Agricultural Postharvest Technology and

Marketing Economics Research

May 1983

NTIS order #PB83-232835
Library of Congress Catalog Card Number 83-600530

For sale by the Superintendent of Documents,

U.S. Government Printing Office, Washington, D.C. 20402
Foreword

The food and agricultural research establishment today is facing new problems that

place severe strains on the research system. A previous OTA report, An Assessment

of the United States Food and Agricultural Research System, documented these concerns and provided policy options to Congress.

Postharvest technology and marketing economics (PHTME) research is one area

of agricultural research in which these problems and concerns are acute. The U.S. Government funds PHTME research, but public support of PHTME research is being questioned.

The Office of Management and Budget and the U.S. Department of Agriculture

have argued that it is no longer necessary to increase investment in PHTME research,

implying that private firms have sufficient resources to conduct their own research. The

executive branch has made numerous attempts to decrease public support of PHTME

research.

At the request of the House Agriculture Committee, OTA conducted an analysis

of PHTME research as a follow-up to the OTA study on food and agricultural research.

This memorandum presents OTA’s findings and conclusions regarding the role of the

public and private research participants in PHTME research, the benefits and burdens

of PHTME research, trends in PHTME research funding, quality of PHTME research,

and management of PHTME research in the public sector,

The author of this memorandum is Michael Phillips. OTA particularly wishes to

acknowledge the panel members from the OTA study on food and agricultural research

who contributed to this memorandum and the public and private sector PHTME research

experts who participated in an OTA workshop and reviewed drafts of the final report.

JOHN H. GIBBONS

Director

. . .

///
U.S. Food and Agricultural Research Advisory Panel

Aileen Adams

Consumer Consultant

Roger Blobau m

President

Roger Blobaum & Associates

Carl W. Carlson

Retired

U.S. Department of Agriculture

Demonic L. Carney

Director

Division of Agriculture

Department of Natural Resources

State of Alaska

Tony J. Cunha

Retired

California State

Susan DeMarco

Consultant

Robert DiMarco

Polytechnic University

Director of Research

General Foods Corp.

Harold Dodd

President

Illinois Farmers Union

Lewis C. Dowdy

Chancellor

North Carolina Agricultural and Technical

State University

Thomas F. Jones*

Vice President

Massachusetts

Jarvis E. Miller

Retired

for Research

Institute of Technology

Texas A&M University

Albert H. Moseman

The Rockefeller Foundation

Lewis F. Norwood

Consultant

National Association of Retail Grocers

of the United States

William A. Reiners

Professor

Department of Biological Sciences

Dartmouth College

James E. Tillotson

Vice President

Technical Research and Development

Ocean Spray Cranberries, Inc.

Harold L. Wilcke

Retired

Ralston Purina Co.

● Deceased.

NOTE: The advisory panel provided advice and critique, but does not necessarily approve, disapprove, or endorse this technical memorandum for which

OTA assumes full responsibility.

iv
OTA Agricultural Postharvest Technology and Marketing Economics

Research Project Staff

H. David Banta, Assistant Director, OTA

Health and Life Sciences Division

Walter E. Parham, Program Manager

Food and Renewable Resources Program

Michael J. Phillips, Project Director

Kerry B. Kemp, Editor

Phyllis Balan, Administrative Assistant

Nellie Hammond, Secretary

Carolyn Swarm, Secretary

Contractors

B. R. Eddleman W. T. Pentzer

Robert E. Evenson J. C. Purcell

Joseph Havlicek, Jr. Frederick R. Senti

George W. Irving, Jr. Fred C. White

Daniel Otto Brian Wright

OTA Publishing Staff

John C. Holmes, Publishing Officer

John Bergling Kathie S. Boss Debra M. Datcher Joe Henson

Doreen Foster Linda Leahy Donna Young
Acknowledgments

A number of individuals and organizations provided valuable

to OTA. In particular, OTA would like to thank the following:

advice, assistance, and review of this report

Walter Armbruster

Farm Foundation

Thomas Army

U.S. Department of Agriculture

Max Brunk

Cornell University

Elwood Caldwell

University of Minnesota

B. R. Eddleman

Mississippi State University

Olan Forker

Cornell University

Joseph Havlicek

University of Maryland

R. J. Hildreth

Farm Foundation

George Irving

Agricultural Research Institute

Terry Kinney

U.S. Department of Agriculture

Ronald Knutson

Texas A&M University

John Lee

U.S. Department of Agriculture

Alden Manchester

U.S. Department of Agriculture

William Manley

U.S. Department of Agriculture

Bruce Marion

University of Wisconsin

William Marion

Iowa State University

Lester Meyers

Chase Econometrics

Max Milner

American Institute of Nutrition

Daniel Padberg

University of Massachusetts

James Pearson

U.S. Department of Agriculture

Leo Polopolus

University of Florida

Harold Ricker

U.S. Department of Agriculture

Martin Rogoff

U.S. Department of Agriculture

Thomas Ronnigen

Northeast Regional Association of State

Agricultural Experiment Station Directors

F. R. Senti

Federation of American Societies for

Experimental Biology

James Shaffer

Michigan State University

Thomas Sporleder

Texas A&M University

James Tillotson

Ocean Spray Cranberries, Inc.

Harold Wilcke

Ralston Purina Co.

James Zellner

U.S. Department of Agriculture

vi
Contents

Chapter Page

1.

2.

3.

4.

5.

6.

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Investment in Postharvest Technology and Marketing Economics Research . . . . . . . 23

Benefits, Burdens, and Quality of Postharvest Technology and Marketing

Economics Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Role of Public and Private Research Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Policy and Management of USDA Research programs . . . . . . . . . . . . . . . . . . . . . . . . . 77

Appendixes

A.

B.

c.

D.

Research Problem Areas in Postharvest Technology and Marketing Economics

Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Postharvest Technology and Marketing Economics Research Expenditures for

Selected Commodities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

Statistics on Agricultural Research Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Development of Public Postharvest Technology and Marketing Economics

Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

vii
Chapter 1

Executive Summary
Contents

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Findings and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Research Benefits and Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Trends in Research Funding and Relationship to Research Beneficiaries . . . . . 5

Quality of Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Public and Private Research Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Chapter 1

Executive Summary

INTRODUCTION

During 1982, American consumers spent $298

billion for food. Approximately 30 percent of that

actually went toward on-farm production costs.

The remainder was spent on postharvest activities

and marketing.

The phrase agricultural postharvest technology

and marketing economics (PHTME) includes all

technological and economic transformations that

occur to agricultural products between harvest

and consumption. PHTME encompasses storage,

assembly, processing, packaging, warehousing,

transportation, and distribution of agricultural

products through the institutional food trade and

wholesale and retail outlets.

The U.S. Government today funds research on

these subjects, but the question is whether or not

it should continue to do so. Accordingly, the

House Agriculture Committee requested that

OTA examine the role of the public sector in

PHTME research. This memorandum presents the

results of that examination, focusing on:

1.

2 .

3.

4.

5.

the development of public sector research;

identifying and, where possible, measuring

the costs, benefits, burdens, and quality of

the research;

examining the role of public and private research participants;

evaluating public sector research programs;

and

findings and conclusions for Congress.

The OTA analysis finds that U.S. labor and

capital productivity of postharvest technology

and marketing sectors is poor relative to on-farm

productivity and that increases in postharvest

technology and marketing costs have contributed

significantly to the U.S. inflationary spiral since

1972. Concurrently, there have been significant

declines in research on postharvest technology and

marketing.

The United States relies on

State agricultural experiment

Federal agencies,

stations (SAES),

universities, and private industry to carry out

PHTME research. Historically, the rationale for

public sector agricultural research has been that

farmers and other businesses have neither sufficient economic incentive nor scale of operation

to conduct their own research. In addition, many

experts believe that a competitive agricultural

structure fosters more rapid adoption of new technology; free information, as supplied by public

research institutions, is one technique used to promote such a structure.

The food and agricultural research establishment today is facing new problems that place

severe strains on the research system. * In response, there is an ongoing search for ways to improve the effectiveness of the research system

while reducing costs. Because of this, some of the

past arguments in favor of publicly supported

PHTME research are being questioned.

Some executive branch members, including the

U.S. Department of Agriculture (USDA) and the

Office of Management and Budget, have argued

that it is no longer necessary to increase investment in certain forms of research—including

PHTME research—implying that private firms

have sufficient resources to conduct their own

research, and that information ultimately will become available to smaller firms. Thus, the executive branch has made a number of attempts to decrease public support for PHTME research over

the last 10 years,

● These problems are discussed and analyzed in detail in the 1981

OTA report An Assessment of the United States Food and Agricultural Research System.

3
4

FINDINGS AND CONCLUSIONS

An earlier OTA study, An Assessment of the

U.S. Foodand Agricultural Research System, determined that the United States does not have

well-articulated and clearly achievable national

food and agricultural goals. This is a major deterrent to directing PHTME or other research efforts.

Vague or implicit goals provide little help in formulating policies or giving the research community direction. For example, such stated goals as

“making two blades grow where one grew before, ” or “provide an ample supply of food,” or

“provide food at a reasonable price to consumers”

are open-ended, unmeasurable, and do not provide any specific guidance to the research community. What is an “ample supply” or a “reasonable price” for food? Have we already achieved

this goal or is it a long way off? How do we

know? Such questions must be answered for a

goal to be useful in policy formulation and in

planning a research agenda.

Examples of what more explicit goals might be

for the PHTME sector are:

1.

2.

Discounting inflation, real retail prices of

agricultural products should be held to less

than an X percent increase within the next

decade.

The total volume of nonrenewable energy

consumed in the PHTME sector should be

held constant during the next 5 years, and

should decline by X percent within 10 years.

By specifying explicit national goals, society,

through its elected representatives, notifies the

research community of societal wishes. Research

then can be directed toward attaining these goals.

Research Benefits and Beneficiaries

PHTME research provides a range of benefits,

including:

● Increased Productivity and Reduced Real

Cost of Food. –Productivity in the PHTME

sector is lagging relative to on-farm productivity. Seventy percent of consumers’ food

cost is attributable to food assembly, processing, transporting, and distribution. Opportunities exist to increase postharvest produc-

●

●

●

tivity by developing new or improved technologies that will reduce the cost of those

operations that add to the cost of food once

it leaves the farm. Such technologies should:

1) increase labor productivity, 2) improve

processing and preservation, and 3) increase

marketing and distribution efficiency.

Ehhanced Food Quality, Safety, and Nutrient

Content. —PHTME research could improve

operations such as food storage, handling,

shipping, intermediate processing, packaging, delivery to merchants, and shelf life, and

thus influence nutritional value and product

quality. For instance, some nutrients, notably

vitamins and fats, are sensitive to changes in

pH, oxygen, heat, light, and can be depleted

during transport, storage, or processing,

Technologies could be developed to inhibit

mycotoxins and infestation by insects and

rodents. PHTME technologies also have

helped improve diets through food enrichment—e.g., addition of vitamins B1

, B2, and

niacin to cereal products, vitamin D to milk,

and iodine to salt.

New or Improved Food Products. —Research

can help develop nontraditional food sources

as alternatives to today’s highly capital- and

energy-intensive food production and processing. Substitute foods and ingredients already have been developed by using diverse

raw materials. For example, raw soybeans

are now used to produce soy flour, protein

concentrate, soybean isolates, or textured

products. Because the importance of plant

protein in diets is expected to increase relative

to meat, fish, and egg protein, research in this

area may have great potential for providing

food to the world population at reduced

costs.

Information for Decsionmaking. –The ME

of PHTME is marketing economics research.

Work in this area helps provide information

to farmers, processors, distributors, consumers, and policymakers, which improves

the effectiveness of their decisionmaking. Information can range from economic forecasts

on grain crops to cost-benefit analysis of food
5

regulations—e.g., food labeling, marketing

orders, and food safety.

● Industry Competitiveness. —Some PHTME

research measures the competitive relationships among firms providing a similar set of

products or services. This research can examine factors such as the degree of market

concentration, barriers to entry, types of

competing organizations, and regulations that

affect competitive behavior. The information

provided is useful for: 1) affected businesses

and the public to help understand the forces

shaping the industry, 2) business groups developing long-range plans, and 3) policymakers designing alternative legislative proposals

or regulations to ameliorate, maintain, or enhance competitive relationships.

PHTME research benefits can accrue to a numof beneficiaries, including:

Farm Producers. —By improving storage,

processing, retailing, and transportation systems, postharvest technologies enhance the

value of farm commodities by letting producers distribute the sale of products over

time. Thus, farmers can obtain increased income by selling products off-season or in

nonproducing areas. In addition, marketing

services increase information available to

producers, increasing their chances to sell at

more favorable market prices.

Consumers and General Economy.—Technological changes in the postharvest or marketing sectors that reduce the costs of product transformation or marketing services can

reduce retail prices for consumers. Similarly, consumers also can benefit from improved market or price information which

leads to more informed decisionmaking. In

addition, consumers benefit if food quality,

nutrition, safety, and convenience are improved.

The distribution of PHTME benefits varies

with income. OTA found that the ratio of

consumer benefits to family income was almost four times higher for the lowest income

class than for the highest. Thus, PHTME

technologies have a greater beneficial impact

on low-income families than on high-income

families.

●

●

Marketing Firms. —Marketing firms also can

benefit from PHTME research, depending on

the competitive structure of the industry. In

a competitive economic environment, firms

that adopt more efficient and productive

technologies might pass the savings on to

consumers. This could provide a higher price

for farm producers and lower retail costs for

consumers. Some firms may retain some of

the cost savings in the form of increased profits. The PHTME sector has elements of both

economic environments depending on the

commodity or food product.

Labor and Other Input Suppliers. —New

technologies can foster increased labor productivity, allowing for increased wages and

salaries without necessarily increasing retail

prices. The result can be a wider variety and

more abundant supply of goods and services.

However, when more productive postharvest

technologies are adopted, the displaced labor

force must find other employment.

Trends in Research Funding and

Relationship to Research Beneficiaries

In comparison to production research, PHTME

research has not been a major public sector priority. Combined USDA and SAES expenditures for

PHTME research equaled $260 million in 1981 and

accounted for 18 percent of total USDA and SAES

agricultural research expenditures, while production research accounted for 69 percent. Further,

public expenditures for PHTME research in constant dollars have increased only 1.6 percent between 1966 and 1981. Since 1978, constant dollar

expenditures for PHTME research have declined

8 percent.

USDA and SAES individual expenditures, however, show two different and distinct patterns.

USDA expenditures for PHTME research (including funds transmitted to SAES and other agencies) decreased 17 percent in constant dollars between 1966 and 1981. In contrast, SAES expenditures for PHTME research increased 32 percent

in the same period. By 1980, SAES had increased

its share of the total public expenditures for

PHTME research from 38 to 51 percent.
6

The majority of SAES funds for PHTME research come from State appropriations. These appropriations increased from 43 to 56 percent of

SAES funds for PHTME research between 1966

and 1981. Federal funding of SAES postharvest

research from 1966 to 1981 declined from 53 to

38 percent. Thus, State appropriations now provide over one-half of the expenditures for PHTME

research in the SAES. This is important when considering the relationship between research beneficiaries and source of funding.

OTA found that the majority of the benefits

from PHTME research flow to those regions and

States with high concentrations of population. In

all geographic regions except the Northeast, the

total benefits accruing to residents outside the

region where the research is conducted are at least

four times greater than the benefits accruing to

the residents in the region.

The bulk of PHTME research at present is conducted in the major farm-producing States and

is mainly supported by State appropriations.

Thus, taxpayers in the major agricultural States,

such as the Midwest States, are subsidizing

PHTME research for consumers in the less intensive agricultural States, such as in the Northeast.

When research benefits the wider public, funding

can be more equitably provided by the Federal

Government. The inequitable distribution of costs

and benefits of PHTME research argues for increased Federal Government support.

Quality of Research

In the debate between the executive branch and

Congress on funding PHTME research, critics frequently point to declining quality of the research,

faculty, and graduate students as reason for not

supporting public PHTME research. Such assertions are subject to question. A review of relevant literature failed to find any formal methods

for evaluating the quality of research. Thus, the

perception that the quality of agricultural research

is declining is based solely on informal judgments.

This study attempted to find credible ways of

measuring the quality of PHTME research. One

measure examined was the number of citations

of: 1) PHTME publications in peer-reviewed journals, and 2) PHTME patents. Using these approaches, OTA found that PHTME is providing

a body of scientific literature that is roughly comparable to that produced in other applied sciences.

Further, PHTME research is providing patents

that are subsequently cited by the private sector.

On the other hand, the OTA review was consistent with the view that PHTME researchers may

not be aware of relevant research in closely related

scientific disciplines and that some research programs could be better organized.

Public and Private Research Sectors

Public and private participants contribute to

PHTME research. However, no fixed pattern has

developed with respect to kinds of research performed by USDA, SAES, and industry, and no

principle has been apparent in determining the role

of each. Decisions as to who performs what research in the public sector invariably have been

decided ad hoc, and are often arbitrary, expedient,

and inconsistent from year to year. These decisions also are easily influenced by immediate

pressures rather than being guided by uniform,

long-range principles. More clearly defined roles

could help each sector contribute more fully in

their respective areas.

Role of Private Sector Research

The private sector is motivated by market incentives. If management believes that the private

rate of return will be substantial, resources are

allocated for research. This memorandum estimates that the social returns from private research

are approximately double the private investment

returns. Some distinguishing characteristics of

private sector PHTME research need to be taken

into account when considering its role: 1) most

private sector research tends to be focused on

short-term applied problems; 2) longer term inquiry into biological, economic, and social system

structure and function would not tend to be supported by private sector research; and 3) even

though there may be substantial social benefits

from private research, private industry generally is not concerned with the net social benefits

from its research endeavors and is reluctant to

release information that might cause technologies
7

or processes they use to be adopted widely before

they benefit from the economic returns that accrue to new, cost-cutting technologies.

