This chapter describes the agricultural innovation system in Korea and outlines the recent changes it has undergone. It first provides an overview of the general innovation system; presents agricultural innovation actors and their roles in the system; outlines changes in roles and themes of R&D; and presents the main policy instruments and monitoring efforts. It then reviews the main trends in public and private investments in R&D, the funding mechanism and the means used to foster knowledge markets and networks. This is followed by an overview of policy incentives for the adoption of agriculture innovation, with an emphasis on the role of training and advisory services at farm level.
Innovation, Agricultural Productivity and Sustainability in Korea
OECD Food and Agricultural Reviews
Chapter 6. Agricultural innovation system in Korea
Abstract
6.1. General characteristics of R&D in Korea
Performance
Korea’s strategic objective is to shift its growth paradigm from that of an industrial economy to that of a knowledge-based one. The intensity of its public and private R&D expenditure is among the highest of OECD countries. Gross domestic expenditure on R&D grew 6.9% in 2009-14, reaching 4.3% of GDP in 2014. Publicly financed R&D expenditure, which grew by 4.1% annually in 2009-14, is 1% of GDP. Korea’s business expenditure in R&D was 3.4% of GDP and at the top of the OECD ranking (OECD, 2017a). The government offers a generous tax credit programme to private R&D investment. Korea’s tertiary education expenditure per GDP is also among the highest of OECD countries. The public research system has concentrated on applied and development-oriented research, much of which is performed in the public research institutes. The government has increased investment in basic research, from 30% of total government R&D investment in 2008 to 36% in 2015, with a target of 40% by 2017 (OECD, 2017a).
Despite this considerable investment in its R&D system, Korea has few world-class universities and produces fewer high-impact publications according to indicators such as the Top 500 universities per GDP, publication in leading journals and triadic patent families (OECD, 2017a). According to OECD statistics, its education sector performance is quite low relative to investment, both in terms of top adult performers in technology problem-solving and doctoral graduate rate in science and engineering (Figure 6.1).
Strong development in ICT sectors has been a key factor in making Korea one of the fastest-growing OECD economies over the past decade. It has a strong revealed technology advantage in ICT, with almost half of business R&D performed by the computer, electronics and optical industries (OECD, 2017a). The country’s infrastructure for ICT and internet is more advanced than that of any other OECD country, particularly in terms of wireless broadband subscriptions and E-government development.
Figure 6.1. Comparative performance of Korea’s science and innovation system, 2016
Source: OECD (2017a), “Korea”, in OECD Science, Technology and Innovation Outlook 2016, http://dx.doi.org/10.1787/sti_in_outlook-2016-71-en.
General governance of innovation
The Science and Technology Framework Law of 2001 includes provisions for the formulation of mid and long-term policies and implementation plans. It serves as the legal basis for inter-ministerial co-ordination of science and technology policies and R&D programmes. It also provides the overall framework of support for R&D activities and science and technology agencies, and the legal basis for fostering an innovation-driven culture (OECD, 2014a). The government formulates five-year Basic Plans for Science and Technology based on the Framework Law. The National Science and Technology Council (NSTC), under the Prime Minister’s Office, is the top decision-making body in the science and technology sector, for which it deliberates key policies, plans, projects and budget operation (Figure 6.2). The council consists of the Prime Minister as the chairperson, 14 Ministers and 10 private-sector members, one of whom acts as co-chairperson. The Presidential Advisory Council on Science and Technology (PACST), established in 1989, provides advice and consultation to the President regarding science and technology development strategies, major policy directions and system improvement measures. From April 2018, NTSC will be merged with PACTS to consolidate the strategic planning organisations and make the decision-making process more efficient.
A ministerial overhaul and major changes in science and technology policy co-ordination arrangements were carried out in 2013. Most science and technology policy functions have been consolidated into the Ministry of Science and ICT (OECD, 2016a). The ministry (MSIT) is in charge of the establishment, supervision, adjustment and evaluation of national science and technology policies, including the Basic Plan for National Science and Technology. The Korea Institute of Science and Technology Evaluation and Planning (KISTEP) provides support for planning, evaluation, and management of national R&D. While the Ministry of Strategy and Finance (MOSF) allocates general R&D budget, ministries such as MAFRA, MOTIE and MSS implement specific R&D projects in co-operation with the co-ordinating institutions such as MSIT and NSTC.
Based on the Framework Act on Science and Technology, each implementing ministry has a specialised R&D management agency that plans, evaluates and manages the public R&D projects. Each of these agencies sets and supports national-level strategies and serves as a link between their respective ministries and R&D agents such as public research institutes and universities. The first R&D management institution was founded in 1977 to manage national projects: the Korea Science and Engineering Foundation, currently the National Research Foundation of Korea (NRF). As of 2017, a total of 19 R&D management institutions exist. For example, the Korea Institute of Planning & Evaluation for Technology in Food, Agriculture, Forestry and Fisheries (IPET) is the R&D agency for MAFRA.
Figure 6.2. Implementation framework of national R&D projects in Korea
Note: KIAT, KEIT, KETEP and TIPA represent Korea Institute for Advancement of Technology, Korea Evaluation Institute of Industrial Technology, Korean Energy Technology Evaluation and Planning and Trade related IPR Protection Association.
Source: Kim et al. (2015), complemented. (Original source: Cho et al., 2003).
