Challenges for U.S. Agricultural Research

Policy

September 1995

OTA-ENV-639

GPO stock #052-003-01443-2
Recommended Citation: U.S. Congress, Office of Technology Assessment, Challenges for U.S. Agricultural Research Policy, OTA-ENV-639 (Washington, D.C.:

U.S. Government Printing Office, September 1995).
iii

Foreword

gricultural productivity has increased markedly in

recent years—more rapidly, in fact, than productivity

in the overall U.S. economy. Many attribute a large

part of this growth to public sector agricultural

research, which is carried out primarily by land grant universities and the U.S. Department of Agriculture’s research

agencies. Despite this success, however, new budget constraints, scientific advances, and public demands for environmental safety are presenting the agricultural research system

with the greatest challenges it has faced since its inception,

more than a century ago. Questions have been raised about

whether the old research institutions are still useful, and

about how they should adapt to accommodate the new realities of the 1990s.

In discussions leading up to the 1995 farm bill, agricultural

research policy has been put squarely on the negotiating

table. Policymakers have been particularly interested in how

well the agricultural system has responded to legislative

directives in the past farm bill that called for a clarification of

the purposes of agricultural research and extension, a national

competitive research initiative, a sustainable agricultural

research program, and research efforts to create new agricultural crops and new uses for agricultural commodities.

This report responds to a bipartisan request from the Senate Committee on Agriculture, Nutrition, and Forestry to

determine the progress the research system has made in meeting the objectives set forth in these new areas, and to provide

guidance on the management of agricultural research. In

doing so, the report focuses on new ways to finance, organize, and manage agricultural research to prepare the system

for the challenges of the next century.

ROGER C. HERDMAN

Director

A
iv

Project Staff

Clyde Behney

Assistant Director

Robert Niblock

Program Director

Environment Program

Michael J. Phillips

Project Director

Theodore L. Hullar

Senior Analyst

Vivian N. Keller

Writer/editor

ADMINISTRATIVE STAFF

Kathleen Beil

Office Administrator

Nellie Hammond

Administrative Secretary

Kimberly Holmlund

Administrative Secretary

Babette Polzer

Contractor
v

Acknowledgments

OTA is very grateful to the

assistance of a number of individuals in the course of preparing this report. They provided

guidance to the study design,

prepared background material,

reviewed background reports,

or provided information to the

project staff. To this OTA is

indebted and as a token of our

appreciation list them as follows:

Bruce Abbe

Chairman of the Board

New Uses Council, Inc.

Julian Alston

Professor

University of California, Davis

Robert Armstrong

Program Analyst

Alternative Agriculture 

Research and 

Commercialization Center

U.S. Department of 

Agriculture

Nicole Ballenger

Project Director

Board on Agriculture

National Research Council

George Bird

Professor

Michigan State University

William Carlson

Acting Administrator

Cooperative State Research, 

Education, and Extension 

Service

U.S. Department of 

Agriculture

Jason Christian

Research Analyst

University of California, Davis

L. Davis Clements

Professor

University of Nebraska

R. James Cook

Chief Scientist

National Research Initiative 

Competitive Grants Program

U.S. Department of 

Agriculture

Bruce Crain

Director

Alternative Agriculture 

Research and 

Commercialization Center

U.S. Department of 

Agriculture

Mark Dungan

President

New Uses Council, Inc.

Michael Harris

School of Agriculture

University of Melbourne

Floyd Horn

Deputy Under Secretary

Research, Education, and 

Economics

U.S. Department of 

Agriculture

John Houghton

President

J.M. Houghton Associates

Edward Knipling

Deputy Administrator

Agricultural Research Service

U.S. Department of 

Agriculture

Michael Mayer

Professor

University of California, Davis

Kathleen Merrigan

Senior Analyst

Wallace Institute for 

Alternative Agriculture
vi

John Mullen

New South Wales Agriculture

Orange NSW

Robert Myers

Director

Sustainable Agriculture 

Program

U.S. Department of 

Agriculture

Susan Offutt

Executive Director

Board on Agriculture

National Research Council

Philip Pardey

Research Fellow

International Food Policy 

Research Institute 

Jenifer Piesse

Professor

University of London

Dean Plowman

Administrator

Agricultural Research Service

U.S. Department of 

Agriculture

Sally Rockey

Program Director

National Research Initiative 

Competitive Grants Program

U.S. Department of 

Agriculture

Richard Romminger

Deputy Secretary

U.S. Department of 

Agriculture

Johannes Roseboom

Fellow

International Service for 

National Agricultural 

Research

The Hague

Hans Rutten

Fellow

National Council for 

Agricultural Research

The Hague

Katherine Reichelderfer Smith

Director of Policy Studies

Wallace Institute for 

Alternative Agriculture

Vincent Smith

Professor

Montana State University

Karl Stauber

Under Secretary

Research, Education, and 

Economics

U.S. Department of 

Agriculture

Colin Thirtle

Professor

University of Reading

Walter Woods

Acting Deputy Administrator

Cooperative State Research, 

Education, and Extension 

Service

U.S. Department of 

Agriculture

Garth Youngberg

President

Wallace Institute for 

Alternative Agriculture
vii

Contents

1 Overview and Policy Implications 1

U.S. Agricultural Research and Extension System 2

The Changing Environment for Agricultural Research 4

Conclusions 5

2 Purposes of the Agricultural Research and 

Extension System 15

Implementation of the Purposes 17

Relevance and Accountability: Key Challenges and Perspectives 19

Approaches to Accomplishing Purposes 21

3 National Research Initiative Competitive

Grants Program 25

NRICGP in Relation to USDA’s Research Portfolio and the Federal 

Extramural Research System 26

Implementation 28

4 Sustainable Agriculture Research and Education 53

Implementation 55

The Place of Sustainable Agriculture in USDA’s 

Overall Program 59

Perspectives on Sustainable Agriculture 60

5 Alternative Agricultural Research 

and Commercialization 63

Alternative Agricultural Research and

Commercialization (Subtitle G) 64

Agricultural Science and Technology Review Board 

(Section 1605) 67

6 Financing, Organizing, and Managing the Agricultural 

Research Portfolio 69

Basis for Government Intervention in Research 70

Government Role in Agricultural Research 80

References 87
| 1

1

Overview

and Policy

Implications

he past decade has brought substantial

new pressures to bear on U.S. agricultural research. As science has opened

the door to heretofore inconceivable

advances, the agricultural research community

has broadened its scope from devising new farm

production technology to the full realm of agricultural activity—from the time the raw product

leaves the farm to the final product in the consumer’s home. Further, U.S. society has

demanded that the research system expand its

focus from increasing agricultural productivity,

profitability, and competitiveness to addressing

the impacts of agricultural production on the

external environment. Of greatest concern have

been problems such as water and air quality,

nutritional quality, food safety, waste from food

production activities, and the economic and

social vitality of rural communities. The combination of these pressures has led to considerable

change, and demands for continuing change, in

agricultural research.

Clearly, more and better research is needed to

address these issues adequately. A crucial determination is where and by whom that research

should be done. By nature, the public and private

sectors conduct very different types of research.

Research that creates easily transferable information is more likely to be conducted by the public

sector; research that creates information that is

proprietary or embedded in a product is more

likely to be conducted by the private sector. For

example, the public sector develops pure lines

and self-pollinated crop varieties that can be used

by any seed company, while the private sector

develops hybrid varieties proprietary to private

firms that must be purchased annually by farmers

if they are to be productive. Further, and perhaps

more important, if the private sector determines

that some research benefits (or costs) accrue to

people other than those who use the results, it

cannot capture the full returns on its investment,

and most likely will not invest sufficiently in

such research. The public sector must fill the

gap.

Given the ever-greater demands on public

agricultural research, however, filling the gap

has become increasingly difficult. Very simply,

the demand for such research has exceeded the

supply available. An effective national strategy,

and advances in science and technology of a

scale and scope the system has not previously

experienced, will be essential in the coming

years.

In 1990, Congress became increasingly aware

of the changing environment in which agriculT
2 | Challenges for U.S. Agricultural Research Policy

tural research would be conducted and the need

for the focus and scope of agricultural research to

change. Accordingly, Congress revised the

research title of the Food, Agriculture, Conservation and Trade Act of 1990 (FACTA). Specifically, Congress added major sections to the

research title of FACTA on 1) purposes of agricultural research and extension, 2) a national

competitive research initiative, 3) sustainable

agricultural research, and 4) new crops, products,

and uses research.

This study focuses on how the U.S. Department of Agriculture (USDA) has implemented

the four new sections of the research title. This

chapter includes a brief overview of the U.S.

agricultural research and extension system, plus

a summary of findings and policy implications

for the above four components of the research

title. In addition, potential changes in the financing, organizing, and managing of agricultural

research are considered. Subsequent chapters

treat these topics in greater detail.

U.S. AGRICULTURAL RESEARCH AND 

EXTENSION SYSTEM

The U.S. public sector agricultural research

system, a dual federal/state system, came into

being in the 1860s. It was not until the late 19th

century, however, that the system began to

provide the scientific knowledge needed to deal

with the problems of agricultural development.

Today, the federal agricultural research system

includes the USDA’s Agricultural Research Service (ARS), Economic Research Service (ERS),

and Forest Service (FS); and the partner State

Agricultural Experiment Stations (SAES) located

within the Land Grant University System.

ARS, established in 1953, is USDA’s largest

intramural research agency. It has major responsibilities for conducting basic and applied

research in natural resources, plant science, animal science, commodity conversion and delivery, human nutrition, and integration of systems.

ARS employs approximately 2,670 scientists and

engineers (of which about 2,500 have doctoral

degrees) and had a FY 1994 research budget of

$679.2 million. Research is conducted at approximately 100 domestic and seven foreign locations. Five major regional research centers are

located in Maryland, Pennsylvania, Illinois, Louisiana, and California. ARS has cooperative

research agreements with other USDA agencies,

and many of the ARS facilities are located at or

near academic institutions. Some ARS staff hold

adjunct faculty appointments and participate in

graduate teaching (30).

ERS was established in 1961 to provide economic and other social science information and

analysis for improving the performance of agriculture and enhancing the economic and social

vitality of rural America. ERS collects and maintains a number of historical data series on farm

type, size, and number; production and input levels; trade; effects of farm policy; and socioeconomic characteristics of rural areas of the United

States. ERS also performs statistical and analytical research, and is organized into four divisions

covering commercial agriculture, food and consumer economics, natural resources and environment, and rural economy. ERS has limited funds

to contract for research in the academic sector

but is not authorized to administer a competitive

grants program. The ERS budget for FY 1994

was $55.2 million (30).

The FS is responsible for research on the

nation’s forests and for technologies useful in the

manufacture of pulp and wood-based products.

Research topics cover a broad range. The FS also

manages 182 million acres of forest. Its research

budget for FY 1994 was $193.1 million. Much of

the research is conducted through its intramural

program and the federal forest experiment

stations (30).

The Land Grant University System was established in 1862 by the Morrill Act. There was a

need to provide higher education to the masses,

with particular emphasis on the children of farmers and industrial workers. The Morrill Act made

grants of land to states that were willing to create

universities to fulfill this mission. Originally,

education focused on agriculture and the

mechanical arts, but the focus has expanded to

include all of the major disciplinary fields.
Chapter 1 Overview and Policy Implications | 3

The partnership between the state and federal

government was extended to agricultural

research with the Hatch Act of 1887, which provided federal funding for the support of agricultural experiment stations at land grant

universities. Agricultural science had previously

been the domain of innovative farmers, inventors, and the industrial sector, and progress had

come primarily in the form of mechanical technology. Few states had provided significant

funding for agricultural research. Eventually,

however, agricultural output did not keep up with

demand and food prices began to rise, leading to

the passage of the Hatch Act. Nonetheless, it was

not until the 1920s that the land grant system was

fully functional. Today, there are 57 SAES

located in each of the 50 states, the District of

Columbia, the Pacific Territories (American

Samoa, Guam, Micronesia, and the Northern

Mariana Islands), the U.S. Virgin Islands, and

Puerto Rico. Six historically black universities

(the 1890 universities) and the Tuskegee Institute

also conduct publicly supported agricultural

research.

The Hatch Act provides research funding to

states based on a formula that considers the

importance of the agricultural sector to the

state’s economy. The formula funding system

provides stable funding for research programs

that may have long gestation periods. All formula funds must be matched by the state. The

current formula for funding designates 1955 as

the base year and the minimum amount to be

allocated.

The federal share of Hatch and related funds

(like the special grants described below) was

$317.5 million for FY 1993, compared with

$331 million in other federal funds (such as

USDA’s competitive grants program and other

federal agency funds) and $1376.3 million of

state ($985.4 million), industry and sales

($256.1 million) funds (30).

The structure of the current system was completed with the passage of the Smith-Lever Act

in 1914, creating the Cooperative Extension

Service (CES), which directly provides farmers

with useful information gleaned from the

research system. Funding is provided to the

states through a formula somewhat similar to that

of the Hatch Act. Today, there are extension

offices in nearly every county in the United

States. They employ approximately 9,650 county

agents and 4,650 scientific and technical specialists. The total CES budget is about $1.2 billion

annually. Of that total in 1993, the states provided almost half the extension funding

(46 percent), the federal government about a

third (31 percent), and the counties about a fifth

(19 percent) (1).

The research system must have public support

and funding to function. It also must have the

flexibility and the management capacity to reallocate scarce resources to new priorities, and to

attract highly qualified personnel who can keep

abreast of changing technological opportunities.

Despite high social returns to public sector agricultural investments, the system has been the

subject of criticism from internal and external

sources. External critics decry the heavy research

emphasis on agricultural productivity and the

lack of research devoted to nutrition and food

safety, rural problems, and environmental concerns. Criticisms have been directed at the perceived low quality of the research, the inadequate

interaction of agricultural researchers with the

basic scientific disciplines that underlie agriculture, and the limited role of peer evaluation in

project formulation and review. In addition, public-sector budget constraints have frozen funding.

The public-sector agricultural research system

is clearly being challenged from many directions.

Whether the system can be revitalized and renew

its historical commitment to solve the problems

of U.S. society, or whether it becomes isolated

and loses its credibility with the public remains

to be seen. The remainder of this decade will be a

period of significant stress and change within the

agricultural research system.
4 | Challenges for U.S. Agricultural Research Policy

THE CHANGING ENVIRONMENT FOR 

AGRICULTURAL RESEARCH

As a catalyst to this change, internal and external

pressures on the system will alter the function

and structure of the system. Changing political

support, resource base, and institutional frameworks will put pressure on the system to

change (20,27).

❚ Political Environment

Historically, political support for the agricultural

research and extension system has come primarily from the farm and rural population; as a

result, the system has placed heavy emphasis on

increasing agricultural productivity. However,

agriculture’s traditional base of support has been

eroding steadily. Farm numbers and populations

have been declining, and today more than

75 percent of the total U.S. population resides in

metropolitan areas. Of the 435 members of the

House of Representatives, fewer than 100 represent rural districts (27).

Public interest groups have become increasingly critical of the emphasis on productivity in

agricultural research. The books Silent Spring

and Hard Tomatoes, Hard Times criticized the

system for its failure to address the problems of

the environment, rural communities, and consumer needs. Environmental, consumer, and animal welfare groups have become increasingly

active in recent farm bill debates. Additionally,

these groups have challenged the universities themselves by bringing lawsuits on the

use of public funds for productivity-increasing

research. A lawsuit was brought against the University of California system, as an example, for

using public money to develop a mechanical

tomato harvester.

Increased public activism is indeed changing

the climate in which the agricultural system conducts research. As a consequence, the Food

Security Act of 1985 contained several conservation measures, and many more such measures

were added in FACTA. Several environmentally

oriented research initiatives, such as the groundwater initiative and the low-input sustainable

agricultural initiative (LISA), were also passed.

In addition, new institutions were established to

focus on research and technology transfer assistance for developing new crops and new uses for

traditional crops. Congress has specifically

directed agricultural research funds to key areas

to help the system adjust to these new priorities

faster (21).

❚ Resource Base

Although total research funding has increased

slightly over the past decade, agricultural

research is generally underfunded when one

takes into account its high rates of return on

investment (see Chapter 6). For example, the

states provide the majority of the funding for

research at the SAES, and through the 1980s,

state support increased. However, the recession

of the early 1990s has constrained state budgets,

resulting in few increases and in some cases

declining state support for agricultural research.

USDA both disperses and consumes federal

research funds. ARS accounts for about one-third

of USDA research and extension expenditures, a

share that has remained fairly constant over the

years. Most of USDA’s funds are spent on intramural research by ARS, ERS, and FS. Slightly

more than a fifth of these resources are administered by the Cooperative Research, Education,

and Extension Service (CREES). Most CREES

funds go to SAES and other cooperating institutions.

USDA is SAES’ second-largest single source

of research funding. Historically, USDA funding

has been in the form of block grant formula

funds. Decisions about how these funds are allocated have been made at the local level. USDA

funding has basically stagnated and barely keeps

up with inflation. Increases in USDA funding

primarily reflect congressional earmarking of

grants for such concerns as water quality, nutrition, and integrated pest management and biological control research.

Research funds are not evenly distributed to

all experiment stations. The experiment stations

in 12 states (California, Florida, Iowa, Illinois,
Chapter 1 Overview and Policy Implications | 5

Indiana, Michigan, Minnesota, North Carolina,

Nebraska, New York, Texas, Wisconsin) account

for nearly 50 percent of the total research funding available to SAES, nearly 70 percent of the

USDA competitive grants, 61 percent of all competitive funds obtained from federal agencies

other than USDA, and nearly 60 percent of all

funding from industry support and product sales.

All SAES have diversified their funding sources

to some degree. However, the “have not” SAES

rely primarily on traditional sources of funding

(state and USDA formula funds), while the

“haves” have to a greater degree diversified their

funding sources (27).

❚ Technology Base

To continue doing high-level research, universities and federal laboratories need to keep abreast

of new information and technologies. New biotechnologies and information technologies in

particular are yielding powerful research tools

that can be applied to questions in a wide range

of scientific disciplines. Effective use of these

technologies will require new funding, or a reallocation of funding from traditional research

projects. The scientists who use these new

research tools will need a thorough grounding in

the basic scientific disciplines that underlie biotechnology and information technology.

The same 12 SAES that receive most agricultural research funds also receive most of the

resources devoted to biotechnology research.

Indeed, the concentration of resources in only a

few experiment stations is even more pronounced for biotechnology than for all agricultural research.

❚ Legal Environment

The legal environment in which the agricultural

system operates is changing. Congress has for

the past 60 years expressly permitted intellectual

property protection of new plants. In 1980, the

U.S. Patent and Trademarks Office changed its

interpretation of patent laws so that microorganisms and animals can be patented as well. More

recent patent and trademark amendments gave

universities, other nonprofit organizations, and

small businesses the option, with few exceptions,

to retain the title rights to any federally funded

inventions that they developed.

Until recently, only a few institutions aggressively marketed the research of their faculties,

primarily by licensing their technology to the private sector. Now, however, venture capital pools,

technology development companies, and

research companies with the goal of transferring

technology and making money have become

much more common. In addition, some universities now hold equity in or are otherwise involved

with new ventures that invest in and commercialize the new technologies developed. These relationships between universities and the private

sector, which are rapidly becoming more common, facilitate technology transfer, further beneficial relationships with private companies

(sometimes with the goal of securing more

research funding for the institution), and provide

a way to better acquaint researchers with the

practical application of their research results and

with real-world problems. Researchers who create the new technology are now often given a

share of the returns. Given these realities, conflict-of-interest policies have been designed to

help ensure that intellectual property stemming

from publicly funded research remains available

to the public. Whether such policies are adequate

is a central question, but they are becoming common throughout the university research

system (21).

This wide range of changes was in part what

led Congress to amend the research title of

FACTA in 1990. USDA’s efforts to implement

the sections added to FACTA are discussed

below.

CONCLUSIONS

❚ Purposes of Agricultural Research 

and Extension

Background

In FACTA, Congress specified the purposes of

agricultural research and extension: 1) to con-
6 | Challenges for U.S. Agricultural Research Policy

tinue to satisfy human food and fiber needs; 2) to

enhance the long-term viability and competitiveness of the food production and agricultural system of the United States within the global

economy; 3) to expand economic opportunities

in rural America and enhance the quality of life

for farmers, rural citizens, and society as a

whole; 4) to improve the productivity of the

American agricultural system and develop new

agricultural crops and new uses for agricultural

commodities; 5) to develop information and systems to enhance the environment and the natural

resource base upon which a sustainable agricultural economy depends; and 6) to enhance

human health.

These purposes not only emphasize agricultural sustainability and rural social and economic

concerns—they embrace the entirety of the agriculture, food, environment system. They emphasize major contemporary issues such as the

environment and natural resources, economic

and quality of life issues for rural America, new

crops and new uses, competitiveness of the agricultural system, and human health. Ultimately,

they lead to accountability. Unfortunately, even

though these purposes provide overall guidance

to USDA for research, they have not been implemented in any direct way.

Findings and Policy Implications

The Secretary of Agriculture has not 

established guidelines for USDA overall, 

and individual research units have not 

established guidelines for their programs.

Given Congressional interest in purposes, and

the value of being clear about them, a set of core

purposes needs to be adopted by USDA for its

research and extension programs. The purposes

should be implemented through a set of guidelines and operating principles for program planning, priority-setting, and management, funding,

and evaluation. One way of establishing purposes is to adopt the purposes established in

FACTA throughout USDA.

Although the FACTA purposes are straightforward and appropriate, some other definitions

of research purposes have emerged. The Congressional purposes might be considered in light

of these other definitions. Alternatively, USDA

could bring the several initiatives for purposes

together into a unified whole. It need not, and

should not, frustrate or obscure Congressional

intent.

A common failing with purposes is that they 

often are so general as to have little meaning.

Purposes should be focused and precise, so that

they can provide meaningful guidance for implementation. One approach is to focus on key contemporary national issues—the central feature of

the Congressional purposes in FACTA. This

approach has the advantage of focusing attention

on issues for which research and extension can

be expected to make a major difference. As such,

measurable objectives and specific management

actions and evaluations can be set forth.

Alternatively, USDA could provide support

for generic research advancement across the

wide spectrum of research and application for

the agriculture/food/environment sector. This

approach has the advantage of ensuring that

the entire research system for the sector is supported and incorporated into planning, allocations, and evaluations. It has the distinct

disadvantage of eschewing focus on pressing

national issues and of being substantially featureless as to priorities and direction.

USDA should decide whether to engage in a 

strategic and operational planning approach 

for focusing on key national issues.

“Unified strategic research and applications/

extension plans” for key contemporary issues of

major national interest could be employed. The

intent is to integrate all potential and actual participants into a unified strategy for addressing

issues so as to make as rapid progress as possible

through coordination and integrated planning.

The present system has a low degree of coordination and integrated planning. The situation is discussed further in the next section on the National

Research Initiative Competitive Grants Program,

which would have to be one of the agencies participating in such plans.
Chapter 1 Overview and Policy Implications | 7

USDA should determine how best to engage 

the research agencies in addressing 

purposes and implementing them.

At this writing, each agency determines how to

implement purposes and with whom to relate.

This approach has the advantage of being “innerdirected.” It has the disadvantage of not necessarily securing the advantages that could (and

likely would) accrue from collaborative work.

Alternatively, an integrated approach could be

established among the agencies. Such an

approach would have the advantages of ensuring

that the best and most efficacious expertise and

capacity are taken from each agency and woven

into a coherent whole. Further, this approach

involves all participants, which could lead to

efficiencies and synergisms that might not otherwise exist. It has the disadvantage of being

potentially cumbersome, diminishing long-standing autonomy, and leading to clashes among different institutional cultures.

USDA must give more emphasis 

to after-the-fact evaluations.

Virtually all emphasis is currently on planning

specific categories of research and deciding how

to aggregate resources to do the work. This

approach is not sufficient. In recent years,

national operational planning, which sets measurable objectives for key national issues, has

become more popular. This is significant

progress and demonstrates that operational planning can be done effectively. However, there has

not been similar progress in outcomes evaluations, both to determine progress in achieving the

objectives and as a guide for future program

activity and also resource allocations.

The current system could be transformed to

include after-the-fact evaluations of outcomes

and impacts. Adopting such evaluations would

continue the evolution of management of the system, be consistent with increased funding stringency and for improved performance of

government effectiveness, and be a significant

advance in adding key factors for allocating

resources. It would, ideally, involve programmatic outcomes and impacts and also evaluation

of management and operational effectiveness

and of financial outlays.

❚ National Research Initiative 

Competitive Grants Program (NRICGP)

Background

By authorizing the NRICGP in FACTA, Congress reaffirmed its commitment to funding

research for foundational knowledge (that is,

knowledge used as a basis for more advanced

and applied research) through grants that are initiated by researchers themselves, peer-reviewed,

and competitively awarded. Congress significantly expanded the authorization for funding

competitive grants, specified six high-priority

research areas, strengthened the peer-review and

advisory oversight of the program, and authorized funds for multidisciplinary research.

Overall, the NRICGP has been implemented

effectively. The priority research areas are appropriate and have received emphasis and funding

within the constraints available. A number of

steps, including advisory mechanisms, have been

taken to ensure that the program is relevant to

issues in the agriculture/food/environment sector. However, appropriations have been substantially less than authorized and required for

adequate funding of the priority research areas.

This dearth of appropriations has necessarily led

to inadequate funding of key research areas,

including natural resources, environment, and

rural economic vitality. Notwithstanding the success of the program and its continuing promise

and potential, there are a number of major implementation and funding issues and policies that

should be dealt with during the next five years.

Findings and Policy Implications

USDA should reinforce the focus and 

emphasis of the NRICGP.

The focus and emphasis of the NRICGP are on

increasing foundational knowledge through

grants that are competitively awarded. The grants

are based on peer review, using the criteria of

scientific quality and relevance to the long-term

sustainability of the agriculture/food/environ-
8 | Challenges for U.S. Agricultural Research Policy

ment sector. At the same time, pressure to

engage the NRICGP directly with the applied

aspects of contemporary issues could well divert

the NRICGP from its original purpose.

If the current emphasis is maintained, the original intentions for the program are preserved.

The NRICGP has shown that it is capable of discerning which topics are relevant and suit the

needs of foundational research knowledge. This

capability increases the attractiveness of

USDA’s mission for agriculture/food/environment to all the nation’s scientists, a desirable

national policy goal.

Alternatively, the NRICGP could be opened

to more applied research. Such an action would

significantly dilute, and ultimately likely preclude, the program focus for doing the kind of

foundational research that needs to be done. It

would also make the NRICGP just another funding vehicle for all manner of research already

well represented in USDA’s research portfolio.

Should this happen, it would be reasonable to

consider phasing out the entire NRICGP.

USDA should affirm and reemphasize the 

direction of the NRICGP on foundational 

knowledge.

The NRICGP has been asked, by direction and

by funding actions, to focus on a broad array of

research questions, priorities, and types. It must

direct its efforts to fundamental and related mission-linked research to provide foundational

knowledge for the agriculture/food/environment

sector, including major long-term issues such as

sustainable agriculture and water quality; and

more specific topical issues, such as global

change and monitoring for UV-B radiation.

The program has responded well to this mixture of demands and has, in the main, been faithful to its original intent. Because of earmarking

and other stresses on the NRICGP, its efforts

have, however, involved sacrificing some funds

and responsiveness.

Consideration could be given to formally

identifying the areas where foundational knowledge is needed and incorporating them into the

NRICGP. Virtually every issue requires additional foundational knowledge. This appropriately falls within the NRICGP, and it is

reasonable that the program be considered as the

agency which should support it (but only if additional funds are provided for new programs and

topics).

USDA should develop unified strategic 

research and application/extension 

implementation plans for contemporary 

issues.

The various programs and agencies that make up

USDA’s research portfolio operate independently from one another to a large extent, even

though the programmatic issues that undergird

and animate the program are common to all. Further, programs such as the NRICGP (along with

major portions of the ARS and the SAES system)

emphasize foundational knowledge, common to

a number of the programmatic emphases and

agency priorities. A set of unified strategic

research and application/extension implementation plans for key contemporary issues would

help to ensure that the necessary work gets done,

related elements are coordinated with each other,

and application of research results is focused and

coordinated.

There are no such strategic plans at present.

Continuing to operate without them means that

the present system of agency autonomy and the

current coordination system among the federal

elements and among the federal, state, and private sector partners would suffice for addressing

the issues. The current system has the virtue of

avoiding undue centralization; it has the drawback of being largely uncoordinated and responsive only to the interests of the individual

elements.

Increasing coordination among programs and

agencies without formally creating such unified

strategic plans is an alternative. This approach

would use the current systems and would avoid

creating yet more planning and associated institutional mechanisms. Some observers believe

there is already more planning than necessary.

Creating a pilot or full program for such unified plans could be attempted. A pilot program
Chapter 1 Overview and Policy Implications | 9

could focus on selected key topics such as water

quality, pest management, and sustainable agriculture. To make the program work (and make it

attractive to the participants), planning could be

followed by funding to implement the program.

The risk is that the plans would be simple listings

and recitations of work under way. That result in

itself would be satisfactory if it were linked to

desired outcomes, but would be unsatisfactory if

merely the status quo were otherwise continued.

The aim is to promote greater efficiency and

effectiveness by leveraging and coordinating

work and funding, and by being clear about and

dedicated to securing meaningful outcomes

within specified time periods.

The NRICGP is not funded sufficiently.

Appropriations for the NRICGP are currently

about $100 million, even though the authorized

level is $500 million. The availability of quality

proposals is more than double the current funding level, and there is obvious programmatic

need for foundational knowledge from the program. The return on research investments is high

(20 percent or more). Without additional funding

and continued growth of funding, there is every

reason to believe that the program will languish

at its current level, and that a major opportunity

for securing both knowledge and researchers for

the sector will be lost.

Earmarking and targeting NRICGP 

funds is counterproductive.

Incorporating earmarks and other targeting of

NRICGP funds would continue current practice.

Over time this practice will destroy the integrity,

and ultimately the fabric, of the program: the

demands for funding for major issues are so

strong and pervasive that there is no obvious way

to limit earmarks and targeting in a systematic

way. Earmarks address applied issues that are the

focus of other parts of the research portfolio, not

the NRICGP. Most important, earmarks do not

provide the foundational knowledge that the

agricultural sector needs.

To ensure the integrity of the program, all earmarking and targeting should cease. If it is

believed that the NRICGP is appropriate for

doing some or all of the work on a topic, the program staff should be consulted to determine how

the interests might be met within the program

structure and what funding would be required.

Responses to earmarks have shown that this

would be effective.

