4. The agricultural innovation system in Norway

The agricultural sector is small for the size of the economy in Norway but attracts a significant amount of policy support covering 59% of farmers’ revenues, the highest share among OECD countries, hindering market signals and incentives for innovative transformations. The share of knowledge and innovation1 policies in total government support to the sector is only 3%, one of the smallest among OECD countries, which have an average of 4.2%, 5.8% in the European Union and 5.3% in Switzerland2 (Chapter 2). The chapter analyses the actors and governance of the agricultural innovation system AIS (Section 4.2), the policies facilitating the flow of knowledge (Section 4.4) and international co-operation (Section 4.5). In order to frame and benchmark the AIS in the broader innovation system (IS), this chapter briefly discusses the general economy-wide IS (Section 4.1), and compares AIS investment with that of the whole Norwegian economy in terms of expenditures (Section 4.3) and performance (Section 4.6).

Norway is a high-income country with good framework conditions in terms of macroeconomic stability and performance and strong tradition on consensus-based decision making. Norway has a satisfactory system of universities and research institutes that collaborate with the business sector on innovation. The Norwegian workforce is highly skilled and able to engage in innovation processes. Despite its successes, the economy wide innovation system in Norway is currently confronted with significant transformation challenges.

The economic history of Norway in the last century is a story of a remarkable transformation that has reshaped the country into one of the richest in Europe. Norway has demonstrated its ability to take advantage of opportunities to develop resource-based sectors pursuing an active industrial policy after World War II, developing successful clusters on oil and gas, shipbuilding, fisheries and aquaculture. Technology and engineering service companies supported these developments, maintaining a close relationship with universities and specialised research institutes. These dynamic sectors became a driving force in growth and innovation and building strong, interlinked research and innovation capabilities as analysed in the last OECD Review of Innovation Policy in Norway (OECD, 2017[1]).

According to general indicators of the Science and Innovation system, Norway’s relative performance is not far from the median values of OECD countries (Figure 4.1). Universities and public research score at the median value in terms of top world-ranking institutions and publications per GDP, but it does so at a higher level of expenditure compared to the median. Norway scores below the OECD median in most indicators on R&D and innovation in the firm, and on venture capital. These results are well below Sweden’s which is among the five top performers among OECD countries in most of these indicators (OECD, 2018[2]). Norway has a strong ICT infrastructure and a highly skilled workforce for innovation, with scores above the OECD median values for all related indicators. However, patents by universities and international co-inventions also score well below the median OECD values (Figure 4.1).

Concerns have been raised about persistent challenges in the Norwegian innovation system, in particular on the limited cost-effectiveness of the research and higher education system (OECD, 2017[1]). On the research side, the system produces “good but not excellent” science results at a relatively high cost in terms of total expenditure;3 on the education side, the higher education pipeline has a high rate of student dropouts and overly long periods of academic studies, even if this is less the case within agricultural studies; the overall research performance is less than excellent with only few “peaks of excellence” in the university system (OECD, 2017[1]). The performance of the higher education sector, which lags behind those of the other Nordic countries on a number of key indicators, is not in line with the annual level of public expenditure, which is well above the OECD average.

Norway is increasingly facing a “triple transition imperative” in its innovation system (OECD, 2017[1]). First, a shift towards a more diversified and robust economy, as Norway is still highly dependent on the fossil fuels exporting sector. Second, moving towards a more competitive, effective and efficient innovation system, with sufficient incentives and checks and balances for better performance in the higher education sector and in the links between research and innovation. Finally, these structural transformations must be achieved with higher responsiveness of the innovation system to an array of demanding societal challenges such as those related with climate change, aging and health. Economy-wide innovation policies should contribute to this triple transition by improving the excellency of the academic communities, enhancing competitiveness, responding to major societal challenges and improving the governance of the innovation system (Box 4.1). The agriculture, food and forestry sectors are a relatively small part of the economy, but through value chains (with a growing food processing sector) and the bio-economy, they need to be interlinked with these upcoming innovative transformations (Chapters 2 and 5).

The Norwegian Agricultural Innovation System (AIS) consists of a network of many actors, both public and private, including universities, research institutes, public funders, farmers’ co-operatives, food, feed and agri-tech industry and extension services. The interactions among them are the result of both authority and funding linkages, and of a diversity of partnerships and exchanges. There are many examples of farmer-owned companies undertaking advance research and innovation (e.g. Norsvin and Geno), but the small fruits and vegetables sector depends mainly on public research. The AIS is part of an overall Innovation System (IS) that is structured through a sectoral approach by leading ministries including the Ministry of Agriculture and Food (LMD).

At the level of government, the building principle is that of a sectorial responsibility of the 15 ministries for funding in their policy domains. There is not a strong priority-setting body of process to guide research and innovation activities. Each ministry is responsible for formulating policy and long-term knowledge development in their respective areas. Ministries have a great deal of independence in terms of policy formulation and execution, and on the allocation of resources to research and innovation. The Ministry of Education and Research is responsible for universities, university colleges and some institutes, and for co-ordinating R&D policy. The Ministry of Trade, Industry and Fisheries is responsible for developing and implementing policies and framework conditions for business innovation, industry and trade and dedicates support for innovation. The Ministry of Agriculture and Food’s’ sectorial responsibility has areas of overlap with the Ministry of Trade, Industry and Fisheries (specifically on growth and increased innovation activity), the Ministry of Climate and the Environment (specifically on environment, biodiversity, climate adaption and mitigation, and energy-related issues) and the Ministry of Health and Care Services.

Despite a concentration of R&D in agriculture in one university (NMBU) and four research institutes (NIBIO and VI under the authority of the Ministry of Agriculture and Food, the foundation Ruralis and NOFIMA company) as illustrated in Figure 4.2, many other actors participate in the Norwegian Agricultural Innovation System. The last survey on the Norwegian AIS (NIFU, 2020[7]) identified more than 200 organisations conducting research and development activities, including 26 units within the system of education (universities and university colleges), 23 research institutes, and 240 companies in industry, including Small and Medium Enterprises (SMEs).

There are three main policy agencies, not specific to agriculture, which implement priorities, channel funds and select projects to be conducted by the implementing organisations: the Research Council of Norway (RCN), Innovation Norway, and Siva – the Industrial Development Cooperation of Norway (the latter is not in Figure 4.2). The sources of this funding are mainly in the different ministries. Additional financial resources come through agriculture or forestry-specific funds from the research fees on agricultural production and the deduction on forest trade. The European Commission through its Horizon 2020 programme is also an important source of funds.

The sectoral governance principle of innovation policy is a key characteristic, not unique, but particularly strong in Norway. It has the advantage of the inclusion of all ministries on R&D policies and tasks, but this comes with a cost as horizontal policy approaches to tackle societal challenges with cross-silos co-ordination and integrated strategic priorities are more difficult to employ (OECD, 2017[1]; OECD, 2021[5]). The multiyear White Paper on research, the Long-Term Plan for Research and Higher Education, first 2015-24 and updated to 2019-28 or LTP, provides strategic cross sectoral direction and is the basis for the Inter-ministerial Committee on Research Policy that meets monthly and other inter-ministerial co-ordination mechanisms (Norwegian Ministry of Education and Research, 2018[9]). The LTP has three overarching broad goals, five long-term priorities and horizontal escalation plans (e.g. on technology), none of them directly linked to food and agriculture.4 Despite these mechanisms, Norway’s STI system is dominated by the vertical sector approach. Ministers (principals) delegate the main task of horizontal co-ordination to agencies, in particular RCN, through the annual allocation letters of the ministers. Although it has a ten-year horizon, the LTP is not a 10-year planning document and, in practice, it works on a four-year rolling planning. Furthermore, even if most ministries align their research strategies with LTP priorities, they do not earmark or commit their budgets through the LTP process. During the first four years of the LTP, interdepartmental groups were formed within each of the four thematic priorities to exchange information on different ministries’ initiatives and monitor progress. Unfortunately, these groups have not met since the last revision of the LTP. The process and interaction between the LTP and the priority setting at each ministry deserves further follow-up and assessment. This vertical governance with sectoral priority setting differs significantly from the AIS in neighbouring Sweden (Box 4.2).

