The role of national seed policies in re-structuring the seed sector in CEEC, CIS and other Countries in Transition - Michael Turner

1. INTRODUCTION

Seeds are a key input for the production of the annual crops that provide the most of the world’s food requirement. They are both the means of establishing a new crop each season and they determine the genetic potential of the crop that is grown. Seeds also provide the vehicle to transfer new genotypes (varieties) from research institutions into the farming community. Despite this fundamental role in crop production, seeds also have some special attributes arising from their biological properties, which make them a difficult product to handle. This is not only a result of physiology and genetics, which are of general application, but there are also strong economic and policy dimensions that are specific to crops, countries and regions.

This paper is intended to explain and review the context and role of policy as a component in the re-structuring of seed industries, especially in the transitional economies that are the main subject of this meeting. Despite their very different sizes and physical environments, the countries of the region share a common heritage of strong state involvement in the organization of agricultural production. Their centrally-planned system has left an immense legacy that affects every sector of the economy, and perhaps agriculture most of all because of the agro-industrial approach which characterized the large state farms in most countries. It is therefore essential to be realistic in considering the impact of policy and to keep in mind the many other factors at work in the local, national and global economies.

This paper first outlines some general concepts and terminology relating to the seed supply system. It then considers the specific characteristics of this region, which may affect the interpretation of those concepts in individual countries. Against this background, it then reviews a number of policy issues that may need to be considered in this meeting. Finally, the international dimensions of policy and the scope for regional cooperation are reviewed.

The main concern of this paper is with arable field crops, such as cereals and legumes, which occupy the majority of the area, and the important industrial crops, notably cotton and sugar beet. Fodder and forage crops should be considered because livestock production is still an important component of agricultural production, although in many countries it has declined dramatically in the past decade. Intensive horticultural crops are very different in terms of seed supply and often depend on imported seed from the international trade. Vegetatively-propagated crops are not included because they present quite different technical problems, although the same policy issues may still apply to them.

In view of the large number of countries represented at this meeting, there are inevitably risks in generalizing. For example, some countries of the former Yugoslavia had very dynamic seed industries and were a major force in the regional market, selling seed into many other countries. In contrast, the huge areas of wheat grown in the USSR and Kazakhstan depended on a completely internalized seed supply system within the state farms.

2. BACKGROUND

2.1 Divisions within the seed market

There are some clear divisions within the seed market, which profoundly affect the organization of seed supply. One is the volume and value of the seed, both in themselves and in relation to the crops which they produce; this determines the extent to which it is possible to make a viable business from producing and selling seed, in other words, the potential to support a “commercial seed market.” In general, crops such as cereals, with high sowing rates and relatively low crop values, are difficult to commercialize, while those such as vegetables, with low sowing rates and high output values, can command a good market price and support a commercial seed trade. Therefore the ratios of volume, value and output potential are major factors in determining how the seed trade works, and it is segmented into different crop groups. Crops such as sugar beet and some forages also have good commercial potential because of the technical difficulty of producing the seed.

A further consequence of this is the partition of the seed supply between formal and informal channels, as represented in Figure 1. This reflects the fact that in most crops, seeds can be produced by the farmers themselves and there is no obligation to purchase each year. Collectively, we may speak of the “seed supply system” to mean the complete mix of formal and informal channels by which farmers satisfy their total seed requirement each year. However, the actual partition varies widely between different crops and countries, depending on the economic circumstances. The term “seed industry” refers to the organized formal sector, which has local, national, and - in some crops - global dimensions. In contrast, the informal seed system is normally localized at the farm or community level and has relatively little organization.