6.2. Actors, institutions and their roles in agricultural innovation systems
An agriculture innovation system (AIS) can be defined as the network of private actors such as farmers, producer organisations, agricultural enterprises and consulting agencies who intend to create new value through new agro-food, new production processes, new marketing, and new organisational forms; it includes public institutions at the central and local level.
In the agri-food sector, MAFRA, the Rural Development Administration (RDA) and Korea Forest Service (KFS) are responsible for planning and implementing R&D policies (Figure 6.3).1 As MAFRA’s main responsibility is the commercialisation of R&D outcomes in the agri-food industry and the development of private R&D capacity, applied and development research accounted for 29% and 56% of its R&D expenditure, respectively. Meanwhile, RDA is mandated to develop pre-industrialisation technologies, thus basic research accounted for 49% of its R&D expenditure in 2016.
Figure 6.3. National agri-food R&D system in Korea
Source: KREI (2015). (Original Source: Korea Institute of Planning & Evaluation for Technology in Food, Agriculture, Forestry and Fisheries, http://www.ipet.re.kr/Policy/Propel.asp. The content was partially complemented).
In 2009, the Science and Technology Commission of Food, Agriculture, and Forestry (STCA) was established as a control centre for efficient supervision, adjustment and management of R&D in the agri-food sector, which is managed by MAFRA, RDA and KFS. In addition to improving co-ordination of public agricultural R&D projects, STCA is also tasked with improving the linkage between policies and the direction of R&D.
The Korea Institute of Planning & Evaluation for Technology in Food, Agriculture, Forestry and Fisheries (IPET) is responsible for planning and supervising the competition-based R&D projects of MAFRA that are carried out by university research institutes, public R&D institutions, corporates, or private research institutes. Its major tasks include supporting the establishment of strategic and action plans to promote technological development in food and agriculture; supporting the planning, management, and evaluation of MAFRA’s R&D projects; examining technological capabilities in the food, agriculture, and fishery sectors; and providing support for developing human resources in the related fields.
The Rural Development Administration (RDA) was established in 1962 to enhance the effectiveness of national agricultural R&D and technology dissemination, unifying the existing experimental research and technology dissemination system. RDA is in charge of planning and managing R&D projects implemented by the national research institutes, namely the National Institute of Agricultural Sciences, the National Institute of Crop Science, the National Institute of Horticultural & Herbal Science, and the National Institute of Animal Science. The work of RDA includes planning and supervision of collaborative joint R&D projects by the national research institutes, universities, public R&D institutions and private research institutions. Unlike other research institutes, RDA performs both public R&D and extension services. The actual extension services are provided by the Agricultural Research and Extension Services at the provincial level and Agricultural Technology Centres at the municipality level. The Foundation of Agricultural Technology Commercialization and Transfer (FACT) was established under RDA to facilitate technology transfer for the agri-food industry, to create the foundation for commercialisation of agricultural R&D outcomes and to provide test services for quality certification.
Regional research institutes include the Provincial Agricultural Research and Extension Services, which operates plant experiment stations specialised in locally grown cereals, fruits and vegetables. Agricultural Technology Centres, which are established in each municipality, carry out R&D related to on-farm application and extend the new technologies to the producers. However, improvement of co-operation between the central and local governments has been a policy issue. MAFRA and RDA are strengthening their collaboration with regional research institutes. For example, RDA is activating a national-regional co-ordination council at the planning stage of their R&D projects as well as national-regional research councils for each agricultural product.
As noted above, AIS actors include private entities such as farmers, agricultural product associations, enterprises, and agricultural co-operatives. The farmers’ main role is to share knowledge and technology with other farmers and to apply technology for the production and marketing of agricultural products. Commodity-specific farmer associations often play a role in disseminating technology to their members, complementing the public extension service. They also communicate the technological needs of their members to public research institutions. NH also disseminates technologies and marketing strategy technologies to farmers, as well as supplying inputs and marketing outputs. Agri-business enterprises often both conduct R&D and communicate technological innovation needs to public research institutions.
Box 6.1. Network analysis of Korea’s Agricultural Innovation System (AIS)
Lee et al. (2016) quantified the networking status among AIS participants (Figure 6.4). The width of the connection between the actors indicates its strength, while the size of the node represents the average influence of each actor. The network analysis of 11 AIS actors shows that public actors such as RDA, provincial agricultural research services and agricultural technology centres play a central role in Korea’s AIS. On the other hand, private actors such as private research institutes, product associations, agro-food companies and agricultural co-operatives are relatively isolated from the public sector. This is an indication that the public-sector organisations need to strengthen their linkage with the private sector to develop a more inter-connected AIS. The network status of AIS also shows close relationships between RDA, the Provincial Agricultural Research Services and the universities. However, the weak relationship between the public R&D institutions and the central government, including MAFRA, shows that public R&D activities can further increase their linkage with national agricultural policy objectives.
Figure 6.4. Networking Status of AIS in Korea
Source: Lee et al. (2016).
Lee et al. (2016) also conducted a survey among 11 AIS actors on 18 items of strengths and weaknesses as well as their importance (Figure 6.5).1 The strengths of the Korean AIS in are identified as R&D capability and manpower, extension and education manpower, and government budget. Almost all actors identified awareness of the need for innovation as a strength, indicating a broad consensus among the actors on the importance of innovation. The proposal and identification of technology innovation ideas is selected as one of strengths, meaning that AIS actors are aware of what they need for agricultural technology innovation. Connecting the recognition of the need for innovation to substantial outputs from AIS is a major policy agenda in Korea.
