Agricultural economics Research review

agricultural research and extension and also agricultural research education and extension organization
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Dr.ThorasRyder,Hong Kong,Researcher
Published Date:07-07-2017
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REVITALIZING AGRICULTURAL RESEARCH AND DEVELOPMENT TO SUSTAIN US COMPETITIVENESS by Philip G. Pardey and Jason M. Beddow This paper was commissioned by the Farm Journal Foundation.A NOTE FROM THE FARM JOURNAL FOUNDATION Over the next few years, we have a unique opportunity to further strengthen US agriculture and transform US agricultural development programs overseas to help foster growing markets and build more stable and secure nations. The 2018 Farm Bill reauthorization presents an opening to reposition US agriculture for the 21st century and deploy the tools needed to strengthen inadequate food systems. Since the Farm Journal Foundation (FJF) started in 2010, it has sought to bring the expertise of US agriculture to the national policy table, providing a plaorm f tf or diverse stakeholders across the US agricultural system to contribute their knowledge and ideas to feed a growing global population. With a longstanding relationship with US agriculture and rural America, the FJF invited renowned experts to suggest approaches to enhance the programs and other tools that policymakers will need to generate beer out tt comes for US investments in agriculture and global food security. A series of three policy papers were commissioned; one on institutional capacity building, one on agricultural trade technical assistance and one on agricultural research. When considered as a whole, we believe that the papers can facilitate a conversation on how US agriculture can maintain its comparative strength while sharing its knowledge and tools with fellow farmers in developing countries to help drive economic growth around the world, and in the process, create new opportunities for US products in the markets of the future. We hope that this eort will assis ff t policymakers in promoting a national vision and commitment to international agricultural development in US foreign policy, and continued support for US farmers utilizing US Agriculture’s best practices and expertise. The Farm Journal Foundation would like to express its thanks to its donors, our Farm Teams, HungerU students, partners and colleagues across agriculture who reviewed these papers. Tricia Beal Chief Executive Officer Farm Journal Foundation The Farm Journal Foundation is a 501(c)3 organization that works with U.S. farmers, ranchers and next generation populations to inform and engage national level policymakers on the important role that the United States can and should play in addressing global food security. FOREWORD Today, too few people know where their food comes from and what is required to produce it. Even fewer understand the strong link between hunger, instability and conflict. Widespread hunger and lack of political stability are closely related and key drivers of both conflict and migration – refugees fleeing to Europe and undocumented immigrants entering the United States are but two examples of how people often respond to their inability to feed and protect their families. As Americans, we have beneed fr fitt om decades of low food prices and a safe food supply. Our country’s agricultural sector has advanced due to the innovation and dedication of our farmers as well as the US Government’s visionary lead- ership since 1862. Together we have created the most advanced agriculture and food system the world has ever seen; however, many US agricultural institutions are now showing the strains of a mature system. New thinking, resources, and innovation, including improved coordination, will be vital to meet the coming challenges facing our world. As President of the University of California system, I launched the UC Global Food Initiative in 2014 to focus our UC re- sources and intellect on one of the critical issues of our time: how to sustainably and nutritiously feed a world population expected to reach at least eight billion by 2025. The governments of China and Brazil are already working hard to bolster their agricultural systems to meet the growing global demand for food; they now spend more than twice the amount the US does on public agricultural research. We need to break out of the ‘business as usual’ approach and catalyze all rele- vant players – governments, universities, the private sector, and NGOs – to meet this challenge. I applaud the Farm Journal Foundation for commissioning this series of reports and taking on the critical issue of how US agriculture can maintain a leadership role in feeding the world. These papers call on the US to both modernize our agricultural system and further link it with national security and development eorts t ff o meet the demands of the future. As each report demonstrates, no one sector can do it alone; success will require leadership, resources and new models for partnership. Taken together, they kick off a much-needed dialogue on how US Agriculture can maintain its compara- tive strength, share its extraordinary knowledge, drive economic growth and stability – all while ensuring US competitive- ness in tomorrow’s agricultural export markets. The issues covered (and the authors) are: • Agricultural research, written by Dr. Phil Pardey and Dr. Jason Beddow. • Human and institutional capacity-building, written by Dr. Thomas Jayne, Hon. Chance Kabaghe and Dr. Isaac Minde. • Agricultural trade technical assistance, written by Mr. Ammad Bahalim and Dr. Joseph Glauber. We have seen that the nation is ready for new ideas, voices and approaches. The Farm Bill reauthorization in 2018 provides a vehicle