“Here’s the bottom line, Mr. and Mrs. Congressman, unless there is more money appropriated for agricultural research, there will have to be more land, labor, capital, and inputs brought into production.” USDA’s Economic Research Service laid it out very clear, and said ag research spending has to keep up with or exceed the rate of inflation to supply enough food to meet the demand. (You can’t get much clearer than that.)
USDA’s economists looked at public funding for agricultural research and compared it to the growing food needs of the next 40 years. What they found confirms what most farmers already knew, but what the Congress needs to hear, and that message is a clear signal that greater financial resources need to be allocated to public agricultural research. Their report forecasts a 70% to 100% growth in demand by 2050 because of population growth, energy demands, and the higher incomes in many developing countries which have recently pressured the markets. Their analysis says global productivity will have to grow by a similar amount, as well as an increase in US domestic food production.
The USDA economists used a yardstick to measure agricultural output called “total factor productivity.” TFP is the output compared to the total amount of land, labor, capital, and inputs used to produce that output, and so if TFP grows then it means technology has had a positive change. They point to the period of 1948 to 2008, in which that 60 year period had an average annual growth rate of 1.58%, while the growth rate in TFP was 1.52%. This was a period of time in which the use of commercial fertilizer, biotechnology, computerization of equipment, and other advancements were introduced. The economists attributed the growth to public investment in agricultural research and development, along with extension, education, and infrastructure improvements, as well as private dollars going into R&D.
In the 82 years prior to 2009, federal and state ag spending on production type research increased an average of 7.5% per year, but when adjusted by the Consumer Price Index and adjusted for inflation, the actual spending was only 3% per year. Spending slowed in the 1980’s, peaked in 1994, and has declined 20% since that time. The economists propose three scenarios that could happen in the next 40 years.
1) Public research spending is held constant at $2.5 billion per year, and inflation reduces it over time.
2) Public research spending is held constant with the recent average of $2.5 billion, but increased at the rate of inflation.
3) Public research spending increases by 1% per year in real terms, which is the rate of inflation, plus 1%, and that would be roughly equal to the rate of population growth in the US. This would be an increase in spending, but not as must as prior to 1980.