However, the survey shows that co-operation with the private sector, private investment, and participation and capability of innovation in the private sector are identified as weak points. These items are also found in the ‘Highest Priority Improvement Area’, which a low performance score compared to their importance score. Moreover, co-operation between the central and provincial government, policy and plan (scheme) to promote technological innovation, and co-operation and co-ordination of interests are shown to be weak, albeit to lesser degree. They are in the “Improvement Area”, which is characterised by a low importance score relative to the performance score. The analysis indicates the future policy agenda should be to strengthen AIS, including by encouraging investment and participation of the private sector, establishing a culture of mutual trust and co-operation, clearly defining the roles of central and regional government, and expanding the autonomy of actors.
Figure 6.5. IPA portfolio for AIS
Source: Lee et al. (2016).
1. Items with a positive value are strengths while those with negative values are weaknesses. The level of strength or weakness of an item is higher as the absolute value is larger. The index is calculated as follows. Each respondent is asked to select three strengths and three weaknesses out of the 18 items. Selected strengths and weaknesses are given points. The score of each item is obtained by averaging the scores obtained from all the respondents. The same method was applied to measure the degree of perceived importance of 18 items. The area below the 45⁰ line in the 1st quadrant is the ‘Relatively Strong Area’, meaning that the items in the area have a high performance score compared to their importance score. The 4th quadrant is the ‘Retention Extended Area’, meaning that the items in the area have high performance score but low importance score. The 3rd quadrant is the area of low importance and low performance. The area below the 45⁰ line is the ‘Improvement Area’, meaning that the items in the area have a low importance score compared to their performance score.
6.3. R&D policy in agriculture
Strategic framework
The 1999 Act on Promotion of Science and Technology in Food, Agriculture, Forestry and Fisheries established the strategic framework for Korea’s agricultural R&D policy, mandating the government to prepare a five-year Comprehensive Plan for Agri-food Science and Technology Development. A working group consisting of MAFRA, RDA, and KFS establishes the Plan, supported by 14 groups of technical committees of experts. Each technical committee proposes the major contents including the vision and direction of the plan, and the technical committee establishes a detailed roadmap for each technical field. The draft plan also reflects the results of the policy research conducted by KREI as well as the opinions of the general public as submitted through an online policy forum. STCA deliberates the draft of the plan, which is eventually endorsed at the national strategic level by the PACST.
Based on the Comprehensive Plan, MAFRA designs an annual implementation plan. For example, the implementation plan for 2017 highlights the significance of improving the R&D governance to minimise investment in similar and overlapping R&D projects run by MAFRA, RDA and KFS. It also recognises the need to re-allocate the roles and responsibilities of three organisations and to strengthen the function of the STCA. Since 2017, MAFRA and RDA have been jointly surveying demand for technology in order to improve the co-ordination of public R&D activities from the project planning phase.
The evaluation of R&D investment made by the 1st Comprehensive Plan (2010-14) highlighted the limitations in connecting agricultural policies and addressing on-site issues. Based on this assessment, the 2nd Comprehensive Plan (2015-19) aims to strengthen the link between policies and fields of activity and to increase the efficiency of the agri-food R&D. The Plan identifies 4 major areas and 50 core technologies (Table 6.1).
Table 6.1. Key contents of the 2nd Comprehensive Plan for Agri-food Science & Technology Development in Korea
Source: MAFRA (2016).
Monitoring and evaluation system
The performance evaluation of R&D in the agri-food sector is conducted as a part of the national framework of R&D performance evaluation. Based on the Act on the Performance Evaluation and Management of National Research and Development Projects, MSIT annually formulates an implementation plan for the national R&D projects and institution evaluation, which is then reviewed by the Steering Committee of the NSTC.
Expanding the independence of researchers and conducting quality-based evaluation are considered the top priority to obtain excellent research outcomes. OECD (2014a) finds that few OECD countries are as comprehensive in evaluating public support for R&D as Korea. The performance evaluation system follows a five-step project cycle (Figure 6.6). It first sets a creative and challenging performance target and measures the qualitative excellence of the performance. Each ministry conducts an internal performance evaluation, followed by a higher-level evaluation by MSIT to examine the relevance and adequacy of the internal evaluation process and its results. MSIT also conducts special evaluations on projects that are relevant to particular policy issues or that require co-ordination with other projects. MSIT and NTIS publish the evaluation results and MSIT reflects these in the budget adjustment and allocation for R&D projects. Researchers who accomplish outstanding performance are rewarded by the government for their efforts with awards and increased R&D budget. MAFRA and RDA also use the internal performance evaluation result when revising and complementing implementation plans for R&D projects.
Figure 6.6. Performance evaluation system of national R&D projects in Korea
Source: MSIT (2017).