Figure 1. Components of the seed supply system

2.2 Characteristics of the previous seed supply system

The essential characteristics of the previous seed system were its independence from market considerations and its emphasis on total control, regardless of cost. Being geared in most countries to the needs of large state farms, this meant very high volumes, in terms of both production quantity and quality control. However, this seed system was not entirely separate from grain production: grain crops were inspected and could continue to be used for seed if necessary, while seed crops could be diverted to grain use if the overall seed need was satisfied. This was a very elaborate system, but it was an integral part of the central planning process for agriculture and so cost implications and market considerations did not apply. As a result, the informal sector, which is the default supplier of low-cost seed in most other countries, simply did not exist because the entire seed supply system was administered by the Ministry.

It is a basic assumption of our discussion that there cannot be a return to the previous system, regardless of any merits it may have had. The structure of agriculture has changed and the resources are no longer available to run a system of that size. It is therefore necessary to find new ways to organize seed supply, both in terms of production and quality control. This is now a matter of some urgency in many countries, following a decade of deterioration in the state system, with virtually no investment made.

One major question is: How to create new viable enterprises in the vacuum created by the near-collapse of the old system? In the past, there was no diversity, no competition between suppliers and no product identity, except for the variety name. This has left a very strong legacy, as there is no experience of, and in general no facilities for, relatively small-scale seed supply. The only model is the large-scale one, which is unsustainable on cost grounds in a market-oriented economy.

2.3 Context and problems of re-structuring the seed sector

The general context of re-structuring throughout the region is the need to introduce a financially self-sustaining seed supply system. In view of the constraints on government funding due to limited budgets, this implies an increasing role for the private sector in production. However, problems of terminology may arise here. For example, in some countries, former state farms have been privatized in name, but their mode of operation may have changed little: they are still very large production units, and perhaps in some areas they will remain the main viable unit for crops such as cereals. Nevertheless, there is a need to plan for a more diverse structure in agriculture, both in terms of the production units themselves and the organizations that service them, even if this process moves slowly in some countries. We recognize that the issue of land reform and re-allocation is complex and may take a long while to complete.

Consequently, there are two distinct aspects of re-structuring. First is the ‘internal’ re-organization of the components of seed supply, such as production, processing, storage and distribution. The second is the ongoing change in the structure of the agricultural sector itself, as the user of the seed. This is important because the trend towards smaller private farms requires a completely different marketing and distribution strategy to that which existed before. There may be a need for packing in smaller units, wider distribution and more active contact with customers, all of which contrast with the former system in which seed, like other inputs and equipment, was simply ‘allocated.’ The immediate problem is the acute lack of experience in carrying out such market-oriented tasks.

A further dimension, particularly in the countries of the former Soviet Union, is that agricultural production did not take account of self-sufficiency on a ‘national’ basis. For example, while wheat was the staple food in the region, in some countries the supply of grain came mostly from other republics of the Union. This has had a profound effect in some countries, which, following political and economic independence, have felt the need to produce more wheat, and perhaps other crops, to reduce dependence on imports. This changes the overall cropping pattern and may lead to a seed demand that did not exist before. There may be other effects of the collapse of this integrated economic system. For example, Kyrgyzstan was formerly a livestock-producing country, with huge, intensive units, but the market for their output has disappeared, leading to a dramatic reduction in the livestock population and in the demand for fodder crops.

Despite the importance of seed in agricultural production, they alone cannot change fundamental structural problems in the sector. For example, in some Central Asian countries, the rural economy is seriously lacking financial liquidity, because of the bankruptcy of many old institutions. This makes it very difficult to re-establish a “normal” commercial trading system for buying and selling seed, or any other commodities. The barter system that has developed as a substitute is very inefficient in comparison with cash transactions. It is therefore essential to have a realistic view of what the seed sector can contribute to reviving agriculture. Seed can certainly make a vital contribution, but alone cannot transform a rural economy subject to many other constraints. Seed must be considered in the wider context of agricultural input supply and output marketing, of which it is an integral part.

