Experts urge longer EU funding horizons to boost food and nutrition innovation

A Finnish longitudinal study has found that public research, development, and innovation (RDI) subsidies have a significant impact on companies’ innovations. It underscores that the results are seen in the long term. 

Nutrition Insight speaks to the study lead from the University of Oulu to discuss how the findings are relevant for food and nutrition innovation, especially since governments in Europe find it challenging to justify long-term public funding due to expectations of fast results. 

The Industrial and Corporate Change study analyzed 219,477 Finnish firms and 2,349 “significant” innovations and compared them against non-subsidized counterparts. It found that public innovation for RDI funding pays off over five to eight years.

Assistant professor Robert van der Have explains that this lag does not mean that the funding is not working, but is reflective of the averaged development time of significant innovations.

“For food and nutrition companies, where developing a new product or process that meets both efficacy and regulatory standards can take considerable time before market launch, this is likely familiar. What our study adds is empirical support for the idea that if we want to understand the role and impact of innovation funding, evaluation frameworks need to match that reality.”

“If funders or policymakers assess success at two or three years, they will consistently underestimate the value of their investments. The implication for nutrition innovation is that public innovation support programs need long enough commitment horizons, and impact assessments need to look well beyond the initial grant period.”

Supporting small innovators

Van der Have cautions that his study does not specifically examine nutrition or science-based innovation, rather, it reflects broad firms and sectors. Nonetheless, the analysis also included data from nutrition and food-sector innovations from Finland.

Public innovation funding for food and nutrition takes years to show measurable results.“That said, the general effect trend that we identified (that meaningful effects from public funding require extended time to manifest for significant innovations’ commercial introduction by companies) is at least theoretically consistent with science-based nutrition development, which involves things such as evidence creation, regulatory compliance, and clinical or consumer validation before a new product reaches the market or a new process is implemented.”

“The so-called market-failure rationale for public funding is also arguably stronger in this context, because private capital tends to be risk-averse toward long development cycles with uncertain commercial outcomes, or, for example, when you think of the size of certain patient groups that could benefit from a specific nutrition innovation.” 

He further points out that in many science-based sectors, innovation environments often involve young, small innovative companies that could be constrained by the risk-aversion of private capital.

“In these contexts, public innovation grants can provide the continuity that private investors won’t provide, at least early on.”

Microenterprises gaining funding

The study also found more commercialized innovations and patents among funded firms, but Van der Have points out that it cannot explain why some supported companies seem to have benefited substantially more than others. 

“We did observe rather large variation in treatment effects around the average effect across supported firms. We tried to better understand what drives this variation, but our analysis could not identify clear company characteristics that stand out in terms of explaining this.”

“Because we did an observational study, our models control for sectoral differences in the propensity of companies to innovate and get publicly funded, so sector differences are accounted for. So, the drivers of such heterogeneity remain a bit unclear, and so it may be that the variation is more at the project level than the company level.”

Assistant professor Robert van der Have explains that this lag does not mean that the funding is not working.The study’s measure of innovation included small ventures and larger firms, says Van der Have, where microenterprises were a growing recipient group.

Long-term innovation challenges

Van der Have highlights that the study argues that short-term output criteria are insufficient when the policy goal is significant, commercially meaningful innovation. 

“Patents offer a useful signal of inventive activity earlier on in time, but as we show, patenting and commercialization are related but distinct outcomes because many patented inventions never reach the market as significant innovations.”

“For nutrition or health innovation specifically, where the ultimate policy interests are presumably in public health outcomes and market success, there is a strong case to be made for evaluation frameworks that track commercialization over extended periods rather than relying solely on patent counts or short-term metrics.”

However, he points out that longer evaluations are a challenge since they cost more and could be politically challenging. This is why Van der Have says it would be better to “anchor” this with support program design.

Increasing global competitiveness

Long-term RDI support is essential for bringing science-based nutrition innovations to market.The study stresses that consistent, long-term public innovation is not trivial and can meaningfully help companies bring significant innovations to market. Van der Have says the study set a high threshold of what counts as significant innovation.

“In a global competitive context where other jurisdictions, such as the US and China, deploy substantial public innovation support, the absence of such programs likely puts domestic companies at a disadvantage, particularly in capital-intensive or ‘long-cycle’ development areas that are familiar in science-based fields such as nutrition and health.”

“That said, our study is a single-country observational study of Finnish companies that may not generalize everywhere because Finland has particular characteristics such as a workforce with high educational attainment and a mature innovation policy tradition. So I would say that our findings are suggestive rather than definitive for any specific sector or competitive context.”

Meanwhile, in the US, the industry is becoming concerned about the future of nutrition and food science funding. The Office of Management and Budget recently proposed rules to rewrite the rulebook for all federal grants, and the Institute of Food Technologists warned these would undermine the nation’s scientific research for food and nutrition and hinder global competitiveness.