In 2017, interim evaluations were carried out on 129 projects conducted by 16 ministries and institutions, with a total value of KRW 5.3389 trillion (USD 4.5 billion). These projects will be rated on a five-point scale based on achievement of their predetermined performance target and excellence of their performance. In agriculture, the interim evaluation comprises four projects by MAFRA including the development of livestock disease countermeasure technology, and eight projects by RDA including the establishment of a climate change response system in agriculture. The final evaluation is conducted on the completed ten projects of six ministries and institutions. The follow-up evaluation is targeted at 15 projects of seven ministries and institutions completed in 2014-15. The level of post-performance management and relevance of the dissemination system are evaluated along with the impact and outcome of utilisation and distribution, including technology transfer and commercialisation.
6.4. Public and private investments in agriculture and food R&D
Public R&D investment grew at an annual average of 3.6% over the period 2012-16 (Figure 6.7). The growth rate of R&D expenditure was more than double the growth rate of three institutions’ combined total budget. As a result, the R&D budget as a share of their total budget increased from 4.9% in 2012 to 5.5% in 2016. Among the three institutions, RDA accounted for 68% of public R&D investment and MAFRA accounted for 21% in 2016.
As a result of an increase in public investment in agri-food R&D, the intensity of government budget appropriations or outlays for R&D in agricultural science in Korea became one of the highest among the OECD countries, exceeding 3% of agricultural value-added in 2015 (Figure 6.8). The intensity of public R&D investment in agricultural science is also much higher than the intensity of other sectors in Korea.
Figure 6.7. Evolution of public investment in agri-food R&D in Korea, 2007 to 2016
Note: R&D in fisheries sector is included for years 2007 to 2012.
Source: NTIS (2017), National Science & Technology Information Service Database, http://rndgate.ntis.go.kr.
Public investment in agri-food R&D includes those projects directly performed by public research institutions (called “ordinary R&D projects”) and competition-based R&D projects performed by external organisations such as universities, private enterprises, and public or private research institutes. Competition-based projects are selected for a specific research theme designated by a government institution or for an open theme suggested by a bidder. The percentage of competition-based projects in 2014 was 87%, 58% and 26% of the R&D expenditure in MAFRA, RDA and KFS, respectively (Table 6.2).
Figure 6.8. Intensity of public agricultural R&D investment
* or latest available year.
Source: OECD (2017b), OECD Research and Development Statistics, Government budget appropriations or outlays; OECD (2017c), System of National Accounts, https://stats.oecd.org; ASTI (2017), Agricultural Science and Technology Indicators (2017), www.asti.cgiar.org/data (last accessed in October 2017).
Table 6.2. Agri-food R&D budget in Korea, 2014
KRW million
1. “Others” include rural development experiment research (1 718) and the policy R&D projects (2 580).
Source: Data provided by the Science and Technology Policy Department at MAFRA (partially complemented).
The thematic focus of public agricultural R&D investment reflects the focus of the Comprehensive Plan for Agri-food Science & Technology Development. The current Plan (2015-19) has four major policy objectives: 1) Reinforcement of Global Competitiveness; 2) Creation of a New Growth Engine; 3) Stable Food Supply; and 4) National Welfare Improvement. The first objective of improving competitiveness includes research areas such as radical reform of agricultural industry, high value-added food and ICT convergence, which accounted for 35% of public R&D investment in 2016. The second objective of creating new growth engines accounted for 30% of investment in 2016, including development of biotechnologies, golden seed projects and rural energy. The stable food supply objective attracted 22% of investment in 2016 and includes improving self-sufficiency rates, responses to climate changes, disaster and disease prevention. Welfare improvement includes safe food production and forest management. Public investment is generally focused on development of new technologies to improve competitiveness and productivity of agriculture, but it pays less attention to improvement in sustainability of agriculture.
Private investment in agricultural R&D
The intensity of private R&D investment, which accounted for 75% of total R&D investment in 2015, is the highest among OECD countries. The food and beverage industry in Korea also invests in R&D more intensively than other OECD countries, although less intensively than other sectors in Korea (Figure 6.9.B). According to the data provided by KISTEP, R&D investment by Korean food manufacturing reached KRW 953 billion (USD 842 million) in 2015, which is 3.9% of the value-added of the industry. Similarly, agriculture-related manufacturing industries including pesticide, agricultural machinery and fertilisers invested KRW 196 billion (USD 173 million) in 2015, which is equivalent to 7.6% of the industry’s value-added. Private R&D investment by the food manufacturing industry and agriculture-related manufacturing industries grew by 3.5 and 1.9 times in 2008-15, respectively.
Despite a high overall level of private R&D investment in Korea, including by the food manufacturing and farm input industry, private investment in agriculture is very low (Figure 6.10.A). The share of private investment in agriculture is only 0.1% of agricultural value added, which is lower than most OECD countries. The growth of private R&D investment in agriculture was 1.5 times in 2008-15, which was significantly lower than other sectors (Table 6.3).
Table 6.3. R&D spending by agriculture-related enterprises in Korea, 2008 to 2015
KRW 100 million
Source: KISTEP.
Figure 6.9. Business Expenditures on R&D (BERD) in the agriculture and food and beverage sectors
Note: The figures are based on the data for the latest available year for each country: the years 2013 and 2014 for the agriculture sector (panel A), except 2010 for Canada; the year 2010 for the food and beverage sector (panel B), except 2009 for Korea and 2006 for Australia.
Source: OECD (2016b), OECD Research and Development Statistics, Gross domestic expenditure on R-D by sector of performance and field of science, http://stats.oecd.org/Index.aspx?DataSetCode=GERD_SCIENCE; OECD (2016c), System of National Accounts, https://stats.oecd.org.