2.4 Regional differences and groupings

This meeting has brought together a very wide range of countries, united solely by their recent history of a socialist economic system, in which state farms and cooperatives were the main organizational unit of agricultural production. There are, however, some clear geographical groupings within the countries represented here. The countries of the former ‘Eastern Europe’ and the Baltic States are looking westwards to the EU, with a view to membership in the short to medium term. Their guiding principle, therefore, is how to integrate into a larger Europe. The Caucasus countries, by reason of their position and small size, have strong links to Russia and - in some cases - also south towards Iran. The Central Asian Republics form another large group, with links to Russia, but perhaps more southwards to Pakistan and the Indian subcontinent, and to Turkey for ethnic reasons. The old ‘Cold War frontiers’ imposed barriers that had no relation to agro-ecology, and Central Asian Republics’ complex boundaries that were largely irrelevant within the Soviet Union are now real national frontiers. Consequently, there are strong regional dimensions in planning seed sector development. It is important to expand regional trade wherever opportunities exist, while at the same time ensuring that countries do not create new barriers ‘accidentally’ by introducing divergent regulations and policies. That is perhaps the most important objective of this meeting.

3. GENERAL ASPECTS OF SEED POLICY

3.1 The nature and role of policy in the seed sector

Policy is essentially a ‘declaration of intent’ by the government on how it wishes the seed sector to develop. When the government was the major or sole player in the seed sector, policy was not important, or was an automatic consequence of a larger economic and social system. However, when the system becomes more diverse and new participants enter the seed business, policy assumes a key role. It therefore has a special relevance to countries undergoing economic transition. In fact, policy could be the key catalyst in the liberalization process. This was demonstrated very clearly in Turkey, which announced a major policy change in the mid-1980s by encouraging foreign investment in the seed sector. India took a similar decisive step in 1990, with dramatic consequences in the ensuing decade.

These examples illustrate clearly the immense impact that policies can have on the development of the seed sector. However, policies cannot change the fundamental technical and economic characteristics of seed supply. No matter how strong the pressure for privatization, some crops are intrinsically unprofitable and may not be taken up by the private sector. Therefore, government agencies may have a continuing strategic role in the seed system to ensure that seed of certain crops continues to be made available and that there is a channel for introducing new varieties. Here again, Turkey provides a good example of this dilemma. Despite the strong encouragement of private sector participation, certain crops, notably wheat, remain largely in the public sector, with state farms and cooperatives still playing a major role in these crops. Moreover, in countries with unpredictable climate, there may also be a seed security element to consider, so that government institutions can be the ‘default supplier’ in times of crop failure. It is impossible for the private sector to accept that responsibility because of the financial risks involved.

3.2 The changing role of government in seed supply

In socialist economies, the government was the only effective supplier of seed, through its central planning of the economy. The current perception is that the role of government is to create a favourable ‘policy environment’ within which other suppliers can develop the commercial market. This concept therefore provides the justification for developing a seed policy that can achieve those objectives. We may consider the analogy of the garden - in the past, large public organizations occupied all the space and this left no room for anything else to grow. Nowadays, the objective is to create a fertile garden in which different types of enterprises may develop according to their competitive advantage. The question again is: How to promote that commercial diversity?

3.3 Policy and legislation

It is important to distinguish between policy and legislation. Nearly all countries have seed laws and technical regulations controlling certain aspects of the variety and seed system. This is intended to protect the various participants, both producers and farmers, and typically covers:

• testing and registration of varieties;

• seed quality standards - typically through ‘certification’ procedures;

• registration of companies and facilities involved in processing and marketing seed;

• labelling requirements on seed packages - linked to certification; and

• protecting the property rights of plant breeders.

Such legislation can exist quite independently of any seed policy; it applies to all seed and varieties marketed within the country, whether originating from government agencies or private companies. Policies, in contrast, are not part of the law: they are intended rather to establish certain basic guidelines for the operation of the sector. For example, the policy may say that regulations should apply in the same way to varieties from public and private sources. Therefore policy is separate from laws and regulations but should be in harmony with them. In the case of seed, the policy may be more concerned with ensuring that regulations are applied in an equitable way and without hidden discrimination. We may consider that there is hierarchy of official interventions, namely policy, laws, regulations and procedures, as represented in Figure 2.

