NC_OLD1034: Impact Analyses and Decision Strategies for Agricultural Research (NC1003)
Statement of Issues and Justification
Continued improvement in social welfare of Americans, international competitiveness of American agriculture, and resolution of production and environmental problems facing American farmers depend on public and private investments in R&D. Public sector research and development have, in the past, contributed substantially to advances in farm productivity and efficiency in marketing agricultural products. Research and development have also generated technologies and provided information that have enhanced environmental quality, improved food product quality and safety, reduced adjustment costs in rural areas, helped maintain the economic viability of rural communities, and upgraded the performance of public policies at state, regional, national, and international levels as they relate to the agricultural sector. A continuing flow of research results is needed to maintain and enhance productivity, efficiency, environmental, and other gains.Significant changes in sources of R&D funding, opportunities in science, intellectual property rights, and new technologies have been occurring during the first decade of the 21 Century. Some of these changes are having large social impacts and others have encountered resistance by consumers. Advances in knowledge from R&D, new technologies, and new social-economic issues associated with the organization of R&D and impacts of new technologies are expected to continue well into the 21st Century. Careful examination and analyses of these issues can produce a national public good yielding valuable information and facilitating better public and private R&D polices in the future. In order to most effectively plan and implement an agenda for public research in agricultural and related areas, substantive information and analyses are needed on (1) expected net benefits and costs of alternative research programs, both basic and applied, (2) distribution of the costs and benefits (including environmental and other selected externalities) among producers, consumers, and (agri-) business/industry, (3) key inter-relationships between investments in research and other public sector programs affecting agriculture, (4) alternative mechanisms for planning, managing, and evaluating agricultural research portfolios, (5) new linkages and relationships between public and private R&D, and (6) evaluation of alternative institutional configurations for funding and conducting research.
Public agricultural research has been supported historically by strong programmatic funding. The federal government provides all of the support for its own research agencies, the Agricultural Research Service and the Economic Research Service. The federal and state governments have provided programmatic funding of the State Agricultural Experiment Stations and Veterinary Colleges/Schools. The federal support has come from the Hatch Act and other formula and competitively funded research programs and the state support has come from state governments. However, the state agricultural research institutions were established with the possibility of obtaining other types of funding and these types have been growing in importance. Over an extended time period, the consensus has been that public agricultural research in the United States is best organized as a partnership; the federal part controlled centrally by the USDA and the state part under local control of the SAESs and state veterinary medicine colleges (Kerr 1987). More generally, there has been an on-going debate about the appropriate composition of SAES funding, including the relative size of USDA federal formula and competitive grant programs. The impacts of public research on agricultural productivity and the associated high rate of return on investment occurred before the USDA had a significant competitive grants program (Evenson 2001; Huffman and Evenson 2005). The initiation by the USDA of a competitive grants program in 1977 was due to concerns about the volume of research in high priority areas and in basic science to support agriculture over the long run. The funding, however, was largely targeted to new areas and had modest impacts on other SAES research programs. More recently the discussion has been of expanding competitive grant funding, while at the same time formula funding is shrinking. This type of policy has major implications for the future potential of the Land Grant Universities to maintain scientific staffing and research infrastructure needed for future agricultural research, especially that which is geo-climate or economic area specific and must be conducted locally and cannot be borrowed from other states or regions of the country. The research agenda for federally funded competitive grants is set in Washington, and some states are better positioned to successfully compete for competitive grants in agriculture. The large state universities generally have the advantage and many of the small Land-Grant Universities are not as competitive. Also, federal competitive grant programs do not account for the time and cost of proposal writing or preliminary results, and when funding is obtained, it is for less that the total cost of a project. Hence, the debate about the future direction of federal funding of agricultural research continues.