Several factors may explain the particularly low level of private investment in agriculture in Korea. First, the primary agricultural sector is dominated by small-scale family farms, which have less capacity to invest in R&D. Moreover, the tax incentive for private R&D investment in primary agriculture is much less than in other sectors as most farmers and agricultural corporations are exempted from income tax. Second, the large public agriculture R&D programme is likely to offset the low private R&D, leading to Korea’s overall intensity of total agricultural R&D investment being one of the highest among OECD countries. The high level of public R&D investment could reduce incentives for private R&D investment. It could also crowd in private R&D investment if public investment is designed as complementary to private investment.
The government can still improve the efficiency of public investment in agri-food R&D and reflect the demand for new technology and knowledge by further enhancing the linkages between public and private R&D. Increasingly, Public and Private Partnerships (PPPs) are considered as a tool to facilitate co-operation between various public and private actors (Box 6.2). In Korea, the government aims to increase the participation of private enterprises in government-led R&D projects. Public R&D funds are provided to the private sector in the form of matching funds for competition-based R&D projects. In this scheme, the minimum share of budget that firms need to finance depends on the size or type of the firm; 50% for large-sized firms, 40% for middle-size firms, 25% for small-size firms and 20% for agricultural corporations. As a result, the proportion of R&D projects in which private companies participate increased to 32% of public agricultural R&D projects in 2013.
In 2016, a pilot R&D voucher programme for agricultural ventures and start-ups was introduced, whereby the government provides a voucher to the technology customer (e.g. farmers and agricultural enterprises) to select the desired technology developer. When the technology developer presents the coupon to the government, they receive support with the cost of development. This programme is focused on short-term (1-2 years) technology development challenges, such as supplementation of existing technologies and the making of commercial prototypes.
The government is also increasing financial support for agricultural start-ups. For example, agri-food venture and start-up support centres have been created in each region. The centres build a co-operative network between relevant institutions in the agri-food sector while providing a customised matching system that start-up founders need for technology, funds and target markets. Private investment in technology-based start-ups is encouraged by dedicated support funds that match public and private capital, such as the R&D Fund (KRW 10 billion – USD 9.5 million – in 2014) and the Agri-food Start-up Idea Fund (KRW 12 billion – USD 10.6 million – in 2015). Moreover, an agri-food crowdfunding platform which enables small investors to invest in new start-ups online has been established.
Box 6.2. Public and Private Partnership for Agricultural Innovation: OECD countries’ experience
Co-operation between various public and private actors in the agricultural innovation system is essential to increase the efficiency with which public funds are used.1 Improving the transfer of knowledge from public research institutions is often a main motivation for the public sector to engage in PPPs in agricultural innovation systems. As private investment typically concentrates in areas where the private returns on investment are high, PPPs can be used to re-orient innovation efforts towards areas with public good aspects, long time horizons and more risks. In addition, PPPs for innovation help secure contributions that are more adapted to both public and private needs. Longer-term benefits include their contribution to fostering links and understanding between public and private researchers and between the research and business-farm community, which facilitates future co-operation and networks. Another longer-term benefit is the improvement of inter-ministerial or federal-provincial co-ordination on innovation issues, and thus of policy coherence.
Innovation actors are increasingly using PPPs to enhance vertical co-ordination in the value chain. The emphasis in this case is less on the joint creation of new knowledge than on the efficient dissemination of existing knowledge to firms which can utilise such knowledge to integrate into global value chains and compete on world markets. In the agri-food sector, non-public partners range from input suppliers and farmers to processors, retailers, NGOs and consumer representatives. Increasingly, PPPs are also considered a strategic tool to foster structural change and competitiveness.
Some OECD countries specifically facilitate the development of PPPs. Direct incentives to PPPs include funding mechanisms – for example public funding conditional on private co-financing. Similarly, other sources of funding, such as producer levies or donations, may include provisions to encourage partnerships. IP protection encourages private investment in innovation, including through PPPs. The handling of intellectual property rights (IPRs) from public research can also provide incentives to partnerships with the private sector. Improving information, knowledge flows and networking also facilitates the development of PPPs as a means to identify opportunities and partners.
In the Netherlands, the R&D strategy introduced in 2011 – the Top Sector policy – places PPPs at the heart of innovation for economic competitiveness (OECD, 2015a). This strategy makes the granting of public funding within leading sectors conditional on participation in PPPs within top sectors and gives industry a leading role in setting the innovation agendas. Public funds have to be matched with an equivalent contribution from the private sector (50-50), which can be in kind (access to facilities) or financial, in which case it can benefit from public support (investment or tax rebates). Public co-funding focusing on pre-competitive research was expected to reinforce the contribution of the private sector in this area.
In Australia, the Rural Research and Development Corporations (RDCs) are the most significant mechanism to foster PPPs for investment in rural R&D. 15 RDCs cover virtually all agricultural industries, as well as fisheries and forestry. They procure rural R&D using funds collected from primary producers via statutory or voluntary levies, together with matched funding from the Australian Government. Australia’s Co-operative Research Centres (CRC) programme is another mechanism to support medium- and long-term end-user-driven research collaboration between the public and private sector. The CRCs are partnerships between different research funders, suppliers and end-users, formed to undertake R&D in specific areas, with a particular emphasis on applied R&D. CRCs receive public funding, which must be matched by participants’ cash and in-kind contributions, for a period of up to ten years via a competitive merit-based selection process (OECD, 2015b).