In this context of ministries being at the summit of the priority setting in their respective sectoral areas, the role of the three main innovation cross-sectoral policy agencies is crucial for the implementation of the priorities defined by the Ministry of Agriculture and Food (LMD) and the co-ordination with other ministries. Following the Parliament’s White Paper, LMD defines the priorities and finances research and innovation through earmarked funds to RCN and IN, and through direct basic funding for three research institutes (NIBIO, the Veterinary Institute and Ruralis). These funds constitute the bulk of the funding for agricultural research and innovation. Agricultural related projects can also be financed by the open calls of RCN and other activities of IN. There are also four specific funds for agriculture and forestry.

Three nation-wide and cross-sectoral agencies are the corner stones of the Norwegian innovation policy (OECD, 2017[1]). Their competencies are to a great extent associated with their different historical origins. First, the Research Council of Norway (RCN) is the dominant operational actor in research and innovation policy. RCN was created in 1993 as a single council gathering together a diversity of previous councils and covering all scientific fields. In 2004, the RCN was supplemented by Innovation Norway (IN), an innovation agency with a pronounced regional mission that was created by joining together several rural, regional and industrial development funds, and focused on private sector innovation. Finally, the industrial Development Corporation of Norway (Siva) founded in 1968 and focused on physical infrastructure.

The Research Council of Norway is a research-funding agency with a unique role to advise the authorities on research policy, and to ensure that research structures and policy tools are coherent across sectors that are led by different ministries. It is also responsible for research evaluations. The RCN manages research funding from the 15 Norwegian ministries and, following their priorities and guidelines, allocates funds to basic and applied research and research-based innovation within all fields and disciplines. Its comprehensive mandate is unique by international standards. In the last decade, RCN has made an effort to rationalise its activities and reduce the number of programmes and initiatives. Its budget per capita is larger than in similar institutions in Austria, Finland or Switzerland5 (OECD, 2017[1]).

RCN is an administrative agency with special powers under the Ministry of Education and Research that provides about 40% of its funds. The Ministry of Agriculture and Food (LMD) is the fifth largest provider of funds (NOK 427 million or USD 49 million in 2019) after the Ministry of Education and Research (NOK 4 509 million or USD 512 million), Ministry of Trade, Industry, and Fisheries (NOK 2 104 million or USD 239 million), Ministry of Petroleum and Energy (NOK 862 million or USD 98 million) and the Ministry of Climate and the Environment (NOK 472 million or USD 54 million). In 2019, the Ministry of Agriculture and Food (LMD) allocated through the RCN around NOK 249 million (USD 28 million) to programme activity and NOK 178 million (USD 20 million) to base funding of the research institutes in the agriculture and food sector. The Ministry, in an annual assignment letter, sets priorities based on overall policy orientations for the agricultural sector set by Parliament. Within this framework, the Research Council makes calls for proposals that are peer reviewed by international experts. The projects with the highest quality and relevance are financed within the open call budget. The Research Council is responsible for the follow up of ongoing projects.

The bulk of the ministry’s (LMD) funding of programme activities in the Research Council goes to the BIONÆR programme (Research Programme on Sustainable Innovation in Food and Bio-based Industries), highlighting the priority given to the bio-economy (Box 4.3). The programme is financed by several ministries, but LMD is the main funder. RCN manages also a funding scheme for independent projects (FRIPRO), an open, national competitive source of funding for projects in all fields of research. The fund is very selective (only 10% of the projects proposed by researchers are granted support) based on scientific excellence rather than innovation impact.

RCN cannot act freely given the numerous earmarks and steering processes from the ministries that could decide to spend their funding through other channels. This may weaken the external advisory capacity of RCN that is below the ministries in the vertical co-ordination system. “For RCN the priority is to balance the various ministry demands and to get sufficient funding without too much earmarking” (OECD, 2017[1]).

However, in recent years some ministries have given increasing flexibility to RCN to bundle financing in common programmes in their letters of assignment, so that RCN can bundle financing in common programmes. The Ministry of Agriculture and Food has increased the share of funds that are targeted to long term sectoral priorities and only around 10% of the funds are earmarked for short term projects. RCN is both the main organiser and customer of evaluations. RCN has developed evaluation practices and the system is professionally organised involving well-known Norwegian and international groups and experts. The combination of the two roles (funder and evaluator) in a single agency could be criticised but there is no sign that this has led to a positive bias in the evaluations.

Innovation Norway (IN) supports innovative projects in enterprises and industry with the objective of developing value-creating business throughout the country. The Ministry of Trade, Industry and Fisheries owns 51% of this public agency and 49% is owned by the 11 county (regional) authorities. IN has a central office in Oslo, and offices throughout all regions in the whole country and in more than 30 countries worldwide. IN provides loans, guarantees and grants and other business advisory services such as mentoring, export services and networking to make start-ups, companies with capacity for growth and innovative business environments, more competitive.

Compared to RCN, IN focuses more on bottom up business and market driven innovation and development. Most of the funding provided by Innovation Norway is not dedicated to any specific sector. Beside agriculture, there are earmarked budgets for enhancing tourism (Visit Norway) and profiling Norway as a location for foreign investments. In addition, there is a mission for the development of business and industry in rural areas, where the counties are the main stakeholders, and Innovation Norway is the national office promoting global opportunities. Nearly half the budget of IN is allocated to the agriculture and marine and maritime sectors, but the bulk goes to the marine and maritime sectors (OECD, 2017[1]). The other half of the funding goes mainly to the knowledge-based industries and services. IN’s new strategy points at working more on missions, societal challenges and high potential global opportunities. .

IN receives funding from 8 ministries and 11 regional municipalities. The three largest funders of IN in 2019 were the Ministry of Trade, Industry and Fisheries with NOK 2 141 million (USD 243 million), exclusively loans, the Ministry of Agriculture and Food with NOK 844 million (USD 96 million) and the Ministry of Modernisation and local affairs (NOK 150 million or USD 17 million).

The Industrial Development Co-operation of Norway (Siva) is a governmental enterprise, owned by the Ministry of Trade, Industry and Fisheries, facilitating national infrastructure for innovation consisting of incubators, business gardens, catapult centres, innovation enterprises, innovation centres and industrial real estate. Siva has equity in more than 100 innovation companies and is present across the whole country.

Norway has 11 administrative regions or counties and 356 municipalities after some recent mergers among these decentralised administrative units. The counties are also developing regional plans related to innovation policies, while municipalities are responsible for business planning and land use and they do not receive innovation funds. Both IN and Siva have a strong regional focus. Despite some overlap between objectives of IN, Siva, RCN and the counties, there is evidence of good communication and co-operation between these actors at national level, with a less clear division of responsibilities at regional level (Oxford Research, 2016[11]). There are also cross-agency schemes such as the Green Platform Initiative and Pilot-E that support clean transport and energy solutions combining various means and interventions. The “Pilot-X model” is being progressively streamlined in other thematic areas (health, circular economy…).

The government has initiated a comprehensive review of all industry-targeted policy instruments, which is to be completed by the end of 2020. The goal is to improve competence, co-operation, the division of labour and the interfaces between different actors, as well as the usability and efficiency of the support system. As part of this review, the Ministry of Finance and the Ministry of Industry and Fisheries mandated an external report on the range of instruments that stimulate business innovation in Norway (Deloitte, 2019[12]). This report does not have an agriculture specific focus and concludes that the set of instruments in Norway is too complex with too many actors. In particular, it proposes that the Research Council of Norway and Innovation Norway (with Siva incorporated as a separate division of IN) should be given a clear responsibility for active portfolio management within their own area within the framework of management of documents and assignments from the ministries. RCN should have primary responsibility for all instruments in research driven innovation, while IN should have primary responsibility in all instruments related to business and customer driven innovation. It is also proposed to pivot towards broad, non-thematic instruments to increase the ability of these actors to conduct more efficient portfolio management and to reduce the number of schemes.