for modernizing our approach and improving the efficacy of our US investments both at home and abroad. Let us use these papers, and their recommendations, as a starting point for discussion and to beer eng tt age the full breadth of stakeholders within the US agricultural system. Janet Napolitano President, University of California ABOUT THE AUTHORS Philip G. Pardey is a professor and Jason M. Beddow an assistant professor in the Department of Applied Economics at the University of Minnesota, and both are affiliated with the University’s International Science and Technology Practice and Policy (InSTePP) Center (www.instepp.umn.edu). The authors thank Connie Chan-Kang for her assistance in preparing this brief. This report was commissioned by the Farm Journal Foundation. The authors are entirely responsible for the content, but they would like to thank Kathryn Boor, Stephanie Mercier, Saharah Moon Chapotin, Sally Rockey, Robbin Shoemaker, Vince Smith, Eric Witte, and Brian Wright for their insightful comments on earlier drafts of this brief. Jason Beddow died suddenly, in April 2016, as the first complete version of this brief was being finalized. REVITALIZING AGRICULTURAL RESEARCH AND DEVELOPMENT TO SUSTAIN US COMPETITIVENESS Philip G. Pardey and Jason M. Beddow SUMMARY This paper describes the downward trends in US public in aggregate, US farmers now produce more output using agricultural research and development (R&D) funding less inputs overall. Agricultural productivity has increased and argues for a doubling of such spending over the next markedly (Alston et al. 2010) with aggregate agricultural eight to 10 years to ensure that US agriculture maintains output increasing by 268 percent from 1949 to 2007 its global competiveness. To address the decline, the (Pardey et al. 2014). Clearly, R&D is essential for achieving US government can reverse current trends in public sustainable improvements in productivity and preserving agricultural R&D spending by creating incentives for the environmental conditions affected by agriculture such increased research funding from state governments and as air and water quality and water use. national commodity groups, much as the new Foundation for Food and Agriculture Research is designed to leverage Unfortunately, the rapid productivity growth of the US private sector R&D funding. This paper also suggests ways agricultural sector over the past half-century is unlikely to to better coordinate agricultural research activities both continue. Indeed, growth in US productivity is slowing, between US government agencies and between US and and that trend is likely to persist since the US government international research institutions, and proposes more spending on agricultural R&D has flat-lined. At the same precise targeting of USDA funds to those places where time, other countries have been ramping up public agricultural production actually occurs. investments in this area. As a result, the US share of global public agricultural R&D has almost halved over the past five decades (Pardey et al. 2016). Continuing to skimp on spending will have detrimental consequences for US agricultural productivity and international competiveness INTRODUCTION: WHY SHOULD for US farmers and ranchers. WE CARE ABOUT AGRICULTURAL RESEARCH? Policy Possibilities Innovations generated by agricultural R&D, along While these developments are cause for concern, it is with better education to enable best use of the new not too late to reverse them. A number of relatively technologies arising from R&D, have enabled American straightforward policy changes would bolster US farmers to produce enough food to feed the people of leadership in agricultural innovation without significant this country and millions of others around the world, on new appropriations from the federal government. In this less land, freeing up resources for other economic and paper, we propose two sets of policy changes that hold environmental uses. Land devoted to recreational use, such the most promise to reverse the disturbing trends revealed as parks, wildlife preserves, and forests, has increased by above: over 45 percent in the last 50 years thanks to a 200 million acre reduction in land used for agriculture (Nickerson et al. 2011). Increasing output while using less land requires Funding Innovations farmers to use more or better inputs, for example, • Federal funding: Refocus Farm Bill priorities. through adopting improved technologies (such as higher- yielding or improved drought-tolerant crop varieties) • State funding: Reengage state government support. and production methods (minimum or no-till cultivation practices). While many US farmers increased the intensity • Enhance private support for publicly performed of use of some inputs (e.g., applying more of a particular research. input, such as fertilizer, per acre), the evidence shows that Commissioned by AGRICULTURAL RESEARCH 1research is left entirely in the private domain (Pardey and Institutional Innovations Alston 2010). • Improve interagency collaboration in science spending with food and agricultural implications. • Facilitate greater international engagement in the CHANGING FOOD AND agricultural sciences. AGRICULTURAL RESEARCH REALITIES Clearly, policy changes involve politics. But before turning to a discussion of these policy options, it is worthwhile to Decisions about the policy approach that best serve step back from the politics and address the fundamental society’s interests in US food and agriculture must take economic rationale for government involvement in into account that the domestic and global contours of the agricultural R&D and the reasons for real concern about R&D investment landscape are now very different than current US trends. in decades past, a