Executive Summary

The nation’s food, fiber, and natural-resources system has always evolved, but the pace of change is now more dramatic than ever. In the life sciences, new knowledge created by a better understanding of animal, human, microbial, and plant genomics is providing new opportunities to control pests and disease, enhance the quality and safety of food, improve nutrition, and increase productivity. Equally impressive advances are occurring in information technology, providing the opportunity to increase productivity, minimize environmental impacts, and fundamentally alter decision-making.

The ability of the United States to resolve challenges to the food, fiber, and natural-resources system by developing sustainable food and fiber production; enhancing food safety, quality, and nutrition; protecting an increasingly fragile environment; responding to predictable cycles of global warming; and developing alternative energy sources depends on the depth of public knowledge, the public availability of technologies, and the skill and insight to apply them.

The US Department of Agriculture (USDA) spends about $1.7 billion per year on research related to the nation’s system of food, fiber, and natural resources, of which about $120 million is spent on merit-based peer-reviewed research funded by the National Research Initiative Competitive Grants Program



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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research Executive Summary The nation’s food, fiber, and natural-resources system has always evolved, but the pace of change is now more dramatic than ever. In the life sciences, new knowledge created by a better understanding of animal, human, microbial, and plant genomics is providing new opportunities to control pests and disease, enhance the quality and safety of food, improve nutrition, and increase productivity. Equally impressive advances are occurring in information technology, providing the opportunity to increase productivity, minimize environmental impacts, and fundamentally alter decision-making. The ability of the United States to resolve challenges to the food, fiber, and natural-resources system by developing sustainable food and fiber production; enhancing food safety, quality, and nutrition; protecting an increasingly fragile environment; responding to predictable cycles of global warming; and developing alternative energy sources depends on the depth of public knowledge, the public availability of technologies, and the skill and insight to apply them. The US Department of Agriculture (USDA) spends about $1.7 billion per year on research related to the nation’s system of food, fiber, and natural resources, of which about $120 million is spent on merit-based peer-reviewed research funded by the National Research Initiative Competitive Grants Program

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research (NRI). The $1.6 billion that USDA spends on research through non-NRI programs is distributed noncompetitively through intramural research grants to USDA staff (which can include cooperative agreements with land grant universities and other organizations), formula funds to state agricultural experiment stations, and special grants for targeted initiatives and direct grants to states. This allocation system does not in itself necessarily reduce the quality or relevance of research, but it runs counter to practices at the National Institutes of Health (NIH) and the National Science Foundation (NSF) and to the general direction of most federal research practices for assessing research quality and relevance. The NRI is the nation’s primary merit-based peer-reviewed research response to challenges to its system of food, fiber, and natural resources. The potential for disease transfer between animals and humans; the use of crops as substitute sources of petroleum-based products; the advent of nutraceuticals (specific foods for the prevention or treatment of disease); preparation for and prevention of biologic terrorism; the environmental impacts of farming, food-processing, and forestry; and the improvement of the vitamin and mineral content of widely grown grains are just a few examples of important emerging research issues directly relevant to USDA’s mission. Merit-based peer-reviewed research on such issues could have profoundly beneficial effects in the United States and the rest of the world, especially in developing countries. HISTORY OF COMPETITIVE RESEARCH AT USDA Competitive merit-based peer-reviewed grants at USDA were first authorized by Congress in 1977. Congress provided $15 million to start the program and mandated that it be open to any researcher who would submit a grant application. From 1977 to 1989, the program grew to $40 million per year. In 1989, the National Research Council called for expanding competitive grants in a new program with proposed annual funding of $550 million. Congress responded in the 1990 Food, Agriculture, Conservation, and Trade Act by authorizing annual spending of up to $500 million on a new competitive grants program within 5 years. Congress initiated the NRI in FY 1991 with an appropriation of $73 million. Annual funding for the NRI was increased to about $100 million in FY 1992 and remained at or near this level through FY 1998. In FY 1999, the NRI budget was increased to $120 million. Since its inception, the NRI has functioned as a pilot program to support high-quality research related to the nation’s food, fiber, and natural-resources system. ORGANIZATION The NRI is in the Competitive Research Grants and Awards Management Division of USDA’s Cooperative State Research, Education, and Extension Service (CSREES). It is governed by a Board of Directors that comprises the

