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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture 4 Structural Impacts of Public Investment in Agricultural Research This chapter analyzes the public research portfolio and its structural implications. It first reviews the array of public-sector responses to structural issues and provides examples that illustrate public-sector efforts to monitor and analyze structural trends, serve the needs of diverse constituencies, and understand the effects of drivers of structural change. Next, the chapter compares empirical data on allocation of research spending among various research categories between 1986 and 1997. This section draws broad conclusions about the distribution of investments in the portfolio and their changes over time, with particular attention to research investments likely to better serve diverse producers or to incur structural change (based on the analysis in Chapters 2 and 3). In-depth analysis of investments in environmental research provides an example of a public-sector research investment that is likely to serve producers outside mainstream agriculture. Finally, innovative funding mechanisms are described as possible avenues for addressing structural issues. PUBLIC-SECTOR RESPONSES TO STRUCTURAL ISSUES Structural and distributional issues have increasingly become focal areas for the public sector. The Federal Agriculture Improvement and Reform (FAIR) Act of 1996 (U.S. Congress, 1996) and the Agricultural Research,
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture Extension, and Education Reform Act (AREERA) of 1998 (U.S. Congress, 1998) highlight the importance of these issues. AREERA authorizes coordinated programs to improve the viability of small and medium-sized operations and to support minority-serving institutions. FAIR established a competitive-education-grants program for Hispanic-serving institutions, and it mandated representation by minority-serving institutions on the National Agricultural Research, Extension, Education, and Economics Advisory Board. Public-sector research that responds to structural issues can be broadly categorized into three major areas (Box 4–1): research to monitor and analyze structural variables; research that serves needs of diverse constituencies; and research to further explain other drivers of structural change, including the influence of alternative policy instruments on structural change (Chapter 5). Box 4–1 lists general examples of public research efforts to address those issues. BOX 4–1 Public-Sector Responses to Structural Issues Research Monitoring Structural Change The U.S. Department of Agriculture (USDA) Economic Research Service (ERS) has developed a significant body of research on structural trends, including a new farm classification system that divides U.S. farms into mutually exclusive and more homogeneous groups. Much of this is included in a Farm Structure Briefing Room on the ERS web site, http://www.ers.usda.gov/briefing/Farm/Structure (Hoppe et al., 2000; Appendix D). As part of the agricultural census, the National Agricultural Statistics Service (NASS) collects data on farm size, farm number, operator characteristics, and farm ownership. Responding to Diverse Needs In 1999, USDA awarded $9.6 million in grants for research, training, and education to implement Hazard Analysis and Critical Control Points (HACCP) and other food safety advancements. Of that, $1.35 million was targeted specifically to assist small meat-processing plants and small farmers (USDA, 1999d). USDA’s Agricultural Marketing Service (AMS) has partnered with the Sustainable Agriculture Research and Education (SARE) program to provide producer-led alternative marketing research and demonstration grants. The AMS Federal-State Marketing Improvement Program (FSMIP) provides matching funds to state Departments of Agriculture and other state agencies to conduct marketing studies or assist in developing innovative approaches to the
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture marketing of agricultural products. Priorities for FY2001 included increasing the base of marketing research and services of particular importance to small-scale, limited-resource farmers and rural agribusinesses and direct-marketing opportunities for producers to respond to expanding consumer demands for products and value-adding services. A project awarded in FY2000 developed and assessed demand for locally manufactured fruit brandy and port products and examined the extent to which sales of fruit brandy and port could be expected to enhance the potential income of small Missouri-based fruit producers (USDA, 2001a). The AMS Direct Marketing Plan identifies USDA’s role in supporting marketing opportunities for small farmers. Through this plan, AMS is conducting research on