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HSE Experts Propose Ways to Transform the Selection and Seed Industry in Russia

Experts from the National Research University Higher School of Economics (NRU HSE) have developed a ten-step plan for the transformation of the selection and seed industry in Russia, aimed at increasing the competitiveness of the agro-industrial complex. A corresponding report entitled "Selection 2.0" was presented at a round table in the "Rossiyskaya Gazeta" with the participation of heads of breeding companies and specialised state institutions.

"The essence of the ten steps we propose in the report 'Selection2.0' is to make the selection and seed industry, an element of the market system. Unfortunately, the transformation of the agro-industrial complex did not take place completely. That is, agricultural production, logistics, trade and export entered the market, and the segments associated with the production of the seeds, remained in the logic similar to the command-administrative system, which causes their inefficiency," said Alexey Ivanov, Director of the HSE-Skolkovo Institute for Law and Development, Director of the BRICS Competition Centre, Academic Director of the Center for Technology Transfer at the Higher School of Economics.

The main steps in the transformation of the selection and seed industry.

According to the presentation at the round table, the first step in the transformation plan of the Russian selection and seed industry is the organisation of several interdisciplinary educational centres for the training of specialists, biotechnologists and bioinformatics based on the model of the world's best agricultural and general biological universities and scientific institutions. According to experts, the conservative estimate shows that Russia needs 250 biotechnologists specialists for 3-4 years.

A successful example in this area, according to HSE experts, is the project of the Educational and Scientific Center for Plant Biotechnology, which has been implemented since January 2020 on the basis of Skoltech, which can subsequently be scaled up to other regions.

The second step should be the creation of a digital structured database of state genetic collections, which will gather all information on the genetic and phenotypic characteristics of the samples. It is planned to include all historical varieties samples and continuously replenish it with new market samples. Then the experts propose to develop and implement a transparent mechanism for equal access of private and state breeding organisations to collections, based on the best world practices in this area.

Also, analysts believe it is necessary to focus public spending on fundamental breeding science, focusing on expanding and exploring collections, developing new biotechnological methods and protocols, and developing pre-selection methods. According to experts, selection work must be structured in such a way that it is focused on the needs of business, including it is proposed to change the regulations for the formation of state assignments for state scientific institutions in the field of breeding, as well as introduce an indicator of the activities of scientific organisations, demonstrating the market demand for breeding achievements ( for example, the proportion of the area sown with the seeds of a given selection in the total area under a given crop).

It also requires the development of new crop breeding programs in the field of nutrient and agrochemical savings, environmental suitability and energy savings for agricultural production and aimed at tightening the global climate agenda.

An important step in the development of the industry is the development of understandable conditions for cooperation between Russian and international breeders and organisations in the long-term interests of Russian companies, including the adaptation of the world's best practices, technologies and accumulated experience, the presentation says. "In particular, we are making proposals for discussing Russia's participation in several international agreements that most of the BRICS countries and Western states have already signed: the Nagoya Protocol, the International Treaty on the Exchange of Genetic Collections in the Agricultural Sphere - we need to understand why we still do not participate in these processes, "Ivanov explained.

At the same time, it is necessary to direct state support measures to create vertically integrated national leaders in the field of breeding, seed production and package agro-technological solutions based on Russian private companies or companies with state participation.

Experts believe that it is imperative to update the regulatory and legal framework for the selection and seed industry, and the unified strategy "Selection-2030", which will include detailed indicators of the state of the industry, may become the fundamental document. After that, it is expected to develop and adopt a set of interrelated regulations governing the entire "value chain" in the agro-industrial complex, emphasising the selection and seed industry - from basic science to export and processing.

According to experts, it is crucial to settle both the issues of germplasm turnover for selection purposes (since the regulations for the import of foreign genetic material within the framework of international cooperation for scientific purposes have not yet been determined in Russia) and the issues of access to Russian genetic collections for private breeders of the country.

Also necessary are the new mechanisms for collecting royalties for finished seeds and the adaptation of control and supervisory functions to new market realities.

Experts call one of the critical challenges - the adaptation of Russian selection programmes to the challenges of the climate agenda, which will require a significant change in priorities in the industry's development due to the introduction of a carbon tax on agricultural products by a number of countries.

Background of the problem

According to Ivanov, now the foreign selection is gaining strength, while Russian, on the contrary, is losing profitability. And, most importantly, Russia is losing control over the agricultural sector's development trajectory. "The time has come to transfer breeding work to market rails, to make the breeding business in Russia private, to let the players operate in a healthy market competition mode so that they can start effectively competing with global companies," Ivanov said.