situation that significantly affects US competitiveness. THE PUBLIC ROLE: WHY SHOULD Public Research Spending Trends GOVERNMENT GET INVOLVED? Decades of progressively slowing growth in US public Despite recent increases in US private sector involvement spending (adjusted for inflation) on food and agricultural in agricultural R&D, which now substantially exceed the R&D have given way to cutbacks in real spending in public commitment, the government must reverse its more recent years (fig. 1, panel a). US public on average recent retreat and revitalize its involvement in agricultural grew by only 2.4 percent per year from 1960 to 2013. In research. contrast, public agricultural R&D spending in the rest of In short, the incentive the world grew substantially structure for private sector Substantial and socially valuable (33 percent) faster at 3.2 investment is unlikely to percent per year over roughly R&D investment opportunities will generate the appropriate the same period. As a result, amount and composition not be supported if the research is the US share of global public of agricultural R&D, thus agricultural R&D spending left entirely in the private domain. necessitating some form of has fallen markedly, from 20 collective action, customarily percent in 1960 to 11 percent facilitated by governments. in 2011. Market failures in agricultural R&D have several dimensions. Notably, those who invest in certain types of agricultural Notably, key middle-income countries with large R&D might not be able to fully capture the benefits of agricultural sectors (specifically Brazil, India, and China) that research, including the broad environmental benefits collectively overtook the United States in 1998 (Pardey et that are intrinsically external to the individual farmer al. 2016) (fig. 1, panel b). As of 2011, for every dollar the who may pay for or use the results of the research. That United States invested in public agricultural R&D, those is, certain farmers and other firms might benefit from the three countries invested 2.35. research even if they do not pay for it directly, and thus there are incentives to “free ride,” sharing in benefits without bearing the cost, leading invariably to private Figure 1: Spending on public food and agricultural R&D sector underinvestment. Furthermore, individual farm Panel a: US public spending growth rates by decade, 1960–2013 operations are almost always too small to carry out robust R&D programs on their own; government investment and collective action among farmers and agribusinesses must usually correct the underinvestment. Moreover, many of the payoffs from agricultural R&D take decades to materialize, which can undermine private sector incentives to invest given their shorter-term planning horizons. However, even though a long time may pass before the benefits of a specific investment in agricultural R&D are fully realized, the overall producer and consumer returns to these investments are still high (Alston et al. 2010; Hurley et al. 2016). The upshot of these market failures is that substantial and socially valuable R&D investment opportunities will not be supported if the Revitalizing Agricultural Research and Development to Sustain US Competitiveness, by Philip G. Pardey and Jason M. Beddow 2Part of this growth in the public-private gap reflects a Who Performs and Pays for Public shift in US funding priorities, which has resulted in an Agricultural R&D? initial decline in the growth rate and more recently, an The split of federal-versus state-support for agricultural actual decline in public spending levels on the agricultural R&D has changed dramatically over the past seven sciences. These policy actions can in part be ascribed to decades, with equally dramatic but different changes an expectation that the private sector will fill the void left in terms of who actually does the research. Since 1950, by these reductions in public spending. This expectation the share of state support for research within the state has not been realized, because public institutions tend to agricultural experiment station (SAES) system has declined undertake more basic and applied types of research for from 62 percent in 1950 to just 36 percent in 2013. which it is difficult to capture sufficient of the benefits to Federal funding has picked up most of the shortfall and incentivize the private sector. Instead, the private sector now accounts for 40 percent of the overall SAES funding, tends to conduct more developmental or nearer-market almost double its share in 1950. However, over the same research that is readily commercialized, but which often period, more of the research has actually been conducted relies on breakthroughs achieved by way of the upstream by state agencies. research. The public R&D role must not only continue but expand. The empirical evidence that the economic returns to public R&D remain high provides a clear signal that Panel b: Shifting global public share of food and investments in this area remain insufficient, despite the agricultural R&D, 1960–2011 expanded private commitment to US food and agriculture research in recent decades. Moreover, the United States is losing ground in terms of its share of global private spending on agricultural R&D. In 1980, private agricultural R&D conducted in the United States accounted for 33 percent of the world total. By 2011, that share had slipped by nearly a quarter. This shift also reflects an increase in domestic spending on Brazil, India, and China private agricultural R&D elsewhere in the world, along with recent decisions by some multinational agribusiness firms headquartered in the United States (and other high- income countries) to shift some of their R&D investments to locations in the agriculturally large and growing