Innovation and the GDP Mirage

The American press has, understandably, been almost myopic in recent  months.  The focus – the US Economy.

Michael Mandel (Business Week Nov 9th) explains how GDP growth, which many see as a barometer of economic well-being, does not tell all.   This measure of economic activity does not record changes in R&D spending or product design.  While Bloomberg is forecasting an increase of almost 4% in US GDP for the third quarter, Mandel points to R&D cuts:  Lexmark, 16%, Adobe 19%, Caterpillar 25% and Alcoa a whopping 36%.  And it is investments in R&D today that will power the economy in years to come.  You can read his analysis at:
http://www.businessweek.com/magazine/content/09_45/b4154034724383.htm?chan=magazine+channel_top+stories

But the innovation model has changed. In WWII and the post-war years, government funded basic research, and the private sector did the applied research required to create products and processes.  The Bayh-Dole Act (1953) expanded the playing field:  universities were allowed to license technologies developed with government research dollars to the private sector, and this set off an innovation boom.

This period marked the ascendance of Xerox PARC and Bell Labs.  Bell  Labs inventions include fax, TV broadcast, the transistor, UNIX, cellphones. But now that private sector investment and government funding for basic research have both been declining, what research is being done today that is going to drive the economy in 5,10 or 15 years?

In “A Radical Rethink of R&D” (Business Week 9/7/09) Adrian Slywotzky, a management consultant, analyzes new innovation models which have been developed by IBM, Microsoft and others. New kinds of research partnerships have been forged, many of them in emerging economies like Brazil.  They are about exerting maximum leverage on available resources; about risk management; and about  incentives. You can read the story in full at: http://www.businessweek.com/magazine/content/09_36/b4145035674883.htm

At CAS-IP we are interested in innovation models because there may be lessons to be learned in the North which can benefit the South.  Our work with cacao producers in Ecuador and with WASA on food security is informed by what we have learned about marketing and about supply and distribution chains in North America and Europe.  And innovation is a critical element in implementing these kinds of projects.

Post written by Peter Bloch, consultant to CAS-IP

Gene Patenting killing health research?

Intellectual Property Watch has been able to see the first draft of the report that the US Health and Human Resources Secretary’s Advisory Committee on Genetics has produced, and has rightly commented on it. The report questions the benefits of patenting genes in the development of research and states that:

“although patents offer an incentive to companies to conduct research and develop genetic diagnostics, exclusive rights are not needed to advance the development of most genetic tests.”

The critic goes further and questions whether patented genes and thus the grant of monopoly in a specific area stiffen competition and lower general quality. Tom Dilenge, general counsel and vice president for legal and intellectual property at the Biotechnology Industry Organization (“BIO”), spoke in defense claiming that what makes research and development possible is the patenting system.
I agree with the Advisory Committee that US patent system should include and apply extensively an exemption from liability for infringement of gene patents when the patented gene is used for patient care purposes. The world of biotechnology has developed too fast and proprietorship over genes and their modifications are raising many questions and concerns. If you are interested in following this debate, you can find more information following this link http://oba.od.nih.gov/SACGHS/

Post written by Francesca Re Manning, consultant to CAS-IP

Oxfam and “The other green revolution”

Oxfam, the UK-based mega NGO, reports on its success in the Sahel where soil management, erosion control and tree planting have transformed the agricultural environment.
http://www.oxfamamerica.org/articles/the-other-green-revolution:

“African farmers have reclaimed farmland lost to drought in the Sahel, bringing hope for the future of this arid region and a model for fighting hunger worldwide”

On October 29th Oxfam hosted several panel discussions in Washington DC to enable the innovators to explain the history of the project and to engage with donors and other NGOs in a discussion about how to replicate this kind of success.

FRAME covered the event on Twitter and comments can be found at:
http://twitter.com/frameweb

FRAME observed that:

“After the devastating droughts of the 1970’s and 1980’s, African farmers in the Sahel region mobilized to reclaim their land from the encroaching desert. Thirty years later, their work has secured 13 million acres of farmland, fed 3 million people, recharged village wells, and supplied useful and valuable tree products. Despite growing populations and the threats of climate change, food security has improved in the Sahel region.”