3.4 Managing the policy

Besides setting up the policy initially, it is essential to monitor its impact and to make adjustments as necessary. Stability is a key feature of policies if they are to generate confidence among the various players in the market, but there should still be a forum for discussing policy issues and suggesting changes. This should be a responsibility of an ‘apex body’ of some kind, such as a National Seed Council or Board, which meets perhaps 2 or 3 times a year to review all aspects of the seed industry. This must be a truly representative body, including the private sector, in contrast to the past, where such committees were dominated by government officials and research organizations. The existence and role of this apex body should be defined in the policy, and also in the Seed Law. There is also a need to ensure that policy is implemented in practice. Sometimes the policy says the right things, but those who implement regulations and procedures lower down the pyramid continue to apply old and discriminatory measures, sometimes for reasons of self-interest because proposed reforms may threaten their employment.

Figure 2. The intervention hierarchy - with an example from plant variety protection

3.5 Ensuring representation

If policy changes are successful in promoting a more commercial seed supply system, how does the emerging private sector ensure that its views and needs are adequately represented to Government? Individual companies may have their own channels of communication, but ideally there should be a truly representative mechanism for discussing matters of mutual interest within the private sector. This function is normally achieved by a ‘National Seed Association’ supported by the member companies and with access to policy-makers at a high level. This has been an important element of the seed industry in developed countries, where ‘trade associations’ of all kinds have a long history. This structure is also reflected in the membership of the International Seed Trade Federation (FIS), which is primarily composed of National Seed Associations, not of individual companies.

In recent years, we have seen the establishment of such national seed associations in several countries in the region served by ICARDA, notably in Turkey, Morocco, Egypt and Pakistan. This is a very positive development, as it can provide the seed industry with a formal voice and a channel for communication to Government. It may therefore be an element of the seed policy to promote and recognize such a body. At the regional level also, new seed associations have been established, notably for the Asia and Pacific Region (APSA) in 1994 and for Africa (AFSTA) in 2000.

4. KEY ASPECTS OF SEED POLICY

4.1 Defining responsibilities

One vital function of a seed policy is to define ‘who does what’ within the more open and diverse system that is evolving. As already noted, this was not an issue when the government did almost everything itself, but, with the liberalization of many economies, seed policies have become much more important. The new policy may therefore be a catalyst for initial change and a guardian of the transition process. It should ensure that the playing field remains reasonably level, and certainly not discriminate against ‘new entrants’ to the seed sector during their establishment phase.

4.2 Access to facilities and services

This applies particularly to quality control procedures, which, in the short term, will remain mostly in Government hands. If new enterprises of any kind enter the market, they may not initially have their own quality control facilities. It may be more efficient for them to use the existing facilities operated by government agencies. This is a logical approach, but it requires absolutely that their needs are being met on an equal basis. If, for example, the seed samples from a local seed cooperative are always left until other, traditional, clients have been satisfied, then the system is being discriminatory. If new entrants to the system are to be encouraged, then they must clearly be treated in an equitable way. Another possibility for such open access is the leasing of existing processing facilities to new enterprises.

4.3 Access to public varieties

This is an important topic, but one which varies according to the actual situation in different countries. If the research system is still in the public sector, then it is necessary to devise a mechanism by which those varieties can be made more widely available, rather than just passing automatically to a public seed organization. There are various ways in which this can be done, such as by offering licences to multiply new varieties. The continuation of public sector breeding is potentially a stimulus to the emergence of a new seed industry, since companies are unlikely to set up breeding programmes initially, and may need to obtain new varieties from elsewhere to strengthen their portfolio. However, an equitable policy for accessing these varieties must be devised and, in the context of plant variety protection, a royalty payment may also be expected.