direct-marketing opportunities, including farmers’ markets, pick-your-own farms, roadside stands, subscription farming, community-supported agriculture, and catalog sales (USDA, 1998c). ARS conducted a program-by-program evaluation for all of its 22 National Programs on small-farm-relevant research projects in response to a recommendation by the USDA National Commission on Small Farms. An ad hoc group composed of representatives from the USDA National Commission on Small Farms and the ARS National Program Staff developed the criteria for determining what part of ARS research is applicable to small farms. The report concluded that more than two-thirds of current ARS research has the potential to contribute to small-farm income-earning capacity and competitiveness (USDA, 2000b). The October 1999 issue of the Agricultural Research Service’s (ARS), Agricultural Research, was dedicated to research projects relevant to small farmers and ranchers (USDA 1999b). Six ARS units in Georgia are collaborating with university scientists to begin an economic and environmental impact analysis project, Small Farm Survival Project for the Southern Coastal Plan (USDA, 2001e). ERS has conducted a comprehensive assessment of certified organic farming, marketing, and acreage by state and by commodity (USDA, 2001c). In August 2000, ERS presented research results, “Goals, Financial Success, and Small Farms”, examining farmers’ ranking of various goals from the 1995 Farm Costs and Returns Survey, at the American Agricultural Economics Association symposium, Successful Small Farms: How Do They Do It? A 1999 issue of University of California’s magazine, California Agriculture, was devoted to small-farm issues (University of California, 1999). Drivers of Structural Change The Program on Agricultural Technology Studies at the University of Wisconsin was established by the Wisconsin State Legislature in 1990 to conduct research and outreach on the effects of new technology and public policy on family farming.
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture Research topics include structural change among Wisconsin farms and its effects on rural communities, and the structural effects of different public policies, such as NAFTA, property tax reform, land-use planning, and milk price supports. Several land grant universities cooperate to analyze the structural effects of technology, farm policy, and tax policy. For example, the Food and Agricultural Policy Research Institute at the University of Missouri, the Center for Agricultural and Rural Development at Iowa State University, and the Agricultural and Food Policy Center at Texas A&M University have a long-standing cooperative effort in which farm-level impacts are analyzed from the perspective of individual, representative farms. Regional models also are used to evaluate the impacts of technology changes. ERS studied the effect of the current federal tax code on farming. This is the first study to apply the ERS farm typology to tax data (Durst and Monke, 2001). Recommendation 8 The public sector should continue to acknowledge the importance of structural change in agriculture. ERS and NASS should continue to monitor and analyze structural change and its causes. AGRICULTURAL RESEARCH INVESTMENTS This section documents the committee’s analysis of the public-sector agricultural research portfolio. It includes a time-series comparison of agricultural research spending between 1986 and 1997 and an analysis of the 1999 investment portfolio subsequent to the 1998 reorganization of the Current Research Information System (CRIS). The committee relied heavily on CRIS, and the next section provides background on the choice of its use as a data set. Current Research Information System CRIS is the USDA’s documentation and reporting system for continuing and recently completed research projects in agriculture, food and nutrition, and forestry. Information is reported to the CRIS database by USDA intramural research agencies, state agricultural experiment stations, state land grant colleges and universities, 1890s institutions, state schools of forestry, schools of veterinary medicine, and USDA grant recipients. A variety of funders, including federal, private, and state sources, support projects reported to CRIS. For example, in FY 1999, USDA funding supported about 37 percent of the total research reported to CRIS. State
