"Market Regulation Dissonance: The Architecture of Pakistan’s Seed System" presented by David Spielman, Senior Research Fellow of the Environment and Production Technology, IFPRI at DSGD Pakistan Strategy Support Program Brown Bag Panel Discussion “Addressing the Needs for Sustained and Rapid Agriculture Sector Growth in Pakistan”, Oct 22, 2014

1. Market Regulation Dissonance:
The Architecture of Pakistan’s Seed System
Ahsan Rana,a David J. Spielman,b and Fatima Zaidib
a Lahore University of Management Sciences, Lahore, Pakistan
b International Food Policy Research Institute, Washington, DC, USA
Presentation at a panel discussion on
“Addressing the Needs for Sustained and Rapid Agriculture Sector Growth in Pakistan”
International Food Policy Research Institute
Washington, DC, October 22, 2014

2. Background
Green Revolution in the 1960s – 1970s
 Introduction of high-yielding, fertilizer-responsive, semi-dwarf rice and wheat cultivars
 Complementary provision of inorganic fertilizers, irrigation, advisory services
 Production incentives through price supports
Slow Revolution in the 1990s – 2010s?
 Concerns about slow varietal change between modern varieties
 Cf. Heisey 1990; Heisey et al. 1997; Farooq and Iqbal 2001; Khan et al. 2002; Battese et al. 2014
 Concerns about greater vulnerability to new pest and disease threats
 Frequent weather shocks, climate volatility, long-term climate change
 Diminishing natural resource base; unsustainable soil nutrient, groundwater extraction
 Changing demand from farmers and consumers

3. A summary of the problem
Supply-side challenges
 Complex legislative framework governing cultivar improvement, seed provision
Weak regulatory system governing varietal release, biosafety, IP use
 Insufficient investment in plant breeding, agronomy, biological/molecular sciences
 Poor policy support for private enterprise development and seed marketing

4. Release of varieties and hybrids, 1933–2013
Crop Pre-1970 1970–1979 1980–1989 1990–1999 2000–2009 2010–2013 Total
Wheat 0 13 20 35 44 22 134
Cotton 2 9 11 28 32 27 109
Pulses 0 0 8 26 32 6 72
Oilseed 0 0 8 31 15 6 60
Vegetables 3 2 2 30 15 5 57
Sugarcane 0 0 3 15 15 6 39
Fodder and forage 0 0 10 6 14 7 37
Rice 5 3 10 8 8 1 35
Fruit 0 0 0 7 20 8 35
Maize 0 5 2 9 5 4 25
Barley 0 0 3 3 2 2 10
Total 10 32 77 198 202 94 613
Source: Authors, based on FSC&RD data

5. Pakistan’s seed industry: A stylized history
 Phase I (1947 - late 1950s): Small-scale research and development in the public sector
and focus on a few major crops primarily in Punjab and Sindh
– Pakistan’s first research center: Punjab Agricultural College and Research Institute, Lyallpur
 Phase II (1950s-1970s): Development of an elaborate network of public-sector
organizations designed to develop and deliver improved cultivars
– Pakistan’s first seed SOE: West Pakistan Agricultural Development Corporation, 1961
– Pakistan’s first seed law: The West Pakistan Seeds and Fruit Plants Ordinance, 1965
 Phase III (mid 1970s-mid 1990s): Legal and institutional development
– WPADC wound up, seed production assigned to provinces (Punjab, Sindh)
– Seed Act, 1976 specifies procedures for varietal registration, seed certification; creates
Federal Seed Certification and Registration Dept (FSC&RD)
 Phase IV (mid 1990s to date): Rapid private sector growth
– Estimated seed market value in 2008-09: US$845 million (Hussain 2011)

6. Seed producers registered with FSC&RD, 1981-2012
Type of company Punjab Sindh KPK GB and Ibd Balochistan Total
Public sector 1 1 1 – 1 4
Private (national) 621 98 23 3 5 750
Private (multinational) 4 1 – – – 5
Total registered 626 100 24 3 6 759
Deregistered 182 23 5 – 3 213
Total 808 123 29 3 9 972
Before 1991 1991-95 1996-2000 2001-05 2006-10 2011-12
No. of companies
registered by period 6 56 229 257 312 103
Source: Authors, based on FSC&RD data.
Notes: “GB” denotes Gilgit Baltistan; “Ibd” denotes Islamabad.