The state agricultural experiments stations are facing other funding issues. SAES funding from 2000 to 2003 has grew very slowly, continuing a trend from the 1990s. Also, state and CSRS/CSREES funding declined. The decline of real state government funding for the SAES system started during the 1990s averaging 0.6 percent per year, but accelerated to a 3.7 percent decline from 2000 to 2003. State government funding of SAES research, which had comprised more than 50 percent of the total during the 20th Century, dropped to 44 percent in 2003. This decline in state support for the SAES system suggests that the nature and magnitude of perceived benefits to state governments and their clientele from programmatic funding of agricultural research has changed. If state agricultural experiment stations were to lose their Federal formula funds, they would most likely lose additional state matching funding. Hence, the SAES system is at risk of losing both federal and state programmatic funding. Regular federal government appropriations for agricultural research declined over the 1980-2000 period, but then rose by about $50 million from 2000 to 2003. The funding under the Hatch Act and other formula funded programs, however, continued the decline that started in the 1980s. Over 2000-2003, a significant increase in CSREES special grants and other CSREES- administered programs occurred. The latter increase was due largely to the IFAFS competitive grant program which has been discontinued. The largest increase was in "other federal government research funding" of about $100 million in contracts and grants with non-USDA federal agencies, which suggests competitiveness of SAES scientists, but also a further potential change in the direction of agricultural research.
The gene revolution is well underway in U.S. agriculture. The first generation GM-products have been input traits--herbicide tolerance and insect resistance--that have been introduced into soybeans, cotton, corn, and canola by modern biotech methods. These traits were introduced in the U.S. starting in the mid-1990s and currently about ninety percent of U.S. soybean acreage is planted to RR soybean varieties and about 45 percent of U.S. corn and cotton acreage is planted to Bt or RR varieties. Although there is not a single documented case of a person being harmed by a new attribute, there is some consumer resistance to GM food products. The image of the public agricultural research system would receive a boost if it could develop a new biotech trait in crops or livestock that has large direct value to consumers. Although we see a number of scientifically proven examples where biotech has been used to enhance traits that might have value to consumers, e.g., Golden rice (Dawe et al. 2002), none has been commercialized or commercially successful yet.
The Bayh-Dole Act of 1980 altered the incentives for IPR protection and distribution of income from discoveries financed completely or partially by the federal government. The Land Grants and other universities have been impacted by this new possibility because it gave the income generating rights of the discovery to the non-federal partner (e.g., a university or research institute). The Bayh-Dole Act was a major force behind the rapid growth of university technology transfer offices and associated increases in university patenting, licensing, and start-up companies, and increase in licensing income of public universities during the late 1990s. However, university patenting slowed dramatically over 2000-2003 (Massing 2004). The future of patenting for profit by Land rant Universities remains clouded. Although the Bayh-Dole Act has provided the opportunity for public universities to undertake discoveries with the objective of profiting from licensing, selling discoveries or from supporting start-up companies, this is not the tradition of the land grant system. Traditionally, administrators of public, e.g., Land-Grant universities have argued successfully that they were undertaking public-good discoveries, and that universities research budgets should be financed from public tax collections. Much, however, remains unknown about the long-term effects of R&D for profit in public universities, e.g., implications for the public/private-good composition of discoveries, the incentives faced by university scientists, the social rate of return to public research, and the reaction of taxpayers. Public universities have also had support from private firms and individuals in the form of contracts, gifts and endowments. The LGUs have had a long history of undertaking research using this type of private funding and much of it has been carried out responsibly at a public institution. In some cases, industry support is in the form of payment for service. In some other cases, the research has public value, e.g., bridges the gap between scientific development and invention potential. In other cases, private support may be in conflict with pubic interest and responsible behavior, for example, when private funding provides exclusive rights to discoveries or inventions. The recent University of California-Berkeley and Novartis Agricultural Research Institute agreement gave Novartis the first negotiating rights to license inventions emerging from the research supported by their funds and inventions from all publicly funded research during a 5-year contract period. The Novartis-Berkeley program was recently evaluated by an external committee (Busch et al. 2004), which raised a number of concerns, including that this form of public-private contract is inconsistent with the public role and responsibilities of a Land Grant university. New public-private institutional arrangements have the potential to raise new and important researchable issues.
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