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture appropriations accounted for about 35 percent; nonfederal funding sources, including private-sector sources, accounted for about 16 percent; and agricultural research funded by other federal agencies accounted for about 12 percent (USDA, 1999f). The committee acknowledges several limitations of the CRIS data set. First, there are institutions, including private-sector institutions, that do not report to CRIS that do perform agricultural research with public funds. Second, information reported to the CRIS is not always reliable, and the classification of research into categories can be misleading. Third, the database does not comprehensively report agricultural research funding from state or other federal sources, although it does include some agricultural projects supported by federal agencies other than USDA. Despite these limitations, CRIS is the only uniform, longitudinal database available in which data are disaggregated by funding source, institution performing the research, and research program area. Public Research Spending, 1986 and 1997 The committee used CRIS data to compare the distribution of funds from various sources among research areas for two years, 1986 and 1997, chosen for data compatibility (USDA, 1986; 1997b). The data are categorized by research subject and research goal. The information is summarized in Tables 4–1 and 4–2. Table 4–1 compares the distribution of public funds for agricultural research by commodity in 1986 and in 1997, and Table 4–2 compares the distribution of public research funds by goal. The committee’s analysis presents the summary of total public research funds (state and federal). Although the committee did not disaggregate the data at the state and federal levels here, general observations are offered about state-level funding as a percentage of total state resources in particular areas and state funding relative to federal spending within an area. Although Tables 4–1 and 4–2 show data for just two years, they illustrate general trends from which we can deduce several patterns of allocation. Most funds were devoted to research on agricultural commodities—both plants and livestock. These subjects received 53.86 percent of research funding (sum for categories 3 through 7 in Table 4–1) in 1986, but that funding dropped to 50.61 percent in 1997. Commodity research is applied, and it tends to result in biologic and agronomic innovation (including new uses for agricultural products). Most of the expenditure, 37.33 percent in 1986 and 33.42 percent in 1997 (sum for categories 4, 5, and 6) went to research on field crops, dairy, beef, poultry, and swine. States also appropriated the largest share of total state resources to research on agricultural commodities. Relative to federal sources, state
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture TABLE 4–1 Historic Allocation of Public Research Funds by Commodity Classification category Percentage of total public fundsa Difference 1986 1997 1. Water, air, soilb 9.07% 10.91% 1.84% 2. Forests, wildlife, fishc 12.80% 15.07% 2.27% 3. Fruits, vegetables, ornamentalsd 13.12% 13.22% 0.10% 4. Field cropse 19.59% 17.90% −1.69% 5. Dairy and beeff 11.05% 9.26% −1.79% 6. Poultry and swineg 6.69% 6.26% −0.43% 7. Other animalsg 3.41% 3.97% 0.56% 8. Equipmenti 0.74% 0.38% −0.36% 9. Economic, nutrition, marketingj 9.67% 9.80% 0.13% 10. Weed, seeds, plantsk 6.48% 5.89% −0.59% 11. Othersl 7.38% 7.34% 0.04% Total (percent) 100.00% 100.00% 0.00% Total (nominal 1,000 dollars) $1,764,129 $2,721,509 $957,380 aTotal public funds represent the sum of USDA-appropriated funding, CSREES-administered funding, other USDA funding, other federal funding, and state appropriations. “Other nonfederal funding” (including self-generated funds, funding from industry grants or agreements, and miscellaneous funds) is not included in the total. bSoil and land; water; watersheds and river basins; air and climate; recreation resources. cTimber forest products; range; wildlife and fish. dCitrus and tropical-subtropical fruit; deciduous and small fruits and edible tree nuts; potatoes; vegetables; ornamentals and turf. eCorn; grain sorghum; rice; wheat; other small grains; pasture; forage crops; cotton; cottonseed; soybeans; peanuts; other oilseed crops; tobacco; sugar crops; miscellaneous and new crops. fBeef cattle; dairy cattle. gPoultry; swine. hSheep and wool; honeybees and other pollinating insects; other animals. iFarm supplies and facilities; housing and equipment. jFood; people as individuals; family members; farm as a business; socio-political organization; agricultural economy U.S.; agricultural economy foreign; farm cooperatives; other marketing, processing, and supply firms; marketing systems. kWeeds; seed research; biologic cell systems; plants. lExperimental design/statistical methods; invertebrates; microorganisms and viruses; animals (vertebrates); research on research; management; research equipment and technology; unclassified. SOURCE: Adapted from FY 1986 unpublished tables and U.S. Department of Agriculture, 1997b. Selected CRIS Funding Summaries, FY 1997, Table C: National Summary USDA, SAES, and other institutions by commodity. [Online] http://www.cris.csrees.usda.gov/star/cristin.htm.
