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The financing of biotechnology in developing countries: A Brazilian case in point
Technology in Society, Vol. 15, pp. 311-325,1993
0160-791X/93 $6.00 + .OO Copyright 0 1993 Pergamon Press Ltd.
Printed in the USA. All rights reserved.
The Financing of Biotechnology in Developing Countries: A Brazilian Case in Point Regis Cabral
ABSTRACT FINER the Brazilian Agency for Financing Studies and Projects (FINanciadora de Estudos e Projetos), despite lack of funding and political pressures, achieved remarkable results in mission-oriented research during the 1980s. It was involved in practically all the major Brazilian biotechnology programs, with a basic policy of overcoming development gaps, for instance, in genetic engineering, cell culture, and molecular biology. This paper discusses FINEP’s evolution and structure in the 198Os, followed by a description of its main projects in biotechnology. Illustrated in more detail is FINEP’s support for its main beneficiary, the Federal University of Vicosa, state of Minas Gerais. Then the reasons for FINEP’s success are described, including the staff dedication to overcoming Brazilian development problems by funding projects that would eventually replace imports, and by carefully assessing the track records of the institutions and the individuals applying for finding. A high priority was given to projects for which there was a significant domestic market potential, and to individuals deemed capable of actually bringing such products to market.
Introduction In a perceptive 1992 description and critique of Brazilian funding, H. M. Nussenzveig pointed out that FINEP, the Agency for Financing Studies and Projects (FINanciadora de Projetos), despite periods of growth, had its efficiency “greatly
research Brazilian Estudos e impaired”
Regis Cabral, an historian of science with a background in physics, divides his time between the Research Policy Institute of the University of Lund, Sweden, and the history department at the Universidade Federal de Santa Catarina, in Florianopolis, Brazil. He has specialized in interactions of science and international relations, and more recently, in science and technology policy. An early version of this paper was presented at the Zschnical University of Denmark, Copenhagen, in November 1991, based on research funded as part of SAREC’s project, “Learning from Experience in Brazilian Biotechnology Policy Making.* 311
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because of inflation and budget cuts. 1 In spite of this lack of funding, results have been achieved, albeit more in market-oriented research than in pure science. At different points in its history FINEP has been one of the major funders of industrial as well as basic research in the country. In the 198Os, it was involved in practically all the major biotechnology projects and programs in the country. Examining its support for biotechnology for the agri-industry during the 1980s indicates a policy of overcoming gaps in the scientific and technological development of the country. FINEP gave particular emphasis to the establishment of research centers for genetic engineering, cell culture, and molecular biology throughout the country, and funded over 35 major research institutions. Like many other government agencies, FINEP had to overcome both the negative effects of political changes, and pressure to fund institutions for political reasons. This paper discusses the evolution and structure of FINEP in this decade, followed by a description of its main funding activities in biotechnology, particularly for one of its main beneficiaries, the Federal University of Vicosa, in the state of Minas Gerais. Finally, the reasons for FINEP’s successes, despite its perennial funding crisis, are considered.
The Structure
and Aims of FINEP
FINEP, an organ of the Ministry of Planning, was created in 1967 specifically to give financial support to research, projects, and programs of significance to Brazilian economic, social scientific and technical development, as defined by the Federal government. It was to study and finance approved projects, with the recipient ultimately reimbursing FINEP for its support. In 1971, it received an additional charge from the National Fund for Development of Science and Technology, to include projects that might never show a financial return, but which fitted the government criteria for appropriate projects. Thus FINEP now undertakes support of both profit-making and non-profit research, plus engages in joint ventures. Since the creation in 1975 of the National System of Scientific and Technological Development, FINEP interacts with numerous other agencies for identification of the common national goals, joint funding if necessary, and reduction or prevention of duplication.2 These organizations include: National Bank for Economic Development BNDE Brazilian National Research Council CNPq FINEP Agency for Financing Studies and Projects FNDCT National Fund for the Development of Science and Technology Support to National Consulting ACN
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Support to Technological Development of the National Companies Support to Users of Consulting Services AUSC PBDCT Basic Plan of Scientific and Technological Development PRONAB National Biotechnology Program SNDCT National System of Scientific and Technological Development Industrial Technology Secretariat of the Ministry of Industry ST1 and Commerce ADTEN
Between 1980 and 1984, there were solid attempts to improve Brazilian biotechnology, in the midst of intensive lobbying and pressure from multinationals and industrialized countries for polices favoring their own interests.3 The main effort was through PRONAB, formed in 1981 with funding and support from CNPq, FINEP, and STI,4 to consolidate and coordinate the public investment in biotechnology in three main areas: energy, health, and agriculture and animal husbandry. In contrast with CNPq’s science bias, FINEP favored projects having a high technological content, either at the development or implementation phases. Private companies and profit-making projects were also candidates for funding, and FINEP’s original business of supporting consulting services was supplemented with yet another responsibility of providing support for the national consulting services, ACN, ADTEN, and AUSC. Through ADTEN, national companies could apply for funding to improve their own technical resources and personnel or to subcontract with Brazilian consultants, universities, or research institutes to produce needed technologies. Priority areas were basic engineering, setting up of R&D centers, development of products and processes, commercialization of new products, diffusion and transfer of technology, acquisition of foreign technology, and quality control. The AUSC focused on the implementation of studies and projects. FINEP paid the cost of hiring consultants to prepare viability studies, long-term planning, and studies aiming at improving a company’s technical capacity, administrative competence, and productive or operational capacity. Through ACN, FINEP supported smaller consulting firms until they could stand alone. To be eligible for funding, the company had to register with FINEP and have a recognized, approved, and permanent technical staff. FINEP could provide financial support to solve the company’s immediate cash problems, but it preferred a longerterm investment until the company became profitable. FINEP’s portion could include the retraining of personnel, buying new equipment, development of technologies and processes from research to commercialization, and the export of services and technologies. The Basic Plan of Scientific and Technological Development, PBDCT, determined FINEP’s priorities. Energy, agro-industry, and issues of social relevance were standard items through the years. Although
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FINEP financed basic research, it was the support for engineering consulting firms, for quality control systems and laboratories, and studies at the development and pilot plant phase, which topped the agenda. Project selection followed two steps. FINEP analysts first determined whether or not the project fitted FINEP’s mandate and objectives. Second, analysts of the FINEP department for which the project was best suited requested and analyzed a detailed proposal.5 Approval was not based only on technological quality.6 Political factors forced FINEP to invest a substantial portion of its non-profit funds in institutions such as the Catholic University in Rio de Janeiro. This was part of the federal government strategy, during the military period, to weaken the Federal University of Rio de Janeiro, then a center of political opposition. From a technological point of view, these were not wasted resources, as they contributed to the development of Brazilian computers and to the growth of an outstanding physics department but the effort drained FINEP’s resources.7 FINEP originally emphasized consulting as the link between technology and industry. In 1988, Brazil was the third-largest consulting market in the world, with over 300 domestic companies making $1 billion (U.S.) per year, most of them FINEP’s “graduates.” Since 1985, FINEP increasingly emphasized industrial R&D and research of industrial interest. The funding had a wide scope, from AIDS research to the turbines for Brazilian-Italian multiple-use fighter plane AMX. FINEP support helped produce chips, optical fibers, quartz, silicon compounds and crystals of high purity, fine films for microelectronics, high-conductivity ceramics, microwave digital systems, numerical control machines, airplanes, robots, oil platforms, rocket fuel, tanks, and artificial skin, among other areas. In biotechnology, seed research institutes and research hospitals were the main, but not the only, beneficiaries.8