In line with these proposals, the Research Council of Norway and, to a lesser extent, Innovation Norway are evolving from traditional programme management towards broader portfolio management. The Ministry of Education and Research, which is responsible for RCN, has introduced a management system based on goals and results (“management by objectives” or MRS) with five goals that guide the activities of RCN and are common for all ministries that allocate funds to RCN: increasing scientific quality, increase value creation in the business sector, meet major societal challenges, well-functioning research system and good advice. The Ministry of Trade, Industry and Fisheries, which together with the counties is responsible for IN, has also introduced an MRS system with three goals: more good entrepreneurs, more expansive companies and more innovative industrial clusters. Since 2017, RCN has reduced its 50 programme boards into 15 portfolio boards with continuously adjusting investment plans. This implies that AIS main innovation areas could be part of broader innovation challenges, mixing funding from different ministries.

LMD implements the bulk of its agricultural policies through the annual Agricultural Agreements (JA) between the government and the two farmers’ unions, including about NOK 16 000 million (USD 1 818 million). The Agricultural Agreement Research Funds are a small part (about NOK 82 million or USD 9 million) of this agreement. The funds are earmarked to cover the needs for knowledge for the ministry and the farmers through research, committing annual amounts for research in the agricultural and food sector and instructions and priorities for their use. The Fund board has a member appointed by the Ministry of Agriculture and Food, and a representative from Norwegian Farmers’ Union and the Norwegian Farmers and Smallholders’ Union. The Research Council participates as an observer. The Agricultural Agreement Funds provide financial support to develop businesses in traditional agricultural production and other farm business. In recent years, priorities have shifted to knowledge on climate adaptation to reduce GHG emissions and carbon storage in soil and forest.

Norway has two specific funds for research on agriculture (Foundation for Research Levy on Agricultural Products - FFL) and forestry (Skogtiltaksfondet) financed through levies to be paid per unit of product. This model of engagement of the private sector on research has shown successful results in other countries like the Rural Research and Development Corporations (RDC) in Australia (OECD, 2015[13]). Unlike in Norway, RDC receive matching finance from the government, creating incentives for private funding. The experience shows that these instruments can be successful for the short-term needs of the primary sector, but longer term innovation priorities require the engagement of processing and retailing stakeholders in their governance and decision making.

The Foundation for Research Levy on Agricultural Products (FFL) was established in 1970. The Fund’s capital is built up through a research fee on agricultural products, both imported and nationally produced. A similar scheme exists for aquaculture products, the Norwegian Seafood Research Fund (FHF). The FFL finances research projects through annual open calls for proposals. A part of the fund is also set aside for basic funding of the research institute Nofima. The board sets the priorities for the annual calls, based on the needs experienced in the industry. The members of the board are: a representative appointed by the Ministry of Agriculture and Food, Norwegian Farmers’ Union, Norwegian Farmers and Smallholders Union, Confederation of Norwegian Enterprise (NHO), Norwegian Agricultural Cooperatives (Norsk Landbrukssamvirke), Enterprise Federation of Norway (Virke) and Norwegian Food and Allied Workers Union (NNN). The Research Council participates as an observer. The Fund is in the national budget estimated at about NOK 170 million (USD 17 million) in 2020. However, recent years have shown that the actual revenues from the levy are much higher than the estimates due to increased consumption.

The Norwegian Agriculture Agency (NAA), the government agency in charge of implementing agricultural policies including payments, imports and property, is also in charge of co-ordinating the board for the Fund for Research Fees of Agricultural Products (FFL) and the board of the Agricultural Agreement Research Funds (JA). The NAA is the Secretariat of the boards of both funds. These boards take decisions on which projects to finance, and the RCN handles the application and evaluation process. The two boards are already rather intertwined having the same chair and same members from the two farmers unions. Following the model of RDCs in Australia, further merging these two funds from levies and from the government budget (FFL and JA, respectively) may have advantages. It would increase their joint capacity for innovation thanks to larger size; with appropriate matching requirements, it could create incentives to increase innovation funding both from the government and the private sector; and broadening the scope of stakeholders in the governance of both funds would improve the innovation focus on long term priorities and new demands from consumers and society.

Skogtiltaksfondet or Forest Owners’ Joint Research Fund, established in collaboration with the Ministry of Agriculture and Food. The fund aims to increase R&D involvement in the forestry industry, and focus on R&D tasks that are of importance to forest owners. Skogtiltaksfondet secures financing for research and development projects on Norwegian forestry through the deduction of NOK 1 (USD 0.1) per cubic meter of traded timber, an obligation regulated by law. In addition, the fund includes returns from its accumulated capital. The Norwegian Forest Owners’ Association acts as the secretariat.

The Forestry Development Fund (Utviklingsfondet for skogbruket) aims to promote research, development, information and training in the forestry sector, as well as other measures of interest to the forestry industry. The funding will primarily support applied R&D activities. The Norwegian Agricultural Agency is the secretariat for the fund. The fund is managed by a board of five members appointed by the Ministry of Agriculture and Food.

Norway has a competitive university (NMBU) and research institutes with a special focus on food agriculture and forestry. They are mostly public institutions or depend on the Ministry of Agriculture and Food for basic funding and authority, which is implemented through the RCN.

The Norwegian University of Life Sciences (NMBU) is fully located in Ås, a pole of excellence of agricultural knowledge, since 2020. The formulation and co-ordination of education policies is the responsibility of the Ministry of Education and Research. NMBU has expertise in life sciences, environmental sciences and in the area of sustainable development. The university was established in 2014, from a merger of the Norwegian School of Veterinary Science (NVH, presently located in Oslo) and the Norwegian University of Life Sciences (UMB). It has 5 200 students and 1 700 employees. The new university has seven faculties from Biosciences to Veterinary Medicine. NMBU has an innovation strategy from 2019, with three overall objectives: contribute to innovation and entrepreneurial activities for students and staff, innovation and value creation in society by increasing co-operation with external players and ensuring that new knowledge and research-based ideas are developed for the benefit of society.

The Centres for Research-based Innovation (SFI) is a scheme mainly financed by the Ministry of Education and Research and aimed to develop expertise in fields of importance for value creation. Long-term research is conducted in SFI centres in close collaboration between research-performing companies and prominent research groups, enhancing technology transfer, internationalisation and researcher training. Foods of Norway is a SFI at NMBU, funded by the RCN and the Centre’s industry partners. The centre aims to increase value creation in the Norwegian aquaculture, meat and dairy industries by developing novel feed ingredients from natural bioresources. Other recent SFI centres are: Smartforest aiming to contribute to a digital revolution in the forest industry; and EarthresQue (Centre for Rescue of Earth Materials and Waste in the Circular Economy) on the sustainable use of soil materials.

The Norwegian Institute of Bioeconomy (NIBIO) is also located in Ås and was founded in 2015 by a merger of three institutes Bioforsk (Skog og landskap and NILF). NIBIO is one of the largest research institutes in Norway with approximately 700 employees. The goal of the institute is “to contribute to food security and safety, sustainable resource management, innovation and value creation through research and knowledge production within food, forestry and other biobased industries”. NIBIO is subject to the Ministry of Agriculture and Food as an administrative agency with its own supervisory board.

The Norwegian Veterinary Institute (VI) is a national biomedical research institute, established in 1891, in the fields of animal health, fish health and food safety. It provides independent research-based advice to the governing authorities. The basic financial resources come from the Ministry of Agriculture and Food and the Ministry of Fisheries and Coastal Affairs. The most important function of the Veterinary Institute is contingency planning and competence development to prevent threats to the health of fish, animals and human beings.

The Institute for Rural and Regional Research (Ruralis) has a national responsibility on rural sociology and applied social research. Ruralis has a multidisciplinary staff, including about 28 researchers with backgrounds in sociology, geography, history, business economics, social anthropology, political science, agronomy and fisheries.

NOFIMA is a business oriented and applied research institute organised as a limited company, owned by the Ministry of Trade and Fisheries, the Agricultural Food Research Foundation and Akvainvest Møre og Romsdal. The institute works on research and development for the aquaculture, fisheries and food industry and present in all major regions in Norway. Digital Food Quality is a SFI centre in Nofima focused on digital transformation of food production. A major part of Nofima’s strategic research is financed by the FFL levy fund.