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture TABLE 4–2 Historic Allocation of Public Research Funds by Goal Research Problem Area Percentage of total public fundsa Difference 1986 1997 1. Sustainable resources managementb 14.23% 15.40% 1.16% 2. Disease controlc 23.38% 24.60% 1.22% 3. Enhanced productivityd 32.86% 26.57% −6.29% 4. Improved productse 9.20% 9.69% 0.49% 5. Improve marketingf 2.62% 2.57% −0.05% 6. Expand export marketsg 1.43% 1.01% −0.42% 7. Improve health and nutritionh 7.11% 7.91% 0.80% 8. Assist rural Americansi 2.22% 2.09% −0.12% 9. Community improvementj 6.95% 10.16% 3.21% Total (percent) 100.00% 100.00% 0.00% Total (nominal 1,000 dollars) $1,764,129 $2,721,509 $957,380 aTotal public funds represent the sum of USDA-appropriated funding, CSREES-administered funding, other USDA funding, other federal funding, and state appropriations. “Other nonfederal funding” (including self-generated funds, funding from industry grants or agreements, and miscellaneous funds) is not included in the total. bEnsure a stable and productive agriculture for the future through wise management of natural resources. cProtect forests, crops and livestock from insects, diseases and other hazards dProduce an adequate supply of farm and forest products at decreasing real production costs. eExpand the demand for farm and forest products by developing new and improved products and processes and enhancing product quality. fImprove efficiency in the marketing system. gExpand export markets and assist developing nations. hProtect consumer health and improve nutrition and well-being of the American people. iAssist rural Americans to improve their level of living. jPromote community improvement including development of beauty, recreation, environment, economic opportunity, and public services. SOURCE: Adapted from FY 1986 unpublished tables and U.S. Department of Agriculture, 1997b. Selected CRIS Funding Summaries, FY 1997, Table D: National Summary USDA, SAES, and other institutions by research problem area. [Online] http://www.cris.csrees.usda.gov/star/cristin.htm. sources for production agriculture accounted for half or more of the total funding in many categories of production agriculture (data not shown). Funding for research on field crops decreased from 19.59 percent in 1986 to 17.9 percent in 1997. The field crop sector is expected to continue toward increased size of operations and declining number of producers. Specialty commodities (fruit, vegetables, ornamentals, and specialty animals: categories 3 and 7) received 16.53 percent of total public funding in
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture 1986 and 17.19 percent in 1997. State funding for research on specialty commodities accounted for about a fifth of total state resources, about half of the total funding allocated to specialty commodities from all public sources, and was concentrated in a small number of states (data not shown). Total spending on specialty commodities relative to total commodities (sum of categories 3–7) increased from 31 percent of commodity spending (16.53/53.86) in 1986 to 34 percent of commodity spending (17.19/50.61) in 1997. Markets for some of those commodities are less saturated, and demand is more elastic than for major commodities; thus, specialty commodities could provide expanding sources of earning and value added to farms. Less funding went to research on poultry and swine than to research on dairy and beef cattle. The poultry and swine industries have become industrialized (much of their output is produced through contracting or by vertical integration), whereas dairy and especially beef producers have retained competitive structures. Some of the major integrators of poultry and swine (e.g., Purdue Chicken, Tyson) have their own research facilities; dairy cooperatives generally fund public-sector research. Little public funding was allocated in either year for basic mechanical or chemical research. Finally, a modest but growing share of the research budget (from 9.67 to 9.8 percent) was allocated to economics, nutrition, and marketing (category 9, Table 4–1). The research results produced in those areas generally could be useful for small and large producers alike; however, results tend to be used more by producers with larger farms and more education. Table 4–2 compares the distribution of public research funds by research problem area in 1986 and in 1997. The data suggest that the major goal of agricultural research is to increase production. That goal includes disease control, enhanced productivity, and development of new products. We observed a reduction in the allocation of resources to improved production categories from 65.44 percent (sum of allocations for problem areas 2, 3, and 4) of the budget in 1986 to 60.86 percent of the budget in 1997. Improved marketing of food and fiber both in the United States and abroad (categories 5 and 6, Table 4–2) received a modest share of the budget—4.05 percent in 1986 and 3.58 percent in 1997. Low prices and unfavorable market conditions are major problems in agriculture (Gardner, 1992), and more research in this area could improve the income and welfare of farmers. Although marketing research could benefit all farms, some will undoubtedly help small farms remain competitive. Nonetheless, larger farmers have a greater incentive to use the information. Finally, modest shares of research funds went to rural development projects (categories 8 and 9, Table 4–2), which received 9.17 percent of funds
