REPORT: Food systems: Research and innovation investment gap study

EC (2013) Food systems: Research and innovation investment gap study # 539 p.

This comprehensive report presents the results of a comparative study of food systems research and innovation (R&I) investment levels in the EU, considering public and private R&I spent at both national and EU level. 

Three main strands of research were used to inform the study: 

1. a review of projects funded through the EU Framework Programmes (Seventh Framework Programme (FP7) and Horizon 2020); 
2. a mapping of national public funding available for food systems R&I in the EU Member States; 
3. and a first analysis of private sector expenditure on food systems R&I. 

Data were categorised according to the priorities, pathways and sectors identified by the European Commission’s Food 2030 R&I policy framework to understand overall levels of expenditure on different priorities in food-related sectors. The report complements the summary report/policy brief published in 2022.

A number of key policy initiatives further support the Green Deal’s overall objectives. In relation to food systems, the Farm to Fork Strategy (published in 2020) aims to transform European food systems to become the global standard in sustainability while striving to supply healthy, safe, equitable, and environmentally friendly food. The Farm to Fork Strategy identifies R&I as a key driver in developing and testing solutions across all sectors of the food system to help accelerate the transition to sustainable, healthy and inclusive food systems across the EU. However, the EU has identified strong indications of a funding gap in public and private sector provision for R&I in food systems.

FOOD 2030 identifies the need for a systemic approach to R&I that addresses four priorities: 

• Priority one: Nutrition for sustainable and healthy diets; 
• Priority two: Climate smart and environmentally sustainable food systems; 
• Priority three: Circularity and resource efficiency of food systems; 
• and Priority four: Innovation and empowerment of communities.

Extracts

EU FUNDING FOR FOOD SYSTEMS R&I (FP7 AND HORIZON 2020)

From 2007 – 2020, almost EUR 18.4 billion of EU funding is estimated to have been provided to projects related to food systems.2 This accounts for 15% of the total EU public funding available under FP7 and Horizon 2020. (page 8)

The majority of relevant funding (55%) allocated at EU level appears to focus on projects in the early stages of the value chain (primary production/food processing), with less focus on logistics (1%) and food retail (1%). (...) From FP7 to Horizon 2020, projects related to food safety experienced the biggest decrease in their proportion of overall relevant EU public funding awarded, from almost 18% to 12%. (page 9)

NATIONAL FUNDING FOR FOOD SYSTEMS R&I IN  THE EU MEMBER STATES

The majority of funding is consistently allocated to primary production, which accounts for almost two-thirds (63%) of overall spend across the EU Member States. Czechia and the Netherlands were notable exceptions to this rule: in both cases, the most common Food 2030 sector related to healthy people. (page 11)

• Germany: Research and Innovation in Germany is funded by three main actors: The Federal Government, the federal states, and the private sector. Overall, Germany aims to invest 3.50% of GDP in R&I by 2025 (page 318) Contrasting many other countries, a comparatively significant percentage of relevant funding corresponded to the pathway “Food Systems Africa” (6%, EUR 149 million).  (page 331) (...) The BMZ invests approximately EUR 2 billion yearly in projects related to food security, rural development and the protection of natural resources in developing countries, specifically in countries where malnutrition and poverty are prevalent. A third of this is allocated to the special initiative One World without Hunger, which comprises ca. 300 projects, with a particular focus on smallholder farming in Africa. While no project-level data is available to determine the ratio of R&I projects within these, publicly available information reveals that under this initiative, the BMZ supports 15 green innovation centres (14 of which are in Africa) with a total of EUR 415 million between 2014-2024. The initiative also covers support to five knowledge centres on ecological farming in Africa. (page 332)
• Netherlands: The main policy actors in the Netherlands in relation to R&I are the Ministry of Agriculture, Nature and Food Quality (ANF), Ministry of Economic Affairs and Climate (EAC) and the Ministry of Education, Culture and Science (ECS) and the Ministry of Foreign Affairs (FA). (page 425) (...) Projects related to the Food systems Africa pathway could be found in the field of development cooperation, executed by the Netherlands Enterprise Agency and funded by the Ministry of Foreign Affairs, contained in the following database: Project Database | Development Cooperation (rvo.nl) (page 437)

CANADA, CHINA AND THE USA

In Canada and the USA, primary production accounts for nearly 75% of public expenditure on food systems R&I. In China the picture is slightly more balanced, with primary production accounting for approximately 41% of spend. (page 77)

PRIVATE INVESTMENTS IN FOOD SYSTEMS R&I WITHIN THE EU

• For the purpose of this analysis, private sector was broadly defined as the companies operating in the agriculture, food, and drink industry, from seed and farming equipment producers, to businesses manufacturing packaging, distributors, and food-related waste treatment businesses, therefore covering the entire food system. 
• The food industry is generally viewed as a sector with medium- to low- research and innovation (R&I) intensity (page 100)
• The low degree of R&I in the agricultural and food sector is at least in part explained by the fact that the EU agricultural and food sector is mainly composed of SMEs, which tend to have less resources to conduct research. In addition, there appears to be a tendency to adopt innovation developed in other industries (such as in the case of packaging, machinery, and manufacturing supplies)120. Innovation activity in the sector is also characterised by close interaction and collaboration between primary producers and their supply chain. (page 100)
• EU-based companies in the food and drink industry also tend to invest relatively less in R&D compared to other international competitors. (page 100)
  

Between 2012 and 2018, an estimated EUR 93 billion was invested in food-related innovation by the private sector in the EU. More than half of all R&I taking place in the EU food sector is carried out by German and Dutch companies. Private sector investment is concentrated in the primary production and food processing sectors. (page 13)

Of the expenditure that did align with the Food 2030 priorities, the largest proportion of investment (32%) aligned with priority two “climate smart and environmentally sustainable food systems”. None of the investment identified aligned with priority four “innovation and empowerment of communities’”  (page 98)

Overall volume of equity investments into companies active in food systems in the EU trailed behind the volume of equity deals in the USA between 2007 and 2020 (11,910 deals in the US (worth EUR 138 billion) and 4,364 in the EU (EUR 43 billion). This confirms analysis undertaken by the EIB113, suggesting that access to finance is a major bottleneck for innovative EU-based firms active in 

food technologies. (page 99)

OBSTACLES TO FOOD SYSTEMS R&I INVESTMENT  WITHIN THE EU

There is very limited information available on the results of R&I spending in food (either traditional R&I outcomes such as increases in Technology Readiness Level (TRL), patenting activity, publications etc or contribution to broader policy-level outcomes), exacerbated by a lack of common indicators which would allow for the collection and comparison of data. (page 14)

TRENDS IN FOOD SYSTEMS R&I FUNDING BETWEEN 2008 AND 2020

Nutrition for a sustainable and healthy diet appears to focus on projects towards the end of the food value chain, with consumers and markets being key targets of projects funded under this priority. 

“Climate smart and environmentally sustainable food systems” has consistently remained the most or second-most funded priority. (...) “Climate smart and environmentally sustainable food systems” received the largest proportion of funding under both FPs, growing from 34% to 37% of total funding respectively. (page 33)

FOOD SYSTEMS AFRICA

The majority of projects under this pathway target the first stage of the food value chain, i.e. primary production. The word frequency analysis identifies some key trends, namely protecting ecosystems and adapting primary production to climate change. 

Other projects focus on fostering integration between different R&I stakeholders (e.g. creating networking and training opportunities for smallholder farmers or fostering connections between universities and other research institutions in Africa and European countries). These trends align with the Joint Africa – EU Strategy and its associated African Union -European Union High Level Policy Dialogue (HLPD), adopted in 2016, which identified food and nutrition security and sustainable agriculture as a key priority area for joint research and innovation activity

Additionally, in 2018 the Development of Smart Innovation through Research in Agriculture (DeSIRA) initiative and the Task Force Rural Africa (TFRA) were launched, further manifesting the focus on food and nutrition security through innovation in (sustainable) primary production. (page 41)

DISTRIBUTION OF R&I FUNDING ACCORDING TO THE FOOD 2030 PATHWAYS FOOD SYSTEMS AFRICA

FP7

• EU level: 3% of relevant funding / EUR 39.3 million
• National level:  5% of identified funding / EUR 109 million

Horizon 2020

• EU level: 4% of relevant funding / EUR 128.8 million
• National level:  1% of identified funding / EUR 36 million

AREAS OF LOW INVESTMENT DENSITY

• Urban food systems; alternative proteins; the microbiome; FOOD SYSTEMS AFRICA; governance and systems change; food from the ocean and freshwater resources.  (page 119)
• Expenditure has been consistently low across four pathways (with each pathway representing 6% or less of all funding): alternative proteins and dietary shift, the microbiome world, FOOD SYSTEMS AFRICA and urban food system transformation.  (page 125)
• Relatively underfunded: “urban food system transformation”, “the Microbiome world” and  FOOD SYSTEMS AFRICA.  (page 126)
• Similarly to the trends identified at EU level, FOOD SYSTEMS AFRICA, the microbiome and urban food systems transformation receive very limited amounts of funding in the Member States across the entire reference period. (page 126)
• Innovation and empowerment of communities; and the FOOD SYSTEMS AFRICA, the microbiome world and urban food systems transformation pathways) require additional investment to achieve the goals of the Food 2030 initiative, in particular in its ambitions to develop systemic solutions that can deliver co-benefits to sustainability and resilience, environment and climate, nutrition, communities and circularity. (page 127)