middle- Source: InSTePP R&D accounts version 3.8. income countries. Note: Panel a annual average period growth rates calculated using the least-squares method and report real (i.e., inflation adjusted) rates of growth. Data are in US Figure 2: Spending trends in US public and private dollars deflated to 2009 prices with implicit GDP deflator agricultural and food R&D from BEA (2016). Panel b R&D shares based on spending denominated in purchasing power parity (PPP) units. In 1950, 39 percent of publicly funded R&D was carried out by federal USDA labs, while 61 percent was done by state-based land-grant universities and other cooperating Public share of Ag R&D agencies. By 2013, the USDA labs’ share had shrunk by (right hand axis) one-third to 27 percent while the states’ share had grown to 73 percent. Support to SAES research through grants and contracts from the private sector now also constitutes an important share of total SAES funding, accounting for 23 percent in 2013. Source: InSTePP R&D accounts version 3.8. Private Versus Public Research Trends Note: Data in real US dollars are deflated to 2009 prices The private and public shares in total US agricultural R&D have with implicit GDP deflator from BEA (2016). also changed markedly over the past half century (Pardey et al. 2016). In 1950, public agencies spent 34 percent more than private firms on overall food and agricultural R&D. By 2011, that relationship had reversed, with the private sector outspending the public sector by 73 percent (fig. 2). Commissioned by AGRICULTURAL RESEARCH 3paving the way for breeding disease-resistant varieties. US Spending on International R&D USDA scientists continue to play a pivotal role in this Initiatives research, which is funded through a variety of sources, including USAID’s Feed the Future program, similar aid For almost half a century, the US government, by way of programs of governments elsewhere in the world, and USAID, has invested in international agricultural research private foundations. The US research program is therefore undertaken by a consortium of 15 research centers located helping to ameliorate production problems in Africa, while throughout the world, organized collectively as the CGIAR. at the same time helping to insure against prospective While this research was pivotal to the development crop losses here in the United States should history repeat of high-yielding wheat and rice varieties that spurred itself and the new rust strains begin cropping up on US substantial growth in Asian and Latin American agriculture farm fields. during the 1970s (dubbed “The Green Revolution” by the USAID Administrator at the time), it also yielded sizable benefits for the United States. CGIAR-bred wheat and rice The US government has been investing in international varieties have been widely and successfully planted by US research and associated education and extension activities farmers, who by 1996 had reaped more than 3.7 billion in for some time (fig. 3). But that commitment has waxed added value to the US economy, an astonishing return to and waned over the years. It was initiated in the 1960s in taxpayers on the 134 million of US investment in CGIAR response to growing global food security concerns, helping wheat and rice research to that point in time (Pardey et al. to fuel the Green Revolution, and surged again in the 1996). 1970s in response to global food price spikes. Investments in international agricultural R&D peaked in inflation- Figure 3: US spending on international food and adjusted terms in the mid-1980s, but subsequently agricultural R&D, 1950–2015 dropped precipitously. Global food price spikes in 2008 led to some recovery in this form of spending, but in real terms US spending on international research still falls far short of the 1986 peak, even though globally, agriculture has to feed 2.4 billion more people than in the mid-1980s, and pressures on crucial agricultural assets such as land and water have intensified. Despite increased US support for CGIAR research in very recent years, the United States, through USAID, accounted for only 16 percent of CGIAR funding in 2014 compared with a peak of almost 30 percent in 1982. PUTTING POLICIES INTO PRACTICE Source: Authors estimate using data from Alex (2012) for 1950–2010; post-2010 is derived from unpublished USAID A number of US public policies collectively shape the data. Note: Data in US dollars are deflated to 2009 prices overall incentives to invest in and perform research of with implicit GDP deflator from BEA (2016). Research relevance for food and agriculture. They include the Farm funding includes estimate of support to national and Bill, annual appropriations for foreign aid budgets, funding international (e.g., CGIAR) research agencies. for non-USDA federal agencies such as NIH, NSF, and others, and legislation related to the scope and nature Decades after the Green Revolution, the worldwide of patents and other forms of intellectual property. So benefits of international support for agricultural R&D what can be done to reshape US public policies in ways continue to flow, including to the United States. Rust in that would reposition and re-energize the domestic and wheat is a devastating fungal pathogen that afflicts crops international agricultural R&D capacities of the United around the globe. US wheat farmers are at risk: almost States? Here we propose some salient US policy changes all US wheat is grown in climatic zones susceptible to the and focus on a set of potentially consequential funding disease (Pardey et al. 2013b). In 1998, a new variant of and institutional innovations. stem rust first appeared in Uganda. Dubbed Ug99 (1999 being the year the strain was scientifically characterized), this strain has since spread, undermining