❚ Sustainable Agricultural Research 

and Extension

Background

Congress has been interested in sustainable agriculture since at least 1977, when it first defined

the new phenomenon as an effort to: 1) satisfy

human food and fiber needs; 2) enhance environmental quality and the natural resource base

upon which the agriculture economy depends;

3) make the most efficient use of nonrenewable

natural biological cycles and controls; 4) sustain

the economic viability of farm operations; and

5) enhance the quality of life for farmers and

society as a whole. Congress’ interest grew out

of a number of different but largely related concerns: emerging recognition that soil and water

resources were being degraded; adverse environmental and human impacts of chemical pesticides; the steady decline of the economic and

social vitality of the rural and farming sector;

steadily decreasing farm numbers and growing

evidence of increasing proportions of larger

farming operations and part-time farmers; and

increased competitiveness in agricultural production. Congress also aimed to address the unease

of some observers who argued that these concerns had received only limited if any attention

from USDA, or from the land-grant university

and state agricultural research system. This issue

was addressed further in the Food Security Act

of 1985 (the 1985 farm bill) by Congress’ intention that USDA determine how to do more

research to preserve natural resources and environmental quality concurrent with ensuring agricultural productivity. Through FACTA,

Congress went on to establish 1) the Sustainable

Agriculture Research and Education (SARE)

program and 2) more specific emphases for a
10 | Challenges for U.S. Agricultural Research Policy

sustainable agricultural economy and for the natural resource, environmental, and social and economic quality of agriculture and the rural sector,

by altering the research title.

Findings and Policy Implications

There is little effective leadership and 

management for sustainable agriculture 

in USDA.

A major criterion for the success of any program

is that it be supported strongly and clearly by

senior policy leadership, and that a management

structure be established that is both effective

internally and accountable externally. At present,

such actions have not been taken, although a

major initiative to this effect has recently been

established, reporting directly to the Deputy Secretary.

USDA should determine the extent to which 

sustainable agriculture should receive 

emphasis, planning, management, and 

funding throughout the department on a 

systemic basis.

The critical issue is whether sustainable agriculture—or other major issue comparable in scale

and substance—should receive systemic leadership, management, planning, funding, and oversight and accountability. Or, alternatively,

whether such issues should receive attention

based solely on the interests and perquisites of

individual agencies and individuals. Advantages

of the former include integration, efficiency,

cost-effectiveness, and increased accountability

for results. A particular advantage is that such an

approach would provide for a systemic analysis

of possibilities and encourage cross-boundary

thinking and collaboration. Possible disadvantages include ineffective, possibly misdirected

“top-down” leadership and management; insufficient scientist and extension motivation and

commitment; and the possibility of catastrophic

failure from “central planning” or its variants. An

almost certain disadvantage is the lack of significant systemwide operational planning (in contrast to thematic and budget acquisition planning,

which is done in USDA).

The advantages and disadvantages of the alternative approach are essentially the obverse of

those of the systemic approach. Possible advantages include minimizing or even avoiding the

disadvantages of the systemic approach. Possible

disadvantages are lack of attention to and incomplete coverage of sustainable agriculture; lack of

involvement of key partners; and cost-ineffectiveness and lack of research focus.

If the systemic approach is taken, a number of

options can be considered. A useful option would

be to build and expand on the current initiative.

Another useful option would be to create an integrated, unified strategic research and applications plan, as outlined previously in the section

on the NRICGP. If that option is pursued, most if

not all of the disadvantages outlined above

would be avoided.

Funding issues should be engaged.

There seems little reason to believe that sustainable agriculture will not benefit from steady

increases in appropriations, as a consequence of

the importance and priority for sustainable agriculture and of the success to date. However, if

increased funding is to come, it will most likely

be at the expense of another research area. Such

an action would have its own limitations. For

example, if the funding were taken from the

NRICGP, a major venue for attracting scientists

to the fundamental research questions that underlie sustainable agriculture would be destructively

compromised.

Congress or USDA could redirect funds from

the federal and state partners to be dedicated to

sustainable agriculture. While such an action

may be satisfactory for federal agencies, it will

likely be resisted strongly, and successfully, by

state partners, given past history. A more

focused, incentive-based system seems more

appropriate.

Redirection is most effectively and directly

done through increasing the competitive grants

programs for both the SARE and training programs. Given the constraints on formula funds

and the decentralized traditions of allocating and

using them, expanding the competitive grants in
Chapter 1 Overview and Policy Implications | 11

these two programs is the more efficacious

approach. Much national experience through the

science and technology sector shows that focus

and direction are easily and positively established for competitive grants, and proposals of

highest merit and relevancy are most readily

assured of being funded. Further, the current

grant programs are successful to this point and

give every indication of being so in the future.

❚ Alternative Agricultural Research 

and Commercialization

Background

Through FACTA, Congress gave major attention

to the broad topic of new uses and products for

the first time. Its action reflected widespread

national interest in diversifying the agricultural

production sector beyond traditional commodities; expanding the economic vitality of the agricultural sector; and expediting technology

transfer from the laboratory to commercial use.

Two major initiatives were taken by Congress: 1) establishment of a program and organizational structure for Alternative Agricultural

Research and Commercialization (AARC) and

2) establishment of the Agricultural Science and

Technology Review Board. AARC assists the

commercialization of nontraditional, nonfood

products through product development and

prototyping, marketing and economic analysis,

precommercial development, early-stage manufacturing and testing, and product introductions.

Its emphasis is on precommercial development

and testing, marketing, and pilot production,

rather than on research and early-stage development. This is done because it is currently

believed to be the most cost-efficient way of

expediting commercialization. The major

research function, appropriately, is left with public or private research and development agencies.

Given that the focus is on business development

and product commercialization, inherently private sector rather than public sector activities,

such an emphasis is appropriate. AARC’s central

financial resource is a revolving fund initially

provided by Congress to make investments to

assist commercialization of new products.

Repayment is through a percentage of future

sales or equity in the company.

The Agricultural Science and Technology

Review Board was established to provide technical assessment of agricultural issues and to consider the impact of technologies on agriculture

and the social and economic well-being of communities. Like AARC, it complements Congress’

intent in encouraging the development of technologies friendly to the environment, people, and

communities. However, both of these new institutions have suffered from inadequate funding.

Findings and Policy Implications

Funding issues for AARC should 

be addressed.

By any measure, this program is a significant element in USDA’s overall program, and a potentially significant adjunct to the department’s

constituent agencies. As such, its future needs to

be addressed forthrightly, and commitment must

be made to its success. A key element is funding.

Based on the data available, and absent the ability at this point in time to make conclusive judgments about the efficacy of its financial

investments, AARC’s funding needs to be sustained at least at the present levels, and preferably increased substantially to add to and

diversify the investment portfolio. With the right

investments, the program should reap a profit

that can be continuously reinvested in additional

technologies and products.

If funding continues at current levels, it would

mean appropriations of about $8–10 million per

year. Such appropriations would be fiscally prudent (and conservative), given the early stage of

the program and the need for determining analytically the success of the project selections and

investment decisions. However, this relatively

low level of funding also indicates to the industry

that AARC will “go slow”—even though there is

evidence that the program is working well and

could be of greater benefit and impact with additional funding.
12 | Challenges for U.S. Agricultural Research Policy

As an alternative, the program could be

expanded commensurate with current staff and

project availability. At present, the program can

be expanded by two- to four-fold without an evident decline in quality, according to staff analysis. Modest expansion of the appropriations to

$15 million for FY 1996 and to $25–30 million

over the following two years would be reasonable. This would bring the total in the revolving

fund to a little less than $100 million.

USDA should determine the optimum 

location and functions for technology 

review and assessment.

At present, this important function rests with the

Agricultural Science and Technology Review

Board established by FACTA, which is outside

the environment of the operating USDA agencies

(e.g., ARS and ERS) and virtually an integral

part of another advisory body (the Joint Council

for Food and Agricultural Sciences). If close

involvement between research and development

and technology review and assessment is desirable, as seems appropriate for most circumstances, it is also appropriate that this review and

assessment function be brought philosophically

and operationally closer to the operating agencies. Alternatively, if review and assessment are

to be something akin to a “conscience” for the

operating agencies, it is reasonable to suggest

that at least some of the function be done outside

as at present, but also with input from, the operating agencies.

At a minimum, technology review and assessment must be emphasized throughout USDA.

Without such emphasis, review and assessment

will always be considered second-hand activities

that are not directly important to the operating

program units.

The present situation keeps the board in relative obscurity, without any real opportunity for

interaction with the operating agencies. It does,

however, provide opportunity for independent

assessment.

Alternatively, the board could be folded into

the Joint Council for Food and Agricultural Sciences. Such a plan has the virtue of administrative simplicity and connection of assessment to

the review, oversight, and advisory functions of

the council. It does not address the fundamental

issue of disconnection from the operating agencies.

USDA should create technology review and 

assessment functions in each operating 

agency, and also create a significant 

coordination and collaboration function to 

work among them in a synergistic way.

The reasons for this approach are derived from

the above rationale: importance, integration into

operating units, coordination as appropriate with

related units, and a USDA-wide approach.

❚ Financing, Organizing, and Managing 

Agricultural Research

Background

Agricultural productivity has grown rapidly in

the United States relative to productivity in the

general economy. Many attribute a good portion

of this growth to public-sector agricultural

research and extension, which operates primarily

through land-grant colleges and USDA research

agencies, in a system that was introduced over a

century ago. In recent years, the agricultural sciences have increasingly been asked to do more

with less. Questions have been asked about

whether the old research institutions are still

needed, and about how they should adapt to

accommodate changes in science, in scientific

institutions, in society and social attitudes, in

government, in agriculture itself, and in the general economy.

To achieve the greatest gains for society as a

whole, a fundamental rethinking of the basis for

and approaches towards financing, organizing,

and managing public-sector agricultural research

is needed. Most previous commentators have

called for more federal dollars for research—but

that is only a part of the solution. Other public

policy mechanisms can (and should) be used,

along with taxpayer funds, to increase the total

private and public investment in agricultural

research, and to promote a socially profitable
Chapter 1 Overview and Policy Implications | 13

mixture of research programs (from basic to

applied research; across disciplinary areas;

across commodity-oriented research programs;

in terms of its geographic relevance; and

between environmental and other natural

resource issues). The policy analysis must

include a consideration of different funding

mechanisms—how they affect the cost of

research (including who bears the cost in relation

to who benefits), and how they affect incentives

for private research and development.

A rethinking of policy extends beyond the

boundaries implied by the current institutional

structure, dominated by the SAES and the USDA

intramural laboratories. Such an effort means

considering greater use of in-between alternatives, such as regional research institutions, and

allowing open competition among all of the different institutions, where appropriate, for the

available funds.

An integrated, rather than piecemeal, assessment of the full range of public policy issues

related to agricultural research is required. Decisions must be made concerning 1) the relative

responsibilities of the major research participants

for research (for example, fundamental, applied,

developmental; generic or specific; geographic

emphasis; and the like); 2) the amount of

resources (federal, state government, and other)

to allocate to the research; 3) the way research is

funded; 4) the types of research undertaken;

5) the institutional structures related to allocating

resources and conducting research; 6) the mechanisms for communicating research results; and

7) the relative roles for the major participants

including federal and state governments, universities and research institutes, and the private sector. All of these are mutually dependent, and they

should be thought through together. Making

changes in one element (for instance, increasing

or decreasing federal support for research, or the

responsibilities of state governments compared

to the federal government for funding locally and

regionally significant research) without thinking

through the implications for other elements of

the system (incentives and institutional mechanisms for industry-based research support, for

instance) could have undesirable and unforeseen

consequences.

Findings and Policy Implications

Economic efficiency should be stressed.

The rationale for intervention leads to a single

criterion for designing public policy for agricultural research and for organizing and managing

the institutions that are used to implement that

policy—economic efficiency. This would permit

the incorporation of externalities, such as environmental and social effects, into the evaluation

of research funding. According to this criterion,

the evidence suggests that the total (private plus

public) investment in agricultural research

should increase.

Alternative financing methods should 

be developed.

Financing can be made more efficient—in terms

of total quantity of research resources, lower

costs of raising the revenues, and greater allocative efficiency. As but one approach, increased

use of industry check-off funds is a good way to

do this. The development of this and comparable

types of arrangements could be stimulated appropriately by the provision of tax incentives and

matching grants from state and federal governments.

Alternative organizations for agricultural 

research should be created.

Research could be organized more efficiently by

developing alternative institutions to bridge the

gap between state and federal jurisdictions, and

through greater use of economic efficiency criteria to determine the balance between different

types of research organizations. The current system emphasizes two types of institutions (for

example, SAES versus intramural USDA institutions) funded by a combination of state and federal government monies. There is a potential to

develop new institutions serving subnational

multistate regional or commodity interests, on

the basis of efficient research jurisdictions, with

a mix of private and public sector funding.
14 | Challenges for U.S. Agricultural Research Policy

Management of agricultural research 

can be improved.

Finally, the management of research can be

improved by substituting economic incentives

for central directions, by clarifying the economic

objective of research and ensuring that resources

flow according to the achievement of that singular purpose, and by using competition rather than

committees to allocate resources. To achieve the

greatest social payoff from public-sector

research, the current arrangements (formula

funding and special grants for extramural

research, and an earmarked pot for intramural

research) must give way to a greater use of competitive grants.
| 15

2

Purposes of the

Agricultural

Research and

Extension System

ongress has long evinced interest in the

effectiveness of the agricultural research

and extension system. It has placed particular stress on high-priority national

issues that it has previously identified, and on

securing research results and applications (outcomes) that address those issues. Accordingly,

Congress took the strong step in FACTA of specifying purposes that “[f]ederally funded agricultural research and extension programs shall be

designed to, among other things, accomplish....”

These purposes are to:

1. “continue to satisfy human food and fiber

needs;

2. enhance the long-term viability and competitiveness of the food production and agricultural system of the United States within the

global economy;

3. expand economic opportunities in rural America and enhance the quality of life for farmers,

rural citizens, and society as a whole;

4. improve the productivity of the American

agricultural system and develop new agricultural crops and new uses for agricultural commodities;

5. develop information and systems to enhance

the environment and the natural resource base

upon which a sustainable agricultural economy depends; and

6. enhance human health:

■ by fostering the availability and affordability of a safe, wholesome, and nutritious

food supply that meets the needs and preferences of the consumer; and ■ by assisting farmers and other rural residents in the detection and prevention of

health and safety concerns.”

In expressing these purposes, the Congress

was also careful to note they are “[s]ubject to the

varying conditions and needs of States.”

Further, to encourage early implementation of

the purposes, the Congressional conference managers stated their intention “that the Secretary

establish guidelines to ensure that the purposes

expressed. . .are reflected in the priority setting

processes for research and extension programs

such that projects consistent with these purposes

are emphasized and each of these purposes is

advanced by the research and extension program

in its entirety...[emphasizing]...that it is not their

intent that this statement of purposes be used to

prohibit any research or line of inquiry.”

Several observations about the FACTA purposes are in order. First, they emphasize agriculC
16 | Challenges for U.S. Agricultural Research Policy

tural sustainability (both environmental and

social) and rural social and economic concerns.

This is a new emphasis for the farm bill and for

the agricultural research system, even though

sustainability has been intrinsic to a number of

initiatives during the past 15 years (such as those

concerning integrated pest management and

water quality).

Second, the purposes embrace explicitly the

entirety of the agriculture/food/environment1

sector. This is a major departure from the previous single-minded emphasis on increasing agricultural production.

Third, the purposes focus on relevance by

emphasizing several major contemporary issues

in the agriculture/food/environment sector,

including environmental and natural resources

“upon which a sustainable agricultural [emphasis added] economy depends”; economic and

quality-of-life issues for rural America; new

crops and new uses in relation to productivity of

the agricultural system; competitiveness of the

food production and agricultural system; and

human health, nutritious food, and prevention of

health concerns. These issues are further emphasized by individual subtitles and sections of

FACTA. For example, subtitle B addresses two

central components of sustainable agriculture:

sustainable use of environmental and natural

resources, and the social and economic quality of

life for rural communities. Subtitle G addresses

new uses and products, and section 1605 establishes a technology assessment board to relate

research results to technology transfer and application. Congress is clearly stressing its belief that

federally funded agricultural research and extension programs should be concerned with the

entirety of the agriculture/food/environmental

1 The term “agriculture/food/environment” sector is used throughout this report. It is an umbrella term that refers to the entire agricultural

production system—including inputs, production and activities at the farm and processing levels, and outputs; the associated food production, processing, and distribution system; and the environmental aspects of both.

sector, not just the agricultural production and

productivity components.

Fourth, the purposes lead to accountability.

Congress wants these purposes to be implemented operationally as rapidly and fully as possible throughout the federally funded agricultural

system, including the state programs that receive

federal funds such as the SAES and CE systems.

This is illustrated by the conference managers’

specific intention that the Secretary establish

guidelines to make priorities consistent with the

purposes and to emphasize projects consistent

with the purposes. Taking the purposes and the

guidelines together, it is reasonable to conclude

that Congress is especially interested in seeing

useful results from federally funded research, in

ensuring that these results be applied to major

issues, and in seeing that USDA is responsive to

the directions and interests of Congress. In short,

Congress wants USDA to be accountable.

Fifth, the context for focusing on purposes has

expanded substantially since FACTA was

passed. Purposes for the research program are

emphasized in at least three additional actions.

The Government Performance and Results Act

(GPRA), designed to increase the effectiveness

of the federal government, also involves research

and hence the purposes for research. It further

embodies the concepts of targeted goals,

expected outcomes, and accountability. The

report on research by the Office of Science and

Technology Policy, Science in the National

Interest,

2

 strongly emphasizes fundamental

research as it relates to national competitiveness

(18). In turn, this relates directly to the agricultural research enterprise. The companion report

by OSTP, Technology for a Sustainable Future,3

bears directly on the purposes for agricultural

research (19). In the past few months, the Under

2 See especially the emphasis on basic research, the value of basic research for understanding plant disease infection, and the importance

of research for a safe and nutritious food supply. 3 See especially the compatibility between science for environmental remediation strategies and agricultural and environmental research

areas.
Chapter 2 Purposes of the Agricultural Research and Extension System | 17

Secretary for Research, Education, and Economics has presented five emphases for USDA’s

research and education program that align quite

closely with the six purposes for research and the

seven criteria for sustainable agriculture established by Congress in FACTA.

IMPLEMENTATION OF THE PURPOSES

The Secretary has not established guidelines for

USDA overall, and individual research units

have not established them for their programs.

However, some actions have been taken with

regard to individual agencies.

❚ Agricultural Research Service (ARS)

ARS, with about 36 percent ($679.2 million) of

the total federal agricultural research and extension appropriation for FY 1994 ($1,885.7 million), is a major part of the federal research

portfolio4 (30). ARS incorporated the FACTA

purposes into its six-year implementation plan.

The plan also sets forth ARS policies that ensure

a focus on the purposes, including operating

practices, setting of research priorities, and

reward systems. ARS believed it had adequately

met the Congressional expectations for the

agency to establish guidelines to implement the

purposes. However, some in Congress and others

outside USDA did not consider the ARS action

sufficient. A significant impediment to establishing these guidelines was a lack of clarity concerning what was meant by “guidelines.” ARS is

now addressing this issue by realigning its program planning, priority-setting, budgeting,

project selection, resource allocation, accountability, and reporting systems with GPRA and

customer service requirements. Also, ARS is

adopting the FACTA purposes as its strategic

planning goals and as the basis for stating

expected outcomes and performance measures.

This process also embodies the five priority

research areas established by the Under Secretary for Research, Education, and Economics.

4 These and other data in this section are based on requested data of USDA as well as published data.

The new ARS strategic plan is expected to be

completed in 1996 (15).

Program guidance within ARS means setting

performance goals that are measurable and quantifiable, and to use a meaningful and measurable

method for pursuing the intent of the purposes

without stifling creativity and productivity. ARS

is also determining how to prepare an integrated

approach for addressing the purposes, the five

priorities of the Under Secretary, and the requirements of the GPRA. In addition, there is some

potentially very useful work under way to integrate ARS and state agricultural experiment

stations (SAES) planning and operations more

effectively. This work is discussed further in the

following section.

❚ Cooperative State Research, Education, 

and Extension Service (CSREES)

CSREES is the direct successor to the former

Cooperative State Research Service. Its principal

responsibility is managing and overseeing the

federal/state partnership for agricultural research,

education, and extension in close collaboration

with the SAES, the state cooperative extension

services, and the land-grant colleges of agriculture. This partnership was first established

through the Morrill Act of 1862, and then effectuated more specifically through the Hatch Act

of 1887 (for agricultural research), the Second

Morrill Act of 1890 (which aimed to involve the

historically black colleges and universities in

agricultural research and education), the SmithLever Act of 1914 (for extension), and subsequent acts. Because of these extensive research

responsibilities and relationships outside USDA,

CSREES is the department’s principal extramural research agency. In addition, CSREES is

responsible for the National Research Initiative

Competitive Grants Program (NRICGP), which

is USDA’s principal extramural, competitive

grants agency (see Chapter 3).

CSREES receives about 17 percent ($325.2

million in the formula and special grants catego-
18 | Challenges for U.S. Agricultural Research Policy

ries) of the federal research portfolio; it receives

another $103 million for competitive grants. The

state land-grant and related institutions that

receive these funds play a very large role in the

national agricultural research and education portfolio, when all funds are considered: they receive

more than $2 billion from a variety of federal,

state, and private sources. Of that figure,

$648.5 million is from federal funds (for

FY 1993), and of these federal funds,

$399.0 million comes from USDA. The remainder comes from other federal grant programs,

including those run by the National Institutes of

Health and the National Science Foundation.

Given the small proportion of funding from

USDA for state and land-grant partner research

and extension, the department plays a significant

support, but not necessarily an agenda-determining, role (17).

CSREES has not promulgated guidelines to

implement the FACTA purposes. Nor has it done

an analysis to determine how relevant the purposes are to the federally funded research

projects for which it is responsible. However,

because of the long-standing partnership

between USDA and the states, and because of

USDA’s fiduciary responsibilities for these federal funds, which are allocated to the states,

CSREES has long taken a strong, active role in

planning and managing the funds and in assisting

the planning and management of programs

funded by them.

This is reflected in actions CSREES has taken,

and is initiating, that relate directly and indirectly

to the purposes and guidelines of the research

title. First, instructions have been sent to the

directors of the SAES and State Cooperative

Extension programs requesting that their federally funded programs be consistent with the purposes. Second, the purposes have become central

to several aspects of research planning and collaboration. For example, a strategic agenda for

CSREES-related extramural research programs

is being prepared consistent with the purposes.

Third, the SAES Strategic Planning Committee

is interested in using the same general areas of

the ARS six-year plan for its own strategic planning. If this takes place, the relationship between

SAES and ARS planning has the virtue of establishing planning and programmatic relationships

between two central elements of USDA’s

research system—which in turn provides a significant opportunity for programmatic integration and collaboration that has heretofore not

been possible. Fourth, the four regional associations of SAES directors are in process of setting

priorities for regional research programs. Fifth,

to bridge gaps between program and purposes, an

effort is under way to bring together strategic

planning for the state system and CSREES, to

provide a common response to the GPRA. And

sixth, attention is being given to linking outcomes, and performance indicators for them, to

the purposes.

If this system can be established and operated,

ARS, the SAES, and the extension systems could

jointly establish major outcomes (to meet the

FACTA purposes and address key national

issues) and identify the performance indicators

(and hence the programmatic work) necessary to

achieve the outcomes. Such a move would augur

well for a more integrated system and focus

attention on outcomes and performance. Present

plans are to focus on a set of major issues of

national concern.

❚ National Research Initiative 

Competitive Grants Program (NRICGP)

The NRICGP accounts for about 6 percent

($103 million) of total federal funding for agricultural research. The NRICGP staff have

included the FACTA purposes in their program

announcements. The instructions to applicants

for NRICGP grants, and to reviewers, make it

clear that all research funded by the NRICGP

must be relevant to the long-term sustainability

of agriculture. Further, the NRICGP has evaluated its research grants to determine the extent to

which they meet the purposes established by

Congress. All of the research is believed to apply

directly to those purposes. Chapter 3 on the

NRICGP provides additional information and

perspective.
Chapter 2 Purposes of the Agricultural Research and Extension System | 19

❚ Economic Research Service (ERS)

The research of ERS totals 2.9 percent ($55.2

million) of the federal funding for agricultural

research. Virtually all of it is allocated for intramural studies. No evident actions have been

taken to directly address the Congressional purposes.

❚ Forest Service (FS)

The FS research budget comprises about

10 percent ($193.1 million) of the total agricultural research budget. Virtually all of this is spent

intramurally. No evident actions have been taken

to directly address the Congressional purposes.

Clearly, guidelines to implement the Congressional purposes have been established in a haphazard fashion. More certainly could have been

done. However, the real issue is to what extent

the purposes have been met. Given the constraints of this study’s design and duration, it has

not been possible to make an analytical determination of the extent to which the purposes have

been met, or to what extent the emphases for federally funded agricultural research have changed.

Some changes have obviously occurred. One

good example is the increased emphasis on sustainable agriculture throughout USDA’s programs and activities. Specifically, all competitive

research grants administered through the

National Research Initiative Competitive Grants

Program (also authorized in FACTA) must be

relevant to the long-term sustainability of U.S.

agriculture, in addition to being of high scientific

merit.

Rather than focusing on the reasons why

guidelines were not established, the next section

addresses the key issues of relevance and

accountability in terms of the characteristics and

context of the research enterprise, and in terms of

how Congress’ intentions might be put into

action.

RELEVANCE AND ACCOUNTABILITY: 

KEY CHALLENGES AND PERSPECTIVES

In the purposes for the research title of FACTA,

Congress clearly gave high priority to relevance

and accountability for the federal agricultural

research and extension system. Implicitly, Congress expressed its dissatisfaction with the lack

of attention given by the system, at least prior to

1990, to major issues affecting the nation’s agricultural and food system, including the vitality

and quality of rural communities and economic

life.

The way Congress chose to focus on relevance and accountability was by setting out six

purposes for the federally funded agricultural

research and extension programs and by asking

that USDA guidelines be promulgated to ensure

that the purposes would be implemented. Both

purposes and guidelines are essential first steps.

But a number of questions arise: Are purposes

and guidelines sufficient? Are they optimal

approaches? Why has there been only limited

implementation to date, and what are we to make

of it? And how can the future be considered?

Altering the direction and management of

research and application—in this case, to achieve

certain purposes and ensure accountability—is a

challenge under any circumstances. In meeting

this challenge, a number of contextual factors

and characteristics intrinsic to any research

enterprise must be considered and dealt with.

Some of these include (i) duration and momentum of research; (ii) the importance of purposes

and guidelines, and their limitations; (iii) context

and characteristics of the agricultural research

system itself; (iv) the dichotomy of top-down

versus internal direction.

❚ Duration and Momentum of Research

Research has a long-term flow, and it cannot be

abruptly stopped and started without sacrificing

results and progress. Scientists and their managers are understandably loath to waste resources

and time in a start-stop, start-change way, particularly given the long investment and start-up

times usually demanded by good research. Thus,

there is a built-in lag in conversion from one

research direction to another, and significant

transition times are often required.
20 | Challenges for U.S. Agricultural Research Policy

❚ Purposes and Guidelines: 

Importance and Limitations

Specifying purposes for a research enterprise is

important. Guidelines for efficacious management to achieve the purposes are appropriate.

Good management requires both. However, no

matter what their specific intentions and how

well intended, purposes and guidelines must

inevitably be written broadly. Such broad directives ensure that opportunities to explore the full

dimensions of a topic are not lost, and provide

for individual creativity and innovation. With

regard to agricultural research, purposes and

guidelines could address a range of issues: much

of traditional agricultural production, productivity, and cultural practices research fits with sustainable agriculture, and much of the

entomology, plant pathology, and pest management research fits with biological control of

pests. It would not be difficult for individual

investigators and managers to believe, accurately

to them, that their current work and future directions fit well within such purposes and guidelines. However, others outside the research

system may not believe that such broad interpretations adhere sufficiently to stated purposes.

There is the very real possibility of unproductive

confusion and even contention.

❚ Context and Characteristics of the 

Current Agricultural Research System

For the agricultural research system—broadly

defined—there are a number of key contextual

factors that bear directly on the efficacy of purposes and guidelines.

First, the system is highly decentralized and

multifaceted, incorporating a number of major

research agencies. This decentralization, both

inside and outside USDA, is an impressive feature of the system. It also makes adhering to centrally established purposes and guidelines

difficult at best. Further, the land-grant research

partners are major participants in the federal

agricultural research system. They receive their

funding from state, private, and other sources, in

addition to federal funds (which are usually only

a small fraction of their research budgets). These

diverse funding sources from outside the federal

government add to the complexity of this decentralized system.

Second, appropriations for USDA ($1,885.7

million) are less than one-half of the overall

funding of the agricultural research system. It is

not obvious that the small fraction of federal

funds in the state and land-grant partners

research programs can have a predominating

influence on those programs, both because of the

amounts and also because of the longstanding

discretion accorded state and land-grant research

and extension program managers.

Third, the agricultural research and extension

system is to a large degree user-based. Both traditional and more recent user and stakeholder

groups have a deep, longstanding claim on the

system. Any efforts to transform so that it

adheres more closely to purposes and guidelines

must also take into account the need to transform

user and stakeholder expectations.

Fourth, there is an unusually broad array of

functions intrinsic to and embedded in the federal agricultural research and extension system.

These functions range from the most basic

research (such as genome studies, mathematical

biology, and secondary products of plant metabolism) to the most applied and developmental

studies (such as testing and applying of new

design and manufacturing principles for devices,

machines, and products). Furthermore, the applications function is embedded strongly in the

cooperative extension system, which itself is

closely attached to, and often inseparable from,

the research function. This “ingrained intimacy”

of function is one of the exceptionally strong

attributes of the agricultural research system. It

also tends to thwart efforts to adhere to purposes

and guidelines and other management directions.

Fifth, just as the functions extend across a

broad range, so do the disciplines involved in the

agricultural research system. They range from

fundamental molecular and cellular biology,

mathematics, chemistry, and physics to ecology,

environmental biology, and soil and geosciences

to the classically agricultural disciplines for the
Chapter 2 Purposes of the Agricultural Research and Extension System | 21

plant and animal sciences, including the pest protection-oriented disciplines. Meshing all of these

disciplines to align with purposes and guidelines

is difficult, at best, absent a guiding construct

that involves them meaningfully in specific

directions.

Sixth, the planning system for the agricultural

research system is a combination of planning for

the intramural research agencies (such as ARS,

ERS, and FS), the extramural competitive grants

program (the NRICGP), and the extramural

agencies (such as the state agencies and landgrant partners). Program planning for the first

two has traditionally been more directed as to

areas, program focuses, and resource allocation

than the last (the state and land-grant partners).

This befits the relative autonomies of the three

parts. However, even the planning for the state

and land-grant partners is more planning for

emphases for funds acquisition (which is centralized through USDA’s budget) rather than for

fund allocation (which is decentralized at the

state and land-grant levels). This basic dichotomy does not encourage program planning consistent with federal purposes.