The Nordic Institute for Studies in Innovation, Research and Education (NIFU) is an independent social science research institute, organised as a non-profit foundation, specifically focusing on studies of innovation, research and education at all levels. NIFU collect, analyse and disseminate national statistics and indicators for R&D and innovation.

SINTEF is a broad, multidisciplinary research organisation in the fields of technology, natural sciences, medicine and social sciences. SINTEF conducts contract R&D as a partner for the private and public sectors, and is one of the largest contract research institutions in Europe. One of SINTEF’s focus areas is circular economy, combining technological expertise with economic and environmental expertise into multidisciplinary solutions.

In 2018, the RCN published a report on the evaluation of the primary sector research institutes including Ruralis, NIBIO, VI and Nofima, together with SINTEF-Fisheries, the Marine Technology Institute, and the fish nutrition institute NIFES (Research Council of Norway, 2018[14]). The report highlights the key role of these institutes as dominant players in the R&D systems and the need for better co-ordination among financing ministries and calls for more strategic management by RCN and the institutes’ boards. Some institutes have strong dependence on a single source of funding. The report highlights the risk of potential conflicts of interest in research and the need to ensure ethical standards and principles for scientific independence and research integrity, a topic that has recently attracted the attention of publications (Ingierd, Bay-Larsen and Hauge, 2019[15]). According to the report, the Research Council and the financing ministries should continue ongoing efforts towards broader thematic programmes, where cross-sectoral research on topics such as bioeconomy, food and sustainable utilisation of marine resources can be financed. Increasing competition from higher education institutions for RCN funding requires the institutes to embrace this broader thematic approach to projects, while a new basic funding system is proposed to better guarantee long-term needs.

The private sector plays an important role in the innovation system. Private enterprises, firms and farms are the core actors of the adoption of technology and organisational innovations. They have the incentive to innovate and they do so to improve economic performance. In Norway, through the Skattefunn programme, all firms can benefit from a tax credit for R&D projects (Section 4.4). The main private players in the agro-food sector have their own research and innovation departments. Only a few examples are mentioned here.

As Norway’s largest producer, distributor and exporter of dairy products with 11 400 members (owners) and 9 000 co-operative farms TINE has an active role both in research and extension services (Chapter 2). TINE has its own R&D department and invests in innovation activities such as the digital platform Mimiro (Box 4.4).

In the meat sector Nortura, a co-operative owned by 18 300 egg and meat producers, undertakes R&D through Animalia (Chapter 3). Animalia is financed mainly by FFL funds from the sales fee, the Research Council of Norway, and from the Agricultural Agreement, Innovation Norway and the European Union. Norilia is a bioeconomy subsidiary of Nortura aiming to preserve and utilise the residues (“plus” products) from the meat and egg industry that do not go directly to food. For instance, Norilia in a joint project with Felleskjøpet Agri and Nortura, has implemented a new biological process called enzymatic hydrolysis in a new biorefinery, Bioco, which will produce high-quality proteins and fats from poultry plus products.

Borregaard is a Norwegian industrial group that produces biochemicals based on timber: lignin, special cellulose, vanillin, bioethanol and microfibrillar cellulose for a variety of applications in agriculture, fisheries, construction, pharmaceuticals and cosmetics, foodstuffs, batteries and biofuels. Borregaard invests considerable resources in research and development at research centres and universities in Norway, Spain, South Africa and the United States.

BAMA is the Norwegian market leader in fresh fruit and vegetables, gaining steadily on the market share on other fresh products including flowers, drinks and sandwich products active in many countries. BAMA has made major joint investments in research and development along the entire value chain.

Food and drink Norway is the largest employer and business policy organisation for the food, beverage and bio-industries in Norway, and is a member of the Norwegian Confederation of Norwegian Enterprise (NHO).

Norway has a significant set of private firms focused on improving the genetics of plants and animals: Graminor for plants, and Norsvin, Geno and Tyr for animals. A prerequisite for breeding is access to a wide variety of genetic resources that need to be conserved and made available to breeders and farmers. The efforts of the breeding industry are supported through the national strategy for genetic resources launched by the Ministry of Agriculture and Food in December 2019. The Svalbard Global Seed Vault is the largest safety backup of the world’s crop diversity. The Seed Vault is a publicly-owned Norwegian facility and is managed and operated in a partnership between the Norwegian Ministry of Agriculture and Food, the Nordic Genetic Resources Centre (NordGen) and the Global Crop Diversity Trust (Crop Trust). The Svalbard Global Seed Vault is the world’s largest seed repository for plants since 2008. It received the support of the FAO Commission on Genetic Resources.

Graminor is the main plant breeding company in Norway, responsible for developing new plant varieties of field crops and horticultural plants suitable for Norwegian and Nordic growing conditions. They also test and represent imported varieties and produce pre-basic seeds for further research.

Norsvin is a breeding company owned by Norwegian pig producers focused on the development, production and sale of pig genetics. Norsvin’s genetics are exported globally through the company Topig’s Norsvin. Around 30% of Norsvin’s total turnover is used for R&D. Geno is the breeding organisation of Norwegian Red, the main dairy breed in Norway. It is a farmer co-operative conducting research and development for cattle breeding since 1935. Geno’s investment in research and development of the Norwegian Red breed has resulted in several biotechnology companies owned by Geno and exploiting specific products, including GENO Globas AS, SpermVital AS and CryoGenetics AS. Geno sells genetic material to more than 30 countries worldwide (Box 4.5). Aquagen is the leading breeding company for fish in Norway.

Biobank is a small private company owned by Norsvin, AquaGen and Geno providing integrated services around a biorepository. These include DNA extraction and storage of genetic material, and linking samples with data as a tool for breeding animals, fish and plants. Biobank is part of the NCE Heidner Biocluster supported by Innovation Norway (Section 4.4).

The Norwegian farmers’ advisory system has evolved over the last decades from a government-driven strategy into a commercialised business with farmers in the focus. Recent trends in farming have increased the demand for specific competences and technical advice, moving away from recipe-based problem solving towards broader business advice and coaching. Advisory services for farmers in Norway used to be almost free of charge, but now farmers have to pay and there is increasing competition among a diversity of advisory service providers in a more pluralistic advisory system (Klerkx et al., 2017[20]). The Norwegian Agricultural Extension Service and the Forestry Extension Institute are partially financed by government grants. The other advisory services are privately financed mainly provided by co-operatives, and normally with a combination of annual fees and fees per specific services. Co-ordination and communication are essential for successful innovations and adoption in agriculture requiring trust when knowledge is to be exchanged. The Norwegian advisory developments through co-operatives respond to this need of social trust, but a systematic evaluation of extension services compared with other countries is missing (Straete et al., 2018[21]).

The Norwegian Agricultural Extension Service (NLR) is an umbrella and service organisation for ten regional advisory units with a total of 24 000 members and 330 employees nationwide. The NLR is a private organisation chaired by a board of directors. Services are paid through fees, but NLR receives close to NOK 100 million (USD 11 million) from the government to ensure comprehensive, independent and knowledge-based advisory services and professional links between agricultural research and producers. Nearly 800 field trials are performed annually by NLR with its members. The areas of advice and capacity building are mainly agronomy, plant production and plant protection, and expanding to agricultural buildings, mechanical engineering, hydromechanics, greenhouses, business development, and the environment.

The Forestry Extension Institute is a non-governmental organisation founded in 1958. The institute is organised as a partnership between 37 forestry organisations and scientific institutions with 20 to 25 staff, half of them being professional foresters and extension specialists. The main purpose of the institute is to provide continuous education and training in the forestry sector and related fields, as well as to raise public awareness to the importance of forestry. The institute receives public grants for their educational and training activities amounted to NOK 14 million (USD 1.4 million) in 2020.

There are other private extension services, in particular provided by co-operatives. Both Tine and Nortura provide extension services to their members in their respective sectors.

The Norwegian Agricultural Purchasing and Marketing Co-operation (Felleskjøpet) is the largest purchasing co-operative, and the third largest farm co-operative organisation with two regional co-operatives: Felleskjøpet Agri (FKA) and Felleskjøpet Nordmøre og Romsdal (FKNR), with a joint membership of about 45 000 farmers. These co-operatives provide advice from the input supply perspective.