Thus, the areas of PHTME research that are primarily in the private sector domain include:

1) patentable processes and techniques-research

that most nearly fits short-term applied problems;

2) research to meet Federal and State regulations—research needed for a business to stay in

operation while meeting social objectives; and

3) research to maintain or gain new clientele.

Role of Public Sector Research

The OTA study shows public sector research

to be justifiable for at least three reasons:

1) because benefits are distributed beyond those

who bear the costs, and substantial social advantages are derived from both public and private

research; 2) in the absence of public sector support and guidance, PHTME research might be

biased strongly toward mechanical and chemical

technologies, since economic returns can be extracted in the short run; and 3) for those situations where private research might be detrimental to industry competitiveness, a mix of public

and private research may best preserve competition or reduce market power.

Thus, the areas of PHTME research that are primarily in the public sector domain include:

1) basic knowledge, 2) information to support

policymakers and government action and regulatory agencies so that informed decisions can be

made, and 3) research to enhance competition,

through development of technologies and information that is disseminated to the public.

Joint Public and Private Sector Research

Some areas of PHTME research merit both public and private sector research. This is the case

when social returns exceed private profit because

a large share of the gains from the private research

can be captured by other firms and consumers.

Thus, research that is best done jointly by the

private and public sectors includes: 1) new food

sources and their development, 2) naturally occurring food contaminants, and 3) yields in relation to productivity versus nutritional components,

Management of USDA Research

Three research agencies in USDA conduct and

fund PHTME research: the Agricultural Research

Service (ARS), Economic Research Service (ERS),

and Agricultural Marketing Service (AMS). Each

agency reports to a different USDA Assistant Secretary, a factor that complicates planning and

coordinating PHTME research.

ARS is not organized to manage, conduct, or

be responsive to broad regional and national

PHTME research needs. When the 1972 reorganization of ARS transferred line responsibility to

four regional administrators, the National Program Staff was left without direct responsibility

for program development, staff selection, and

resource allocation. This reduced the ARS ability to plan, manage, and conduct research on

broad problems. This agency thus lost national

technical leadership. In addition, PHTME research

is identifiable as an individual research entity at

the national level, but no such distinction exists

at the regional or area level. Not only does this

provide opportunities for duplication, but it increases the likelihood that broad regional and national PHTME research will not receive adequate

attention and that Federal funds appropriated for

these purposes will be used inefficiently.

ERS allocates a large part of its resources to

PHTME research; nevertheless, the expenditure

is not identified as a separate research activity.

PHTME research is fragmented, with an accompanying loss in direct cooperation with ARS

laboratories and university departments of agricultural economics.

AMS is an action agency with a small research

program that focuses on wholesale market development. AMS distributes market news to the agricultural community, inspects and grades agricultural food products, and conducts other regulatory activities. Few AMS activities are devoted

to market development. Its research program suffers both by being isolated from the main PHTME

research programs and by being located in an action agency which, given its mission, has a low

priority for this research. A research program that

supported the major mission of the agency probably would be of more value.
8

USDA and SAES Roles

The allocation of research responsibilities between USDA and SAES is distributed logically.

The Federal Government, either intra- or extramurally, must give highest priority to problems

of national significance, and must, as a part of

this responsibility, be aware of States and private

industry contributions toward national objectives.

SAES, insofar as Federal funds are concerned, give

highest priority to State and regional concerns.

As more is known about the beneficiaries of this

research, and in particular the relationship between funding source and beneficiaries, there is

increasing evidence to support a major Federal effort in PHTME research because for most technology development, the beneficiary is the U.S.

public generally rather than any one State or

region. Thus, the Federal role includes: 1) providing leadership in identifying national research

priorities and conducting supporting research with

a regional or national emphasis; 2) supporting

SAES so they conduct research of special concern

to a locale, State, or region; 3) assuring development of new, fundamental knowledge by supporting or conducting basic research; and 4) maintaining a research capability for conducting basic and

applied research in support of unique Federal

missions.
Chapter 2
Contents

Page

Orientation to PHTME Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Private Sector Research.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Public Sector Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Description of the Food Marketing Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Contribution to Consumer Food Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Contribution to the Output of the Food and Fiber System . . . . . . . . . . . . . . . . 15

Number of Food Marketing Establishments and Employees . . . . . . . . . . . . . . . . 15

Consumption of Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Impact of the Food Marketing Sector on the U.S. Economy . . . . . . . . . . . . . . . . . 16

Contribution to Inflation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Contribution to Lagging Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Contribution to Gross National Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Contribution to Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Income Multiplier for Food Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Contribution to International Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Chapter p references . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

List of Tables

Table No. Page

l. Consumer Expenditures on U.S. Farm-Produced Foods, 1971-82 . . . . . . . . . . 14

2. Components of the Marketing Bill for U.S. Farm Produced Foods,

1971-82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

3. Numbers of Establishments and Employees in Food Marketing

Industries, 1967,1972, Len. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

4. Contribution of Food Prices to Inflation, 1951-81 . . . . . . . . . . . . . . . . . . . . . . . 16

5. Contributionof Food-Price Components to Price Increases at Food

Stores, 1971-81 ... .. ....... .. .. . . . . . . . . . . . . . . . . . . . . . . . . .. ....... 17

6. Productivity Growth Rates for the U.S. Food Manufacturing and

Distribution Sectors: 1958-72 Compared With 1973-79 . . . . . . . . . . . . . . . . . . 18

7. Employment in the U.S. Food and Fiber System, 1978, 1979, 1980. . . . . . . . 18
Chapter 2

Introduction

American consumers spent an estimated $298

billion dollars for food during 1982. Approximately 30 percent of that amount was attributable to

on-farm production activities. However, $214.5

billion of the consumer food bill, the remaining

70 percent, was attributable to postharvest activities and marketing.

Before they finally reach consumers, agricultural commodities produced on the farm must be

assembled, processed, packaged, warehoused,

stored, transported, and distributed through the

institutional food trade wholesale and retail outlets. The subject of this memorandum is research

pertaining to all the technological and economic

transformations that agricultural products undergo after leaving the farm up to the time of their

consumption—henceforth referred to as postharvest technology and marketing economics (PHTME)

research.

The U.S. Government funds PHTME research,

but the question is whether or not it should continue to do so. The food and agricultural research

establishment today is facing new problems that

place severe strains on the research system. As

a result, there is an ongoing search for ways to

improve the effectiveness of the research system

while reducing costs. Because of this, some of the

arguments in favor of publicly supported PHTME

research are being questioned.

Some executive branch agencies, including the

U.S. Department of Agriculture (USDA) and the

Office of Management and Budget, have argued

that it is no longer necessary to increase investment in certain types of research, including

PHTME research, implying that private firms

have sufficient resources to conduct their own

research and that the information ultimately will

become available to smaller firms. Thus, the executive branch has made numerous attempts to decrease public support for PHTME research over

the last 10 years.

This memorandum presents OTA’s findings

and conclusions regarding the nature of the benefits and burdens of PHTME research, trends in

research funding and the distribution of benefits

from PHTME research, the quality of PHTME research, the roles of public and private research

participants in PHTME research, and the allocation of public research responsibilities between

USDA and State agricultural experiment stations

(SAES). Public and private sector investment in

PHTME research is discussed in chapter 3. The

benefits, burdens, and quality of PHTME research

are discussed in chapter 4. The roles of public and

private research participants are discussed in chapter 5, and the policy and management of USDA

research programs are discussed in chapter 6.

As background for the discussion in the chapters that follow, this chapter provides a brief

orientation to PHTME research. PHTME research

focuses on the economic and technological transformations that agricultural products undergo

once they leave the farm, so the chapter also discusses the sector of the economy in which these

transformations take place, namely the food marketing sector.

ORIENTATION TO PHTME RESEARCH

PHTME research has two primary components: Postharvest technology research is biologically

1) postharvest technology research, which focuses or physically oriented. Such research thus compleon the biological, chemical, or mechanical trans- ments physically oriented production research

formations of agricultural products subsequent to (e.g., research concerned with the soil, water, and

harvest; and 2) agricultural marketing economics air resources and the production of farm crops).

research, which focuses on the economic aspects Some postharvest technology research focuses on

of marketing agricultural products. the biological or chemical properties (e.g., compo11
12

sition, quality, safety, nutritional value) of agricultural products that affect the handling, storage,

transportation, preservation, and effective use of

such products. Other postharvest technology research focuses on the mechanical technologies

used to assemble, process, package, warehouse,

store, transport, and distribute agricultural products.

Agricultural marketing economics, like economics generally, is a social rather than a biological or physical science. Marketing economics

focuses on the economic aspects of human and

organizational behavior. Agricultural marketing

economics takes two components of this behavior

into account. One is behavior pertaining to demands of consumers for the combination of products and services that make up the national food

supply. The second is behavior pertaining to efficiency with respect to the processing and distribution of the national food supply. In order to maximize profits, individual firms seek to minimize

the resource requirements and consequently the

costs of the marketing functions they perform.

Based on the above components, agricultural marketing economics research is concerned with three

broad areas: efficiency analysis, price analysis,

and policy analysis. Efficiency analysis is concerned with the problems of increasing efficiency

in the procurement, processing, and distribution

of farm products. Price analysis focuses on problems related to agricultural product and input

prices over time. Policy analysis is concerned with

the expected or observed effects of alternative policies that influence the marketing of agricultural

products (1).

PHTME research is conducted and supported

by both the public and private sectors, although

the types of PHTME research they conduct reflect

the two sectors’ differing orientations. The major participants in the public sector are USDA and

SAES. Some lesser funds for PHTME research are

made available by Federal agencies other than

USDA, but those agencies are not considered in

this technical memorandum. Also not considered

here are certain non-land-grant universities, including those publicly and privately financed, that

have research programs supported by public

funds.

Research participants in the private sector include foundations, industry, and industry associations. Industry and industry associations’ financial investments in PHTME research can be quite

large, although the direction of this private research can be quite different from that of public

PHTME research.

Private Sector Research

Private sector PHTME research is generally

motivated by economic concerns such as profit

and growth. If management expects that the rate

of return will be substantial, resources are set aside

for research.

Because of this profit orientation, PHTME research in private industry primarily takes the form

of new product development. This includes product line extensions (e.g., new flavors, colors, package sizes, or other variations introduced to supplement existing products) as well as product improvements (e.g., modifications in the formulation of existing products, or improvements in the

technologies used to process existing products).

The profit orientation also leads private industry

to conduct economics research, for example, in

the form of demand and supply forecasts that can

be used by an individual firm to make decisions

concerning production levels, pricing, or purchasing of inputs.

Some firms conduct PHTME research in order

to comply with or mitigate the impacts of government regulations, including those for food safety,

food quality, environmental pollution levels, and

labeling. This is sometimes referred to as “defensive research. ” For example, where a firm is required to sell a safe and wholesome product, it

may have to undertake research to establish the

parameters for the safe use of its product. If a firm

uses nutritional labeling or makes a nutritional

claim about the product in its advertising, it must

have conducted the necessary research to support

the nutritional label or advertising claim.

Public Sector Research

PHTME research conducted in the public sector is focused on the concerns of society as a
13

whole—maintaining costs of food at a reasonable

level, enhancing product quality, protecting the

environment, efficiently using energy and renew- ●

able resources, increasing productivity, ensuring

the safety of the food supply, using agricultural

products for industrial and fuel purposes, and ●

others.

PHTME research addresses these concerns

through effort in the following types of activities: ●

●

●

●

development of new and improved technologies and methods for processing and distribution of food products in order to increase ●

efficiencies and improve competition;

development, improvement, and/or adapta- ●

tion of technologies for prevention or reduction of product losses caused by microbial

contamination, insects, rodents, birds, etc.;

identification of potential hazards to health ●

and safety resulting from food or work environment and development of methods for

elimination or reduction of the degree of

hazard;

development of technology for maintaining

optimum quality and acceptability of food

products;

pollution reduction in the water, soil, and atmosphere through new processing technologies, waste management, and use of biodegradable materials;

development of methods, processes, and

techniques for conservation of energy and the

use of alternative sources of energy;

development of methods for enhancing the

properties and uses of agricultural products;

identification and forecasting of demand and

supply relationships for agricultural commodities for use in firms as well as public policy decisionmaking; and

evaluation of the structure and Performance

of the food industry to measure the degree

of industry competitiveness.

DESCRIPTION OF THE FOOD MARKETING SECTOR

Conceptually, the food marketing sector of the

U.S. economy can be thought of as a link between

farmers and consumers. This link has three critical dimensions: physical, pecuniary, and communicative. The physical dimension involves the flow

of agricultural commodities from the farmer

through the assembler, processor, wholesaler, and

retailer to the consumer. The pecuniary dimension involves the flow of dollars from consumers

of agricultural commodities back to the producers.

The communicative dimension involves the flow

of information about the nature of the physical

and pecuniary flows (e.g., information about supply and demand conditions) to participants in the

market system.

More concretely, the food marketing system

can be described in terms of the participants in

the system. Participants in the marketing system

include the multitude of institutions and institutional arrangements that exist to facilitate the flow

of information and trading—e.g., commodity exchanges, central markets, auctions, trade organizations, and the news media. Other participants

in the system include organizations which render

services as part of the system—e.g., financial institutions, processing firms, warehousing companies, retail firms, and transportation firms. The

Federal Government is also involved in the system

in its capacity as regulator—e.g., of food safety,

grades and standards, nutrition, and competition.

Inputs into the marketing system include labor,

building materials, packaging, and equipment.

These inputs become part of the products that are

marketed.

The food marketing sector can also be described

vis-a-vis the food production sector in terms of

its contributions to total consumer food expenditures, its contribution to the output of the food

and fiber system, its contribution to employment,

and its consumption of energy.

Contribution to Consumer

Food Expenditures

Consumer expenditures on U.S. farm-produced

food have been consistently increasing on an annual basis since 1971 (see table 1). The trend in

both on-farm production costs and marketing
14

Table 1.— Consumer Expenditures on U.S. Farm-Produced Foods, 1971-82

Consumer

expenditures

Year (in billions)

1971 . . . . . .

1972 . . . . . .

1973 . . . . . .

1974 . . . . . .

1975 . . . . . .

1976 . . . . . .

1977 . . . . . .

1978 . . . . . .

1979 . . . . . .

1980 . . . . . .

1981 . . . . . .

1982 . . . . . .

$114.6

122.2

138.8

154.6

169.0

183.7

192.3

214.3

241.2

260.8

285.0

298.0

Farm value

(in billions)

$36.1

39.8

51.7

56.4

55.6

58.3

58.0

69.4

78.4

81.1

82.9

83.5

Marketing

bill Marketing bill as a percentage

(in billions) of consumer expenditures

$ 78.5

82.4

87.1

98.2

113.4

125.4

134.3

144.9

162.8

179.7

202.1

214.5

68.4%

67.4

62.8

63,5

67.1

68.3

69.8

67.6

67.5

68.9

70.9

71.9

SOURCE: U.S. Department of Agriculture, Economic Research Service, 1982.

costs from 1971 to 1982 generally has been upward. In 1982, total consumer expenditures on

food reached a high of $298 billion: while the

amount attributable to on-farm production costs

was $83.5 billion (28 percent of the total), the

amount attributable to marketing costs (i. e., the

difference between the farm value or payment to

farmers for foodstuffs and consumer expenditures

for these foods) was $214.5 billion (71.9 percent

of the total). From 1971 to 1982, the percentage

of consumer food expenditures attributable to

marketing costs ranged from a low of 62.8 percent in 1973 to a high of 71.9 percent in 1982.

Increases in the specific components of the food

marketing bill from 1971 to 1982 are shown in

table 2. By far the largest component of the bill

is labor costs. Since 1971, labor costs have been

consistently increasing on an annual basis; in

1982, they accounted for $97.2 billion, or 45 percent of the total $214.5 billion marketing bill,

Other components of the marketing bill include

packaging, which accounted for 11 percent of the

bill in 1982; transportation, which accounted for

7 percent of that bill; fuels and electricity, which

accounted for 5 percent; corporate profits, which

accounted for 6 percent; and other items including

Table 2.—Components of the Marketing Bill for

U.S. Farm. Produced Foods, 1971-82 (in billions)

Intercity Corporate Total

Packaging transportation Fuels and profits marketing

Year Labor a materials rail and truck electricity before taxes Other b

bill c

1971 . . . . . . . . $34.5

1972 . . . . . . . . 36.6

1973 . . . . . . . . 39.7

1974 . . . . . . . . 44.3

1975 . . . . . . . . 48.7

1976 . . . . . . . . 53.7

1977 . . . . . . . . 58.4

1978 ...., . . . 65.3

1979 . . . . . . . . 73.8

1980 . . . . . . . . 80.7

1981 . . . . . . . . 90,7

1982 . . . . . . . . 97.2

$8. 5

8.9

9.4

11.8

13.5

14.6

15.2

16.3

18.4

21.1

22.9

23.2

$6. 0

6.1

6.4

7.5

8.5

9.1

9.8

10.3

11.6

12.7

14,1

14.7

$ 2.4

2.5

2.8

3.7

4.6

5.0

5.6

6.2

7.6

9.0

10.9

11.2

$3. 9

4.0

5.4

6.1

7.5

7.6

8.0

9.0

9.9

11.0

12.0

12.9

$23.2

24.3

23.4

24.8

30.6

35.4

37.3

37.8

41.5

45.2

51.5

55.3

$ 78.5

82.4

87.1

98.2

113.4

125.4

134.3

144.9

162.8

179.7

202,1

214.5

a

lncludes employee wages or salaries, and their health and welfare benefits, Also includes imputed earnings of proprietors,

partners, and family workers not receiving stated remuneration.

b

Includes depreciation, rent, advertising and promotion, interest, property taxes and insurance, accounting and professional

services, and many miscellaneous items. Data for 1987-89 also include fuels and electricity.

cThe marketing bill is the difference between the farm value or payment to farmers for foodstuffs and consumer expenditures

for these foods both at food stores and away from home eating places. Thus, it covers processing, wholesaling, transportation, and retailing costs and profits

SOURCE: U.S. Department of Agriculture, Economic Research Service, 1982
15

depreciation, advertising, interest, and repairs,

which accounted for the remaining 26 percent of

the marketing bill.

