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Abstract
There is a growing trend to widespread privatisation of crop breeding, and there are grounds
for expecting this trend to continue and even to accelerate. Possible consequences for
Australian grain growers and the national interest of much greater private sector involvement
in plant breeding are explored.
Growing privatisation and commercialisation of plant breeding will lead to increased
competition between plant breeders. While this increased competition has been at least partly
driven by the potential for value creation, it also is likely to enhance value creation from plant
breeding so long as there is adequate continuing investment in the capacity for plant breeding,
and more particularly in productivity enhancing enabling technology.
In the event of monopoly provision of such enabling technology, an important policy issue
will be access to what might be termed essential plant breeding infrastructure. For any access
regime to essential infrastructure, the core issue is to select terms and conditions for access
that promote full and efficient competition in upstream and downstream markets (e.g. plant
breeding) while preserving the incentive for adequate levels of investment in the ongoing
development, maintenance, and provision of such essential infrastructure.
A key, perhaps pivotal issue will be pricing policy and practice. Because EPBI has the public
good characteristic of being non-rival in use, price discovery by market processes can not be
expected to produce the desired outcome. Moreover, even if an access regime mandated that
EPBI be made available to all plant breeders at a uniform price, the imbalance in market
power between the monopoly provider of EPBI and plant breeders seeking access would
almost inevitably result in both under-production of EPBI, and in under-utilisation of any
produced EPBI due to price rationing. Such outcomes would severely undermine the
competitive position of Australian grain growers in international markets.
Results from the literature on what are called excludable public goods are used to analyse the
impact on the incentive for adequate investment in EPBI under an access regime mandating
uniform pricing.