1. PPPs for innovation are defined as “any formal relationship or arrangement over fixed-term/indefinite period of time, between public and private actors, where both sides interact in the decision-making process, and co-invest scarce resources such as money, personnel, facility, and information in order to achieve specific objectives in the area of science, technology, and innovation” (OECD, 2004).
Source: Moreddu (2016).
6.5. Facilitating knowledge flows
Because of the fragmented structure of agricultural production comprised of relatively small firms producing multiple homogeneous products, few farms are willing to investment in private R&D activities. Furthermore, because of the biological nature of agriculture, improved crop seed and animal breeds are self-replicating. This complicates the ability of innovators to protect intellectual property. In addition, many agricultural technologies tend to be geographically specific, meaning that they do not transfer directly to other locations with different soil types, weather patterns, or topography. These features imply that unique policies to foster innovation in agriculture are required (OECD, 2016a).
Intellectual property rights protection
Private firms would not have an incentive to invest in agriculture R&D unless they can recover the costs of private R&D. To foster private R&D, the government should allow private firms to maintain exclusive control over their discoveries by protecting intellectual property rights (IPR). Recognizing that intellectual property plays a fundamental role in creating private incentives to innovate, the government has continuously revised the laws and regulations to cope with changes in the domestic and international environment, such as amending the patent law to relax the patent application format requirements and revising the design protection law to introduce the domestic design application system.
Patent protection has been strengthened, particularly in the late 1980s, to a level comparable with many OECD countries (Figure 6.10.A). Similarly, a Plant Variety Protection index calculated by Campi and Nuvolari (2013) shows a remarkable improvement in Korea during the 1990s and 2000s (Figure 6.11.B). Korea established a strong foundation for the private sector to invest in agricultural R&D. However, both indices show the intellectual property protection is still weaker than leading countries such as the United States and the Netherlands.
Figure 6.10. Intellectual property protection indicators
1. Overall index is the sum of indices for duration, enforcement, loss of rights, membership and coverage.
Source: Unpublished update by the OECD Secretariat of the series from Park, W.G. (2008), “International Patent Protection: 1960-2005”, Research Policy, No. 37. (panel A); Campi and Nuvolari (2013), IP Protection in Plant Varieties: A New Worldwide Index (1961-2011), http://hdl.handle.net/10419/89567 (panel B).
In 2013, the National Patent Competitiveness Improvement Plan was established to enhance the quality of IPR, including shortening the period for processing one. The government supports SMEs in coping with IPR disputes. It also promotes global intellectual property co-operation and has established both an intellectual property valuation system and financial support for expanding the use of intellectual property. The Design Protection Act was amended to introduce an international design application system. In 2013, the Industrial Property Protection and International Co-operation Bureau was established in Korea’s Intellectual Property Office to enhance policy co-operation within government departments on IPR and to strengthen the enforcement of IPR protection and enterprise's ability to cope with the IPR-related disputes (Huh, 2016).
Since 2002, Korea has become a member of the International Union for the Protection of New Varieties of Food, and since 2012 it has been obliged to protect all new varieties of plants. In addition to general systems to protect IPRs, the plant variety protection system has been strengthened to facilitate the use of important varieties in farming. The new system legitimately guarantees the rights of those who grow new plant varieties in the form of IPRs, providing them with an exclusive commercial right which is similar to patent rights, copyright and trademark registration. The system aimed to protect the rights of cultivators growing new plant varieties, thereby accelerating the cultivation and dissemination of high-quality varieties. The law extended the target of the new variety protection to all plants and differentiated the payment amount according to the delayed period of the breeder protection fee. The penalties for infringement of breed protection rights were also raised.
In Korea, technology transfer from public R&D institutions to agricultural corporation or farms is not active, leading to little follow-up of R&D performance at the farm level. The indicator of technology commercialisation (e.g. share of patents that have earned royalty income or contributed to productivity improvements) has not grown enough despite the establishment of government policies fostering ventures and start-ups and other continued efforts to promote application-developed technologies to actual production processes (Box 6.3).
Box 6.3. Support to the commercialisation of agricultural technology in Korea
To support farmers and agricultural companies to acquire IPRs for the technologies they develop, the government established the Foundation of Agricultural Technology Commercialization and Transfer (FACT) in 2009. The number of successfully established IPRs increased from 81 in 2012 to 102 in 2013. The success rate of commercialisation has also increased, from 16% in 2010 to 37% in 2016. FACT provides services on R&D planning, technology evaluation, and training and support for technology transfer through consultation with patent experts. For example, the evaluation of technologies owned by venture enterprises is used for investment matching or for attracting private capital. It also enables technology owners to get a loan from financial institutions (IP-backed loan, IP guarantee loan). The government provides financial support to these activities though its technology commercialisation assistance project and IP-backed loan programme.
The government also designated FACT as the technology trust management institution for the agri-food sector in 2013. Universities, public research institutions and non-profit organisations entrust their unused patents to FACT, which facilitates technology transfer to its potential users. FACT carries out marketing activities for IPRs with high commercialisation potential by holding technology transfer presentation events, publishing technical description booklets and providing a technology information web service. In 2013, a total of 456 transfer contracts were concluded on state-owned patented agri-food technologies. Furthermore, the government expanded the exclusive use of state-owned agri-food patents, encouraging agri-business corporations to commercialise the state-owned IPRs. The exclusive right of use allows the designated company to have a sole right to utilise the technology.