The Norwegian Forest Owners’ Federation was founded in 1913. It is the umbrella organisation of four regional co-operatives that cover almost the whole of Norway and represent about 35 000 family forest owners and has a joint market share of approximately 80% of the timber market. The regional co-operatives offers professional forestry and land management guidance and to take on the management of forest operations for members if required.

Both private and public resources invested in research, development and innovation (R&D&I), and the evolution of these funding sources are a good indicator of the country’s efforts to innovate. The comparison of these indicators for the whole economy and for the agro-food sector provides some basis to assess the effort made by the AIS. Several indicators are used to analyse the source of the funding, the sector that performs the investment and the thematic focus (Figure 4.3, Panel A for the whole innovations system and Panel B for the AIS) and to measure the expenditure intensity Table 4.1).

Focusing first on the whole innovation system across all sectors, Norwegian gross domestic expenditure on research and development (the GERD covering both private and public) has more than doubled over the last 16 years reaching NOK 69 billion (USD 6.9 billion PPP) in 2017. This level of resources is comparable with those of Finland (USD 7.0 billion PPP) and the Czech Republic (USD 7.2 billion PPP), however lower than the average for Nordic countries (USD 8.2 billion PPP) (OECD, 2020[22]). The intensity of this effort as a percentage of GDP is 2.1%, lower than the OECD average of 2.4% and well below other Nordic countries (2.7%) and the United States (2.8%), also influenced by its high GDP (Table 4.1).

These funds come from different public and private sources. A large but decreasing share of the Norwegian R&D funding comes from private funds: 40% or NOK 27.4 billion (USD 3.3 billion) in 2017 compared to 52% in 2001 (Figure 4.3, Panel A1). Over the last ten years government, including central and local authorities, the Research Council of Norway (RCN) and, increasingly, the tax incentive SkattenFUNN programme, have become the main source of R&D expenditure with NOK 32.3 billion (USD 3.9 billion) or 47% of the total in 2017 compared to 28% in 2001. Funding coming from abroad (NOK 6.1 billion or USD 0.7 billion in 2017), and in particular from the European Commission (NOK 1.1 billion or USD 0.1 billion), remains relatively less important but increasing. Compared to the countries with a similar level of GERD, Norway has a lower share of the funding coming from the European Union (2% compared to 3% for Finland) (OECD, 2020[22]; Samfunnsøkonomisk analyse, 2019[23]).

The higher education system – mostly public – performs an increasing share of the funds up to 34% in 2017. The business sector, including the industry and research institutes serving enterprises, remains the main sector of performance in Norway with 52% of R&D expenditures, but it has decreased since 2001 (Figure 4.3, Panel A2.). The share of the business sector in R&D activities in Norway is low compared to other Nordic countries (65% in 2017) and OECD (60% in 2017) averages. This can be partially explained by the structure of the Norwegian economy based on exploitation of natural resources, including petroleum and fish, and low share of industries and sectors that are more R&D intensive (OECD, 2017[1]).

With NOK 11.3 billion (USD 1.4 billion), Health and Care, is the most important thematic area in terms of the operating expenditure on R&D (excluding capital expenditure, e.g. on scientific equipment or buildings) in 2017 and the activity is mostly performed in educational establishments (Figure 4.3, Panel A3). Energy is the second largest area (NOK 9.7 billion or USD 1.2 billion) with a high involvement of the industry sector. It is followed by Environmental R&D (NOK 3.8 billion or USD 0.5 billion) and Climate research (NOK 3 billion or USD 0.4 billion). Aquaculture and Agriculture occupy lower places in this classification – fifth and ninth position – with the operating expenditures on R&D of NOK 2.6 billion (USD 0.3 billion) and NOK 1.8 billion (USD 0.2 billion) respectively. The research focus on the environment is low compared to other OECD countries (Chapter 3 on eco-innovation). Agriculture represents around a fifth of the expenditure dedicated to energy.

Focusing now on the AIS, unlike the total gross domestic expenditure on R&D (GERD), the GERD funding on agricultural sciences (including forestry in all the statistics) has decreased by 0.5% per annum in real terms, between 2007 and 2017. This reduction was mainly due to fewer funds sourced from the government, only partially offset by increases in financing provided from various national private sources, as well as the Fund for Research Fees of Agricultural Products and the Agricultural Agreement Research Funds (National Research Funds in Figure 4.3, Panel B1). In 2017, industry and government were the two main sources of funds (NOK 719 million and NOK 716 million, or USD 86.9 million and USD 86.6 million, respectively) for agricultural R&D. The role of foreign-financing remains weak (NOK 72 million or USD 9 million; out of which NOK 66 million or USD 8 million is provided by the EU Commission/Horizon 20206) even if steadily increasing and its share is lower in the agricultural sector than in the Norwegian economy as a whole (4% compared to 9%; Figure 4.3, Panels B1 and A1).

Among the categories of institutions and sectors implementing R&D activities in agriculture, private industry is the only one having increased operating expenditures over the last ten years. The private sector used to have a lower share in agriculture than in the whole economy, but it became the main sector of performance (NOK 797 million or USD 96 million) in 2017 with a share of 45%, still below but very near the 46% for the whole economy (Figure 4.3, Panels B2 and A2). This catch-up by the private industry sector is undertaken by companies of diverse sizes engaging in a broad spectrum of activities among which, Tine and Kveik Yeastary, a young business developing yeast for breweries. Industry expenditure is largely financed by companies’ self-financing (around 80%) and, to a lesser extent, by contributions from governmental agencies and tax funds.

The institute sector, with NIBIO, Ruralis, Nofima and the Norwegian Veterinary Institute, account for 39% of the operating expenditures on agricultural R&D (NOK 687 million or USD 83 million). The activities of these institutes are mainly financed by the Research Council of Norway and the Ministry of Agriculture and Food, but some additions come from the Fund for Research Fees of Agricultural Products and the Agricultural Agreement Research. Finally, the higher education (HE) sector, represented primarily by the Norwegian University of Life Sciences (NMBU), spent NOK 288 million (USD 35 million) in 2017. The financial sources of this HE sector come mainly from the Research Council of Norway and basic grants (Rørstad et al., 2017[8]).

R&D in agriculture is divided into five main thematic research areas (Figure 4.3, Panel B3). The primary production of food is the largest research area in terms of attributed funds (NOK 699 million, or USD 85 million, corresponding to 39% of all resources) in 2017. R&D on foodstuffs and food processing is the second largest research thematic area receiving NOK 524 million (USD 63 million or 30% of the funds). For the thematic area of forestry and use of timber, expenditure amounts to NOK 204 million (USD 25 million), with NIBIO being a leader in this field (Rørstad et al., 2017[8]).

In order to stimulate innovation and economic performance, the Norwegian Government has set ambitious targets for R&D intensities of 3% of GDP by 2030 for the whole innovation system, with spending split between public and private institutions at the ratio of one to two. Although research intensity has slowly increased from 1.6% in 2007 to 2.1% in 2017 reaching comparable levels to the EU28 (2.0%) and OECD (2.4%) averages, it remains lower than in other Nordic countries (2.7%) and the United States (2.8%) (Table 4.1) and below the government target. While the government allocations for R&D (GBARD) reached 1% of GDP already in 2016, business is still far from achieving its part of the goal. Levelling up to the target or to OECD and Nordic countries averages (around 1.7% in 2017) might require a substantial restructuring of Norwegian industry (OECD, 2017[1]). However, low business R&D intensity in Norway is partly explained by its industrial structure (OECD, 2015[24]).

The Norwegian Government has been highly supporting R&D aiming at promoting agriculture, forestry, fisheries and food production. Allocations to this objective sum 8% of the entire R&D budget over the last two decades (NOK 3.2 billion or USD 0.4 billion in 2017) which is a much larger share than the averages for Nordic countries (6%) or OECD (5%), also reflecting the importance of the fishing sector in Norway. This is reflected in agriculture public research intensities (government budget allocations for agricultural R&D as a share of the sector value added) which is 4.3% in Norway, well above other OECD countries (Table 4.1). Agriculture Innovation Systems (AIS) is also the main area of expenditure in the General Services Support Estimate (GSSE) with 64% in 2017-19. However, as discussed in Chapter 2, most of the agricultural policy effort of the government is made on supporting individual producers through the Producer Support Estimate (PSE) and Norway has one of the lowest shares of GSSE in Total Support Estimate (TSE) of 5% compared to the OECD average of 13%. Expenditure on AIS represents only 3% of the TSE, one of the lowest among OECD countries.

