DRAFT REPORT

A Term Paper on
A g r i c ul t ur e I n n o v at i o n & I t s
Impact in Commercialization
(A paper for partial fulfillment of internal assessment)

Report Submitted to
Mr. Rudra Bahadur Shrestha (PhD)
Adjunct Professor

Report Submitted By
Mr. Basudev Sharma

M.Sc.Ag. (Agribusiness Management)

Faculty of Science and Technology
Himalayan College of Agricultural Sciences and Technology
Kathmandu, Nepal
June, 2017

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Summary
Agriculture contributes 32.12% to the Nepals GDP and employs about two thirds of the
workforce. So that development of national economy is directly depends on the
agricultural development. Commercialization of agricultural business, maintain quality
agricultural products and enhance marketing are the key priority for the agriculture
development. The lack of appropriate knowledge in processing potential, technology
access and market coupled with the capacity gaps in the private sectors has obstructed
the sector to reach its full potential. On the other hand, there is huge potential of import
substitution as well as export of processed food products to the international market.
Investments in knowledge, especially in the form of science and technology, have
featured prominently and consistently in most strategies to promote sustainable and
equitable agricultural development at the national level. Although many of these
investments have been successful, the context for agriculture is changing rapidly,
sometimes radically.
Agricultural development depends to a great extent on how successfully knowledge is
generated and applied, and indeed knowledge intensiveness has featured prominently
in most strategies to promote agricultural development. Yet the changing context for
agricultural development has highlighted a strong need to understand and adopt
innovation systems thinking. Without innovative technology we cant compete with
international traders. Agricultural development demands and depends on innovation
and innovation systems. Innovation is widely recognized as a major source of improved
productivity, competitiveness and economic growth throughout advanced and
emerging economies. Innovation also plays an important role in creating jobs,
generating income, alleviating poverty, and driving social development. Agriculture
innovation can able to harness markets in ways that are inclusive and all encompassing.
It also can reinvest gains in innovations and enterprises that move key actors along the
value chain and also manage risks inherent in the agro industry sector that are
stumbling blocks for the startups, youth and SMEs especially finance.
Introduction
Innovation is the process by which individuals or organizations can get modern skills
and implement those skills on designing and production of goods and services that are

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new to them, irrespective of whether they are new to their competitors, their country, or
the world. An innovation system is a network of organizations, enterprises, and
individuals focused on bringing new products, new processes, and new forms of
organization into economic use, together with the institutions and policies that affect
their behavior and performance.

An innovation system can be defined as a network of organizations, enterprises, and

individuals that focuses on bringing new products, new processes, and new forms of
organization into economic use, together with the institutions and policies that affect
their behavior and performance. The innovation systems concept extends beyond the
creation of knowledge to encompass the factors affecting demand for and use of
knowledge in novel and useful ways. Innovation systems not only help to create
knowledge; they provide access to knowledge, share knowledge and foster learning. The
innovation systems concept is derived from direct observations of countries and sectors
with strong records of innovation. The concept has been used predominantly to explain
patterns of past economic performance in developed countries and has received far less
attention as an operational tool. It has been applied to agriculture in developing
countries only recently, but it appears to offer exciting opportunities for understanding
how a countrys agricultural sector can make better use of new knowledge and for
designing alternative interventions that go beyond research system investments.
Agricultural research, extension, education, and training are key components of an
agriculture innovation system.
The agricultural innovation system is an understanding of how a countrys agricultural
sector can make better use of new knowledge and design interventions that go beyond
research investments. It is a collaborative arrangement bringing together several
organizations working towards technological, managerial, organizational and
institutional objectives. The approach represents a major change in the way that the
production of knowledge is viewed, and thus supported. It shifts attention away from
research and the supply of science and technology, towards the whole process of
innovation, in which research is only one element.
Agricultural development enables agriculture and people to adapt rapidly when
challenges occur and to respond readily when opportunities arise, as they inevitably

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will, because agricultures physical, social and economic environment changes

continually. Agricultural development demands and depends on innovation and
innovation systems. Innovation is widely recognized as a major source of improved
productivity, competitiveness, and economic growth throughout advanced and
emerging economies. Innovation also plays an important role in creating jobs,
generating income, alleviating poverty, and driving social development. Innovation is a
major source of improved productivity, competitiveness, and economic growth
throughout advanced and emerging economies, and plays an important role in creating
jobs, generating income, alleviating poverty, and driving social development.
Objectives
The overall objectives of the agriculture innovation system is
To support the small & medium enterprises (SMEs) in their capacity development
To contribute for commercialization and industrialization of the agribusiness
sector
To foster collaboration among ecosystem actors in promoting agribusinesses
To make analysis of the solutions to the problems on agribusiness and help to get
healthy decisions
Theoretical insight
Science and technology are critical to the development and economic growth strategies
of both developed and developing countries. Scientific and technological knowledge
and information add value to existing resources, skills, knowledge, and processes,
leading to novel products, processes and strategies. These innovations are the changes
that lead to improvements in economic and social conditions and environmental
sustainability. Innovation is therefore central to development.

The concept of commercialization refers to the increasing share of the marketable

surplus in the total farm business income of the farms. This share can be increased by
(i) Generation of more marketable surplus in subsistence oriented food grain
crops
(ii) Increasing production of market oriented commercial crops and other
products (collectively known as high value adding enterprises) and

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(iii) Increase in food grain production through improvement in productivity of

land and diverting area for the high value adding crops or other enterprises
will ensure food security and commercialization simultaneously.
Commercialization of agriculture is a phenomenon where agriculture is governed by
commercial consideration i.e. certain specialized crops began to be grown not for
consumption in village but for sale in national and even in international market.
Various streams of economics thinking are helpful in understanding how drivers of
growth are changing and the resulting implications for managing innovation.

