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Agribusiness

Embrapa’s Growth Acceleration Program

Institutional innovation to consolidate company's presence in Africa, Europe and Latin America

faoAfrica: Embrapa gets aid from international organisms for projects about the sustainable use of natural resourcesfao

Embrapa, the Brazilian Crop and Livestock Research Company (Empresa Brasileira de Pesquisa Agropecuária) established in 1973 as a government-owned company, has become a research and development (R&D) center of excellence. The company, which is celebrating its 35th anniversary, plans to transform this knowledge into wealth. “We now have the opportunity of implementing partnerships and partnering with the private sector in Brazil in activities with the potential to generate significant resources. This will be achieved by means of technology transfer, patent royalties, and licensing, among others,” says Silvio Crestana, head of Embrapa.

However, this strategy will require another kind of institutional architecture and the creation of new business units to strengthen Embrapa’s presence in the international market and its ties with the private sector. The company’s business plan and Master Plan for the 2008-2010 period, named the Embrapa Growth Acceleration Plan (GAP), a reference to the growth acceleration plan of several sectors of the economy, are ready and expected to be officially announced by President Luiz Inácio Lula da Silva in April.

Embrapa’s international activities began in 1997, with an investment program in the United States and Europe, named Labex (Laboratories Abroad). Embrapa also works in Africa and has recently begun negotiations to enter into partnerships with China, Japan and South Korea.

Embrapa’s international presence follows different models in each region of the world. Labex, for example are prospecting technological partnership labs in countries in the Northern Hemisphere. The first such laboratory was jointly set up in Maryland, Washington, with the Agriculture Research Service/ARS; its aim was to follow research studies in the fields of biotechnology, nanotechnology, climate change, agro-energy and bio-energy. “We need to stay attuned to future agricultural technology scenarios,” he explains. “Together, we worked on the roadmap for the production of ethanol, soy beans, corn and hogs.”

The U.S. Labex is led by senior scientists, with significant research know-how. Crestana himself held this position before becoming the company’s president in 2005. In France, Labex shares a research network with three research centers from the science and technology complex of Agropolis, in Montpelier; in Holland, Labex works together with the University of Wageningen on research into advanced biology and genomics.

Embrapa has an exchange relationship with its Northern Hemisphere partners. “We are leaders in tropical agriculture and they are leaders in temperate climate agriculture. We have managed to create a balanced model,” he states. This will also be the nature of the Labex that Embrapa wants to open up in China, South Korea and Japan. “These countries have consolidated research institutes, with highly qualified personnel. We can implement cooperation policies.”

Triangular Agenda
The model is different in the Southern Hemisphere. “We are leaders in South America, where Brazil enjoys scientific and technological hegemony. So it isn’t really a technological exchange, even though there are some cooperation studies on climate change and biodiversity, among others. The interest in research is secondary,” compares Crestana. “The relationship entails agribusiness or humanitarian cooperation,” he emphasizes.

In May, Embrapa will open a technological business office in Venezuela, which imports 75% of the food consumed by its population from the United States and Colombia. The government wants to reduce this dependence and, in the medium term, produce milk, eggs and poultry. “We are going to transfer the technology for the production of corn, soy beans and forage, as well as share our expertise in genetics,” says Crestana.

The commitment, which involves a partnering agreement with the Venezuelan Instituto Nacional de Investigaciones Agrícolas (the National Institute of Agricultural Research), was signed on December 12 and 13, 2007, when Crestana went to Caracas as part of President Lula’s retinue on the latter’s official visit to that country. “The office will be self sufficient; it will pay for itself in the medium term and will generate income for Embrapa”, points out Crestana.

The office in Venezuela will be part of Embrapa Internacional, the creation of which is provided for in the Master Plan. The expectation is that it will be the embryo of Embrapa Latin America.

The agreement entered into with Ghana, in Africa, also follows market rules. “We have technological packages that can be transferred and adapted to the demands of the given countries,” he says. In Ghana, Embrapa pursues projects regarding the sustainable use of natural resources, production systems and the sanitary protection of plants and animals, tropical fruit and vegetable farming, agricultural zoning, biotechnology and the exchange of genetic material, among others.

In Mozambique, Angola, and Guinea-Bissau, Embrapa’s activities are of a “humanitarian cooperation” nature and follow a triangular “agenda:” personnel training and technology transfer is financed by third parties, such as the World Bank, the Interamerican Development Bank, and the Melinda and Bill Gates Foundation, among others. The Japanese International Cooperation Agency/Jaika, for example, funded the program for the support of cashew and milk production in Guinea-Bissau.

“Our international agenda has a major impact on Brazil’s foreign policy,” Crestana emphasizes.

embrapaSoy: partnership agreements to transfer technology to Latin-American countriesembrapa

Private sector partners
In addition to Embrapa Internacional, the new institutional model also provides for the creation of Embrapa Participações, which will allow the company to hold minority stakes in Special Purpose Companies/SPC set up for research and development of projects, such as those in the field of bio-energy. “We have already proposed an SPC in lignocellulose to develop second-generation technology for the production of ethanol. This is a US$100 million business. The remaining challenge is to deal with the management of the venture,” says Crestana (see Pesquisa FAPESP, issue No.135).

