Agriculture Depends on Research and Technology Development
Virtually all growth in U.S. agriculture comes from raising productivity of existing resources rather than from bringing new resources into production. As a result, growth in agriculture is highly dependent on R&D spending, which is the primary driver of productivity improvement over the long term. The agricultural R&D system in the United States is a Federal, State, and private- sector partnership, with each sector providing unique and essential inputs for agricultural innovation. Public-sector funding in particular provides the advances in basic scientific research that, in turn, create new technological opportunities for private R&D to commercialize. Federal support for agricultural research underpins the whole system, and any decline in Federal agricultural R&D spending is likely to see similar reductions in State and private agricultural R&D spending eventually.
Over the past 40 years, agricultural R&D has increased, and funding now totals about $11 billion per year. Historically, public institutions played a direct role in developing new technologies and encouraging their commercialization and adoption by farmers. Advances in the biological sciences, beginning with hybridization in the 1930s, and expanded intellectual property rights protection have stimulated private sector efforts in R&D. These now exceed R&D investments by the public sector, although private sector funding has been more variable. Since about 1980, public sector agricultural research funding has been stagnant for long periods of time.
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Multiple Institutions Operate in a Complex System
Agriculture has benefited from a unique Federal-State agricultural research and extension system, with a history of collaboration with the private sector. The private sector provides most of the funding for agricultural R&D, followed by the Federal Government and the States. But the mix of research institutions that actually perform agricultural R&D differs slightly from the sources of funding. Federal-level research, funded at about $1.4 billion in 2007, generally addresses issues of national importance. State-level research received $3.8 billion in 2007 and may be regionally applicable, though research at academic institutions may be broad in scope. Private sector research is nearest to the marketplace, and the private sector performs most of this research—$6 billion in 2007. The system is characterized by numerous linkages between institutions. For instance, State-level institutions receive funds from several Federal agencies other than USDA, and USDA funds State-level institutions through a variety of instruments. The private sector and USDA exchange funds or conduct joint research through cooperative agreements, contracts, and trusts.
Private and Public R&D Emphases Differ, Despite Some Overlap
Although broad private and public R&D themes overlap somewhat, in many ways public and private research are complementary rather than competitive. Little incentive exists for private firms to pursue public goods research because the results benefit society as a whole, rather than the specific innovator. Thus, the private sector focuses mainly on R&D related to marketable goods. Advances in biology, microbiology, and computing created new technological opportunities for private companies. For example, gene transfer technologies enable researchers to tailor crops for specific uses, such as resistance to disease, pests, herbicides, or harsh environmental conditions.
The change in focus and increase in intensity of private sector R&D allows public-sector science to devote more of its resources to fundamental agricultural research and to research with public good characteristics, such as environmental protection and nutrition and food safety. Public research generally operates on a longer time frame as well, which allows it to address problems with little probability of short-term payoff.