Promoting the adoption of technologies
Public extension service
The agricultural extension system belonged to a national organisation under RDA until 1997, when the status of extension officers was shifted from national to local government officials in order to promote co-operation between the central and local governments in implementing extension services (Oh et al., 2000). Currently, local governments are responsible for developing and implementing extension projects that meet their local needs. Agricultural Technology Centres at the municipality level provide most of the farmers’ education programmes and extension services. RDA currently plays a co-ordination role. For example, RDA disseminates agricultural technologies developed by a local government to other parts of the country, obtaining a permission to use the technology from the relevant local government (Figure 6.11).
Figure 6.11. Implementation System of Agricultural Extension Services in Korea
Source: RDA (2014), Basic Plan for Projects for Guidance to Agricultural Communities (2013-2017).
RDA establishes the Basic Plan for Agricultural Extension Services every five years as well as its annual implementation plan. The current Basic Plan (2013-17) aims to: 1) increase agricultural competitiveness through swift distribution of developed technologies; 2) promote the 6th Industrialisation and improve farming business management to boost rural economy; and 3) minimise damage by agricultural disasters. Expenditure for the public extension service at the central government doubled in 2000-16, keeping up with the increase in the expenditure for public R&D (Figure 6.12). The extension service currently accounts for 12% of the R&D budget, but RDA is planning to increase the ratio to 30% to promote the adoption of technology. Despite an increase in budget expenditure, the number of extension officers has been decreasing since the 1990s, when their status was shifted from being national government officers to local ones.
The government also provides various training courses for farmers. For example, the Agricultural Meister College is a two-year certificate course to foster highly qualified farmers with the latest high technologies and management skills. This certificate programme was founded in 2009 and nine Agricultural Meister Colleges were operating in 39 university campuses in 2015. Work Place Learning is a field-oriented farmer training programme to support the improvement of productivity and the quality of agricultural products. Farmers as well as students take part in training programmes and develop agricultural and managerial skills through field-oriented tasks.
Figure 6.12. Expenditure and staff in the public extension service in Korea, 2000 to 2016
Source: RDA, Rural Extension Service Report.
Private technical advisory service
Public extension plays a major role in extending agricultural technologies to small-scale family farms, which often cannot afford the paid services. However, commercialised farmers tend to have demand for more specialised and diverse services than the standard public extension service offers. In Korea, diverse entities such as private enterprises, product organisations, agricultural co-operatives, and professional farmers offer private technical advisory services mainly to commercial family farmers and agricultural corporations.
In addition to providing a fully public extension service, the government supports agricultural corporations in obtaining private consulting services to meet their specialised needs; it covers half of the expenses for professional management and technical consulting services for up to three years. The project is targeted to next-generation agricultural or fisheries enterprises, urban-to-rural returners and corporations. The average annual spending on this project declined from KRW 7.123 billion (USD 6.4 million) to KRW 3.84 billion (USD 3.3 million) in 2011-16 as the demand for consulting services is on the decrease. In Korea, a non-commercial consulting service provided by the government agencies such RDA and the Korea Agro-Fisheries & Food Trade Corp may be impeding the development of the private technical advisory service.
6.6. R&D output and impact
With increased investment in the public agriculture R&D system, scientific output in agriculture also increased rapidly over the last two decades. Output of agricultural science publications from Korean authors as a percentage of world output increased from 0.4% in 1996 to 2.0% in 2012, which is equivalent to the OECD average and above that of EU15 countries (Table 6.4; Figure 6.13). Similarly, the world share of agricultural patents exceeded both the OECD and EU15 averages. The strengthened performance evaluation of R&D by the Act on the Performance Evaluation and Management of National Research and Development Projects in 2005 may have contributed to the increase in scientific output in Korea. However, the world share of citations is lower than the OECD and EU15 averages, indicating that the scientific impact has not increased with the number of publications. Among the three public agricultural R&D institutions (RDA, MAFRA and KFS), RDA accounted for approximately 60% of publications and registered patents.
Figure 6.13. Evolution of scientific output and impact in agricultural and food sciences, 1996 to 2012
Source: SCImago. (2014), SJR — SCImago Journal & Country Rank, http://www.scimagojr.com (accessed 13 March 2014).
Table 6.4. Korea’s agriculture and food R&D outcomes in international comparison, 2007-12
Source: SCImago. (2014). SJR — SCImago Journal & Country Rank. Retrieved March 13, 2014, from http://www.scimagojr.com.
6.7. International co-operation
The benefits of international co-operation for national innovation systems stem from the specialisation it allows and from international spill-overs. International co-operation in agricultural R&D is particularly important where global challenges (as in the case of responding to climate change) or trans-boundary issues (related to water use or pest and disease control) are encountered, and when initial investments are exceptionally high.
Korea’s share of output of agricultural R&D with foreign collaborators shows that the degree of international co-operation in agricultural science is significantly less than the OECD average (Table 6.5). For example, 5.8% of Korean patents in the agri-food sector have a foreign co-inventor, which is much less than the OECD average. The percentage of agri-food publications with foreign authors is also far less than the OECD average.