❚ The Dichotomy of Top-Down Versus 

Internal Direction

A serious organizational challenge is whether

efficacy in research best comes from top-down

direction or from internal direction. Top-down

direction of a research program, such as established by purposes and guidelines, is necessary

but not sufficient. Although it may be satisfying

to managers, top-down direction is less than optimally effective with scientists who are primarily

self-motivated. Alternatively, internal direction

can run the risk of flowing slowly over time to

projects that, while interesting, may be neither

important nor contribute to overall purposes and

goals. A creative combination of the two

approaches is most appropriate.

Given this array of context and characteristic

for the research enterprise, the challenge then

becomes how best to encourage and reinforce the

direction of research and application consistent

with the purposes of FACTA. The key issue is

philosophical, and it strikes to the very heart of

the successful research enterprise:

To what extent should a central research management agency, the Department [USDA] in

this case, specify or write guidelines as to how

and on what major research and extension is to

be done (“top down” direction) as contrasted

with the extent to which scientists and appliers/

extenders should be provided incentives and

encouragement so they can choose their own

directions within established policy parameters

(“bottom up” direction)?

The aim must be to set up a system of clear

directions—coupled with strong, attractive

incentives and benefits for the participants—that

empower persons to work toward established

goals. One caveat must be that research programs

need to be based on and suffused with fundamental research providing foundational knowledge,

and with the opportunity and encouragement to

stimulate creativity and innovation, no matter

where they may lead.

APPROACHES TO ACCOMPLISHING 

PURPOSES

Different approaches can be considered for meeting the purposes established by Congress. One

approach is for the research and extension enterprise to continue as it has been. Given the

strength of Congress’ conviction that change is

desired, the status quo would not seem to meet

Congress’ agenda.

A second approach is to adjust and modify the

current programs in the belief that continuous

improvement, always laudable, is sufficient.

Given the intentions and interests of Congress,

this also seems insufficient.

A third approach, intended by Congress, is to

establish guidelines to encourage and guide pursuit of the purposes. Such guidelines could and

should include a number of useful and valuable

mechanisms, such as creating program plans and

convening program performance reviews that

address the elements of the research enterprise

overall and also the key dimensions established
22 | Challenges for U.S. Agricultural Research Policy

in the purposes; using review and approval systems for new projects that would encourage or

require adhering to the purposes; and making hiring and resource allocations based on the purposes. Even though such guidelines involve topdown direction, they are also good management

practices. However, if there is not a clear structure of priority and direction within which these

guidelines are implemented, then much of this

emphasis will be for naught. More than guidelines is needed.

A fourth approach is to establish a clear set of

operational program goals and objectives within

a strategic context. Operational goals and objectives are necessary to guide specific decisions. A

strategic context is necessary to ensure adequate

long-term direction and to identify and secure the

roles and opportunities for participation from all

participants in the agricultural research and

extension enterprise. This approach also has topdown characteristics, but it has the distinctive

value of establishing priorities, and providing

financial incentives that reflect a broad, societal

view. It has the disadvantage of being forced on

an organization with its own pre-existing

momentum and culture, and with slow and long

response times.

For this approach to be optimally effective, it

is essential that goals and objectives within a

strategic context be established through direct

involvement, and ultimate concurrence, of major

programmatic leadership from the scientistapplier/extender community. Scientists and

appliers/extenders should be directly involved in

developing the plans and guidelines to be used.

They will then have the maximum opportunity to

understand, be acclimated to, and provide their

own perspectives on how to achieve the most

efficacious response.

This approach makes a key contribution by

providing a comprehensive basis for making

allocation decisions that support the purposes

and provide incentives for participation in the

necessary research. If resources are not applied

to priorities, the exercise is hollow. Guidance

language for this decision process can be general

and provide for internally directed responses.

Alternatively, it can be more tightly drawn and

focus more attention on key issues and topics.

Each approach provides for internalized incentives—that is, scientists can make their own decisions about participation. Focusing attention and

commitment has the advantage of effecting more

rapid change.

Unfortunately, given the highly decentralized

and variegated nature of the agricultural system,

it is unlikely that such a broad, comprehensive

approach can be fully effective, at least in

addressing key contemporary issues of the kind

Congress has emphasized. Something more is

needed.

A fifth approach addresses both the operational and strategic planning requirements outlined above, while emphasizing key

contemporary issues. This approach can create

“unified strategic research and applications/

extension plans” for key contemporary issues of

major national interest. The plans would be both

strategic (focusing on what direction, how different parts of the system participate, with what

expectations) and operational (focusing on how

resources are deployed and for what purposes).

This approach combines breadth of scope and

thinking—of inclusiveness of the entire research

system—with the specificity of focusing on

pressing national issues.

Strategic plans focused on key contemporary

issues (for instance, one plan per issue) would

outline (and specify to the extent possible) the

applications and associated information and

knowledge needs useful for addressing the

issues, identify the sources and means for securing those needs and resulting applications, and

propose the best form for applying the knowledge to address the issues. All elements of the

agricultural research portfolio, and the extension

and application agencies as well, would have

identifiable roles and responsibilities in these

plans. To the fullest extent practicable, the agencies would be integrated and coordinated with

one another to achieve optimal leverage of

resources and cost-effectiveness. This approach

is further addressed in the chapter on the
Chapter 2 Purposes of the Agricultural Research and Extension System | 23

National Research Initiative Competitive Grants

Program.

An obvious advantage of this approach is that

respective roles and responsibilities for national

issues would be clear. Possible shortcomings of

this approach are that it smacks too much of central planning and direction, and predicts in

advance what should be done to achieve success.

The latter is useful when technologies and methods are ready to be applied or can readily be

developed. It is rarely useful—and is, indeed,

usually counterproductive—in the research

enterprise. The former can be done with prudent,

careful, nonobtrusive coordination combined

with some financial resources.

These last two approaches go beyond stating

purposes and establishing guidelines. They

address the central issue: guidance for allocating

funds. If funds are not allocated to priorities, it is

not entirely possible to plan and posit direction.

A sixth approach is to expand significantly the

concept and practice of competitive grants programs to address the major issues of interest.

Competitive grants focus attention by rewarding

high-quality ideas with funding that attracts

strong, active researchers. Indeed, the record

from the biomedical research arena shows that

such grants have garnered unusually strong and

long-term attention from top scientists. A major

virtue of competitive grants is that they are probably the most effective mechanism for securing

rapid response and alignment of direction and

purpose with scientist interest and they do it in a

manner consistent with the principles that animate the best scientists—pursuing their own

intellectual directions in their own way. A problem with competitive grants is that they are not

long enough for scientists to complete a full body

of work to address a problem. They also do not

usually provide for the long-term work on biological systems that is often required for agricultural, environmental, and ecological topics. In

spite of the oft-voiced frustration of scientists

that “grantsmanship” and the repeated preparation of proposals takes too much time, the careful

refinement of ideas within a competitive environment should improve research direction and

conception. Notwithstanding some obvious deficiencies with competitive grants, they are an

attractive approach for addressing major contemporary issues.

A seventh approach is to incorporate an

accountability mechanism into guidelines, so that

management and outcomes can be evaluated in a

regular, ongoing, systematic manner. The guidelines would outline and/or describe how accountability and relevance are to be measured and

evaluated. The emphasis would be on after-thefact evaluations, most usefully in connection

with future allocations of funds and other

resources. They would complement evaluations

made at the outset of research.

Each of these approaches have their advantages. Combining them preserves the advantages

and obviates the disadvantages. Thus, as a prospectus for the future, each of these approaches

should be used and combined appropriately into

an overall program.
| 25

3

National Research

Initiative

Competitive

Grants Program

ongress in FACTA authorized the

National Competitive Research Initiative (known generally as NRI, but in

USDA as the National Research Initiative Competitive Grants Program, or NRICGP).

This pivotal action affirmed Congress’ commitment to funding research for foundational knowledge through competitively awarded grants that

would be initiated by researchers and reviewed

by their peers. Such a commitment to competitive grants for USDA was first made in 1978,

when Congress authorized USDA’s Competitive

Research Grants Office (CRGO), and appropriated $15 million to start the program. The basis

for the CRGO was due, in large part, to findings

from the 1977 OTA report Organizing and

Financing Basic Research to Increase Food Production that pointed out the need for a significant

focus on basic research for agriculture (28).

Through FACTA, Congress expanded the

competitive grants program and specified six

high-priority research areas for NRICGP: plant

systems; animal systems; nutrition, food quality,

and health; natural resources and environment;

engineering, products, and processes; and markets, trade, and policy. These six areas encompass virtually all topics relevant to the

knowledge and research needs of the agriculture/

food/environment sector. To implement NRICGP,

funding was provided for the first four areas in

FY 1991 and for the last two areas in FY 1992.

Consequently, there is now funding for competitive grants across the entire agriculture/food/

environment spectrum. Congress also strengthened the peer-review and advisory oversight of

the program; authorized funding for multidisciplinary research; authorized research on longterm mission-linked research problems and provided for developing the research capacities of

institutions and individuals. The basis and the

specific provisions for this program were derived

to a large extent from the 1989 report of the

Board on Agriculture/National Research Council

(BA/NRC), Investing in Research (5).

The purpose of NRICGP is to provide the

basic knowledge necessary to discover new principles and to serve as the basis for applied- and

problem-oriented studies, just as fundamental

research sponsored by National Institutes of

Health (NIH) provides new principles and serves

as the basis for applied studies and clinical work

in the biomedical and health sector. Such “foundational knowledge” addresses the basic characteristics and interactions among biological,

physical, and social phenomena—which, by their

C
26 | Challenges for U.S. Agricultural Research Policy

nature, are generic and broadly relevant as the

foundation for more applied studies.

Both the BA/NRC report and the Congressional language of FACTA also speak to “mission-linked research.” This research is composed

of those studies—basic and applied—designed

and carried out to make early connections to

applied topics. This research was included in the

original BA/NRC report to provide a place for

studies that are more closely connected to mission applications, generically national in impact,

and also have characteristics of fundamental

studies providing foundational knowledge. They

were included to strengthen the continuum from

foundational knowledge to more applied studies.

As another means for connecting the foundational research to application, the BA/NRC

report specifically speaks to applications experts,

including Cooperative Extension specialists,

being involved in this mission-related research

and in the related multidisciplinary research to

allow for easier technology development, transfer, and application.

Like other federal extramural basic research

programs, NRICGP specializes in proposals that

are initiated by investigators and evaluated by

peer review (also termed merit review) to assess

their scientific quality and relevance to high-priority areas in the agriculture/food/environment

sector. Only proposals that are relevant to the

sector are funded through competitively awarded

grants based on merit.

Congress specified in FACTA that NRICGP

must allocate its funds so that mission-linked

research is at least 20 percent of NRICGP (which

means that fundamental research may comprise

up to 80 percent of the research); multidisciplinary research is at least 30 percent of the

program by 1993; and research and education

strengthening is at least 10 percent. These

requirements are extraordinarily strong, and

appropriate, for multidisciplinary research

because of the multifaceted scientific dimensions

of key research questions relevant to the agriculture/food/environment sector. The requirements

further strengthen the intention of Congress that

fundamental research is to be relevant to the

major issues in the sector. The fact that up to

80 percent may be fundamental research emphasizes the urgent need for a wide range of foundational knowledge. In fact, if foundational

knowledge were to be deemphasized, much of

the value of NRICGP would be diminished or

even lost.1

NRICGP IN RELATION TO USDA’S 

RESEARCH PORTFOLIO AND THE 

FEDERAL EXTRAMURAL RESEARCH 

SYSTEM

NRICGP contributes significantly to and fits

well with USDA’s overall research portfolio as

well as with the federal extramural research system. (“Research portfolio” means the several

agencies and funding mechanisms within USDA

that are responsible for research and their

research programs.) The portfolio contains the

intramural research programs of the Agricultural

Research Service (ARS), Economic Research

Service (ERS), and the Forest Service (FS). The

portfolio also contains several extramural programs. A major component of these extramural

programs is the partnership between USDA and

the State Agricultural Experiment Stations

(SAES), as well as the 1890 colleges, for conducting state- and college-initiated agricultural

research. This research is funded by so-called

formula funds—Hatch, Regional Research,

Evans-Allen—that are allocated to SAES and the

1890 colleges. Another component of the portfolio is the program of special grants to support

national and regional (and sometimes more local

1 There is, of course, always a need for more mission-oriented research. However, there are a number of mechanisms and funding sources

for mission-oriented research, including ARS, both federal and state elements of the SAES system, and private sector sources. NRICGP is the

only mechanism and funding source that aims for foundational knowledge. It is reasonable to emphasize this focus, rather than sacrificing it

to other focuses that are already emphasized by all other parts of the agricultural research enterprise. This contention is discussed further in

the next section and in a later section.
Chapter 3 National Research Initiative Competitive Grants Program | 27

and site-specific) research topics. In general

these funds, too, go to SAES and 1890 colleges.

Cooperative agreements and contracts are also

available, usually between SAES and 1890 colleges with units of USDA.

NRICGP holds a distinctive place in USDA’s

overall research portfolio as a consequence of its

emphasis on foundational knowledge and its

openness to all qualified scientists. Other elements of the portfolio emphasize intramural

research (ARS, ERS, and FS) and a combination

of fundamental and applied research conducted

largely in an intramural manner (the SAES system). NRICGP’s role with regard to the agriculture/food/environment sector may, in fact, be

compared with the role that NIH’s extramural

research program plays in relation to the biomedical and health sector. NRICGP may also be

compared with the National Science

Foundation (NSF) as a place for the nation’s scientists involved in the biogeochemical, biological, environmental, and engineering sciences.

NRICGP fits well with USDA’s programmatic issues. Its research applies throughout

USDA’s overall program, by virtue of the comprehensive coverage of the agriculture/food/

environment sector afforded by the six priority

research areas. It also fits well with contemporaneous issues such as sustainable agriculture and

agricultural systems, water quality, global climate change, and genome studies, as evidenced

by the incorporation of these research needs into

its portfolio.

NRICGP provides distinctive advantages to

USDA’s overall research program. First, the

competitive grants program of NRICGP is the

major, often the only, means for federal funding

of any qualified scientist—irrespective of institutional or disciplinary affiliation or local academic or research unit—to work on topics of

direct interest to the agriculture/food/environment sector. This makes it possible for all qualified scientists with relevant research ideas to

compete for funds and, if the funds are awarded,

to participate in USDA’s—and the nation’s—

research mission for agriculture, food and the

environment. Second, because competitive

grants are for limited periods of time, they provide a strong, responsive mechanism for addressing priority topics and they provide major

flexibility in focusing on national needs and priorities. Third, NRICGP provides a distinctive

mechanism for research to complement formulaand state-funded state research and the long-term

intramural research of USDA’s agencies.

NRICGP thus serves diverse national needs,

along with USDA needs.

Funding for NRICGP has increased from

$46 million in 1985 (3.5 percent of the total

USDA appropriations for research and education

of $1318.7 million) to $103.1 million in 1995

(5.4 percent of the total appropriations of

$1,900.7 million). Irrespective of the rate of

increase of funding for NRICGP in 10 years, the

funding level is still only a small fraction (about

6 percent) of the total USDA research and education (and extension) budget.

Just as NRICGP provides a distinctive component in USDA’s research portfolio, it also provides a distinctive contribution to the federal

system for extramural research. The federal

extramural research system has a number of

components, depending on the agencies

involved. It operates through several different,

usually complementary mechanisms including:

(i) investigator-initiated, competitively awarded,

peer-reviewed grants; (ii) cooperative agreements; (iii) contracts; and (iv) major institutional relationships such as between universities

and the Department of Defense (DOD), Department of Energy (DOE), National Aeronautics

and Space Administration (NASA), National

Oceanic and Atmospheric Administration

(NOAA) laboratories and, of course, USDA.

Among these agencies, competitively awarded

grants to support investigator-initiated research

are an especially important component of the

federal extramural research system. This is the

predominant mechanism used by NSF, to a large

degree (about 80 percent) by NIH, and significantly by other agencies such as the Environmental Protection Agency (EPA) and DOE. They

provide the most open access to research opportunities for scientists throughout the country,
28 | Challenges for U.S. Agricultural Research Policy

regardless of institutional or disciplinary affiliation.

A key effect of Congress’ reaffirmation of

competitive grants for agriculture and expansion

of CRGO to form NRICGP was to make it a

more integral and significant participant in the

overall federal extramural, competitive grants

system long characterized and dominated by

NSF and NIH. Valuably, Congressional actions

make NRICGP—and USDA’s mission—much

more attractive to scientists outside the traditional agriculture research sector, just as the NIH

program is attractive to scientists outside the biomedical sector. It thus provides for the widest

participation of qualified scientists, irrespective

of whether they come from the SAES system or

from laboratories not at all associated with colleges of agriculture. All of this is appropriate and

should, in the long run, provide the best science

to help ensure the competitiveness and sustainability of the U.S. agriculture and food system.

IMPLEMENTATION

A number of key steps to implement NRICGP

have been taken. These include (i) reflecting the

FACTA purposes in the program’s description;

(ii) establishing key advisory mechanisms,

including potential positive relationships

between foundational knowledge and technology

transfer; (iii) consulting broadly and regularly

with user groups and stakeholders;

(iv) collaborating with related federal agencies

and research leaders; (v) taking steps to make the

program more attractive to investigators by

increasing the amount and duration of grant

awards (for details, see a later section); and

(vi) managing the program effectively and efficiently.

❚ Purposes

The purposes specified by Congress for USDA’s

research are prominent in the program description for NRICGP, which “requires that research

supported by NRICGP address, among other

things, one or more of the...purposes.” The

guidelines to implement the purposes—sought

by Congress through the conference report for

FACTA—are considered to be the specific program descriptions, priorities, and research areas

presented in the annual program description.

❚ Advisory Mechanisms

A three-part advisory system has been established for NRICGP. For its part, USDA has

established NRICGP’s board of directors. It is

chaired by the Under Secretary for Research,

Education, and Economics and composed of the

administrators of ARS, CSREES, and ERS, the

Deputy Chief for Research of the FS, the director

of the National Agricultural Library, and the

chief scientist of NRICGP. The board establishes

internal operating policy for NRICGP, including

approval of the annual program description and

request for proposals. The board has the added

advantage of integrating USDA’s research agencies—especially ARS, ERS, FS, and the

CSREES—more closely with the program.

The National Research Initiative Competitive

Grants Scientific Advisory Committee is authorized through a USDA regulation. A similar

committee was established for the predecessor

Competitive Grants Program, starting in 1978.

The purpose of the committee is to provide recommendations on the scope and focus of the programs carried out by NRICGP to meet the goals

and mandates of Congress. The committee may

also advise the Secretary on NRICGP regarding

matters such as programs, policies, priorities,

operating procedures, and desirable corrective

actions needed. The committee is to comprise

twelve scientists broadly representative of the

disciplines and research areas of NRICGP, and

its membership is selected by the administrator

of CSREES and approved by the Secretary of

Agriculture (through the Under Secretary for

Research, Education, and Economics) and by the

White House.

The regulation provides for the committee

within the limits authorized for USDA, and it

requires the committee to be reauthorized by

USDA every two years. The committee first met

in August 1992. However, it was not reautho-
Chapter 3 National Research Initiative Competitive Grants Program | 29

rized in January 1993 after its first two-year

term. After a hiatus, the committee was reauthorized in 1994. The chief scientist has now identified candidates for the 12 positions, including

two alternates, and made recommendations for

the committee. Although the reactivation and

forthcoming appointments are commendable,

this kind of hiatus is unacceptable. There is no

obvious substantive reason why the committee is

subject to recurrent two-year authorization by

USDA. A distinctly preferable system would be

to have the committee authorized indefinitely,

with provision for its termination for cause. Further, its members should be appointed on a “rolling basis,” with staggered three-year terms to

provide for overlap of membership and consequent continuity.

The third advisory relationship was established by Congress through FACTA, consistent

with its interest in technology development and

transfer. Congress provided that the Secretary

“may consult with the Agricultural Science and

Technology Review Board, established by Section 1605 of the Title, regarding policies, priorities, and operations” of NRICGP from the

perspective of technology evaluation and transfer. This consultation has not been done to date,

in part because this board, formed in September

1992, has focused on its own mandated

responsibilities (2, 24).

As the relationship between foundational

knowledge and technology assessment function

is contemplated, caution is urged in expecting

too many direct relationships between results

from research funded through NRICGP and technology transfer more generally. Technology

transfer2 is an intrinsically difficult matter. In

relatively rare instances, the technologies derive

directly from fundamental research. Generally,

technology transfer occurs most readily and

often from the more applied, developmental

research that characterizes other parts of the

USDA’s portfolio. The purpose of NRICGP is to

2 For a discussion of agricultural research and technology transfer policies, see Agricultural Research and Technology Transfer Policies

for the 1990s, Office of Technology Assessment, U.S. Congress, 1990.

furnish the foundational knowledge that makes

possible this applied and developmental

research. Nonetheless, the relationship between

the board and NRICGP should be made as expeditiously as possible.

❚ Stakeholder Relationships

In organizing NRICGP, USDA has been consulting with outside groups, including commodity

organizations, senior representatives of scientific

societies, and advocates of sustainable agriculture. For example, USDA convened Users Workshops in FY 1991 covering seven different

subject areas and in FY 1993 covering nine subject areas. In the process, there were consultations with more than 200 industry, scientific, and

related user groups and stakeholders. In addition,

USDA focused specifically on concerns that sustainable agriculture, and particularly its social

dimensions, were not adequately represented in

NRICGP’s first program solicitations (7). These

concerns were relevant because (a) funds were

limited in the start-up appropriation for FY 1991;

and (b) the social science and rural development

components, both important for sustainable agriculture, were not funded by Congress until

FY 1992. Item (b) has been addressed. Currently, there is significant funding awarded for

grants that are directly applicable to these areas

(such as $14.7 million in FY 1994 for sustainable

agriculture), in addition to much of NRICGP

portfolio which is also relevant to them. Also, the

program staff gave specific attention to stakeholders in sustainable agriculture, meeting regularly with them and including at least one

representative in each workshop.

There is obviously value in sustaining the

ongoing connection between NRICGP major

user and stakeholder groups through these workshops and the scientific community through the

Scientific Advisory Committee. Both should be

firmly established as features of the program and

kept in continuous use.
30 | Challenges for U.S. Agricultural Research Policy

Collaboration with federal agencies. A key,

productive part of implementation of NRICGP

has been its collaboration with related federal

agencies. Because of its purpose and method for

providing rigorous peer review, NRICGP is a

major participant, along with other agencies, in

several significant interagency programs and has

established positive rapport and regard among

related federal extramural granting agencies.

These interagency programs include the Plant

Biology Program; the Global Change Program;

and ad hoc discussion groups of mutual, multiagency interest such as plant molecular biology

and microbial physiology. For example, USDA

together with DOE and NSF established by

cooperative agreement in 1992 the Joint Program

on Collaborative Research in Plant Biology.

NRICGP, along with DOE and NSF, provides

the merit review of research proposals for the

program.

This collaborative approach continues. For

example, in FY 1995, a new program on Terrestrial Ecosystems (TECO) was established jointly

among NRICGP, DOE, NASA, and NSF. In the

collaborative Global Change research program,

USDA has the lead responsibility for establishing the UV-B monitoring network. NRICGP is

specifically responsible for funding development

of the sensitive instrumentation required. There

have been recent discussions among NRICGP,

DOE, and NSF about mapping the entire genome

of Arabidopsis, a plant widely used in fundamental plant biology research.

There are also several collaborative programs

between NRICGP and USDA agencies. For example, for USDA studies on the plant genome, ARS

and NRICGP collaborate, with NRICGP being the

lead agency for merit review of proposals. USDA

has a memorandum of understanding with EPA and

the Food and Drug Administration (FDA) regarding integrated pest management (IPM), and

NRICGP’s responsibility is providing relevant

foundational knowledge. Further, NRICGP programs relevant to IPM are closely coordinated with

other IPM programs in USDA (22). Regarding

water quality, there is a joint program between

NRICGP and the special grants water quality

program in CSREES, with each partner providing one-half the funding. The program is administered by a single scientist.

In all of these examples, NRICGP’s chief scientist and program directors and their counterparts in other agencies—such as NSF, NIH,

EPA, and DOE—have collaborated to discuss

areas of mutual interest, determined how to create a unified program among the agencies consistent with the separate agency missions, and

determined the best strategies for collectively

funding qualified proposals. The directors of

these agencies also jointly consider the effectiveness of the administration of their peer review

procedures. These collaborations provide for

greater effectiveness within the overall federal

effort in these research areas of interest to two or

more agencies, and the partnerships that result

provide substantial leverage of funds and interests of the agencies.

The value of these collaborative programs is

that they provide for larger grants, often required

for success in these subject areas; permit significant training components to be done concurrently with the research, thereby providing

additional leverage and value of funding; and

allow networking to develop work among scientists that would otherwise be forgone (22). These

advantages would be difficult or impossible to

attain with single-agency approaches. The effectiveness of these collaborative programs is significant, as judged by NRICGP program staff

and as shown by the continued development of

these programs.

These relationships of NRICGP with related

programs of other agencies, and of USDA, are

commendable and should be sustained and

expanded as opportunities occur.

Ensuring the program’s attractiveness and

usefulness for research scientists. A crucial

aspect of implementing the program is providing

sufficient funding for individual awards to

ensure the program’s attractiveness and utility.

CRGO suffered substantially from having too little funding for too many high-quality requests. In

an effort to provide at least some funding for a

broad spectrum of proposals, the level and dura-
Chapter 3 National Research Initiative Competitive Grants Program | 31

tion of funding for individual grant awards was

substantially less than for either NSF or NIH.

This disparity between CRGO (and also

NRICGP more recently) and cognate programs

in NSF and NIH, for often equivalent kinds of

research, hindered the attractiveness of the program to scientists. As funding for NRICGP has

increased, USDA has endeavored to increase the

amount of awards and lengthen their duration,

making the program more attractive to the best

scientists and providing for more coherent

research programs. However, the relative insufficiency of funds makes it difficult to realize this

goal in any significant way. (Because of the

importance of this issue, it is discussed in more

detail in a later section.)

Internal management of the program. The

internal management of NRICGP is comparable

to that of the highly successful NSF and NIH

extramural grants programs, and the program’s

staff have regularly sought advice from those

programs to supplement their own experiences.

Panels of scientists with demonstrable stature in

their fields evaluate and rank the proposals in

terms of scientific quality and relevance to the

long-term sustainability of agriculture (broadly

defined). The scientists are apprised, as part of

their instructions, of the importance of research

for sustainable agriculture and the “relevancy

criterion” that all research must be relevant to

sustainability if it is to be eligible for funding.

The panels provide their advice on quality and

relevance to the chief scientist through the program officers, who make the funding decisions

based on funds available. The chief scientist

gives final approval. All proposals within a program area—irrespective of whether they are single- or multidisciplinary, mission-linked, or

research strengthening3

—are evaluated by a single panel of scientists who themselves represent

a range of disciplines. Only the funded proposals

are classified into these categories, and then only

after all review is done. As necessary, proposals

3 Research strengthing refers to a portion of the grants allocated to those universities that have not received the same proportions of 

federal funding as more established institutions.

may be shifted from one program to another

because of the topic and with the concurrence of

the principal investigator. Only the proposals that

have both high scientific quality and relevance to

the program description and the long-term sustainability of agriculture are funded. The one

caveat to this system is that it may at times be

difficult to evaluate multidisciplinary proposals

if the panel does not contain sufficient expertise

in the dimensions of the proposed research, or if

the scientists take a too-narrow view of the subject and try to force a single-discipline perspective on an inherently multidisciplinary problem

or approach. The NRICGP staff are aware of this

issue and work to ensure adequate breadth of

review.

Overall, implementation of the program is

positive and productive.

❚ Funding

Funding of NRICGP warrants attention from

different, but complementary perspectives:

(i) appropriations in relation to authorizations;

(ii) sufficiency of funds for the established program; (iii) relevance of the funding to program

priorities of USDA; (iii) earmarking; and

(iv) attitudes within the agricultural research

community to funding of NRICGP. The key

issue of whether NRICGP is relevant to contemporaneous issues in the agriculture/food/environment sector is specifically addressed in the next

section.

Appropriations and authorizations. One of

the most significant implementation actions for

NRICGP was Congress’s action in FACTA to

authorize NRICGP at $500 million dollars. This

increases seven-fold the authorization of $70

million provided by the 1985 farm bill. In addition, Congress authorized a phasing schedule

(FY 1991, $150 million; FY 1992, $275 million;

FY 1993, $350 million; FY 1994, $400 million;

and FY1995, $500 million).
32 | Challenges for U.S. Agricultural Research Policy

The appropriations record is substantially less

positive. Appropriations for NRICGP programs

have indeed more than doubled in the past six

years ($43.1, 73, 97.5, 97.5, 103.1, and 103.1

million for FYs 1990–1995, respectively; see

table 3-1). This is about 6 percent of the total

USDA budget for agricultural research and education. But these increases fall far short of the

amounts authorized in FACTA. They are significantly less than is required to meet priority

research needs and than is merited by the number

of proposals which can appropriately be funded

(based on the relatively low proportion of highquality proposals for which funds are available).

For example, NRICGP cannot even fund all of

the “high-priority” proposals in several of the

program areas and must limit its funding only to

those that are “outstanding.” This is discussed

further in the next section.

Funding of meritorious proposals was made

even more difficult during the past two years

because of earmarks (see discussion below) and

set-asides required by law for Small Business

Innovation Research (SBIR, 2 percent) and biotechnology risk assessment (1 percent of biotechnology-related research). Administrative costs

are set by law at 4 percent in 1995. Thus, of the

approximately $103 million available in recent

years, only about $91–$96 million has been

available for actual grants to investigators.

Furthermore, growth of the program has

stalled at about $100 million for four consecutive

years (FY 1992–95). As a result, NRICGP

appears to be languishing at this level and is in

serious danger of failing to meet both the need

for its research and also the promise for its program.

This funding situation raises the obvious issue

of where, and how, to secure additional funds for

NRICGP, particularly in the stringent budget climate of 1995–96. One approach is to recognize

that additional funding for NRICGP results in a

zero-sum scenario wherein funds from other

parts of the agricultural research portfolio are

redirected into NRICGP. This proved deleterious

to all parties in the late 1970s, and it is not a feasible alternative because the other programs provide critical support for research in other

dimensions of agricultural research.

