and in Eastern and Southern Africa in particular - with respect to the desirable relative roles of different types of organisations in meeting the seed needs of small farmers. The specific objectives of the project are: to establish performance criteria for the seed sector in developing countries; to define the relationship between performance and the organisational structure of the seed sector; to identify the organisational structures that are most successful in meeting the seed needs of small farmers; to assess the scope, if any, for promoting improved seed sector performance dirough organisational change. It is hoped that die project will also contribute more broadly to two areas of the wider debate concerning agricultural development in the small farm sector of developing countries. One is that concerning the scope for improving overall agricultural service delivery through organisational change, and specifically dirough reducing the role of the public sector in favour of the private sector. The ouier is that concerning the characteristics of new agricultural technology which are necessary for it to be successfully incorporated into small farm farming systems. The research task has been divided into three phases. The first, on which this Working Paper reports, is a comparative analysis of available documentary evidence of past and present seed projects and programmes with die specific objectives of: establishing the desirable economic functions of organisations within the seed sector in developing countries and appropriate criteria for measuring their performance with respect to these functions; developing an analytical framework that identifies the factors influencing the performance of organisations within the seed sector and the linkages between them; creating a practically implementable mediodology for assessing die comparative influence of these factors on performance in individual developing countries. The second phase of the research task is field work investigation, in Malawi, Zambia and Zimbabwe, to compare the influence of the different factors identified in the analytical framework as determining seed sector performance, to reach country-specific conclusions concerning the wider research objectives. Reports for each of these countries appear as separate Working Papers in this series. The countries have been chosen to enable comparisons to be made between different approaches to seed sector organisation within broadly similar agro-ecological and socio-economic conditions. Finally, in die third phase a synthesis is made of die framework development and field work investigations, to reach more generally applicable conclusions concerning the wider research objectives, and to assess the implications of these conclusions for the wider debate concerning agricultural service delivery and small farm technology development in developing countries. Athough it is given numerous other names as well - for example, 'high yielding variety', 'modem variety', 'quality seed' - the product of the formal agricultural research system and the organised seed sector is commonly referred to as 'improved' seed and this is the convention followed in the present study. A detailed discussion of the concept of improvement in seeds is given in Chapter 3. The research deals with cereal and legume crops propagated by true seed, which together account for virtually all the activities of national seed programmes in developing countries and are the crops of greatest importance in most small farm farming systems. Of course, in a number of countries vegetatively propagated crops such as potatoes and cassava are also very important - but they present entirely different technical seed problems and are therefore omitted from die present study. Neither are die more specialised seed crops, such as vegetables and pastures, considered in detail as they too have quite different economic characteristics.

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Jul 27, 2017
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