Institutional innovation is a strategic change that focuses on the company’s future. “Nowadays, Brazil is a global partner; it is no longer the hillbilly,” says Crestana. The country holds a strong position in the global meat market and is the “current star,” as he says, in terms of the production of food, energy and fibers. “We have to exercise this leadership,” he warns.

To this end, it is necessary to meet the requirements of social and environmental sustainability that the international markets require and ensure competitive prices and quality. “From the technological point of view, the biggest challenge is the traceability of products. We must be able to show the origin and the destination of the product, and guarantee the quality of the inputs used in production, which have to comply with the specifications,” he exemplifies.

Embrapa’s GAP also provides for the revival of the state system for crop and livestock farming research, knows as OEPAs. “In the last 15 years, the system has become weaker, because Embrapa lacked the power to maintain the training programs and the funds to finance these institutions’ projects,” explains Crestana. Some of these institutions were closed down and others have been abandoned and are “just lying around.” The new perspectives and challenges faced by the Brazilian farming, ranching, and agribusiness sectors, however, will require a new round of investments in research projects. “Embrapa will be unable to do this on its own. Indeed, it is not incumbent upon it to do this on its own. Its original working model provided for the collaboration of the state systems,” points out Crestana. The state entities’ task was to develop adaptability and applied research. “We are not going to set up an Embrapa unit in the state of Mato Grosso to test the adaptability of a soy bean developed in Londrina,” he says. “To this end, there has to be a partnership with the states. We commit to training the technicians for dissemination in the rural milieu and to keep track of the development.”

The effort to recover OEPAs began last year, when Congress allocated R$ 11.8 million to Embrapa to support these institutions. “A congressional front was created to aid the system,” says Crestana. The Embrapa GAP will allocate R$ 300 million to investments in the infrastructure of the OEPAs, which will also rely on funds from a special GAP program focused on Science and Technology. “The sum of these resources allows us to say that the state organizations for agribusiness research will be allocated a significant amount of money to conduct research in the forthcoming years.” The project provides for counterpart funding by the states. “We are negotiating on a state-by-state basis,” he adds.

More researchers
The Embrapa GAP also provides for a higher budget and a bigger staff. Last year, the company had already budgeted a record R$ 1,150 billion, which was only lower than the budget for 1996, the fiscal year in which the company’s budget amounted to R$ 1.4 billion, adjusted by the IGPDI price index. “We went up from a level of R$ 790 million in 1996, and grew at a rate of more than 10% a year, whereas the Brazilian economy grew at an average of 3%”, compares Crestana. This year, it is expected that the R$ 1.4 billion barrier will be overcome and that the previous record, set in 1996, will be broken.

The company also plans to increase its employee headcount, especially the PhDs. This year, it will fill the 300 available positions in its authorized headcount of 8,632 positions; in 2010, it will employ 10,243 people, 2,294 of whom are researchers, most of them with doctorates. “We will hire another 752 researchers,” he adds. He does not fear the government’s budget cuts. “I traveled with President Lula on the day on which the Senate voted against the CPMF tax on financial operations. I asked the President if this would jeopardize our project to modernize Embrapa and he assured me that it would not. Later on, I submitted the company’s restructuring program at a meeting with the President, which was also attended by the Chief of Staff, Dilma Roussef, and by the Minister of Science and Technology, Sérgio Resende. The information we have is that the project will not be jeopardized.”

The future of ethanol
Embrapa Agroenergia submitted a study about the state-of-the-art and the outlook for ethanol research, development and innovation (R,D & I) for the next five years to the Minister of Agriculture, Ranching and Supplies, Reinhold Stephanes. “This was in response to a federal government request,” Crestana explained.

After consulting all the important players, and identifying the bottlenecks and gaps, the conclusion is that Brazil has expertise in ethanol R, D & I at eight institutions: University of São Paulo (USP), State University of Campinas (Unicamp), Paulista State University (Unesp), the Agronomical Institute (IAC), the Sugarcane Technology Center (CTC), Canaviallis and the Interuniversity Network for Sugar and Alcohol Development (Ridesa). “When these institutions are integrated, they will take a major leap forward in terms of research quality,” analyses Crestana. But there are some technological gaps. In the field of agronomics, for example, it is necessary to focus on biomass. “It is possible to double the production of ethanol with higher productivity and expand the sugarcane fields in the country, which will require new cultivars.” But it will be necessary to produce more with more sustainability in relation to water consumption, energy and CO2 emissions, without disregarding the social issue. “We have to be able to certify the ethanol earmarked for export.” In the field of transformation, the solution is lignocellulose. It will be possible to double the production of ethanol per hectare, without expanding the planted area,” he says.

According to Crestana, the prospects are highly encouraging. “But we need to invest R$ 1 billion in research in the course of the next five years.” The suggestion of Embrapa Agroenergia is that this be provided by a fund with money from the public and the private sectors, the governance of which should be handled by a network of consortiums, along the lines of Funcafé, created after the Brazilian Coffee Institute (Instituto Brasileiro do Café -IBC) was wound up.

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