Another approach was outlined in 1989 with

the initial formulation of the program in Investing in Research and mentioned again in the 1994

BA/NRC review of NRICGP (6). According to

this rationale, much new foundational knowledge

is necessary to serve as the basis for sustaining

productivity along with increasing availability of

environmentally sustainable cost-effective technologies for all producers, large and small. Without this knowledge, American agriculture will

languish. On this basis, then, the source of additional funds for NRICGP could reasonably come

from either (or both) of two sources. One source

would be inside the current agricultural research

system. This means other programs will have

decreased funds, as mentioned above, with ensuing problems. Alternatively, the budget mark can

be increased, with the increase to be funded from

other funds within the federal budget. For example, a policy could be established to use some of

the downsizing of the agricultural commodity

support programs for funding a portion of this

foundational research. The rationale for this

action is that the results will lay the basis for subsequent productivity or profitability increases to

offset the economic losses from the support programs (and also to increase the viability of nonsupported programs). The discussion later in this

report on patterns and policies for supporting

agricultural research, and delineating public and

private responsibilities for the research, bear

directly on this key policy issue.

Sufficiency of funds for NRICGP. Sufficiency of funds can be addressed by examining

at least seven characteristics: need for the program; interest in the program; demand in relation

to quality; sufficient funding for individual

awards; availability of the program to the widest

possible pool of qualified investigators; sufficiency of coverage of the priority research areas;

effect of funding on risk-averseness in making

awards; and the management challenge of using

funds by the program in a cost-effective manner.
Chapter 3 National Research Initiative Competitive Grants Program | 33

There is a strong need for NRICGP, because

there is clearly a major need for its foundational

knowledge. Fundamental understanding is still

lacking for the central biological and biogeochemical processes involved in critical elements of agricultural production, food safety and

nutrition, and related environmental quality and

conservation of natural resources. For example,

fundamental molecular and cellular biology,

along with genetics and physiology and biochemistry, are crucial to understanding the biological basis for nitrogen fixation, the cellular

and molecular biology of pathogenesis, natural

mechanisms of disease resistance in plants and

animals, and systems ecology and management

in emerging areas such as sustainable agriculture.

Without this fundamental knowledge the desired

advances necessary for environmentally sustainable productivity and for increasing productivity

to meet increased food and nutritional needs cannot be met.

The interest of qualified scientists in the program is also evident. For example, each major

increase in appropriations to the earlier Competitive Research Grants Office and now to NRICGP

has resulted in a corresponding, and quite proportionate, increase in the number of proposals

(for instance, for 1978–84, an average of 842

proposals for an average of $16 million appropriation; for 1985–90, an average of 1632 proposals

for an average of $42.4 million appropriation; for

1992–94, an average of 3084 proposals for an

average $100.1 million appropriation) (14).

The quality of proposals that has accompanied

the increasing interest in the program has

remained consistently high, as shown by the generally same proportion of all proposals receiving

high ranks by panel reviewers (7). Senior staff of

NRICGP estimate, based on evaluations by panel

reviewers, that another 25 percent of the proposals could be funded without diminishing quality.

One area had about 35 percent of the proposals in

the outstanding and high-quality categories;

because of funding constraints, only 18 percent

(about one-half of these highly qualified proposals) could be funded.

Sufficient funding of individual awards is an

important, but difficult and problematic, issue for

the program. The constancy of quality of proposals for funding and the increasing interest in the

TABLE 3-1: U.S. Department of Agriculture Research Budget

Fiscal Years 1987–1996 (million dollars)

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996*

ARS 518.4 552.7 578.2 602.3 640.9 681.4 680.2 706.1 707.8 704.3

CSREES 293.7 303.1 310.6 326.6 373.3 414.4 415.0 425.3 414.6 414.1

NRICGP 40.7 42.4 39.7 38.6 73.0 97.5 97.5 103.1 103.1 130.0

AMS 2.5 2.6 2.7 4.2 4.8 4.7 4.9 4.8 4.8 4.8

APHIS 4.9 6.6 11.3 13.0 15.7 16.7 14.7 19.2 19.1 18.9

ERS 44.9 48.3 49.6 51.0 54.4 59.0 58.9 55.2 53.5 54.7

FAS 4.2 1.5 1.3 2.3 2.6 1.5 1.5 1.4 1.4 1.4

FS 126.7 132.5 138.3 150.9 167.6 180.5 182.7 193.1 199.7 203.8

NASS 3.4 3.6 2.9 2.8 3.2 3.6 3.9 3.9 3.6 3.7

RBCD 2.7 2.7 2.7 3.4 2.8 8.0 9.6 11.4 9.9 19.2

TOTAL 1042.1 1096.0 1137.3 1195.1 1338.3 1467.3 1468.9 1523.5 1517.5 1554.9

* Executive Branch request to Congress, ARS–Agricultural Research Service

CSREES–Cooperative State Research, Education, and Extension Service, NRICGP–National Research Initiative Competitive Grants Program

AMS–Agriculture Marketing Service, APHIS- Animal and Plant Health Inspection Service

ERS–Economic Research Service, FAS–Foreign Agriculture Service

FS–Forest Service, FGIS–Federal Grain Inspection Service

NASS–National Agriculture Statistics Service, RBCD–Rural Business and Cooperative Development

SOURCE: U.S. Department of Agriculture Budget Office, 1995.
34 | Challenges for U.S. Agricultural Research Policy

program has not been matched by available

funds. To illustrate the problem, the total award

amount, total number of grants, the average size

of awards in major grant categories (excluding

the strengthening, multiagency, and solar UV-B

grants, because of their wide variation in award

amounts), and their average duration are shown

in table 3-2.

Not only have appropriations been substantially less than authorized (as already noted),

they have not been sufficient to fund qualified

proposals to appropriate levels and durations. For

example, the average amount of the total award

was $117,295 for FY 1991, with an average

duration of 2.22 years ($52,836/year) and

$137,256 for FY 1994 ($58,804/year). These

awards are little more than the awards for

FY 1988 for the previous program ($50,000/

year4

) (5). Even in 1988, the USDA competitive

grants awards were only 72 percent of comparable NSF awards (and 32.5 percent of NIH

awards, which would be expected to be higher

because of the higher animal and related research

expenses, on average) (5). In 1995, the NSF

average awards for Biological Sciences were for

a three year duration and at $83, 000 per year (8).

This means NRICGP awards have declined to

about 55 percent of comparable NSF awards.

Thus, on the critically important issue of funding

of individual awards—in terms of amount of

award and duration—the program is woefully

inadequate, especially in comparison to the

closely related comparison programs in NSF and

NIH, and little improvement has been made

between the earlier Competitive Research Grants

program and NRICGP; the reason for this, of

course, is the lack of funding and the desire by

both Congress and the NRICGP management to

cover all subject areas, even with the limited

funds available.

It may be questioned why the award amounts

and duration are less than they should be. The

reason is the strong desire of the NRICGP staff

to involve as many scientists as possible in the

4 The amount includes indirect costs of 14 percent.

program, even with the disadvantage of limiting

their funding. Until the appropriations are significantly increased (difficult in these budget times)

or the amounts and durations of awards increased

(undesirable within the current level funding

because of the resulting decreased number of

awards), the sufficiency of funding for awards

will be especially difficult for the program.

Furthermore, and reinforcing the problem of

amounts per award, the multidisciplinary awards

for the same period average $144,736 and last

2.4 years. This duration is virtually the same as

for single-investigator awards. As regards the

amount of the awards, if there are three investigators per award, the funding per investigator is

slightly less than single-investigator awards.

Even if there are only two principal investigators,

the funding is only nominally more than singleinvestigator awards. These terms are a substantial disincentive for multidisciplinary work,

which is difficult even when funding is adequate.

To encourage multidisciplinary work there could

be a premium provided for doing it, not just an

equality, which is itself a disincentive because of

the difficulties involved. It is increasingly recognized that multidisciplinary work is highly desirable and useful for addressing the multifaceted

research questions confronting the agriculture/

food/environment sector. This kind of financial

disincentive is not consistent with the goal of

attracting scientific talent to address them.

These amounts and durations for grant awards

raise a fundamental question which should be

forthrightly resolved as early as practicable:

“To what extent should the NRICGP continue with these current award amounts and

durations or, alternatively, to what extent

should the amounts be raised to be, for example,

comparable to NSF awards in amount and duration?”

Raising the amounts and durations to NSF

levels would make NRICGP directly comparable

to NSF and thus provide opportunity (in terms of

research program support) for all scientists to
Ch

apter3NationalResearchInitiativeCompetitiveGrantsProgram|35

TABLE 3-2: NRICGP Total Awards by Research Areas, Fiscal Years 1991–1994

1991 1992 1993 1994

Priority 

Research Areas

Total $ 

awardeda

(000)

Total 

number of 

awards

Average 

award sizeb

($)c

Total $ 

awarded

(000)

Total 

number of 

awards

Average 

award size 

($)

Total $ 

awarded

(000) 

Total 

number of 

awards

Average 

award size 

($)

Total $ 

awarded

(000)

Total 

number of 

awards

Average 

award size 

($)

Plants 33,180 NA 96,897 37,795 360 110,539 37,608 371 106,952 37,211 378 103,169Animals 18,960 NA 154,247 23,622 156 167,426 23,519 156 168,983 21,068 149 157,421Nutrition, Food Quality and Health

3,792 NA 126,400 6,142 51 130,673 6,134 49 133,742 6,766 49 149,171

Natural Resources and Environment

13,272 NA 118,663 17,008 143 137,940 16,994 146 127,277 20,647 169 129,682

Processing for Value-Added Products

NE NE NE 3,780 29 139,751 3,777 32 133,583 5,598 44 144,322

Markets, Trade and Development

NE NE NE 3,792 38 104,629 3,782 36 110,087 3,410 33 107,545

Agricultural Systems

NE NE NE NE NE NE NE NE NE 1,930 11 175,442

Total 69,204 117,295 92,139 777 126,998 91,814 790 124,846 96,630 833 137,256SOURCE: Annual reports of the U.S. Department of Agriculture, National Research Initiative Competitive Grants Program.Research areas of the NRICGP in FY 1994; correspond to those in FACTA, Agricultural Systems was added by USDA.NA, not available,. NE, not established.a Includes all awards, including for strengthening, multi-agency, and solar UV-Bb Does not include awards for strengthening, multi-agency, and solar UV-B because of their variation in size. Year, number, and average duration for the included awards: 1991, 592 awards, 2.22 yr;1992, 675, 2.14; 1993, 704, 2.1; and 1994, 743, 2.35.c Includes indirect (research support) costs of 14% of total award amount.
36 | Challenges for U.S. Agricultural Research Policy

participate in the fundamental research mission

for the agriculture/food/environment sector

equivalent. This would have the effect of

research for this sector being as attractive for its

segment of researchers as NIH is for its segment

of researchers. Achieving this would be a distinct

advantage for the sector. If this were done, however, within the current appropriation levels, it

would also have the effect of reducing by about

25 percent the researchers who would be funded5

and, inevitably, of reducing the scope of coverage of the program. The tradeoff, then, is larger

award amounts and durations (and thus more

appeal to more investigators, with an expected

further increase in quality of proposals) versus

breadth of coverage and funding of the largest

reasonable number of investigators.

This dilemma can probably be most efficaciously resolved by determining, first, if the

amounts and durations per investigator are

equivalent to those for NSF (and NIH, in the case

of animal and clinical studies) investigators in

the cognate fields. If so, then, as additional

appropriations may become available, over a

moderate period of 3–5 years the amounts and

durations could be increased incrementally (to

increase attractiveness) along with increase in

the number of grant awards (to broaden coverage

of the priority research areas). The key for success is to increase appropriations to the program.

Without such an increase, the program will be

frozen into its current, truncated state; there are

few, if any advantages of that for the program or

for the nation’s needs in the agriculture/food/

environment sector.

As already pointed out, one of the aims of the

program is to involve investigators throughout

the scientific community—irrespective of the

institutional affiliations, home departments, or

disciplinary specialties of the scientists—in

research questions especially relevant to the agriculture, food, and environmental sector. In addi5 Calculated using data provided by the NRICGP office in determining the appropriation levels required if NRICGP grants were to be

equal in direct costs to NSF grants.

tion, it is the aim of the program to make it

attractive and available to those in the SAES and

land-grant university systems. This has occurred

(see table 3-3). The program has received proposals from investigators from traditional and

nontraditional institutions (see table 3-3 for definitions) in almost exact proportions (79:21) for

each of the past 10 years; only 1994 showed a

slightly larger proportion of proposals from the

nontraditional institutions (76:24). During this

time, the program appropriations increased from

$46 million to $103 million. Thus, as the funding

increases, scientists from both traditional and

nontraditional institutions are comparably

attracted to it in proportional number. Equally

positive has been the relative success of scientists from the two institutional types. Each has

been funded to almost exactly the same extent

(averaging 23.4 and 22.7 percent, respectively,

over 10 years). This shows both comparable

quality and competitiveness from scientists from

the two institutional types.

These results have clear implications:

NRICGP appeals much more strongly to scientists from traditional institutions than nontraditional (79:21 preference). Scientists submitting

proposals are equally competitive irrespective of

type of institution. Scientists from both types of

institutions are comparably and proportionately

attracted to the program, irrespective of funding

level (the average amount and duration of grants

has been generally constant throughout this

period). A major way to involve more scientists

from the nontraditional institutions is to increase

appropriations. But, caveats are also in order. For

example, it is quite possible that scientists from

nontraditional institutions might be even more

attracted to the program if average grant awards

and durations were increased, given the “award

sensitivity” of certain investigators, and given

the relatively different award structures between

the NRICGP and NSF (and NIH) programs.
Chapter 3 National Research Initiative Competitive Grants Program | 37

As already emphasized, it is important for the

health of the agriculture/food/environmental sector to attract the widest possible pool of investigators to do research relevant to the sector, to

make them part of the knowledge generation system for the sector, just as has been done for the

biomedical sector. So far, notwithstanding the

several elements of USDA’s research portfolio,

the nation’s scientists are not substantially

attracted to or invited to participate in research

for the agriculture/food/environment sector.

NRICGP is the best, often the only, mechanism

for doing this for the sector, just as NIH has been

able to attract an exceptionally broad and talented pool of scientists for the biomedical sector.

The funds available are not sufficient to provide adequate and to fund adequately the qualified proposals for them. This is illustrated by the

lower award amounts and duration, as discussed

above; by the modest proportion of proposals

that can be funded (21–27 percent during

FY 1990–946) and the inability to fund another

25 percent of the proposals judged to have high

6 From Annual Reports of the NRICGP.

quality which merit funding; and the pressing

need for this foundational research (22).

Thus, it is concluded that the funds available

for NRICGP are distinctly insufficient for the

overall program. This works to the detriment of

the goals of the program, increases the frustration

and lowers the productivity of participating scientists, and makes obtaining the necessary foundational knowledge more difficult and

attenuated. None of this benefits the quality or

security of the research system for the agriculture/food/environmental sector.

Some have suggested7 that the decreasing

availability of federal funds for competitive grant

programs in the face of continued scientist interest and high-quality proposals is leading to a

risk-averseness in making awards, with more

risky and innovative research being funded

proportionately less than more established

approaches and subjects. Program managers for

NRICGP do not believe that is occurring for this

program. In addition, NRICGP specifically

includes a program area for strengthening

7 See for example, Washington Post, 25 December 1994.

TABLE 3-3: NRICGP Award Distribution by Institution, Fiscal Years 1985–1994

Traditional institutionsa Nontraditional institutionsb

Year Requested Funded

Percentage 

funded Requested Funded

Percentage 

funded Total

Percentage 

from 

traditional

1985 2,054 342 16.7% 530 104 19.6% 2,584 79%

1986 1,562 374 23.9 424 104 24.5 1,988 79

1987 1,280 279 21.8 365 84 23.0 1,645 78

1988 1,230 292 23.7 318 78 24.5 1,548 78

1989 1,120 280 25.0 278 51 18.3 1,398 80

1990 1,363 316 23.2 391 66 16.9 1,754 78

1991 2,122 456 21.5 536 121 22.6 2,658 80

1992 2,342 624 26.6 537 148 27.6 2,879 81

1993 2,295 629 27.4 590 159 23.8 2,885 80

1994 2,666 634 23.8 837 199 23.8 3,503 76

SOURCE: U.S. Department of Agriculture, National Research Initiative Competitive Grants Program Office, 1995

a Traditional institutions include: 1862 Land Grant, 1890 Land Grant, Other Federal Research Laboratories, State Agricultural Experiment Stations, USDA/S&E Laboratories, and Veterinary Schools/Colleges.

b Nontraditional institutions include: individuals, private nonprofit, private-for-profit, private universities/colleges, and public universities/colleges.
38 | Challenges for U.S. Agricultural Research Policy

research capacity for institutions that have traditionally not received the same proportions of federal funding as more established institutions.

These awards are of the riskier type, given institutional capacity and less grant-experienced

investigators. From 11–19 percent of the program’s awards have gone to these institutions,

testifying to the willingness of the program to

take these risks conditioned only by the same criteria as for all proposals (quality of the proposed

research and its relevance).

As a management issue, it is important that

additional funds be used by the program in a

cost-effective manner. The program has “lean”

staffing levels (17 scientists for $100 million of

grants) and it economizes on administrators

(having only three directors to manage six program divisions and the agricultural systems, and,

in addition, one program director for the SBIR

program). This compares favorably with other

federal agencies. Even with this economical

approach, because of the way work is deployed,

it is estimated that current staff could handle an

additional $25–50 million of funding. Thus,

when funding for the program has been

increased, there has been no difficulty managing

the increased workload, including review of proposals and making timely allocations. Thus, “rate

of absorption” of additional funds is not an issue.

Earmarking. Earmarking has unfortunately

become part of NRICGP, and must be addressed

with a view to its elimination. As context for this

discussion, it is important to consider the rationale for the program. NRICGP has a very strong

focus of connecting fundamental research and

the resulting foundational knowledge to the missions of USDA and the contemporaneous issues

facing the agriculture/food/environment sector. It

does this in several key ways: the disciplinary yet

mission-linked focus of its priority research

areas; the cross-cutting programmatic themes

that embrace these issues; the major emphasis on

multidisciplinary research and mission-linked

research (at least 30 and 20 percent, respectively,

of the research funding must go to these two

areas) along with the foundational research; the

social and economic aspects of the sector, including rural life and development; and the major

provisions in NRICGP for incorporating knowledge and technology transfer and their practitioners, including Cooperative Extension

personnel, into the research programs. Further,

the NRICGP staff in its implementation of the

program has continuously emphasized in its

announcements and in its review practices the

need for relevance of the program to these issues.

For all of these reasons, the program is closely

and prudently connected to the issues of the sector, while emphasizing the necessary foundational knowledge that is broadly applicable to

them. Thus, it cannot be reasonably concluded

by any objective assessment that NRICGP is

ignoring the needs of the agricultural sector and

needs to have earmarks placed on its programs so

that it pays adequate attention to those needs.

Some funds appropriated to NRICGP have

been earmarked for specific issues and interests,

in direct contradiction that these funds be

awarded to the best science in high-priority areas

relative to agriculture. Earmarking to fund local,

specific research and/or facilities issues has long

been a feature of Congressional appropriations

for USDA’s overall research portfolio. Earmarking makes the insufficiency of funds for

NRICGP all the more onerous. Earmarking

reduces the funds that can be competitively

awarded to the fundamental studies for which

NRICGP is specifically and predominantly

designed. Significantly, earmarking substitutes

contemporaneous, usually short-term political

judgments for long-term scientific judgments of

mission relevance and scientific merit. Two

kinds of earmarks have occurred: administrative

and Congressional.

In FY 1994 the Secretary of Agriculture earmarked $2.5 million to the U.S.–Israel Binational Agricultural Research and Development

(BARD) program. This was the first time this

kind of earmarking had been done by the administration of USDA. For FY 1995 Congress seized

on this precedent and itself earmarked

$2.5 million for BARD within NRICGP, dividing the funding among the NRICGP program

categories.
Chapter 3 National Research Initiative Competitive Grants Program | 39

Congress in FY 1995 earmarked $8,113,000

of the NRICGP appropriation for three new

issue- and management-oriented programs—

water quality, integrated pest management, and

pesticide assessment. Prior to this time, funds

had been appropriated to the six research program areas authorized by FACTA. This earmark

originated in FY 1994 when Congress shifted

more than $9 million to NRICGP while subtracting the same amount from a combination of the

special grant funds for the generic, national programs for regional water research, regional IPM,

National Pesticide Impact Assessment Program

(NPIAP), and Global Change research.

To try to keep these FY 1994 funds as much

as possible within the principles of NRICGP

under these compromised circumstances, the

NRICGP staff created four mission-linked programs—water resources assessment and protection (for water quality research), biological

control (for IPM research), assessment of pest

control (for NPIAP research), and UV-B monitoring; placed them within the relevant research

priority divisions (Plants and Natural Resources

and Environment) of NRICGP; solicited proposals for them and managed the proposals in the

normal way; and made awards for work in these

categories by using the normal peer-review process followed by competitively awarded grants.

Interestingly, because the NRICGP office had

already established “cross-cutting program

areas” for both water quality and integrated pest

management, and because UV-B monitoring fits

neatly into the Natural Resources and Environment research area, earmarking these funds in

1995 was not even necessary.

The NRICGP management staff has been

effective in connecting the program to contemporary issues in the agriculture/food/environment sector. Given this, simply registering

Congressional intent to ensure work in these

areas would very likely have been sufficient.

Notwithstanding the positive efforts by

NRICGP, the earmarking of these funds is an

ominous portent because it provides a precedent

for dividing these funds into issue-focused

project funding. This defeats the purpose of

NRICGP to support fundamental studies and,

especially, to have an organized, managed integrity of the six program areas.

As noted at the outset, and as a final policy

perspective, this earmarking is incongruous

because of the unusually strong emphasis given

by NRICGP to the issues and problems of the

agriculture, food, and environment sector. To a

large degree, NRICGP conceptually is a hybrid

between the foundational programs of NSF and

the applied research programs throughout USDA

and its participating state institutions. Ironically,

this mission-orientation of this program could be

its “Achilles heel.” This open connection of

NRICGP with issues of the sector could, indeed,

provide a quiet, convenient entry point and

rationale to shift this largely foundational knowledge program to applications-oriented research.

If that were to happen, the value of the program

would be lost. And if the foundational purpose of

the program were lost, it would be prudent to

abolish the program rather than create an unnecessary redundancy with existing programs and

simply leave a void in the foundational research

area.

Attitudes toward NRICGP. A number of

attitudes toward NRICGP are positive and supportive, while some are less so. Taken together,

and recognizing that concerns can easily diminish support for appropriations, this mixture of

attitudes contributes to the languid funding of

NRICGP.

Some of the positive and supportive attitudes

include the following. The positive response

among research scientists has been strong and

consistent, both in terms of submitting high-quality research proposals and in their advocacy for

NRICGP. A wide range of commodity and user

groups were early supporters of the proposals

leading to NRICGP, and a number have continued their support, such as the wheat growers.

Similarly, the SAES directors have steadily supported NRICGP, along with other elements of

the agricultural research portfolio in their annual

budget recommendations made through the

National Association of Land Grant Colleges and

State Universities. But it must be observed that
40 | Challenges for U.S. Agricultural Research Policy

none of this support has taken on the force and

immediacy found for support of biomedical,

physical science, engineering and related programs such as for global climate change. Until

that kind of impact is felt, support for NRICGP is

likely to continue to be viewed as tepid or unimportant. In the face of this, the value of NRICGP

in advancing science is amply demonstrated in a

number of ways, one of which is illustrated during 1994–1995 by nine cover stories in Cell, The

Plant Cell, Nature, and Science—four of the

most significant peer-reviewed journals for biological research—featuring research funded by

NRICGP.

Of particular importance, Congress has consistently supported NRICGP. Further, Congress

has recently been emphasizing basic research of

the type that characterizes NRICGP. It is also

giving steadily more attention and emphasis to

competitively awarded research funding, of the

kind that also characterizes NRICGP. And Congress has appropriated regular increases in

NRICGP’s funding to its current level of about

$100 million. Congress has not, though,

responded positively to increases proposed by

both Bush and Clinton administrations for additional appropriations (up to $130 million for

FY 1996).

There are also some less-than-positive aspects

of support for NRICGP. Funding by Congress, as

already noted, has not increased in the past three

years. This is particularly disturbing given the

erosion of purchasing power caused by level

funding, making it particularly difficult for

NRICGP to meet the objectives set for it by Congress itself. Funding earmarks, some by Congress and others by the administration, have

further eroded NRICGP and show less than full

support for the program. The positive support by

the agricultural research sector is not as enthusiastic as might be expected. For example, and as

already noted above, the NRICGP is included in

the annual NASULGC recommendations as just

one of several recommendations; while this may

be appropriate given that all elements of the

research portfolio are important, it being but one

of several items does little to demonstrate the

crucial importance of NRICGP. Some have criticized NRICGP, both directly and indirectly,

because it does not specifically include Cooperative Extension. The criticism is not justified.

NRICGP—in both the BA/NRC report and in the

Congressional language of FACTA—specifically speaks to multidisciplinary and missionlinked studies, each of which relate directly to

Cooperative Extension; further, both the BA/

NRC report and managers of NRICGP encouraged Cooperative Extension to be part of multidisciplinary research teams, thereby further

incorporating user perspective in the research

and expediting application of research results.

There is also the concern by both agricultural

research and extension leaders that funding

NRICGP competes with other funding, such as

formula funding.

There are at least four distinct actions that are

appropriate for the research/extension community and USDA. First, advocates for agricultural

research and extension, including its leadership,

must continuously understand and articulate the

importance of foundational knowledge for the

agriculture/food/environment sector, along with

the more applied and specific research and application. Second, there must be comparable recognition that the overall research (and extension)

portfolio is complex, that each element is important including NRICGP, and that support is

needed for NRICGP, particularly because it is

still a new, emerging program. Third, as a corollary, it is essential that the emphasis on NRICGP

continue to be on foundational knowledge, that

the emphasis not shift to applied studies on contemporaneous issues. Fourth, USDA and specifically the NRICGP staff should continuously

show the relevance of NRICGP’s knowledge

development to topical issues. This should be

done by illustrating the relationships between its

studies and the issues and by continuously examining its portfolio to ensure that synergistic connections to agriculture/food issues obviously

exist within its grant programs and awards.

USDA’s work to date in these regards has been

effective, but it should also be continued and

intensified.
Chapter 3 National Research Initiative Competitive Grants Program | 41

❚ Relevance of NRICGP to Issues in 

Agriculture

The relevance of NRICGP to major issues and

challenges in the agriculture/food/environment

sector is a key factor for establishing and evaluating the success of the program. NRICGP is relevant to the issues confronting agriculture when

assessed by at least four criteria: (i) the central

value of foundational knowledge for addressing

key agricultural challenges; (ii) a central element

in USDA’s diversified research portfolio;

(iii) the quality of the research proposed that is

directly relevant to the challenges; and (iv) its

direct relevance to key topical issues such as sustainable agriculture.

Value of foundational knowledge. The purpose of the program is to provide foundational

knowledge by conducting fundamental research

that establishes new principles, understanding,

methodologies, and mission-linked research that

aims at solutions to contemporary problems but

that is also broadly applicable and thus has characteristics similar to fundamental research. As

noted earlier, the priority research areas of

NRICGP embrace the breadth of knowledge

needs for the agriculture/food/environment sector. For example, the molecular and cellular biology, biochemistry, and physiology necessary for

understanding insect and pathogen damage and

control is addressed within the plant, animal, the

environment areas; the biology and control of

food-borne pathogens is addressed in the plant

and nutrition areas; the understanding of biological and physical properties necessary for creating

new products and processes is addressed in the

plant, animal, and engineering/new products

areas; and the social and economic analyses necessary to sustain rural communities are studied in

the markets, trade, and policy area. Put another

way, one of the most significant challenges in

U.S. agricultural research is developing the

knowledge needed to change from resourcebased to knowledge-based agricultural production systems. In a very real sense, the program is

directly relevant to the issues and challenges of

the U.S. agricultural system.

Central element in USDA research portfolio. The program is a central, integral element in

the overall federal and USDA research portfolio

for the agriculture/food/environment sector. The

program emphasizes foundational knowledge.

For example, NRICGP funds plant breeders to

understand the mechanisms of genetic variability

and its usefulness in plant structure and disease

resistance. But the program does not fund plant

breeding; that is the responsibility of other parts

of the portfolio and the private sector. As noted

earlier, other elements of the portfolio include

ARS, with its emphasis on basic and applied

research that is nationally relevant; SAES and

land-grant colleges of agriculture and allied subjects which do basic and applied research and

focus on locally and regionally specific issues as

well as generic national issues; the nationally

applicable special grants which address major

current issues; ERS and FS which emphasize

economics and forest-related questions, respectively; and the Cooperative Extension system,

which emphasizes developing applications and

extending them to users, often in cooperation

with SAES and ARS researchers. In addition, the

private sector is a major research contributor,

generally emphasizing technology development

and application. NRICGP provides foundational

knowledge relevant to all of these research participants. Each of these has its special roles to

play. None can succeed well absent the others.

The program is a key central element of this

diverse research portfolio.

Quality of research. Quality of the research

is increased by its peer evaluation and by seeking

and insisting on connection to the issues of the

sector. Various indicators have already been discussed and include: use of the criteria of scientific merit and relevance to issues for both peer

review of proposals and award allocations; user

and stakeholder workshops; scientific advisory

committees; program announcements and panel

composition that recognize the relevancy criterion; cross-cutting themes; openness to including additional topics in the program areas, such

as soils and soil biology, which are closely

related to resource productivity and protection.
42 | Challenges for U.S. Agricultural Research Policy

All of this is commendable and should be continued. This insistence on relevance is further

enforced by the specific inclusion of multidisciplinary research (required to receive not less than

30 percent of the funds) and specific opportunities for connection of the research to the extenders and appliers of research by encouraging their

participation in the multidisciplinary research

and in the category of mission-linked research

(required to receive not less than 20 percent of

the funds in FY 1993 and thereafter).

Direct relevance to key topical issues.

NRICGP is directly relevant to key topical issues

in the agriculture/food/environment sector.

NRICGP secures this relevance to these issues

by its subject area comprehensiveness; its

requirement of relevance—along with scientific

merit—for grant awards; its inclusiveness of and

responsiveness to topical issues, such as biological control, water quality, and global change;

guidelines for and management of proposal

review and grant awards; and the continuing

relationships of the program staff with users and

stakeholders. This is demonstrated by the average of 75 percent (in a range of 66–83 percent)

of all NRICGP funds during FY 1991–1994 allocated to cross-cutting themes—strategic areas—

which, themselves, are broad categories of topic

issues (discussed in a later section).

Sustainable agriculture provides an illustrative

example. It has intrinsic importance as a research

area and paradigm for the overall agriculture,

food, and environmental sector, including rural

areas. Reflecting this, Congress in FACTA

requested that “the Secretary of Agriculture shall

ensure that grants [from NRICGP]...are, where

appropriate, consistent with the development of

sustainable agriculture” (Title XVI, Sec. 1615,

(b) (j)). Sustainable agriculture is defined in

FACTA and discussed in chapter 4.