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research administrators of all the USDA intramural research agencies and the under secretary for research, education, and economics, who is the board chair. The NRI has six divisions organized according to the six mandated programs authorized by Congress: Animal, Plants, Food and Nutrition, Marketing and Trade, Natural Resources and Environment, and Food Processing. The scientific staff consists of the chief scientist, division directors, program directors, and the rotating panel managers recruited from the research community to administer NRI review panels. STUDY PROCESS In 1997, USDA asked the National Research Council’s Board on Agriculture (now the Board on Agriculture and Natural Resources) to conduct an independent assessment of the NRI program. Specifically, USDA asked the Board to (1) perform a retrospective assessment of the quality and value of research funded by the program, (2) determine if the science and technology priorities with the major NRI programs are defined appropriately, (3) assess how NRI activities complement other USDA programs and those of other federal agencies and state programs in the private sector, (4) recommend the nature and content of changes for the future. The Research Council appointed a 14-member committee in early 1998 to carry out this study. To respond to USDA’s four-point charge, the committee gathered impressions and systematic data on the performance of the NRI. The committee conducted a series of surveys and interviews and solicited testimony from several constituent groups. Former chief scientists, deans and directors of land grant and non-land grant universities, and recipients and nonrecipients of NRI grants were included in mail surveys as a first comprehensive effort to assess the functioning of the NRI. In addition, the committee devoted a full day to receiving testimony from interested stakeholder1 groups. Every effort was made to gain the views of individuals or groups that had had contact with the NRI and were therefore knowledgeable as to its activities. The committee found a great deal of consistency in findings from the survey, interviews with the chief scientists, and testimony presented by stakeholders at a public workshop. Early in the study the committee recognized that the NRI did not maintain a systematic record of direct research results (for example, publications, patents) or a running evaluation of the originality and significance of current applications and renewals. The committee therefore based its assessment of the “quality and value of research funded by the program” (its first task) largely on surveys, testimony, and its own experience. To supplement these subjective evaluations, the committee chose to expand the scope of its investigations to evaluate how well the NRI program has met the goals that were set forth in the 1989 NRC report and the original congressional authorization, some of which involve 1   The term stakeholder is used here to refer to all individuals and organizations that have an interest in the operations and outcomes of the NRI.

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research organizational and funding issues. In adopting this expanded charge, the committee therefore has discussed a number of organizational and funding issues and has offered recommendations to help achieve the original goals for this program and to give it greater visibility within, and external to, USDA. STATUS OF THE NATIONAL RESEARCH INITIATIVE The committee found the NRI to have financed high-quality scientific work within congressional guidelines. The committee also found, however, that the program is in danger of languishing. Program size, grant duration, grant size, and a low overhead allowance have led to reduced application numbers. Applicants are primarily from traditional food, fiber, and natural-resource sciences. A key goal of the program—to attract scientists from outside the traditional food complex—has not been achieved. Furthermore, the committee found that traditional stakeholders in the NRI are losing confidence in the health and direction of the program. Uneven and opaque internal procedures, funding allocation processes, and priority-setting patterns have reduced the desirability of the program in the eyes of potential applicants in and outside the traditional food-research complex. Finally, the location of the NRI within the USDA organizational structure suggests that the USDA and Congress place a higher priority on formula funds, special grants, and intramural research than on extramural, merit-based peer-reviewed research. Expectations of increased funding for the NRI generated by two National Research Council reports (in 1989 and 1994) and the 1990 congressional authorization have not been met. That has generated frustration in the food, fiber, and natural-resource research community and has had an adverse effect on the acceptance of the NRI as a strong research program. The committee reiterates the extraordinary importance of public merit-based peer-reviewed research in food, fiber, and natural resources. In the committee’s opinion, past public research and current private activities cannot meet the needs that are being created by population growth, climate change, and natural-resource deterioration or the challenges related to food safety and nutrition and to the growing convergence of foods and medical research. THE NRI’S MISSION A successful grants program contains elements of value, relevance, quality, fairness, and flexibility. The committee found that the proposals to the NRI and the research conducted by scientists who receive NRI grants are of high quality. That finding is based on the results of the committee’s survey of applicants, awardees, administrators of land grant institutions, and industry; the views of former chief scientists and individuals from federal agencies; and the personal perspectives of committee members and their colleagues. Through conscientious stewardship, the NRI has been successful in generating fundamental and applied