4.4 Variety release and introduction

One of the features of centrally-planned agriculture was its reliance on a few varieties, which were sown on very large areas. This was perhaps a matter of convenience in specifying cultivation procedures, but it also often reflected the relatively small number of varieties that satisfied the criterion of wide adaptation. The same situation can be found in government-dominated seed programmes in many developing countries, where, despite large-scale breeding and evaluation, relatively few varieties were actually listed and the procedures for such listing were often very lengthy. Indeed, this situation still persists in many countries, and it is regrettable for several reasons, in particular as it reduces the return on research investment by delaying the uptake of new varieties, and it deprives farmers of the choice that would enable them to exercise flexibility in their management practices. Of course, such flexibility was not encouraged in centrally-planned agriculture.

A related issue is the introduction and release of varieties from other countries. The lengthy testing and stringent release conditions mentioned above may also apply to foreign varieties, but that is especially wasteful if they those varieties are already being grown successfully in similar environments. At its worst, this practice may simply be a way of favouring the national breeding programme by making it harder for introduced varieties to reach the market. This again reduces farmers’ choice and potentially deprives them of varieties that could meet their needs very effectively. For this reason, cooperation in variety testing would be a very positive regional dimension in seed policy. This referred to again below.

4.5 Prices and subsidies

The previous socialist system was highly subsidized, so there was no direct relationship between costs and prices: everything was simply administered according to the Plan. With the move towards a market economy, there is a natural expectation of charging to a market price, which covers at least the direct costs of production. This is certainly a desirable objective, but of course it may also be difficult to achieve because the production units were often inefficient and they did not have to consider cost control. The sudden imposition of market obligations on previously subsidized state institutions may be unrealistic, and, if enforced, may simply lead to rapid bankruptcy, which has happened in some countries. At the same time, if subsidies continue, then it will be very difficult for new entrants from the private sector to compete on price, and, furthermore, they may be discouraged from even starting because they are uncertain about government intentions.

Therefore, the question of pricing is one of the most sensitive issues in the re-structuring process. The policy should lay down guidelines that promote equal treatment for all, but the implementation of this should also be monitored. Complete collapse of the former system, without any new growth to replace it, may have a disastrous effect, and indeed that is the situation observed in some countries. Although the private sector has moved in to colonize some sectors of the economy, in general that has not been the case in agriculture because of the risks and low returns on investment. There are more attractive areas of the economy for private capital.

5. RELATED ISSUES

5.1 The future of research institutions

The place of research institutions within the re-structured agriculture and seed sector deserves special attention. A convenient solution is to say that these institutions now have to become market-oriented and to survive on income generated by the products of their research. While this may be a very desirable goal, it may also be unrealistic in practice, because they do not have a product portfolio sufficient to support the research infrastructure, even with some drastic pruning. The ‘Seed Associations’ of the former Yugoslavia were a classic model of how to link breeding research to the market and achieve full cost recovery. However, that approach worked well in only a few crops, especially maize and sunflower, that are highly profitable. It is unlikely that small research institutes will suddenly become self-financing. The writer believes that this has been tried in Poland over the past ten years, but there have been many casualties.

In these circumstances, the government may be forced to decide whether it wishes to allow these research centres to perish, or whether to support them from the central budget, if they have some strategic importance. It may certainly be risky to abandon the research system to a market fate. In the long term, plant variety protection and royalties may provide the solution to this issue, but in the interim, expecting significant revenue may be optimistic in view of the poor economic status of agriculture in so many countries. Furthermore, there may be legitimate concerns in abandoning national breeding capability and thus becoming totally dependent on foreign suppliers for both varieties and seed.