Table 6.5. Agri-food R&D co-operation, 2006-11
Agri-food R&D outputs with foreign co-authors as a share of country’s total agri-food outputs (%)
Source: OECD (2014b), http://www.scimagojr.com.
International co-operation projects in exchanging and disseminating science and technology in the agri-food sector exist with international organisations, international research institutes, and foreign states. The government promotes joint research projects with domestic and overseas institutions to introduce foreign technologies and address global issues. For example, in 2017, RDA and the Asian Food and Agriculture Co-operation Initiative (AFACI) jointly conducted research projects on the management of migratory disease and pests, and on technologies for organic farming.
The government is also expanding its partner country and global network. RDA seeks new agendas for collaboration and reinforces its network with countries and international institutions that have advanced technologies and useful resources. For example, co-operation projects for common agricultural issues are conducted with continental technological co-operation bodies, such as AFACI, Korea-Africa Food and Agriculture Co-operation Initiative, and Korea-Latin America Food and Agriculture Co-operation Initiative. Moreover, bilateral joint research projects are conducted through the Korea-Japan Agricultural, Forestry and Fishery Technical Co-operation Committee. As of 2017, a joint research project is ongoing between RDA, Korea Food Research Institute and National Institute of Fisheries Science, and Japan’s agricultural research institution under the Ministry of Agriculture, Forestry and Fisheries. The two countries share scientific and technological trends in the sector, hold a joint symposia for scientists, and carry out a researcher-exchange programme.
RDA is a primary supporter of international co-operation in the agri-food sector. It undertakes co-operative research with international organisations including members of the Consultative Group on International Agricultural Research. RDA also develops bilateral co-operation with the United States’ Agricultural Research Service, the Chinese Academy of Agricultural Sciences, the Netherlands’ Wageningen University and Research, the Brazilian Agricultural Research Corporation, Japan’s National Agriculture and Food Research Organization, Israel’s Agricultural Research Organization, New Zealand’s Plants and Food Research, Australia’s Commonwealth Scientific and Industrial Research Organisation, and France’s National Institute for Agricultural Research.
RDA also implements a Korea Project on International Agricultural (KOPIA) which provides technical assistance to developing countries. KOPIA operates pilot villages in developing countries to increase agricultural productivity and income based on technologies it has developed (e.g. pilot villages for high-quality rice seed production in the Philippines). KOPIA also distributes Korea’s advanced farming techniques through the KOPIA centres.
6.8. Summary
As a result of increasing public investment in agricultural R&D, the intensity of public agriculture R&D expenditure in Korea has become one of the largest among OECD countries. The scientific output from the R&D system such as the world share of publications in agriculture and food exceeded both OECD and EU15 averages. The sector can benefit more from the high level of R&D investment to improve its productivity and sustainability.
Despite a series of reforms, Korea’s current agricultural innovation system (AIS) is characterised by the dominance of public actors such as public research institutions and a public extension service, and the limited role of private research and technical advisory services. However, agricultural innovation today is increasingly taking place in a network-based setting, in which a more inclusive, interactive, and participatory approach fosters greater innovation in response to emerging and pressing challenges facing food and agriculture systems. A network analysis among AIS actors in Korea shows a weak connection between the private sector, producers and government. AIS in Korea should evolve to a more collaborative and demand-driven system between public and private sectors, including higher education institutions.
The complex public agricultural R&D system in Korea involving RDA, MAFRA and KFS is making co-ordination and collaboration between different public institutions involved in agricultural R&D at multiple administrative levels more difficult, despite the establishment of STCA as a co-ordinating institution. The co-ordinating function of STCA should be further strengthened to form a more consolidated and coherent public agricultural R&D investment strategy.
Korea increased efforts to enhance the participation of private enterprise in public R&D projects through a matching fund system and voucher system. However, the high level of public R&D investment could reduce incentives for private R&D investment. Public agricultural R&D investment should shift its focus to pre-competitive areas or areas of public interest which are complementary to private R&D. Moreover, the tax incentive for private R&D in agriculture is much less than in other sectors, as most farmers and agricultural corporations are exempted from income tax.
Another shortcoming of the top-down R&D system is that its output is not necessarily adopted at the farm level and does not necessarily address the practical needs of producers and food industries. Experience in OECD countries shows that enhancing the partnership between various public and private actors would increase the efficiency of public R&D investment and help secure contributions that are better adapted to both public and private needs
As the farm population becomes more diverse and produces high value-added niche products, the standardised service of the public extension system has a limited capacity to meet producers’ needs. While the government encourages the use of the private technical service through subsidies, its development is still limited. Extension services in some OECD countries have evolved to a more competitive system that is demand-driven, more pluralistic and decentralised, and that mixes both public and private providers. The public extension service should be reduced to focus on public interests such as animal disease prevention and environmental protection, allowing more diverse private companies to provide services.
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Note
← 1. Although established under MAFRA, RDA and KFS are operated independently from it in terms of budget and personnel affairs. KFS manages R&D projects in forestry, which are implemented by the Korea Forest Research Institute. The Korea Forestry Promotion Institute promotes commercialisation of R&D outcomes. The Animal and Plant Quarantine Agency (APQA) under MAFRA also implements R&D projects specifically on animal and plant diseases.