wheat yields Fund innovations to double investments throughout East Africa and beyond. Over the past decade, in public food and agricultural R&D over the work of USDA scientists at the Cereals Disease Lab time. in St. Paul, Minnesota—in close collaboration with the efforts of SAES and CGIAR scientists and national research All available evidence indicates that the economic returns partners in Africa and elsewhere in the world—has been to US producers and consumers from publicly performed pivotal in identifying the changing pathogenicity of Ug99, agricultural R&D are exceptionally large: on the order of Revitalizing Agricultural Research and Development to Sustain US Competitiveness, by Philip G. Pardey and Jason M. Beddow 420 dollars of social benefit for every dollar spent (Alston fallen over time; almost 87 percent of total USDA support et al. 2010). Such high returns strongly signal that the to the states in 1970 was matched by the states, declining United States under-invests in agricultural research, leaving to just 35 percent in 2009. This shrinking share of formula important research projects unfunded. The necessary funds was due to two reasons, an increase in competitive boost to agricultural R&D funding should occur gradually, grants funding and funding made available to the SAESs allowing the relevant institutions to ramp up activities in by way of USDA contracts for specific research projects, ways that avoid any wasteful spending. Reversing the and an increasing share of funding flowing to the SAESs long-term decline in spending on US public agricultural from other federal agencies such as NIH, NSF, and DOE, R&D should be underwritten by federal and state much of it competitive funding not requiring a match. In taxpayers as well as private agricultural sector interests, 2013 state governments committed just 0.89 on average as all three parties stand to reap substantial rewards from for every dollar of federal funding made available for the research that private market forces alone are unable to research conducted in the SAESs, compared with 4.36 of deliver. Below are some suggestions to leverage existing state funding per federal dollar in 1925. There are several authorities and funding for food and agricultural R&D. ways in which the mix of federal-state support can be rebalanced. Refocus Farm Bill priorities. Expand the scope or size of the state Though an important step, the 200 million allocated for matching requirements to secure federal agricultural research through the new Foundation for Food funding for SAES research. and Agriculture Research provided in the Agricultural Act of 2014 is not enough to stem the rundown in US public The composition of state and federal funding for SAES agricultural research capacity that has occurred over recent research varies considerably among the states. In 2013, decades (Pardey et al. 2014). “The additional R&D funding 32 state governments contributed less than one dollar for authorized in the 2014 Farm Bill falls far short of doubling every federal dollar, 12 states contributed between one public support for the agricultural sciences. It constitutes and two dollars, and only four states provided more than an average nominal increase of just 130 million per year, two dollars of funding for each federal dollar directed to equivalent to an average the SAESs. Expanding the scope annual increase of only 3 or size of the state matching percent of total US public requirements to secure federal R&D spending for food and So what can be done to reshape funding for SAES research is agriculture (as compared one practical way of rebalancing US public policies in ways that to 2009 spending levels).” federal and state support for With the January 2016 would reposition and re-energize SAES research. It could also serve budget outlook by the to better align the locus of where the domestic and international Congressional Budget Office research is performed with where (CBO) pointing to increasing agricultural R&D capacities of a specific agricultural production budget deficits and rising activity occurs, with potential for the United States? national debt over the achieving increased efficiencies coming decade (CBO), calls in the productiveness of R&D to increase overall federal given the strong site-specific government spending on Farm Bill programs, even for a attributes that often affect agriculture and its associated crucial area like agricultural research, seem destined to fall environmental impacts. This improved alignment will also on deaf ears. Actually needed, however, is a realignment expand public support for this type of spending. of congressional priorities on recurring agricultural R&D spending, rather than a net increase in funding for US agricultural programs. Revisit the basis of the “formula funds.” Politics hinders efforts to reach an allocation of research Reengage state government support. resources that make economic sense. A state is unlikely The trends described above show a distinct and broad- to be the most “efficient jurisdiction” for a particular set based decrease in state government funding for state- of R&D services, where efficient jurisdictions are defined performed agricultural R&D, while the share of SAES according to the largely interstate geographical range funding from federal sources has increased. There of production supported by those research services. are several reasons why this is so. Some of the USDA- Agricultural production is unevenly distributed across the administered funds made available for SAES research United States, so that striking a more efficient geographical require matching state funding to secure the federal balance of funding would entail shifting existing federal support. However, the share of these