FINEP and Biotechnology In 1988, out of 30 different FINEP programs, 12 were for biotechnology or its applications. A Program for Basic Sanitation led to new forms of water and sewage treatment. Another for Collective Health resulted in the national cancer register and in the University of S&o Paulo preventive medicine program. The AIDS program financed research, the training of personnel to deal with the problem, development of diagnostic systems, and special studies of HIV in hemophiliacs. The Program of Environmental Resources funded research on mutagenesis. In addition to these 12 programs, FINEP had five others which, although not specifically biotechnology, funded related projects. The program to improve technological capability in micro and small
Financing Biotechnology in Developing Countries: Brazil
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enterprises, and the program to support Technological Institutes funded the alcohol projects. FINEP also funded local and state organizations such as the agricultural cooperative of Cotia. Given the great importance of agriculture to the Brazilian economy, it is understandable that a substantial portion of the investments in biotechnology were for agriculture and animal husbandry. FINEP and Agricultural
Biotechnology
The funding for agricultural projects was the responsibility of the Agricultural and Animal Husbandry Division. Between 1979 and 1989, FINEP promoted modern biotechnology by funding small and middlesize projects throughout the country, and by establishing large centers for biotechnology and laboratories for tissue and cell culture. FINEP’s documents reveal that the emphasis had been on the infrastructure necessary for obtaining and propagating plants that are disease resistant and can adjust to difficult climates and soils.9 FINEP supported short-term, middle-term, and long-term projects. Short-term (three years) programs included vegetative propagation, elimination of diseases, and germoplasm transfer. Middle-term (three to eight years) programs emphasized embryo culture, in vitro fertilization, somaclonal variation, gametoclonal variation, antera culture, and the production of haploidies. Long-term (eight to fifteen years), the objective was to achieve somatic hybridization, produce hybrids, obtain mutant cell lines, transfer organelles, chromosomes, and genes, and produce secondary metabolic products. These translated into the funding of research to obtain grain and vegetable varieties better adapted to Brazilian conditions, including draught and aluminum toxicity. Research to produce virus-free clones for species of economic importance was also emphasized. Biological probes included kits for diagnosing disease in potatoes, tomatoes, and peppers, and for producing improved nitrogen-fming soil bacteria. Finally, FINEP has funded R&D on bio-insecticides, bio-nematicides and pheronomes. The latter has been particularly driven by the need to protect the environment and to reduce expenditures on insecticides. Seed technology programs had a major objective of reducing the national dependency on imports, and of making national companies competitive. FINEP also funded research in molecular biology, with two main centers located in Port0 Alegre, RS, and in UNICAMP, SP. FINEP and Animal Husbandry FINEP focused on disease control and embryo technology management, also aimed at reducing dependency on imports. Thus the research was closely linked to identifying bottlenecks in animal production. The high cost of imported embryos and the danger that these embryos might one
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day be denied to Brazil motivated the construction of these programs. Short-term, FINEP financed the development of vaccines and hyperimmune sera. Middle-term, the objective was to produce monoclonal antibodies, synthetic peptides, and hormones, and achieve embryo transfers and in vitro fecundation. Long-term applications include sexual selection of spermatozoa, cloning via nuclei transfer, and the production of chimeras. The practical outcome was a vaccine for some common animal diseases, and diagnostics kits for others. Other results included techniques for embryo development and the production of growth hormones. FINEP and Food Technology Finally, FINEP’s Agroindustry and Food Science and Technology Program supported overall cost reduction by optimizing the use of raw materials and reducing production losses, along with research on recycling industrial residue as animal feed. Grain and food storage techniques in Brazil have improved because of FINEP programs.
FINEP and Its Main Beneficiaries FINEP’s biotechnology philosophy was to create or reinforce existing elements of an infrastructure to help Brazil cope with global technological changes. It should also be able to address problems relevant to Brazil’s national or regional development. Table 1, FINEP’s distribution of resources according to recipient, shows that the three major beneficiaries were institutions of higher education. Only a small portion of the biotechnology funds went to private companies, although the amount received by BIOBRAS, 3.7%, was significant. Also relevant was the support to the biotechnology science park in Rio de Janeiro, BIORIO, a very successful operation.lo Prominent was UNICAMP, a young university in Sao Paulo state, which set up a research center to run its Molecular Biology Program. By the early 198Os, UNICAMP had already built a research tradition in biology areas, such as tissue culture of tomatoes, even though its programs tended to be isolated from each other. Joint FINEP and BID funding of over US$16 million enabled it to build up its resources, which included an Integrated Research Center, acquired from Monsanto, and a Molecular Biology Center built in 1987-88. Areas of emphasis included biopolymers and enzymes for the food industry; pharmaceutical, antiinflammatory, and analgesic products; and animal vaccines.ll Almost at the same level of funding was ESALQ, the Advanced Agricultural School “Luiz de Queiroz,” formally a campus of the University of Sao Paulo, but a de facto autonomous institution, with an extensive program of agricultural biotechnology. In 1985, ESALQ had
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Financing Biotechnology in Developing Countries: Brazil TABLE 1. Distribution of FINEP Funding in Agricultural and Animal Husbandry Biotechnology: By Institution Between 1979 and 1989a Institution
UNICAMP EMBR.APA UFRGS BIOBRAS FAEPEESAL UFRRJ UFMG FAPEU UFSM UFAL UFPEL FAEPE S.BRAS.SEMENTES IPVDF SASP UNESP FACTEC UFF U.CAXIAS DO SUL USP FUNEP CEBTEC IAC UFPR EPAMIG IPA U. PASS0 FUND0 CODE-PA FATEC BIO-RIO UFRPE EMBRYOS TECH CNEN TOTAL
Federal Unit
Amount (USD)
%
MG SP SP DF RS MG MG RJ MG SC RS AL RS MG RJ RS SP SP RS RJ RS SP MG SP SP PR MG PE RS AM RS RJ PE PR SP
3708834
29.2 11.8 11.6 6.5 5.4 3.7 3.4 2.9 2.8 2.7 2.0 1.9 1.9 1.8 1.8 1.5 1.1 1.1 1.0 0.7 0.7 0.7 0.7 0.6 0.5 0.3 0.3 0.3 0.3 0.2 0.2 0.1 0.1 0.1 0.1
1498119 1479791 824790 680787 476301 432079 366490 359935 341859 253288 237257 241161 227840 227434 192228 134656 133870 122129 89426 88428 87206 94550 79370 69241 38584 34935 36726 38846 23474 29946 15083 15884 9100 14245 12703892
100
*Note that institutions beginning with W” signify universities, beginning with “F a foundation associated with an advanced agricultural college.
numerous alcohol fermentation and yeast projects underway, including applications for both animal feed and sugar cane crops. FINEP support spread over several departments - Chemistry and Wood Research, CENA, the Nuclear Energy Applied to Agriculture center, and the Electron Microscopy section. Projects ranged from classical genetics and tissue culture to the isolation and fusing of protoplasts using electric fields. l2
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Table 2a shows the geographic distribution of FINEP funding by region and state. The south and south-east, being the areas of greatest economic activity with the largest numbers of researchers and scientists, also received the majority of FINEP grants. Minas Gerais produces cattle and milk; S&o Paulo, along with a large industrial base, is a major sugar producer and has some large agricultural cooperatives; Rio Grande do Sul produces both grains and soy beans. Table 2b details the institutions within each state that received the funding. Minas Gerais and Sao Paul0 each received in excess of 25%. A mid-level 13% went to Rio Grande do Sul. All others received much smaller amounts. None of these overall tables adequately highlights the special position of the University of Vicosa, which, over the decade, received nearly 30% of the funding, and it is useful to look more closely at this institution and its accomplishments.