Clearly, sustainable agriculture needs foundational knowledge for all its facets. NRICGP’s

emphasis is such foundational knowledge.

Examples of this needed knowledge include

understanding the organismal and environmental biology of soil-borne organisms; understanding and using biological methods of pest

management; understanding analytically the

social and anthropological relationships between

humankind and the land and water resources, and

the factors that provide for self-sustaining rural

communities; and understanding the system of

sustainable agriculture and how the components

interact.

NRICGP relates directly to sustainable agriculture. NRICGP staff review all proposals to

determine their relevancy to the long-term sustainability of agriculture in general and to sustainable agriculture in particular. Estimates for

FY 1995 awards are that at least $16 million of

NRICGP’s roughly $100 million budget will

relate directly to core sustainable agriculture

issues such as helping rural communities, sustaining natural resources, and decreasing the

dependency of U.S. agriculture on pesticides.

More than $14 million of the FY 1994 NRICGP

research grants related directly to sustainable

agriculture. Much more research also relates,

such as molecular mechanisms of virus movement through plant tissues and resistance genes

to bacterial pathogens, two discoveries that lie at

the center of natural mechanisms for pest management in sustainable agricultural systems.

Both, incidentally, have been featured as lead

research findings in leading international

research journals.

Some have sought to establish a sustainable

agriculture relevancy protocol for research supported by USDA. Because foundational research

is, by definition, research that aims to discover

underlying principles permitting understanding

of fundamental phenomena and is usually

broadly applicable across a spectrum of more

applied problems, it follows that relevancy protocol, for sustainable agriculture or other specific

management or production systems, are not especially useful or appropriate for NRICGP. This

was, indeed, the consensus view of a broad spectrum of scientists and policy analysts gathered to

consider research supportive of sustainable

agriculture (11). The review of NRICGP by the

Board on Agriculture reached a similar

conclusion (6).
Chapter 3 National Research Initiative Competitive Grants Program | 43

Proposals relevant to sustainable agriculture

must, like all proposals for funding by NRICGP,

be investigator-initiated: responsibility for their

content is with the investigators proposing the

research. Thus, it is the responsibility of the

investigators to ensure the proposals contain sufficient social, economic, cultural, rural development (and also biological) aspects to meet the

research needs. The program judges the proposals on their scientific merit and relevancy; it does

not try to force a particular form of relevancy,

which would be antithetical to the usual traditions of investigator responsibility and freedom.

In addition to all of the above, the NRICGP

staff have taken a number of steps to ensure that

research for sustainable agriculture is intrinsic to

NRICGP. This has included lengthy discussion

with advocates for sustainable agriculture to

understand and incorporate their concerns; specific inclusion into NRICGP’s call for proposals

and instructions to peer reviewers of the FACTA

definition of sustainable agriculture; FACTA’s

emphasis on research to advance sustainable

agriculture; and incorporation of relevance of

proposed research to the long-term sustainability

of agriculture into the proposal evaluation factors. Workshops with users and stakeholders

have also included an emphasis on sustainable

agriculture.

❚ Relationships between Program 

Areas and Funding

It is important that there be supportive relationships between the program areas and the funding

available. Within the limited funds, this appears

to be the case. These relationships can be

addressed in at least five ways: (i) financial

coverage of the priority research areas;

(ii) responsiveness to new issues and related

research questions; (iii) cross-cutting themes in

relation to the priority research areas and the

issues of contemporary agriculture; (iv) multiple

disciplines and priority research areas; and

(v) capacity for funding the mix of multidisciplinary and mission-linked grants.

Financial coverage of priority research

areas. FACTA authorized six high-priority

research program areas, represented organizationally by the current six divisions of NRICGP.

Each has now received funding, with funding for

processing for value-added products and markets, trade, and rural development starting in

FY 1992 (see table 3-2). Financial coverage of

all the areas is commendable. However, the

amounts are insufficient for the program’s scope

and importance, as documented in the previous

section. For example, the size and duration of

awards is already less than desirable for individual grants; further, the appropriations are insufficient to fund all of the highest priority proposals

and to attract even more of the nation’s scientists

to the program. To give some estimate of the

shortfall in funds for adequate coverage of the

six areas, just based on current interest of scientists, NRICGP staff have estimated that providing grant awards comparable to NSF and to fund

the same highest priority proposals would have

taken an additional $24 million in FY 1994.8

As noted earlier, NRICGP senior staff estimate that the next 25 percent of the proposals

(after those already funded) could be funded

without any reduction in quality of proposals

funded, bringing to about 48 percent the submitted proposals worthy of being funded. Further,

relative to plant systems and animal systems, the

four other priority research areas of natural

resources and environment; nutrition, food quality and health; markets, trade, and rural development; and processing for added value are

substantially underfunded.

Although there is financial coverage of the

priority research areas, the funding for the areas

is not sufficient either to fund all qualified proposals or to provide proportionate funding for the

8 Estimates by NRICGP staff factoring in the differences caused by the NRI overhead rate of 14 percent and an NSF overhead rate of

50 percent on direct costs. Thus, a $100,000 NRI award (with 14 percent overhead rate) is comparable to a $129,000 NSF award (with a 50

percent rate).
44 | Challenges for U.S. Agricultural Research Policy

six areas based on funding for the areas of plant

and animal systems.

Responsiveness to new issues and related

research questions. There have also been significant additions to NRICGP, especially in

FY 1994.

Agricultural systems research, a multidisciplinary, mission-linked program that relates to

ecological and socio-economic principles and

practices in agriculture (such as integration of

field-farm-watershed and production-processingmarketing studies), was added as a program element in 1994. It was established by the NRICGP

staff because they realized that some areas of key

importance to sustainable agriculture, and to

agriculture and environment more generally,

were not given sufficient emphasis by the extant

program categories. Specifically, there was

determined to be insufficient opportunity for

funding research that was multidisciplinary.

Although not a division as an organizational unit,

the agricultural systems category is listed equivalent to other program areas to emphasize the

importance of it for the entire program (14).

Soil biology and ecosystems were established

in 1994 as programs within the natural resources

and environment division; the ecosystems program was expanded to include aquatic ecosystems.

This steady development of NRICGP is commendable. However, new program areas cannot

be added unless additional funding is provided.

Without additional funding, the NRICGP will be

threatened with too many grants of limited duration and funds, two problems that plagued the

earlier competitive grants program.

Cross-cutting program areas. Because the

primary purpose of NRICGP is to fund foundational research in relation to the missions of

USDA and the agriculture/food/environment

sector, NRICGP is also managed to provide coverage of major “cross-cutting program areas”

that address contemporaneous issues and concerns. A significant portion (ranging from

66 percent in FY 1992 and 1993 to 88 percent in

FY 1994) of the grant awards are directly related

to these issues and concerns (see table 3-4). It is

also true that results from other fundamental

TABLE 3-4: Award Distributions of NRICGP by Cross-Cutting Program Areas,

Fiscal Years 1991–1994

Program Area 1991 1992 1993 1994

Awards $ (000) Awards $ (000) Awards $ (000) Awards $ (000)

Plant Gnome 77 10,500 95 12,309 91 12,126 104 11,739

Forest Biology 53 6,428 57 7,164 50 6,340 52 6,993

Global Change 79 9,059 83 9,400 86 9,218 93 10,575

Sustainable 

Agriculture

76 7,059 97 10,640 100 10,142 102 14,668

Animal Genome 27 4,526 33 5,661 26 4,096 25 3,908

Animal Health 53 8,870 72 11,213 69 10,693 75 9,964

Water Quality 33 4,369 37 4,629 33 4,325 54 7,395

Food Safety NI NI NI NI 31 3,973 28 4,343

Integrated Pest 

Management

NI NI NI NI NI NI 153 15,611

Total awards to 

program areas

398 50,811 474 61,016 486 60,913 686 85,196

Total awards to 

entire NRI

590 69,204 777 92,139 790 91,814 833 96,630

% in cross cutting 73% 66% 66% 88%

SOURCE: U.S. Department of Agriculture, National Research Initiative Competitive Grants Program Office, 1995.

NI, not identified.
Chapter 3 National Research Initiative Competitive Grants Program | 45

studies will, over time, be directly relevant to

these areas, as the principles they elucidate form

the basis for applied research and direct applications. Based on the amount of funds directly

related to cross-cutting program areas, research

funded by NRICGP is obviously relevant to contemporary issues in agriculture.

Multiple disciplines and priority research

areas. Research challenges for the agriculture/

food/environment sector involve, to a large

degree, topics that must be addressed in a multidisciplinary fashion. Research is often done, for

good reasons, from the perspective of single

investigators, from the perspective and using the

methodologies and paradigms of a single discipline. However, this is inherently limiting in

addressing the more multifaceted dimensions of

key phenomena in the sector, such as pathogenesis, environmental stress, prey-predator interactions, environmental and landscape biology, and

ecosystem phenomena. For these reasons, multidisciplinary research was given specific and distinctive emphasis in the original BA/NRC report

and in the Congressional authorization of

NRICGP.

A specific concern is sometimes raised regarding the role of economics in research areas. The

markets, trade, and rural development program

area is obviously relevant to economic issues.

Further, certain biogeophysical and technology

areas are also directly relevant, such as ecosystems (especially if dealing with optimization and

natural resource valuation issues) in relation to

value-added questions. Some have urged that

social scientists, and specifically economists,

must be part of certain kinds of proposals. Such a

mandatory requirement is inappropriate. The

entire philosophy of a competitive grants program is to provide opportunity for grants, and

study, within a program area, contingent upon

having high-quality proposals that have relevance, rather than strictures on what disciplines

must, or must not, be included. It is of course

true that the highest quality and relevance might,

indeed, require economics as part of the analysis

or participation by economists on the research

team (as might be true for multidisciplinary proposals), but this is best established by the review

process, not as a stricture at the beginning. Interaction is forced only in the agricultural systems

program, and even then the disciplines or subjects are not specified.

A caveat is in order, however. Desirable as

this peer-driven system is, it is essential that peer

review of the proposals involving multiple disciplines involve scientists from those disciplines—

and especially scientists who are expert in multidisciplinary work. For example, when social science topics are part of a biologically oriented

proposal, social science disciplines should be

involved in its review, along with the requisite

natural science expertise, to ensure that the social

science components are considered fully by

experts in those fields, not by other scientists

making judgments on their behalf.

It is thus evident that the present system provides ample opportunity for investigators to form

into teams as necessary and that there is ample

opportunity, specifically, for social scientists to

participate in a broad range of research areas.

Further, the peer-review process is appropriate

for determining the relevance and quality of proposals where social science is, or could advantageously be, an integral part of the research plan.

Capacity for funding the mix of multidisciplinary and mission-linked research. FACTA

specifies that not less than 10, 20, and 30 percent

of NRICGP funds, respectively, for FY 1991,

1992, and 1993 and years thereafter, are to go to

multidisciplinary research; not less than

20 percent to mission-linked research; and not

less than 10 percent for research and education

strengthening. Table 3-5 shows that USDA has

distributed the funds generally consistent with

this intent. This is noteworthy, considering that

appropriations have not increased or even closely

approximated the authorization levels for the

program, and it is especially significant because

the increase in percent of multidisciplinary

grants included in FACTA was predicated based

on corresponding increases in funding.
46 | Challenges for U.S. Agricultural Research Policy

❚ Implementation Issues

NRICGP is running well, given the constraints of

funds and the high and varied demands on it.

Major changes in its operational features are not

necessary. There are, however, several related

issues that must be considered. Some have

already been considered earlier, but only briefly.

Others, such as a proposed strategic research and

applications plan, are derived by synthesis from a

number of observations and are discussed at

greater length.

Understanding and emphasizing the role of

fundamental research, foundational knowledge, and competitively awarded research

grants for the agriculture/food/environment

sector, including contemporary issues. As

already noted, there is a continuous need to make

clear the contribution of foundational knowledge

and fundamental research (including the more

basic aspects of mission-linked research) for all

aspects of the sector. This applies especially for

contemporaneous issues such as sustainable agriculture and social and economic quality of the

rural and farming sector. This requires diligence

and initiative by the scientific community as a

whole, and not just by the NRICGP staff. It also

requires understanding and confidence by advocates of topical issues.

Consistent with this, there is increasing support in Congress and nationally for sustaining

(even increasing) federal support for fundamental research; for determining and then focusing

what the federal government should support, in

relation to what the states and private sectors

should rightfully support; for cutting “pork barrel” projects away from federal funding; and for

making grant awards through competitive processes, whether for fundamental or missionlinked research.

Understanding the role of NRICGP in

securing foundational (and related missionlinked) knowledge within the portfolio of

research for the agriculture/food/environment

sector. NRICGP is one of the major elements in

the portfolio in securing this foundational and

related mission-linked knowledge. It is not the

only element: ARS, ERS, and FS, and key elements of the overall SAES program, are other

elements. But NRICGP is a key element, particularly because it is the major entry point for all the

nation’s scientists to participate in research for

the sector. Further, NRICGP cannot stand alone.

Its work must be an integral part of the fundamental-applied research continuum; and it must

also be related to applications. Both are accommodated in NRICGP because of the emphasis on

multidisciplinary and mission-linked research.

Establishing unified strategic research and

applications plans for contemporary issues.

One of the challenges for the overall research

and applications/extension portfolio for the agriculture/food/environment sector is the need for

connecting and expeditiously applying research

results from across the sector to key, vexing

national challenges. The most obvious way to

meet this challenge is to create a unified strategic

research and applications plan for key contemporaneous issues. Such a plan would identify the

key knowledge development questions, and

TABLE 3-5: Award Distributions of NRICGP by Research Dimension, Fiscal Years 1991–1994

Research Dimension 1991 1992 1993 1994

$ (000) % $ (000) % $ (000) % $ (000) %

Basic Fundamental 50,985 74 64,501 70 61,911 67 60,677 63

Mission-linked 18,219 26 27,638 30 28,903 33 35,955 37

Multidisciplinary 19,781 28 22,872 25 31,513 34 26,345 27

Single discipline 49,723 72 62,267 75 60,301 66 70,287 73

Research Strengthening 7,450 0 16,053 186 * 17,152 209 * 16,874 211 *

SOURCE: U.S. Department of Agriculture, National Research Initiative Competitive Grants Program Office, 1995.

*Number of grants
Chapter 3 National Research Initiative Competitive Grants Program | 47

hence the several research and application elements, needed to address an issue. The plan

would describe how the research and application

elements would be combined and integrated

meaningfully to take advantage of comparative

strengths and expertise, and link research results

to desired applications outcomes and preferred

mechanisms. A crucial component of the plan

would be to identify desired outcomes and anticipated time frames. Funding, including relevant

federal funds, for dealing with a specific issue

could then be optimized for application within

the context of the overall strategic plan. Recent

examples of such federal funding have been

those for pest management, sustainable agriculture, genome research, and water quality.

Fundamental research and foundational

knowledge may be expected, usually, to be part

of this. Thus, NRICGP would usually be a part of

these plans along with the other relevant elements of the research portfolio, including usually

ARS, SAES, the private sector, and often other

cognate agencies (such as, for example, EPA, the

U.S. Geological Survey, ERS, and FS). Similarly, the extenders of knowledge and technology

transfer entities would be a part, including especially the Cooperative Extension system and various USDA agencies.

The purpose of the plans would be to show

how all elements fit into a comprehensive strategy designed to “deliver the goods” to major

issues and what their principal contributions

would be expected to be. The purpose of such

plans would not be to specify how (largely)

autonomous researchers and extenders would

function. At present, there is no evidence of such

strategic plans, except informally and through

traditional ways of working among the elements.

These plans would be an effective venue for

addressing the key question: Is the current system for dealing with contemporary issues adequate, or is a holistic, focused approach

preferred? It is certainly incorrect, unreasonable,

and unwise to ask any single part of USDA’s

overall research program—such as NRICGP—to

carry by itself a preponderant share of the

research burden for a particular topic. This narrow focusing on to just one part of the folio—

either NRICGP or another—is especially inappropriate because so many different components

apply to a single issue. It is important to harness

all of them. It is more appropriate to ensure, first,

that the various dimensions of the topic are covered by one or more elements within the various

USDA research programs and, second, that there

are no gaps or unnecessary redundancies and

duplications of research coverage. This means,

for example, that the foundational questions have

a place in the NRICGP portfolio and that relevant priorities are also established for other elements of the portfolio (ARS, states, cooperators).

Applied research results should be drawn from

throughout the overall USDA program (and from

others agencies and sources, where relevant

knowledge is available), integrated, and transferred to the relevant applications and the user

organizations. The key role for Cooperative

Extension in this knowledge and technology

transfer process is very important and must not

be underemphasized. Taken as a whole, this

would result in an integrated, strategic research

and applications plan where knowledge and technology transfer is connected interactively with

the research process. Put differently, all elements

of the research and applications portfolio could

be considered together and function collaboratively in relation to key issues and each would

have its own place in the issues.

It might be argued by some that such a strategic plan is already in place, especially with the

array of federal-state cooperative arrangements,

collaborations between ARS and SAES scientists, and relationships among scientists. Many

observers, as evidenced by the persistent critiques of the agricultural research system, would

argue otherwise. The planning done by the SAES

and extension systems approximate in certain

ways these plans, but they are not inclusive of all

elements of the portfolio. The planning of the

Joint Council does not address the agency

focuses for the proposed strategic plans.

It might be argued by others that such planning must be (or at least preferably should be)

from the “bottom up,” from the scientists and
48 | Challenges for U.S. Agricultural Research Policy

extenders, not imposed from “top down.” Establishing research approaches and specifying

research plans is most appropriately done by scientists and evaluated and decided upon (for specific funding, for example) by scientific peers.

No one else has the expertise or insight to evaluate the quality and methodologies of a research

plan. This kind of planning should always be

from the “bottom up.” However, establishing

issue areas for emphasis is partly, but not solely,

a scientist’s responsibility. It is very much a “top

down” obligation for those charged with larger

social responsibilities, such as research managers, experiment station directors, Congress, and

society as a whole. Similarly, establishing a strategic research and applications plan is a responsibility for these persons, combined with the

expertise and insight of the scientists and extenders and appliers. In any event, developing these

plans would very much involve the research and

application practitioner/leaders relevant to the

issues, so they would be, to a large extent, “bottoms up.”

In making the strategic plans, the six priority

research areas established by FACTA should be

used as the template and framework for setting

out the research needs. The research needs can be

further correlated with the cross-cut areas established by NRICGP, which themselves directly

relate to the great proportion (80–85 percent) of

the NRICGP program. The reasons for using the

priority research areas are several: the six priority research areas cover the entirety of research

relevant for the agriculture/food/environment

sector; they have proved effective and workable

as a framework for planning and managing

research programs; they relate to major issue

(cross-cutting) areas; and they correspond well to

the purposes for USDA’s research as set forth by

Congress.

Sustaining the emphasis on foundational

knowledge. It is not appropriate to force

NRICGP into funding applications-oriented

research, such as sustainable agriculture

research. Other programs have been established

for that (such as the Sustainable Agriculture

Research and Education program), and other

organizations are more appropriate for that (such

as the SAES system and Cooperative Extension).

Conversely, it is not appropriate to ask issuerelated research, such as that for sustainable agriculture, to carry major fundamental research

responsibilities (even though there is much intermixing in both cases). Such issue-specific

research is more appropriately funded separately,

as it currently is.

Specific comment should be made about the

proportion of mission-linked research to be

funded by NRICGP. As noted earlier, missionlinked research was included in the original formulation of NRICGP. This was done to provide a

place for studies that more closely connected to

mission applications having characteristics of

fundamental studies. This strengthens the continuum from foundational knowledge to more

applied studies. Inclusion of mission-linked

research was not meant to take from or be preponderant over fundamental research.

The initial amount of 20 percent for missionlinked research was believed appropriate to make

the connections but not diminish the emphasis on

foundational knowledge. More than 20 percent

(such as 30–50 percent) of mission-linked

research would be inappropriate and destructive

to the purpose of NRICGP. It would be inappropriate because there are many places in the

research portfolio where mission-linked work is

emphasized (including the ARS, SAES, and special grants) and because NRICGP is the only

place in the portfolio that emphasizes foundational studies in relation to all of the nation’s scientists. And it would be destructive because there

is already insufficient funding in NRICGP to

cover its priority research areas and fund qualified proposals.

Sustaining the openness of NRICGP to all

qualified scientists. A major feature of

NRICGP—and a major advantage of it for

USDA’s mission—is NRICGP’s openness to all

qualified scientists, to providing opportunity for

all these scientists to participate in addressing the

agriculture, food, and environmental challenges

of the nation. There is no evident threat to this

feature of NRICGP. However, nothing should be
Chapter 3 National Research Initiative Competitive Grants Program | 49

done to diminish this important feature. Major

actions need to be taken to expand further these

opportunities.

Expanding the means for addressing the

research and technology needs of the future.

At present a number of mechanisms are available

for addressing these needs, several of which have

been emphasized by the BA/NRC report and

NRICGP as established by Congress in FACTA.

These mechanisms emphasized in NRICGP

include multidisciplinary research (in addition to

the single disciplinary research which justifiably

continues as a dominant mode), bringing extenders into the research programs (as in the missionlinked studies), and strengthening research

capacity. FACTA also gives desirable emphasis

to technology transfer and encourages positive

relationships between, for example, NRICGP,

SBIR, and the AARC (Alternative Agriculture

Research and Commercialization Center, discussed in another chapter). Creation of strategic

research plans would be helpful in addressing

these future needs. All of this should continue to

be emphasized. In addition, conducting multidisciplinary research and addressing multidiscipline

and multispecialty issues such as sustainable

agriculture, pest management, and water use and

quality are relatively new approaches for

researchers in the agriculture/food/environment

sector. It is reasonable that continuing, special

attention be given to improving ways to evaluate

research for them, such as by expanding peer

review of research proposals to include panels

with expanded technical expertise and/or user

and stakeholder expertise.

Emphasizing purposes and guidelines.

Although the purposes for research established

by Congress in FACTA are already part of

research proposal solicitation and peer review by

NRICGP, it is important to continue to emphasize them because they are national policy.

Relating to stakeholders and clientele. As

already emphasized in several ways, this is a key

challenge for NRICGP, just as it is for any program. Continuing and expanding stakeholder and

client relationships, and particularly for commodity and rural economic development constituencies, is a major challenge for NRICGP, made

easier by the major work it has already done.

Reexamining the organizational location of

the NRICGP office. It is reasonable that an

agency establish its own organizational and management system for its programs. However, it is

also reasonable to examine the organizational

location of NRICGP within USDA. The program

is administratively located within the Cooperative State Research, Education, and Extension

Service (CSREES). This location is appropriate

in the sense that the CSREES funds extramural

research (in contrast to the ARS as an intramural

research agency) and because NRICGP is cooperative with the participating research organizations and that many of those are in the state

agriculture/food research and extension systems

(the primary agencies in the CSREES). Also,

these beneficiary organizations should thus have

a strong sense of the importance of the program

and be strong stewards for its effective management and equally strong advocates for its continuance.

However, the mission of NRICGP very much

transcends both ARS and CSREES. It relates to

all scientists doing fundamental research and

related mission-linked research. It relates to the

entirety of the responsibilities of the Under Secretary for Research, Education, and Economics.

Indeed, it goes beyond the Under Secretary’s

responsibility within USDA because it also

relates to the FS, Natural Resources Conservation Service, the Animal and Plant Health

Inspection Service, and other units of USDA,

and to myriad scientists not directly within agricultural units per se. As such, it is not wholly

appropriate for the program to be within a single

research agency of USDA (such as CSREES or

ARS). Rather, a more appropriate location to

remedy this situation is to have it be a separate,

independent office reporting directly to the

Under Secretary.
50 | Challenges for U.S. Agricultural Research Policy

❚ Financial Issues

Resolving affirmatively several key funding

issues is essential if NRICGP is to flourish as

intended.

Resuming continued growth of the appropriations. The upward financial growth of the

program must be continued, irrespective of external budget strictures, if there is to be even the

possibility of securing the necessary foundational knowledge critically needed by the sector

in the foreseeable future. There is much obvious

need and, as Chapter 6 shows, research is a wise

financial and public investment, given the high

returns on the investment. This requires that

Congress meet more closely, and preferably

exceed, the funding increases requested by the

Administration.

Increasing the proportion of funding to key

areas. All of the priority research areas need

additional funding. In particular, though, as additional appropriations are made, the proportion of

funding should be increased for the research

areas of markets, trade, and rural development;

nutrition, food safety, and health; and processing

for value-added products. Nutrition, food safety,

and health is a particularly important area. Funding was provided for the other two areas after

NRICGP was started, and thus their funds are

limited. Furthermore, these latter two areas relate

directly to key national issues: the social and

economic vitality of rural communities and new

products and processes. The extent of additional

funding should be determined by NRICGP staff

relative to the quality of proposals.

Stopping earmarks. Earmarking has been

discussed in earlier sections, as has the view by

some that NRICGP can be seen as a source of

discretionary funds. Both should be stopped, as

matters of national policy and in fairness to the

critical needs for which NRICGP was designed.

Topical, contemporaneous issues are very

important, such as sustainable agriculture, water

quality, genome research, and pest management;

internationally oriented research could also be

included, given global concerns for food security

and its effect on U.S. agriculture. However, it is

inappropriate to redirect funds for fundamental

research (NRICGP) away from generating essential foundational knowledge especially when

other funds and mechanisms are already available for the intended research. Further, earmarking by USDA or Congress is contrary to best

practices for research grants and antithetical to a

peer-reviewed program where the reviews are

based on the merits of scientific quality and relevance to the issues. Indeed, NRICGP has strong

evidence that scientists are, themselves, strongly

responsive to the topical issues relevant to their

research. For example, with the emphasis on

food safety in the FY 1994 proposal solicitation,

the proportion of proposals and of grant awards

for work on E. coli in food increased several-fold

compared with the FYs 1991–93.

Increasing collaborations with other federal agencies. The collaboration between

USDA’s NRICGP and cognate programs in other

agencies, such as NSF and DOE, is commendable. It should be continued and expanded to

other agencies, such as Department of the Interior and EPA, where the interests of those agencies and USDA are similar. This mutual interest

of related departments leverages the effect of

federal funding, and encourages more effective

and efficient federal funding. As additional funds

become available, these collaborations should be

increased.

Discriminating between national special

grants programs and NRICGP. There are a

number of areas appropriate for nationally

focused special grants programs which bring

basic and applied research (sometimes with

extension involvement) to bear on key national

issues. These areas and issues include sustainable

agriculture, water quality, pest management, and

the like. The emphasis of these mission-linked

and often applied programs is compatible with

the emphasis for NRICGP. But these missionlinked issues ought not to be subsumed by

NRICGP. They should be placed inside other

programs or into special grants. Being clear

about objectives for the special grants programs,

and having realistic expectations for what the

outcomes will be from their funding, is impor-
Chapter 3 National Research Initiative Competitive Grants Program | 51

tant. That clarity is obscured when special grants

are blended with NRICGP, as has been done by

some of the earmarks. It would be better for both

the special grants and NRICGP to have the two

programs—and the issues to be addressed—kept

organizationally separate, along with seeing

them as interactive elements in the strategic

research plans discussed in the previous section.

Rationalizing indirect (research support)

cost rates. At present there is one set of research

support (indirect) cost principles and rates for

NRICGP and another for all the other federal

competitive grants programs. There is no policy

reason why this should continue. The principles

and rates for NRICGP should be the same as for

the related federal programs. The reasons for this

different rate may be understandable because of

several distinctive features: USDA’s longstanding partnership with state agricultural experiment

stations; a long history of collaborative and

cooperative arrangements; and the interest of

faculty and their research managers in securing

as much money as possible for research, and not

providing for the necessary research infrastructural support. Those reasons may still be valid for

formula funds to SAES and to cooperative agreements. But NRICGP grants are not in either category. Further, just as the lack of growth of

appropriations for NRICGP by Congress is

retarding the future of the program, the capping

of the research support (indirect) cost rate at the

arbitrary rate of 14 percent has made substantial

difficulty for non-federal research partners.

Indeed, this capped rate, which is far below the

recovery of even nominal indirect costs, has

effectively chilled, and in some instances precluded, the participation by scientists who are

most at the leading edge of the foundational

knowledge which the program seeks. Furthermore, the 14 percent has little bearing on actual

conditions; it is simply a calculated rate from

nominal ARS research administration costs. A

more appropriate rate would be to follow current

practice for other agencies, which involves capping administrative cost recoveries and conducting the normal indirect research cost negotiation

process for all other costs, and Congress could so

specify.
| 53

4

Sustainable

Agriculture

Research and

Education

wo major components of the research

title, as changed by Congress, address

sustainable agriculture. First, the purposes applicable to the entire research

title (discussed in chapter 2) emphasize sustainable agriculture. The purposes emphasize that all

federally funded agricultural research and extension of USDA “be designed to, among other

things, ...enhance the environment and natural

resource base upon which a sustainable agricultural economy depends...enhance the long-term

viability...of the food production and agricultural

system...[and] enhance the quality of life for

farmers, rural citizens, and society as a whole...”

Notwithstanding the key importance of these

provisions, this aspect of sustainable agriculture

has not been emphasized here because of time

constraints and because the General Accounting

Office (GAO) published a study of USDA’s

management of the sustainable agriculture program in 1992 (31).

Second, as a continuation of Congress’

interest in sustainable agriculture, it established

through FACTA—in Subtitle B—the Sustainable Agriculture Research and Education

(SARE) program as a successor to the Low-Input

Sustainable Agriculture (LISA) program

addressed in the Food Security Act of 1985 (the

1985 farm bill).

The purposes established by Congress in

FACTA for SARE in this subtitle are “to encourage research designed to increase knowledge

concerning agricultural production systems that:

1. maintain and enhance the quality and productivity of the soil;

2. conserve soil, water, energy, natural

resources, and fish and wildlife habitat;

3. maintain and enhance the quality of surface

and ground water;

4. protect the health and safety of persons

involved in the food and farm systems;

5. promote the well being of animals; and

6. increase employment opportunities in agriculture.”

In addition Congress reaffirmed in FACTA

the definition of sustainable agriculture which it

first established in the National Agricultural

Research, Extension, and Teaching Policy Act of

1977 as follows:

1. “satisfy human food and fiber needs;

2. enhance environmental quality and the natural

resource base upon which the agriculture

economy depends;

3. make the most efficient use of nonrenewable

natural biological cycles and controls;

T
54 | Challenges for U.S. Agricultural Research Policy

4. sustain the economic viability of farm operations; and

5. enhance the quality of life for farmers and

society as a whole.”

Sustainable agriculture involves a systems

approach, which Congress emphasized by establishing integrated crop management and integrated resource management as key components

of this subtitle. It defined them as:

“an agricultural management system that

integrates all controllable agricultural production factors for long-term sustained productivity, profitability, and ecological soundness” and

“livestock management which utilizes an

interdisciplinary systems approach which integrates all controllable agricultural production

practices to provide long-term sustained productivity and profitable production of safe and

wholesome food in an environmentally sound

manner.”