matched formula funding from some states to others. A practical way forward funds in the total USDA funds flowing to the SAESs has is to revisit the basis of the “formula funds,” perhaps Commissioned by AGRICULTURAL RESEARCH 5putting more, or even exclusive, weight on the relative across various commodity sectors. Most of the remaining value of agricultural production as the basis for cross-state funds are used for short-term promotional activities (Alston 1 allocation. Combined with more stringent state matching et al. 2005; Lee et al. 1996). requirements, moves in this direction could strike a more Legislation that provides incentives for industry to impose appropriate balance between federal versus state funding, a research levy scheme where the funds are focused where efficient financing principles would call for financing specifically on R&D and managed outside existing US “local” public goods using “local” taxes. check-off programs in ways that optimize the innovative “bang for the buck”—perhaps along the lines of the very successful, farmer co-funded Research Development Re-allocate federal support between states to Corporation model launched by the Australian Federal make more effective use of scarce R&D dollars. Government in the late 1980s (see Alston et al. 2012)— Tackling this spatial resource allocation problem leads to would be a straightforward way to enable (and induce) another political challenge: Is 50 (one for each state) the producers to collectively co-finance the research that optimal number of experiment stations for the United benefits their enterprises. States? While farmers reap some of the benefits of R&D, To make the program consumers are also significant palatable to grower groups beneficiaries in the form (and recognizing that US While farmers reap some of the of access to cheaper, safer, consumers and taxpayers benefits of R&D, consumers are and more varied choice of also gain from agricultural produce. The “beneficiary R&D via safer, more abundant also significant beneficiaries in the pays” principle of public and affordable food), the form of access to cheaper, safer, finance is based on the notion federal government should that all US consumers (and offer matching funds (up to and more varied choice of produce. thus federal taxpayers) should some predetermined limit), underwrite public agricultural thus splitting the R&D burden R&D, even though all states between producer research may not share equally in the distribution of those research levies and general tax revenues. Including other industries dollars. With agricultural production spread unevenly over that benefit from agricultural R&D in the scheme (such the geographical (and political) landscapes, the “efficient as input suppliers and food processors) would allow for jurisdiction” concept introduced above suggests the need even more agricultural R&D and, if implemented wisely, to improve the alignment between where the majority of substantially correct the persistent underinvestment US agricultural production is located and the allocation in agricultural R&D (Pardey et al. 2013). The federally- of federal agricultural research dollars, especially in an matched, research levy scheme introduced by the environment with scarce financial resources available for Australian government decades ago is a successful and such work. now significant source of funding for public research carried out by universities and other government institutions in that country. Enhance private support for publicly performed research. If we apply the basic logic of the “beneficiary pays” INSTITUTIONAL INNOVATIONS principle, those who benefit from a program should pay for it. The innovations spurred by agricultural R&D Reversing the long decline in funding for publicly improve food quality, decrease food prices, and protect performed US food and agricultural R&D will be a step the environment from the negative externalities associated in the right direction toward maintaining the sustainable with agriculture. Since all consumers benefit from productivity performance of US agriculture. Improving the agricultural R&D investments, general tax revenues should effectiveness by which these funds are mobilized and spent at least partially fund them. is also possible, requiring adoption of the complementary institutional innovations outlined below. However, farmers also clearly benefit from innovative agricultural technologies that improve productivity, reduce Improve interagency collaboration in risk, and decrease production costs. As such, farmers—and R&D spending with food and agricultural agribusiness in general—may appropriately have roles in implications. funding agricultural R&D. US farmers already engage in collective action to fund activities that benefit agricultural Both the relevance of R&D in food and agriculture and producers. In recent years, these collective “check-off” the economic and societal consequences of innovations arrangements have garnered annual funding of around in these sectors extend well beyond the domain of the one billion dollars. Some of the check-off boards provide USDA. For example, food and agriculture directly affect funds to support R&D, but the share varies substantially nutrition and therefore human health, and so it follows that Revitalizing Agricultural Research and Development to Sustain US Competitiveness, by Philip G. Pardey and Jason M. Beddow 6coordination of research enabled by such entities as the economic development activities. Over the subsequent USDA and the NIH must be improved. In recent years, the years, CGIAR funding by way of USAID country missions NIH has committed around 1.5 billion dollars annually rose much faster than funding from more centralized to nutrition research and training (NIH 2015) compared