Agriculture and food R&D efforts of the business sector have also been considerable in Norway with research intensity in both the agriculture and food and beverage sectors (1.2% and 1.9% of the respective sectoral value added) being among the highest in the OECD countries, and above the Nordic average (0.5% and 1.7% respectively) (Table 4.1).

The flow of knowledge and its application in the private sector requires creating the right incentives to innovate while protecting the rights of the innovator. Many policies in Norway aim at improving the adoption of technological and organisational innovations and partnerships.

SkatteFUNN is the largest public support programme for business R&D in Norway and one of the most important non-thematic demand driven instruments. The programme is a tax incentive scheme designed to stimulate research and development (R&D) in Norwegian trade and industry. The incentive is a tax credit in the form of a deduction from a company’s payable corporate tax. The volume of this tax credit has more than doubled in the last decade. To be eligible to apply for SkatteFUNN, the company must seek to develop a new or improved product, service or production process through a dedicated R&D project. The project must generate new knowledge, skills and capabilities within the company. In order to be eligible, the company needs to be liable to pay corporate tax in Norway. If the tax credit for the R&D expenses is greater than the amount the firm is liable to pay in tax, the remainder will be paid out in cash to the firm. If the applying company does not generate a taxable income, the entire SkatteFUNN credit is paid out in cash. All SkatteFUNN project applications are processed and evaluated by the Research Council of Norway, with special emphasis on its R&D content. Only projects approved by the RCN are eligible for the actual tax credit, which is granted by the Norwegian Tax Administration after assessing eligible costs.

Originally targeted to Small and Medium Enterprises (SMEs), but expanded to all firms since 2003, the main beneficiaries of this programme are still enterprises with fewer than 50 employees. All branches of industry and all types of companies can apply for support from the SkatteFUNN. SME can receive a tax credit of up to 20% (18% for large firm) of the eligible expenditures of approved projects. The ceilings are higher if there is collaboration with universities and research institutes. Compared with other similar programmes in other countries, SkatteFUNN is among the most generous for SMEs and one of the easiest to manage in terms of administrative requirements for the firms (European Commission, 2014[26]; OECD, 2019[27]). The tax exemption policy benefits all regions in Norway and there is evidence that being in a peripheral location is not a disadvantage (Isaksen, Normann and Spilling, 2017[28]).

Norway is a member of the European Patent Organisation (EPO) and has a strong protection of intellectual property rights as shown by the high index of patent protection of the Wold Economic Forum, very near the top OECD countries (Figure 4.4, Panel A).

Norway has implemented the EU directive on the legal protection of biological innovations (entered into force in February 2004). The Ministry of Justice is in charge of this. Norway became a member of the International Union for the Protection of New Varieties of Plants (UPOV) in 1993 and has a law on plant breeders’ rights, based on the 1978 Act of the UPOV Convention, rather than in the latest UPOV 1991 Convention. The Ministry of Agriculture and Food is responsible for the plant varieties protection legislation. Both the patent and plant breeders’ rights laws include provisions on disclosure of origin in order to facilitate mutual supportive implementation with the Convention on Biological Diversity (CBD) and its Nagoya Protocol and the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA).

According to the Plant Variety Protection Index, Norway scores below other OECD countries like Switzerland, Finland and Sweden (Campi and Nuvolari, 2015[29]). The late adoption of the UPOV convention may have contributed to this low score.

The adoption of new technologies or organisational innovations is a complex process that needs to link new knowledge with the potential adopters in the private sector. For that purpose, the main national actors (such as Innovation Norway or Siva) interact with initiatives at county and municipality levels. Norway has several initiatives to “incubate” innovations and facilitate technology and knowledge transfer. Digital initiatives also facilitate the transfer and use of knowledge and information and many innovation initiatives in Norway have this focus on digital (Box 4.6).

Within the agricultural value chains, Innovation Norway has in recent years paid special attention to assisting agri-tech companies in their business development, innovation and market entrance both on a national and international level. In most of these programmes all industries, including food but excluding primary agriculture, are eligible for aid. The National Innovation Aid Scheme primarily covers the needs of small and medium sized enterprises (SMEs), but it is also open to large ones; grants and risk loans can finance projects relating to entrepreneurship and innovation, restructuring, development and internationalisation. The Environmental Technology Scheme aims at promoting Norwegian environmental technology in national and international markets; the scheme is intended to support pilot and demonstration facilities in the development of new environmental technology. The Research and Development Contracts Aid Scheme aims to increase value creation in Norway by contributing to the development of competitive goods and services with international potential. The Bio-economy Scheme focuses on value creation in bio-based industries through a market-oriented and sustainable utilisation of the bio-resources from the sea, soil and forest.

The government enterprise Siva has the operator responsibility for the incubators programme. An incubator is an innovation company that offers entrepreneurial businesses and consulting in business development and commercialisation at a subsidised cost. They also offer office space, a professional environment and a network where entrepreneurial businesses can connect with other companies, academia, R&D environments and investors. The current programme started in 2012 and will expire in 2022. From 2020, the county municipalities took over the financing responsibility from the state.

Norwegian universities, colleges, research institutes and health enterprises have their own companies (Technology Transfer Offices TTO) that ensure that research is turned into new profitable products, companies and workplaces. Since 2003, universities have the right to capitalise on intellectual property (IP) developed by their employees. According to Norwegian law, the universities and the other collaborating research institutions are obliged to assist with this transfer of innovative technology. In 2020, there are ten TTOs that receive funding from RCN’s FORNY2020 programme focused on increasing the commercial use of R&D results, financed by the Ministry of Trade, Industry and Fisheries. At least three of these TTOs are highly relevant for agricultural innovation systems: ARD Innovation, Kjeller Innovation and Validé.

ARD Innovation is a continuation of NMBU Technology Transfer Office and has been the commercialisation actor of NMBU since 2014. Owned equally by NIBIO and NMBU, ARD is their catalyst for innovation. The company assists students and employees with the commercialisation of research and promotes innovation and entrepreneurship in general.

Innovation Norway finances the Norwegian Innovation Clusters (NIC),7 a programme that aims to contribute to value creation through sustainable innovation in well-defined clusters of highly interconnected actors. There are three levels within NIC – Arena, Norwegian Centres of Expertise (NCE) and Global Centres of Expertise (GCE).

There are many examples of dynamic partnerships for innovation in the agro-food and forestry sector in Norway. Some of them have a national scope while others are regional in nature. Two important national partnerships are the projects on Climate Smart Agriculture and the Network Bio economy for the People.

The project “Climate Smart Agriculture” aims to reduce the climate impact of Norwegian agriculture by ensuring better information and good tools for climate smart operation on Norwegian farms. The project is led by Agriculture’s Climate Company owned by the two main Norwegian Farmers’ Associations, the Norwegian Agricultural Advisory Council, and a diversity of stakeholders such as TINE, Nortura and GENO. The project was supported with NOK 20 million (USD 2 million) for 2020 through the Agricultural Agreement. Climate smart Agriculture aims to develop a new system and tools for calculating climate footprints and mitigation practices adapted to each individual farm.

At the regional level, Klosser Innovasjon provides knowledge-based business development throughout Innlandet county. They assist the business community with innovation projects, business development and research projects to develop a new industry based on local natural resources. NCE Heidner Biocluster, with more than 50 partners, aims at improving sustainability in food production through innovation, with a special focus on essential inputs such as genetic material, feed and fertilisers, as well as utilising and adding value to the residual materials. The Wood Cluster of Central Norway is an Arena initiative for the use of wood and wood-fibers in existing and new products and market areas. It has 50 partners from the industry, research and public sectors. Arena for fruit and berries (AFB), a regional project on the west coast, to increase the value creation in fruit and berries with 23 enterprises and industry actors. Another interesting partnership at regional level focused on social and health innovation in rural areas is Green Care, a network of services that can increase farm household income and promote social entrepreneurship (Box 4.7).