Contribution to the Output of

the Food and Fiber System

As shown below, the total output of the U.S.

food and fiber system continues to increase, and

in 1981 was estimated at $612 billion (3). The nonfarm activities or marketing provides over 85 percent of the value added to the food and fiber system’s output.

output Percentage added by:

Year (in billions) Farming Nonfarm activities

1978 ......., $432. 7 14% 86%

1979 . . . . 486.2 15 85

198 0 532.8 13 87

198 1

a

612.0 N A N A

a

Preliminary

Number of Food Marketing

Establishments and Employees

Table 3 shows the numbers of establishments

and employees in food marketing industries (food

manufacturing, food wholesaling, food stores,

and eating places) for the years 1967, 1972, and

1977. From 1967 to 1977, both the number of food

manufacturing establishments and the number of

employees in such establishments declined, from

32,518 establishments and about 1.7 million

employees in 1967 to 26,656 establishments and

about 1.6 million employees in 1977.

During the same period, the number of food

wholesaling establishments and food stores also

declined, but in these establishments, the number

of employees increased. The increase in the

number of employees in food stores from 1967

to 1977 was substantial, from 1.4 million employees in 1967 to about 2 million employees in 1977.

Of all the establishments shown in table 3, only

eating places increased in number from 1967 to

Table 3.—Numbers of Establishments and

Employees in Food Marketing Industries,

1967, 1972, 1977

Number of Number of

Industry and year establishments employees

Manufacturers:

1967 . . . . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . . . . .

1977 . . . . . . . . . . . . . . . . . .

Wholesalers:

1967 . . . . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . . . . .

1977 . . . . . . . . . . . . . . . . . .

Food stores:

1967 . . . . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . . . . .

1977 . . . . . . . . . . . . . . . . . .

Eating places:

1967 . . . . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . . . . .

32,518

28,184

26,656

40,055

38,531

37,960

294,243

267,352

251,971

236,563

253,136

1,725,900

1,663,000

1,622,100

533,837

579,531

601,920

1,444,469

1,722,486

1,959,008

1,736,693

2.317.425

1977 . . . . . . . . . . . . . . . . . . 274,337 3,425,060

SOURCE: Census of Manufacturers, Wholesale Trade, and Retail Trade, 1977

1977. Along with the increase in number of establishments, there was a substantial increase in the

number of employees in eating places. In 1967,

eating places employed about 1.7 million people;

by 1977, the number of employees had reached

about 3.4 million.

Consumption of Energy

According to the Department of Energy, an

estimated 17 percent of the total energy consumed

in the United States is consumed by the U.S. food

and agricultural system, which includes production, marketing, and consumption (4). About half

of this, or nearly 8 percent of the total, is consumed by the food marketing sector. This includes

4.4 percent for processing, 2.1 percent for transportation, 0.5 percent for wholesaling, and 0.8

percent for retailing. The production of food accounts for 3 percent of the total energy consumed,

and consumption at home accounts for the remaining 6 percent.
16

IMPACT OF THE FOOD MARKETING SECTOR ON THE U.S. ECONOMY

The food marketing sector has a number of significant impacts on the U.S. national economy,

and these are described further below. On the negative side, the food marketing sector has been a

major contributor to inflation in the general economy. It has also contributed to lagging productivity. On the positive side, however, the food marketing sector contributes significantly both to the

gross national product (GNP) and employment.

Increased output in food manufacturing has a

large impact on other sectors of the economy (3).

And too, food is a significant component of U.S.

import-export trade.

Contribution to Inflation

Over the past decade, there has been a significant increase in consumer prices, and inflation in

consumer food prices has had a profound effect

on the national economy. The annual rate of inflation in consumer food prices for the years 1951

through 1981, as well as the proportion of overall

inflation accounted for by inflation in consumer

food prices for those years, is shown in table 4.

During the 1970’s, food price inflation averaged

8 percent per year and accounted for an average

of 26 percent of inflation in the general economy.

Table 4.—Contribution of Food Prices to Inflation, 1951-81

Food price

Overall inflation inflation rate

Year rate (percent) (percent)

1951 . . . . . .

1952 . . . . . .

1953 . . . . . .

1954 . . . . . .

1955 . . . . . .

1956 . . . . . .

1957 . . . . . .

1958 . . . . . .

1959 . . . . . .

1980 . . . . . .

1961 . . . . . .

1962 . . . . . .

1963 . . . . . .

1964 . . . . . .

1965 . . . . . .

1966 . . . . . .

1987 . . . . . .

1988 . . . . . .

1989 . . . . . .

1970 . . . . . .

1971 . . . . . .

1972 . . . . . .

1973 . . . . . .

1974 . . . . . .

1975 . . . . . .

1976 . . . . . .

1977 . . . . . .

1978 . . . . . .

1979 . . . . . .

1980 . . . . . .

1981 . . . . . .

7.9%

2.2

0.8

0.5

–0.4

1.5

8.6

2.9

0.8

1.5

1.1

1.2

1.3

1.4

1.5

3.2

2.8

4.4

5.7

6.1

4.3

3.4

6.1

9.8

9.1

5.6

6.3

7.8

10.0

13.8

9.2

11.1%

1.0

– 1.5

–0.2

– 1,4

0.7

3.3

4.2

– 1.6

1.0

1.3

0.9

1.4

1.3

2.2

5.0

0.9

3.6

5.1

5.5

3.0

4.3

14.5

14.4

8.5

3.1

6.3

10.0

10.9

8.6

8.2

Contribution of food

prices to overall inflation

(percentage points)

2.7

0.4

–0.4

–0.1

0.3

0.2

0.8

1.0

–0.4

0.2

0.3

0.2

0.3

0.3

0.5

1.2

0.2

0.9

1.2

1.3

0.7

1.0

3.5

3.5

2.0

0.8

1.5

1.8

2.0

1.5

1.4

Proportion of overall

inflation accounted

for by food price

inflation (percent)

34.20/o

18.2

–33.3

–16.7

–75.0

13.3

22.2

34.5

–33.3

13.3

27.3

16.6

23.1

21.4

33.3

37.5

7.1

20.5

21.1

21.3

16.3

29.4

57.4

35.7

22.0

14.3

23.8

23.1

20.0

10.9

15.2

a

The proportion of overall inflation accounted for by food price inflation is derived by dividing the contribution of food prices

to overall inflation by the overall Inflation rate.

SOURCE: U.S. Department of Commerce, Bureau of Economic Analysis, as presented by R. D. Knutson, J. B. Penn, and W.

T. Boehm in Agricultural and Food Policy (New Jersey: Prentice-Hall, Inc., January 1983).
17

Food price inflation peaked at 14.5 percent and

14.4 percent in the years 1973 and 1974, respectively, and it accounted for nearly 50 percent of

the inflation in the general economy during those

2 years.

Table 5 shows that much of the inflation in food

prices is due to increases in the farm-to-retail price

spread —i. e., marketing, The inflationary impact

of the food marketing sector was especially great

in the years 1974, 1975, 1976, 1978, 1979, 1980,

and 1981. In 1981, for example, increases in the

farm-to-retail price spread accounted for 74 percent of the increases in food prices at food stores.

From 1971 to 1981, consumer expenditures on

food rose about $170 billion (from $114.6 billion

in 1971 to $285 billion in 1981), and increases in

the marketing bill have accounted for 73 percent

of that amount (3). In some years, even though

farm prices declined, consumer food prices increased because of increases in the food marketing

sector. Labor and energy have been major components of these increases.

Contribution to Lagging Productivity

Historically, productivity gains in the food marketing sector have been less dramatic than those

achieved in farming. Most components of the food

manufacturing and distribution sectors (see table

6) are afflicted with laggard or declining growth.

The problem is especially evident in the food

transportation, food retailing, food service, and

some food manufacturing industries.

Labor productivity growth rates in the food

manufacturing sector vary considerably by industry. Although increases in labor productivity

growth rates have occurred since 1972 in some

industries (e. g., wet corn milling and soft drink

manufacturing), in other industries (e. g., meatpacking, sugar, candy, and breakfast cereal), there

have been no significant increases; in one industry

(i.e., blended flour), productivity has actually

declined.

In the food distribution sector, labor productivity growth rates in the rail and truck transportation have not increased significantly since 1972.

In retail food stores and in eating and drinking

places, productivity now is significantly below

1958-72 levels. Lagging productivity growth in the

food processing and distribution sectors, in addition to contributing to lagging productivity in the

general economy, has contributed to increased

rates of food price inflation (2).

Contribution to Gross National Product

The U.S. food and fiber system in 1980 accounted for about 20 percent of the GNP. According to USDA, 87 percent of that (17.8 percent of

total GNP) was attributable to nonfarm or market

industries: 38 percent was attributable to retailing, wholesale trade, and transportation industries; 31 percent was attributable to processing and

manufacturing industries; and 18 percent was attributable to services and raw materials industries

(3).

Table 5.—Contribution of Food-Price Components to Price Increases at Food Stores, 1971-81

Change in food store prices due to:

Farm value of food Farm to retail price spread Fish and imported foods Total retail price

Year (percentage points) (percentage points) (percentage points) increase (percent)

1971 . . . . . . . . . . . . . . . 0.1 1.5 0.8 2.4

1972 . . . . . . . . . . . . . . . 3.0 1.3 0.2 4.5

1973 . . . . . . . . . . . . . . . 11.6 3.7 1.0 16.3

1974 . . . . . . . . . . . . . . . 3.2 9.2 2.5 14.9

1975 . . . . . . . . . . . . . . . 1.3 5.1 1.9 8.3

1976 . . . . . . . . . . . . . . . – 1.8 2.7 1.2 2.1

1977 . . . . . . . . . . . . . . . 0.1 1.8 4.1 6.0

1978 . . . . . . . . . . . . . . . 4.5 4.6 1.4 10.5

1979 . . . . . . . . . . . . . . . 3.4 6.2 1.2 10.8

1980 . . . . . . . . . . . . . . . 1.7 4.2 2.1 8.0

1981 . . . . . . . . . . . . . . . 0.9 5.4 1.0 7.3

SOURCE Derived from Bureau of Labor Statistics data and USDA market basket statistics.
18

Table 6.—Productivity Growth Rates for the U.S. Food Manufacturing

and Distribution Sectors: 1958-72 Compared With 1973-79

Annual productivity growth rate

(output per man hour) Direct ion

1958-72 (percent) 1973-79 (percent) of change

Food manufacturing:

Fluid milk . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Preserved fruits and vegetables . . . . . . . . . .

Flour and other grain products . . . . . . . . . . .

Cereal and breakfast foods . . . . . . . . . . . . . .

Rice milling . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Blended and prepared flour . . . . . . . . . . . . . .

Wet corn milling. . . . . . . . . . . . . . . . . . . . . . . .

Prepared feed ... , . . . . . . . . . . . . . . . . . . . . . .

Raw and refined cane sugar . . . . . . . . . . . . .

Beet sugar. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Candy and confectionery products . . . . . . . .

Malt beverages . . . . . . . . . . . . . . . . . . . . . . . . .

Distribution:

Intercity truckinge 

. . . . . . . . . . . . . . . . . . . . . .

Intercity truckinge (general freight) . . . . . . . .

Railroad (car miles) . . . . . . . . . . . . . . . . . . . . .

Bakery products . . . . . . . . . . . . . . . . . . . . . . . .

Retail food stores . . . . . . . . . . . . . . . . . . . . . .

Eating and drinking places . . . . . . . . . . . . . .

3.8%

2.7a

4.1a

2.2C

3.6C

2.9

4.OC

4.4C

3.5

3.4

3.6a

5.9a

3.5%

1.9d

4.9

0.8d

2.5d

–4.0

d

9.8d

2.2d

1.5d

0.6d

0.2d

5.3

Reduction

Reduction

Increase

Reduction

Reduction

Negative

Increase

Reduction

Reduction

Reduction

Reduction

Reduction

2.6C

2.1C

3.8a

2.7b

3.0

1.2

1.1d Reduction

1.4d Reduction

0.8 Reduction

1.0 Reduction

– 1.0 Negative

– 2.4 Negative

a

1954-72.

b

1957-72.

c 1963-72.

d

1973-78.

eOutput per employee.

SOURCE: B. R. Eddleman, L. Teigen, and J. C. Purcell, “Productivity in U.S. Food and Agriculture: Implications for Research

and Education,” paper presented at the Southern Agricultural Economics Association meeting, Orlando, Fla., February

1962, p. 6a.

Contribution to Employment Table 7.—Employment in the U.S. Food and

Fiber System, 1978, 1979, 1980

In 1980, the U.S. food and fiber system accounted for approximately 23 percent of total employment in the country, a percentage which is

roughly the same as the food and fiber system’s

contribution to GNP. The number of employees

is shown in table 7. In 1980, 20.4 million (about

86 percent) of the 23.7 million people employed

in the food and fiber system as a whole were employed in nonfarm industries (i.e., food processing, resources and services, manufacturing, transportation, trade, retailing, and eating establishments). Over the years, the number of employees

in farming has declined, while the number employed in the food marketing sector has increased

(see table 7).

Income Multiplier for

Food Manufacturing

The impact of the food marketing system on

the U.S. economy can also be viewed through the

income multipliers that are derived from input/

Number of employees

(in millions)

Food and fiber system activity

Production agriculture. . . . . . . .

Non-farm . . . . . . . . . . . . . . . . . . .

Food processing . . . . . . . . . .

Resources and services . . . .

Manufacturing. . . . . . . . . . . . .

Transportation, trade, and

retailing . . . . . . . . . . . . . . . .

Eating establishments. . . . . .

Total employment in the U.S.

food and fiber system . . . .

Total employment in the

U.S. economya 

. . . . . . . . . .

Employment in the food and

fiber system as a percent

of the U.S. employment . .

1978 1979 1980

3.4

19.0

1.7

2.3

4.7

3.4

20.1

1.7

2.5

5.0

3.3

20.4

1.7

2.5

5.1

7.2

3.1

7.6

3.3

7.7

3.4

22.4 23.5 23.7

100.4 102.9 104.7

22.30/o 22.80/o 22.60/o

‘Represents the available work force,

SOURCE: U.S. Department of Agriculture, Economic Research Service, 1982,

output analysis for the United States. The income

multiplier for a particular sector of the economy

is a measure of the increase in income to the whole

economy resulting from an increase in output by

that particular sector.
19

Because of the food manufacturing industry’s

heavy reliance on other industries for inputs, its

high level of labor utilization, and its operation

on a comparatively low profit margin, the income

multiplier for food manufacturing is much greater

than the income multiplier for other sectors of the

economy (3). The weighted average personal income multiplier for food manufacturing is 9.8 (this

compares to a multiplier of 4.8 for nonfood and

nonfiber manufacturing, 4.0 for mining, 3.5 for

services, 3.4 for transportation and housing, and

2.8 for wholesale and retail trade). This implies

that a $1 million increase in output or income in

the food manufacturing sector would lead to a

$9.8 million increase in income in the total economy, while the total impact would be less than

$5 million for a $1 million increase in income to

those employed in other manufacturing.

Contribution to International Trade

Food represented about 19 percent of the total

U.S. export trade in 1982 and 7 percent of the U.S.

import trade. These figures are representative of

CHAPTER 2 REFERENCES

1. Forker, Olan D., Caldwell, Elwood F., Cowan,

Andrew, and Godwin, Marshall R., “Report of the

Subcommittee of the Committee on Coordinating

Marketing Research to the Joint Council on Food

and Agricultural Science, ” September 1980.

2. Polopolus, Leo, “Agricultural Economics Beyond

the Farm Gate, ” Presidential Address, American

Agricultural Economics Association, August 1982.

3. U.S. Department of Agriculture, Economic Rethe food production and marketing sectors’ combined contribution to international trade over the

past 15 years (3).

As shown below, the agricultural sector has

provided a positive trade balance which reached

a high of $24 billion in 1981, In contrast, the nonagricultural sector has a growing negative trade

balance which increased to $53 billion by 1981.

U.S. Trade Balance, 1975-82 (billions)

Agricultural Nonagricultural Total

1975 ....., . . . $12.57 –$ 2.83 $ 9.74

1976 . 12.01 –20.67 –8.67

1977 . . . . . . . 10.20 –39.97 – 29.78

1978 . . 14.58 –46.38 – 31.80

1979 . . 18.02 –45.37 –27.35

1980 . . . . . . . 23.89 –47.24 –23.35

1981 . . . . . 24.35 –53.52 –29.17

1982 . . . . . 19.73 – 52.64 –32.91

SOURCE: U.S. Department of Agriculture, Economic Research Service, 1982

The principal agricultural exports are the basic

commodities of wheat, corn, and soybeans. With

the exception of soybean oil and soybean meal,

few value-added agricultural products are exported.