7. The operative governance framework today
 The Seed Act, 1976
 Seed (Registration) Rules, 1987
 Seeds (Truth-in-Labeling) Rules, 1991
 Fruit Plants Certification Rules, 1998
 Biosafety Rules and National Biosafety Guidelines, 2005

8. Recent efforts to reform the legal framework
 Legal reforms aimed at archaic regulations are at the center of conflict between
government and entrepreneurs
• Draft bill from FSC&RD (2009)
• Draft Punjab Seed Act (2011)
• Plant Breeders Rights Act (under development)
 THE RESULT?
 A vibrant, unregulated, informal seed market serviced by the formal sector

9. Source of seed, by crop, 2012
Source Wheat (%)
n= 414
Cotton (%)
n= 266
Maize (%)
n= 54
Source: Authors, based on data from IFPRI/IDS (2012).
Note: Figures may not to 100 percent due to rounding.
The statistics are fairly constant across landholding sizes – see annex slides for details
Rice (%)
n= 261
Punjab Seed Corporation 2 3 0 0
Agriculture extension department 2 0 7 0
Research institute 1 1 3 0
Private seed company 33 28 46 24
Input dealer 38 55 27 32
Landlord 12 7 0 35
NGO/ Relief agency 2 0 11 0
Cooperative society 0 0 0 1
Friend/relative/neighbor 11 6 6 7
Formal
sector
Formal/
Informal
Informal
sector

10. Seed provision in the formal and informal sectors
Research Institutes Seed Company
New cultivars New cultivars
Seed Council
FSC&RD
Seed Corporation
Agri-input Dealer
Seed Company
Sale Point Sale Point
Farmer
Own Seed
Other Farmers
Seed production
Seed
certification
Seed production
Informal sector
Informal sector
Registered
growers
Registered
growers
R&D R&D
International
Sources
Exotic germplasm
“The informal market”

11. Bt cotton adoption, 2003-13, as reported by respondents
95.5
85.1
50.3
100
90
80
70
60
50
40
30
20
10
0
2003
2004
First Bt cotton varieties approved by NBC
2005
2006
2007
2008
2009
2010
2011
2012
2013
Rate of adoption (%)
Punjab Sindh Overall
Source: Spielman et al. (forthcoming)

12. Farmers’ beliefs about whether their cotton variety is Bt or not
Source: Spielman et al. (forthcoming)
83
91
87
60 63
77
0
67
100 100
20
80 79
12 9 8
33
0
24
14
27
0 0
50
20
14
100
90
80
70
60
50
40
30
20
10
0
MNH-886
IR-3701
FH-142
NEELAM-121
Z-33
TARZAN-1
NIAB-78
Ali Akbar-703
BT 456
SG-1
CIM-506
Ali Akbar-802
A-555
% of farmers
Yes Do not Know

13. Constraints for private seed industry development
 Mistrust between FSC&RD and private companies leading to growing
dissonance between the law and the market
 Inadequate legislative and institutional framework (technical and resource
capacity issues with FSC&RD and NBC)
 Limited access to breeder seed from public research institutes for
companies that multiply and market public varieties
 Relatively small domestic market size disincentivizes to investment, esp.
given barriers to seed trade with India
 Absence of intellectual property rights (IPR) protection; reluctance of
private companies to handover germplasm for testing at competitor
institutes

14. Formalizing the informal
Four pronged approach to reform the legal and institutional regime
Redesign the
regulatory
framework
Re-evaluate the
role of seed
certification and
replacing with a
truth-in-labeling
regime
Simplify variety
release
procedures
Encourage
competition on
genetics, quality
of service and
Position farmers
at the center of
policy debates
other
dimensions

15. Thank you