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture TABLE 4–3 Allocation of Public Agricultural Research Funds, 1999a Topic Area total Subcategory total Administration 0.24% Soil 5.11% Water 2.30% Management of range and forest 3.85% Natural resources general 5.67% Natural resources and environment 16.93% Plant production 17.02% Plant protection 15.12% Plants and their systems 32.14% Animal production 12.76% Animal protection 10.57% Animals and their systems 23.33% Engineering and support systems 2.22% Food products 3.64% Nonfood products 2.52% Food and nonfood products: development, processing, quality, and delivery 6.16% Economic markets and policy 6.98% Human nutrition 4.32% Food safety 3.49% Human health 1.32% Human nutrition, food safety, and human health and well-being 9.13% Family and community systems 1.44% Total research support administration and communication 1.42% National total (percent) 100.00% National total (thousands of dollars) $2,815,834.00 aTotal public funds represent the sum of USDA-appropriated funding, CSREES-administered funding, other USDA funding, other federal funding, and state appropriations. “Other nonfederal funding” (including self-generated funds, funding from industry grants or agreements, and miscellaneous funds) is not included in the total. REVISED: Major topic areas shown in bold.
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture SOURCE: Adapted from U.S. Department of Agriculture, 1999f. Selected CRIS Funding Summaries, FY 1999, Table D: National Summary USDA, SAES, and other institutions by research problem area. [Online] http://www.cris.csrees.usda.gov/star/cristin.htm. in 1986 and 12.25 percent in 1997. Relative to federal sources, state sources accounted for approximately half of the total in these categories. The increase in public funding could have structural implications, to the extent that alternative rural livelihoods could improve as a result of the research. Small, part-time farmers would benefit from the results. Public Research Spending, 1999 A revised CRIS taxonomy was approved by the CRIS Enhancement Steering Committee in 1998 (USDA, 1999f). Table 4–3 shows the allocation of funds to research problems by major topic area and by subcategory. The new structure allows useful insight about allocations both by crop and by objective. Production issues, including plants, animals, and economic markets and policy, received 62.45 percent of total funding. The balance went to areas that do not contribute directly to agricultural production but that address environmental, engineering, nutritional, and social concerns of the agricultural and food sector. A small but substantial share, 16.93 percent, was allocated to projects on natural resources and the environment. Although engineering received only 2.22 percent of the total funding, more than a third of that went to environmental engineering topics, including waste disposal, recycling, and reuse. A significant share, 14.35 percent, was allocated to development of new products, to studies of economic markets and policy, and to studies of family and community systems. The largest portions of economic funding were allocated to natural resources and environmental economics. Environmental, consumer, and community resource and development economics received about 2 percent of the total public funding. Production and business economics received only 0.8 percent of the total public funding. Nutrition received 9.13 percent of the funding, of which 3.49 percent was allocated to food safety; the rest went to studies of human nutrition and health. In summary, production agriculture, a significant force in encouraging structural change, remains the dominant recipient of public research funding. Crop protection, supply increase, and the development of new products are related major targets. However, the share of research funding allocated to production agriculture decreased from 1986 to 1997. Of the research
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture dedicated to commodity production, specialty commodities received an increasing share of the portfolio; field crops research drew less; and poultry and swine research decreased relative to research on dairy and beef cattle. Our analysis also indicates that the public sector spends only a small proportion—less than one percent—on development of mechanical innovations (0.74 percent in 1986 and 0.38 percent in 1997), which are more likely to benefit large farms than small ones. Research areas that are likely to benefit small and underserved farms and large farms alike—economics, nutrition and marketing, and specialty commodities—received increasing attention. Our analysis also demonstrates that research on resource conservation, rural