As more land is lost to drought, this work may have far-reaching implications for food security in sub Saharan Africa.
Oxfam is far more visible in the UK than it is in North America.  They have played a signicant role in making England a big market for Fair Trade products.  Even chains like Tesco and Waitrose carry FT products in at least five categories, and Sainsburys has a partnership with Twin Trading about (the co-founder of Divine Chocolate) to develop FT products.

OxfamAmerica played a major role in building consumer support for Ethiopia’s coffee trademark initiative (click here for our blog posts on this subject); if you search http://www.oxfamamerica.org for “Ethiopian coffee” you’ll find a dozen links that describe the history of their involvement.

Oxfam understands branding better, probably, than any other NGO.  Check out their range of activities – which includes global warming, emergency aid and poverty in the UK – at:
http://www.oxfam.org.uk/oxfam_in_action/

Post written by Peter Bloch, consultant to CAS-IP

Whole Earth Discipline: An Ecopragmatist Manifesto

Stewart Brand’s new book will not be published until January 2010.  But it is already creating a stir.  Brand’s “Whole Earth Catalog” was ubiquitous in the 60s and 70s and was the default bible for what became the environmental movement.

Kai Ryssdal interviewed Brand on NPR’s Marketplace.  You can listen to the exchange at:
http://marketplace.publicradio.org/display/web/2009/10/26/pm-whole-earth-q
(text of the interview available even if you have problems downloading the audio)

Fans of Brand will be surprised;  his underlying message is that if the modern environmental movement is going to have any impact, practitioners must keep up with new science.  Within the context of climate change, Brand spoke about big city slums, nuclear power and GM crops.  He expressed the view that if critics could get over their built-in resistance, they would see that GM will support positive environmental goals.

Already the crops that we have now, the herbicide tolerant and the insect-resistance crops, like Bt-corn and Bt-cotton, and so on, are cutting back on pesticide use, which is terrific. The herbicide-tolerant ones mean that you don’t need to plow every year, so you’re getting what amounts to higher yield, so you can raise more food on less land. And all of that is good for ecology in general and climate in particular.

The interview has already generated a number of comments.  One listener observed:

… in light of the interview on NPR I heard about a month ago produced by World Vision that discussed the so-called “Green Revolution” which is based on genetically engineered crops.

Although the initial outcomes were encouraging, one only needs to look at the current food crises in India to see the devastation that has occurred. The dependence on monoculture and fossil fuels for fertilizers, especially with the end of cheap oil, is the “height of irresponsibility”.

Monoculture results in depleted soil with poor yields, not to mention the high cost of fertilizer. Quoting Vandana Shiva: “We must stop focusing on simply maximizing grain yields at any cost and consider the environmental and social impacts of food production.”

(see also - http://casipblog.wordpress.com/2009/09/24/the-next-green-revolution-warnings/)

Post written by Peter Bloch, consultant to CAS-IP

Update to post: Report to the UN General Assembly on “The Right to Food”

Update to post: Report to the UN General Assembly on “The Right to Food”  http://casipblog.wordpress.com/2009/10/15/seed-policies-and-the-right-to-food-enhancing-agrobiodiversity-and-encouraging-innovation-report-to-the-un-general-assembly/

On the 15^th October 2009, we published a post about the Report to the UN General Assembly on “Seed Policies and the Right to Food”.  This document has also been sent to us by numerous contacts in our extended network.   Victoria Henson-Apollonio, Manager of CAS-IP has some initial comments:

“Intellectual Property Rights and seed systems feature in the report of the special rapporteur on the Right to Food of the UN. These are key issues for the CGIAR. It is very important to note that this report now raises awareness among an audience that may not have previously realised the importance of these issues. The recommendations are a comprehensive catalog of ideas encompassing a wide range of suggestions. However, the summary itself seems to be an industrious recap of arguments and ideas that some may consider well known and in some cases even outdated.