When the purposes and definitions are taken

together, it is particularly significant to note that

sustainable agriculture includes three essential

components: 1) agricultural production and productivity; 2) conserving, enhancing, and sustaining the natural resource base on which “the

agricultural economy depends,” including general environmental quality; and 3) the economic

and social quality of farmers and farming. It is

the efficacious combining of these three components that characterizes sustainable agriculture.1

Congress has been interested in sustainable

agriculture since it devised the 1977 definition

quoted above. This interest reflects emerging

recognition of degradation of soil and water

resources; the adverse impacts of chemical pesticides on environmental and human health; the

steady decline of the economic and social vitality

of the rural and farming sector; steadily decreasing farm numbers and growing evidence of

increasing proportions of larger farming opera1 Many of the conflicts and contentions related to sustainable agriculture arise because one of these three components is emphasized at

the expense of the others. The three components must be considered together, in an integrated fashion, in order to fully understand their interactions, congruences, and synergies.

tions and part-time farmers; and increased competitiveness in agricultural production. Congress

also aimed to address the unease of observers

who argued that these concerns have received

only limited attention from USDA and the landgrant university and state agricultural research

system, if not outright neglect (23). This concern

was reflected in the 1985 Farm Bill by Congress’

intention that USDA determine how to do more

research to preserve natural resources and environmental quality concurrent with ensuring agricultural productivity. USDA responded by

giving increased attention to alternative agriculture,2 including establishing the LISA program

in 1988. Congress appropriated $3.9 million for

the new program. During this time, also, the

Board on Agriculture published a major study on

sustainable (alternative) agriculture (4).

A particularly significant feature of the SARE

program deserves special comment: specific

provisions for administering and managing the

program encourage, and enforce, the collaborative nature of the research-application process.

Although this pairing has long been a feature of

the agriculture research and application (extension) system, it is given new force and cogency

by the SARE program. The key feature is a set of

regional administrative councils that manage the

SARE program and are to be composed of

“farmers utilizing systems and practices of sustainable agriculture,” agribusiness, “nonprofit

organizations with demonstrable expertise,”

“state departments engaged in sustainable agriculture programs,” and the customary array of

leaders from the federal and state agricultural

research and extension systems. These regional

councils are responsible for project review,

selection, and recommendations for funding of

the grants to be awarded. A national advisory

council, also established by FACTA, is comparably composed, and makes recommendations for

2 These concerns were also marked by a range of titles and descriptions for what was intended: organic farming, alternative agriculture,

and sustainable agriculture are just three of the names used, even though each means something considerably different from the others.
Chapter 4 Sustainable Agriculture Research and Education | 55

project approval and funding to the Secretary.

Thus, the users of research are centrally involved

in guiding the research program and full partners

in it. This “market pull” for the SARE program

contrasts with the “market push” of research

findings separated from application.

IMPLEMENTATION

Congress established in FACTA three separate

but interrelated programs: Chapter 1: Best Utilization of Biological Applications; Chapter 2:

Integrated Management Systems; and Chapter 3:

Sustainable Agriculture Technology Development and Transfer Program. Each is discussed in

turn below.

For this subtitle, Congress in FACTA authorized a total of $80 million to be divided among

the chapters as follows: $40 million for Chapter

1; $20 million for Chapter 2; and $20 million for

Chapter 3. Appropriations, however, have been

substantially less. The LISA program, which preceded SARE, received appropriations for FY

1988, $3.9 million, (its first year of appropriations) and for FY 1989 and FY 1990, $4.5 million each year. SARE received $6.7 million for

each of the first three years, FY 1991–1993.

Authorization of the SARE program was accompanied by a substantial percent increase in funding, emphasizing Congress’ commitment to

sustainable agriculture. For FY 1994, $7.7 million was appropriated for SARE, and funding

was first provided for Chapter 3, the so-called

training program, at a level of $3.1 million. For

FY 1995, SARE appropriations were $8.1 million and training appropriations $3.5 million. No

funding has been provided for Chapter 2, and it

is not likely that this chapter will receive funding

in the foreseeable future. There have been no earmarks, sequestrations, or special requests for any

of these appropriations.

Four major general implementation steps have

been taken. First, SARE has been administratively located and supported within the Cooperative State Research Service (now the

Cooperative State Research, Education, and

Extension Service, or CSREES), as was the

LISA program before it. Given the intended

extramural character of both LISA and SARE,

this administrative location is appropriate. When

the extension-based national training program

(Chapter 3) was funded, a new office of Sustainable Agriculture Programs was established in

CSREES and a director appointed effective February 1995. Second, the National Sustainable

Agriculture Advisory Council, stipulated in

FACTA, was established (see below in discussion of Chapter 1). Third, an administrative advisory group has been evolving for the Office of

Sustainable Agriculture Programs. Its membership includes two representatives of each SARE

region and representatives of the Agricultural

Research Service (ARS), Natural Resources Conservation Service (NRCS), and the Environmental Protection Agency (EPA). This senior-level

attention to sustainable agriculture is a positive

development. Fourth, an inter-agency working

group was established in August 1995 to advance

sustainable agriculture research and extension

throughout USDA. This development is discussed further in the section below.

❚ Chapter 1: Best Utilization of 

Biological Applications

Appropriations for the SARE program are summarized above. In addition, a related program for

Agriculture in Concert with the Environment

(ACE) was jointly established by USDA and the

EPA in 1991. It is a grant program to fund

projects competitively that focus on pollution

prevention in agriculture and on environmental

and ecological aspects of agriculture, purposes

complementary to and supportive of those for

SARE. The ACE program is discussed concurrent with SARE, with which it is most closely

associated. Funding of the companion ACE program derives from USDA and EPA on a 1:1

matching basis. For FY 1995, a total of $2.0 million was available.

The purposes of SARE include conducting

“research and extension projects to obtain data,

develop conclusions, demonstrate technologies,

and conduct educational programs that promote
56 | Challenges for U.S. Agricultural Research Policy

the purposes...including...projects that (1) facilitate and increase scientific investigation and education in order to [among other things] reduce, to

the extent feasible and practicable, the use of

chemical pesticides, fertilizers, and toxic natural

materials in agricultural production; improve

low-input farm management...; promote crop,

livestock, and enterprise diversification; and

(2) facilitate the conduct of projects in order to

[among other things] study farms...using farm

production practices that rely on low-input and

conservation practices; take advantage of the

experience and expertise of farmers and ranchers

through their direct participation and leadership

in projects; transfer...information to farmers and

ranchers concerning low-input sustainable farming practices and systems; and promote...” partnerships among the various participants and

organizations relevant to sustainable agriculture.

The SARE program is carried out through its

own competitive grants program organized and

managed by the four regional administrative

councils authorized by this chapter.3

 Each

regional council is composed of representatives

of the relevant federal and state agricultural

research and extension agencies (such as ARS,

CSREES, state extension service, state agricultural experiment station [SAES], NRCS, state

agriculture departments engaged in sustainable

agriculture), farmers involved in sustainable

agriculture, agribusiness, state or U.S. geological

survey organizations, and other persons knowledgeable about sustainable agriculture. Each

regional council receives an equal amount of

funding ($1.7 million in FY 19954

) for allocation

on a competitive basis to research and extension

projects in the region. Each regional council

establishes the priority areas for its emphasis and

issues a call for proposals; preproposals may be

3 The four regions correspond to the four land-grant university research and extension regions. The Northeast region involves the states of

Pennsylvania, Maryland, and Delaware and all states to the northeast of them. The North Central Region involves Ohio, Indiana, Illinois,

Missouri, and Kansas and the states to the north of them. The Southern Region involves North Carolina, Kentucky, Arkansas and states south

of them, including Oklahoma and Texas. The Western Region includes Montana, Wyoming, Colorado, New Mexico and all states to the west

of them, including Alaska and Hawaii. 4 This is a total of $6.8 million to the regions from the total SARE funding of $8.1 million for FY 1995. The remaining funds

($1.3 million) are used for administration and for information dissemination.

invited. The technical and scientific merits of

each proposal are evaluated by a technical committee established for this purpose by each

regional council, and written and numeric evaluations are provided by the committee to the

council. The regional council combines these

evaluations of technical and scientific merit with

its own evaluation of the relevancy and merit of

the proposals for advancing sustainable agriculture goals. Recommendations for funding are

forwarded to the National Sustainable Agriculture Advisory Council which makes recommendations to the Secretary through the CSREES for

projects suitable for funding. As a practical matter, the decisions by the regional councils are

supported by USDA except in isolated and special cases. The ACE program is also administered through the regional councils using the

same mechanisms, and the same technical committees for evaluating the proposals.

A review of the projects illustrates their

breadth and type. Projects last up to two years

(Northeast region) or three years (the other

regions). Funding per project varies from

$50,000 to $250,000. SARE/LISA grants averaged $76,800 between 1988 and 1992 and

$95,600 in 1993; ACE projects averaged

$71,500 and $61,600, respectively. Of the 2,169

proposals received for the SARE and LISA programs between 1988 and 1993, 367 (about

26 percent) were funded, 65 projects in 1993. In

1993, 178 projects were active, ranging from 58

for the North Central Region to 35 for the Northeast, with the Southern and Western Regions

having 43 and 42, respectively. Consistent with

provisions for the federal-state matching grants

program, the projects require a nonfederal match

of not less than 50 percent of the project expenditures. These projects received $27.9 million in
Chapter 4 Sustainable Agriculture Research and Education | 57

federal funds during this 1988–1993 period,

which was matched by $30.7 million in nonfederal matching funds. Nationally, SARE and ACE

projects with an experimental component and on

whole farm systems received the largest share of

the federal funding (55 percent), followed by

whole farm demonstration and education, training, and information transfer (36 percent). Subject areas receiving the major portion of funding

were communications, education, and marketing;

field crops; and soil, water, nutrient, and waste

management. Regional emphases varied somewhat from these national emphases, but were

generally consistent. Rural quality-of-life

projects received the least funding among the

defined categories (29).

The content of the projects is left to the discretion of the proponents. Quite often successful

proposals include economic components, as well

as extension and outreach components (which

are weighed heavily in the evaluations of

research projects). An educational component is

estimated to be part of 20–30 percent of the

projects (16). Both the ACE and SARE programs

successfully address the three components of

sustainable agriculture (including economic viability) and incorporate research and extension

into a common program. ACE and SARE have

also been successful in nurturing diverse projects

that represent the range of growing and farming

conditions in the region (as called for in the

chapter) and in ensuring that a reasonable proportion of crop and livestock projects are funded.

To further projects that relate to farmers and

draw on their experience and expertise—beyond

the extent to which the research and extension

projects already do so—producer grants are also

awarded directly to farmers for applied research

and demonstration projects. The North Central

region started its producer grant program in

1992, the Northeast in 1993, and the Southern

and Western regions in 1994. To fund these, each

regional council allocates $100,000 from its allocation for SARE projects. Proposals are

reviewed by the regional councils and awarded

competitively based on merit and relevancy, just

as for the research and extension proposals. For

example, in FY 1993, the North Central council

made 31 grants, ranging from as low as $575 (for

establishing hazelnut windbreaks on an Iowa

farm) to as high as $5000 (for replicated manure

use trials in Wisconsin, rotational grazing for

custom dairy heifer feeding in Wisconsin, and

grazing on former CRP [Conservation Reserve

Program] acres in Minnesota).

The regional administrative councils are aided

in their administration of the programs by four

regional host institutions (University of Vermont, Northeast Region; University of Nebraska,

North Central Region; University of Georgia,

Southern Region; and Utah State University,

Western Region) also authorized in the chapter.

These host institutions manage the grants process, negotiate budget and contracts, and provide

administrative and fiduciary oversight. They also

provide for information, education, and outreach

about sustainable agriculture, including newsletters, speakers, publications, and other types of

electronic and printed communications.

A crucially important element of sustainable

agriculture—for both SARE and ACE programs

and also for sustainable agriculture as a USDA

mandate and responsibility—is the extent and

quality of involvement of the several USDA

agencies that are relevant to and involved with

sustainable agriculture. Clearly, the agencies are

involved through their representatives in the

regional administrative councils and on the

National Advisory Council. SAES are involved

because much of the project money flows

through them and to their scientists. Support for

the programs varies among the regions, but it

appears to be steadily increasing.

Based on all the evidence, the SARE program

is well administered and is meeting the needs and

purposes envisioned in the chapter. The widespread and strong constituency support for

SARE is graphically illustrated by the successful

advocacy for continued funding through

FY1995, in spite of the federal budget stringencies.

A second major provision of this chapter is the

Federal-State Matching Grants Program. Funds

have not been appropriated by Congress for it,
58 | Challenges for U.S. Agricultural Research Policy

nor have funds otherwise been provided. The

program does not exist, nor is there discussion or

evidence that its implementation is being, or

should be, contemplated. The rationale for this

appears to be that the current programs (SARE

and the training programs described for

Chapter 3, combined with existing state programs) meet the intent of this provision.

❚ Chapter 2: Integrated Management 

Systems

Notwithstanding the definitions for integrated

crop systems and integrated resource management systems, and the emphasis on systems in

the subtitle, this chapter has not been implemented as a part of SARE and related programs.

Congress has not appropriated funds for it, nor

has USDA otherwise allocated funds to it. In

fact, at the beginning of FY 1994, Congress specifically stated by letter that the funds appropriated for training were to be spent for the

purposes of Chapter 3, not for those of Chapter 2.

Given the success of the SARE program and its

coverage of both plant/crop and livestock areas,

it is reasonable that this program be held in abeyance, especially if its purposes can be addressed

as part of SARE, as it appears they can be.

Indeed, a separate program is philosophically not

consistent with the entire rationale for sustainable agriculture (which is to think systematically,

not compartmentally). To date, a significant

number of the projects funded have addressed

integrated management systems, and proposals

of this type are encouraged. This could be further

strengthened, if necessary, by further encouragement in the call for proposals and in the instructions to the technical committees reviewing the

proposals.

❚ Chapter 3: Sustainable Agriculture 

Technology Development and Transfer 

Program

This is commonly referred to as the training program (and that name will be used in this review)

because training is the principal element of the

chapter, given funding to date. Funding was first

provided for FY 1994 ($3.1 million). This program and the SARE program are incorporated

into, and managed integrally by, USDA’s Office

for Sustainable Agriculture Programs.

The training program, like the research and

education program (SARE), is organized and

managed through the regional councils, assisted

by the regional host institutions. For FY 1995,

$693,000 was provided to each of the regions.

The chapter established that the funds were to be

allocated to proposals on a competitive basis.

This has been done, using merit and relevance to

training needs as the principal criteria for making

the awards. Each regional council established a

merit and relevancy review process for these

awards of a type similar to that used for evaluating the research and extension projects. A technical review committee was specifically

established for the training awards. The same

approval process was used, involving the

regional and national councils and, finally,

approval by CSREES on behalf of USDA.

The work of the regional host institutions for

the training programs warrants specific comment. These institutions are also the regional

training centers specified by the chapter. Each

regional host institution has a coordinator for

training in the region. Functions carried out by

the host institutions, and coordinator, include

participation in the Sustainable Agriculture Network (a national network of more than 700 persons and groups involved in providing

information about sustainable agriculture); talks

and presentations; and preparation and distribution of printed publications including booklets,

bulletins, and newsletters. In addition, all publications are made available in two additional,

electronic forms: distribution of diskettes for use

in personal computers and downloading from the

Internet.

It may be expected that this program will yield

good results, based on the already established

and positive record of the regional councils for

the SARE program. However, it is too early to

determine the effectiveness of the projects

(which last two and three years), because a number of them have only recently been completed.
Chapter 4 Sustainable Agriculture Research and Education | 59

A second program was established by the

regional councils to create, first, a strategic training plan for each state and, then, an implementation plan. This involved a one-year allocation of

$10,000 to each 1862 and 1890 land-grant university ($3,000 to the District of Columbia) from

the total training funds. The regions continued

this funding ($10,000–15,000 per land-grant

institution) for a second year (FY 1995) from

their regional allocations. It is too early to determine the effectiveness and value of this program.

This chapter specified that additional programs be undertaken. One of these programs,

geared to providing technical guides and handbooks, has not been explicitly done. Rather, the

information components of the SARE program,

the information and knowledge dissemination

functions of the regional host institutions, and the

materials for the training program have received

priority. To a significant extent, the outputs from

these activities should suffice. In any event, the

regional councils are in a good position to determine whether guides and handbooks should be

prepared in addition to the documents already

developed and prepared. Another effort, which

involves the training of cooperative extension

agricultural agents and is required by the chapter,

is being implemented as a goal that each will be

trained, but on a voluntary rather than a required

basis. In a third effort, regional sustainable agricultural specialists were established in the form

of sustainable agricultural training coordinators

for each of the four regions, and each state extension system has identified a sustainable agriculture training coordinator.

THE PLACE OF SUSTAINABLE 

AGRICULTURE IN USDA’S OVERALL 

PROGRAM

As noted at the outset, Congress has directed that

sustainable agriculture be emphasized in

USDA’s overall program. To date this emphasis

and attention, by the relevant agencies and by the

policy leadership of USDA, has been lacking.

For example, the 1992 study by GAO discusses

the agencies involved and the extent to which

effective leadership and management have been

provided. The agencies include ARS, the Cooperative State Research Service and Extension

Service (now combined into CSREES), Economic Research Service (ERS), National Agricultural Library, Soil Conservation Service (now

the NRCS), Animal and Plant Health Inspection

Service. GAO also examined USDA’s management of its sustainable agriculture programs,

including the congruence and/or conflict of policy, goals, and management. It found no single

entity “responsible for overseeing or coordinating the entire issue.” GAO also found program

management for sustainable agriculture to be

fragmented and lacking “in clear and comprehensive goals for the nine agencies

involved...”(31).

There has, however, been interest and emphasis by some specific programs. For example, and

as already discussed in a previous chapter, the

National Research Initiative Competitive Grants

Program (NRICGP)—after intensive discussion

with representatives of the sustainable agriculture advocacy community—has incorporated the

relevancy criterion of contribution to the longterm sustainability of U.S. agriculture into its call

for proposals and its commission to proposal

reviewers. In addition, one of NRICGP’s programmatic cross-cuts is sustainable agriculture.

More than $14 million currently goes directly to

sustainable agriculture research, with much more

applying indirectly to sustainable agriculture.

NRICGP is one of the few agencies where social

and economic research (a key aspect of sustainable agriculture research and extension) can

be specifically funded. The state agricultural

research and extension systems, which are partially supported by federal funds, have a variety

of programs for sustainable agriculture.

ARS is also increasing its attention to sustainable agriculture. There was a collaborative effort

between the leadership of the LISA and SARE

programs, and ARS and other USDA agencies,

to determine to what extent research projects

contributed to sustainable agriculture. Although

the results may have had some interest, the process was refined to provide full utility, and its
60 | Challenges for U.S. Agricultural Research Policy

utility in any event was substantially limited

because its methodology called for categorizing

projects based on the research summaries in the

Current Research Information System (CRIS)

documents. CRIS, however, is a source that is

open to varied interpretation relative to what is

actually being done in research projects.

No matter what other actions have been taken,

there has not been—until now—a systematic initiative by USDA to provide the senior policy

leadership and integration of effort that sustainable agriculture warrants as a major cross-cutting

issue. Very recently (August 1995), an initiative

was established by the Deputy Secretary to provide this leadership and integration. More than

50 persons are meeting biweekly to create action

plans, which are to be completed by December

1995. Several agencies are involved, including

the science and education agencies (such as

CSREES, ARS, and ERS), NRCS, and other relevant agencies in USDA such as in rural development and in marketing.

Creation and action by this interagency group

is an important step toward establishing sustainable agriculture as a priority program within

USDA. It should help to integrate the work

among the several agencies relevant to sustainable agriculture and increase collaboration and

cooperation among them; provide a coherent

management system for USDA’s work in sustainable agriculture; and provide USDA accountability. It remains to be seen what will emerge.

Optimally, it would include clear emphasis

throughout USDA; a streamlined and clear

USDA management and oversight structure;

clear, compelling goals and objectives; a system

of funding that combines USDA leadership and

emphases with incentives and opportunities for

scientists and extenders/appliers; a system of

accountability, including clear criteria and

expectations; a set of expected achievable and

meaningful outcomes; measurable performance

indicators; and clear roles and expectations for

each of the relevant agencies, separately and also

collaboratively with cognate agencies. A particularly valuable outcome would be a unified and

integrated strategic and operational plan, which

incorporates each of the relevant agencies (and

state and other partners) separately and collectively.

PERSPECTIVES ON SUSTAINABLE 

AGRICULTURE

Clearly, sustainable agriculture is an issue of

major proportions: in its inherent substantive

content; its longevity as a Congressional concern

and interest; and in the pervasiveness and inclusiveness of its organizational and intellectual

components. Further, it is a particularly attractive

meeting ground where environmental and social

interests and perspectives converge with food

production and agricultural productivity interests.

Just as important, sustainable agriculture is an

inextricable component of sustainable development—a recent, momentum-creating international emphasis. This is particularly apt because

agricultural development is the basis for social

and industrial development, and sustainability of

the environmental resources needed for agricultural and food production is a vital international

concern.

If sustainable agriculture is a key issue—and

if sustainable agriculture is embracing of much

of what we can call the agriculture/food/environment research and extension system and should

thus be embedded in that system—then it

deserves, and should be accruing, major attention

and support from USDA and the entire agricultural research and extension system. This support

is still only limited, compared with what it reasonably could be. Nonetheless, it is important to

point out that support is increasing.

It further follows that a leadership and management system of commitment, stature, and

influence needs to be in place to guide and support development of research and extension for

sustainable agriculture. This involves creating

effective organizational means for bringing

together the agencies (inside and outside USDA)

relevant to sustainable agriculture, using their

expertise, and combining them together so as to

create strategic and operational approaches that
Chapter 4 Sustainable Agriculture Research and Education | 61

integrate their special capabilities. Leadership

and commitment must be fused with strategic

focus and operational plans to produce results

that combine the best that can be obtained and

create new direction and strength.

Irrespective of what directions may be taken

in the future, a particularly important feature of

the SARE program, as already pointed out, bears

examination: the way in which the SARE and

national training programs are organized,

directed, managed, and reviewed. This feature

involves combining the separate but congruent

interests of knowledge users, knowledge extenders and applicators, and knowledge producers

into an effective organizational framework. It

involves both a “market pull” from the knowledge users based on their needs and a “market

push” from the knowledge producers based on

their research interests and opportunities. The

organizational approach established by FACTA

and implemented in the field combines researchers and extenders, farmers and agribusiness

enterprises, associated governmental agencies,

and involved non-governmental organizations

into an effective, and enthusiastically supported

research selection and management system that

is results-oriented.

The agricultural research and extension system, of course, enjoyed much success by using

this paradigm. Indeed, the system continues to be

an especially powerful model for research, development, and application, both nationally

throughout all of American society and worldwide. But the evident success of this paradigm

for sustainable agriculture gives it renewed

emphasis and compels the view that other major

issue-oriented programs could profit from its

intensified use.
| 63

5

Alternative

Agricultural

Research and

Commercialization

ongress in FACTA gave major attention

to the broad topic of new agricultural

products and new uses for traditional

agricultural products. This attention

reflects widespread national interest in diversifying the agricultural production sector beyond

traditional foods and fibers; expanding and intensifying the economic vitality of the agricultural

and farm sector; and expediting technology

transfer from laboratory to commercial use.

A number of FACTA provisions illustrate this

interest and attention. For example, the purposes

for the federal agricultural research and extension system (see chapter 2) specifically include a

provision for developing “new agricultural crops

and new uses for agricultural commodities”

(Section 1602). The Supplemental and Alternative Crops program, designed “to develop and

implement a pilot research program to develop

supplemental and alternative crops,” was

extended through FY 1995 (Section 1601). A

related FACTA provision called for “developing...commercial uses of mesquite” (Section

1672). The Critical Agriculture Materials Act,

“to carry out demonstration projects to promote

the development or commercialization of critical

crops,” was extended through FY 1995 (Section

1601). The Research on Alcohol and Industrial

Hydrocarbons program was authorized through

FY 1995. One of the six priority research areas in

the National Research Initiative Competitive

Grants Program (NRICGP), established by

FACTA, deals specifically with new crops, new

uses, and value-added processes. It was funded

starting in FY 1992. Generically, an Agricultural

Science and Technology Review Board was

established (Section 1605) which will, among

other things, make assessments of technology

transfer initiatives and the extent to which agricultural research and extension programs foster

“a diversity of products that can be marketed by

the farm operator” and “develop new farm crops

and enterprises that are economically and environmentally advantageous and enhance agricultural diversity.” This interest by Congress is

buttressed by two reports to Congress from the

Office of Technology Assessment: Agricultural

Commodities as Industrial Raw Materials and

Agricultural Research and Technology Transfer

Policies for the 1990s (25, 26).

Given this broad emphasis on new uses and

products, two major initiatives were taken by

Congress: (i) establishment of a program and

organizational structure for Alternative Agricultural Research and Commercialization (subtitle

G, sections 1657–1662) and (ii) establishment of

C
64 | Challenges for U.S. Agricultural Research Policy

the Agricultural Science and Technology Review

Board (section 1605). These two initiatives are

the focus of this chapter

ALTERNATIVE AGRICULTURAL 

RESEARCH AND COMMERCIALIZATION 

(SUBTITLE G)

The purposes of subtitle G are to (i) “authorize

research in the modification of plants and plant

material...and other agricultural commodities...to develop and produce marketable products other than (emphasis added) food, feed, or

traditional forest or fiber products”; (ii) commercialize these products to produce jobs; (iii) direct

efforts “toward the production of new industrial

products that can be raised by family-sized agricultural producers”; and (iv) foster “economic

development in rural areas of the U.S. through

the introduction” of these new products from

agricultural commodities. Compared with provisions in previous farm bills, subtitle G provides

substantially greater emphasis on alternative

research and commercialization.

To achieve these purposes, Congress established the Alternative Agricultural Research and

Commercialization Center (AARC Center). The

center is to “operate as an independent entity”

within USDA, and its director is to be appointed

by a nine-person board, which in turn is

appointed by the Secretary. The enabling legislation specifies that the director reports to the Secretary. Currently, there is a working arrangement

for the director to report for organizational and

administrative purposes to the Under Secretary

for Rural Economic and Community Development. The board is to have one member from

USDA, a scientist, a producer or processor, and

persons privately engaged in commercialization.

In addition, there are to be two scientists from a

panel of four experts in applied research relevant

to development and commercialization of nonfood, non-feed products nominated by the Director of the National Science Foundation. Similarly, there are to be two persons from a panel of

four who have relevant financial and management expertise nominated by the Secretary of

Commerce.

The center is authorized to undertake two

major functions to aid commercialization. One

function is to conduct research on developing

products. The other is to aid the commercialization process through product development and

prototyping, marketing and economic analysis,

precommercial development, early stage manufacturing and testing, and product introductions.

Of these two broad functions, the center has

emphasized the second in the belief that it is

currently the most cost-efficient manner of expediting commercialization and increasing the center’s revolving fund. The major research function

is left, appropriately, with research and development agencies, either public or private. No

research and development will be done until the

fund is substantially larger; and even then, if

such work is done, it will be distinctly different

in priority and type to related work done in public sector agencies (3).

As its central financial resource, the center

manages a revolving investment fund, initially

provided by appropriations from Congress. The

fund, which is used for making investments

(usually for a five-year period which may be

renewed annually) to assist the commercialization of new products, and which has been established through cooperative agreements with

successful originators of technologies and products, is critically important. The center has the

authority to make loans but at this time has not

chosen to do so. Repayment is made through a

percentage of future sales or equity in the company, such as stock. Returns to the fund are to be

used to fund additional projects.

The center does not duplicate existing programs. It is designed to complement USDA’s

research agencies and programs, and appropriately be a bridge between research and development and the commercialization of research

results. As such, it has a central role in USDA’s

overall program of technology development and

transfer, whether the technologies are derived

directly from USDA programs or not.
Chapter 5 Alternative Agricultural Research and Commercialization | 65

Taking this major step for technology and

product commercialization is consistent with initiatives throughout the country that aim to bridge

similar technology-commercialization gaps. The

Cooperative Research and Development Agreements for federal agencies aim to do this. Similarly, universities across the nation have taken

similar steps by creating research parks, establishing aggressive patenting and licensing programs, and modifying longstanding policies to be

more involved and/or helpful to the commercialization process, including assisting formation of

start-up companies (12,32).

USDA established the center in March 1992.

Operations began soon thereafter. The board was

established at the outset, and there have been

changes in it since then to reflect new emphases

and make operations more effective. As of June

1995, 45 projects had been selected and funded.

During FY 1994–95 (the first two years of full

operation), the center reports that it invested

$15.3 million, matched by $43 million from private partners, in 39 projects. Project selection,

management, and funding is presented below.

Congress in FACTA authorized funding of

$10 million for the center for FY 1990, $20 million for FY 1991, and then $75 million annually

for FY 1995–2000. Appropriations have been far

short of these authorized amounts. Total appropriated funds have been $4.5 million (for FY

1992), $7.25 million (FY 1993), $9 million (FY

1994), and $6.5 million which was rescinded to

$5 million (FY 1995). These funds have been

matched, overall, in a 2–3:1 ratio by private partners, with matching on specific projects ranging

from 1:1 (the minimum permissible match) to

7:1 (private:public). For example, the $9 million

appropriation for FY 1994 has been matched by

$25 million from private partners. Given the

rapid start-up of the program and the staff effectiveness in selecting and managing the projects,

it is clear that more funding is justified. The staff

estimates that the minimum number of staff in

place can handle substantially more projects. It is

too early for projects already funded to know

whether the investments have been successful.

The results should be clear in the next year or

two. At that time, decisions can be made about

adhering to the original authorization schedule.

Until then, it is reasonable to support the center

at the $10–20 million level per year.

No formal evaluations have yet been done by

the center on rates of return for technologies in

which investments have been made. It would be

prudent to do this evaluation using sound

accounting and financial management principles

as early as possible, both to ascertain returns to

the revolving fund, to assess effectiveness of the

investment strategy to date, and to guide any necessary program modifications during the next

two years.

Emphases of the center are on non-food, nonfeed products derived mainly from plants (as

noted above). Products derived from animalbased materials can be no more than 25 percent

of the investments. A specific aim is to encourage the development of “bio-friendly” products.

Project selection is the key step. Rather than

choosing or targeting technologies itself, the

center has opened its doors to proponents of

technologies and products. This is a wise

approach, based on accumulating experience

throughout the country, where the “push” of initiative, drive, and commitment of the inventorentrepreneur is generally the first, key component in developing technologies and products.

Without that personal commitment and capacity,

technologies and products have a substantially

decreased possibility of being effective.

