1960, more than 80 percent of private research funding was for improving farm machinery or developing new food products or processing methods, while public research focused on increasing crop and livestock yields. By 1992, 60 percent of private research was also devoted to increasing crop and livestock yields by improving crop varieties, agricultural chemicals, animal breeding, feeds, and pharmaceuticals. These trends point toward more potential for competition between private and public agricultural research and development and a less clear-cut division of labor. Most of the research and development embodied in current precision agriculture technologies has come about either through public investments in defense and space technologies or by the private sector; there has been little investment in precision agriculture by traditional public agricultural research institutions. There is every reason to believe that private research and development investment in precision agriculture will continue to be made as long as there is potential for profit. What is not clear are appropriate roles for public research and development in precision agriculture that are not duplicative of private efforts and that can materially improve development and adoption.
Left to itself, the private sector will generally underinvest in socially desirable research for several reasons:
Gains from research investments may be difficult to protect from competitors.
Basic research may be too risky to justify investment.
Potential markets for products of research may be too small.
Traditional technologies may have fully captured the market.
Available labor is not trained to use the new technologies.
Clients may have no incentives to adopt products of research, particularly those that improve environmental quality.
Research and development are costly, and it is difficult for firms to appropriate the fruits of their research and development efforts because, once known, the results of those efforts can be copied easily and inexpensively. For example, competitors of a firm that has invented a new piece of equipment can reverse-engineer their own versions and thus produce equipment of equal or better capability without having to invest in the initial research and development.
Patents and other forms of intellectual property rights were designed to encourage the private sector to conduct research (Fuglie et al., 1996). Patent law is geared toward protecting inventions that embody new knowledge, not toward protecting what Huffman and Evenson (1993) term pretechnology science (i.e., scientific research applied to specific problem areas but not toward the development of products, inventions, or other patentable items), which is thus generally neglected by the private sector. For example, research on farming methods enhances knowledge about crop productivity under alternative management systems. Such pretechnology science cannot be patented, and the private sector has an incentive to engage in research of this kind only if the resulting knowledge is