development, and improved health and nutrition is increasing. Those areas are likely to be scale neutral, so they will benefit diverse constituencies equally. Changes are slowly occurring in the process of broadening the criteria for setting research priorities. The committee encourages the public sector to continue in this direction. PUBLIC RESEARCH AND ENVIRONMENTALLY SUSTAINABLE ALTERNATIVE AGRICULTURE One way to evaluate the structural implications of public-sector research is to consider its relative contributions to developing knowledge and basic components of technology, such as those that support environmentally sustainable alternative agriculture. These are of interest to small-scale farmers, organic farmers, and others outside the commercial mainstream. The extent to which publicly funded research supports environmental technology is an indicator of its support for these constituencies. Mainstream agriculture also is adopting many of those technologies in response to more stringent environmental regulations. Alternative technologies include biologic pest control and IPM strategies (as alternatives to the use of chemical pest controls); the use of symbiotic microorganisms, including nitrogen-fixing bacteria (as alternatives for chemical fertilizers); on-farm composting and biodegradation of organic wastes (as an alternative to dumping or disposal); soil conservation tillage (as alternatives to conventional tillage); and management-intensive rotational grazing (as an alternative to open grazing or confinement). The second column of Table 4–4, which relies on the CRIS database1, shows a large number of current USDA-funded intramural and extramural research projects on topics that are crucial for alternative agriculture. The record of U.S. patents granted from 1975 through 1998 for most of 1 In each area listed in Table 4–4, the numbers of current publicly funded research programs were searched by research area code number and by technology keyword in the online CRIS database.
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture TABLE 4–4 Selected Alternative Agricultural Technologies: Current USDA-Funded Projects and Total Patents Granted, 1975–1998, by Type of Organization Alternative Agricultural Technology Total number of research projects at USDA and Land Grant Universities in 1999 (CRIS Dataa) Number and Share of Public-Sector Patents Granted (1975–1998): Universities and Public Research Institutions (Micropatent Data) Number and Share of Private-Sector Patents Granted (1975–1988): Individuals, Private Firms, Corporations (Micropatent Data) Biocontrol of plant pathogens 161 60 (37%)b 101 (63%) Biocontrol of insectsc Btd 30 22 (11%) 186 (89%) Biocontrol of insectsc non-Bt 362 50 (30%) 116 (70%) Biocontrol of weeds 146 38 (62%) 23 (38%) Encapsulation and delivery technologies for biocontrol applications 35 36 (32%) 76 (68%) Insect pest management 1044 51 (57%) 38 (43%) Nitrogen fixation (including nitrogen-fixing bacteria) 390 13 (34%) 25 (66%) Beneficial soil microorganisms and bioinnoculants (not including nitrogen-fixing bacteria) 165 15 (27%) 40 (73%) On-farm composting and biodegradation 604 N/Ae N/A Conservation tillage and no tillage 492 N/A N/A
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture Alternative Agricultural Technology Total number of research projects at USDA and Land Grant Universities in 1999 (CRIS Dataa) Number and Share of Public-Sector Patents Granted (1975–1998): Universities and Public Research Institutions (Micropatent Data) Number and Share of Private-Sector Patents Granted (1975–1988): Individuals, Private Firms, Corporations (Micropatent Data) Intensive rotational grazing 121 N/A N/A Total Number of Research Projects of All Types, 1999 17,320 N/A N/A Overall Distribution of Public to Private Recipients of U.S. Patents in 1984f (3%) (97%) aUSDA FY1999 CRIS data (USDA, 1999f). bPercentages of patents for each technology are in parentheses. cTotal percentages calculated from statistical reports by U.S. Patent and Trademark Office, 1975–1998. dThis category does not include any transgenic applications of Bacillus thuringiensis. eNot applicable. f1984 was chosen as a representative, midrange year. the alternative agricultural technologies (columns three and four of Table 4–4) illustrates the historic division of labor between the public and private sectors in developing technologies. The distribution of patents particularly demonstrates the large role of public-sector research in generating alternative agricultural technologies. Using the Micropatent database of front-page data for U.S. patents, technologies were searched by keyword and then expanded to include both cited and citing patents. Patent search results in each category were examined individually and inappropriate matches were discarded. Table 4–4 suggests that USDA and the land grant universities are involved in the science of alternative agriculture, funding the science to create technologies that are more responsive to the needs of farmers outside the large-scale mainstream and making American agriculture more environmentally sound. The proportion of intellectual property created by the public sector in alternative technologies is generally an order of magnitude higher than a baseline proportion of all U.S. patents from 1984, the mid-sample year; only 3 percent of all U.S. patents in that year were assigned to