4.

search Service, data derived by ERS based on a letter of inquiry from the Office of Technology Assessment, May 1982.

U.S. Department of Energy, Energy Consumption

in the Food System, report prepared for the Federal

Energy Administration by Booz, Allen, &

Hamilton, Report No. 13392-007-001, Washington,

D. C., December 1975.
.——

Chapter 3

Investment in Postharvest

Technology and Marketing

Economics Research

Contents

USDA and SAES Expenditures on

Production, PHTME, Other, and

Total Agricultural Research,

1966-81 . . . . . . . . . . . . . . . . . . . . . . . . . .

USDA Expenditures . . . . . . . . . . . . . . . . .

SAES Expenditures . . . . . . . . . . . . . . . . . .

SAES/USDA Relative Shares of PHTME

and Total Agricultural Research. . . . .

USDA and SAES Expenditures on

PHTME and Total Research for

Selected Commodities. . . . . . . . . . . . . .

Page

Private Industry Expenditures on Applied

Research and Development of

Agricultural Chemicals, Farm

Machinery, Food, and Kindred

Products, 1963-75 . . . . . . . . . . . . . . . . .

Page

USDA Expenditures on Production,

PHTME, Other, and Total

Agricultural Research by Research

23 Agency, 1966-81 . . . . . . . . . . . . . . . . . . 28

24 Agricultural Research Service

25 Expenditures . . . . . . . . . . . . . . . . . . . . . . 28

Economic Research Service

25 Expenditures . . . . . . . . . . . . . . . . . . . . . . 30

SAES Expenditures on Production,

26 PHTME, Other, and Total

Agricultural Research by Source

of Funds, 1966-81 . . . . . . . . . . . . . . . . . 31

SAES Expenditures From Federal

Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

SAES Expenditures From State

27 Appropriations. . . . . . . . . . . . . . . . . . . . 34
Page

SAES Expenditures From Private

Industry Funds . . . . . . . . . . . . . . . . . . . . 35

Principal Findings . . . . . . . . . . . . . . . . . . ! . . 36

Chapter preferences . . . . . . . . . . . . . . . . . . 37

List of Figures

Figure No. Page

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Combined USDA/SAES Expenditures

on Production, PHTME, Other, and

Total Agricultural Research, 1966-81. 24

Combined USDA/SAES Expenditures

on Production, PHTME, Other, and

Total Agricultural Research, 1966-81. 24

USDA Expenditures on Production,

PHTME, Other, and Total Agricultural

Research, 1966-81 . . . . . . . . . . . . . . . . . . 25

USDA Expenditures on Production,

PHTME, Other, and Total Agricultural

Research, 1966-81 . . . . . . . . . . . . . . . . . . 25

SAES Expenditures on Production,

PHTME, Other, and Total Agricultural

Research, 1966-81 . . . . . . . . . . . . . . . . . . 26

SAES Expenditures on Production,

PHTME, Other, and Total Agricultural

Research, 1966-81 . . . . . . . . . . . . . . . . . . 26

SAES Expenditures on PHTME and on

Total Agricultural Research as a Percent

of Combined USDA/SAES Expenditures

on PHTME and Total Agricultural

Research, 1966-81 . . . . . . . . . . . . . . . . . . 26

Private Industry Expenditures on

Applied Research and Development of

Agricultural Chemicals, Farm

Machinery, and Food and Kindred

Products, 1963-75 . . . . . . . . . . . . . . . . . . 28

Private Industry Expenditures on

Applied Research and Development of

Agricultural Chemicals, Farm

Machinery, and Food and Kindred

Products, 1963-75 . . . . . . . . . . . . . . . . . . 28

ARS Expenditures on Production,

PHTME, Other, and Total Agricultural

Research, 1966-81 . . . . . . . . . . . . . . . . . . 29

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

ARS Expenditures on Production,

PHTME, Other, and Total Agricultural

Research, 1966-81 . . . . . . . . . . . . . . . . . .

ERS Expenditures on Production,

PHTME, Other, and Total Agricultural

Research, 1966-81 . . . . . . . . . . . . . . . . . .

ERS Expenditures on Production,

PHTME, Other, and Total Agricultural

Research, 1966-81 . . . . . . . . . . . . . . . . . .

SAES Expenditures From Hatch Act

Funds on Production, PHTME, Other,

and Total Agricultural Research,

1966-81 . . . . . . . . . . . . . . . . . . . . . . . . . . .

SAES Expenditures From Hatch Act

Funds on Production, PHTME, Other,

and Total Agricultural Research,

1966-81 . . . . . . . . . . . . . . . . . . . . . . . . . . .

SAES Expenditures From Cooperative

Grants and Cooperative Agreements on

Production, PHTME, Other, and Total

Agricultural Research, 1966-81 . . . . . . .

SAES Expenditures From Cooperative

Grants and Cooperative Agreements on

Production, PHTME, Other, and Total

Agricultural Research, 1966-81 . . . . . . .

SAES Expenditures From Other Federal

29

30

30

31

31

32

32

Sources on Production, PHTME, Other,

and Total Agricultural Research,

1966-81 . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

SAES Expenditures From Other Federal

Sources on Production, PHTME, Other,

and Total Agricultural Research,

1966-81 . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

SAES Expenditures From State

Appropriations on Production, PHTME,

Other, and Total Agricultural Research,

1966-81 . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

SAES Expenditures From State

Appropriations on Production, PHTME,

Other, and Total Agricultural Research,

1966-81 . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

SAES Expenditures From Private

Industry Funds on Production, PHTME,

Other, and Total Agricultural Research,

1966-81 . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

SAES Expenditures From Private

Industry Funds on Production, PHTME,

Other, and Total Agricultural Research,

1966-81 . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Chapter 3

Investment in Postharvest Technology

and Marketing Economics Research*

Public food and agricultural research in the

United States is conducted chiefly by the U.S.

Department of Agriculture (USDA) and State

agricultural experiment stations (SAES) in conjunction with land-grant universities (including the

1890 Institutions and Tuskegee Institute).**

USDA research is funded from Federal sources.

SAES research is supported by Federal funds,

State appropriations and sales, and grants from

private sources.

Historical data are available for public expenditures on food and agricultural research, including

postharvest technology and marketing economics

(PHTME) research, and are presented in the

analysis below. Patterns and trends in USDA and

SAES expenditures are analyzed for the 16-year

period from 1966 to 1981.

For the analysis of public expenditures, agricultural research is separated into three components:

*The material found in this chapter was originally prepared by

Joseph Havlicek, Jr. ( and Daniel Otto, and can be found in more

detail in their paper, “Historical Analysis of Investment in Food and

Agricultural Research, ” OTA, An Assessment of the United States

Food and Agricultural Research System, Vol. II—Commissioned

Papers, Part C, April 1982,

**A description of the U.S. food and agricultural research system

can be found in An Assessment of the United States Food and

Agricultural Research System (2).

USDA AND SAES EXPENDITURES

1) production, 2) PHTME, and 3) other. Production research includes research on all aspects of

producing crops and livestock. PHTME research

encompasses research on all functions after harvest of crops and beginning with the first phase

of marketing for livestock. Thus, it includes all

functions from storage to distribution of agricultural products through the institutional food trade

and wholesale and retail outlets. “Other” food and

agricultural research includes all remaining publicly funded research (rural development, human nutrition, conservation of resources, environment,

etc. ). The “other” category is a residual category

that includes all research that is neither production oriented nor PHTME. The particular research

problem areas included in PHTME are identified

in appendix A.

The scope and amount of food and agricultural

research performed by private industry cannot be

reported accurately, because reliable data are lacking. Private firms engaged in agricultural research

are not required to identify themselves, nor are

they required to disclose their investments in agricultural research publicly. Thus, any analysis of

agricultural research by private industry is based

on incomplete data. The data that are available

will be discussed later in this chapter.

ON PRODUCTION, PHTME,.

OTHER, AND TOTAL AGRICULTURAL RESEARCH, 1966-81

USDA and SAES expenditures on production,

PHTME, other, and total agricultural research for

the 16-year period from 1966 through 1981 are

presented in figure 1, and constant dollar expenditures are shown in figure 2.* Production research

is a much larger component of total public agricultural research than PHTME research is. Pro-

‘Data used to construct these and all remaining figures in this

chapter can be found in app. C.

duction research accounted for 69 percent of total

USDA/SAES research in 1981. Furthermore, combined USDA and SAES expenditures on production research, in current and constant dollars, exhibit patterns almost identical to those of combined expenditures on total agricultural research.

From 1966 to 1981, current dollar USDA and

SAES expenditures on production research increased steadily. The current dollar increase during this period was 306 percent, equivalent to a

38-percent increase in constant dollars.

23
24

Figure 1 .—Combined USDA/SAES Expenditures on

Production, PHTME, Other, and Total Agricultural

Research, 1966-81 (in current doiiars)

1400 — 

● Tota l

1300 — Production

1200 ●

1100 /

●

1000 /

●

1965 1970 1975 1980

Year

SOURCE, Off/cc of Technology Assessment.

Public expenditures on PHTME research accounted for about 24 percent of total public agricultural research funds in 1966 and for approximately 18 percent in 1981. In current dollars, combined USDA and SAES expenditures on PHTME

research steadily increased from 1966 to 1981, but

the 198-percent increase in current dollars represented a 1.6-percent overall increase in constant

dollars. Between 1966 and 1978, there was an increase of approximately 9.6 percent in constant

dollars for PHTME research. However, from 1978

to 1981, constant dollar expenditures for PHTME

research declined approximately 8 percent.

“Other” food and agricultural research, the

smallest of the three components of public research, in current dollars rapidly increased from

1966 to 1978 but declined from 1978 to 1981. In

current dollars, the overall increase during the

1966-81 period was 425 percent, representing a

79-percent increase in constant dollars.

Figure 2.—Combined USDA/SAES Expenditures on

Production, PHTME, Other, and Totai Agricultural

Research, 1966-81 (in constant dollars)

1100,

1000

s

● —* Total

--- PHTME

900 — Production

- — Othe r

800

m

200

t

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment

USDA Expenditures

USDA expenditure patterns for production,

PHTME, other, and total agricultural research for

the period from 1966 to 1981 are almost identical

to combined USDA/SAES expenditure patterns,

as shown in figures 3 and 4.

USDA expenditures for production research,

the largest component of USDA research, accounted for 64 percent of total USDA research

expenditures in 1981. USDA expenditures on production research increased 251 percent in current

dollars from 1966 to 1981, but increased about

20 percent in constant dollars.

USDA expenditures on PHTME research increased 144 percent in current dollars from 1966

to 1981, but decreased by 17 percent in constant

dollars. Much of this decrease in constant dollar

expenditures occurred from 1979 to 1981, partly

because of level current dollar funding but also

because of the rate of inflation. As a proportion

of total USDA research expenditures, PHTME expenditures decreased from 35 percent in 1966 to

27 percent in 1981.
25

Figure 3.—USDA Expenditures on Production,

PHTME, Other, and Total Agricultural Research,

1966-81 (in current dollars)

450 -

400 “

350 “

s

= 300 “

<

: 250 “

c

: 200 -

z

150 -

100 -

50 “

o—

Total

---- PHTM E I

-— Othe r /

●

/

●

✏

1965 1970 1975 1980

Year

SOURCE. Off Ice of Technology Assessment

From 1966 to 1981, USDA expenditures on

“other” research increased 293 percent in current

dollars and 34 percent in constant dollars. Despite

these increases, however, other research is still a

small component of total agricultural research in

USDA and in 1981 accounted for only 9 percent

of the total.

SAES Expenditures

SAES expenditures on production, PHTME,

other, and total agricultural research for the

16-year period from 1966 to 1981 are shown in

current and constant dollars in figures 5 and 6,

respectively. These figures show that SAES expenditure patterns are similar to those for USDA.

Production research is the largest component

of total SAES research, and during the 1966-81

period, current dollar expenditures increased 338

percent, although constant dollar expenditures increased by 50 percent. SAES expenditures on

PHTME research were of approximately the same

magnitude as SAES expenditures on “other” research-but for “other” research, current and conFigure 4.—USDA Expenditures on Production,

PHTME, Other, and Total Agricultural Research,

1966-81 (in constant dollars)

Year

SOURCE: Office of Technology Assessment

stant dollar expenditures increased 488 and 100

percent, respectively, while for PHTME research,

current dollar expenditures increased 287 percent

and constant dollar expenditures by 32 percent.

SAES expenditures on PHTME research decreased

from 16 percent of total SAES research funds in

1966 to 14 percent in 1981. The proportion of

SAES expenditures devoted to “other” research

increased from 11 percent of total SAES research

expenditures in 1966 to 15 percent in 1981, but

was as high as 17 percent in 1978.

SAES/USDA Relative Shares of PHTME

and Total Agricultural Research

Expenditures by SAES on PHTME and total

agricultural research as a percent of combined

USDA/SAES expenditures on such research for

the period from 1966 to 1981 are presented in figure 7. With some minor variations, the SAES proportion of combined USDA/SAES expenditures

on all agricultural research increased from a low

of 56 percent in 1967 to a high of 65 percent in

1981. At no time during the 1966-81 period did

SAES account for less than half the combined

USDA/SAES expenditures for all agricultural

research.

98-952 0 - 83 - 3
26

Figure 5.–SAES Expenditures on Production, PHTME,

Other, and Total Agricultural Research, 1966-81

(in current dollars)

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.

SAES expenditures on PHTME research as a

percent of total public expenditures on PHTME

research increased about 14 percent during the

1966-81 period. Although there was a slight variation, the proportion increased from about 37 percent in 1967 to 51 percent in 1980.

USDA and SAES Expenditures on

PHTME and Total Research for

Selected Commodities

Patterns in expenditures by USDA and SAES

on PHTME and total research were analyzed for

the 16-year period from 1966 to 1981 for nine

selected agricultural commodities: potatoes, other

vegetables, corn, wheat, soybeans, rice, cotton,

dairy products, and beef. The analysis is presented

in detail in appendix B.

The expenditures of SAES and USDA on total

and PHTME research for the nine commodities

exhibited several unique patterns in terms of levels

and variations in funding. However, some general

Figure 6.–SAES Expenditures on Production, PHTME,

Other, and Total Agricultural Research, 1966-81

(in constant dollars)

1965 1970 1975 1980

Year

SOURCE: Off Ice of Technology Assessment.

Figure 7.—SAES Expenditures on PHTME and on

Total Agricultural Research as a Percent of

Combined USDA/SAES Expenditures on PHTME

and Total Agricultural Research, 1966-81

1.0r

I I

,,

0.0 i

1965 1970 1975 1980

Year

SOURCE: Off Ice of Technology Assessment,

tendencies did exist which allowed the following

general conclusions to be drawn:

I. In general, the total expenditures on all research for specific commodities were greater

in SAES than in USDA except for cotton.
27

2.

3.

4.

While current dollar total research expendi- 5

tures by both SAES and USDA for all commodities increased from 1966 to 1981, the

constant dollar expenditures exhibited slight

or no increases and for some commodities

declined substantially.

The loss of purchasing power due to infla- 6.

tion from 1966 to 1981 was substantial, and

the real dollars available for total agricultural

research on the nine commodities in both

SAES and USDA remained at about the 7.

same level over the 16-year period.

In general, the level and proportion of expenditures allocated to PHTME research on 8.

these commodities were greater in USDA

than in SAES.

From 1966 to 1981, both SAES and USDA

current dollar expenditures for PHTME research on all nine commodities exhibited an

overall increase, but current dollar expenditures for PHTME research for several commodities decreased from 1977 to 1979.

From 1966 to 1981, both SAES and USDA

constant dollar expenditures for PHTME research on the nine commodities only increased slightly or declined.

PHTME commodity research generally declined more in USDA than in SAES during

this 16-year time period.

SAES did not increase commodity PHTME

research enough to make up for the USDA

decline.

PRIVATE INDUSTRY EXPENDITURES ON APPLIED RESEARCH AND

DEVELOPMENT OF AGRICULTURAL CHEMICALS, FARM MACHINERY,

FOOD, AND KINDRED PRODUCTS, 1963-75

Data are not available on agricultural research

expenditures by private industry to permit separating out production, PHTME, and other food

and agricultural research. Data available for private industry pertain to applied research and development in agricultural-related products: agricultural chemicals, farm machinery, and food and

kindred products.

Much of private industry’s applied research and

development in agricultural chemicals and farm

machinery tends to be production-oriented. In the

following discussion, it is assumed that private

industry’s applied research and development on

food and kindred products in private industry is

similar in nature to the PHTME research in the

public sector. This assumption allows some comparisons of trends in public and private expenditures on PHTME research,

Expenditures by private industry on applied research and development of agricultural chemicals,

farm machinery, and food and kindred products

for the period 1963 to 1975 are presented in current dollars in figure 8 and in constant dollars in

figure 9. The largest of these three components

of private industry’s applied research and development—and the only one for which there was a

steady increase in both current and constant dollar

expenditures in the period 1963 to 1975—was applied research and development of food and kindred products. From 1963 to 1975, private industry expenditures on applied research and development of food and kindred products increased by

186 percent in current dollars and by 47 percent

in constant dollars. These expenditures accounted

for nearly half the total private industry expenditures on applied research and development of agricultural-related products.

Current dollar expenditures by private industry

for applied research and development of farm machinery, while exhibiting an erratic pattern during the 1963-75 period, overall increased about

91 percent. Most of the erratic fluctuations occurred between 1967 and 1972. Constant dollar

expenditures in this area exhibited considerable

fluctuation, decreasing by 2 percent from 1963 to

1975 and by 15 percent from the high in 1965 to

1975.