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research research and fostering the development of future scientists with strong backgrounds in food, fiber, and natural resources. The committee recommends that a major emphasis of the NRI continue to be the support of high-risk research with potential long-term payoffs. Much of this research would be classified as fundamental in the traditional use of this term. The NRI also should continue to emphasize the importance of multidisciplinary research. The NRI program is credited with important contributions to fundamental and applied research. The distinction between fundamental (or basic) and applied research often is unclear in the food, fiber, and natural-resources sector, however. Instead of classifying research arbitrarily as fundamental or applied, it should be thought of as on a continuum with short-, medium-, and long-term objectives identified in any research area. The committee believes that a major emphasis of the NRI should continue to be the support of high-risk research with potential long-term payoffs—the type of research that is unlikely to be funded through other research programs in USDA, other federal agencies, or the private sector. The committee also encourages the NRI to continue to emphasize multidisciplinary research because the problems in the food, fiber, and natural-resources system demand multidisciplinary approaches and collaboration. The committee recommends that the NRI continue to emphasize its mission of training and education. The training and education of graduate students and postdoctoral researchers attributable to the NRI program have been valuable. Although grants have been small and of short duration, training appears to have been a major use of NRI funds among university researchers. “Strengthening grants”2 provided by the NRI program have had a major impact on the careers and productivity of faculty who otherwise would not receive federal grant support. Furthermore, NRI staff have been successful, particularly in view of the organization’s limited resources, in organizing several vehicles to promote public understanding of research in food, fiber, and natural resources. RESEARCH ACCOUNTABILITY The committee recommends continuing the process of merit-based peer review as the most effective method of competitively distributing funds for research in food, fiber, and natural resources. The committee views the NRI as a model of merit-based peer-reviewed research in USDA. Because it uses a competitive review process to rank 2   Strengthening grants are made available to faculty of small- and medium-sized academic institutions or institutions in USDA-EPSCoR (Experimental Program for Stimulating Competitive Research) entities who have not received NRI awards during the previous 5 years.

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research proposals, however, the NRI remains outside the mainstream USDA culture of formula funding. The successful operation of the peer-review system in the NRI accounts for the high quality of the projects funded. Stakeholders in the food, fiber, and natural-resources system hold the NRI’s peer-review process in high esteem. Some survey respondents indicated that the NRI merit-based peer-review process was as fair as and perhaps more responsive than the review process of other federal research agencies. The committee recommends that a more effective performance-tracking system be established to improve research accountability. The committee believes that the NRI could improve its record by documenting the value of research that it funds. The NRI does not keep a definitive record of patents and publications resulting from NRI research. Nor is there a running evaluation of originality and significance of current applications and renewals. Although the committee has found based on its surveys that funded applications are of high quality, the NRI lacks a tracking system of critical factors needed for self-evaluation or effective reporting of research accomplishments to outside groups, which would create a feedback system to establish value. Every federal research agency faces important challenges in measuring outcomes of research projects, and the NRI is no exception. The committee concluded that the quality of research supported by the NRI is high, but it was unable to scrutinize individual projects extensively because of the absence of a tracking system tailored to tying projects to outcomes. A standardized tracking system needs to be implemented for the NRI program. Such a system would be beneficial both for tracking outcomes and for making the NRI’s programs more transparent to stakeholders. The National Research Council has recently released a report, Evaluating Federal Research Programs, on accounting for federal outcomes as part of the Government Performance and Results Act mandate. The NRI should use the recommendations in that report. The committee recommends implementation of an internal information system that generates data on current operations of the NRI. The committee found it difficult to follow year-to-year changes in funding areas and to generate numbers to measure effort by project and category outcome. The committee’s requests for information generated more work by the NRI professional staff than should have been required. The committee believes that those problems were due to deficiencies in the underlying information system itself.