USAID agencies such as the Bureau for Food Security. As a with approximately 300 million per year of human consequence, by 2015, the R&D-oriented share of funding health, nutrition, and food safety R&D undertaken by the to the CGIAR (from both mission and more centralized USDA and the SAESs in 2013. Despite recent interagency sources) had dropped to around 42 percent of the USAID deliberations between the USDA and the NIH (and other total, thus significantly shifting the balance of USAID agencies) (see ICNHR 2016), these two agencies are support away from the central “research-for-development” presently investing just 3.4 million annually in jointly raison d’être of the CGIAR. USAID should refocus its managed nutrition-related research. CGIAR funding on long-term R&D activities and resist the temptation to seek shorter-term payoffs. The scale and importance of the social and economic issues involved—notably the increased health costs stemming Lowering bureaucratic barriers for USDA (and SAES) from obesity and other nutrition-related problems— engagement in international R&D would further leverage support the case for a much larger commitment of R&D USDA research expertise. Section 1402 of the National resources and improved interagency collaboration. Such Agricultural Research, Extension, and Teaching Policy Act collaboration would also be helpful in other research of 1977 is still the prevailing legislation for agricultural topics that cross agency jurisdictions, such as remote outreach efforts. That legislation makes repeated reference sensing technology and climate impacts that involve to “United States Agriculture.” Within USDA agencies scientists within both USDA and other agencies such as this wording has the practical consequence of making it the Department of Defense (DOD), the National Science difficult for bench scientists to deploy federal government Foundation (NSF), and the National Aeronautics and Space funds in direct support of research done outside (or Agency (NASA). Improved data capture and sharing tools targeting problems outside) the United States, even if across agencies could better reveal and leverage cross- those issues have the potential to affect US producers and agency complementarities in food and agriculture related consumers. Adding a clause to the law that acknowledges R&D. that some US agricultural research must be dealt with at the international level would facilitate more effective deployment of scarce USDA resources. Facilitate greater international engagement in the agricultural sciences. Manage modes of allocating public Addressing global hunger concerns via R&D enabled agricultural R&D resources. growth in agriculture around the world has clear US national security and humanitarian rationales. Furthermore, a The President’s budget (OMB 2016, p. 305) has proposed comparison of public agricultural an increase in federal funding R&D in the United States and to agricultural research (from the rest of the world shows that 2.7 billion in 2016 to 2.9 the geography of innovation Reversing the long decline in billion in 2017), which if is shifting offshore, increasing supported by Congress is an funding for publicly performed opportunities for scientific and initial yet incomplete step technological spill-ins to the US food and agricultural R&D toward redressing the chronic United States. Finally, as the stem underinvestment problem. How will be a step in the right rust example above makes clear, and to what areas these funds the crop and animal disease direction toward maintaining are allocated matters as much as problems (as well as food safety the amount. In its score for the the sustainable productivity issues) originating elsewhere can 2014 farm bill, the Congressional directly and dramatically impact performance of US agriculture. Budget Office indicated that US producers and consumers. 74 percent of the additional agricultural research (Title VII) Among the host of policy mandatory funds for research changes that would likely improve outcomes of US were earmarked for organic and specialty crops R&D. international engagement in food and agricultural R&D, Such earmarks affect the dispersal of these funds to the two largely budget-neutral options, one involving USAID extent that the perceptions of scientific opportunity by and the other the USDA, stand out. Over the past several USDA and SAES researchers and the technical judgment years, there has been a dramatic shift in the orientation of NIFA (National Institute of Food and Agricultural) R&D of USAID support to CGIAR research. In 2011, around 64 funding managers are curtailed relative to the influence of percent of that support was directed to longer-run R&D political operators. It also limits the opportunity for a fully activities with especially large social and economic payoffs, effective operation of the scientific marketplace via NIFA’s and the residual went to a host of (often shorter-term) flagship competitive grants program (Agriculture and Food Commissioned by AGRICULTURAL RESEARCH 7Research Institute), wherein scientific ideas are solicited, funding has shrunk relative to competitive funding from peer reviewed, and, for the lucky one in 10 proposals the USDA and others—it has also induced a shift away submitted, funded. One useful and potentially game- from (longer-term) programmatic research toward (shorter- changing policy innovation in the 2014 Farm Bill was the term) project research. It still takes seven to 10 years of creation of the Foundation for Foundation for Food and R&D to turn out a new wheat or corn variety, and the lags Agriculture Research, to which in deploying and, as necessary, Congress awarded 200 million adapting new agricultural of startup funds, which can only technologies as they