The Art of the Multilateral Deal
8 August 2018
Luigi Guarino | Crop Trust Director of Science and Programs
Imagine I’m your neighbour, and I have something you want, a tool say, to fix your car. Can we come to some arrangement that will make both of us happy?
Well, I could just give you the thing as a present, for example, if I don’t need it any more, or I have a spare one. Or I could lend it to you for a specified period. Or I could rent, or even sell it to you, at a price we both think fair. The point is, we can try to make a mutually beneficial deal. Nothing more natural, right?
Now imagine you need not just one but two tools, and that I only have one of them. That makes two deals you have to negotiate. Trickier, of course, but still doable. You just need to make another call – to someone who has the other tool.
But now imagine you in fact need a whole toolkit, and none of your neighbours has more than one or two tools, and indeed there are some tools that none of your neighbours have. Things are getting a bit more complicated now, aren’t they? You might need to negotiate a dozen or more separate deals, some with people whom you don’t know very well, living a couple of streets over, perhaps, or maybe in the next town. Still, if you need the toolkit badly enough, you’ll invest the time and energy, because what choice do you have?
And it gets worse. Now imagine that you don’t have much time. You just don’t have the luxury to spend the next week calling around trying to make lots of different deals with lots of different people for a wrench here and a screwdriver there. It’s the weekend, and you need to fix your car now, so that it’ll be ready to take you to work on Monday.
Not so sure it’s such a good strategy now, are you? Time to panic. Or think of something else.
That’s not unlike the situation plant breeders found themselves in until recently. They’re in a race against pests, diseases and climate change to breed higher yielding, more nutritious, more resilient crops. To do that they often need crop diversity (“tools”) from lots of different countries. The transaction costs involved in making bilateral deals with all the different providers of that diversity would be prohibitive, and potentially threaten food security if they caused breeding programmes to grind to a halt.
And not just in the plant breeder’s own country. Because, finally, imagine that it’s not just you that needs your car on Monday, but a bunch of your neighbours too, because it’s your turn to carpool.
The countries of the world, or rather their ministries of agriculture, didn’t panic. They thought of something else. Recognising they were all in the same boat – or car – they negotiated the International Treaty on Plant Genetic Resources for Food and Agriculture, which came into force in 2004. Countries that ratify the Treaty put the genetic resources in their genebanks into a metaphorical basket – the Multilateral System (MLS) – from which they are available to all who agree to abide by pre-defined rules.
According to the Standard Material Transfer Agreement (SMTA) negotiated by Treaty parties, if you use material from the MLS to create a new crop variety, and commercialize this new plant, you have to pay a portion of any money you make back into something called the Benefit Sharing Fund (BSF), which then goes to support the conservation and use of crop diversity around the world. The BSF is different from the Endowment Fund of the Crop Trust in that it supports short-term projects rather than long-term grants, and not just ex situ conservation activities but also in situ and sustainable use. But both the BSF and the Crop Trust are central, in their complementary ways, to the funding strategy of the Treaty.
The BSF reached a major milestone recently by receiving the first such contribution. It has actually been getting voluntary contributions from a number of countries and others for some years now, but this is the first payment tied to use of material in the MLS. A Dutch vegetable breeding company used crop diversity in the common basket, made some money because of it, and paid USD 119,083 back into the system, as per the SMTA they signed when they first got hold of seeds from genebanks in the Netherlands and Germany.
Why did it take so long? Well, it takes time to breed new varieties and commercialize them successfully. Hopefully this will be the first of many contributions, as products incorporating material accessed years ago finally make their way to market.
The Treaty is looking into ways of enhancing the system, but this is good start. It shows that a multilateral approach to accessing crop diversity and sharing the resulting benefits can work. To go back to the tool metaphor, just imagine: you don’t now need to make separate deals with everyone who has a tool that you might require to fix your car. You just pick up the tools you need from the common storehouse where they are kept, and pay something back into the kitty to keep the wheels turning. That’s only fair. The tools need to be kept nice and clean, and there needs to be a full complement of them, and enough for everyone when they need them to fix their own car, and take you to work.