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture the public sector. In some areas that are crucial to alternative agriculture, however, the percentage of technology assigned to the public sector is much higher. For example, the public sector has about 37 percent of Bt biocontrol patents, 62 percent of patents on biocontrol of weeds, and 34 of patents on nitrogen-fixation patents. STRUCTURAL IMPLICATIONS OF RESEARCH FUNDING MECHANISMS Research funding mechanisms are shifting the programmatic focus toward structural issues. The USDA National Research Initiative Competitive Grants Program (NRICGP) recently began to increase funding relevant to structural issues and to the research needs of small farms. In addition, new funding mechanisms, such as USDA’s Fund for Rural America and the Initiative for Future Agriculture and Food Systems (IFAFS), now encourage multistate, multidisciplinary, and multifunctional (linking research and extension) activities. Working across state lines and across disciplines could be a way to mobilize research and extension processes that offer viable alternatives to more constituencies. It is important to recognize, however, that unless limited-resource farmers are specifically considered, cross-state or cross-disciplinary collaboration also can provide technology and processes of engagement that primarily benefit large farms. The next sections describe competitive-grants programs, and Box 4–2 provides examples of research for those programs that responds to structural issues. Fund for Rural America The Fund for Rural America, authorized under the 1996 FAIR act, was created to expand economic opportunities for rural Americans (U.S. Congress, 1996). Starting in 1997, one-third of the fund, $33.3 million annually over 3 years, was dedicated to research, education, and extension grants in the areas of international competitiveness, profitability, and efficiency; environmental stewardship; and rural community enhancement. Portions of the $33.3 million in discretionary funding were targeted to research, education, and extension programs. This included $4.5 million in technical assistance and training for an outreach program for socially disadvantaged Americans and $12.8 million in research, education, and extension programs for priority areas, including telecommunications research and research on counteracting concentration in the livestock sector. The 2001 program will award some $9.5 million to integrated research and extension projects that focus on preserving the economic viability in rural communities, tracking demographic changes and rural community innovations.
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture Initiative for Future Agriculture and Food Systems IFAFS, authorized by Congress in 1998, is a competitive-grants program that gives priority to interdisciplinary, multistate, multi-institutional proposals integrating agricultural research, extension, and education. Distributional concerns related to the viability and competitiveness of small-and medium-sized farms are highlighted among the six priority programs. In FY 2000, 19 grants—representing 16 percent of the total funding of $120 million—were awarded in this category. In the first round of IFAFS funding in 2000, 17 percent of the total funding went to projects (15 percent of all projects) that had the phrases “small farm” or “underserved population” in the title (USDA, 2000d). More than half of the IFAFS proposals are still oriented toward production and to commodity subject matter that does not specifically acknowledge structural issues (USDA, 2000d). National Research Initiative Competitive Grants Program In 1991, Congress created the National Research Initiative (NRI), an expanded competitive-grants program at USDA. The NRI was funded in FY 2000 at $119 million. In 1999, a goal was established to award up to $5 million of the NRI for small farm research projects (OFRF, 1999). A National Research Council panel also identified needed research on the effects of the changing farm and agribusiness structure that could be addressed by NRI (NRC, 2000a). Research relevant to small farms was funded by several NRI programs in FY 2000 and reported by USDA at $3.4 million. In its FY 2001 program description, NRI encourages research proposals that assess and evaluate “impacts of industrialization on industry structure and performance” and “impacts of public policy alternatives on industry structure” (USDA, 2000c). BOX 4–2 Research Funding and Structural Change Fund for Rural America Many of the fund’s competitive grants have been awarded for research on structural and distributional issues relating to small producers and disadvantaged groups (1997 funding cycle): Strategies were developed for market improvement, genetic improvement, valueadded processing, and new product development for the Navajo wool and mohair industry.
