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President of Embrapa defends partnerships with private sector, reveals 5 bets for 2020![qrcode]()
Feb. 21, 2020
Brazil"In a private world, the word ‘change’ is the keynote, but for us in the public sector, change causes chills.” With this sentence, the new president of the Brazilian Agricultural Research Corporation (Embrapa), Celso Moretti, began what he came here to do, to propose changes to the state-owned company.
Agronomist and doctor from the University of Viçosa, Moretti made the commitment to head Embrapa in January this year. Among his tasks is to restructure the company’s staffing, strengthen its international ties, and manage a budget of R$3.7 billion.
For 2020, his strategic bets are genomic editing, digital agriculture, integrated systems, microbiomes and plant-based foods. To achieve his goals, he aims to rely on private sector initiatives.
What is Embrapa's budget for 2020?
Moretti: We attained approval based on the Annual Budget Law (LOA) allocating practically the same level of resources to Embrapa as in 2019, so about R$3.7 billion. We sign around 200 to 250 partnership contracts per year with companies of all sizes, from a small seed company to one of the largest in the world. We have a large portfolio of projects with the private sector, which also guarantees us resources.
Of the R$3.7 billion, how much is earmarked for research?
Moretti: It is difficult for us to specify the exact amount needed for research. I consider the R$3.7 billion allocated annually to Embrapa to be intended for financing research. If I say that we are going to invest more or less between R$200 million and R$250 million per year, this will not necessarily make up 10% of the budget, because I must consider the salaries of researchers, analysts, technicians, assistants and so on. Actually, this is not the real number. I think that I am being fairer to all those who contribute when I say that we are investing R$3.7 billion per year.
What proportion of the funds will come via Treasury bills?
Moretti: According to the golden rule of the budget, you can only commit up to a certain percentage to pay personnel and other obligations. The federal government cannot provide resources above a certain limit, so 55% comes from the Treasury and the other 45% from the issuing of bonds. Everything is from the federal budget, but there are different ways of providing resources. We are going to work more with the private sector so it can also contribute resources.
There are several ideas to consider. Americans do this a lot with so-called checkoffs, in which a small percentage of the value of a sack of soy goes to a fund that is managed by producers, usually with the participation of relevant researchers and someone from a participating university. Illinois soy producers in the northern United States (US) have the Illinois Soybeans Association (ISA).
Is there a model similar to this in Brazil?
Moretti: In the states of Paraná, Santa Catarina and Rio Grande do Sul, there is a fund called Funcema (National Fund for the Control of Madeira Wasp). There are 100 companies that work with eucalyptus and pine that have allocated 1 percent of their production per hectare to a fund. Last year, Brazil produced 34 billion liters of milk. Imagine adopting a tax reduction scheme of 1 percent of milk, which will total R$340 million. If 1 percent is too much then let’s say a third of 1 percent, so we would still get R$110 million. We can, therefore, finance four or five years of research on the milk production chain, and we can solve issues such as mastitis, brucellosis and tuberculosis, maybe even ticks.
Embrapa does not have this resource. What we are proposing is for this type of fund to be created and managed by the producers themselves, with the participation of a researcher from Embrapa and another from the university, which can then issue public notices once or twice a year to solve problems. I talked about this idea with Tereza Cristina (Agriculture Minister) who found it interesting, and we need to move forward.
From Embrapa's budget, 85% is earmarked. Does this hold?
Moretti: This figure was close to 85% before we started the “Incentive Dismissal Program” (PDI). We will lay off approximately 1,300 people in June. We have the authorization of the Ministry of Economy to replace up to 75% of those who will leave. So, in the second semester, we will have a truer idea of the number of those leaving and how the remaining staff are impacting Embrapa's payroll.
Is this planned staff restructuring guaranteed?
Moretti: We have the authorization to hold a contest, but this does not mean that we will do it this year, probably not. This will be negotiated, firstly with the Ministry of Agriculture and then with the Ministry of Economy.
What about the company’s remuneration policy?
Moretti: Our career plan at Embrapa has seen significant improvements over time. There is competition in the search for intelligent personnel. I think that Embrapa’s professionals are currently well paid. We offer a decent and competitive salary, and we have been rewarding those entitled to the payment they receive and encouraging them to stay in the country.
How much work does Embrapa do itself and when does the work of private institutions begin?
Moretti: In the 1990s, when we did not have the Law on the Protection of Cultivars and the Law on Intellectual Property, large multinational genetics companies did not gamble on the Brazilian market, because they were not sure about the returns of their investments. Then, in the 1990s, with the introduction of the two laws, private capital felt that it would be safer to make larger investments, and Embrapa left the market and passed it on to those entitled to it. In my view, it is not up to the state to produce seeds, pack them, put them in a bag, and then market them. It is the private sector that must, in fact, take risks, generate income, create jobs and pay taxes, which are then reinvested into research. The role of the state is to conduct research, generate knowledge, and establish partnerships with the private sector.
Working with private companies does not mean privatization, right?
Moretti: Not at all. I am convinced that the company should not be privatized, but that will not prevent us from acting aggressively in the market, creating partnerships, raising funds, monetizing our assets and ensuring added value.
What are Embrapa's bets for 2020?
Moretti: We have four or five bets for 2020. The first is genomic editing, to see how new genetic techniques can help obtain better products that are more competitive, efficient and resistant to pests and diseases. The second is the adoption of digital agriculture. I predict that integrated systems will continue to play a key role in achieving sustainable intensification, such as the ILPF. Other bets are microbiomes and plant-based protein foods, which will make a considerable impact until 2030. Today, we already have a partnership with a company from Niterói which makes hamburgers from cashew nuts. Brazil produces 60,000 tons of cashew nuts annually. In five years, precision biology and precision fermentation will have advanced considerably and have a major impact.
What is the future of the vegetable protein market?
Moretti: There is demand from consumers, but they are usually very busy and do not have time to think about what they want. So you have to go out there and offer products. Obviously, we can meet the demand, but there are other times when we must lead in terms of attaining knowledge and making technology available. That is why it is important for people to think about the future and imagine what may come.
The original Portuguese version of this report is from Globo Rural.
Source: AgroNews
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