The center solicits proposals in the usual way

and also accepts those that come in over the transom. Proposals must be accompanied by a business plan. Proposals are first evaluated by

outside reviewers (selected by center staff) who

are knowledgeable about the proposed technology and product. If the first reviews are negative,

the board does not receive the proposals. If they

are positive, the board selects proposals for its

own review of financial capacity and probity and

for further technical evaluation. This review is

done through a site visit that includes one board

member and relevant technical experts from outside the board and center staff. Of the projects

evaluated, about 10 percent are selected for fund-
66 | Challenges for U.S. Agricultural Research Policy

ing. The quality of proposals, however, are such

that center staff estimates 35–40 percent warrant

funding using existing criteria.

There is no requirement for geographic distribution of the investments. However, it is center

policy that the location be “blind” to the extent

possible in initial evaluations. Currently there are

projects throughout the country, including Pennsylvania, Texas, California, Florida, Michigan,

Arizona, and the grain belt. By definition, all

projects must be in rural areas. There is no

requirement as to size and stage of development

of firms. Current projects are concentrated in

firms that range from early start-ups to mediumsize enterprises. One project has been with a

large manufacturing company, and it was done in

the first year of the center’s operation.

After reviews are completed and the board

gives final approval, contractual relationships are

established between the center and the applicant.

Among other considerations, terms of repayment

and any equity interest to be retained by the center are established.

Funding is provided through repayable investments. Generally the amount is in the $250,000–

$300,000 range. One million dollars is the maximum any project should receive. As noted,

although the minimum private sector match is to

be 1:1 (private:public), it has ranged to date from

1:1 to 7:1. Of the appropriations from Congress,

not more than 15 percent can be for administrative services, and not less than 85 percent is to be

for the revolving fund.

Projects funded in FY 1993 include the following representative examples: ethanol as a

replacement for methanol in windshield washer

fluid; ethanol from woody plant materials; a new

material for furniture and decorative ware from

waste newspaper and soybean meal; biodiesel

fuel from soybean oil; biodegradable polymers

from wheat; biodegradable kenaf mats for application of grass seed and nutrients; wool waste as

material for cleaning up oil spills; kenaf paper;

wood strands flaked from pulpwood timber

molded into furniture parts; conversion of kenaf

into paneling; oil from the new crop Lesquerella

as a basis for lubricants and cosmetics; and

blending of Bacillus thuringiensis with biodegradable carriers to provide environmentally

friendly pesticides. Projects funded in FY 1994

include: building panels from straw; bacteria

endemic in cotton cellulosic waste that degrades

oil; mesquite briquettes as a substitute for coal

briquettes; utility poles made using a plywoodlike core and skin technique; crambe oil for

personal care products and surfactants; wheat

straw and recycled plastic to form composite

sign posts; potting soil made from tree and yard

trimmings combined with animal manure and

inoculated with plant disease-combating microorganisms; and, similarly, compost from agriculture and forestry wastes as a carrier for bacterial

biocontrol agents (3).

FACTA provides for regional centers. These

were not established initially because of the startup of the center and the limited funds. Collaboration has recently been established with two

Midwest centers—the Agricultural Utilization

Research Institute (Crookston, MN) and the Kansas Value-Added Center—which were selected

through a competitive process. Initial agreements

were established in summer 1995. Under the current agreements, the major purposes of these

regional centers are to assist in review and evaluation of proposed technologies; to establish a

database and clearinghouse for new uses; and to

provide strategic investment information to the

board on the potential for business opportunities

for new uses and products. They are not, however, functioning in the full regional center role

as envisioned in the enabling legislation.

Overall, implementation of the AARC Center

is proceeding satisfactorily. Prudent decisions

regarding mechanisms for project review and

selection have been made. Sound investment

policies are in place, both as to the private-public

match ratios and the form of repayments

expected. The portfolio of technologies and their

widespread geographic distribution is appropriate. It is too early to determine the success of the

investments. However, it is useful to note that

two companies are already making payments to

the center based on the signed agreements, and a
Chapter 5 Alternative Agricultural Research and Commercialization | 67

third will begin repayments as of January 1,

1996 (3).

AGRICULTURAL SCIENCE AND 

TECHNOLOGY REVIEW BOARD 

(SECTION 1605)

The Agricultural Science and Technology

Review Board was established in FACTA (section 1605) for the purpose of providing “technical assessment of agriculture science issues

and...[considering]...the impact of technologies

on agriculture and the social and economic wellbeing of communities.” It is designed to advise

the Joint Council on Food and Agricultural Sciences and the National Agricultural Research

and Extension Users Advisory Board. In addition, it is to provide assessment of “public and

private agricultural research and technology

transfer initiatives...”

The board was established by the Secretary in

1992 and has had five meetings to date, including

a public forum early in 1995 to review its proposed technology assessment protocol (24). In

accordance with Congressional requirements, the

majority of the 11 board members are from the

private sector and represent technology assessment, technology transfer, the agricultural and

environmental sciences, and international programs. The board gave its first report (for 1994)

to the Secretary in 1995. Appointments to the

board are made by the Secretary through the

Joint Council on Food and Agricultural Sciences,

which provides the board with some staff support. Current budget constraints have, however,

meant little personnel support for the board. If

there is not more personnel support, it is difficult

to believe that the board can make much of a

contribution. Compounding this problem is the

fact that the board maintains minimal or no relations with other entities in USDA. This is to be

expected, given the early stages of development

of the board’s program, but changes must be

made in the future.

A fundamental issue is the optimum location

within USDA for technology assessment. At

least five different approaches can be considered:

(i) make technology review and assessment

everyone’s responsibility, and institutionalize it

as such throughout USDA; (ii) create a separate

board outside the operational components of

USDA, such as the Technology Review Board;

(iii) incorporate technology assessment directly

into the Joint Council on Food and Agricultural

Sciences, rather than have the board a companion

entity to the council; (iv) provide strong institutional support for the board, or an equivalent

entity at the Secretary level, and give it enough

staffing to do its work in respectful relationship

with the operating agencies; (v) create technology review and assessment functions within each

of the operating agencies (such as ARS, FS, and

CSREES) to assist with these functions and create a coordinating mechanism that ensures commitment and collaboration throughout USDA.

Clearly, technology assessment and review

are major interests. Consequently, it is reasonable to focus on approaches (i), (iv), and (v)

because they are “closer to where the action is.”

Approaches involving the current board (ii) or a

variant of it (iii) seem less appropriate because

they are separated from the agencies, even

though the current board has a broader mandate

than simply providing advice to the Joint Council. Whatever is considered, approach (i)—institutionalizing the mandate, importance, and

responsibility for technology assessment, review,

and transfer throughout USDA—should at a

minimum be taken. Approach (v)—creating

technology assessment and review functions—is

also appropriate. It is substantially more problematic, however, because so much of CSREES’

work is done through the state and land-grant

partners. By virtue in the 1980s of federal legislation and subsequent USDA action, the primary

technology review and assessment function for

these partners rests with them, not with USDA.

Given the emphasis on technology review,

assessment, and transfer at the state and university levels, this should not be a problem.
| 69

6

Financing,

Organizing, and

Managing the

Agricultural

Research Portfolio1

gricultural productivity has increased

rapidly in the United States—more rapidly than productivity in the general

economy. Many attribute a good portion

of this growth to public-sector agricultural

research which is conducted primarily through

land-grant colleges and USDA research agencies. In recent years, the agricultural sciences

have increasingly been asked to do more with

less. Questions have been raised about whether

the old research institutions are still needed, and

about how they should adapt to accommodate

changes in science, in scientific institutions, in

society and social attitudes, in government, in

agriculture itself, and in the general economy.

The post-war years have been characterized

by a general growth in congressional interest in

agricultural research, and political involvement

in allocating research resources. Funds earmarked for particular purposes, or to be spent in

particular locations, have increased markedly,

while other types of funds have increased at a

slower rate or declined. Recently, as a reflection

of concerns about the size of the government

1 Material in this chapter was drawn from the OTA contractor

report, “Agricultural Research in the Public Interest,” by Julian M.

Alston and Philip G. Pardey, May 1995.

budget, research investments have been scrutinized more carefully and demands for accountability have intensified.

In the discussions leading up to the 1995 farm

bill, agricultural science policy has been put,

along with other agricultural policies, on the

negotiating table. Given recent moves toward

freer global trade, competitiveness has assumed

ever greater importance. And as components of

competitiveness, environmentally supportable

improvements in agricultural productivity, and in

product safety and quality, driven by research,

are critical. There is not yet a clear consensus on

what role government should play, but there is no

doubt that it will be involved in some way.

The purpose of this chapter is to provide a

basis for policymakers to approach agricultural

research policy questions—questions concerning the financing, organization, and management

of public-sector agricultural research programs,

including accountability provisions—in an

objective and consistent fashion. The chapter

reviews the U.S. government’s agricultural

research policies and related arrangements for

administration and accountability. It draws on

relevant economic principles to review and evaluate the past and present policies as a basis for

considering policy directions for the future.

A
70 | Challenges for U.S. Agricultural Research Policy

The primary focus of the chapter is on how

public sector research can compensate for the

private sector’s relative lack of investment in

agricultural research. Discussion is not restricted

to whether the total amount of taxpayer funding

is adequate. To achieve the greatest gains for

society as a whole, a more fundamental rethinking of the basis for and approaches toward

financing, organizing, and managing public-sector agricultural research is needed. Most previous

commentators have, simplistically, called for

more federal research dollars. Other public policy mechanisms can and should be used, along

with taxpayer funds, to increase total private and

public investment in agricultural research, and to

promote a socially profitable mixture of research

programs (from basic to applied research; across

disciplinary areas; across commodity-oriented

research programs; in terms of geographic relevance; among environmental and other natural

resource issues). The policy analysis must

include a consideration of different funding

mechanisms—show how they affect the cost of

research (including who bears the cost in relation

to who benefits), and how they affect incentives

for private research.

The benefits that public and private research

provide to society are also affected by existing

mechanisms for allocating public sector research

resources, and for managing those resources to

ensure that they are used to greatest effect. Since,

ultimately, individual scientists make many of

the critical decisions, the relevant issues extend

beyond simply allocating resources to high-priority questions. Mechanisms to ensure that individual incentives are compatible with the public

purpose, and some accountability arrangements,

are also desirable. Such considerations lead to a

questioning of the use of political criteria versus

formula funding or competitive grants to allocate

research resources—at least about how the decisions concerning those funding arrangements are

made.

A rethinking of options extends beyond the

boundaries implied by the current institutional

structure (which is dominated by the State Agricultural Experiment Stations, or SAES, and the

USDA intramural laboratories) to consider a

greater use of in-between alternatives, such as

regional research institutions, and to allow open

competition among these different institutions,

where appropriate, for available funds.

The economic rationale for government intervention in agricultural research is market failure—in this case, a socially undesirable situation

that the free market will not correct on its own.

This leads, logically, to the use of economic

arguments to determine how government can

best correct the market failure. The particular virtue of the economic approach is that it provides a

coherent, consistent basis for developing, considering, and evaluating alternative approaches

towards financing, organizing, and managing

public-sector agricultural research.

Along with the use of economics, there has to

be an integrated, rather than piecemeal, assessment of the full range of public policy issues

related to agricultural research. Decisions must

be made concerning the amount of resources

(federal, state government, and other) to allocate

to research, the way research is funded, the types

of research undertaken, the institutional structures related to allocating resources and conducting research, and the mechanisms for

communicating the research results. All of these

factors are mutually dependent and should be

thought through together. Linkages among these

aspects are important. Making changes in one

element (for instance, increasing or decreasing

federal support for research) without thinking

through the implications for other elements of

the system (for instance, incentives and institutional mechanisms for industry-based research

support) could have undesirable and unforeseen

consequences.

BASIS FOR GOVERNMENT 

INTERVENTION IN RESEARCH

❚ Principles for Government Intervention

Spillovers and Externalities

A basic tenet of economics is that the benefits

society receives from production and consump-
Chapter 6 Financing, Organizing, and Managing the Agricultural Research Portfolio | 71

tion (in this case agricultural production and consumer consumption) will be maximized when the

costs to society of that production or consumption are equal to the social benefits it provides. A

“market failure” exists when private incentives

lead to a different resource allocation, and a different product mix, than the socially optimal outcome. This will happen if private benefits and

costs differ from social benefits and costs, so that

private interests and national interests do not

exactly coincide. For the purposes of this discussion, a market failure can be viewed as a socially

undesirable situation that the free market will not

correct on its own.

Market failures can be caused by externalities.

Externalities, which can be positive or negative,

result when the effects of certain production or

consumption activities “spill over” to other parts

of society. Groundwater that is polluted by agricultural chemicals is an example of a negative

externality. Free-riding by others on an individual’s research results is a positive externality.

Appropriability and Private Sector 

Underinvestment

Market failure in agricultural research seems to

be widely taken for granted: left to its own

devices, the private sector would invest too little

in agricultural research. Some incentive problems arise from the economics of the research

enterprise as it relates to the size of farm firms.

The nature of research activity, which is usually

long-term, large-scale, and risky, means that the

typical firm in agriculture is not able to carry out

effective research (although it can help to fund

it), and institutions may have to be set up on a

collective basis.2

 The main reason for privatesector underinvestment in research, however, is

2 There are exceptions to the typical situation, but even when firms are large enough to find it profitable to carry out some research, there

is still likely to be too little research for the other reasons (appropriability and externalities).

inappropriability of research benefits: that is, the

firm responsible for developing a technology

may not be able to appropriate all of the benefits

accruing to the innovation. The reason for such

an “appropriability” problem is often that fully

effective patenting or secrecy is not possible, or

that some research benefits (or costs) accrue to

people other than those who use the results.3

Appropriability problems give rise to an

asymmetry between the incidence of benefits and

the costs of research. For certain types of

research, the rights to the results are fully and

effectively protected by patents, so that the

inventor, by using the results from the research

or selling the rights to use them, can appropriate

the benefits.4

 Often, however, those who invest

in research cannot capture all of the benefits—

others can “free-ride” on an investment in

research, using the results and sharing in the benefits without sharing in the costs.5

 Hence, private

benefits to an investor (or group of investors) are

less than the social benefits of the investment

and, as a result, some socially profitable investment opportunities remain unexploited. In the

absence of government intervention, the investment in agricultural research is likely to be too

little.

These conventional reasons for private-sector

“underinvestment” in agricultural research

explain the major result from the empirical literature concerning different commodities and different countries: agricultural research has been,

on average, a highly profitable investment from

society’s point of view. In turn, this suggests that

research has been underfunded, and that current

government intervention may be inadequate.

This is not to say that the amount of government

spending necessarily should increase. Changes in

3 This appropriability problem extends beyond relations among single individuals to relations among collectives, such as one producer

cooperative or industry group versus another, and among states and even countries. 4 For instance, the benefits from most mechanical inventions and developing new hybrid plant varieties, such as hybrid corn, are mostly

appropriable. 5 For instance, an agronomist or farmer who developed an improved wheat variety would have difficulty appropriating the benefits: the

inventor could not get the potential social benefits simply by using the new variety himself; but if he sold the (fertile) seed in one year, the

buyers could keep some of the grain produced from that seed to use as seed thereafter.
72 | Challenges for U.S. Agricultural Research Policy

government intervention can take many forms.

Some see it only in terms of increased government (that is, taxpayer) funding of research, but

that is only a part of the problem. The federal

government can also act to change the incentives

for the private sector or state governments to

increase their investments in private or public

research. That government intervention is inadequate implies simply that the nature of the intervention should change so as to bring forth either

more private investment or more public investment. In addition to efficiency gains from

increasing the total research investment, the government can also intervene with a view to

improving the efficiency with which those

resources are used within the research system.

Environmental Externalities

Spillovers and externalities may be relevant not

only in relation to the products from research, but

also through problems in the markets for agricultural outputs and inputs, leading to indirect problems in research. Agriculture often involves

environmental externalities arising from spillover effects of agricultural production on other

agricultural producers (for example, through

effects on incidence of pests) or others through

impacts on groundwater or air pollution that are

not compensated through markets. Even in the

absence of market failures associated with the

atomistic nature of agricultural production, and

appropriability, there will be problems with

incentives, so that the direction of research will

be biased against technologies that help alleviate

the effects of environmental externalities and in

favor of technologies that make the effects of

environmental externalities worse. In the absence

of government intervention, commercial decisions will tend to produce too much pollution

and preserve too little pristine wilderness.

Agricultural research can generate technologies that are environmentally friendly, relative to

the current technology; but it is not sufficient to

invent the technology. The very nature of (negative) externalities is that it doesn’t pay private

investors to make an effort to reduce them, either

in the choice of production practices with given

technology, or in the choice of the direction for

technology to evolve through research, development, and adoption decisions. If agricultural

research is to be effective in reducing environmental externalities, the resulting new technologies must be adopted, and if they are to be

adopted, they must be viewed as privately profitable. This could happen in one of two ways:

either a new (environmentally friendly) technology is privately more profitable than the current

technology, under the current incentives, or the

government acts to change the adoption incentives as well. Similar arguments apply to the

development and adoption of technologies that

consume stocks of unpriced or underpriced natural resources. Private incentives are liable to lead

in the direction of developing and adopting technologies that consume too many natural

resources, unless government acts to modify the

incentives and “internalize” the externalities.

Research Beyond the Farm Gate

The farm input suppliers, and other components

of the agribusiness industry that transport, processes, and markets farm products, tend to be relatively large firms, large enough to exploit

economies of size in research. The technologies

they use tend to be mechanical, of a type that can

be protected by patents, or process innovations

that can be protected by secrecy. The technology

used by agribusiness is often not specialized to

agribusiness, and can be adapted from broader

industry (for example, refrigeration or transportation technology). For these reasons, appropriability problems tend to be less important in the

agribusiness industry than in the farming industry. Thus, the potential role for the government

(by inference, the chance of market failure) is

generally greater in research pertaining to farming than in research pertaining to agribusiness.

There are exceptions, however. Some parts of

the farming industry are involved in vertically

integrated structures where research benefits can

be internalized (for instance, the broiler chicken

industry); certain types of technology applicable

to farming are effectively protected by patents

(for instance, machinery, hybrid lines of plant
Chapter 6 Financing, Organizing, and Managing the Agricultural Research Portfolio | 73

varieties). Research incentive problems are

important in some parts of agribusiness. In plant

breeding, for example, there is “natural” appropriability for hybrid lines, since the crop does not

reproduce itself, but for open-pollinated varieties

it is necessary to legislate and enforce property

rights to ensure appropriability.

It is important to exercise discretion in judging specifically where the market failures in

research are important and where they are not,

since government investment in research in a

particular area is likely to crowd out some private-sector research. In cases where private-sector underinvestment in research is not otherwise

a problem, public-sector research can cause a

private-sector underinvestment.

❚ Rates of Return to Research

The payoff to research can be summarized in

terms of the private rate of return (comparing private costs and benefits to the investors in the

research) and the social rate of return (comparing

benefits and costs to society as a whole). Alston

and Pardey (1) have documented the results of a

large number of studies of social and private

rates of return to agricultural research. The overwhelming conclusion from that collection of

results is that estimated rates of return to agricultural research have been very high, typically well

in excess of 20 percent per year. The relevant

comparison is with the rate at which the government borrows money, typically 3–5 percent per

year. Since the rate of return to research is much

greater than the borrowing rate, there appears, in

general, to have been a gross underinvestment in

agricultural research.

It is less clear from this type of evidence

whether there has been an underinvestment in

agricultural research relative to other industrial

research. For instance, a number of studies that

were recently documented by the Industry

Commission (IC) (13) in Australia showed rates

of return to industrial research that are comparable to rates of return to agricultural research: typically well in excess of 20 percent, and often

ranging around 100 percent per year.6

 Hence, the

rate of return evidence does not support a diversion of resources from industrial research to agricultural research. Rather, taken at face value, the

evidence on rates of return to both the industrial

research and agricultural research supports the

view that resources should be diverted from

other economic activities to both.7

Some reservations can be raised about the evidence on rates of return. Most of those studies

have not adjusted for the effects of price-distorting policies (such as commodity price support

programs) on the measures of research benefits,

an omission that might lead to over- or understatement of the benefits and the rate of

return (2). Most have not adjusted for the effects

of the excess burden of taxation on the measures

of costs, an omission that will lead to a systematic understatement of the social costs and an

overstatement of the social rate of return (9).

On the other hand, a number of factors could

lead to underestimated rates of return to agricultural research, including the omission of spillovers from agricultural research into

nonagricultural applications and the consequences of such things as environmental, food

safety, and social science research that are not

reflected in conventional productivity or rate-ofreturn measures. Allowing for all these potential

sources of error, on balance it seems likely that

the rates of return to both public and private agri6 The IC documented 20 rates of return to industrial R&D (reported in 10 studies of the United States and 4 studies of Japan) to the industry and, where available, to firms in other industries as well as to the nation as a whole. The unweighted means of the annual rates of return

were 26 percent to the industry (standard deviation of 13 percent), 75 percent to firms in other industries (standard deviation of 27 percent),

and 85 percent to the nation (standard deviation of 22 percent). The IC also reported similar evidence on rates of return to industrial R&D in

Belgium, Canada, France, Germany, and the United Kingdom. 7 The rates of return may not be fully comparable between agricultural and industrial R&D (or even within those classes), since different

studies make different types of assumptions, use different concepts, and hold different things constant. Such details can have substantial

effects on the estimates and thus are important for making relevant or meaningful comparisons.
74 | Challenges for U.S. Agricultural Research Policy

cultural research have been high and that there

has been underinvestment.

❚ Forms of Government Intervention

It is one thing to establish a case of market failure. It is another to determine the best action for

the government to take to reduce the costs that

society must pay for the market failure. Indeed,

taking no action may be the optimal policy.

Many interventions are used in relation to agricultural research. They include improvements in

private property rights (such as recent changes in

intellectual property rights involving plant variety protection or “utility patents” for plants),

enhanced incentives for private research

(through the provision of tax breaks, direct subsidies, or other incentives, for instance), the provision of public funds for publicly or privately

executed research through competitive grants, or

the creation of new public or private sector

research institutions (as an example, legal

arrangements under which an industry funds

research cooperatively). Another way to finance

public sector agricultural research is to sell the

scientific results (even public sector organizations such as universities now often patent their

research results whenever possible, and sell the

product).

These alternatives may all differ in terms of

their incentive effects and the total cost to society

of financing research. An intervention is justified

only if it improves the situation by reducing

social costs of market failure—the benefits of the

intervention must be greater than the costs. Different interventions will be more or less effective

at correcting different types of market failures;

they will also have different distributional (or

equity) consequences.

The dominant U.S. strategy has been to use

state and federal government revenues to finance

public or private sector research. This includes

the provision of tax breaks and other financial

incentives for private research, which involves a

loss of government revenues, as well as the direct

use of government funds both to finance private

research, through grants and contracts, and to

finance the production of knowledge in a variety

of publicly administered research organizations.

❚ Public Sector Research Expenditures

Public sector research in the United States is big

business by most measures. In 1994 the federal

government spent a little more than $64 billion

on research, compared with only $178 million in

1949.8 About $38.8 billion, or 57.1 percent, was

spent on defense-related research and development, down from its 69.7 percent share of total

research spending in 1987. In 1994, about

$29.1 billion was earmarked for nondefense

research and development, of which federally

funded agricultural research accounted for just

$1,142 million, or 1.7 percent of the total.

Table 6-1 gives a more detailed, longer-run perspective on agricultural research spending in the

United States. In 1889, shortly after the Hatch

Act was passed, federal and state spending

totaled $859.3 million. A century later the public

sector agricultural research enterprise had grown

to more than $2.6 billion, an annual rate of

growth of 8.0 percent in nominal terms. The

national system in 1889 was dominated by intramural research by USDA. By 1993 SAES

accounted for 74 percent of total public spending

on agricultural research, with federal laboratories

operated by USDA making up almost all of the

remaining 26 percent.

The sources of funds for SAES research have

also changed markedly. During their early formative years, SAES received a relatively small

but growing share of their funds from state

sources. The proportion of funds received from

state sources peaked at 69 percent in 1970 and

has fallen steadily since to average only 48 percent in 1993. Funding from miscellaneous fees

and sales (including funds from grants and industry checkoffs) has grown steadily as a share of

8 These are in term of nominal or current purchasing power (i.e., undeflated figures) rather than real or constant purchasing power (i.e.,

which would be obtained by using a price index to deflate the nominal figures).
Chapter 6 Financing, Organizing, and Managing the Agricultural Research Portfolio | 75

the total since the early 1970s and now accounts

for nearly 20 percent of SAES funds.

Between 1972 and 1993, total support for

SAES grew by 8.5 percent per year in nominal,

or current purchasing power, terms (as shown in

table 6-2) and only 2.8 percent in real or constant

purchasing power terms. About 51 percent of the

federally sourced resources have come from

Cooperative State Research, Education, and

Extension Service (CSREES) administered

funds, which include funds dispersed on a formula basis, some earmarked funds, and funds

made available to the states as part of the competitive grants program.9

 The remainder (about

49 percent) of the federal funds going to the

states comes from other earmarked funds, funds

9 In October 1994, USDA initiated a major reorganization which, among other changes, merged Cooperative State Research Service and

the Cooperative Extension Service into a newly created Cooperative State Research, Education, and Extension Service (CSREES). This

action draws the cooperative extension and research functions together into a single agency for the first time in USDA history.

TABLE 6-1: Long-Run Perspective on Funds for Public-Sector Agricultural Research, 1889–1993.

SAESsa

Year or decade 

average State Federal

Miscellaneous 

fees & sales Total USDAb U.S. total

(millions of current dollars)

1889 0.08 0.59 0.06 0.72 0.14 0.86

1890–99 0.22 0.70 0.11 1.04 0.21 1.25

1900–09 0.65 0.87 0.31 1.84 1.04 2.88

1910–19 2.24 1.43 1.09 4.76 4.48 9.24

1920–29 6.01 2.11 2.09 10.21 18.44 28.65

1930–39 8.25 4.88 2.60 15.72 30.68 46.40

1940–49 15.81 7.42 5.44 28.67 40.97 69.64

1950–59 56.17 19.10 14.27 89.55 46.08 135.63

1960–69 132.10 42.87 25.20 200.18 109.32 309.50

1970–79 289.13 131.14 63.41 483.68 258.58 742.26

1980–89 646.44 359.41 207.04 1,212.89 500.37 1,713.25

1990 927.15 500.86 338.07 1,766.07 614.08 2,380.15

1991 961.73 532.15 358.72 1,852.59 650.62 2,503.22

1992 956.29 582.06 376.52 1,914.87 689.97 2,604.84

1993 960.41 632.39 387.54 1,980.33 692.29 2,672.63

Annual growth rates (%)

1889–93 9.52 6.95 8.93 7.96 8.50 8.04

1980–89 7.87 6.87 9.57 7.86 5.06 7.04

1990–93 1.18 8.08 4.66 3.89 4.08 3.94

SOURCE: Office of Technology Assessment, 1995. Compiled from various USDA sources, including U.S. Department of Agriculture Inventory of

Agricultural Research data for years after 1980.

a Data includes experiment stations and cooperating institutions for U.S. contiguous states.

b Series approximates intramural research by USDA and consists of total appropriations to the Agricultural Research Service, the Economic

Research Service, and the Agricultural Cooperative Service less appropriations to contracts, grants, and cooperative agreements with the SAESs

made by these USDA agencies.
76 | Challenges for U.S. Agricultural Research Policy

TABLE 6-2: Source of Funds to SAES and Other Cooperating Institutions, 1972–1993

Federal Non-Federal

Year

CSREES 

admina USDAb Otherc Total State Sales Industryd Other Total Grand total

(millions of current dollars)

1972 71.5 7.0 28.2 106.7 205.5 23.2 16.6 11.0 256.3 363.0

1973 78.2 7.7 29.6 115.4 222.1 28.1 17.7 11.7 279.6 395.1

1974 83.2 8.8 32.0 124.0 247.5 32.4 21.0 12.2 313.0 437.0

1975 92.0 11.1 35.3 138.4 284.7 37.3 24.0 15.0 361.1 499.4

1976 104.8 10.5 40.8 156.1 309.7 30.7 28.3 16.4 385.2 541.3

1976e 26.2 2.6 10.2 39.0 77.4 7.7 7.1 4.1 96.3 135.3

1977 118.9 12.6 55.6 187.0 321.2 39.1 32.7 21.9 414.8 601.8

1978 134.5 16.5 57.9 208.8 374.9 40.1 34.7 22.4 472.1 680.9

1979 156.3 21.1 64.6 242.1 413.5 46.7 37.1 27.2 524.6 766.6

1980 162.8 27.5 71.6 261.9 456.4 55.9 48.4 30.5 591.3 853.1

1981 174.3 33.3 83.0 290.6 501.2 59.1 53.5 38.2 652.1 942.7

1982 199.2 36.2 107.6 343.0 545.2 62.5 61.3 45.5 714.6 1057.6

1983 204.9 38.9 95.2 339.0 576.5 65.4 66.7 49.1 757.7 1096.7

1984 210.5 38.5 103.2 352.3 621.8 66.3 71.0 54.4 813.5 1165.7

1985 221.0 35.9 112.4 369.4 678.3 70.5 79.1 61.5 889.3 1258.7

1986 222.7 35.8 140.6 399.1 741.7 69.4 85.1 70.2 966.5 1365.6

1987 230.8 36.8 148.1 415.7 778.9 75.4 93.8 85.1 1033.1 1448.8

1988 247.8 42.2 153.5 443.5 823.4 84.8 99.1 91.1 1098.3 1541.8

1989 261.0 48.9 169.7 479.6 894.4 92.4 111.3 102.1 1200.2 1679.8

1990 272.8 54.1 188.6 515.5 950.1 102.4 126.6 112.4 1291.5 1807.0

1991 290.8 57.8 199.4 548.0 985.9 113.6 134.0 114.9 1348.4 1896.3

1992 316.6 60.7 221.3 598.7 981.5 116.1 143.4 121.0 1362.1 1960.7

1993 331.0 68.6 249.0 648.5 985.4 110.0 146.1 134.8 1376.3 2024.8

Annual Growth Rates (%)

1972–93 7.6 11.5 10.9 9.0 7.7 7.7 10.9 12.7 8.3 8.5

1989–93 6.1 8.8 10.1 7.8 2.5 4.5 7.0 7.2 3.5 4.8

SOURCE: Office of Technology Assessment, 1995. Compiled from U.S. Department of Agriculture, Inventory of Agricultural Research, various

annual issues, table IV-E.

