The innovations identified in this research affected both the efficiency of production and the qualities of the products produced. Particularly in livestock, the innovations that generated the greatest return were input-oriented. These innovations changed an input to make production better, but left the final product unchanged. Other innovations were output-oriented and changed the final product; these were more common in arable and vegetable crops.
Where there have been product improvements, the value of the improvements is sometimes uncertain. A good example is crop improvements in wheat. Wheat breeding programmes have worked to improve the milling quality of New Zealand wheat. The economic value of these traits and the extent to which the value can be attributed to biotechnology are both uncertain. The four biotechnologies have had quite different impacts on the primary sector. Clonal propagation/cell manipulation (a set of techniques that are core to plant breeding programmes) has had by far the largest economic impact. However, their impact can only be measured at the level of a crop, rather than on a cultivar-by-cultivar basis. Furthermore, the value of these techniques comes from the steady improvement to primary sector performance over time. The use of biocontrol agents is much more on a case-by-case basis. This is a much newer field, thus represented by specific products in this category. Biocontrol agents are also an additional input to a production system, whereas clonal propagation/cell manipulation change an input – the seed used – but are not itself a separate input. Valuation of biocontrol
16
agents was therefore valued here through a case study approach. Enzyme manipulations are little used in producing raw products, being much more important in transforming raw goods into products for retail sale. In that context, enzyme use is extensive but its valuation sometimes beyond the scope of this project. Finally, marker-assisted breeding is another technology with wide application across the primary sector. However, it has produced few commercial products. Thus, although it is subject of research, the value of this technology so far is represented by a few discrete products.
There are three issues that are treated separately as important issues regarding the use of biotechnology. These are: the nil results, the extent of contributions of biotechnology, and the value of innovations.
3.2.1 Nil results
An important qualitative result of this study was what is referred to here as the nil results. These are biotechnologies which did not currently yield significant commercialised returns and were still under development or yielding only small revenues. This was often to the surprise of not only researchers but also those involved in the sector.
The nil results are important for two reasons. First, this report can be seen as establishing a baseline for the economic impact of the four biotechnologies. Whilst of course those technologies yielding positive returns are vital for this baseline so are those which do not. Future research may be able to use these results as a baseline against which to measure progress towards commercialisation. The second reason that these nil results are important is that they provide important information to the sector as well as policy makers. Many people who seemed to be well informed about the biotechnology sector were not fully aware of which companies had actual sales of commercial products and which were surviving but still had products yet to be commercialised.
Of the four biotechnology types used in this report the most significant giving nil results was marker-assisted breeding. This biotechnology has been described for years as the way of the future, the approach to breeding that will allow precise selection of desirable traits and introduction of new varieties in a fraction of the time that traditional breeding requires. However, key informants only identified three examples of commercialised marker-assisted breeding in the primary sector in New Zealand. Two are for sheep, and only one of these is currently boosting production (the other is too new to have had an impact). The third, a disease-resistant field pea, may be producing benefits in New Zealand, but the scale of the benefits was entirely unclear. For other arable crops, vegetables crops, fruit growing, dairy and meat cattle, etc., marker-assisted breeding has not yet increased production or improved products.
Two subsectors also produced nil results. The seafood industry was not using any of the four biotechnologies in production. In part, this nil result came from the boundaries of the project. The industry used enzymes to produce processed seafood products and also used them to clean equipment, but these uses were not considered directly involved with production. None of the other biotechnologies was applied to the seafood sector. The other subsector was ‘new industries’, a loose category that was expected to contain residual innovations that could not be otherwise categorised. In fact, there were no such innovations. Activities that are typically included under ‘new industries’, such as biofuels, were heavily dependent on technologies and production processes that are not biotechnology.
17
The intent of this research was to identify and evaluate biotechnological innovations. Researchers thus did not give up searching for examples the first time a key informant said that a biotechnology was not used in a specific subsector. Multiple informants were interviewed for each subsector and each technology, and areas in which nil results were identified were probed even more. Some informants were contacted more than once, just to be certain of the information they had provided. These nil results do not demonstrate a lack of evidence of commercialised products, but rather evidence that commercial products based on these biotechnologies are not in use in certain subsectors.
3.2.2 Extent of contributions of biotechnology
As stated above some of the four biotechnologies have had marginal impacts on primary production. This statement is not meant to disparage the contributions of biotechnology and the obvious gains that have been made, as the following sections will show. However, the qualitative survey results did stress the importance of other factors in increasing returns from the primary sector. These factors include natural resources – land, fresh water, marine environments – in combination with management effort, human labour, and machinery. A significant proportion of the growth in the primary sector has been by adding more of these inputs, as when irrigation is added to land, and by being more efficient in their use, as when information and experience improve farm management. Thus the current use of biotechnologies has tended to make improvements at the margin.
Nowhere is this more apparent than with biocontrol agents. It is perhaps the nature of such products that they contribute only at the margin. It seemed particularly true of the biocontrol agents identified in this research. They seemed to contribute a bit per hectare or a bit to overall production, but in many instances the contribution was hardly measurable.
A further reason for the marginal nature of biotechnology is the volatile nature of primary production. A good example comes from the apple industry. Although the industry uses an integrated pest management programme that makes use of bioinsecticides and biocontrol agents, their impact was overwhelmed by trade patterns, exchange rate fluctuations, and market trends in the industry. Disentangling the impacts of what amounts to a minor input to production from all the other factors affecting the industry was not possible given information available; in any case, these impacts were highly unlikely to be significant.
3.2.3 Value of innovations
In general, few respondents knew about the value of specific biotechnological innovations. For many innovations, it seemed that commercial considerations were minor factors in the process of commercialisation. Biotechnology research appeared to focus on problems that could be solved, rather than examining whether the problems were worth solving from a financial point of view. This was of course not universally true. Many key informants could provide detailed information about production impacts and their values.
As a result of this focus on the technically possible, an innovation might be quite effective against a specific pest or disease. It could be difficult to determine, however, the extent of that pest or disease in New Zealand. The economic benefit might not be immediately clear or readily available, and instead further research was required to uncover exactly what the economic impacts were.
18
It was also difficult to obtain from respondents what the alternatives were in the absence of the biotechnology, information important to assess correctly the economic value. Again, an innovation might be effective, but consideration was not always given to alternative methods or inputs that could yield similar results. From an economic point of view, allocating resources amongst competing uses is a key consideration. Thus, a central question always is, ‘what is the alternative?’
This research bridged these gaps by examining the specific innovations, the economic value of the ‘problem’ they solved, and the possible alternative solutions.