FINEP and the Federal University of Viqosa13 Origins of the University The state of Minas Gerais was authorized to create the Advanced College for Agriculture and Veterinary Science in 1920, backed by the then President of the state, Arthur da Silva Bernardes. The institution was TABLE 2a. Distribution of FINEP Funding in Agricultural and Animal Husbandry Biotechnology According to Geographic Regions, 1979-1989 Region South
Total for Region South South-East
Total for Region South-East Center-West Total for Region Center-West North-East Total for Region North-East North Total for Region North
Federal Unit
Amount (USD)
%
Rio Grande do Sul Santa Catarina Parana
1646813 341859 47684
13 2.7 0.4
Minas Gerais SBo Paul0 Rio de Janeiro
2036356 5334474 3496498 698433
16.1 41.9 27.5 5.5
9529405 Federal District
74.9 824790
6.5
Pernamhuco Alagoas
824790 52610 237257
6.5 0.4 1.9
289867 Amazonas
2.3 23474 0.2
23474 TOTAL
0.2
12703892
100
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319
TABLE 2b. Distribution of FINEP Funding in Agricultural and Animal Husbandry Biotechnology, 1979/1989, According to Federal Unit Federal Unit
Institution
Amount (USD)
8
3708834 476301 432079 359935 227840 94550 34935 5334474
29.2
1498119 1479791 134656 133870 87206 79370 69241 14245 3496498
11.8 11.6 1.1 1.1 0.7 0.6 0.5 0.1 27.5
UFRGS UFSM UFPEL IPVDF FACTEC U.CAXIASDOSUL U.PASSO FUND0 FATEC 1646813
680787 253288 241161 192228 122129 88428 38846 29946 13
5.4 2.0 1.9 1.5 1.0 0.7 0.3 0.2
DF Total for the Federal District
EMBRAPA
824790 824790
6.5 6.5
RJ
UFRRJ S.BRAS.SEMENTES UFF BIO-RIO
366490 227434 89426 15083 698433
2.9 1.8 0.7 0.1 5.5
SC Total for Santa Catarina
FAPEU
341859 341859
2.7 2.7
AL Total for AIagoas
UFAL
237257 237257
1.9 1.9
PR
UFPR EMBRYOS TECH
38584 9100 47684
0.3 0.1 0.4
IPA UFRPE
36726 15884 52610
0.3 0.1 0.4
CODE-A
23474 23474
0.2 0.2
MG BIOBRAS FAEPE/ESAL UFMG FAEPE FUNEP EPAMIG Total for Minas Gerais SP
FEALQ UNICAMP SASP UNESP USP CEBTEC IAC CNEN
Total for Sgo Paul0 RS
Total for Rio Grande do SuI
Total for Rio de Janeiro
Total for Parana PE Total for Pernambuco AM Total for Amazonas
TOTAL
12703892
3.7 3.4 2.8 1.8 0.7 0.3 41.9
100
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inaugurated in 1926 by Bernardes, then President of Brazil. It graduated the first students in both agriculture and veterinary science in the 1930s. In 1948, after some other changes, the state government created the Rural University of Minas Gerais, which brought together the advanced schools of Agriculture, Veterinary Science, Home Economics, an advanced training school, a research and experimentation facility, and an extension service. A Forestry school was added in 1955, and in 1961, the school became a federal university. A very short period of complete autonomy followed, but in 1969, under President Arthur da Costa e Silva, it became the Federal University of Vicosa, administratively and financially dependent on the Ministry of Education and Culture. During the 197Os, despite political and economic constraints, it continued to grow and added Institutes of Biology, Physics, and centers for agrarian sciences, for geological sciences and health, and liberal arts. By 1984, the University of Vicosa had 177 Ph.D.s, 314 M.Sc.s, and 210 B.Sc.s on its staff. It had 6319 students, including 949 at the secondary level, 4739 undergraduates, 530 at the master level, 103 at the doctoral level, and 8 special students. Its campuses extended to Vicosa, Florestal, Capinopolis, Visconde do Rio Branco, and Araponga in the state of Minas Gerais, with experimental stations not only in this state, but also in the states of Para, Acre, Mato Gross0 do Sul, Espirito Santo, Goias and Parana. FINEP, BNDE, CNPq, and FIPEC have been its major funding sources. Although broadly based with interests in many technical areas, Vicosa did not neglect its original charter - that of disseminating the results of its research. Over the years, both the U.S. Deptartment of Agriculture and Purdue University were involved either in joint programs or organizational development, and like its American predecessors, Vicosa has remained actively involved in rural extension programs. Since 1928 it has sponsored an “Agriculture Week” for local farmers - a program which has grown from 39 attendees the first year to 3148 in 1984. In 1980, it started a special program to reach the small producers.14 Currently, through the Technical Council of Extension and its Nucleus for Technology Diffusion, it uses print, radio, and TV to spread its messages throughout the country. FINEP and the Research
at Vicosa
While research is at the heart of Viaosa’s existence, FINEP’s support has played a strong role in its growth and development, particularly in the last two decades. “Scientific curiosity . . . influenceld the] selection of research problems for at least 50% of Vicosa’s researchers.15 Since the 193Os, it has advanced knowledge on plant varieties, including hybrids, on soil conservation, animal improvement, and plagues and disease control. Tables 3a and 3b detail this support for the 1974-1986 period by the number of projects and by department supported, showing that the number of projects has increased, as has the total value.
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TABLE 3a. FINEP’s Support for the University of Vicosa, by Year Number of Projects Year
OTN/Project
Value in OTN* At signing
1976 1977 1978 1979 1980 1981 1982 1983 1984
1 2 4 1 1 4 4 15 11
16134 29093 105047 14649 3045 76930 128421 184602 235404
16134 14546.5 26261.75 14649 3045 19232.5 32105.25 12306.8 21400.37
TOTAL
43
793326
18449.45
al% prevent distortion due to inflation, US dollars are translated into the Brazilian “hard currency” of the period, or OTN, valued at $S/OTN in 1988.16
The FINEP-sponsored projects ranged widely over many departments. The Phytopathology department worked on research on coffee rust and bean diseases, beginning in 1971; by the mid 199Os, rust-resistant varieties of coffee beans will be ready for distribution to the growers. Field work on the spread of the disease led to a major scientific advance - the modification of the equation that measures the disease’s life cycle - and hence, better pesticides and pest control techniques. Vicosa, in conjunction with the USDA and the National Center for Soybean Research, also pioneered work on soybean diseases, including rust, resulting in new varieties already on the market. Other research resulted in disease-resistant varieties genetically adjusted to the harsh agricultural environment of Minas Gerais. Variety UFV-9, sold under the TABLE 3b. FINEP’s Support for the University of Vigosa, by Department Department
Number of Projects Value in OTN
OTN/Project
Phytopathology Soils Chemistry Forestry Agricultural Eng. Veterinary General Biology Phytotechnics Central Library Food !kchnology Teaching and Extension Vegetal Biology
11 5 2 4 6 3 2 1 2 2 3 1 1
277971 98279 85135 84964 76584 69734 31965 27334 24240 9160 7083 453 426
25270.1 19655.8 42567.5 21241 12764 23244.67 15982.5 27334 12120 4580 2361 453 426
TOTAL
43
793325
18449.45
kt4?chnics
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name Sucupira since 1983, has proved superior to most other varieties, with a yield of up to 11% higher than its competitors. Vicosa also has a history of genetic manipulation of the soya plant, particularly since 1983. End results of their research have meant improved flavor, improved nutritional value, and progress in reducing the inhibitors of trypsin in soya, which will ultimately eliminate the need for heat treatment of animal feed preparations. Brazilian soil has a high concentration of aluminum and manganese, elements which reduce the plant’s ability to use nitrogen. Vicosa adapted the relevant bacterium to Brazilian soil conditions, and also improved the methods for grain drying and storage, including construction of over 100 demonstration units and courses for farmers and agricultural managers. Another FINEP-funded project led to a training course on cell and vegetable tissue culture, and ultimately to improvements in orange varieties; in a project started in 1984, Vicosa added a modern tissue culture laboratory. 17 In the Zootechnics group, new technologies and products were developed that helped reduce imports of fowl genetic material, and the better adaption of some species of cattle to Brazilian conditions. They also studied, and determined the source of, aflatoxin contamination in animal feeds. An interesting sidelight to the studies of animal health established that the Brazilian farmer did not trust technologies that were not complicated, and Vicosa, along with its counterparts in EMBRAPA, the Brazilian Company for Agricultural and Livestock Research, found that introducing extra lights and noise along with the technology, improved its acceptance by a considerable margin18 Other work on cattle led to a sophisticated national system for diagnosing and treating common cattle diseases. FINEP participated for several years (1982-1984), and the fine results of this program led to the integration of this project into the Biotech Program of the PADCT national plan. A similar program on the chemical/ecological control of insects, particularly the Brazilian ant, was also incorporated into the PADCT plan, as a result of basic funding and excellent results from a FINEP project. Still other projects enlisted private industry, such as work on the gasohol technologies for tractors, which was supported both by private and government groups. One of FINEP’s most important choices was with Vicosa’s BIOAGRO, the Center for Biotechnology Applied to Crops and Animal Science. Starting with the $4 million FINEP grant, plus support from the state of Minas Gerais Biotechnology Program (BIOMINAS), over 70 scientists were gathered with experience in biological probes, cell and tissue culture techniques, molecular genetics, biological control of pests, and fermentation technologies. This group began operations in 1989, and rapidly showed some important results, including the following:19