NOTE: Includes all state agricultural experiment stations, forestry schools, 1890/Tuskegee institutions, veterinary schools, and other cooperating

institutions.

a Includes formula funds, special grants, and competitive grants.

b Includes monies received from USDA grants, contracts, and cooperative agreements.

c Includes contract, grant, etc., monies received from agencies such as the National Science Foundation, Energy Research and Development

Administration, Department of Defense, National Institutes of Health, Public Health Service, National Aeronautics and Space Administration,

Tennessee Valley Authority, and so on.

d Includes monies received through industry grants and agreements.

e Includes appropriations for the transition quarter which covers the period from July 1, 1976 to September 30, 1976.
Chapter 6 Financing, Organizing, and Managing the Agricultural Research Portfolio | 77

derived from USDA grants, contracts, and cooperative agreements, funding received from agencies such as the National Science Foundation, the

National Institutes of Health, the Department of

Defense, and so on. These have accounted for a

rising share of the SAES total, well up from their

33 percent share of federal funds just two

decades ago.10 Revenues from the sale of services and products (including royalties from patents) account for only 5.4 percent of total funds.

Industry funds from grants, checkoffs, and the

like still account for only 7.2 percent of the total,

although this was one of the faster-growing components of funds received over the past two

decades.

The differential growth rates imply a changing

mixture of sources of funds, with a rising share

of funds from industry sources and, of the government funds, a shrinking share of funds from

state governments. Of the federal funding, competitive grants have been rising relatively quickly

and have grown, along with earmarked funds,

partly at the expense of formula funding. Some

of these changes are in directions that should

enhance economic efficiency, such as more

industry funding, increased competitive grants

and less formula funding—but the rate of change

may be too slow, and competitive grants may

still have too small a share. Other trends, such as

declining state government support and the rise

of earmarked funds, will not enhance economic

efficiency in agricultural research.

USDA both disperses and relies on federal

research funds. Table 6-3 details the deployment

of federal appropriations to USDA. Since 1970

an increasing share of USDA resources earmarked for research and education has gone to

research, with a corresponding contraction in the

share going to education and extension services.

10 As a share of the total, not just federal, funds going to SAES, these sources of funds collectively accounted for 9.7 percent of the total

in 1972 and 15.7 percent in 1993.

Such services now account for a quarter of total

funds, whereas in 1970 they took one-third of the

available resources. ARS accounts for about onethird of all USDA expenditures on research and

education, a share that has remained fairly constant over recent years. Slightly more than onefifth of USDA expenditures on research and education are administered by CSREES, mostly earmarked to go to SAES and other cooperating

institutions, although some of the competitive

grant funds that CSREES oversees are spent by

agencies within USDA.

❚ Private Sector Research Expenditures

The private sector committed $3.3 billion to inhouse agricultural research in 1992, about 27

percent more than the amount spent on agricultural research conducted by the public sector

(table 6-4).11 The amount of privately conducted

research increased nearly 19 fold in the past three

decades, a substantially faster rate of growth than

occurred in the public sector. As a result, for

every dollar of publicly conducted research in

1992, the private sector spent $1.27, compared

with just 94 cents in the early 1960s. But, like the

public sector, the growth in private spending on

agricultural research slowed considerably in

recent years. From a rate of growth in real spending on private agricultural research in excess of

4.5 percent per year throughout the 1960s and

1970s, the rate dropped to only 1.7 percent for

the post-1980 period. The focus of this private

research also changed considerably. In 1960,

agricultural machinery and postharvest and foodprocessing research accounted for more than 88

percent of total private agricultural research. By

1992 these areas of research collectively

accounted for only 44 percent of the total, with

11 The private R&D estimates are documented in detail by Alston and Pardey (1). They explain that measuring privately conducted agricultural R&D in ways that can be meaningfully compared with the public sector figures is problematic. Invariably, changes and inconsistencies are found in the underlying survey methods used to compile the private sector series. Also, it is often difficult to distinguish in-house

R&D from other activities such as product promotion, or to distinguish agriculture-related R&D from other types of R&D, and the public and

private series currently available are not always strictly comparable in terms of their coverages regarding the pre-, on-, and post-farm

research orientation.
7

8|ChallengesforU.S.AgriculturalResearchPolicy

TABLE 6-3: U.S. Department of Agriculture Appropriations for Research and Education, 1970–1992

CSREES Administered Economics & Statistics Education

Year Competitive Others

Total

CSREES

Agricultural 

research 

service

Forest 

service

Economic 

research 

service

Statistical

 service Total

Total 

research

National 

ag. library

Extension 

service Other Total

Total 

research & 

education

(millions of current dollars)

1970 — 62.7 62.7 160.1 45.6 — — 17.0 285.4 — 146.2 4.8 151.0 436.41971 — 69.6 69.6 178.6 48.8 — — 18.4 315.4 — 165.6 5.5 171.1 486.51972 — 83.0 83.0 191.7 54.4 — — 18.8 347.9 — 182.2 6.1 188.3 536.21973 — 91.5 91.5 208.1 57.8 — — 20.6 378.0 — 197.9 6.5 204.4 582.41974 — 90.1 90.1 205.0 64.7 — — 22.0 381.8 — 206.7 6.8 213.5 595.31975 — 101.8 101.8 224.4 77.6 — — 24.9 428.7 — 217.2 7.9 225.1 653.81976 — 114.5 114.5 282.8 82.3 — — 28.9 508.0 — 230.2 8.3 238.5 746.51976a — 28.6 28.6 64.4 22.3 — — 7.4 122.4 — 56.0 2.1 58.1 180.51977 — 129.0 129.0 282.9 89.8 24.5 4.7 29.2 530.9 — 232.7 9.2 241.9 772.81978 15.0 142.9 157.9 313.9 90.6 26.0 5.0 31.0 593.4 6.6 257.5 20.8 284.9 878.31979 15.0 159.3 174.3 328.0 95.0 28.2 5.4 33.6 630.9 7.0 263.8 21.2 292.0 922.91980 15.5 170.4 185.9 358.0 95.9 26.1 5.0 31.1 670.9 7.3 274.0 21.5 302.8 973.71981 16.0 184.7 200.7 404.1 108.4 39.5 7.5 47.0 760.2 8.2 292.2 22.4 322.8 1,083.01982 16.3 204.3 220.6 423.2 112.1 39.4 7.0 46.4 802.3 8.2 315.7 11.0 334.9 1,137.21983 17.0 215.3 232.3 451.9 107.7 38.8 7.6 46.4 838.3 9.1 328.6 11.9 349.6 1,187.91984 17.0 220.7 237.7 471.1 108.7 44.3 8.2 52.5 870.0 10.4 334.3 18.2 362.9 1,232.91985 46.0 230.6 276.6 491.0 113.8 46.6 8.4 55.0 936.4 11.5 341.2 21.3 374.0 1,310.41986 42.3 227.3 269.6 483.2 113.6 44.1 8.0 52.1 918.5 10.8 328.0 18.4 357.2 1,275.71987 40.7 253.0 293.7 511.4 126.7 44.9 3.4 48.3 980.1 11.1 339.0 18.7 368.8 1,348.91988 42.4 260.7 303.1 544.1 132.5 48.3 3.6 51.9 1,031.6 12.2 358.0 19.8 390.0 1,421.61989 39.7 270.9 310.6 569.4 138.3 49.6 2.9 52.5 1,070.8 14.3 361.4 21.9 397.6 1,468.41990 38.6 288.0 326.6 593.3 150.9 51.0 2.8 53.8 1,124.6 14.7 369.3 28.6 412.6 1,537.21991 73.0 300.3 373.3 631.0 167.6 54.4 3.2 57.6 1,229.5 16.8 398.5 34.8 450.1 1,679.61992 97.5 316.9 414.4 670.6 180.5 59.0 3.6 62.6 1,328.1 17.8 419.3 35.8 472.9 1,801.01993 97.5 317.5 415.0 671.7 182.7 58.9 3.9 62.8 1,332.2 17.7 428.4 35.7 481.8 1,814.01994 103.1 325.2 437.3 679.2 193.1 55.2 3.5 58.7 1,359.3 18.2 434.6 37.5 490.3 1,849.61995b 130.0 272.1 402.1 712.7 204.0 53.7 3.5 57.2 1,376.0 19.6 432.4 38.9 490.9 1,866.9
Chapter 6 Financing, Organizing, and Managing the Agricultural Research Portfolio | 79

CSREES Administered Economics & Statistics Education

Year Competitive Others

Total 

CSREES

Agricultural 

research 

service

Forest 

service

Economic 

research 

service

Statistical

 service Total

Total 

research

National 

ag. library

Extension 

service Other Total

Total 

research & 

education

Annual growth rates (%)

1970–80 1.7c 10.5 11.5 8.4 7.7 2.1d 2.3d 6.2 9.0 5.2c 6.5 16.1 6.9 8.3

1980–90 9.6 5.4 5.8 5.2 4.6 6.9 -5.6 5.6 5.3 7.3 3.0 2.9 3.0 4.71970–94 13.4 7.1 8.4 6.2 6.2 4.9 -1.7 5.3 6.8 6.5 4.6 8.9 4.8 6.2

SOURCE: Compiled from various USDA sources, including U.S. Department of Agriculture, Inventory of Agricultural Research, various annual issues.a Includes appropriations for the transition quarter which covers the period from July 1, 1976 to September 30, 1976.b Estimate only. c Growth rate is for the 1978–90 period. d Growth rate is for the 1977–90 period.

TABLE 6-4: Private-Sector Agricultural Research Expenditures, 1960–1992

Input oriented Total

Year Agricultural chemicals Machinery Veterinary & pharmaceutical Plant breeding Postharvest & food processing Current Real

(millions of current dollars) (millions 1980 dollars)

1960 9.7 75.9 6.0 5.6 80.0 177.2 511.91965 63.0 86.9 23.0 8.8 123.1 304.8 700.11970 126.0 89.1 45.0 26.3 206.1 492.5 839.01975 176.0 138.0 79.0 50.0 273.1 716.0 917.61980 390.0 287.0 111.0 96.7 456.1 1,340.8 1,340.81985 758.0 304.5 159.0 179.3 801.1 2,201.9 1,574.41990 1,031.0 360.5 245.0 314.4 926.9 2,877.8 1,544.61991 1,077.0 381.9 276.0 342.0 962.7 3,039.7 1,557.11992 1,123.0 394.0 306.0 399.7 1,088.0 3,310.7 1,648.0

Annual growth rates (percent)

1960–92 16.0 5.3 13.1 14.3 8.5 9.6 3.71960–70 29.3 1.6 22.3 16.7 9.9 10.8 5.11970–80 12.0 12.4 9.4 13.9 8.3 10.5 4.81980–92 9.2 2.7 8.8 12.6 7.5 7.8 1.7

SOURCE: Alston, J.M. and Pardey, P.G., Making Science Pay: The Economics of Agricultural R&D Policy, American Enterprise Institute Press, Washington, DC, 1995 (forthcoming).

TABLE 6-3: U.S. Department of Agriculture Appropriations for Research and Education, 1970–1992 (Cont’d.)
80 | Challenges for U.S. Agricultural Research Policy

the share of total private sector research directed

toward agricultural machinery dropping from 43

percent in 1960 to less than 12 percent just three

decades later. Two of the more significant

growth areas were plant breeding and veterinary

and pharmaceutical research. Spending on agricultural chemicals research grew the fastest and

now accounts for about one-third of total private

agricultural research.

❚ Overview of Funding Patterns

These data point to a dramatic shift in the pattern

of publicly and privately conducted agricultural

research in the United States over the past two or

three decades. In summary, both the private and

public sectors have expanded their annual investments in agricultural research, but private sector

agricultural research has expanded more quickly.

Within those broad categories the mixture of

activities has changed: not every element has

grown at the same rate. Among the changes in

support for agricultural research, perhaps the

most significant is the declining share provided

by state governments. State government support

for SAES has been stagnant during the 1990s, a

change which has been offset by rapid growth in

fees and sales, and industry support, combined

with some growth in federal government support.

At the same time, the nature of federal government support has changed, with an increasing

emphasis on competitive grants and a dwindling

role for formula funds. A persistence of such patterns of change seems likely, and would have

major implications for the structure, conduct, and

content of public research at both the state and

federal levels. Of course, the rate, as well as the

direction, of change, is critical.

GOVERNMENT ROLE IN AGRICULTURAL 

RESEARCH

Government action is warranted if it is believed

that the benefits of agricultural research will

exceed the costs. The best kind of intervention is

the one with the greatest net national benefit. In

the case of agricultural research, the unfettered

workings of the free market produce too little

research and not enough agricultural scientists.

What should the government do? Government

production is only one of several options. Government research funded by general government

revenues is not obviously the best policy in all

cases, but it is by far the dominant element of

U.S. government response to a private sector

underinvestment in agricultural research. High

rates of return to this investment justify the government intervention and testify to a substantial

persistent underinvestment.

The mix of agricultural research (in terms of

the types of research being undertaken), and the

way funds are obtained, disbursed, and managed,

are also questionable. Questions can reasonably

be raised about the distribution of the total

between the intra- and extramural alternatives,

and about the incentives within USDA’s administration of the two programs. Questions can also

be raised about the processes and procedures

used to allocate research resources within the

two broad programs. Of the extramural funding

through CSREES, very little is allocated according to economic, or even scientific, criteria. Only

one-quarter of the total extramural funding goes

to competitive grants. More than half of the

extramural funds are distributed among states by

formulas based on their values of agricultural

production and rural and farm populations,

essentially political criteria that are unlikely to

yield the maximum social payoff to the investment. Other extramural funds are allocated

according to other political criteria, through the

Special (earmarked) Grants program.

Financing arrangements, as well as spending

patterns, can be improved. The contributions by

state governments have been declining as a share

of the total. And while private sector research

and industry contributions to public sector

research have been rising, the general taxpayer

still bears the brunt of the burden.

❚ Principles for Intervention

The optimal intervention by the government,

aiming to reduce the distortions arising from
Chapter 6 Financing, Organizing, and Managing the Agricultural Research Portfolio | 81

inadequate private sector incentives for agricultural research, would seek to:

1. optimize the total investment in public sector

agricultural research, and the mix of research,

while minimizing the attendant problems of

“crowding out” private research;

2. minimize the cost of raising the revenues to

finance public sector research by using the

least-cost sources of funds;

3. organize public sector research institutions so

that they can conduct research in the least-cost

way, with a minimum of wasteful replication

of facilities and programs;

4. allocate and use research resources efficiently

among programs and projects (that is, according to economic criteria, not political criteria),

minimize transactions costs and administrative and bureaucratic overhead, and allow

decentralized decision-making where effective incentive mechanisms are possible.

Respectively, these four principles relate to

economic efficiency of research in terms of

(a) the total funding, (b) the sources of funds,

(c) institutional organization, and (d) resource

allocation and management. This section considers these four elements of research policy with a

view toward identifying possible changes that

would lead to greater economic efficiency.

❚ Total Funding for Agricultural Research

Agricultural research institutions and policies

have evolved considerably since their inception.

The public sector U.S. agricultural research

enterprise is now big business—worth more than

$2.6 billion per year. Correspondingly, private

sector investment in agriculturally related

research grew to total $3.3 billion per year by

1992. In spite of the government’s efforts, there

is still too little agricultural research being produced. A significant increase in federal funding,

or federal government action to stimulate

increased funding by either state government or

industry, seems to be warranted. Unlike other

agricultural programs in the farm bill, which

involve a net drain on the economy, agricultural

research is a socially profitable thing for the government to do. Concerns about the budget should

not crowd out agricultural research.

In relation to total funding, prospects for

expanding total federal funding for agricultural

research seem gloomy, and it might not be the

most economic way to address the sustained

underinvestment. Hence, alternatives are discussed for using federal resources to mobilize

greater supplementary funding from other private and government sources.

❚ Financing Strategies

Under the present policy, a mix of federal and

state government funding is used to support agricultural research conducted by SAES. In addition, federal and state governments conduct

separately administered programs of research.

The primary source of funding for these expenditures is the general tax revenues of the federal

and state governments—an expensive source of

revenues12 (10). Industry funds garnered through

tax incentives, matching grants, or from checkoffs may be less expensive, fairer, and politically

more sustainable when used to finance certain

types of research in order to achieve an expanded

total public sector research budget13.

Agricultural research may be a public good,

accessible and potentially beneficial to all, but

this does not mean that everyone in the nation

benefits and it does not mean that everyone in the

nation should pay. Both fairness and efficiency

are promoted by funding research so that, as

12 Recent studies have shown that it costs society more than a dollar to provide a dollar of general taxpayer revenues to finance public

expenditures. The U.S. evidence indicates that a dollar of government spending on agricultural research may cost society between $1.07 and

$1.25 when the market problems induced by taxation are taken into account (10). 13 There are two basic types of checkoff programs: voluntary and legislated. Voluntary checkoffs involve industry members funding certain activities by agreeing to contribute funding for a common purpose. Legislative checkoffs involve the passage of legislation by a government entity (state or federal) requiring certain persons (such as farmers) to pay assessments on marketing or some other act of a particular

product or service.
82 | Challenges for U.S. Agricultural Research Policy

much as possible, the costs are borne in proportion to the benefits.14 This can be encouraged by

choosing funding arrangements that reflect the

geographic focus and the commodity orientation

of the research. Thus, different agricultural

research programs and projects call for different

funding arrangements. In particular, a greater use

of private sector funding through such vehicles

as commodity checkoffs and a greater use of

multistate (but subnational) regional or commodity research programs is suggested. The federal

role in both instances may be to develop the

institutional arrangements, to provide incentives

such as matching grants, or both.

Industry contributes very little directly to U.S.

public sector agricultural research; it is mostly

funded by the general revenues of federal and

state governments.15 This situation should

change for three reasons. First, industry funding

is a potential complement to other sources of

funds which, as a practical matter, are likely to

continue to leave total funding inadequate from

the viewpoint of both the industry and the nation.

Second, from the point of view of raising funds

in the least-cost way, mechanisms such as commodity checkoffs are likely to provide a relatively efficient (and fair) tax base. Third, in

relation to allocating the funds efficiently, industry funding arrangements can be organized to

provide incentives for efficient use of checkoff

funds and other research resources.

Checkoff programs, as a major form of agricultural research funding, can be a practical reality. In 1985, the Australian federal government

introduced legislation that provides for groups of

commodity producers to establish research funds

based on a checkoff (industry levy), which the

government will match up to 0.5 percent of the

gross value of production (GVP) of the commodity. These arrangements (revised in 1989) have

been very effective in increasing total resources

14 Incentive problems in agricultural research arise from inappropriability of benefits and free-riding, and may be serious unless some

way can be found to ensure that beneficiaries share appropriately in research costs. Hence, a criterion for efficiency, as well as fairness, is to

whom the benefits accrue. 15 The comments here pertain more to the farm production sector than to the input supply and post-farm agribusiness sectors which do

fund and execute significant amounts of research.

available for agricultural research. Indeed, for

several commodities the 0.5 percent constraint

on matching funds is binding; the research institutions are spending 1 percent or more of

GVP (13).

Checkoff funding is clearly applicable to

research on a particular commodity. By definition, this is not basic research. Similarly, checkoff schemes tend to be less applicable to research

that affects multiple commodities and research

that applies to particular factors of production or

that has an environmental focus, but they need

not be. However, these issues notwithstanding,

commodity checkoffs could be used more extensively to support the significant proportion of

research that can be identified with a welldefined commodity (or other) interest group.

Some of these mechanisms are already in place

in the United States but are relatively underused

in the sense that only a small fraction of total

research resources are generated in this fashion,

and the checkoff funds are directed mainly

toward market promotion.

The federal government could encourage a

greater use of such funds for agricultural

research by providing matching (or more than

matching) support for programs funded using

industry checkoffs. When a combination of

industry levy funds and general revenues is used

to finance public or privately executed research,

there is a clear case for government involvement

in the administration, management, and allocation of those funds to ensure that the public interest is adequately considered. It is important to

understand that industry checkoff funding is not

to be regarded solely as a producer “self-help”

arrangement, that is, producers collectively funding research on their own behalf and to serve

their own ends. Consumers and taxpayers are

affected by, have an interest in, and should be

involved in such enterprises as much as produc-
Chapter 6 Financing, Organizing, and Managing the Agricultural Research Portfolio | 83

ers. Producer-dominated boards allocating such

funds are likely to direct research resources

toward work that benefits a narrower set of interests than may be socially optimal. In addition,

there still may be incentive problems if, within

the group of producers and consumers of a commodity, there are different distributions of benefits from different research programs (for

instance, producers from a particular region prefer research specific to their own situation, which

may not benefit certain other producers).

What seems to be equally or more important,

to secure industry support for this type of program, is an assurance that funds raised through

checkoffs would not crowd out other federal or

state research funding. If the use of commodity

checkoffs would not yield an increase in total

research funding, there might be some efficiency

gains in terms of lower social costs of funding

and greater efficiency of research resource allocation—but much diminished gains compared

with a situation where the checkoff funds were

additional. This is particularly so since checkoff

funds are liable to be spent on relatively applied

work, where the social returns may be relatively

low. If the checkoff funds were not additional,

some loss of efficiency might be associated with

the effective diversion of funds from more basic

to more applied research.

❚ Research Organization

The appropriate regional and institutional structure for organizing research programs ought to

vary according to the nature of the research.

Some issues are clearly national issues and are

appropriately addressed by federal programs. But

the federal government can choose whether to

address an issue using federal funds in federal

research institutions, or in state organizations (or,

for that matter, in private organizations), or by

using incentives to encourage state organizations

to take joint action.

Institutional Structure

In the land-grant system, SAES are substantially

and physically integrated with colleges of agriculture (and, in many cases, extension agencies).

This institutional structure was initially justified

on the grounds of “complementarity” between

research and teaching and extension. Although it

is still a widely cited rationale for the continued

support of the land-grant system, the precise

nature and magnitude of these complementary

effects is not always as clear as may be desirable.

In any event, it is an open question whether the

current number and structure of land-grant colleges, which has changed little over the years, is

optimal for today. If we were designing the landgrant system today, from the ground up, for conditions in the twenty-first century, the results

might be very different.

Serious study is warranted into whether economic efficiency criteria justify a land-grant college for each and every state (from a federal, if

not a state perspective). It may be economic, for

instance, to consolidate some college programs

and, perhaps, some research programs among

states, given that students are much more mobile

and communications are much better these days

than they were when the land-grant colleges

were first formed. Similar questions can be

raised about the organization of extension.

Sources of supply for agricultural extension services are expanding rapidly. This factor, coupled

with accelerating improvements in communication and information technologies, and bettereducated farmers, raises similar questions about

the cost-effectiveness of investments in agricultural extension services in the current organizational structures. These issues are well beyond

the scope of this present study. The Board on

Agriculture is currently conducting a study of the

Land Grant University System, considering both

research and teaching functions and their interactions. That study is expected to document in

detail the nature of the interactions between the

different functions and the evolution.
84 | Challenges for U.S. Agricultural Research Policy

To facilitate some investigation of the potential roles for institutional alternatives, work is

also under way to review the institutional structures in other countries, including Australia, the

Netherlands, and the United Kingdom. In each of

these countries there have been important recent

changes in the administration of agricultural

research, including issues of financing, organization, and management. Although none of those

countries has ever had an arrangement like the

U.S. land-grant system, combining research,

teaching, and extension, their experiences of

change may provide some lessons for the United

States.

Regional Issues

Research spillovers, where results from one

state’s research are adopted in another state or

overseas, are important. Individual states may

not be able to capture economies of size and

scope in research programs that pertain to larger

jurisdictions. As a consequence, state-level

arrangements are often inadequate. The intramural work of the USDA laboratories can often be

seen as an effort to find solutions to problems

that touched several states, but were beyond the

research capabilities of individual states. At the

same time, federal funding of national programs

is not always the right policy for addressing

underinvestment in research issues that involve

multiple states.

Congress and USDA have also adopted a variety of approaches to encourage multistate cooperation in agricultural research. Support for

regional research in SAES has been provided

both on a formula basis, as earmarked funds, and

more recently (as in the regional centers supervised by the Alternative Agricultural Research

and Commercialization Board, created in the

1990 farm bill) on a competitive basis. The most

concrete development was the institution of the

nine regional research laboratories under the

Bankhead-Jones Act in 1935 to study specific

crops, livestock, and resources issues, and the

four regional research laboratories introduced in

1938 to study new industrial uses for agricultural

products. To many those developments might

appear to have been driven as much by political

and, perhaps, scientific factors as economic ones.

❚ Research Funding Decisions, Resource 

Allocation and Management

The current set of institutional arrangements

apportions research funds among alternative

research-executing agencies in ways that have

little economic foundation. High measured rates

of return notwithstanding, a sizable share of the

potential benefits from the agricultural research

enterprise may have been wasted in inefficient

resource allocation.

Roles for Economizing

Some would say that the system has worked very

well (high reported rates of return testify to that)

and, by implication, that we should not spoil a

good thing. There is some truth in that. The public sector agricultural research system has

achieved a great deal, and it would be undesirable to change it in ways that would diminish its

capacity to contribute to the economy into the

future. By the same token, the fact that it has

done well does not mean that it could not have

done better. Moreover, having done well in the

past might not guarantee continued future success, especially considering recent trends in the

evolving structure and management of the system that, if allowed to continue, may threaten its

future effectiveness.

These concerns include, in particular, the rising politicization of research, including the rise

of earmarked funds and declining state-government support. The rapidly changing economic

environment in which the research system finds

itself is also relevant in this regard. Things that

worked in the past may not work in the future.

The public sector may need to reconsider and

revamp the way it goes about its business.

Allocating scarce research resources is an economic problem. In the system as it stands, too little use is made of economic analysis, economic

incentives, and the economic way of thinking

about problems. The current system emphasizes

processes and politics, the inputs side, and pays
Chapter 6 Financing, Organizing, and Managing the Agricultural Research Portfolio | 85

scant attention to actual performance, the outputs

side. There is a notable lack of any systematic

attempt to undertake economic evaluation studies on agricultural research investments as an

integral part of the resource-allocation process.

Resources are allocated according to ad hoc

approaches that may simply serve to reinforce

prior prejudice.

Economic Criteria

It is very important to institutionalize processes

that establish and enforce an economic efficiency

criterion as the primary (preferably sole) basis

for allocating research resources and for evaluating research performance, so that research

resources are freer to flow flexibly, according to

economic criteria, to achieve the most good. A

simple, singular, economic efficiency objective

coincides with the rationale for public sector

research.16 Resolving a simple objective also

allows the development of simple and clear criteria for making decisions about how to allocate

resources, about how to evaluate the outcome

from research and, perhaps, about how to reward

effort.

Earmarked Funds

The current system of formula funding is uneconomic and it is not obviously fair. However, it

may be superior to earmarked Special Grants.

Special Grants have been rising relative to other

components of the research pot. If these earmarked grants do not crowd out other uses of the

funds, they may not be as bad as if they compete

for funds with projects that are justified on merit.

Indeed, if they are additional funds, Special

Grants might even be a profitable use of society’s resources—but that seems unlikely. On the

negative side, much of what is done in the name

of Special Grants is of questionable intrinsic

merit, and it is visible “pork” that looks bad and

16 Although research ought to be directed according to economic efficiency considerations at the strategic or programmatic level, different criteria may be more applicable at the level of individual projects or individual scientists. Research within broad programs may be best

directed according to well-structured and well-executed peer review. At that level, the critical issues may be scientific merit and technical

considerations, such as the probabilities of research success and the likely lags involved in the research, more than the other economic variables.

taints an otherwise, at least potentially, “clean”

portfolio. It is not clear what can be done to

reduce the politicization of research. One possibility is to increase the emphasis on demanding

demonstrated benefits assessment as a criterion

for funding. Another is, through regular formalized system reviews, to systematically expose the

costs (or their orders of magnitude) of the elements that cannot be justified on merit.

Competitive Grants

Competitive grants, discussed in chapter 3, have

a great deal to recommend them as a way of allocating public sector research resources. However, competing for grants is hard work and

expensive, and if competitive grants are to

deliver the promised benefits of greater allocative efficiency, they have to be allocated according to efficiency criteria. The same arguments

can be applied to USDA’s intramural research

efforts. There is no reason why non-SAES organizations should not be allowed to compete for

extramural funds, as in the NRICGP. Likewise,

there seems to be no good reason why such a

large share of the USDA agricultural research

budget should be quarantined from competition.

ARS will clearly be superior to SAES in some

research areas, and vice versa; in some other

areas they should collaborate.

Such decisions could be based on economic

considerations rather than precedence. In general

there could be more open competition, greater

public scrutiny, and greater accountability for the

public sector research effort. This change could

be conducted in terms of the economic impacts

of the research. It is not obvious what implications this more open competition would have for

the balance of funding between the intra- and

extramural research programs, but it would be

expected to enhance the total net benefits

through more efficient use of the funds.
86 | Challenges for U.S. Agricultural Research Policy

Alternative arrangements could be instituted

to reduce reliance on politically based Formula

Funds and Special Grants for SAES, and to open

up the USDA intramural funds for competition,

thereby strengthening funding for competitive

grants. But this must be subject to some caveats.

Proposals ought to be subject to review based on

the sole criterion of the expected economic benefits. A poorly administered and corrupted system

of competitive grants could easily be worse than

the antiquated, inefficient, and inflexible system

of formula funding.

Transactions Costs

Some have argued that the transactions costs

involved in competitive grants programs—in

terms of the costs to individual scientists of preparing proposals, and reporting to granting bodies, and the costs of evaluating the proposals and

deciding which ones to support—are so high that

the programs cannot be economic. That charge

could be accurate, but relevant alternatives must

be compared, and on a comparable footing.

Every method of allocating research resources

is bound to involve four types of costs:

(a) information costs (the costs of obtaining relevant information on the benefits from different

types of research projects, on which to base decisions); (b) other transactions costs (the costs of

applying for grants, managing them, and administering them); (c) opportunity costs of inefficient resource allocation, due to research

resources not being used in the projects and programs with the highest social payoff; and

(d) “rent-seeking” costs (costs of resources being

spent wastefully attempting to cause a redistribution of grant resources).

Different research resource allocation processes will involve different amounts of particular types of costs. For instance, through the

proposal process, competitive grants generate

information about research alternatives for decision makers. Although they may lower the cost

of certain types of information, they also involve

relatively high transactions costs. They might

also involve relatively high rent-seeking costs

(say, of scientists lobbying for their programs to

be supported). However, these additional costs

may be justified if competitive grants lead to a

lower overall social cost, because they reduce the

cost of resource misallocation. On the other

hand, formula funds involve relatively high

resource misallocation costs, which get higher

the longer a formula stays fixed (since circumstances change) and relatively low transactions

costs. This is not to say the transactions costs are

zero, or that the rent-seeking costs are zero with

formula funds (there is a fair bit of bureaucracy

associated with the administration of the funds;

the formulas do or, at least, may change from

time to time). Earmarked funds may involve the

greatest rent-seeking and resource misallocation

costs, but they may also involve relatively small

transactions costs. In short, the full costs should

be considered when comparing research resource

allocation procedures. Competitive grants are

relatively efficient, but that is based primarily on

a perception that the alternatives have involved

very significant opportunity costs arising from

resource misallocation.
| 87

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