For those of us that work in this uneven terrain on a daily basis, it seems a missed opportunity for serious discussion on the dynamic relationships between the domain of IPRs/farmers rights/farmer preferences/contracts/contract law/competition law/seed law and food security.

It is on one hand heartening to see these issues being presented at such a high level.  However, the lasting impression I have after reading the document is of disappointment and sadness of missed opportunities. Of course we have to wait for the full report and hope that it provides a clearer analysis of solid data.  It is curious to note that for several people in our IP in agriculture & development network, this report came as a surprise; they (including us at CAS-IP) have so far not been consulted even though the CGIAR is specifically referred to and this is our area of experience from a practical level. The recommendations of the report will involve many, many years of hard work.  It is essential that recommendations logically flow from an analysis of the data and that clear indicators are developed to measure success in obtaining the goals.

Let’s wait for the presentation of the background documents that have led to the report, monitor reactions in the mean time.  Let’s involve ourselves in the discussions that likely follow from the political attention that these important issues have received.”

Piracy for development?

 The Washington Post.com: Piracy worked for us, Romania president tells Gates 

According to the Washington Post, Romanian President Traian Basescu recently told Bill Gates:

“Piracy helped the young generation discover computers. It set off the development of the IT industry in Romania,”

No doubt it wasn’t the first time ”piracy” has boosted an industry, and certainly won’t be the last.  Piracy can, at least in some cases, be in the eye of the beholder.

Bill Gates unsurprisingly made no comment… 

Thanks to Sebastian Derwisch, consultant to CAS-IP for sending me the link.

POORFARMER; something’s brewing in Ethiopia

Since the CAS-IP blog was launched over a year ago, we have posted several items relating to both Ethiopian coffee branding and to Eleni Gebre-Madhin, sometime economist at IFPRI and now Chief Executive Officer at the Ethiopian Commodity Exchange (ECX), an entity that she founded.  Gebre-Madhin was the principal investigator on a comprehensive report published by IFPRI in 2003 on supply chains  – Getting Markets Right in Ethiopia: An Institutional and Legal Analysis of Grain and Coffee Marketing.

We had also referenced the imbroglio surrounding the Government of Ethiopia’s (GOE) move to trademark several of their coffee names; this was intended to firmly establish these varieties as premium coffees, license the use of the names and, over time, to establish distribution chains that would result in a higher return to impoverished producers.  This met with substantial opposition from the US coffee industry, and the National Coffee Association filed a 200 page letter of protest with the USPTO.  Oxfam, supporting the producers, initiated a media campaign to persuade Starbucks to support the GOE plan.  The outcome of this initiative is that the GOE now owns trademarks to Sidamo, Harrar/Harar and Yirgacheffe in the US and in other territories, in spite of objections that these names were generic and/or merely geographically descriptive when the applications were filed in 2005.

A part of our mission at CAS-IP is to help small-holder farmers in developing countries raise their incomes through increased productivity, value add and benefit sharing.  Lessons learned from the Ethiopian trade marking program might inform related projects and support our work with commodity producers in the South (see our market development project).  By way of disclosure, I was the co-founder of Light Years IP and, prior to joining CAS in 2007 acted as COO.  With funding from DfID, Light Years represented the GOE, and I managed the coffee trade-marking program  until 2006.

The latest development brings Ethiopian coffee and Gebre-Madhin together at the ECX Specialty Coffee Event.
The story can be read at:
http://af.reuters.com/article/investingNews/idAFJOE59K0I020091021?feedType=RSS&feedName=investingNews&rpc=401
I would like to thank Shlomo Bachrach and eastafricaforum.net for bringing this to my attention.

According to Reuters:

Ethiopia plans to move the trade in its specialty coffee to an Addis Ababa-based commodities exchange instead of the current channel of selling the beans at auctions overseas, a senior trade official said.
Eleni Gebre-Madhin, Chief Executive Officer at the Ethiopian Commodity Exchange (ECX) said up to 30 percent of the country’s produce is classified as specialty beans but that higher prices for the fine coffees were not trickling down to farmers.
“The initiative positions Ethiopia to have perhaps the only domestic marketing system in the world for discovering and trading specialty coffee at the arrival stage, thus benefiting the farmers who produce these coffees, rather than at the export end of the chain…..”