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research The committee recommends that the NRI Web site be more readily accessible to allow the location of research projects and results with the use of issue-oriented key words and technical terms that are accessible and understandable to all stakeholders. A number of recommendations reflect directly on the NRI’s ability to reach both traditional and new stakeholders. But the needs for transparency, access to the current research agenda, and documentation of past outcomes suggest a substantial expansion in communication strategy. A Web site could be linked to nontechnical summaries, technical abstracts, impact statements, and publications and to a catalogue of current and past funded projects. Such data and communication could be maintained for 10 years to build a timely, comprehensive, and searchable record of research impacts generated by NRI funding. PRIORITY SETTING AND ORGANIZATION The committee has concluded that the priority-setting process of the NRI needs substantial revision. The committee found that parts of the process used by the NRI staff seem unstructured, appear to be unevenly administered across NRI divisions, and are not explicitly linked to the goals and other strategic planning elements of the Research, Education and Economics Mission Area. Changes in program areas and priorities appear to have occurred primarily in response to the urging of vocal stakeholders rather than as the result of a deliberative priority-setting process. Mechanisms are not well established to evaluate the effectiveness of NRI-funded research as time passes and progress occurs or to delineate how key research outcomes correlate with guiding research goals. The priorities of the NRI do not appear to be linked closely with the priorities of the Agricultural Research Service (ARS) and the Economic Research Service (ERS), perhaps because the potential cross-functional nature of present research programs is not fully appreciated in either the ARS or NRI administration. The committee believes that an improved priority-setting process should involve independent input from scientists and informed members of the public. The priority-setting process also should allocate more of the NRI’s funds by issue, not by research category. The committee believes that changes in the NRI’s organization need to be made. Most important, USDA needs to find a way to enhance the position of extramural research in USDA and to encourage NRI priority-setting to reflect national priorities more clearly. The committee offers the following recommendations to improve the priority-setting in and the overall effectiveness of the NRI. Other solutions are possible; ultimately it will be up to USDA, and possibly Congress, to decide how best to address these problems.

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research The committee recommends that six standing scientific-research review committees be assembled to identify critical issues in each research area. The committee further recommends that the current 26 programs be eliminated and replaced with an issue-based agenda across the purviews of the six committees. Some NRI divisions have been relatively stable programmatically since their inception, whereas others have seen many program starts and stops. The subdivision of the NRI’s six main research areas into 26 programs solely by research “category”, in the absence of an overall strategic plan, might have been partly responsible for a lack of critical mass among the NRI’s natural stakeholders, particularly because the recommended increases in research funding to $500 million did not materialize. Several short-term changes in program direction (over 4- to 6-year time frames) have occurred in research areas that would otherwise need about 8–10 years to have an impact. The stop-start nature of some NRI funding commitments over its short history indicates that the NRI has been unable to sustain funding support for some high-risk areas with long-term payoffs—the types of research for which the NRI is ideally suited. The lack of a clear perception of the logic of annual requests for proposals across all 26 programs could be partly responsible for the NRI’s inability to attract increased research budgets for its programs. A more logical, priority-setting process that relates the NRI’s research programs to USDA goals and emerging issues in the food, fiber, and natural-resources system might be effective in demonstrating more clearly the importance of NRI-supported research and lead to increased research budgets. The committee recommends that the research review committees give special consideration to important problems perceived by the public at large—such as alternative energy, healthfulness of food, food safety, and nutrition (issues at the consumer end of the food system)—in addition to the more traditional emphases on productivity, rural economies, and environmental protection. The likely outcome would be a better distribution of research funds across the entire food, fiber, and natural-resources system and a research agenda more closely aligned with public concerns. The NRI research agenda would thus become more forward-looking and issue-driven. The committee recommends that a cooperative formal goal and strategy process be instituted in the context of the NRI’s role in federal food, fiber, and natural-resources research programs. The NRI generally complements other USDA activities and does not duplicate other federal research efforts. The NRI actively participates in cross-agency funding opportunities to ensure complementarity of research efforts, but it clearly follows rather than leads in such efforts. Apart from memoranda of understanding and interagency coordination provided by the National Science