Financing Biotechnology in Developing Countries: Brazil
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synthesis of nucleic probes, antibodies, and diagnostic kits for detecting common fruit and vegetable viruses; l altered bacterial strains that would better fx atmospheric nitrogen in the low-fertility, high manganese and aluminum soils; l development of new means of insect control, including pheromones, bio-insecticides and encouragement of natural enemies of pests; l improved production of enzymes for food production, such as betagalactosidase, the selection of micro-organisms for industrial processes and for dietetic purposes; 0 plant tissue culture to select resistant plant varieties of native species; and l improvement of the most widely used commercial varieties of soybeans. l
Conclusion This detailed, but partial list serves primarily to indicate the scope of Vicosa activities. Although the total is larger than the projects at other institutions, it is nevertheless typical of the research being funded by FINEP across the country How, then, did FINEP identify and choose biotechnology projects that produced the expected results most of the time? There are several answers. First of all, there was the outlook of the FINEP staff involved in the biotechnology projects. They were much more interested in the completion of the projects than in FINEP’s internal bureaucratic structure or power struggles. Their measure of FINEP’s success was the success of the projects. These individuals had an allegiance to, and an identification with their agency, a phenomenon possibly not very common in developing countries. For the staff involved in biotechnology, work at FINEP was also an active way of meeting Brazilian needs. One of the major goals in Brazil was import substitution, or producing in the country what was previously imported, thereby improving the balance of payments and preventing future bottlenecks.20 Therefore, funding needed to address import substitution in terms of developing domestic knowledge for products, processes, and technologies specific to Brazilian conditions. Secondly, the staff searched for mechanisms to optimize the success rate of their projects, the most important of which was assessing the reliability of the institution that applied for the funds. This assessment became a function of trust, which depended on previous performance and, particularly, personal knowledge more than political affiliations or attachments. Thirdly, FINEP’s biotechnology staff was market driven, and not afraid of applying evaluation criteria learned while working for the private sector. Brazil is a capitalist country with, at least internally and for a
324
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good deal of its economy, a free market. The existence of a potential user or market for the outcome of the project played an important role in approving projects. At the same time, the effectiveness of the project applicants was considered from the same perspective, that is, whether or not they could push their project forward under the pressures and needs of market conditions. This meant that the applicant had to demonstrate that she or he had the potential to produce the expected results, and beyond, in a competitive market. FINEP’s Vicosa funding illustrates the main principles involved in this process. A well established and recognized institution was funded as it continued to produce knowledge relevant for national development. Despite oscillations in funding, it is possible to consider FINEP a successful funding agency in the 198Os, given the environment of a developing country in a permanent state of crisis. To achieve its success, FINEP had to play the political game, for it never actually had available for its own discretion all the funds it nominally received. But, as the case of the University of Vicosa illustrates, FINEP made excellent use of the resources available for biotechnology. The importance of the FINEP case is, among other things, in allowing us to identify a few parameters - which could be tested in further case studies - that must be taken into account if a technology funding agency is to expect results under the stressful conditions of underdevelopment. Too often, researchers have focused on limitations or on failures and on the reasons for such outcomes. Although necessary, such research is only half the story The world, especially the developing world, is in need of solutions, and success cases, even though partial and limited, offer us alternatives to be critically and constructively considered. The case of biotechnology funding by FINEP in the 1980s is a success story. The staff identified with the agency and the agency with national goals. The staff gave higher priority to the success of the projects than to internal bureaucratic turf battles. There was an understanding that the great substitution to be effected was in the production of knowledge, particularly knowledge relevant to Brazilian interest and environment - and sometimes only to the Brazilian environment. Given these points, the approval of projects then depended on previous knowledge of the institution applying for funding and on the capacity of the individuals applying for the funding to operate and to produce results compatible with the domestic market forces. lb a large extent, FINEP’s biotechnology personnel had work experience with large corporations operating in Brazil. Such practical experience with the actual market forces in the country might have been one of the great keys to the funding successes of the period. Whether such a lesson can be applied to other than Brazilian situations is hard to attest, but it is certainly worth exploring.
Financing Biotechnology in Developing Countries: Brazil
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References 1. H. M. Nussenzveig, “Research Funding in Brazil: A Case History,” lkchnology in Society, Vol. 14, no. 1(1992), pp. 137-149. 2. J. F. de Carvalho, “Entidades e Organiza es Incumbidas da Atribui o de Meios,” in Heitor G. de Souza, Darcy F. de Almeida, and Carlos Costa Ribeiro, Pal tic-o Cient fia (Sao Paulo: Edit ra Perspectiva, 19721, pp. 203-223; Genetic Engineering and Biotechnology Monitor (Vienna: Unido, 19891,p. 26. 3. W. An&es and Jose Eduardo Cassiolato, Biotecnologia. Seus Zmpactos no Setor Industrial (Brasilia: CNPq, 19851, pp. 128-152. 4. J. de Souza Silva, “Biotechnology in Brazil and Prospects for South-South Cooperation.” In Biotechnology Revolution and the Third World. Challenge and Policy Options (New Delhi: Research and Information System for the Non-Aligned and Other Developing Countries, 1989), pp. 420-442. 5. M. do C. de Lacerda Peixoto, “Participa o da Comunidade Cient fica na Pol tica de Ci ncia e Tecnologia: A FINEP.” In Setores Sociais e a C & T, Vol. 1 (Brasilia: CNPq, Estudos para o Planejamento em Ci6ncia e ‘Ibcnologia, 19881,pp. 9-32. 6. For an example of the intense debate on the political reasons for funding science and technology see Ci&mia e Tecnologia: Urn Desafio Permanente (Celso Juarez de Lacerda, coord.) (Rio de Janeiro: FINEP and the Associa@o dos Diplomados da Escola Superior de Guerra, 1984). 7. Interview with FINEP officials, Rio de Janeiro, May 1990. 8. FINEP. Relatdrio de Atividades 1988 (Rio de Janeiro: FINEP, 1989). 9. FINEP, 19794989. Dez Anos de Apoio a Biotecnologia na Agropecuciria (Rio de Janeiro: FINEP, December 1989). This report is also the main source for the following sections. 10. R. Cabral, “The Interface Between University and Industry: The Case of Brazilian Biotechnology Science Parks,” Central European University, Praha, 1991. 11. GeneticEngineering and Biotechnology Monitor, Vol. 2 (Vienna: Unido, 19881, p. 23; o Globo (Rio de Janeiro, 16 November 1987); W. Anciaes and J. E. Cassiolato, Biotecnologia. Seus Zmpactos no Setor Industrial (Brasilia: CNPq, 1985). 12. Biotecnologia, Vol. 1 (EsALQ, SP, March 1987); W. Anciaes and J. E. Cassiolato, Biotecnologia. Seus Zmpactos no Setor Industrial (Brasilia: CNPq, 1985). 13. Sources for this section include Brazil, Minis&i0 de Educa&o e Cultura, Universidade Federal de Vicosa, Pesquisas Desenvolvidas na U.FV corn Apoio da FZNEP (Vicosa: Emprensa Universitiria da Universidade Federal de Vicosa, 1984); A. Sasson, Biotechnology and Development (Paris: UNESCO and Technical Center for Agricultural and Rural Development of the Netherlands, 19881, p. 316 after Biotecnologia (EsALQ, SP, 71 (Sept. 1987); Mini&&o de Educa@o e Cultura. Universidade Federal de Vicosa, Pesquisas Desenvolvidas na U.FV corn Apoio da FZNEP (Vicosa: Imprensa Universitlria, 1984); Genetic Engineering and Biotechnology Monitor, Vol. 26 (Vienna: Unido, 1989); W. An&es, and J. E. Cassiolato, Biotecnologia. Seus Zmpactos no Setor Industrial (Brasilia: CNPq, 1985). 14. The small producers were the ones defined as owning less than 50 ha. 15. L. Velho, “Sources of Influence on Problem Choice in Brazilian University Agricultural Science,” Social Studies of Science, Vol. 20 (1990), pp. 503-517. 16. OTN: Notes of the Brazilian National Treasure, 1 OTN = US$8 in 1988. The OTN may be taken as the Brazilian “hard currency” of the period. A. P. de Carvalho, 0 Polo BZO-RIO: Presente e Future. Urn Cen rio de 1988 a 1998 (Rio de Janeiro: Funda@o BIORIO, Sept. 19881, p. 5. 17. A point made by FINEP officials during May 1990 interviews and confirmed by researchers and staff of the Brazilian Agricultural and Animal Husbandry Research Corporation, EMBRAPA, late May 1990. 18. R. Cabral, “Biotechnology Applied to Agriculture: The Case of EMBRAPA - The Brazilian Company for Agricultural and Livestock Research” (Lund: Research Policy Institute, December 1991). 19. Genetic Engineering and Biotechnology Monitor (Vienna: Unido, 1989), p. 26. 20. This is also true for the FINEP financing on pharmaceutical and fine chemicals. “FINEP, Qu mica Fina, a Luta pela Independencia National,” Cadernos de Ci&%tcia, Vol. 6 (February 1988).