Current dollar expenditures by private industry

for applied research and development of agricultural chemicals steadily increased from 1963 to

1975, except in 1972 and 1973. The overall increase was about 267 percent. The constant dollar

expenditures varied over the 1963-75 period, but

overall increased about 88 percent.
28

Figure 8.—Private industry Expenditures on Appiied

Research and Development of Agricuiturai

Chemicals, Farm Machinery, and Food and Kindred

Products, 1963-75 (in current doiiars)

m -

1962 1967 1972 1977

Year

SOURCE: Office of Technology Assessment,

Finally, private industry expenditures on applied research and development of food and kindred products ranged from 150 percent of combined USDA/SAES expenditures on PHTME research in 1966 to 176 percent of these expenditures

in 1975. During that lo-year period, the expendiFigure 9.—Private industry Expenditures on Appiied

Research and Development of Agricuiturai

Chemicais, Farm Machinery, and Food and Kindred

Products, 1963-75 (in constant dollars)

1962 1967 1972 1977

Year

SOURCE: Office of Technology Assessment.

tures by private industry on applied research and

development of food and kindred products increased more rapidly than did the expenditures

by USDA and SAES on PHTME research.

USDA EXPENDITURES ON PRODUCTION, PHTME, OTHER, AND TOTAL

AGRICULTURAL RESEARCH BY RESEARCH AGENCY, 1966-81

Patterns in expenditures on production, PHTME, Agricultural Research Service

other, and total agricultural research for the major Expenditures

research agencies within USDA are analyzed in

this section for the 16-year period from 1966 to Current dollar and constant dollar expenditures

1981. The agencies considered are the Agricultural on production, PHTME, ** other, and total agriResearch Service (ARS) and the Economic Re- cultural research by ARS for the 1966-81 period

search Service (ERS). For the Agricultural Market- are presented in figures 10 and 11, respectively.

ing Service (AMS), comparable data are not avail- In terms of total agricultural research funding,

able during this time period. * ARS was by far the largest service in USDA during this time.

*Research expenditures by Agricultural Marketing Service for * ● PHTME research supported by ARS is considered postharvest

other years are in table C-8 in app. C. technology research as defined in ch. 2.
29

Figure 10.—ARS Expenditures on Production,

PHTMEa

, Other, and Total Agricultural Research,

1966-81 (in current dollars)

Figure 11 .—ARS Expenditures on Production,

PHTMEa

, Other, and Total Agricultural Research,

1966-81 (in constant dollars)

1965 1970 1975 1980

Year

aPHTME research supported by ARS iS considered postharvest technology

research as defined in ch. 2

SOURCE Office of Technology Assessment

From 1966 to 1981, ARS current dollar expenditures on all agricultural research increased 207 percent. In 1966, ARS current dollar expenditures on

all agricultural research were about $137 million,

and these expenditures increased to approximately

$419 million in 1981. Constant dollar ARS expenditures on all agricultural research from 1966

to 1981 exhibited considerable year-to-year fluctuation. They decreased from $144 million in 1966

to $135 million in 1976, then increased to $150

million in 1978, again decreased in 1979 and 1980,

and finally increased to the $150 million level in

1981.

From 1966 to 1981, production research constituted the largest part of total agricultural research

funding in ARS. The pattern of ARS expenditures

on production research during that period is similar to that of ARS total agricultural research expenditures. ARS current dollar expenditures on

production research increased fairly steadily

throughout the 1966-81 period. These expenditures were about $85 million in 1966 and increased

by 235 percent to $286 million in 1981. Constant

aPHTME research supported by ARS is considered postharvest technology

research as defined In ch. 2,

SOURCE: Office of Technology Assessment.

dollar expenditures on production research by

ARS fluctuated from 1966 to 1981, but increased

by 14 percent overall, from about $89 million in

1966 to $102 million in 1981.

ARS current dollar expenditures on PHTME research, after a slight decrease from 1967 to 1968,

steadily increased from about $46 million in both

1966 and 1968 to $107 million in 1981. In constant dollars, ARS expenditures on PHTME research exhibited some variation, but decreased by

20 percent overall from 1966 to 1981.

The remaining component of ARS agricultural

research, the category labeled “other,” has been

a small component of ARS research expenditures.

The current and constant dollar expenditures

steadily increased from 1966 to 1978, but in constant dollars, decreased by nearly $10 million from

1978 to 1979. In current dollars, ARS expenditures on “other” research were a little over $5

million in 1966 and increased to nearly $20 million

in 1978. In constant dollars, ARS expenditures on

other research increased from nearly $6 million

in 1966 to over $9 million in 1978, and returned

to that level of spending in 1981.
30

Economic Research Service

Expenditures

Current dollar expenditures on production,

PHTME, * other, and total agricultural research

in ERS for the 1966-81 period are presented in figure 12, and constant dollar expenditures are presented in figure 13. ERS current dollar total research expenditures increased by 185 percent during this 16-year period, but constant dollar expenditures decreased by 3 percent. However, there

was a severe decline of 15 percent in ERS constant

dollar total research expenditures from 1966 to

1977.

Expenditures on PHTME research were the

largest component of total research expenditures

in ERS. Expenditures on PHTME research in ERS,

in both current and constant dollars, exhibit patterns similar to those for total agricultural research

expenditures in ERS. From 1966 to 1981, ERS

PHTME research expenditures increased 164 per-

*PHTME research supported by ERS is considered marketing economics research as defined in ch. 2.

Figure 12.— ERS Expenditures on Production,

PHTMEa

, Other, and Total Agricultural Research,

1966-81 (in current dollars)

45 /

40 — Productio n

-- Othe r

●

35

30 / ’

/ - ”

Year

aPHTME research supported by ERS is considered marketing economics

research as defined in ch. 2.

SOURCE. Office of Technology Assessment.

cent in current dollars but decreased by 10 percent in constant dollars.

Expenditures in ERS on “other” research varied

substantially and from 1966 to 1981 show erratic

patterns in both current and constant dollars. The

overall increase from 1966 to 1981 in ERS current

dollar expenditures on other research was 183 percent, while constant dollar expenditures decreased

3.5 percent. Throughout the 16-year period, expenditures on “other” research accounted for

about one-third of the total research expenditures

of ERS.

Expenditures on production research were the

smallest component of total agricultural research

expenditures in ERS. Expenditures on production

research accounted for about 16 percent of total

research expenditures in ERS during the early part

of the 1966-81 period, but declined to a low of

2 percent in 1971. Thereafter, the proportion of

ERS expenditures on production research varied,

reaching 25 percent in 1980 but declining to 20

percent in 1979. Current dollar expenditures on

production research in ERS increased 255 percent

from 1966 to 1981, and constant dollar expenditures increased 21 percent.

Figure 13.—ERS Expenditures on Production,

PHTMEa

, Other, and Total Agricultural

Research, 1966-81 (in constant dollars)

25

1 -

1965 1970 1975 1980

Year

aPHTME research supported by ERS is considered marketing economics

research as defined in ch. 2

SOURCE. Office of Technology Assessment
31

SAES EXPENDITURES ON PRODUCTION, PHTME, OTHER, AND TOTAL

AGRICULTURAL RESEARCH BY SOURCE OF FUNDS, 1966-81

Trends in SAES expenditures on production,

PHTME, other, and total agricultural research for

the period from 1966 to 1981 are analyzed below

by the types or sources of funding: 1) Federal

funds (including Hatch Act funds, USDA cooperative grants and agreements, other Federal

sources); 2) State appropriations; and 3) private

research funds to SAES.

A major trend in SAES funding is the decline

of Federal support and the significant increases

in State appropriations. The majority of funds for

PHTME research in SAES now come from State

appropriations. The analysis in this section shows

that from 1966 to 1981, State appropriations increased from 43 to 56 percent of SAES funds for

PHTME research, while Federal funds to SAES

for PHTME research decreased from 53 to 38

percent.

Figure 14.—SAES Expenditures From Hatch Act

Funds on Production, PHTME, Other, and Total

Agricultural Research, 1966-81 (in current dollars)

SAES Expenditures From Federal Funds

Hatch Act Funds

Current dollar expenditures on production,

PHTME, other, and total agricultural research at

SAES and the 1890 land-grant colleges and Tuskegee Institute from Hatch Act or Federal formula

funds for the 1966-81 period are presented in figure 14, and constant dollar expenditures are given

in figure 15. The total SAES expenditures on agricultural research from Federal formula funds

steadily increased in current dollars from about

$48 million in 1966 to nearly $172 million in 1981,

an increase of 258 percent. Constant dollar expenditures varied during the 16-year period, but

increased about 22 percent overall.

A large part of Federal formula funds (65 percent in 1966 and 1981) were allocated by SAES

to production research. Current dollar expenditures on production research from formula funds

increased 255 percent from 1966 to 1981, exhibiting a pattern similar to that of expenditures on

total agricultural research from these funds. Con150

100

50

0

.

.

--- PHTM E i

— Productio n ● r “

—— Othe r

-.— Tota l /

●

/

.

/

1965 1970 1975 1980

Year

Figure 15.—SAES Expenditures From Hatch Act

Funds on Production, PHTME, Other, and Total

Agricultural Research, 1966-81 (in constant dollars)

150-

---- PHTME

— Productio n

— — Othe r

-.. Tota l

1965 1970 1975 1980

Year

SOURCE Office of Technology Assessment SOURCE Off Ice of Technology Assessment
32

stant dollar expenditures on production research

from Federal formula funds varied between $28

million and $42 million during the 16-year period,

and increased 21 percent overall from 1966 to

1981.

SAES expenditures on PHTME research from

Federal formula funds increased steadily in current dollars from about $11 million in 1966 to over

$30 million in 1981, but declined slightly from

1979 to 1981. Overall, the increase in current

dollar expenditures on PHTME research from

1966 to 1981 was 181 percent. However, SAES

constant dollar expenditures on PHTME research

decreased by 4 percent from 1966 to 1981. SAES

expenditures on PHTME research accounted for

23 percent of SAES expenditures from Federal formula funds in 1966 and only 18 percent in 1981.

Current dollar expenditures from Federal formula funds on “other” agricultural research steadily increased from 1966 to 1981, declining slightly

from 1979 to 1980. The overall increase from 1966

to 1981 was 413 percent. The corresponding inFigure 16.-SAES Expenditures From Cooperative

Grants and Cooperative Agreements on Production,

PHTME, Other, and Total Agricultural Research,

1966-81 (in current dollars)

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.

crease in constant dollar expenditures was 75 percent. “Other” agricultural research was a relatively

small part of SAES expenditures on agricultural

research from Federal formula funds, ranging

from 12 percent in 1966 to 19 percent in 1977, and

then declining to 17 percent in 1981.

USDA Cooperative Grants and Agreements

Another Federal source of funding to the States

is cooperative grants and agreements with USDA.

SAES current dollar expenditures on production,

PHTME, other, and total agricultural research

from cooperative grants and agreements for the

1966-81 period are presented in figure 16, and constant dollar expenditures are given in figure 17.

From 1966 to 1981, SAES current dollar expenditures on total agricultural research from

cooperative grants and agreements increased overall by 396 percent. The corresponding constant

dollar expenditures increased 69 percent.

Expenditures on production research were the

largest component of SAES expenditures from

cooperative grants and agreements. In 1966, expenditures on production research comprised 65

percent of total research funds from cooperative

Figure 17.-SAES Expenditures From Cooperative

Grants and Cooperative Agreements on Production,

PHTME, Other, and Total Agricultural Research,

1966-81 (in constant dollars)

25 F

1965 1970 1975 1980

Year

SOURCE. Office of Technology Assessment
33

grants and agreements, and in 1981, they represented 63 percent. The patterns in SAES expenditures on production research, in current and constant dollars, are similar to those for SAES expenditures on total agricultural research from

cooperative grants and agreements. In current dollars, the expenditures on production research increased 381 percent from 1966 to 1981. The corresponding increase in constant dollars was 64

percent.

SAES expenditures on PHTME research from

cooperative grants and agreements varied in current dollars during the 1966-81 period, but increased by 251 percent overall. In constant dollars, the expenditures from cooperative grants and

agreements on PHTME research increased 14 percent from 1966 to 1981. However, these expenditures decreased by 22 percent between 1966 and

1979. SAES expenditures on PHTME research as

a percent of total SAES expenditures on agricultural research from cooperative grants and agreements decreased from 26 percent in 1966 to 18 percent in 1981.

SAES current dollar expenditures from cooperative grants and agreements on “other” agricultural research increased from about $0.5 million

Figure 18.—SAES Expenditures From Other Federal

Sources on Production, PHTME, Other, and Total

Agricultural Research, 1966-81 (in current dollars)

70

— Production / I

— - Other

-Tota l

50

40

1965 1970 1975 1980

Year

SOURCE Off Ice of Technology Assessment

in 1966 to $5.5 million in 1981. In constant dollars,

this increase was 257 percent. However, other research expenditures have been a small component

of total SAES agricultural research expenditures

from cooperative grants and agreements and increased from about 9 percent in 1966 to 18 percent in 1981.

Other Federal Sources

The other Federal category includes obligations

of funds reserved by SAES from contracts, grants,

and cooperative agreements with Federal agencies other than USDA. SAES expenditures on production, PHTME, other, and total agricultural research from other Federal sources are presented

in current and constant dollars for the 1966-81

period in figures 18 and 19, respectively.

SAES total agricultural research expenditures

from other Federal sources exhibited some variation from 1966 to 1981, but current dollar expenditures increased by 217 percent overall. In constant dollars, the total expenditures increased by

8 percent from 1966 to 1981.

SAES expenditures on production research were

the largest component of expenditures from other

Figure 19.—SAES Expenditures From Other Federal

Sources on Production, PHTME, Other, and Total

Agricultural Research, 1966-81 (in constant dollars)

70 ‘

--- PHTM E

~ Production

60

-- othe r

- ● - Total

50

t

1965 1970 1975 1980

Year

SOURCE. Office of Technology Assessment
Federal funds during the 1966-81 period. With

some minor deviations, these expenditures exhibit

patterns in both current and constant dollars that

are similar to those exhibited by total agricultural

research expenditures. During the 16-year period,

expenditures on production research were about

two-thirds of the total agricultural research expenditures from other Federal funds. In current

dollars, SAES expenditures on production research from other Federal funds increased by 224

percent from 1966 to 1981. In constant dollars,

the expenditures on production research increased

11 percent.

SAES expenditures from other Federal sources

on PHTME research show some minor variation

during the 1966-81 period, but overall the current

dollar expenditures increased by 153 percent from

1966 to 1981. In constant dollars, there was a decrease of 14 percent.

In both current and constant dollars, SAES expenditures from other Federal sources on “other”

research increased during the 1966-81 period and

Figure 20.—SAES Expenditures From State

Appropriations on Production, PHTME, Other,

and Total Agricultural Research, 1966-81

(in current dollars)

‘

--- PHTM E

— Production /

500 -- Othe r

-O-O Total

/ “

/.

1965 1970 1975 1980

Year

SOURCE Office of Technology Assessment

peaked in 1980. In current dollars, the overall increase from 1966 to 1981 was 290 percent, and

in constant dollars, the increase was 33 percent.

Expenditures on “other” agricultural research as

a percent of total SAES expenditures on agricultural research from other Federal sources was

about 12 percent during the late 1960’s and early

to mid-1970's, but increased to a high of 18 percent in 1978, and then declined to slightly under

15 percent in 1981.

SAES Expenditures From

State Appropriations

SAES current dollar expenditures on production, PHTME, other, and total agricultural research from State appropriations and sales for the

1966-81 period are presented in figure 20, and constant dollar expenditures are presented in figure

21. SAES current dollar expenditures from State

appropriations and sales on total agricultural

research increased steadily from $118 million in

1966 to $586 million in 1981, which is an increase

of 397 percent. The constant dollar expenditures

increased fairly steadily from 1966 to 1981, and

the overall increase was 70 percent.

Figure 21 .—SAES Expenditures From State

Appropriations on Production, PHTME, Other,

and Total Agricultural Research, 1966-81

(in constant dollars)

. . . . PHTM E

— Production

400 -- Othe r

300

t

1965 1970 1975 1980

Year

SOURCE Off Ice of Technology Assessment.
35

Expenditures on production research were the

largest component of total SAES agricultural research expenditures from State appropriations and

sales, and in both current and constant dollars,

these expenditures exhibit patterns similar to those

for SAES expenditures on all agricultural research.

In 1966, expenditures on production research accounted for 78 percent of total SAES agricultural

research expenditures from State appropriations

and sales, and in 1981, for 75 percent. In current

dollars, the expenditures on production research

increased by 377 percent from 1966 to 1981. The

corresponding increase in constant dollars was 63

percent.

SAES expenditures on PHTME research funded

from State appropriations and sales steadily increased in current dollars from $14 million in 1966

to $71 million in 1981. The overall increase from

1966 to 1981 was 404 percent. Constant dollar expenditures on PHTME research increased steadily

over the 16-year period, and the overall increase

from 1966 to 1981 was 72 percent. Throughout

the 16-year period, expenditures on PHTME research were about 12 percent of the total SAES

agricultural research expenditures from State appropriations and sales.