are It still takes seven to 10 years be dispensed if a one-to-one adopted over diverse climatic of R&D to turn out a new wheat match of non-federal funds zones are often decades long. can be obtained. This funding or corn variety, and the lags in model, or variants thereof, Making the right decision deploying and, as necessary, should not only be maintained on what and how to fund but expanded in the upcoming adapting new agricultural agricultural R&D is difficult and farm bill. involves continuous monitoring, technologies as they are assessment, and active The lack of a well-informed adopted over diverse climatic management. To do this requires and articulated strategic vision, putting in place effective data zones are often decades long. combined with bureaucratic capture and sharing protocols inefficiencies (including those and investing resources in arising from overly prescribed, an ongoing evaluation of the idiosyncratic, and inconsistent calls for research funding effectiveness of US agricultural R&D spending. Some efforts applications), raises the transactions costs incurred by in this area are underway, but more could and should be competitive funding processes and mutes the operation done to improve overall accountability and, in particular, of the scientific marketplace. NIFA has suffered from both the efficacy of the allocation of public agricultural R&D of these problems (NRC 2014), but has implemented steps resources. to address these issues and streamline the whole process (NIFA 2015). NIFA’s streamlining efforts should continue, THE BOTTOM LINE along with the development of a strategic vision for US public sector spending on agricultural R&D. The reduced financial support for public agricultural R&D in While the upside of competitive funding processes the United States over the past several decades suggests is that they solicit new scientific ideas that have not a creeping policy and political complacency about the been envisioned by farmers, politicians, or bureaucrats long-term implications of this trend. The overall pace of US (Wright 1983), their downside is that they are costly due agricultural productivity growth has been slowing in parallel to the time and resources devoted to preparing and with the decline in public agricultural R&D spending, while reviewing proposals. Striking the right balance between the pressures to address evolving agricultural pest and the associated costs and benefits involved in allocating disease problems with increasingly constrained land and R&D funds to individuals (via, for example, AFRI) versus water assets are growing. Maintaining agricultural producer institutions (primarily via the formula funds) is difficult. performance, sustainably, will not happen absent adequate Through competitive grant programs conducted over funding and improved institutions to allocate and deploy the past several decades, federal government support to the dollars dedicated to public food and agricultural SAES research has shifted substantively from institutions research. Failing to reverse these R&D funding trends is an to individuals. Not only has that shift inadvertently and unacceptably risky scenario for the United States. deeply undercut the extent of matching support from state governments to SAES research—as the amount of formula Revitalizing Agricultural Research and Development to Sustain US Competitiveness, by Philip G. Pardey and Jason M. Beddow 8ENDNOTES 1. These formula funds are disbursed to the states under various allocation rules that are still in force. The 1935 Bankhead-Jones Act imposed a formula that tied SAES support to each state’s share of the nation’s rural population; a more complicated formula was used in the Research and Marketing Act of 1946, with part of the funds divided equally among states, part distributed on the basis of rural population, and a third part based on farm population. The 1955 Hatch Act amendment included a similar formula that replaced the original Hatch, Adams, and Purnell Acts; formula funding also found its way into the 1962 McIntire-Stennis Forestry Research Act and the Research Facilities Act of 1963. The periodic Farm Bills reauthorized federal support for the SAESs thereafter.National Institute of Food and Agriculture (NIFA) 2015. REFERENCES “National Institute of Food and Agriculture Re- sponse to National Research Council Report Spur- ring Innovation in Food and Agriculture: A Review of Alex, G. 2012. Unpublished data files. Washington, DC: the USDA Agriculture and Food Research Initiative United States Agency for International Development. Program.” Accessed May 2016 from http://nifa.usda. Alston, J.M., J.M. Crespi, H.M. Kaiser, and R.J. Sexton, gov/sites/default/files/resource/nifa_response_to_ eds. 2005. The Economics of Commodity Promotion nrc_report_fnl_jan_08_2015_0.pdf. Programs: Lessons from California. 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In 2016, the Foundation launched the Farm Journal Foundation Dialogue, with the desire to convene a public conversation on issues viewed as critical to feeding a growing global population, including discussion of how specific U.S. policies might be improved to better address those issues. Towards that end, the Foundation commissioned policy briefs by renowned experts in the areas of agricultural research, human and institutional capacity building, and agricultural trade technical assistance, which will be released individually during the month of February 2017. These Dialogue documents reflect the views of the authors, and are intended to stimulate interest and debate on these issues as Congress begins to consider the next farm bill and other relevant legislation.Farm Journal Foundation 1600 Market St., Suite 1530 Philadelphia, PA 19103 farmjournalfoundation.org