5.2 The future of quality control services

The possibility of cost-recovery is raised frequently in the context of quality control (QC) agencies. In some European countries, there has been a steady trend in this direction so that nowadays some such agencies are virtually self-financing from charges levied for their services. There are two problems with this approach in the countries represented here. First, the existing QC services are often large, because of the comprehensive service they provided in the past: this makes them relatively costly and inefficient. Second, seed producers may be reluctant to pay the charges because this is another element that has to be covered in the selling price. To summarize, cost recovery is a good principle, because it makes both service providers and clients more alert to the efficiency and value of the service they get. In practice, however, it may have to be implemented cautiously to stand any chance of success.

5.3 The development of extension services

The absence of organized extension services was one of the most notable features of the agricultural sector in centrally-planned economies. This function was assumed partly by general recommendations for crop husbandry, and locally by specialist technicians within the production units. The lack of a diverse community of farmers, and the lack of managerial flexibility at the farm level, largely removed the need for this service. With the diversification of agriculture during economic transition, there is a need to provide information, and this prompts the establishment of an extension facility of some kind. The immediate problem is that this is an additional responsibility that governments will find difficult to finance from their limited budgets. This is a serious constraint, because the emerging community of ‘new farmers’ may need both management and technical advice to establish their businesses. Whatever arrangements are made in different countries to address this need, information about varieties and seed quality will be a key component. Familiar activities, such as on-farm trials, demonstrations and field days, will all have a part to play in this process. When the private sector does start to take over a significant proportion of the seed supply, it would be an intrinsic part of their marketing operations to provide information and to organize promotional activities.

6. INTERNATIONAL DIMENSIONS IN SEED POLICY

Policy is essentially a national concern, promoted by individual governments for their own territories. However, there are also external considerations, both regionally in relation to the adjacent countries, and globally, relating to the international seed industry and those organizations involved in it. Some parts of the seed trade are now so internationalized that very few countries can pursue a policy of independence and self-sufficiency. Certainly, within the region under discussion at this meeting, only one or two of the larger countries could adopt that approach, while the majority will depend on substantial trans-border movements of seed.

6.1 The climate for foreign participation and investment

There are several different mechanisms by which foreign expertise and material can be used to develop the seed sector. These range from simple importation of pre-packed seeds (typically of vegetables), through to major investment or joint ventures undertaking the full range of activities, including breeding, production and marketing. The climate for receiving inbound investment may vary greatly depending on general financial regulations as well as market opportunities. We would consider that inward investment is a positive factor because it demonstrates commitment and confidence in the market. However, countries might wish to impose some conditions about local participation in such ventures to ensure mutual benefit and promote continuity in such commercial relationships.

6.2 Participation in international organizations

During the time of the Soviet Union, COMECON provided a massive integrated group of economies working on broadly the same system. There were formalized internal supply channels, though not on a truly commercial basis. For example, Kyrgyzstan and southern Kazakhstan produced seed of forages, especially alfalfa, for export to other countries in Eastern Europe and the Baltic States. There was a significant volume of movement, but all administered internally and with no element of competitive marketing. This network collapsed with the break up of the Soviet Union, and it would be very difficult to restore, because there are many other suppliers in the international market who can quickly take that business, and have done so. However, ultimately, some countries of the region do have a comparative advantage in seed production, as indeed Hungary has had for many years, exporting to many western countries. Therefore, despite the recent interruptions in trade, countries in this region will eventually find their place within the international seed trade, both as producers and importers, depending upon their needs and comparative advantage. With that prospect, it is essential that they begin (or resume) participation in the various international organizations that facilitate that trade, namely FIS, ISTA, OECD and UPOV. Unfortunately, that may present funding difficulties because of the costs of participation. Here again, a regional association might assist individual countries by developing links of that kind and providing information to members in the way that the ‘WANA Seed Network’ does from ICARDA for some 20 countries in West Asia and North Africa.