State appropriations recently have accounted

for the bulk of the total SAES expenditures on

PHTME research. In 1966, State appropriations

accounted for 43 percent of these funds and those

of the Federal Government, 53 percent. These proportions gradually changed over the 16-year period, and by 1981, State appropriations accounted

for 56 percent of PHTME research funds and those

of the Federal Government, 38 percent. This has

significant implications on the issue of equity in

funding PHTME research, discussed in the next

chapter,

The patterns of SAES expenditures on “other”

research funded from State appropriations and

sales are similar to the patterns for PHTME expenditures, except from 1977 to 1978 when

expenditures on “other” research increased nearly

$14 million more than did expenditures on PHTME

research. In current dollars, SAES expenditures

on other research funded from State appropriations and sales increased 540 percent from 1966

to 1981. The corresponding increase in constant

dollars was about 118 percent. Expenditures on

other research were 10 percent of total SAES expenditures on agricultural research funded from

State appropriations and sales in 1966 and were

13 percent of these expenditures in 1981.

SAES Expenditures From

Private Industry Funds

SAES expenditures on production, PHTME,

other, and total agricultural research from funds

provided by private industry during the 1966-81

period are presented in current dollars in figure

22, and constant dollar expenditures are presented

in figure 23. Current dollar expenditures from private industry sources on total agricultural research

increased steadily from 1966 to 1981, for an overall percentage increase of 484 percent. The corresponding increase in constant dollars was 99

percent.

Expenditures on production research were the

largest component of total SAES agricultural research funds from private industry. Expenditures

on production research were 72 percent of total

research funds from private industry in 1966 and

69 percent in 1981. From 1966 to 1981, SAES expenditures on production research funded by private industry increased by 464 percent. Constant

dollar expenditures increased by 54 percent.

SAES expenditures on PHTME research funded

by private industry varied during the 1966-81 period, but current dollar expenditures increased 462

percent overall. In constant dollars, the expenditures on PHTME research increased by 92 percent from 1966 to 1981. Although these percentages are fairly high, the dollar amounts spent were

quite small—the largest expenditure during the

16-year period was $7.7 million for 1981.

SAES expenditures on “other” research from

private industry sources were about the same

magnitude as those for PHTME research. From

1966 to 1981, the current dollar expenditures on

other research increased 629 percent, while constant dollar expenditures increased by 149 percent.

The expenditures on “other” agricultural research

were 12 percent of the total SAES agricultural research funds from private industry sources in 1966

and 15 percent in 1981,
36

Figure 22.—SAES Expenditures From Private

Industry Funds on Production, PHTME, Other,

and Total Agricultural Research, 1966-81

(in current dollars)

Figure 23.—SAES Expenditures From Private

Industry Funds on Production, PHTME, Other,

and Total Agricultural Research, 1966-81

(in constant dollars)

35

30

25t

1965 1970 1975 1980

Year

SOURCE: Off Ice of Technology Assessment.

PRINCIPAL FINDINGS

● The largest component of USDA research is

production research. In 1981, current dollar expenditures on production research totaled

$308.2 million or 64 percent of total USDA

research, while current dollar expenditures on

PHTME research totaled $132.2 million or 18

percent of USDA research expenditures.

● In constant dollars, USDA expenditures for

PHTME research declined 17 percent from 1966

to 1981.

● Within USDA, PHTME research is conducted

chiefly by two agencies: 1) ARS, and 2) ERS.

In constant dollars, ARS expenditures on postharvest technology research declined by 20 percent from 1966 to 1981. The largest component

of ERS research expenditures is marketing economics research. However, ERS expenditures

on marketing economics research decreased by

10 percent in constant dollars from 1966 to

1981.

I

3 0 *

t

25“

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.

●

●

●

The largest component of SAES research, like

USDA ‘research; is production research. In

1981, current dollar expenditures on production

research were $656.4 million or 72 percent of

SAES research expenditures, while current dollar expenditures on PHTME research were

$127.3 million or 14 percent of SAES research

expenditures.

In constant dollars, SAES expenditures for

PHTME research increased by 32 percent from

1966 to 1981.

The majority of funds for PHTME research in

SAES now come from State appropriations.

From 1966 to 1981, State appropriations increased from 43 to 56 percent of SAES funds

for PHTME research, while the Federal funds

to SAES for PHTME research decreased from

53 to 38 percent.
37

CHAPTER 3 REFERENCES

1< Havlicek, Joseph, Jr., and Otto, Daniel, “Historical 2. Office of Technology Assessment, An Assessment

Analysis of Investment in Food and Agricultural Re- of the U.S. Food and Agricultural Research System

search, ” An Assessment of the United States Food (Washington, D. C.: U.S. Congress, December

and Agricultural Research System, Vol. II—Com- 1981),

missioned Papers, Part C (Washington, D. C.: Office of Technology Assessment, April 1982).
Chapter 4

Benefits, Burdens, and Quality

of Postharvest Technology and

Marketing Economics Research
Contents

Page

Benefits From PHTME Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Reduced Food Processing and Marketing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Enhanced Quality, Nutritional Value, and Safety of Food . . . . . . . . . . . . . . . . . 46

New or Improved Food Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Reduction of Food Losses Due to Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Information for Decisionmaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Beneficiaries of PHTME Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Farm Producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Consumers and General Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Marketing Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Labor and Other Input Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Funding and Flow of Benefits From PHTME Research . . . . . . . . . . . . . . . . . . . . . . 50

Private Sector Funding Related to Flow of Benefits . . . . . . . . . . . . . . . . . . . . . . . 50

State Government Funding Related to Flow of Benefits . . . . . . . . . . . . . . . . . . . 51

Federal Government Funding Related to Flow of Benefits . . . . . . . . . . . . . . . . . 52

Burdens of PHTME Research. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Environmental Contamination of Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Displacement of Labor/Shifts in Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Burdens on Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Quality of PHTME Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Evaluation of PHTME Research Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Peer Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Principal Findings . . . . . . . . . . . . . . . . . . . . . ● . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Chapter p references . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

List of Tables

Table No.

$. Relationship Between Food and Agricultural Research Benefits and

Family Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

9. Distribution of Benefits From and Funding for Production-Oriented

AgriculturalResearch and Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

10. Distribution of Benefits From Production-Oriented Agricultural Research

and Extension Investment in Regions of the United States, 1976-88 . . . . . . . 53

List of Figure

Figure No.

24.Estimated Labor Productivity Growth Rate in the Food Processing Sector,

1954-72 and 1973-79 . . . . . . . ● .,,. .,. ,....,.. ● .+. . . . . . . . . . 43

25. Estimated Labor Productivity Growth Rates in the Food Distribution

Sector, 1954-72 and 1973-79. . . . . . . . . . . . . . . . . . . . . . . . . . +... . . . . . . . . . 44

26. Real Price of Food, 1947-80 ..,,.. ● ..’...* .*..*.. . . . . . . . . . . . . . . . . 45

27. Regional Distribution of Benefits Resulting From an Increase in

. . .

Agricultural Research and Extension Expenditures.......,......,........ 55
Chapter 4

Benefits, Burdens, and Quality

of Postharvest Technology and

Marketing Economics Research*

The rationale for public funding of postharvest

technology and marketing economics (PHTME)

research, Federal funding in particular, is that such

research yields benefits to society that would not

be realized in the absence of public funding, and

furthermore, that these societal benefits are well

in excess of societal costs. This chapter discusses

the nature of the benefits from PHTME research

to farmers, marketing firms, consumers, and

others.

The benefits of PHTME research to society are

yielded over time and, an appropriate timeframe

is required to evaluate such benefits. Time lags

occur that can slow the benefits from reaching

society (7). Such lag periods may include in part:

●

●

●

the length of the research itself,

the time between when research results become available and the time when society

starts to use them, and

the time it takes for a major sector of society

to use or adapt the research to their needs.

The benefits society receives from increased

productivity resulting from PHTME research follows a bell-shaped curve over time, one similar

to production-oriented agricultural research where

increased productivity reaches its maximum during the sixth year (7).

Moreover, many of the benefits of food and

agricultural research accrue to parties (e. g., farm

producers or consumers) other than the parties

funding or conducting the research. Improvements in storage, processing, retailing, and trans-

● The material in this section draws heavily on “Nature and Flow

of Benefits From Ag-Food Research, ” prepared by Fred C. White,

B. R. Eddleman, and J. C. Purcell; and “An Evaluation of Methods

for Examining the Quality of Agricultural Research,” prepared by

Robert E. Evenson and Bryan D. Wright in An Assessment of the

United States Food and Agriculural Research System, Vol. II, Part

C (Washington, D. C.: Office of Technology Assessment, U.S. Congress, April 1982).

portations systems, for example, can benefit farm

producers by allowing them to sell their products

in off seasons or in nonproducing areas of the

country. Such improvements similarly can benefit

consumers by increasing food availability and

lowering food costs if such benefits are passed

along. Benefits from activities of a private or public organization for which the organization is not

compensated are termed positive externalities or

spillovers. The association of positive externalities

with PHTME research has significant implications

for the funding of such research in both the private

and the public sectors.

Because they are generally motivated by profit,

private firms have an incentive to invest in those

types of PHTME research for which they anticipate reaping a sufficiently large return on their

investment. Factors that help a firm capture benefits from its own research include patentability,

patent enforceability, and obstacles to the imitation of such research (26). These factors are present, in the area of mechanization research, for example, a research field traditionally conducted by

the private sector.

In some cases, however, private firms have little

incentive to invest in research because they anticipate being unable to capture a large share of the

benefits from their own research. It may be that

most of the benefits will accrue to producers, other

firms, or consumers. This maybe a problem even

with patent enforceability, because of factors such

as imperfect consumer knowledge, product emulation, and the prohibitive costs of collecting benefits from research. From a societal perspective the

research may be of considerable importance, but

if a firm is unable to reap the benefits it will have

little incentive to conduct the research. Thus, to

help ensure the optimum level of societal investment in such

be needed.

research, public sector support may

41

98-952 CI - !33 - 4
42

However, the problem of spillovers, as discussed further in this chapter, can also arise within

the public sector. Benefits resulting from the research of State agricultural experiment stations

(SAES), for example, frequently are reaped not

only by producers in the State in which the research is conducted but also by producers in other

States (25). These benefits similarly maybe reaped

not only by consumers in the State where the research is conducted but by consumers in other

States, as well. From the standpoint of equity, it

may be desirable to provide Federal funding for

such research.

Overall, a high degree of uncertainty about the

possible outcomes of research increases the likelihood of underinvestment in research relative to

the optimum level for society (36). Some food and

agricultural research projects undertaken do not

turn out to be economically successful. A small

firm that is able to pursue only a few projects faces

a high probability that none of its projects will

be successful. Historically, however, when all successful and unsuccessful projects in food and agricultural research are considered, the average or

expected rate of return on investment has been

favorable (9). In a large firm or in a large aggregate such as the United States, the productivity

of food and agricultural research can be viewed

in terms of a framework of risk rather than of pure

uncertainty.

The following sections of this chapter examine

the benefits, burdens, and quality of PHTME research. Chapter 5 further delineates the roles of

public and private research participants.

BENEFITS FROM PHTME RESEARCH

PHTME research is designed to provide products where and when needed, in the form desired,

and with maximum economic efficiency. PHTME

research can make more food available by improving processing, upgrading products, preventing waste, and providing for use of products previously not considered usable. Such research also

can reduce marketing costs by improving efficiency in storage and transportation of food and by

improving efficiency of use of resources.

The primary aims of PHTME research are to:

1) increase productivity in the food processing and

marketing sectors and reduce the real cost of food;

2) maintain or enhance the nutritional value, quality, and safety of food; 3) develop new or improved food products; and 4) provide information that policymakers and others can use in

decisionmaking.

Reduced Food Processing and

Marketing Costs

An estimated 70 percent of food costs to consumers is attributable to assembling, processing,

transporting, and distributing food; the remaining 30 percent goes to farmers and their suppliers

(see also ch. 2). Furthermore, rising marketing

costs are the main cause of rising food costs. By

leading to increases in labor productivity and

other developments, PHTME research can reduce

the costs of processing and marketing food, and

thus it may lower food costs to consumers.

Reducing Costs Through Increased

Labor Productivity

The largest cost component in the food processing and marketing sector by far is direct labor,

accounting for 45 percent of total marketing costs,

followed by food packaging costs (12 percent) and

the costs of shipping food by rail and truck (8 percent). Thus, research that leads to increases in

labor productivity offers the greatest potential for

constraining increases in consumer food prices (s).

For most industries that process and distribute

farm products, the rate of labor productivity

growth (output per employee hour) since 1972 has

declined in comparison to the rate for previous

years (see ch. 2). Figure 24 shows trends in labor

productivity growth among processors of farm

products. During the period 1973 to 1979, increases in rates of growth of labor productivity

in the food processing sector occurred in grain

milling and soft drinks; whereas in cereal and
43

Figure 24.— Estimated Labor Productivity Growth Rates (output per employee hour) in the Food Processing

Sector, 1954-72 and 1973-79

SlC Industry Annual Growth Rate Percent code

-1 -2 0 2 4 6 8

I I I I I I

2046 Wet corn milling 1963-72

1973-78

2082 Malt beverages 1954-72

1973-79

2086 Bottled and canned 1958-72

soft drinks

1973-79

2044 Rice milling 1963-72

1973-78

2041 Flour and other 1954-72

grain mill products 1973-79

2026 Fluid milk

203 Preserved fruits

and vegetables

2061 Raw and refined

2062 cane sugar

2063 Beet sugar

2043 Cereal and

breakfast food

2065 Candy - other

confectionery products

2045 Blended and

prepared flour

1953-72

1973-79

1954-72

1971-78

1958-72

1973-78

1958-72

1973-78

1963-72

1972-78

1964-72

1973-78

1963-72

9.8

1.7

] 2.5

\ 3.8

L

J 3 . 5

2.7

3.5

~ 1.5

t

3.4

[ 0.6

( 2.2

j 0.8

3.6

1 I 1973-78

5.9

SOURCE Bureau of Labor Statistics, Productivity Indexes for Selected Industries, 1979 Edition, Bul. No. 2054, December 1979 [Tiegen, 1981]
44

breakfast foods, beet sugar, and candy manufacturing, labor productivity remained almost constant and the blended flour industry declined at

an annual rate of 4.0 percent. Although the Bureau of Labor Statistics does not report productivity in meatpacking, output per employee hour

as computed from the Industrial Production Indexes of the Federal Reserve Board showed no

change from 1971 to 1978 (28).

All labor productivity growth rates in the food

distribution sector have declined significantly

since 1972 (see fig. 25). In particular, labor productivity in food stores and eating and drinking

establishments had a negative growth rate. In food

stores, longer shopping hours essentially accounted for the same volume of sales and is considered a major cause of decline; automated

checkout systems have not yet affected labor productivity in food retailing. Although fast-food

chains have made organizational and technological improvements, increases in hours worked and

the number of small, marginal enterprises have

held productivity down (4).

Lagging labor productivity growth rates in the

food processing and distributing sectors have contributed significantly to increased rates of food

price inflation (see ch. 2). In the period 1960 to

1965, the annual rate of increase in food prices

Figure 25.— Estimated Labor Productivity Growth Rates (output per employee hour) in the Food Distribution

Sector, 1954-72 and 1973-79

SIC

code Industry Annual growth rate percent

– 2 o 2 4

4213PT Intercity truckinga

Intercity truckinga

4213PT (general freight)

401 Railroad (car miles)

205 Bakery products

1954-72

1973-78

1954-72

1973-78

1954-72

1973-79

1959-72

1973-79

54 Retail food stores 1958-72

I

2.6

1.1

2.1

1.4

3.8

2.7

1.0

– 1.0 1973-79

Eating and

58 drinking places 1958-72 1.2

aOutput per employee.

SOURCE: Bureau of Labor Statistics, Productivity Indexes for Selected Industries, 1979 Edition, Bulletin No. 2054, December 1979 (Teigen, 1981).
45

was 1.1 percent; in the period 1966 to 1972, the

annual rate of increase in food prices rose to 3.9

percent, and in 1973, it reached 7.7 percent. Although annual wage gains during the period 1950

to 1965 (3.9 percent) and 1966 to 1972 (7.5 percent) outpaced the annual food price gains, they

barely kept pace during the period 1973 to 1979

(7.5 percent). The real price of food in the period

1973 to 1980, in terms of hourly earnings, was

not significantly different from 1967 level (see fig.

26).

Reducing Costs Through Improvements

in Processing and Preservation

Many food products are wasted because of improper methods of processing and preservation.

In some cases, a particular treatment can make

food products available that would otherwise be

wasted. Research to develop treatments that

would be economically feasible to use is currently

being conducted (33). Reducing food losses due

to wastes could result in cost savings to consumers. In the area of preservation, the product’s safety and other factors must be taken into consideration. In addition, the food must be acceptable to

consumers.

Both better use of food materials through improvements in processing and preservation, and

research that reduces energy and water use for

processing may lower food costs. Given the present level of resource use, such cost savings could

be substantial. For example, drying processes are

energy-intensive and could be made more efficient. Fabricated foods can lower food costs by

substituting cheaper grain ingredients for more expensive livestock ingredients. Improved knowledge of physical and chemical properties of food

may result in savings related to food storage,

processing, and handling.

Reducing Costs Through Efficient

Marketing and Distribution

In the last 30 years, changes in the marketing

and distribution of food have been significant, as

Figure 26.— Real Price of Fooda

, 1947-80

160 -

150 -

140 -

-

“

“

80 -

‘

/ ‘

o 1 I I 1 I I

1950 1960 1970 1980

Year

aConsumer price index for food relative to private nonagricultural hourly earnings, adjusted for overtime and interindustry

shifts

SOURCE. Lloyd D Teigen, “Productivity A Food and Agriculture Perspective, ” mimeo draft, U.S. Department of Agriculture,

Economic Research Service, August 1981
46

evidenced by the expansion of supermarkets.

Supermarkets have reduced the retail cost of food

to consumers by some 15 to 25 percent (15). These

cost reductions were achieved through labor reductions made possible through self-service and

large-volume operations in transportation, storage, and distribution.