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research and Technology Council, no process exists for establishing formal relationships with other federal agencies or for consulting and using stakeholder groups. NIH, NSF, the Department of Energy (DOE) and NRJ form the backbone of the nation’s merit-based peer-reviewed research effort in food, fiber, and natural resources. The NRI is the nation’s only merit-based peer-reviewed research program that focuses explicitly on challenges to its system of food, fiber, and natural resources. A comprehensive strategy that required coordination among congressional committees—particularly those with jurisdiction over USDA, NSF, and NIH programs and budgets—would allow an expanded NRJ food, fiber, and natural-resources agenda to be coordinated with complementary work funded by NIH and NSF. The committee recommends that the NRI and other competitive USDA research programs be moved to a new Extramural Competitive Research Service (ECRS) that would report to the under secretary for research, education, and economics. The location of the NRI as one component of the Competitive Research Grants and Awards Management Division, rather than on an organizational level equivalent to USDA’s two main research agencies (ARS and ERS) suggests that USDA and Congress place a higher priority on formula funds, special grants, and intramural research than on extramural, merit-based peer-reviewed competitive research. The committee believes strongly that unless extramural competitive research is given the same stature organizationally as formula-funded and intramural research in USDA, it will remain difficult for the NRI program to achieve its mission. The committee believes that the NRI has suffered as a program in an agency—CSREES—that is also responsible for defending and allocating formula funds and special grants. Intramural research is represented by ARS and ERS, which report directly to the under secretary for research, education and economics, as does CSREES. The committee strongly recommends that extramural competitive research be given an organizational stature that would allow it to compete effectively for resources with formula funds and special grants and to participate directly in USDA’s high-level priority-setting process. The committee recommends the establishment of a new Extramural Advisory Board (12–14 members) that represents NRI stakeholders and has a non-USDA chair. Funding has been unevenly allocated among the NRI’s divisions since its initiation. No substantial changes in the proportions of funding allocated to the divisions have occurred, even though the nature of food, fiber, and natural resources has changed since 1991. Funding allocations do not appear to have distinguished between traditional and emerging areas in food, fiber, and natural resources. The current NRJ Board of Directors provides necessary administrative oversight of the NRI program and can be used to link the NRI with USDA’s

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research other research organizations. The Board of Directors is not responsible for providing guidance on scientific or technologic priorities, providing a forum for stakeholder concerns, or measuring research outcomes and evaluating NRI operations. An external advisory board of some type is necessary to handle those responsibilities. The Advisory Board would advise and assist the chief scientist in identifying fundamental issues and future strategies to meet the greatest needs. It would represent scientists and engineers, deans of land grant and non-land grant institutions, industry across the entire food and fiber system, commodity and farm groups, consumer groups, and 1890 colleges. Ex officio members would include select program managers at NIH and NSF and the NRI chief scientist. Board members would serve 3-year terms on a staggered, rotating basis with a maximum of two terms. The board would be appointed by the secretary of agriculture. In the committee’s opinion, an external Advisory Board is critical to the successful functioning of the NRI. Stakeholder contact, the advocacy of extramural research inside and outside USDA, measurement of research outcomes, and continuing evaluation of NRI operations (including the peer-reviewed project-selection system) would ensure thoroughness, objectivity, and transparency. A visible, mandated external Advisory Board would bring renewed energy and focus to an expanded NRI effort and would provide Congress with an objective appraisal of NRI efforts. The committee recommends that the position of chief scientist be a full-time, permanent 5-year position, with an option of one 5-year renewal, chosen by the secretary of agriculture with the consultation, recommendation, and advice of the newly created NRI Advisory Board. The chief scientist would be the administrator of ECRS. The current responsibilities of the NRI chief scientist are equivalent to a full-time position. A part-time revolving chief scientist cannot meet the strategic-planning, priority-setting, and communication needs of an effective NRI. Although past chief scientists have done excellent work, having a part-time chief scientist impedes continuity in accountability and leadership and counters successful long-range planning and followup and consistent stakeholder involvement. The necessary duties of the chief scientist-administrator of ECRS, in addition to those now assigned within the NRI, would include directing the program and developing a definitive strategic plan and advocacy for the NRI program. The chief scientist could also take the lead in changing the culture of the NRI from a program-based to an issue-based research agenda. The full-time chief scientist would report directly to the under secretary and would play a major role in setting the nation’s federal food, fiber, and natural-resources research agenda.