0160-791X/93 $6.00 + .OO Copyright 0 1993 Pergamon Press Ltd.
Printed in the USA. All rights reserved.
The Financing of Biotechnology in Developing Countries: A Brazilian Case in Point Regis Cabral
ABSTRACT FINER the Brazilian Agency for Financing Studies and Projects (FINanciadora de Estudos e Projetos), despite lack of funding and political pressures, achieved remarkable results in mission-oriented research during the 1980s. It was involved in practically all the major Brazilian biotechnology programs, with a basic policy of overcoming development gaps, for instance, in genetic engineering, cell culture, and molecular biology. This paper discusses FINEP’s evolution and structure in the 198Os, followed by a description of its main projects in biotechnology. Illustrated in more detail is FINEP’s support for its main beneficiary, the Federal University of Vicosa, state of Minas Gerais. Then the reasons for FINEP’s success are described, including the staff dedication to overcoming Brazilian development problems by funding projects that would eventually replace imports, and by carefully assessing the track records of the institutions and the individuals applying for finding. A high priority was given to projects for which there was a significant domestic market potential, and to individuals deemed capable of actually bringing such products to market.
Introduction In a perceptive 1992 description and critique of Brazilian funding, H. M. Nussenzveig pointed out that FINEP, the Agency for Financing Studies and Projects (FINanciadora de Projetos), despite periods of growth, had its efficiency “greatly
research Brazilian Estudos e impaired”
Regis Cabral, an historian of science with a background in physics, divides his time between the Research Policy Institute of the University of Lund, Sweden, and the history department at the Universidade Federal de Santa Catarina, in Florianopolis, Brazil. He has specialized in interactions of science and international relations, and more recently, in science and technology policy. An early version of this paper was presented at the Zschnical University of Denmark, Copenhagen, in November 1991, based on research funded as part of SAREC’s project, “Learning from Experience in Brazilian Biotechnology Policy Making.* 311
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312
because of inflation and budget cuts. 1 In spite of this lack of funding, results have been achieved, albeit more in market-oriented research than in pure science. At different points in its history FINEP has been one of the major funders of industrial as well as basic research in the country. In the 198Os, it was involved in practically all the major biotechnology projects and programs in the country. Examining its support for biotechnology for the agri-industry during the 1980s indicates a policy of overcoming gaps in the scientific and technological development of the country. FINEP gave particular emphasis to the establishment of research centers for genetic engineering, cell culture, and molecular biology throughout the country, and funded over 35 major research institutions. Like many other government agencies, FINEP had to overcome both the negative effects of political changes, and pressure to fund institutions for political reasons. This paper discusses the evolution and structure of FINEP in this decade, followed by a description of its main funding activities in biotechnology, particularly for one of its main beneficiaries, the Federal University of Vicosa, in the state of Minas Gerais. Finally, the reasons for FINEP’s successes, despite its perennial funding crisis, are considered.
The Structure
and Aims of FINEP
FINEP, an organ of the Ministry of Planning, was created in 1967 specifically to give financial support to research, projects, and programs of significance to Brazilian economic, social scientific and technical development, as defined by the Federal government. It was to study and finance approved projects, with the recipient ultimately reimbursing FINEP for its support. In 1971, it received an additional charge from the National Fund for Development of Science and Technology, to include projects that might never show a financial return, but which fitted the government criteria for appropriate projects. Thus FINEP now undertakes support of both profit-making and non-profit research, plus engages in joint ventures. Since the creation in 1975 of the National System of Scientific and Technological Development, FINEP interacts with numerous other agencies for identification of the common national goals, joint funding if necessary, and reduction or prevention of duplication.2 These organizations include: National Bank for Economic Development BNDE Brazilian National Research Council CNPq FINEP Agency for Financing Studies and Projects FNDCT National Fund for the Development of Science and Technology Support to National Consulting ACN
Financing Biotechnology in Developing Countries: Brazil
313
Support to Technological Development of the National Companies Support to Users of Consulting Services AUSC PBDCT Basic Plan of Scientific and Technological Development PRONAB National Biotechnology Program SNDCT National System of Scientific and Technological Development Industrial Technology Secretariat of the Ministry of Industry ST1 and Commerce ADTEN
Between 1980 and 1984, there were solid attempts to improve Brazilian biotechnology, in the midst of intensive lobbying and pressure from multinationals and industrialized countries for polices favoring their own interests.3 The main effort was through PRONAB, formed in 1981 with funding and support from CNPq, FINEP, and STI,4 to consolidate and coordinate the public investment in biotechnology in three main areas: energy, health, and agriculture and animal husbandry. In contrast with CNPq’s science bias, FINEP favored projects having a high technological content, either at the development or implementation phases. Private companies and profit-making projects were also candidates for funding, and FINEP’s original business of supporting consulting services was supplemented with yet another responsibility of providing support for the national consulting services, ACN, ADTEN, and AUSC. Through ADTEN, national companies could apply for funding to improve their own technical resources and personnel or to subcontract with Brazilian consultants, universities, or research institutes to produce needed technologies. Priority areas were basic engineering, setting up of R&D centers, development of products and processes, commercialization of new products, diffusion and transfer of technology, acquisition of foreign technology, and quality control. The AUSC focused on the implementation of studies and projects. FINEP paid the cost of hiring consultants to prepare viability studies, long-term planning, and studies aiming at improving a company’s technical capacity, administrative competence, and productive or operational capacity. Through ACN, FINEP supported smaller consulting firms until they could stand alone. To be eligible for funding, the company had to register with FINEP and have a recognized, approved, and permanent technical staff. FINEP could provide financial support to solve the company’s immediate cash problems, but it preferred a longerterm investment until the company became profitable. FINEP’s portion could include the retraining of personnel, buying new equipment, development of technologies and processes from research to commercialization, and the export of services and technologies. The Basic Plan of Scientific and Technological Development, PBDCT, determined FINEP’s priorities. Energy, agro-industry, and issues of social relevance were standard items through the years. Although
314
R. Cabral
FINEP financed basic research, it was the support for engineering consulting firms, for quality control systems and laboratories, and studies at the development and pilot plant phase, which topped the agenda. Project selection followed two steps. FINEP analysts first determined whether or not the project fitted FINEP’s mandate and objectives. Second, analysts of the FINEP department for which the project was best suited requested and analyzed a detailed proposal.5 Approval was not based only on technological quality.6 Political factors forced FINEP to invest a substantial portion of its non-profit funds in institutions such as the Catholic University in Rio de Janeiro. This was part of the federal government strategy, during the military period, to weaken the Federal University of Rio de Janeiro, then a center of political opposition. From a technological point of view, these were not wasted resources, as they contributed to the development of Brazilian computers and to the growth of an outstanding physics department but the effort drained FINEP’s resources.7 FINEP originally emphasized consulting as the link between technology and industry. In 1988, Brazil was the third-largest consulting market in the world, with over 300 domestic companies making $1 billion (U.S.) per year, most of them FINEP’s “graduates.” Since 1985, FINEP increasingly emphasized industrial R&D and research of industrial interest. The funding had a wide scope, from AIDS research to the turbines for Brazilian-Italian multiple-use fighter plane AMX. FINEP support helped produce chips, optical fibers, quartz, silicon compounds and crystals of high purity, fine films for microelectronics, high-conductivity ceramics, microwave digital systems, numerical control machines, airplanes, robots, oil platforms, rocket fuel, tanks, and artificial skin, among other areas. In biotechnology, seed research institutes and research hospitals were the main, but not the only, beneficiaries.8