New growth theory stresses the importance of increasing returns to knowledge

accumulation, based on investment in new technologies and human capital.
Evolutionary and industrial economics demonstrates that this accumulation is a
learning process that involves interactions between the different stages of
research and innovation and is shaped by the interplay of market and nonmarket
organizations (such as networks) and by various organizations (such as social
norms or regulations).
Institutional economics stresses the importance of organizational innovation
within firms and governments in the design and coordination of institutions and
procedures involved in handling more complex interdependencies, as growth
leads to the increasing specialization of tasks and productive tools
Sociology of innovation stresses the role of trust in avoiding the escalating
transaction costs that result from increased specialization and the role of
institutional and cultural variety in boosting creativity.
Methodology
Relevant information are collected from published documents & other related
publications regarding agriculture innovation. Necessary information is also explored
from related web pages. Collected information or data are analyzed with the help of
simple data analysis tools.
Results and discussion
Agriculture innovation is the most important and essential factor for modern
agriculture. Agricultural development enables agriculture and people to adapt rapidly

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when challenges occur and to respond readily when opportunities arise, as they
inevitably will, because agricultures physical, social and economic environment
changes continually. Business incubation is a unique and highly flexible combination of
business development processes, infrastructure and people designed to nurture new and
small businesses by helping them to survive and grow through the difficult and
vulnerable early stages of development. Business incubation features strongly in local,
regional and national economic strategies and is a key component in the development
of most overseas, developed and developing economies, particularly those aiming to
develop a knowledge based economy. Business incubation is an important mechanism
to support growth-oriented entrepreneurs. It needs be well understood and properly
integrated with other tools supporting SME development.
Different types of business incubators have been found in serving to the agricultural
innovation. Public or non-profit incubators; private incubators; academic-related
incubators and public/private incubators are the most common. Recently Project for
Agriculture Commercialization and Trade (PACT) under the Ministry of Agriculture
Development (MoAD), Government of Nepal and the World Bank have provided
funding and support to establish a private incubator, Nepal Agribusiness Innovation
Centre (NABIC). It is Nepals first agri-focused business incubator and innovation
platform. It provides holistic services to support and enhance innovation, growth and
competitiveness of agribusinesses. It is a not-for-profit sharing entity established under
the company act, 2002 which shall be a one stop business solution for agribusiness to
identify and realize their maximum growth potential.

NABIC is established with its objectives of care & protect of start-ups as well as small &
medium enterprises and innovators in the agribusiness sector through business
incubation from conceptualization, implementation and scaling up, contribute to
commercialization and industrialization and foster collaboration among ecosystem
actors to promote agribusinesses in Nepal. It provides intensive business counseling,
business incubation services and other promotional services to the entrepreneurs. It has
clear mission to identify and nurture agribusinesses with high growth potential and
help them reach their full potential and has vision to be the leading provider of
knowledge, skills and services to agribusinesses to contribute to Nepals agriculture
sector development.

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Conclusions and recommendations

The agricultural sector of many countries is changing in response to new market
opportunities and productivity requirements, new resource management problems, and
new roles assumed by public, private, and civil society actors. In this context, the pace of
change and level of uncertainty can be considerable. Support to agricultural research
and extension systems is necessary but not sufficient to expand the capacity for
innovation in agriculture. New ways of enabling innovation are required to deliver
economic growth and reduce poverty.
Knowledge created by research is a fundamental building block of an innovation
system.
The context of agriculture is continuously evolving.
The need to integrate social and environmental concerns can be viewed in
various ways.
Even when competitive incentives to innovate are very strong, they are not
always sufficient to bring together all of the actors needed for innovation to
function or to reach sufficient scale.
Dynamic and coordinated interaction among actors in an innovation system
often is frustrated by a range of deeply entrenched attitudes and practices that
originated when research through a linear process of technology transfer was
seen as the main driver of innovation, or when the main source of
competitiveness was considered to be low cost (rather than innovation).
The organization of rural stakeholders is a common element of value chain
approaches and community-driven development.
Innovation systems depend on intermediary organizations to facilitate interaction
or access to technology and information, and they also depend on coordinating
bodies to help integrate the activity of different actors in a sector.
Interaction is only one (albeit important) practice to promote innovation.
The innovation systems concept pays attention to the enabling environment as an
important promoter of innovation capacity.

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References

The World Bank, Agricultural Innovation Systems, AN INVESTMENT

SOURCEBOOK
The World Bank, 2013, PROMOTING AGRIBUSINESS INNOVATION IN NEPAL:
Feasibility Assessment for an Agribusiness Innovation Center. 2013. infoDev,
Finance and Private Sector Development Department. Washington, DC: World
Bank.
The World Bank, Enhancing Agricultural Innovation: How to Go Beyond the
Strengthening of Research Systems, Agriculture & Rural Development (ARD)
http://siteresources.worldbank.org/INTARD/Resources/Enhancing_Ag_Innovation
.pdf
https://www.infodev.org/infodev-
files/promoting_agribusiness_innovation_in_nepal_-_full_study.pdf
http://www.infodev.org/press-releases/world-bank-group-launches-new-
center-promote-agribusiness-nepal
http://pact.gov.np/?option=publication&page=publication_type&publication_type
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http://www.infodev.org/articles/infodev-captures-growing-interest-
agribusiness-nepal
http://www.nabic.agribiznepal.com/index.php
https://www.infodev.org/infodev-files/m1_traineemanual_20101029.pdf
http://www.ukspa.org.uk/sites/default/files/factsheet%201%20-
%20A%20Brief%20Introduction%20to%20Business%20Incubation.pdf
http://www.netfund.go.ke/images/2016/April/The-Effect-of-Business-
Incubation-in-Developing-Countries.pdf