The value of a novel biotechnology: Lessons from Canada’s canola crop and implications for China

The purpose of this paper is to examine the impacts of changing biotechnology and intellectual property rights (IPRs), institutions, and policies for Canadian crop development related to oilseed rape or “canola” as a case study. Implications for China as it considers regulatory and institutional change related to private sector incentives to invest in biotechnology are also discussed.

The authors assess the effects of introducing biotechnology and IPRs in the Canadian oilseed sector over time. Data on the rate of return on agricultural research in general are presented and then the focus moves to the impacts for farmers in Canada. New data are gathered to estimate recent gains in the benefit of biotechnology advancements for farmers. Furthermore, the evolution of agricultural research in China is briefly presented, and a discussion follows that considers Canadian evidence and the possible applicability of the impacts to China.

The results support earlier studies identifying gains from agricultural research and show that private sector investments in Canada are now much higher than public sector investments and thus institutional innovations have been a powerful trigger to improve productivity. The gains from biotechnology for farmers are now over CND 1 billion per year in Canada.

The research gains measured are for Canada so should be applied to China’s situation only as a potential for gains.

While more work is needed to identify reasonable institutional incentives to generate private investment in China’s biotechnology industry, the potential impact in the Canadian canola sector highlights the importance of continuing the investment in biotechnology, and the need for appropriate policies and regulations to spur private investment.

Biotechnology greatly improved the welfare of farmers in Canada. Much of the gain the authors find was in improved yields and lower herbicide costs that improved farmer profits. Privatization of breeding was a key step in this transformation.

The paper contributes an updated review of Canadian intellectual property institutions related to biotechnology, and an updated measure of gains at the farm level. It also begins the analysis of the applicability of these institutional changes for China.