Does Plant Variety Intellectual Property Protection Improve Farm Productivity? Evidence from Cotton Varieties

In a recent decision focusing on utility patents for plants and seeds (J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 2001), the United States Supreme Court made room for plant variety protection (PVP) alongside the expanded applicability for utility patents provided by the decision. PVP was described as providing “limited patent-like protection for certain sexually reproduced plants. ” The plant breeder’s rights provided by PVP are limited in that they contain a research exemption (Kesan, 2001) and an exemption that allows farmers to save and replant seeds. The effectiveness of PVP in promoting the development of improved varieties will likely influence US farm productivity through yield and other advantages and is also relevant internationally, as World Trade Organization (WTO) countries are increasingly adopting some form of PVP to meet their obligations under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. Initial empirical evidence has failed to find support for the hypothesis that PVP has a positive influence on crop yields. Each of the studies investigating this relationship considered a different crop: Alston and Venner (2002) investigated wheat; Babcock and Foster (1991), flue-cured tobacco; Perrin, Hunnings, and Ihnen (1983), soybean; and Carew and Devadoss (2003), canola. Janis and Kesan (2002) expanded the crop coverage of the debate (without providing any new yield-impact evidence) by discussing soybeans and corn and made the conclusion that their “results indicate that the Plant Variety Protection Act (PVPA) rights are burdensome to acquire, and yet the expected post-issuance licensing and enforcement activities. are virtually non-existent” (Janis & Kesan, 2002, p. 754) and that PVP serves “primarily as a marketing tool” (Kloppenburg, as cited in Janis & Kesan, 2002, p. 775). The lack of impact of PVP on yields is intriguing as there is evidence that PVP has provided the necessary incentives for breeding research. For example, in an early evaluation of the PVP Act, Perrin et al. (1983) found that both the absolute number and expenditure of nonhybrid crop breeding programs increased substantially after 1970; they attributed this change to the incentives created by the PVP Act. They found that the rate of improvement of yields released after the PVP Act was higher than those released before, although this result was significant only at the 16% level. Butler and Marion (1985) concluded that the “PVPA has stimulated the development of new varieties of soybean and wheat” (p. 75), but were unable to conclude that total R&D activity had increased. Knudson and Pray (1991) and Pray and Knudson (1994) also found that PVP has effects on private-sector research priorities and breeding activity but did not relate PVP to yields. Likewise, Srinivasan (2004) and Diez (2002) have found that the impact of Plant Breeder’s Right in Europe has been to increase the incentives for private firms to develop new varieties, but they too did not relate the effect of those new varieties on yields. The primary contribution of this paper is quantification of the effect of PVP varieties on cotton yields. It is somewhat anomalous that cotton has not been previously examined, as cotton is a major US row crop and relies heavily on PVP certificates for intellectual property (IP) protection. In contrast to corn and soybeans, which in recent years have been protected primarily by utility patents (Lesser, this issue), by 2001 only two cotton varieties were protected by utility patent (United States Department of Agriculture [USDA] Economic Research Service, 2005). PVPs are not widely used for tobacco and canola, with fewer than 100 PVP certificates granted for either crop, as opposed to 600 for cotAnwar Naseem International Food Policy Research Institute