International co-operation of agricultural R&D is a priority for the Ministry of Agriculture and Food, as mentioned in the assignment letter to the Research Council. Norway is a small country, and international co-operation is important for Norwegian research groups with respect to benchmarking, networks and pooling of limited resources. The participation of Norway in European programmes is the main tools of international co-operation in agri-food and forestry. There are also specific co-operation initiatives with Nordic countries. Finally, there are several other specific research co-operation initiatives.

Norway has participated in the framework programmes on research and innovation as an associated country since 1994, due to the EEA Agreement. Participation in the framework programmes and in the European Research Area is a core element in Norwegian research policy. Norway has a strategy for research and innovation co-operation with the European Union, which was launched in 2014 at the same time as Horizon 2020.

The EU Horizon 2020 programme (H2020) is the EU research and innovation framework for 2014-20, in which Norway fully participates. The ERA-net Cofund instrument allows national research funders (e.g. Research Council of Norway) to collaborate in joint calls with EU co-funding to the national contribution. In the Horizon 2020, the ERA-Net Cofunds in which Norway has participated include more than 10 networks on food and livestock production, organic production and consumption, animal health and forestry.

The share of competitive funds from the European Union that went to Norwegian actors under the EU’s Seventh Framework Programme for Research (FP7) was 1.67%. The ambition for Horizon 2020 is that 2% of the competitive funds shall go to Norwegian actors. The OECD Review of Innovation Policy (OECD, 2017[1]) found the low levels of application and participation in the EU framework programme as one of the weaknesses of the Norwegian Innovation System. However, Norway is among the countries that has increased its share the most from FP7 to H2020.

According to eCorda (the Common Research Datawarehouse of the European Commission), as of November 2019, Norway received NOK 9.1 billion (USD 1.0 million), which is 2.2% of all allocated funds in H2020, above the 2% goal. Norway participates in over 90 projects based on, or related to, land-based resources (projects based on marine resources are not included). The vast majority are within the SC2 thematic area (Societal Challenges 2: Food Security, Sustainability, Agriculture and Forestry, Marine, marine, Maritime and Inland water Research and the Bio economy), but there are also projects within LEIT (Leadership in Enabling and Industrial Technologies). About 15% of these projects are co-ordinated in Norway and there is a good mix of research and innovation actions (RIAs), SME instruments and M.S. Curie research mobility projects.

In total, Norway receives more than NOK 1 billion (USD 0.11 billion) in “green” bioeconomy projects. This corresponds to approximately 12% of all funds returned to Norway from H2020. For the entire SC2 thematic area, the return rate is higher than average: 5.1%, corresponding to EUR 122.2 million (USD 137 million), but this includes marine projects several of which are Norwegian-co-ordinated.

The EU Joint Programming Initiatives (JPI) are public-to-public partnerships with public research funding organisations/programme owners. The main objective of the JPI participation is the alignment of innovation strategies and the development of joint calls. Norway participates in all ten JPIs, and two of them are relevant in the food and agriculture sector, notably JPI FACCE (Food security, agriculture and climate change) and JPI HDHL (Healthy diet for a healthy life). In JPI FACCE the Research Council of Norway has been an active partner investing approximately NOK 75 million (USD 8.5 million) in the period 2011-19 and chairing the Governing Board for 2020-22. In JPI HDHL Norway has participated in 10 projects, and invested approximately NOK 22 million (USD 2.5 million) in these projects, half of this is funded by the Ministry of Agriculture and Food, and the rest is from the Ministry of Health and Care Services and the Ministry of Trade, Industries and Fisheries.

The Research Council of Norway is responsible for Norway’s membership of the Nordic Committee for Research in Agriculture and Food (NKJ). Both the Research Council and the Ministry of Agriculture and Food have a representative in the board. NKJ’s purpose is to identify strategic research agendas and promote a knowledge-based agriculture and food sector, organising joint calls for networking activities in the Nordic countries.

Nordic Forest Research (SNS) is funded by the Nordic Council of Ministers to promote research into the various functions of forests within a sustainable forestry industry. SNS funded networks are beneficial in a Nordic context and include researchers from at least three Nordic countries. Networks have an even gender distribution and are co-financed. SNS also finances other activities, such as research projects, centers, etc.

The Nordic Bioeconomy programme is a joint investment between Sweden, Finland, Iceland and Norway, with the purpose of producing more knowledge to facilitate the transition to the bio-economy. The research is organised in three Nordic Centres of Excellence, including NIBIO, where researchers from at least three Nordic Countries participate. Norwegian participation is financed through the Research Council of Norway.

Bioeconomy in the North implements transnational calls for proposals for research, development and innovation in the forest-based bio-economy sector relevant for the northern part of Europe. The primary objective is to support research and innovation leading to new products and supply services from non-food/non-feed biomass resources. The consortium currently consists of partners from Finland, Germany and Norway. The Research Council of Norway participates from Norway.

Finally, there are several bilateral innovation initiatives, e.g. with Sweden on Equine Research, antimicrobial resistance with India, and food safety with the People’s Republic of China (China).

There is no available in-depth evaluation of the Agriculture Innovation System in Norway. Kjølseth and Pettersen (2012[31]) provide a succinct account of agricultural innovation issues and make a positive assessment of performance based on productivity outcomes, both total factor productivity and labour productivity, compared to other countries and sectors (Chapter 6). In that sense, agricultural innovation in Norway has a history of specific successes on technology adoption and application of knowledge in an economy that is abundant in capital and energy. However, the report does not analyse broader R&D outcomes and impacts, such as environmental outcomes. This and other reports (Borgen and Aarset, 2016[18]) state that Norwegian farmers and their organisations and co-operatives have a significant participation in innovation along the food chain.

Some of the outcomes of the agriculture and food science R&D are shown in Table 4.2. Norway has a slightly higher specialisation of research on agriculture and food than other OECD countries, leading to a significant contribution of the Norwegian AIS to main R&D outcomes (patents and publications). Patents and publications are not the only way in which innovation takes place, but are available and comparable indicators of performance.

Norway has a system of research and development that is more specialised in agri-food than most OECD countries, including most Nordic countries. Patents specialisation in agri-food has been generally reduced worldwide over the last quarter of a century (4.7% vs. 3.5%). This trend has been even more pronounced in Norway, where the share of agri-food patents to the country total has decreased from 8.0% at the beginning of the 1990s to 5.5% in the mid-2010s. However, this share is higher than the OECD average of 3.7%. The agri-food specialisation is even higher if measured in terms of scientific publications, 6.8% of which are on agri-food sciences in Norway, one of the highest among OECD countries for which the average is 4.9%.

Norway’s contribution to the world’s agri-food patents has remained relatively stable over the last 25 years and was 0.4% in 2012-16. The share of publications was higher at 0.6%, highlighting that Norway is better at producing publications than at applying research to patentable uses for the private sector, revealing a bias in favour of scientific publications rather than industry solutions, which could be due to the structure of incentives. Unlike Norway, many OECD countries including the United States, the European Union, Sweden or Denmark have higher shares in patenting than in publishing (Table 4.2).

Similarly to the OECD and EU27 averages, around 13% of all citable agricultural and biological sciences publications are in the top 10% most cited between 2012 and 2016. It remains, however, below the average for Nordic countries (15%). Norway also has around 20% more citations in agricultural and biological sciences than the world average; however, the average for Nordic countries is even higher with 36% over their global average of citations.

Norway has a high degree of collaboration with other countries in publications on agri-food sciences; 43.5% of these publications are joint with other partners. This is frequently the case in relatively small countries but is lower than in Sweden and Switzerland.

Norway has a well-developed agriculture and food innovation system. The AIS is part of a satisfactory but not excellent performing economy-wide innovation system that in the past has contributed to the transformation of the country into a dynamic economy with one of the highest income per capita and low inequalities. However, the innovation system now requires an additional transformation towards a more diversified economy beyond oil and gas, and to more responsiveness to new challenges, in particular climate change. These new challenges require cross-silos strategic priorities and implementation for which the principle of sector responsibility may be a barrier. Some recommendations are proposed to improve the agricultural innovation system performance and its interconnection with the economy wide priorities.