Thus, research designed to improve efficiency

in food marketing and distribution can be used

to lower marketing costs. Improved coordination

of marketing activities, in the private and public

sectors, is needed to move food more efficiently

through marketing and distribution channels.

Enhanced Quality, Nutritional Value,

and Safety of Food

The quality of food products primarily refers

to such products’ esthetic characteristics, but may

also refer to their nutrient value, whether naturally occurring or introduced by processing and preservation technology. Operations relating to storage, handling, shipping, intermediate processing,

packaging, delivery to merchants, shelf life, and

final sale of food products can materially influence

such products’ quality, nutritional value, and

safety.

Some nutrients, notably vitamins and fats but

proteins and carbohydrates as well, are sensitive

to pH, oxygen, heat, and light, and are particularly susceptible to damage in the presence of certain trace elements. PHTME research can help

minimize or negate the influence of these factors

and the effects of environmental conditions on

development of mycotoxins (naturally occurring

toxic contaminants in food produced by molds)

and the effects of insect and rodent infestation on

nutrient content and safety.

Fortification and enrichment of foods are means

to improve nutritional value of food. Fortification and enrichment of foods generally increase

the food’s retail cost, and this increase must be

weighed against benefits derived from the practice. Actions that have helped improve U.S. diets

include the addition of vitamins Bl

, B2, and niacin

to cereal products, vitamin D to milk, iodine to

salt, and fluoride to drinking water, Iron fortification of foods is another example, although some

controversy exists regarding the benefits of this

practice.

Consumers almost exclusively benefit from research that: 1) increases the supply of nutrients;

2) determines the nutritional requirements and

food consumption practices of various consumer

groups; 3) increases the nutritional value of foods;

and 4) reduces the potential hazards of naturally

occurring toxins, food preservatives, or other additives used in processing, insect and rodent contamination, residual pesticides used in production,

and other inadvertent contaminants. Producers

may benefit from, be unaffected by, or be disadvantaged by such research (36).

In some cases, food products may contribute

to nutritional problems. Examples of such products are the high-calorie, low-nutrient snack foods

and food substitutes that are of lower nutritional

value than the foods they replace. There is a need

to consider nutritional value as an integral part

of food quality, since an increasing proportion of

the food supply is modified by postharvest processing.

New or Improved Food Products

PHTME research can contribute to development of new or improved food products that directly benefit consumers. Such developments include food products which substitute vegetable

for animal protein and use of other alternative

food sources.

The importance of plant protein in the diets of

people in industrialized countries such as the

United States is expected to increase, relative to

the demand for meat, fish, and egg protein. Plant

protein products can be introduced into the diet

either as food ingredients (e.g., textured soy flour

as an extender added to ground beef) or as ersatz

foods (e.g., simulated chicken or ham). Food

blends have been developed through research

from a variety of cereals and oilseeds, Lipid protein concentrate derived from soybeans can be

used as a beverage base. Raw soybeans can be

used to produce soy flours, protein concentrates,

soybean isolates, or textured products.

Other possible alternative food sources include:

1) fats and oils from controlled animal feeding and
47

breeding, controlled fish farming, single-cell cultivation (yeast/fungi), selective plant propagation,

and synthesis from petroleum and enzymic processes; 2) meat or simulated meat products from

new animal species and vegetable and microbial

sources; and 3) carbohydrates such as glucose

syrups from cellulose, chemically synthesized

sugar, or low energy substitutes replacing starch

(13). Research on new or improved food products

may have the greatest potential for providing food

nutrients to the world population at minimum or

reasonable food costs (36).

Reduction of Food Losses Due to Waste

The National Academy of Sciences has estimated that research on reducing food losses due

to pests could save $1.5 billion annually in the

United States (19). Research on reducing the

storage and transportation losses of fruits and

vegetables, it estimated, could increase the supply

of these products from 15 to 30 percent (19). The

benefits from basic research in areas such as establishing physiological and biological interactions

and analyzing metabolic processes of micro-organisms, although more difficult to quantify, would

very likely include the prevention of food losses

and improved food quality.

As discussed earlier, many food products are

wasted because of improper methods of processing and preservation. Particular treatments can

make food products available that would otherwise be wasted. Research to develop treatments

that would be economically feasible to use is currently being conducted (33), Reducing such food

losses could result in cost savings to consumers.

Information for Decisionmaking

PHTME research can provide information on

markets, prices, and government regulations that

farmers, processors, distributors, consumers, and

policy makers can use in making decisions. Research on industry competitiveness can provide

information to producer groups and the public on

the forces that are shaping this industry, information to assist producers in long-range planning,

and information to policy makers on alternative

legislative proposals in relation to the projected

change in the industry.

PHTME research that provides information

about current and future market conditions, including future supply and demand, for example,

can be useful to individual firms. This is the case

in the area of grain marketing. Food and industrial

uses of grain and grain products are increasing

rapidly, and the composition of products produced by U.S. grain processors has changed, reflecting shifts in consumer preferences. In order

for individual firms in the grain marketing industry to make effective and efficient adjustments,

they may need information about how changes

in economic and institutional factors affect the demand for grain and grain products (33).

PHTME research that assesses the impact of

government regulations can provide valuable information for policymakers. Regulations intended

to improve industry performance, for example,

in the red meat industry, may sometimes have unintentional and costly side effects, and the benefits

derived from the regulations may sometimes be

eroded. This situation leads to numerous inefficiencies that affect the ability of firms to compete,

adopt new technologies, and experience growth

in output and sales. Research that assesses the impact of regulations provides policymakers with

the necessary information to assess the benefits

and costs of the regulations.

PHTME research that measures the competitive

relationships among firms producing a similar set

of products considers both how the organization

of the industry affects its behavior and performance and what determines how an industry is

organized and how it changes. Important aspects

of this research include the degree of market concentration, barriers to entry, the types of competing organizations, and regulations that affect competitive behavior. Such research can be useful to

industry, consumers, and policy makers.

Recent studies indicate that increasing concentration in the food processing and retailing subsectors may increase real food prices to consumers.

Parker and Conner (24) found that the following

monopolistic trends in the food manufacturing

subsector, which were identified by the National

Commission on Food Marketing in 1966, have
48

continued: 1) a decline in company numbers;

2) an increase in concentration; 3) a substantial

increase in the conglomerate nature of leading

food manufacturing firms; 4) an increase in the

number of large acquisitions by the larger companies; 5) substantial increases in product differentiation expenditures by large food manufacturers;

and 6) a growing differential between profitability

of large versus medium and small food manufacturers. The consumer loss attributable to these

monopolistic characteristics was estimated to be

approximately $12 billion to $14 billion annually,

or as much as 25 percent of the value added to

food products by food manufacturers (24). *

*This conclusion was rebutted by O’Rourke and Greig (23) and

Bullock (l).

Net profits and food prices of large food chains

were positively and significantly related to market

concentration and a chain’s relative market share

(17).** Marion’s findings tend to refute the notion that higher profits for dominant firms in concentrated markets are due to such firms’ efficiency

and lower costs. Increased profits by firms in noncompetitively structured markets account for

about one-third of the increases in food prices

(17). Thus, policy-oriented PHTME research directed toward improving competition in the food

processing and retailing subsectors potentially

could result in substantial benefits (i.e., lower

costs) to consumers and farm producers.

BENEFICIARIES OF PHTME RESEARCH

** This study used cross-sectional data, not time series data. Thus,

efficiency and costs could not be accounted for over time.

Analysis of the flow of benefits from food and

agricultural research— including PHTME research

—focuses primarily on the distribution of benefits

between domestic consumers and producers. The

analytical framework is the concept of economic

surplus and the partitioning of this surplus into

the portion accruing to buyers (i.e., consumer surplus) and the portion accruing to sellers (i.e., producer surplus) (2,38).

Farm Producers

In the United States, the demand for food is

only slightly responsive to changes in the price

of food and rising personal income has almost no

effect on per capita food consumption. Thus, the

domestic demand for food increases at about the

same rate as the population growth. In this situation, technology that increases output in excess

of that needed to meet demand growth results in

depressed prices.

The food processing and marketing system enhances the value of farm commodities by changing their form and distributing the products over

time and space. For example, few households buy

wheat, but some buy flour and most buy bread.

The demand for wheat is largely derived from the

demand for flour, and the demand for flour is

largely derived from the demand for bread.

PHTME research may lead to an improvement

in the food processing sector which reduces costs

to that sector; the reduction in costs to the food

processing sector may or may not be passed on

to consumers. An improvement, for example, in

transportation or distribution technology in the

food marketing sector might reduce costs to farmers and could increase their income.

Consumers and General Economy

Benefits to consumers from PHTME research

may include increased availability of food and

reduced retail food costs. A technological change

that reduces the costs of marketing services may

reduce the retail price to consumers. The farm

price could be expected to increase, but the retail

price would be expected to decline with reduced

marketing margins. *

Consumers (and farmers, too) also may benefit

from research to improve market or price infor-

‘These relationships hold for a competitive market structure in

which changes in margins are reflected throughout the marketing

system. Both the derived supply at retail, which is dependent on

farm supply and the marketing margin, and the derived demand

at the farm level, which is dependent on the retail demand and the

marketing margin, would shift in a competitive market as a result

of a reduction in marketing costs. The impacts on consumers of a

technological change in the marketing sector are dependent on the

price elasticities of supply and demand and the magnitude of cost

savings resulting from the technological change.
49

mation. If producers incorrectly estimate the price

of a commodity above the market equilibrium

price, they will produce a quantity larger than the

market equilibrium quantity. The resulting price,

however, will be lower than producers expected

and result in a net loss to society. If marketing

economics research such as econometric modeling

lead to a price forecast close to the market equilibrium, this net social loss will be minimized (22).

Consumers also may benefit from improved

quality, nutrition, safety, and convenience of

foods. Some of these benefits seem to be concentrated among certain groups of families. It is estimated that the diets of 20 percent of the households in the United States provide less than twothirds of the recommended daily allowance of one

or more nutrients (15), Malnutrition is more evident among low-income families, and relationships between diet and chronic illnesses have been

identified (30). PHTME research that improves

the quality and safety of food products is likely

to affect consumers in all income categories beneficially.

From the standpoint of equity, the distributional impacts of agricultural research—including

PHTME research-are important. In the analysis

that follows, the distribution of benefits from agricultural research is estimated on the basis of consumer food expenditures. Each dollar of food expenditure is assumed to be related to the same

amount of research benefits, whether the expenditure is made by high- or low-income families.

The relationship between family income and

agricultural research benefits for average size families in six family income categories are given in

table 8. Family income ranges from under $5,000

in the lowest class to over $20,000 in the highest;

average family size ranges from 2.93 persons in

the lowest income class to 3.79 in the highest. The

present value of average benefits per family for

the various income classes shown in table 8 may

be interpreted as the benefits accruing to each

family as a result of agricultural research expenditures in that year. * Average benefits per family,

which increase with the level of family income,

range from $16.20 in the lowest income category

to $30.74 in the highest.

The ratio of benefits to family income is almost

four times higher for the lowest income class than

for the highest, indicating that food and agricultural research has a greater beneficial impact on

low-income families than on high-income families

in relation to family income. For some commodities, the distribution of consumer benefits from

research tends to be biased in favor of families

● Even though benefits would be realized through time, this stream

of benefits was discounted with a 10-percent discount rate to find

the present value of benefits (8).

Table 8.— Relationship Between Food and Agricultural

Research Benefits and Family Income

Average

Family Distribution Average Average benefits

income of size family per familyc

class population a

family b

income (present value)

Under $5,000 . . . . . . . . . . . . . 18.190/o 2.93 $3,981

$5,000 -$8,000 . . . . . . . . . . . . .

$16.20

14.14 3.15 7,922 19.06

$8,000-$ 12,000 . . . . . . . . . . . . 21.17 3.28 10,528 20.13

$12,000-$ 15,000 . . . . . . . . . . . 14.47 3.48 13,458 22.63

$15,000-$20,000 . . . . . . . . . . . 16.07 3.68 17,371 25.91

Over $20,000 . . . . . . . . . . . . . 15.96 3.79 28,953 30.74

aAnthony E. Gallo and William T. Boehm, “Food Expenditures by Income Group,” National Food Review, NFT-3, USDA, ESCS,

Washington, D. C., June 1978.

bU.S. Department of Commerce, Bureau of the Census, Current Population Reports, Series P-60, No. 101, “Money Income in

1974 of Families and Persons in the U. S.” (Washington, D.C.: U.S. Government Printing Office, 1976).

c

Total consumer benefits are calculated according to the equation:

T BC = 1⁄2 X MVP R X RE X D

where TBC is total consumer benefits from ag-food research; MVPR is marginal value product of research (Davis); RE is production oriented research expenditures in 1974 (Budget of the US Government; USDA, Inventory of Agricultural Research,

U.S. Department of the Treasury); and D is the discount factor over 13 years at 10 percent (Lu, Cline, and Quance) Total consumer benefits are allocated to income classes according to the level of food expenditures.

SOURCE: Fred C. White, B. R., Eddleman, and J. C Purcell, “Nature and Flow of Benefits From Agriculture-Food Research,”

in An Assessment of the United States Food and Agricultural Research System, Vol. 11, Part C (Washington, D.C.

Office of Technology Assessment, U.S. Congress, April 1982).
50

with higher income. The larger the quantity consumed in the higher income categories relative to

the lower income categories (e.g., pork, poultry,

beef, and dairy products), the more favorable the

distribution of benefits to higher income families.

Marketing Firms

Competition among marketing firms results in

lower costs of marketing services being passed on

to consumers and producers. As indicated earlier

in this chapter, however, there is evidence that

the food marketing system does not conform to

a competitive market, particularly at the regional

and local market level (17,24).

Marketing firms with some monopolistic power

may retain a part of the cost savings from technological change in the form of increased profits

(10). Monopolies, because of profits captured and

desire to retain monopolistic control, maybe willing to invest in private research.

The more competitive the industry, the less incentive there is for private research, because the

benefits accrue to consumers and farmers. In a

less competitive industry, however, private research is more profitable for the individual firm,

and private research may reduce the level of competition.

Public research may enhance competition or

reduce market power in a particular subsector.

The benefits from public food and agricultural

research in a highly competitive marketing sector accrue to consumers and to farmers.

Labor and Other Input Suppliers

Technology that changes the relative productivity of resources shifts the distribution of income

among resources (12). These changes have reduced the proportion of total food and agricultural income attributed to labor and increased the

proportion attributed to capital.

Changes in the proportion of income attributable to labor depends on the type of technology.

Labor-saving technology reduces the demand for

labor. Mechanical technology that has been developed almost entirely by the private sector generally can be characterized as labor-saving (6).

Research that develops more productive postharvest technologies usually makes possible increased labor productivity and provides opportunity for increasing wages and salaries without necessarily placing an upward pressure on retail

prices. The process may displace part of the labor

force thus requiring them to find other employment.

Research that provides for more efficient use

of energy and capital provides more residual capital for increased wages and salaries in real terms.

Conversely, rising prices of energy and investment

funds (through rising interest rates) place downward pressures on salaries and wages, upward

pressures on retail prices, and downward pressures on farm prices. These are the conditions that

dominated during most of the past decade. Such

pressures as rising energy costs can be mitigated

by improved efficiencies from PHTME research.

Increases in wages and salaries, without compensating increases in labor efficiency, result directly

in inflation.

FUNDING AND FLOW OF BENEFITS FROM PHTME RESEARCH

From the standpoint of equity, an important Private Sector Funding Related to

consideration is the extent to which the flow of Flow of Benefits benefits from PHTME research is related to the

sources of funding for such research. Ideally, the Who captures the benefits from public sector

beneficiaries of research should pay the research and private sector food and agricultural research

costs. As discussed further below, however, the is a prominent issue in PHTME research. The

beneficiaries of PHTME research sometimes do question is whether a particular research problem

not pay the research costs. area should be addressed through public research
51

if the gains from the research are embodied in private firms’ products. In general, there are spillovers or indirect benefits both from public research to the private sector and from the private

sector research to society.

If benefits from the results of private sector

PHTME research can be captured by the private

sector, then there is an incentive for private firms

to invest in research activities. Research activities

can be distinguished in terms of patentability and

patent enforceability of the product, technique,

or process that results from the research; the economic life of the technique or process; the technological versus pecuniary effects of the technique

or process; and the ability of rival companies to

initiate the research and development process (36).

These characteristics determine whether net benefits of the research activities can be captured by

the private sector.

To the extent that the benefits of research can

be captured by firms in the private sector, public

sector involvement in the types of research activities from which such benefits flow would be a

form of subsidy to private firms. In some cases,

however, private sector research activities yield

spillover effects and indirect benefits to society.

Although no specific case studies have been done

for agricultural input or food-processing industries, studies by Mansfield, et al. (16), Terleckyj

(29), and Griliches (11) of the distribution of gains

from private research activities in manufacturing

and nonmanufacturing industries indicate that the

spillover effects are at least as large as the direct

benefits going to firms conducting the research.

Thus, the social returns from industry research

are roughly double the private investment returns.

In this regard, substantial social benefits are derived from private industry investments in research activities.

State Government Funding Related

to Flow of Benefits

Food and agricultural research financed by one

State may benefit the residents of other States.

For example, a more energy-efficient food processing technology developed in one State may be

adopted in neighboring States to increase efficiency at the same or higher total output.

State boundaries do not coincide with homogenous agricultural regions. PHTME research projects in one State that are addressed to specific local

problems likely will produce results applicable to

other States. Applied research focused on a specific local problem may be adapted for more general purposes to help meet the needs in other

regions. Furthermore, knowledge gained from

basic research is disseminated without regard to

geographic boundaries.