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research The committee recommends that each of the six mandated areas of research emphasis be led by a half-time associate chief scientist with a 2-year rotation. Each associate would be a scientist from a visible and productive outside research program. In recent years, the NRI staff has been stretched to cover its responsibilities, and this has increased the burdens of communication and timeliness on NRI staff at all levels and on the scientists who serve as ad hoc reviewers and panel members. The proposed rotation system would allow the chief scientist to recruit a flow of intellectual capital and would provide a mechanism for obtaining input from the population of researchers served by the NRI. The full-time chief scientist plus the six associate chief scientists would have the time and resources to carry out long-term analyses of research needs in the context of issues rather than programs, as is now the case. This recommendation highlights the importance of establishing and maintaining a scientifically based research agenda. The associate chief scientists would complement the division directors, program managers, and volunteer panel leaders. A number of factors could account for the fact that USDA’s research agenda has struggled over the last decade. The committee understands current budget constraints and understands that the implementation of some of its recommendations would increase personnel and operating costs. We believe strongly, however, that substantial changes are needed to ensure the future success of merit-based peer-reviewed research in food, fiber, and natural resources. FUNDING The committee recommends that grant awards be immediately increased to an average of $100,000 per year (total costs) over 3 years. NRI research grants are much smaller and shorter than grants supporting similar types of research at NSF, NIH, and DOE. Continued underfunding of NRI research grants relative to those of other federal research agencies will tend to discourage new researchers outside the traditional food and fiber system from applying for NRI grants—one original goal of the NRI. It might also cause highly qualified scientists who have received NRI support to apply for research funds from other sources and even redirect their research away from issues important to the food and fiber system. That could lead to a decrease in the overall quality of food, fiber, and natural-resources research. The proposed increase would solidify the stakeholder foundation of the NRI and prepare it to receive additional funds. The committee recognizes that without an increase in the NRI’s total budget (as recommended strongly by this committee), the increase in size and duration of grants would reduce the number of grants and perhaps cause hardship among investigators who have depended on NRI funding to sustain their research programs. However, continued underfunding of individual research grants will reduce the aggregate impact of

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research the NRI’s competitive funding. The number of current proposals is lower than in the past, and stakeholder support appears to be waning. An increase in the size and duration of grants would enable the scientific community to attack issues in food, fiber, and natural resources by preparing proposals that require multi-investigator and multidisciplinary teams of researchers. Increased size and duration of grants would allow researchers to carry out projects as planned without narrowing their scope to fit a shorter period and smaller amount. Finally, increased size and duration of grants would attract new, creative proposals from researchers who are now outside the traditional food and fiber system. The latter was one of the key reasons for instituting the NRI, and it continues to be a worthwhile objective. To achieve it, the NRI must provide realistic funding levels to continue to attract the best and the brightest students and investigators to food, fiber, and natural-resources research. The NRI should benchmark the funding level and duration of its grants to those of the other federal merit-based peer-review agencies that support research. NSF and NIH support competitive research projects in some of the same basic science and engineering areas as the NRI, that complement food, fiber, and natural-resources research. The challenge is to keep the best intellectual capital engaged in the NRI’s scope of issues. The committee recommends that the NRI’s overhead limit be immediately replaced with indirect-cost standards that are used by other federal research agencies. When it established the NRI program in 1991, Congress imposed a 14% limit on the amount of indirect costs that can be charged as a percentage of the total award.3 The 14% limit was replaced by a 19% limit4 in FY 2000 as part of the Agricultural Research, Extension, and Education Reform Act of 1998. Although the increase from 14% to 19% reduces the gap between overhead rates on NRI grants and rates on grants awarded by other federal agencies, overhead rates for most academic and private-sector research institutions are significantly higher than the 19% limit currently allowed. Average overhead rates for NSF’s Biology Directorate, for example, are approximately 45% of the modified total direct costs of the award—nearly double the NRI limit. The committee is not aware of any other federal merit-based peer-reviewed research program with such a congressionally mandated limit on overhead rates. Presumably, the motivation for setting such a limit was to increase the percentage of NRI research funds spent on research activities. However, such a mandated cap on overhead may have a negative effect on the NRI program because it causes some institutions (especially those from outside the traditional applicant community) to discourage their researchers from submitting proposals to the program. Because the committee did not address this issue in its survey, it was not able to estimate the magnitude of this effect on the NRI program. 3   This limitation is equivalent to 0.16279 of the total direct costs of an award. 4   This limitation is equivalent to 0.23456 of the total direct costs of an award.