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture Training videos that promote food safety were developed for educating workers in small (10–500 employees) and very small (fewer than 10 employees) meat and poultry plants. Processing techniques, such as hot water and acid treatment, are affordable and effective for very small facilities, and they produce marked reductions in microbial contamination. The effects of integrator practices on contract poultry growers were examined from economic, sociologic, and legal perspectives. Using a survey of poultry growers, contract terms and practices were investigated. Federal and state law governing relationships between integrators and growers also was analyzed. Finally, educational materials were developed to explain the analysis to poultry growers involved in dispute resolution or arbitration. Initiative for Future Agriculture and Food Systems Many IFAFS competitive grants have addressed structural and distributional issues relating to small producers and disadvantaged groups (2000 funding cycle). An integrated research, extension, and education program investigated directmarketing systems of small farms and worked with vendors and managers to explain, evaluate, and improve the performance of these markets as profitable outlets for small farms. Small, mid-size, and limited-resource farmers were targeted for adopting beef or forage enterprises as an alternative to tobacco cultivation. Participants enrolled in “cow college” programs to learn successful production techniques, rotational grazing management, artificial insemination techniques, farm records analysis, value-added marketing, and leadership development. A research project investigated which factors motivate commercial banks, the dominant guaranteed loan users, to lend to small, socially disadvantaged, or beginning farmers. Bank financial data and variables were analyzed to explain commercial bank decisions to guarantee loans and the volume they lend to farms. National Research Initiative Competitive Grants Program Research awards in the NRICGP 2000 funding cycle also addressed structural issues and small-farm needs: An experimental survey investigated the extent of and motivations for integration and coordination decisions as reflected through contracting behavior on the part of agricultural producers. A project used Geographic Information Systems technology, focus groups, and interviews to investigate the constraints and opportunities small farms face in enhancing viability in the context of the local food system. Although these public-sector competitive grants programs account for only about 10 percent of all publicly funded agricultural research ($2.8
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Publicly Funded Agricultural Research and the Changing Structure of U.S. Agriculture billion in FY1999), they increasingly address issues relating to small and medium-sized farmers, respond to concerns of underserved constituencies, and encourage a closer linkage of extension and research in multistate, multidisciplinary, and public and private efforts emphasizing research that bears on the structure of agriculture. Recommendation 9 The public sector should continue to experiment with research approaches—including multifunctional partnerships that link research and extension, partnerships that link the public sector with the private and nonprofit sectors, multi-state cooperation, and multidisciplinary collaboration—as instruments for serving small farms, minority farmers, and other underserved producers. The public sector should evaluate the potential and effectiveness of these research approaches to serve these constituents. SUMMARY Public research is responding to a broadening of criteria for priority setting in research, which has implications for the structure of agriculture. This is occurring in three major areas: research to monitor and analyze structural variables; research to serve the needs of diverse constituencies; and research to further understand drivers of structural change other than research and development. An analysis of the public-sector research portfolio demonstrates that although production agriculture still dominates, its share has decreased over time. Funding for research on specialty commodities, which offer opportunities for smaller growers to capture value, has increased relative to funding for research on other commodities, such as field crops. Support for chemical and mechanical research is minimal, whereas research on issues likely to benefit small and underserved farms as well as large farms—for example, natural resources and the environment, marketing, and rural development—is increasing. An analysis of research on environmentally sustainable technologies indicates that the public sector has played a major role in generating these technologies, many of them useful to farmers outside the commercial mainstream. Innovative funding mechanisms integrating research and extension and fostering multidisciplinary research are suggested as possible avenues toward more effective investigation of structural questions.
Representative terms from entire chapter: