09/09/2010 12:43 pm ET Updated May 25, 2011

Embracing Embrapa

San Francisco — In the summer of the Tea Party, it's politically incorrect to point out that government does many things better than private firms — indeed, that the most important things are very hard for markets to accomplish.

But an unlikely source — the Economist — recently provided a powerful object lesson from an unlikely country: Brazil. In an in-depth article on how Brazil became the first tropical agricultural superpower, the free market's most credible cheerleader makes clear that Brazil "has revolutionized its own farms" by investing public funds in agricultural research, and by testing and disseminating a broad system of agricultural interventions suited for tropical conditions, instead of developing proprietary patented biotech varieties.

Indeed, the Economist attributes the entire story to Brazil's government research program. "If you want the primary reason in three words, they are Embrapa, Embrapa, Embrapa."

This choice might not seem surprising if it had been made by Brazil's current leadership; it fits with President Luiz Lula da Silva's ideology. But the crucial decision — to invest heavily in Embrapa, the Brazilian Agricultural Research Corporation, instead of simply ploughing public funds into subsidies to offset rising food prices — was made by Brazil's conservative military junta in 1973.

The results are staggering. In the last ten years agricultural production rose by 365%, without genetically engineered private patents and without destroying rainforest for new cropland. (Rainforest continued to be destroyed, but for other reasons. Deforestation contributed nothing to the agricultural miracle.)

What did Embrapa do? First, it focused on improving soils, discovering that Brazil's cerrado (savannah) soils needed lots of limestone to counter their acidity. Then, using conventional cross-breeding instead of GMO interventions, Embrapa created an enormously prolific variety of tropical grass, which greatly expanded Brazil's ability to grow grass-fed beef, again without destroying rainforest. Finally, again using conventional breeding, Embrapa took the classic temperate climate crop — soybeans — and made it suitable for the tropics. It pioneered no till agriculture, and created an integrated farming system using crops, livestock, and trees.

Problems remain. Embrapa is now experimenting with GMO crops, and while its goals are to be more broadly beneficial than making the world safe for Roundup (which dominated U.S. biotech), the fundamental problem of properly testing GMO crops for safety remains unsolved. And Embrapa's agricultural system isn't labor intensive enough to deal with Brazil's enormous employment and poverty problems. Its strategies, like those of the Green Revolution, tend to favor prosperous farmers and larger enterprises.

But Embrapa has created the greatest change in agriculture since the Green Revolution, which in turn was the greatest change in agriculture since the propogation of hybrid seed agriculture in the U.S. All three had one thing in common: they were funded and carried out by government institutions. Public sector research produced freely disseminated, commonly shared agricultural systems — seeds, fertilizers, livestock, techniques. These were deployed by markets, but created by governments. If we're going to feed a world of six, seven, even eight billion people in a rapidly changing climate, we are going to do it with approaches like Embrapa's — not with privatized, patent-protected, proprietary approaches like the U.S. approach to genetic engineering.

Agriculture is not the only place where we need more public goods, more investment in common assets, less reliance on privatization. Brazil got it right in agricultural research; India got it right with information technology when it created the publicly-funded, meritocratic network that makes up the Indian Instititutes of Technology. But Brazil, like India, failed to invest in one of the most important public goods: basic and universal education. Even Lula let his educational reforms lag, and as a result, while Brazil is the agricultural powerhouse of the tropics, its economic growth will be badly damaged by poor schooling for decades.

The Obama administration seems to miss the point, at least when it comes to climate diplomacy. At this week's Geneva Conference on climate finance, US emissary Todd Stern slammed the concept that finding new ways to share knowledge about climate-protecting technologies might require changes in global patent rules:

The U.S. has been clear sort of forever on this issue. We're not going to agree to a weakening of intellectual property rights and we actually think if there was a single thing you could do that would be most wrong-headed in this world it would be to do that and it would be wrong-headed for China, India and everybody else who more and more are becoming innovators... you've got to have major technological development and the way you drive technological development is through intellectual property rights. So it would be really a huge mistake to weaken those.

One imagines that Stern reads the Economist, but perhaps he hasn't yet had a chance to think about the lesson of Embrapa.