FINEP and Biotechnology In 1988, out of 30 different FINEP programs, 12 were for biotechnology or its applications. A Program for Basic Sanitation led to new forms of water and sewage treatment. Another for Collective Health resulted in the national cancer register and in the University of S&o Paulo preventive medicine program. The AIDS program financed research, the training of personnel to deal with the problem, development of diagnostic systems, and special studies of HIV in hemophiliacs. The Program of Environmental Resources funded research on mutagenesis. In addition to these 12 programs, FINEP had five others which, although not specifically biotechnology, funded related projects. The program to improve technological capability in micro and small
Financing Biotechnology in Developing Countries: Brazil
315
enterprises, and the program to support Technological Institutes funded the alcohol projects. FINEP also funded local and state organizations such as the agricultural cooperative of Cotia. Given the great importance of agriculture to the Brazilian economy, it is understandable that a substantial portion of the investments in biotechnology were for agriculture and animal husbandry. FINEP and Agricultural
Biotechnology
The funding for agricultural projects was the responsibility of the Agricultural and Animal Husbandry Division. Between 1979 and 1989, FINEP promoted modern biotechnology by funding small and middlesize projects throughout the country, and by establishing large centers for biotechnology and laboratories for tissue and cell culture. FINEP’s documents reveal that the emphasis had been on the infrastructure necessary for obtaining and propagating plants that are disease resistant and can adjust to difficult climates and soils.9 FINEP supported short-term, middle-term, and long-term projects. Short-term (three years) programs included vegetative propagation, elimination of diseases, and germoplasm transfer. Middle-term (three to eight years) programs emphasized embryo culture, in vitro fertilization, somaclonal variation, gametoclonal variation, antera culture, and the production of haploidies. Long-term (eight to fifteen years), the objective was to achieve somatic hybridization, produce hybrids, obtain mutant cell lines, transfer organelles, chromosomes, and genes, and produce secondary metabolic products. These translated into the funding of research to obtain grain and vegetable varieties better adapted to Brazilian conditions, including draught and aluminum toxicity. Research to produce virus-free clones for species of economic importance was also emphasized. Biological probes included kits for diagnosing disease in potatoes, tomatoes, and peppers, and for producing improved nitrogen-fming soil bacteria. Finally, FINEP has funded R&D on bio-insecticides, bio-nematicides and pheronomes. The latter has been particularly driven by the need to protect the environment and to reduce expenditures on insecticides. Seed technology programs had a major objective of reducing the national dependency on imports, and of making national companies competitive. FINEP also funded research in molecular biology, with two main centers located in Port0 Alegre, RS, and in UNICAMP, SP. FINEP and Animal Husbandry FINEP focused on disease control and embryo technology management, also aimed at reducing dependency on imports. Thus the research was closely linked to identifying bottlenecks in animal production. The high cost of imported embryos and the danger that these embryos might one
R. Cabral
316
day be denied to Brazil motivated the construction of these programs. Short-term, FINEP financed the development of vaccines and hyperimmune sera. Middle-term, the objective was to produce monoclonal antibodies, synthetic peptides, and hormones, and achieve embryo transfers and in vitro fecundation. Long-term applications include sexual selection of spermatozoa, cloning via nuclei transfer, and the production of chimeras. The practical outcome was a vaccine for some common animal diseases, and diagnostics kits for others. Other results included techniques for embryo development and the production of growth hormones. FINEP and Food Technology Finally, FINEP’s Agroindustry and Food Science and Technology Program supported overall cost reduction by optimizing the use of raw materials and reducing production losses, along with research on recycling industrial residue as animal feed. Grain and food storage techniques in Brazil have improved because of FINEP programs.
FINEP and Its Main Beneficiaries FINEP’s biotechnology philosophy was to create or reinforce existing elements of an infrastructure to help Brazil cope with global technological changes. It should also be able to address problems relevant to Brazil’s national or regional development. Table 1, FINEP’s distribution of resources according to recipient, shows that the three major beneficiaries were institutions of higher education. Only a small portion of the biotechnology funds went to private companies, although the amount received by BIOBRAS, 3.7%, was significant. Also relevant was the support to the biotechnology science park in Rio de Janeiro, BIORIO, a very successful operation.lo Prominent was UNICAMP, a young university in Sao Paulo state, which set up a research center to run its Molecular Biology Program. By the early 198Os, UNICAMP had already built a research tradition in biology areas, such as tissue culture of tomatoes, even though its programs tended to be isolated from each other. Joint FINEP and BID funding of over US$16 million enabled it to build up its resources, which included an Integrated Research Center, acquired from Monsanto, and a Molecular Biology Center built in 1987-88. Areas of emphasis included biopolymers and enzymes for the food industry; pharmaceutical, antiinflammatory, and analgesic products; and animal vaccines.ll Almost at the same level of funding was ESALQ, the Advanced Agricultural School “Luiz de Queiroz,” formally a campus of the University of Sao Paulo, but a de facto autonomous institution, with an extensive program of agricultural biotechnology. In 1985, ESALQ had
317
Financing Biotechnology in Developing Countries: Brazil TABLE 1. Distribution of FINEP Funding in Agricultural and Animal Husbandry Biotechnology: By Institution Between 1979 and 1989a Institution
UNICAMP EMBR.APA UFRGS BIOBRAS FAEPEESAL UFRRJ UFMG FAPEU UFSM UFAL UFPEL FAEPE S.BRAS.SEMENTES IPVDF SASP UNESP FACTEC UFF U.CAXIAS DO SUL USP FUNEP CEBTEC IAC UFPR EPAMIG IPA U. PASS0 FUND0 CODE-PA FATEC BIO-RIO UFRPE EMBRYOS TECH CNEN TOTAL
Federal Unit
Amount (USD)
%
MG SP SP DF RS MG MG RJ MG SC RS AL RS MG RJ RS SP SP RS RJ RS SP MG SP SP PR MG PE RS AM RS RJ PE PR SP
3708834
29.2 11.8 11.6 6.5 5.4 3.7 3.4 2.9 2.8 2.7 2.0 1.9 1.9 1.8 1.8 1.5 1.1 1.1 1.0 0.7 0.7 0.7 0.7 0.6 0.5 0.3 0.3 0.3 0.3 0.2 0.2 0.1 0.1 0.1 0.1
1498119 1479791 824790 680787 476301 432079 366490 359935 341859 253288 237257 241161 227840 227434 192228 134656 133870 122129 89426 88428 87206 94550 79370 69241 38584 34935 36726 38846 23474 29946 15083 15884 9100 14245 12703892
100
*Note that institutions beginning with W” signify universities, beginning with “F a foundation associated with an advanced agricultural college.
numerous alcohol fermentation and yeast projects underway, including applications for both animal feed and sugar cane crops. FINEP support spread over several departments - Chemistry and Wood Research, CENA, the Nuclear Energy Applied to Agriculture center, and the Electron Microscopy section. Projects ranged from classical genetics and tissue culture to the isolation and fusing of protoplasts using electric fields. l2
R. Cabral
318
Table 2a shows the geographic distribution of FINEP funding by region and state. The south and south-east, being the areas of greatest economic activity with the largest numbers of researchers and scientists, also received the majority of FINEP grants. Minas Gerais produces cattle and milk; S&o Paulo, along with a large industrial base, is a major sugar producer and has some large agricultural cooperatives; Rio Grande do Sul produces both grains and soy beans. Table 2b details the institutions within each state that received the funding. Minas Gerais and Sao Paul0 each received in excess of 25%. A mid-level 13% went to Rio Grande do Sul. All others received much smaller amounts. None of these overall tables adequately highlights the special position of the University of Vicosa, which, over the decade, received nearly 30% of the funding, and it is useful to look more closely at this institution and its accomplishments.