6.3 Regional harmonization of procedures and standards

Harmonization is probably one of the most important technical aspects of seed policy, although it is difficult to implement unless there is some forum for coordination. The members of the European Union have had common (although not identical) procedures for many years in respect of seed. The most important aspects relate to the quality standards required for marketing seed and for variety testing and listing procedures, since there is a Common Catalogue of varieties. As a result, both varieties and seed can move within the EU with relative ease, using a uniform labelling format recognized in all countries. The actual standards adopted have to be agreed among all the participants, and that may cause difficulties initially, as happened in the EU. However, in this region, because many countries had a common background, such harmonization should not be too difficult. It is perhaps more important that countries do not start taking divergent paths, thus making harmonization and re-integration more complicated.

As already noted, regional groups of countries should certainly consider the coordinated testing of varieties, particularly in Central Asia, where complex national boundaries overlay uniform agro-ecological areas. It would be very efficient for these countries to coordinate their variety assessment trials so that data from many locations could be combined within a single analysis. Regional variety lists, whether for regulatory or advisory purposes, would therefore be a very positive development.

Plant variety protection is another activity that would benefit from regional coordination, such as by agreeing to share data and extend rights between participating countries. This inspired the establishment of the European Community Variety Rights Office, thus enabling breeders to obtain variety rights for all countries of the Union on the basis of a single application and test.

6.4 Regional seed policy initiatives

If the countries of this region are preparing or implementing policies to guide the development of their seed industries during the period of economic transition, then some mechanism for regional coordination would be very desirable. In the case of the westward-looking countries, any policies they devise should be based on convergence with the standards of the European Union, both for commercial benefit and to ease the path towards eventual membership, if desired. For the Central Asian and Caucasus countries, the European Union may not be the determining factor, but still some regional coordination would be highly desirable for reasons already outlined. Given the various regional dimensions noted above, the Central Asian countries might benefit particularly from a regional initiative of this kind, because of their complex national frontiers, which bear no relation to agriculture.

7. CONCLUSIONS

7.1 An overview of factors affecting the seed industry

Three broad influences determine the development and status of the seed industry, namely:

• Technology - especially the flow of new varieties from research;

• Economics - both of seed production itself and of the agricultural sector generally; and

• Policy - which creates the commercial and financial environment.

All of these factors can be modified and there are many interactions between them that ultimately determine the size, viability and other characteristics of the seed industry. Figure 3 provides a diagrammatic representation of this analysis, in which various influences on the seed sector are represented within the triangle formed by these three primary elements. Policy has been placed at the top because of the major impact it can have on technology and economics. At the centre lies the production environment, which forms the basis for agriculture, and which cannot be substantially modified, except by irrigation or protected cultivation.

We should recognize seed policy as a major tool for change, but also accept that it cannot alter certain physical and environmental factors and, in a free market, it will always interact with technology and economics. In addition to the policy designed specifically for seeds, wider social and environmental policies may also have an impact on the seed sector and these may be driven by public awareness. For example, the current debate in Europe about the use of genetically-modified crops is not primarily conducted on technical issues about seeds but on wider environmental and food safety concerns. It has nonetheless had a major effect on the seed industry.

7.2 From uniformity to diversity: the big challenge

To summarize, a major task of any new seed policy is to replace the uniformity of the past with a new diversity in the supply system. As already noted, the previous system was characterized by institutional uniformity, both among the producers and among the consumers, state farms being the dominant production unit. This uniformity also had a biological dimension as, in many countries, relatively few varieties were often grown on huge areas of land. Massive state farms would sometimes grow only two or three varieties of cereal on thousands of hectares. The challenge of transition is to create diversity in this system, among the institutions, and hopefully among varieties as well, so that the re-structured farming units have a larger number of varieties to choose from. With the ending of centralized control of agronomic practices, one would expect producers to start making their own managerial decisions about the mix of varieties they wish to grow in future. However, at present, the supply system is weak and does not provide many options. Furthermore, in some countries, the agricultural sector is in very poor economic condition due to the lack of investment over a decade. For this reason, there is some urgency to make progress on seed sector reform and development at both the national and regional levels. Policy initiatives can play a major role in the process.

Figure 3. Major factors affecting the development of national seed programmes