He added that the Higher School of Economics is working on the Selection 2.0 project together with the Federal Antimonopoly Service (FAS) of Russia.

Vugar Bagirov, director of the Department for coordinating the activities of organisations in the field of agricultural sciences of the Ministry of Science and Higher Education of the Russian Federation, noted that the private selection business in Russia has great potential for development, and private investors should come to the selection industry. In his opinion, the selection industry needs a serious reformatting of the legal field in which it currently operates.

Back in 2015, a working group of the competition authorities of the BRICS countries was created to study global food chains. The essence of its work was to understand how competition in food markets works today. "In 2017, the working group - with our active expert participation - prepared and presented an extensive report that described the key risks and problems of transformation of global food chains as a whole. With sufficiently large volumes of agricultural production in our country, there is also a large volume of imports of capital goods - thus, the delta that remains in Russia is not as large as we would like, "Ivanov stressed.

In his opinion, to rise higher in the value chains, it is necessary to have a robust technological base, and in Russia, the agro-industrial complex is seriously lagging technologically.

The project is being implemented within the framework of the National Plan for the Development of Competition, approved by Russian President Vladimir Putin in 2017 and the roadmap adopted on its basis by the government in 2018 for the development of competition in the agro-industrial complex, the main goal of which is to qualitatively increase the competitiveness of Russian agriculture at the world level.

Reducing the domestic market's dependence on foreign selection material and associated agro-technological solutions is included in the list of tasks set by the President and the Government of Russia in the framework of the national plan for the development of competition.

Recently, the branch of selection and seed production as the most important strategic direction of agriculture has been in the focus of special attention of the country's leadership. In particular, Russian President Vladimir Putin announced the need to increase independence in this area during the annual press conference.

Industry position

During the presentation, the chairman of the board of directors of Bio-ton LLC, chairman of the board of the Union of Grain Exporters Eduard Zernin noted that now Russia accounts for about 20% of the world grain market, and our country's goal is to maintain this leadership. To do this, it is necessary to develop the direction of selection. However, according to him, the trajectory of the industry's development does not fully reflect the needs of the business, and there is no effective link between agricultural business and the selection work of state institutions. In the same rare cases, when a business is ready to get involved in breeding projects with the state, it faces barriers.

Thus, according to Zernin, the Bio-ton company was denied the possibility of obtaining germplasm as part of the technological transfer, implemented by the FAS order as part of the agreement on the economic concentration of Bayer and Monsanto, since Bio-ton wanted to involve state institute in a selection program, which was prohibited from participating by the Ministry of Education and Science.

Large companies in Russia are already actively developing the direction of selection and seed production and consider the industry's transformation as a tool to significantly increase its investment attractiveness. According to Vitaly Voloschenko, director of the centre for selection and primary seed growing at EkoNiva, the holding spends about 30 million rubles a year for this purpose. In particular, the company's specialists annually carry out about 500 combinations of crossing various varieties of wheat and soybeans. Besides, this year the company launched a soybean genomic breeding project. And the ten transformation steps presented in the report, according to Voloschenko, will help increase the attractiveness of this area for private investors significantly.

How to develop the industry

The authors of "Selection 2.0" are confident that the state of affairs in the industry threatens to turn Russia into a "world garden" - the center of low-margin, economically unstable and environmentally harmful production, which is deeply dependent on government subsidies. To avoid this, selection and seed production need a structural transformation.          

An example of a new approach to the development of the industry, focused on increasing the Russian agricultural sector's competitiveness, was the order of the FAS Russia on the Bayer-Monsanto merger. The regulator approved the merger but set several conditions for Bayer. The agro-giant was obliged to transfer genetic material and technologies to Russian farmers to breed their varieties and hybrids and conduct training for recipients. A plant biotechnology training and research centre has also been set up with Bayer's support to teach advanced breeding techniques.

The fulfilment of the order is controlled by the Technological Transfer Center, specially created for this purpose on the basis of the HSE. One of the centre's special projects, implemented jointly with partners, was "Selection 2.0".

Helping the development of strong private sector companies is the most obvious way to overcome dependence on foreign varieties and hybrids, said Igor Artemyev, an aide to the Russian Prime Minister and former head of the FAS. "Only such players have a chance to compete with foreign suppliers, which increasingly offer not just genetic material (seeds), but ready-made package solutions," notes Artemyev.