Strengthening cross-sectoral innovation prioritisation and continuing to explore gradual evolution towards a more mission oriented portfolio approach, would help to better interconnect agriculture, food and forestry innovation into broader societal demands. The public sector and the public research institutes remain the core of the agricultural innovation system in Norway. The system is organised by sector with the corresponding ministries – including the Ministry of Agriculture and Food – earmarking the R&D funds’ priorities to the main objectives of their respective policies. Several reports have recommended institutional improvements towards a more strategic approach across different disciplines and sectors. The Long-Term Plan (LTP) for Research and Higher Education process and the interactions with the priority setting at each ministry deserve a systematic follow-up and assessment. The LTP could be more actively contribute to broader cross-thematic priority setting, rather than the current dominance of sectorial prioritisation and earmarking. In the absence of such stronger prioritisation in the LTP, RCN and IN play a pivotal role and need more responsibility and freedom in active portfolio management and strategic planning from the different ministries including LMD. There have been signs of improvement in this direction and RCN has moved towards a more portfolio management approach since 2017, ministries are increasingly limiting their earmarking and focusing it to long-term priorities and there are efforts to apply a mission-oriented approach to innovation policy. These developments deserve to be pursued and assessed, and the agricultural innovation system should actively embark on the broader innovation prioritisation policy process.

A more coherent policy support package for agro-food. The AIS in Norway is highly supported with public policies. However, compared to the high level of total support to the agri-food sector, innovation is only a small part of this support (Chapter 2). High support to the sector that keeps traditional activities and practices, and particularly market price support, hinders the dynamics of transformation and innovation. Increasing the incentives to innovate from the private sector in agri-food requires higher incentives and signals from the markets to identify opportunities to innovate. Incentives to innovate need to come from the whole set of support measures, including incentives to respond to societal and market demands. A larger share of the agricultural agreement expenditures could go to finance innovation.

Strengthening the scientific independence and cross-sectoral approach of agri-food research institutes. There is a high density and diversity of institutes and universities that provide high quality research such as NMBU, NIBIO, VI, Ruralis and Nofima. Some of them are already the result of some consolidation. The challenge is to keep high incentives for research excellence, while maintaining basic funding for the long-term strategic plans and responding to new demands; ensuring both scientific independence and relevance to respond to the current challenges for the sector, in particular contributing to climate change mitigation and adaptation. The institutes that receive direct basic finance from the LMD should be encouraged to actively embrace cross-sectoral research with other actors. Following the conclusions of the report by the RCN (Research Council of Norway, 2018[14]), ways to enhance their independence to achieve their objectives should be explored.

Improving cost-effectiveness and demand driven approaches. Low cost effectiveness is a concern in the whole innovation system in Norway. In the AIS public R&D expenditure intensity is higher than in other sectors and in other countries, and performance in terms of one of the indicators of applied innovation, patents, is not as good as in terms publications. This latter may be due to a bias towards basic research and against applied outcomes usable by the private sector. This reflects to some extent a predominance of the supply driven approach in an agro-food sector that is not fully connected to market price signals and demand. Policies should continue to invest more in non-thematic instruments that respond to new demands rather than to specific industries. Despite the growing role of the private sector in financing innovation, the participation of the industry is below two-thirds of all expenditure, which is the government target for the whole economy. This is also the case in the agri-food sector. For a country well endowed with skills and capital, and with a relatively well-financed research system, the performance of innovation in the firm is not outstanding. The tax incentives programme for innovation SkatteFUNN is effective and reaches SMEs and remote regions. It is recommended to undertake an assessment of the impact of SkatteFUNN on agro-food and forestry.

Assess the performance of the FFL levy fund and JA innovation funds and propose improvements in their governance. Norway has two private sector funds financed through levies, one for agriculture and one for forestry. This formula has the strength of potentially involving the private sector into a more demand driven innovation with participation of farmers and stakeholders from the processing and retailing parts of the value chain, which are also part of the board. An assessment could evaluate the outcomes of the FFL and JA funds and explore the opportunity of broadening the focus of both funds towards longer-term innovation challenges, including consumer and environmental concerns. The possibility of channelling the agricultural agreement research funds JA and the levy fund FFL, through a single merged fund on agricultural research could also be assessed, exploring alternative modalities for funding such as linking the amount of government funding to that from the industry. This could strengthen the existing synergies and create incentives for additional private funding. For instance, in the financing of RDCs in Australia the government matches the funds raised by the industry. With good governance, a larger single fund is more likely to follow a more strategic long-term approach to innovation and to create incentives to private innovation.

Engage co-operatives and farmers’ organisations with actors in other sectors on broad economy wide priority setting. Norway has a strong co-operative sector that allows farmers to be linked to value chains and engaged in innovation. These large co-operatives are a significant part of the private investment on research and innovation and provide advisory services that, in the past, were dominated by the public extension service. Co-operatives have the advantage of creating trust for adoption, and they are also dominant players in the food market (Chapter 5). They are an opportunity for change and focus innovation on main societal challenges like climate change and the environment.

Strengthening international co-operation for innovation. Norway is a small country and research and innovation requires enough critical mass to create clusters of knowledge and competition among research teams. The participation of Norway in international research and innovation is even more important than for bigger countries. Norway should keep and strengthen its participation in the European Research Area and related programmes and partnerships on agricultural innovation. This includes collaboration and partnerships for funding, project design and implementation, publications and adoption of innovation. Norway’s national research funds, including for agriculture, should create strong incentives to co-finance international joint teams. All opportunities for further international co-operation deserve to be explored, including among Nordic countries (e.g. NKJ).

Norway has a comparative advantage on research and knowledge with high levels of human capital in research and in the agri-food value chains. The sector does not have a comparative advantage on producing agricultural commodities and policies should better shift some of its focus on the production of agricultural goods towards producing and even exporting technology and knowledge. Some specific areas deserve particular attention in Norway’s AIS:

  • Building on the comparative advantage in specific scientific areas such as breeding, particularly in animals where there is research capacity, knowledge and well positioned private enterprises like GENO and Norsvin. Identifying such areas could allow focussing the development of the agri-food sector in producing knowledge rather than commodities. Norway has done this in other areas such as oil and gas technology and engineering.

  • Enhancing the focus on the bio economy and the interlinkages with other sectors and climate change to contribute to a circular economy with low emissions that makes a sustainable use of natural resources, in particular forests. Innovation efforts, including prioritising bio economy projects, have contributed to improve the productivity of the sector, but so far have not translated into significant improvements in the agri-environmental performance (Chapter 6). Improving agriculture sustainability and co-ordination with forestry and aquaculture should be an innovation priority.

  • Norway has a good set of geo-localised information from different sources and a tradition of transparent information systems. There is scope for improving the use of digital information systems for the monitoring of the agri-environmental performance of farms and for the redesign of agri-environmental policies, creating incentives for innovation that respond to the climate and environmental challenges. Policy design and implementation should increasingly rely on such digital tools, in particular for targeted agri-environmental policies.

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Notes

← 1. As defined by the Oslo Manual (OECD/Eurostat, 2018[36]), innovation in the OECD Productivity – Sustainability – Resilience Framework is a broad concept (OECD, 2020[34]). It is more than research and development (R&D) and encompasses both the creation and adoption of innovation, which can be “new to the firm, new to the market or new to the world”.

← 2. Share of the expenditure on Agriculture Innovation Systems (part of the General Services Support Estimate GSSE) on the Total Support Estimate (TSE).

← 3. Government expenditure as a percentage of GDP is well above the OECD median, while innovation outcomes are not (OECD, 2020[35]), Figure 4.1.

← 4. However, some agro-food related areas are specifically mentioned in the LTP as subsections.

← 5. However, responsibilities of these agencies are not fully comparable across countries.

← 6. Amount for a single year 2019. Total for SC2 for agri-research in 2014-19 was NOK 700-750 million (USD 80-85 million).

← 7. https://www.innovasjonnorge.no/nic.

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