Donor investment strategies should support the development of private seed enterprises to make quality seed available to small-scale farmers. Seed provision is at an important crossroads in many developing countries. Donor support to public seed enterprises has diminished because they have not been efficient. Strategies for supporting the private seed sector are still evolving. As a result, many farmers have little access to commercial seed, which has restricted their choice of crops and varieties. Since the benefits of modern plant breeding can reach farmers only through an efficient seed system, there is an urgent need to develop the private seed sector. The development of private seed enterprises will require a long-term outlook, recognizing that the first steps will likely be taken with higher-value seed crops (such as hybrids). It will also require the strengthening of various elements of the seed system (these elements may be in the hands of various independent enterprises or combined in a single firm). Support must also enhance the development of competitive markets. Seed enterprise development includes attention to the policy environment, support to public sector plant breeding, seed regulatory reform, and strengthening input and output marketing capacities. Developing Private Seed Enterprises Public seed enterprises have introduced new crop varieties and have been important in development efforts, but it is increasingly difficult to defend their continued support, as seed production and marketing are inherently private sector activities. Public enterprises generally lack the incentives that a competitive private sector can offer to respond to changing demands or new markets or to increase industry efficiency. An emerging private seed industry faces many obstacles, some relating to the general business climate and others specific to the seed industry. Public sector interventions should be market-based to the extent possible, using competitive grants, matching grants, and vouchers. Public-private cooperation can realize synergies in policy preparation and implementation, developing new varieties, and developing efficient and effective marketing outlets. Public investment can be justified because of the large spillover benefits to society. The seed sector comprises the following activities, which present varying opportunities for private and public investment. Plant breeding. Seed enterprises require access to new varieties. Although private plant breeding capacity is increasing, many crops will depend on public sector breeding programs for the foreseeable future. Public plant breeding organizations must have adequate links to private seed distribution mechanisms.
Source seed production. Commercial seed production entails the multiplication of several generations of source seed (for example, breeder seed, foundation seed). Enterprises managing commercial seed multiplication may or may not have the capacity to produce and maintain source seed.
    
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