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research However, the committee is aware of one research institution that prohibits its scientists from submitting proposals to the NRI because the low overhead rates do not cover the true institutional costs associated with such research and because its auditors require consistency among all incoming grants. Other institutions discourage their researchers from submitting proposals by requiring that the researchers (or their departments) use other funds to make up the difference between mandated low overhead rates and the established rates used by other federal agencies. This is especially problematic for smaller institutions where researchers do not have the flexibility to balance low-overhead grants against other sources of unrestricted funds. These factors also may have a disproportionate impact on institutions (or departments) from outside the traditional food, fiber, and natural-resources system because they do not have a historic association with USDA and may be less willing to accept a low overhead rate that is unique to USDA-sponsored research. The committee believes that Congress could help broaden the scope of NRI researchers beyond the traditional food, fiber, and natural-resources system—one of the original goals of the program—by allowing the NRI to use the same negotiated overhead rates used by other federal agencies. This action, together with the increased grant amounts recommended previously, would make the NRI a more attractive source of funding to all institutions and researchers and could encourage proposals from researchers from outside the traditional food, fiber, and natural-resources system The committee recommends that by 2005 the NRI budget be increased to a level equivalent (adjusted for inflation) to the $550 million recommended by the NRC in 1989—but only if recommended changes in priority setting, documentation, and organization are put into place. Inadequate funding of the NRI has significantly limited its potential and placed the program at risk. A substantial increase in funding will ensure a robust and high quality public research effort that can significantly transform the nation’s food, fiber, and natural resources system in response to critical needs in agricultural productivity, environmental health, and societal well-being. In its 1989 report Investing in Agricultural Research, the NRC called for expanding competitive research within the USDA and establishing the NRI, with a proposed funding increase to $550 million within one year, if possible. Congress responded in 1990 by authorizing $500 million for the NRI by 1995, but the current program is only $120 million. The committee strongly re-affirms the previous NRC recommendation, and has estimated that the equivalent size of the NRI budget would be approximately $800 million in 2005. The committee believes that attaining this level would be an important step in re-energizing the national food, fiber, and natural resources research complex—which in turn, would result in major benefits to the nation. After reaching this budget level, the future growth of the NRI budget should be evaluated and compared with the growth in the budgets of complementary research programs in NSF, NIH, and

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National Research Initiative: A Vital Competitive Grants Program in Food, Fiber, and Natural-Resources Research DOE, as suggested in the committee’s earlier recommendation to benchmark the amount and length of NRI grants against such research programs. The committee believes that the recommended increase in funding should take place incrementally as the various changes recommended earlier in this report are put into place. The ability to utilize large amounts of new funding effectively will be compromised unless recommended changes to the priority-setting process and NRI’s organization are implemented. A NATIONAL FOOD, FIBER, AND NATURAL-RESOURCES RESEARCH COMPLEX If implemented, the recommendations growing out of this third National Research Council review of the NRI (the other two were in 1989 and 1994) will re-energize the NRI and the nation’s food, fiber, and natural-resources research complex and will give USDA the opportunity to rediscover its fundamental research roots—where it began 120 years ago. In the committee’s opinion, the nation needs USDA to re-emerge as the research engine of the food, fiber, and natural-resources complex that has served the nation so successfully in the 20th century. There is no acceptable alternative. The food, fiber, and natural-resource system is too important and too fundamental to future national security and stability not to have its own research program that focuses explicitly on high-risk problems with potential long-term payoffs. The committee believes that an expanded and refocused NRI is the proper platform. Without a dramatically enhanced commitment to merit-based peer-reviewed food, fiber, and natural-resources research, the nation places itself at risk.