Chile's Institute of Agricultural Studies (INIA) is facing a serious financial crisis with an average annual deficit of CLP1.045 billion (US$2.27 million) since 2004, according to Universidad Catolica agricultural economist Guillermo Donoso.

Guillermo Donoso

The former INIA director told www.freshfruitportal.com the deficits led to an accumulated debt of CLP4.22 billion (US$9.17 million) by 2009, which implied a lower budget execution of projects and a failure to deliver on research objectives.

The INIA has had to return funds that weren't used, while the Comptroller General is conducting studies that will lead to the closure of one project due to a lack of contract compliance.

To improve the situation the institute has taken several measures since June 2010, such as looking for economies of scale and transforming different components of fixed and variable costs, along with other measures to increase efficiency.

However, these measures  only tackle 20% of the budget problem as 80% of costs are spent on staff. To address this issue the institute conducted a study analyzing the scientific productivity and work commitment of employees. Staff whose assessments fell under a rating of 4 out of 7 were dismissed, leading to 29 job losses at INIA since September 2010.

"Unfortunately, these professionals had low scientific productivity; for example, some of them did not do scientific research in the last 10 years and didn't report their results through scientific publications or other means of transfer or extension," says Donoso.

"The cost of training these highly skilled professionals is a sunk cost, and it's fitting to ask whether national agriculture can afford the luxury of INIA not being productive, nor complying with its objective of generating innovation for agriculture, by having highly qualified professionals that do not research and finally do not generate innovation for agriculture."

He says the layoffs have been painful for the institute due to the resources invested in their training, but these cost could be recovered in about two years and improve the budget by CLP1.3 billion (US$2.825 million) each year.

One of the INIA's trade activities is the multiplication, distribution and sale of seeds, but Donoso says due to the high costs of production there are more profitable alternatives, including association with organizations like ANASAC to hold intellectual property for wheat varieties and engage in marketing.

This idea was presented at an INIA Council meeting but rejected on the basis that keeping business would be more profitable than outsourcing.

"Changes in national and economic policy, and in development strategies, in both countries demanding Chilean agricultural products and competitors, a rapid change of scenery is being generated. To have agriculture that's competitive and sustainable in time, a permanent capacity for innovation is required," says Donoso.

"In this context there are challenges and opportunities for research and economic development, to generate results that contribute to having products.

"Agriculture that doesn't have the capacity to react is destined to die. So the INIA requires a process of renewal of research capacity, driven by an innovative spirit based on the creation of knowledge."

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Photo: Dialogo Sur

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