Wondwossen, an Ethiopian blogger (http://poorfarmer.blogspot.com) provides coverage of the Ethiopian coffee saga.  His three-part, in-depth report on recent events suggests that relationships between specialty coffee importers in the US (and Europe) and Ethiopian producers have been disrupted by the GOE’s move to channel sales of all coffee through ECX.  When I spoke to Wondwossen, however, he observed that “coops and large estates growing specialty coffee are allowed by the GOE to bypass ECX and sell directly to the ultimate buyers”.

It is difficult to determine whether Wondwossen’s analysis is accurate (although his past reporting has proven to be reliable), but the real questions remain:

• has the trade-mark program effected an increase in s/h farmer incomes?  Not so, according to Gebre-Madhin.  The trade-mark and licensing program would, however, likely not deliver results for several more years;
• will the channeling of all (or most) coffee export sales through ECX have a negative impact on the availability and/or sale of premium coffees in the West?

One informed observer suggested that the Government’s activities are destructive.

We know from studying the market for premium chocolate that direct buyer-seller relationships have been critical in helping producers to achieve a consistent high quality bean, and that this has helped certain estates to sell their output for double the commodity price.  We also know that Starbucks has developed relationships, many of which include grants, with producers with the intention of ensuring a consistent and high quality product.  But there is little if any evidence that high prices in the West for premium coffee or premium chocolate have had much impact on producer incomes.

By way of conclusion:  the Ethiopian coffee supply and distribution chains have been tinkered with, and producer-importer relations disrupted.  The outcomes are unclear, as is the impact of the trade-marking, branding and licensing programs.  Wondwossen is considering a more academic study (he is currently seeking an academic institution to sponsor this, and can be reached though his blog).

More information at:
http://www.bloomberg.com/apps/news?pid=20601116&sid=aAwrvMjuvdbc
http://www.lightyearsip.net/
http://www.ethiopiancoffeenetwork.com/

post written by Peter Bloch, consultant to CAS-IP

Copyright & implied licence

IPKat: Committal for contempt not fit for ‘grey area’ disputes

A case reported on the IPKat today highlights a dispute between a copyright owner and a newspaper publisher. Francesca Re Manning, the CAS-IP consultant who sent this link to me said this could be of interest to the Centres who use photos – even though the legal systems they operate might be different from the English one.

The dispute arose over how far the licence extended (there was no written agreement).  The judge ruled that the publisher had incorrectly assumed to have an ‘implied licence’ to use the owners copyrighted materials in back issues databases which further to the initial use in the publication.

It highlights a need to have an agreement in place when using the copyright of others, even if just to ensure that everyone is reading from the same page!

Self regulation of public goods

NYTimes.com article: “The Non-Tragedy of the Commons”
Interesting point of view about the self regulation of

“resource(s) that don’t belong to anyone”. 

The author sums up some of the arguments from research by Elinor Ostrom of Indiana University into the management of “commons”. 

“the effort to preserve biodiversity should not lead to the destruction of institutional diversity”

Click here to link to the publication “Understanding Knowledge as a Commons. From Theory to Practice” Edited by Charlotte Hess and Elinor Ostrom. 

Some of my favourtite topics in there — digital media and OA! I will have a quick read of the sample chapters and update this post with any points of interest I find.

Thanks to Irina Curca, Programme Assistant to CAS-IP who sent this link.

An alternative to the IMF? The Emerging Monetary Fund

Simon Johnson, Chief Economist at the IMF from March 2007 to August 2008, writes in the October 19th issue of Business Week that:

“To be effective, an international lending organization must be trusted by potential borrowers”. 

Unfortunately, many developing countries do not trust the IMF, and Johnson proposes the creation of a new entity – an EMF, or Emerging Monetary Fund.

Johnson’s proposes that

“The EMF would be like your friendly neighborhood physician; the IMF could run intensive care”.

Read his rationale in the Business Week article, “An IMF Just for Emerging Markets”

Post written by Peter Bloch, consultant to CAS-IP