FINEP and the Federal University of Viqosa13 Origins of the University The state of Minas Gerais was authorized to create the Advanced College for Agriculture and Veterinary Science in 1920, backed by the then President of the state, Arthur da Silva Bernardes. The institution was TABLE 2a. Distribution of FINEP Funding in Agricultural and Animal Husbandry Biotechnology According to Geographic Regions, 1979-1989 Region South
Total for Region South South-East
Total for Region South-East Center-West Total for Region Center-West North-East Total for Region North-East North Total for Region North
Federal Unit
Amount (USD)
%
Rio Grande do Sul Santa Catarina Parana
1646813 341859 47684
13 2.7 0.4
Minas Gerais SBo Paul0 Rio de Janeiro
2036356 5334474 3496498 698433
16.1 41.9 27.5 5.5
9529405 Federal District
74.9 824790
6.5
Pernamhuco Alagoas
824790 52610 237257
6.5 0.4 1.9
289867 Amazonas
2.3 23474 0.2
23474 TOTAL
0.2
12703892
100
Financing Biotechnology in Developing Countries: Brazil
319
TABLE 2b. Distribution of FINEP Funding in Agricultural and Animal Husbandry Biotechnology, 1979/1989, According to Federal Unit Federal Unit
Institution
Amount (USD)
8
3708834 476301 432079 359935 227840 94550 34935 5334474
29.2
1498119 1479791 134656 133870 87206 79370 69241 14245 3496498
11.8 11.6 1.1 1.1 0.7 0.6 0.5 0.1 27.5
UFRGS UFSM UFPEL IPVDF FACTEC U.CAXIASDOSUL U.PASSO FUND0 FATEC 1646813
680787 253288 241161 192228 122129 88428 38846 29946 13
5.4 2.0 1.9 1.5 1.0 0.7 0.3 0.2
DF Total for the Federal District
EMBRAPA
824790 824790
6.5 6.5
RJ
UFRRJ S.BRAS.SEMENTES UFF BIO-RIO
366490 227434 89426 15083 698433
2.9 1.8 0.7 0.1 5.5
SC Total for Santa Catarina
FAPEU
341859 341859
2.7 2.7
AL Total for AIagoas
UFAL
237257 237257
1.9 1.9
PR
UFPR EMBRYOS TECH
38584 9100 47684
0.3 0.1 0.4
IPA UFRPE
36726 15884 52610
0.3 0.1 0.4
CODE-A
23474 23474
0.2 0.2
MG BIOBRAS FAEPE/ESAL UFMG FAEPE FUNEP EPAMIG Total for Minas Gerais SP
FEALQ UNICAMP SASP UNESP USP CEBTEC IAC CNEN
Total for Sgo Paul0 RS
Total for Rio Grande do SuI
Total for Rio de Janeiro
Total for Parana PE Total for Pernambuco AM Total for Amazonas
TOTAL
12703892
3.7 3.4 2.8 1.8 0.7 0.3 41.9
100
320
R. Cabral
inaugurated in 1926 by Bernardes, then President of Brazil. It graduated the first students in both agriculture and veterinary science in the 1930s. In 1948, after some other changes, the state government created the Rural University of Minas Gerais, which brought together the advanced schools of Agriculture, Veterinary Science, Home Economics, an advanced training school, a research and experimentation facility, and an extension service. A Forestry school was added in 1955, and in 1961, the school became a federal university. A very short period of complete autonomy followed, but in 1969, under President Arthur da Costa e Silva, it became the Federal University of Vicosa, administratively and financially dependent on the Ministry of Education and Culture. During the 197Os, despite political and economic constraints, it continued to grow and added Institutes of Biology, Physics, and centers for agrarian sciences, for geological sciences and health, and liberal arts. By 1984, the University of Vicosa had 177 Ph.D.s, 314 M.Sc.s, and 210 B.Sc.s on its staff. It had 6319 students, including 949 at the secondary level, 4739 undergraduates, 530 at the master level, 103 at the doctoral level, and 8 special students. Its campuses extended to Vicosa, Florestal, Capinopolis, Visconde do Rio Branco, and Araponga in the state of Minas Gerais, with experimental stations not only in this state, but also in the states of Para, Acre, Mato Gross0 do Sul, Espirito Santo, Goias and Parana. FINEP, BNDE, CNPq, and FIPEC have been its major funding sources. Although broadly based with interests in many technical areas, Vicosa did not neglect its original charter - that of disseminating the results of its research. Over the years, both the U.S. Deptartment of Agriculture and Purdue University were involved either in joint programs or organizational development, and like its American predecessors, Vicosa has remained actively involved in rural extension programs. Since 1928 it has sponsored an “Agriculture Week” for local farmers - a program which has grown from 39 attendees the first year to 3148 in 1984. In 1980, it started a special program to reach the small producers.14 Currently, through the Technical Council of Extension and its Nucleus for Technology Diffusion, it uses print, radio, and TV to spread its messages throughout the country. FINEP and the Research
at Vicosa
While research is at the heart of Viaosa’s existence, FINEP’s support has played a strong role in its growth and development, particularly in the last two decades. “Scientific curiosity . . . influenceld the] selection of research problems for at least 50% of Vicosa’s researchers.15 Since the 193Os, it has advanced knowledge on plant varieties, including hybrids, on soil conservation, animal improvement, and plagues and disease control. Tables 3a and 3b detail this support for the 1974-1986 period by the number of projects and by department supported, showing that the number of projects has increased, as has the total value.
Financing Biotechnology in Developing Countries: Brazil
321
TABLE 3a. FINEP’s Support for the University of Vicosa, by Year Number of Projects Year
OTN/Project
Value in OTN* At signing
1976 1977 1978 1979 1980 1981 1982 1983 1984
1 2 4 1 1 4 4 15 11
16134 29093 105047 14649 3045 76930 128421 184602 235404
16134 14546.5 26261.75 14649 3045 19232.5 32105.25 12306.8 21400.37
TOTAL
43
793326
18449.45
al% prevent distortion due to inflation, US dollars are translated into the Brazilian “hard currency” of the period, or OTN, valued at $S/OTN in 1988.16
The FINEP-sponsored projects ranged widely over many departments. The Phytopathology department worked on research on coffee rust and bean diseases, beginning in 1971; by the mid 199Os, rust-resistant varieties of coffee beans will be ready for distribution to the growers. Field work on the spread of the disease led to a major scientific advance - the modification of the equation that measures the disease’s life cycle - and hence, better pesticides and pest control techniques. Vicosa, in conjunction with the USDA and the National Center for Soybean Research, also pioneered work on soybean diseases, including rust, resulting in new varieties already on the market. Other research resulted in disease-resistant varieties genetically adjusted to the harsh agricultural environment of Minas Gerais. Variety UFV-9, sold under the TABLE 3b. FINEP’s Support for the University of Vigosa, by Department Department
Number of Projects Value in OTN
OTN/Project
Phytopathology Soils Chemistry Forestry Agricultural Eng. Veterinary General Biology Phytotechnics Central Library Food !kchnology Teaching and Extension Vegetal Biology
11 5 2 4 6 3 2 1 2 2 3 1 1
277971 98279 85135 84964 76584 69734 31965 27334 24240 9160 7083 453 426
25270.1 19655.8 42567.5 21241 12764 23244.67 15982.5 27334 12120 4580 2361 453 426
TOTAL
43
793325
18449.45
kt4?chnics
322
R. Cabral
name Sucupira since 1983, has proved superior to most other varieties, with a yield of up to 11% higher than its competitors. Vicosa also has a history of genetic manipulation of the soya plant, particularly since 1983. End results of their research have meant improved flavor, improved nutritional value, and progress in reducing the inhibitors of trypsin in soya, which will ultimately eliminate the need for heat treatment of animal feed preparations. Brazilian soil has a high concentration of aluminum and manganese, elements which reduce the plant’s ability to use nitrogen. Vicosa adapted the relevant bacterium to Brazilian soil conditions, and also improved the methods for grain drying and storage, including construction of over 100 demonstration units and courses for farmers and agricultural managers. Another FINEP-funded project led to a training course on cell and vegetable tissue culture, and ultimately to improvements in orange varieties; in a project started in 1984, Vicosa added a modern tissue culture laboratory. 17 In the Zootechnics group, new technologies and products were developed that helped reduce imports of fowl genetic material, and the better adaption of some species of cattle to Brazilian conditions. They also studied, and determined the source of, aflatoxin contamination in animal feeds. An interesting sidelight to the studies of animal health established that the Brazilian farmer did not trust technologies that were not complicated, and Vicosa, along with its counterparts in EMBRAPA, the Brazilian Company for Agricultural and Livestock Research, found that introducing extra lights and noise along with the technology, improved its acceptance by a considerable margin18 Other work on cattle led to a sophisticated national system for diagnosing and treating common cattle diseases. FINEP participated for several years (1982-1984), and the fine results of this program led to the integration of this project into the Biotech Program of the PADCT national plan. A similar program on the chemical/ecological control of insects, particularly the Brazilian ant, was also incorporated into the PADCT plan, as a result of basic funding and excellent results from a FINEP project. Still other projects enlisted private industry, such as work on the gasohol technologies for tractors, which was supported both by private and government groups. One of FINEP’s most important choices was with Vicosa’s BIOAGRO, the Center for Biotechnology Applied to Crops and Animal Science. Starting with the $4 million FINEP grant, plus support from the state of Minas Gerais Biotechnology Program (BIOMINAS), over 70 scientists were gathered with experience in biological probes, cell and tissue culture techniques, molecular genetics, biological control of pests, and fermentation technologies. This group began operations in 1989, and rapidly showed some important results, including the following:19
Financing Biotechnology in Developing Countries: Brazil
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synthesis of nucleic probes, antibodies, and diagnostic kits for detecting common fruit and vegetable viruses; l altered bacterial strains that would better fx atmospheric nitrogen in the low-fertility, high manganese and aluminum soils; l development of new means of insect control, including pheromones, bio-insecticides and encouragement of natural enemies of pests; l improved production of enzymes for food production, such as betagalactosidase, the selection of micro-organisms for industrial processes and for dietetic purposes; 0 plant tissue culture to select resistant plant varieties of native species; and l improvement of the most widely used commercial varieties of soybeans. l
Conclusion This detailed, but partial list serves primarily to indicate the scope of Vicosa activities. Although the total is larger than the projects at other institutions, it is nevertheless typical of the research being funded by FINEP across the country How, then, did FINEP identify and choose biotechnology projects that produced the expected results most of the time? There are several answers. First of all, there was the outlook of the FINEP staff involved in the biotechnology projects. They were much more interested in the completion of the projects than in FINEP’s internal bureaucratic structure or power struggles. Their measure of FINEP’s success was the success of the projects. These individuals had an allegiance to, and an identification with their agency, a phenomenon possibly not very common in developing countries. For the staff involved in biotechnology, work at FINEP was also an active way of meeting Brazilian needs. One of the major goals in Brazil was import substitution, or producing in the country what was previously imported, thereby improving the balance of payments and preventing future bottlenecks.20 Therefore, funding needed to address import substitution in terms of developing domestic knowledge for products, processes, and technologies specific to Brazilian conditions. Secondly, the staff searched for mechanisms to optimize the success rate of their projects, the most important of which was assessing the reliability of the institution that applied for the funds. This assessment became a function of trust, which depended on previous performance and, particularly, personal knowledge more than political affiliations or attachments. Thirdly, FINEP’s biotechnology staff was market driven, and not afraid of applying evaluation criteria learned while working for the private sector. Brazil is a capitalist country with, at least internally and for a
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good deal of its economy, a free market. The existence of a potential user or market for the outcome of the project played an important role in approving projects. At the same time, the effectiveness of the project applicants was considered from the same perspective, that is, whether or not they could push their project forward under the pressures and needs of market conditions. This meant that the applicant had to demonstrate that she or he had the potential to produce the expected results, and beyond, in a competitive market. FINEP’s Vicosa funding illustrates the main principles involved in this process. A well established and recognized institution was funded as it continued to produce knowledge relevant for national development. Despite oscillations in funding, it is possible to consider FINEP a successful funding agency in the 198Os, given the environment of a developing country in a permanent state of crisis. To achieve its success, FINEP had to play the political game, for it never actually had available for its own discretion all the funds it nominally received. But, as the case of the University of Vicosa illustrates, FINEP made excellent use of the resources available for biotechnology. The importance of the FINEP case is, among other things, in allowing us to identify a few parameters - which could be tested in further case studies - that must be taken into account if a technology funding agency is to expect results under the stressful conditions of underdevelopment. Too often, researchers have focused on limitations or on failures and on the reasons for such outcomes. Although necessary, such research is only half the story The world, especially the developing world, is in need of solutions, and success cases, even though partial and limited, offer us alternatives to be critically and constructively considered. The case of biotechnology funding by FINEP in the 1980s is a success story. The staff identified with the agency and the agency with national goals. The staff gave higher priority to the success of the projects than to internal bureaucratic turf battles. There was an understanding that the great substitution to be effected was in the production of knowledge, particularly knowledge relevant to Brazilian interest and environment - and sometimes only to the Brazilian environment. Given these points, the approval of projects then depended on previous knowledge of the institution applying for funding and on the capacity of the individuals applying for the funding to operate and to produce results compatible with the domestic market forces. lb a large extent, FINEP’s biotechnology personnel had work experience with large corporations operating in Brazil. Such practical experience with the actual market forces in the country might have been one of the great keys to the funding successes of the period. Whether such a lesson can be applied to other than Brazilian situations is hard to attest, but it is certainly worth exploring.
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References 1. H. M. Nussenzveig, “Research Funding in Brazil: A Case History,” lkchnology in Society, Vol. 14, no. 1(1992), pp. 137-149. 2. J. F. de Carvalho, “Entidades e Organiza es Incumbidas da Atribui o de Meios,” in Heitor G. de Souza, Darcy F. de Almeida, and Carlos Costa Ribeiro, Pal tic-o Cient fia (Sao Paulo: Edit ra Perspectiva, 19721, pp. 203-223; Genetic Engineering and Biotechnology Monitor (Vienna: Unido, 19891,p. 26. 3. W. An&es and Jose Eduardo Cassiolato, Biotecnologia. Seus Zmpactos no Setor Industrial (Brasilia: CNPq, 19851, pp. 128-152. 4. J. de Souza Silva, “Biotechnology in Brazil and Prospects for South-South Cooperation.” In Biotechnology Revolution and the Third World. Challenge and Policy Options (New Delhi: Research and Information System for the Non-Aligned and Other Developing Countries, 1989), pp. 420-442. 5. M. do C. de Lacerda Peixoto, “Participa o da Comunidade Cient fica na Pol tica de Ci ncia e Tecnologia: A FINEP.” In Setores Sociais e a C & T, Vol. 1 (Brasilia: CNPq, Estudos para o Planejamento em Ci6ncia e ‘Ibcnologia, 19881,pp. 9-32. 6. For an example of the intense debate on the political reasons for funding science and technology see Ci&mia e Tecnologia: Urn Desafio Permanente (Celso Juarez de Lacerda, coord.) (Rio de Janeiro: FINEP and the Associa@o dos Diplomados da Escola Superior de Guerra, 1984). 7. Interview with FINEP officials, Rio de Janeiro, May 1990. 8. FINEP. Relatdrio de Atividades 1988 (Rio de Janeiro: FINEP, 1989). 9. FINEP, 19794989. Dez Anos de Apoio a Biotecnologia na Agropecuciria (Rio de Janeiro: FINEP, December 1989). This report is also the main source for the following sections. 10. R. Cabral, “The Interface Between University and Industry: The Case of Brazilian Biotechnology Science Parks,” Central European University, Praha, 1991. 11. GeneticEngineering and Biotechnology Monitor, Vol. 2 (Vienna: Unido, 19881, p. 23; o Globo (Rio de Janeiro, 16 November 1987); W. Anciaes and J. E. Cassiolato, Biotecnologia. Seus Zmpactos no Setor Industrial (Brasilia: CNPq, 1985). 12. Biotecnologia, Vol. 1 (EsALQ, SP, March 1987); W. Anciaes and J. E. Cassiolato, Biotecnologia. Seus Zmpactos no Setor Industrial (Brasilia: CNPq, 1985). 13. Sources for this section include Brazil, Minis&i0 de Educa&o e Cultura, Universidade Federal de Vicosa, Pesquisas Desenvolvidas na U.FV corn Apoio da FZNEP (Vicosa: Emprensa Universitiria da Universidade Federal de Vicosa, 1984); A. Sasson, Biotechnology and Development (Paris: UNESCO and Technical Center for Agricultural and Rural Development of the Netherlands, 19881, p. 316 after Biotecnologia (EsALQ, SP, 71 (Sept. 1987); Mini&&o de Educa@o e Cultura. Universidade Federal de Vicosa, Pesquisas Desenvolvidas na U.FV corn Apoio da FZNEP (Vicosa: Imprensa Universitlria, 1984); Genetic Engineering and Biotechnology Monitor, Vol. 26 (Vienna: Unido, 1989); W. An&es, and J. E. Cassiolato, Biotecnologia. Seus Zmpactos no Setor Industrial (Brasilia: CNPq, 1985). 14. The small producers were the ones defined as owning less than 50 ha. 15. L. Velho, “Sources of Influence on Problem Choice in Brazilian University Agricultural Science,” Social Studies of Science, Vol. 20 (1990), pp. 503-517. 16. OTN: Notes of the Brazilian National Treasure, 1 OTN = US$8 in 1988. The OTN may be taken as the Brazilian “hard currency” of the period. A. P. de Carvalho, 0 Polo BZO-RIO: Presente e Future. Urn Cen rio de 1988 a 1998 (Rio de Janeiro: Funda@o BIORIO, Sept. 19881, p. 5. 17. A point made by FINEP officials during May 1990 interviews and confirmed by researchers and staff of the Brazilian Agricultural and Animal Husbandry Research Corporation, EMBRAPA, late May 1990. 18. R. Cabral, “Biotechnology Applied to Agriculture: The Case of EMBRAPA - The Brazilian Company for Agricultural and Livestock Research” (Lund: Research Policy Institute, December 1991). 19. Genetic Engineering and Biotechnology Monitor (Vienna: Unido, 1989), p. 26. 20. This is also true for the FINEP financing on pharmaceutical and fine chemicals. “FINEP, Qu mica Fina, a Luta pela Independencia National,” Cadernos de Ci&%tcia, Vol. 6 (February 1988).