Spillover benefits generated by State A which

accrue to the residents of State B generally are not

accounted for by State A policymakers. The argument concerning neglect of these externalities has

been that State A will provide a smaller level of

research expenditures than would be the efficient

from society’s perspective. Given the possibility

of negotiation between States, State B may find

it advantageous to pay A to increase its level of

research activities. Such a subsidy will reduce A’s

research costs and lead to a higher level of research

activities. The negotiation process likely will be

complicated by the fact that spillovers flow in

both directions between the two States. Furthermore, the outcome will depend on the relative bargaining strength of the two States and will not

necessarily lead to an efficient solution to the benefit problem (18).

If only a few States have an interest in a particular commodity or segment of the marketing

system, one of the States might conduct the research, with the research effort being supported

by the other States. However, attempting to coordinate these activities involves decisionmaking

costs that include the value of time, effort, and

direct outlays related to the bargaining process.

For those cases in which external benefits from

agricultural research affect a large number of decisionmaking units, total decisionmaking costs of

effective coordinated action are likely to be large.

When the impact on consumers is considered, a

large number of States would be concerned with

almost all aspects of food and agricultural research.
52

Federal Government Funding Related

to Flow of Benefits

Public goods with significant externalities may

be classified as either national or quasi-national

public goods. A national public good that is consumed equally by all residents (e. g., national

defense) may be provided more efficiently by the

Federal Government than by State or local governments. Quasi-national public goods, on the

other hand, are consumed on a less comprehensive basis throughout the Nation.

Agricultural research, and especially PHTME

research, serves as an excellent example of a quasinational public good. Financing this research at

the State level produces benefits that are consumed by the State’s residents, but also provides

benefits that pass to other States and nations in

the form of externalities. While financing can be

produced at either the Federal or State level of

government, the presence of externalities indicates

a need for the coordination of research among

various States.

Partial funding by the Federal Government affords one solution to attaining the nationally desired level of research expenditures. An often-used

technique to increase State expenditures for government services is the matching grant, in which

the recipient State government is required to

match Federal funds with funds from its own

sources according to some specified formula.

While some Federal grants to States for food and

agricultural research (including PHTME research)

require matching funds, most States invest more

in food and agricultural research than just the

amount required to match Federal grants, as

shown in chapter 3.

The formula for matching funding should be

based on the relative importance of external and

internal benefits. Properly designed Federal grant

programs direct State expenditures toward levels

considered optimal from society’s perspective

(rather than from the State’s perspective) by financing the cost of the external benefits.

An appropriate matching grant program requires identifying and quantifying State benefits

and spillovers from agricultural research expenditures. An estimated 55 percent of the change in

productivity attributed to technology-oriented research conducted by a State is realized within the

State conducting the research, whereas the remaining 45 percent is realized in other States (9).

Table 9 shows the estimated spillover benefits

from food and agricultural research conducted

from 1949 to 1972 in 10 different regions of the

country (37). The ratio of external benefits (i. e.,

spillovers to other regions) to internal benefits

(i.e., benefits realized within the region in which

the research was conducted) range from a low of

1.31 to 1 in the Northeast region to a high of 2.80

to 1 in the Southern Plains region. The aggregate

ratio for all regions is 1.73 to 1.

Table 9 also shows the ratio of Federal to State

expenditures for production-oriented food and

agricultural research in each of the 10 regions and

for all regions combined. By comparing these

ratios to the spillover ratios, one can determine

whether the Federal Government actually financed the spillovers. The aggregate ratio of Federal to State expenditures is only 1.38, compared

to aggregate spillover ratio of 1.73.

Table 9.—Distribution of Benefits From and

Funding for Production-Oriented Agricuiturai

Research and Extension

Ratio of Ratio of

spillovers Federal to State

to regional expenditures b

Region benefits a

1949-72

Northeast . . . . . . . . . . . . . . . 1.31

Lake States . . . . . . . . . . . . . 2.73

Corn Belt . . . . . . . . . . . . . . . 2.04

Northern Plains . . . . . . . . . . 1.40

Appalachian . . . . . . . . . . . . . 1.19

Southeast . . . . . . . . . . . . . . . 1.40

Delta . . . . . . . . . . . . . . . . . . . 2.48

Southern Plains. . . . . . . . . . 2.80

Mountain . . . . . . . . . . . . . . . 1.60

Pacific. . . . . . . . . . . . . . . . . . 1.89

All regions . . . . . . . . . . . . 1.73

0.97

1.10

1.25

1.63

1.60

1.37

1.80

2.10

2.35

0.90

1.38

a

The values measure the benefits accruing to farmers outside the region relative

to the benefits accruing to farmers within the region.

b

Federal expenditures are not limited to these funds going to the State agricultural experiment stations and cooperative extension services under formula and

grant programs; they also include Federal funding of under formula and grant

programs; they also include Federal funding of production-oriented agricultural

research and extension in each region through USDA/ARS, USDA/ERS, and

USDA/SCS, The values measure the level of Federal funding from all these

sources relative to State funding for agricultural research and extension in each

region during 1949 to 1972. The 1949.72 period was used for estimating the relationship between productivity growth and agricultural research/extension investments, based on a 13-year distributive lag estimation technique.

SOURCE: Fred C. White and Joseph Havlicek, Jr., “lnterregional Spillover of Agricultural Research Results and Intergovernmental Finance: Some Preliminary Results,” in Evaluation of Agricultural Research, Minnesota

Agricultural Experiment Station Miscellaneous Publication No, 8, 1981
53

This analysis suggests that the the Federal Government did not finance the spillover benefits to

the Nation as a whole of production-oriented agricultural research conducted in the various regions.

In order to align aggregate Federal expenditures

with national benefits from production-oriented

agricultural research conducted in the various

regions, Federal expenditures would have to be

increased about 25 percent, Several regions would

require a greater percentage increase to yield an

equitable distribution among regions.

It could be inferred that a similar analysis for

PHTME research might result in the same conclusion. The benefits of PHTME research accrue to

regions and to the Nation, not to local areas as

is characteristic of production-oriented research,

so the ratio of spillovers to regional benefits from

PHTME research would likely be at least the

production-oriented research ratio of 1.73 or

higher. As discussed earlier in chapter 3, almost

50 percent of the PHTME research is conducted

by the States, and over 50 percent of SAES funds

are from State appropriations for this research.

Thus, the ratio of Federal expenditures to State

expenditures for PHTME research would likely

beat least as low as the 1.38 ratio discussed above,

if not lower. Thus, assuming these estimates are

realistic, the Federal Government’s contribution

to PHTME research would have to be increased

at least 25 percent to align funding with national

benefits.

The benefits from increased productivity of

food and agricultural research are divided between

producers and consumers. When demand is inelastic and growing slowly, as in the United States

during most of the past 50 years, a large share

of the gains from innovation are passed on to consumers in the form of lower real food prices.

When consumer benefits are combined with producer benefits, the magnitude of spillovers to regional benefits is affected dramatically, as shown

in table 10.

Table 10 shows the discounted total net benefits

that accrue to consumers plus producers per dollar

of production-oriented agricultural research and

extension (R&E) investment: the internal benefits

are presented in the first column of the table, and

the spillover benefits are presented in the second

column. The third column of table 10 shows the

ratio of external benefits to benefits accruing within the region, i.e., the spillover ratio per dollar

of R&E investment, and the final column of table

10 shows the actual ratio of Federal expenditures

to State expenditures for the production-oriented

agricultural R&E within each region (repeated

from table 9).

Table 10.—Distribution of Benefits From Production-Oriented Agricultural Research

and Extension Investment in Regions of the United States, 1976=88

Total producer and consumer benefits

per $1 R&E investment

Inside the Outside the

Region region region

Northeast . . . . . . . . . . . $28.39 $13.14

Lake States . . . . . . . . . 7.93 36.82

Corn Belt . . . . . . . . . . . 5.19 37.95

Northern Plains. . . . . . 1.20 47.96

Appalachian . . . . . . . . . 8.19 34.01

Southeast. . . . . . . . . . . 7.98 34.45

Delta States. . . . . . . . . 3.38 39.38

Southern Plains . . . . . 8.05 37.99

Mountain . . . . . . . . . . . 2.72 40.35

Pacific ... , . . . . . . . . . 7.88 34.76

All regions . . . . . . . . 8.62 34.84

Actual ratio

Ratio of of Federal

spillovers to State R&E

to regional expenditures b

benefits 1949-72

0.46

4.64

7,32

40,10

4.15

4.32

11.65

4,72

14.85

4,41

4.04

0.97

1.10

1.25

1.63

1.60

1.37

1.80

2.10

2.35

0.90

1.38

aDiscounted at 10 percent.

b

lncludes Federal funding of production-oriented agricultural research and extension in each region through CSRS, ARS, ERS,

SCS, and Cooperative Extension relative to State expenditures within the region,

SOURCE’ Rod. F. Zimmer, F. C. White, and P. L. Cline, “Regional Welfare and Agricultural Research and Extension in the U.S.,”

Agricultural Administration, vol. 9, 1982.
54

In all regions except the Northeast, the benefits

accruing to residents outside the region conducting the production-oriented agricultural R&E are

at least four times larger than the benefits accruing to the residents within the region. The regions

with the highest ratios of spillovers to regional

benefits are the Northern Plains (40.10), Mountain (14.85), Delta States (11.65), and Corn Belt

(7.32). Three of these regions (Northern Plains,

Mountain, and Delta States) have relatively fewer

consumers than most others; thus, a major proportion of net benefits accrue to consumers in

other regions through interstate flows of food

products and lower consumer prices in the recipient regions. The Lake States (4.64), Appalachian

(4.15), Southeast (4.32), Southern Plains (4.72),

and Pacific (4.41) regions have spillover ratios

near the national average for all regions (4.04).

From an equity perspective, the spillover ratios

indicate that the Federal Government’s share of

investment should be more in the Northern Plains,

Mountain, Delta States, and Corn Belt regions

(e.g., farm producing regions) than in other regions of the Nation that have spillover ratios near

the national average. A comparison of the ratio

of actual Federal expenditures to State expenditures in each region to the ratio of spillovers to

internal benefits in each region indicates that in

every region except the Northeast, the spillover

ratio is more than double the ratio of Federal expenditures to State expenditures.

Figure 27 shows the regional distribution of benefits resulting from an increase in agricultural R&E

expenditures. Distribution of consumer benefits

is highly correlated in a positive manner with food

purchasing patterns and population density. The

Northeast receives 38 percent of all benefits resulting from agricultural R&E investments made

throughout the Nation. Other major beneficiaries

are the Corn Belt, Pacific, Appalachian, and

BURDENS OF PHTME RESEARCH

Achievements from PHTME research have contributed to the economic stature of the United

States, but these achievements have not been atSoutheast regions. Each of these regions receives

more than 10 percent of the total benefits.

Even though specific data for PHTME research

is not available, it could again be inferred with

confidence that a similar analysis would result in

the same conclusion given the above rationale.

For example, the development of a food processing technology which lengthens the shelf life of

a food product or the development of a computerized food warehousing system which is based on

research conducted in Iowa is just as applicable

if used in New York, California, or Texas. Thus,

because of the high transferability of the PHTME

technology the benefits of PHTME research are

highly correlated with food purchasing patterns

and population distribution and could result in

the same, if not greater, distribution of benefits

as above. However, the benefits to consumers in

all these major recipient regions are partitioned

into such small amounts that the individual consumer cannot feel the connection with increased

farm and PHTME productivity realized as a consequence of R&E. Thus, agricultural R&E remain

undervalued by consumers as well as by farmers

(3,9,39)

From an equity perspective, the spillover ratios

indicate that the Federal Government’s share of

research investment should be larger. When such

public benefits have an impact on residents of the

Nation, funding for the research can be more

equitably provided by the Federal Government.

The bulk of research investments is financed by

States in the major farm producing regions. However, the majority of food consumers—especially

those who benefit from PHTME research—live

outside these major agricultural States. Thus, taxpayers in major agricultural States are subsidizing PHTME research for consumers in less intensive agricultural States.

tained without certain costs and burdens to society. For that reason, the benefits accruing from

such research must be weighed not only against
55

Figure 27.— Regional Distribution of Benefits Resulting From an

Extension Expenditures

Increase in Agricultural Research and

Pacific

11.59%

Lake States

7.77%

m

,

I

Appalachian

10.44%

east

%

SOURCE: Rod F. Zimmer, F C White, and P. L. Cline, “Regional Welfare and Agricultural Research and Extension in the U.S., ” Agricultural Administration, vol. 9, 1982

the magnitude of whatever dollar and scientific

manpower investments are required, but against

these other costs and burdens.

Environmental Contamination of Food*

Historically, chemicals such as salt, sugar, and

wood smoke have been used to preserve foods.

Modern food technology relies extensively on the

use of chemicals not only for preservation but also

*For a more in-depth discussion of this topic see Environmental

Contaminants in Food, Office of Technology Assessment, U.S. Congress, December 1979.

to produce appealing colors, flavors, aromas, and

textures.

In the United States food laws have been designed to permit the use of such chemicals in food

under conditions judged to be safe. These chemicals are not considered adulterants or contaminants and are classed as intentional additives.

Environmental contaminants include substances

from natural sources or from industry and agriculture. Many naturally occurring contaminants

in food are of microbiological origin and consist

of harmful bacteria, bacterial toxins or fungal tox-
56

ins. The second category of environmental contaminants includes organic chemicals and heavy

metals.

Environmental contamination of food is the result of our modern, high-technology society. The

United States produces and consumes large volumes of a wide variety of substances, some of

which are toxic. It is estimated that 70,000

chemicals may currently be in commercial production in the United States and that sO of these chemicals are manufactured in quantities greater than

1.3 billion pounds per year (32). During the production, use, and disposal of these substances,

there are opportunities for losses to the environment.

Chemicals contaminate foods through different

routes depending on the chemical, its use, and

source of contamination. A pesticide becomes an

environmental contaminant when it is present in

foods for which the application or use of the substance has not been approved. Improperly fumigated railroad cars, trucks, ships, or storage buildings used for the transport or storage of human

food or animal feed are sources of contamination.

The interiors are sprayed or fumigated with pesticides, and if not sufficiently aired, contamination

of the food or feed occurs.

Polychlorinated biphenyls (PCBS) were widely

used in transformers and capacitors, as heat transfer fluids, and as an additive in some dyes, carbon paper, paint, pesticides, and plastics. PCBS

occur in food as the result of environmental contamination leading to accumulation in the food

chain, direct contact with food or animal feeds,

or contact with food packaging materials made

from recycled paper containing PCBS (35). Several comprehensive literature reviews have been

published detailing the acute and chronic toxic effects of PCBS in animals and humans (32).

Displacement of Labor/Shifts

in Employment

The adoption of mechanization technology in

the marketing sector has increased labor productivity, but it has also displaced labor and caused

shifts in employment. Moreover, new product

development, although beneficial to consumers,

may have adverse effects on others. For example,

following development of margarine from vegetable oils, butter was to a great extent replaced

by margarine. Consumers benefited from this development through lower cost of food and potentially better health, but it was disadvantageous

to the dairy industry. However, jobs lost in butter manufacturing plants became jobs gained in

margarine plants, and dairy farmers, at least in

the Midwest, now can produce soybeans as a cash

crop to provide the oil for margarine production.

Future developments and consumer acceptance of

“synthetic” milk made from vegetable proteins

and fats also may have an adverse effect on dairy

farmers, as the development of meat analogues

based on vegetable proteins would have on the

meat industry. The magnitude of such effects will

depend on the demand-supply relationships for

these products when competitive products become

available (14).

Burdens on Consumers

Some burdens from PHTME research have been

placed on consumers. As noted earlier in this

chapter, postharvest technology research has

resulted in some products that actually contribute

to nutritional problems. For example, high-calorie, low-nutrient snack foods and food substitutes are of lower nutritional value than the foods

they replace. Nutritional value needs to be an integral part of food quality, because an increasing proportion of the food supply is modified by

postharvest technology.

Among the rapid changes that PHTME research

has brought to the processing and packaging of

food, the use of chemicals in these processes is

looked on with disfavor by certain segments of

society. Others eschew highly processed food

products in favor of more “natural” foods. Food

attitudes are deeply rooted even in a technological

culture such as that prevailing in the United States.

During the last three decades packaging of food

has undergone major changes. In bottling, for example, there has been a shift from use of refillable

glass bottles to the use of nonreturnable glass and

plastic bottles and metal cans. A result of this

trend has been that discarded food containers
57

have become significant components of both litter and municipal solid waste (31). In addition,

economies of scale in bottling and transportation,

especially using lightweight nonreturnable containers, have favored a trend toward centralization of processing and bottling with fewer processors and fewer brands available.

QUALITY OF PHTME RESEARCH

Quality is an important aspect of all research.

While the quality of research is difficult to measure quantitatively, most scientists would agree

that essential aspects of quality include a logical

research plan, dealing with adequate numbers of

samples, reproducing results, recording data so

that the material can be understood and evaluated

by others, and organizing and conducting research

so that it is amenable to statistical analyses.

In the debate between the executive branch and

Congress on funding PHTME research, critics frequently point to declining quality of the research

as reason for not supporting public PHTME research. The perception of low quality is based on

past informal or quasi-formal evaluation methods,

including those contained in the so-called Pound

Report (20). * A review of the literature failed to

find any formal methods used in the past for

evaluating the quality of agricultural research.

Newer, more formal evaluation methods were examined for their usefulness.

Evaluation of PHTME Research Quality

OTA commissioned a study to examine new

ways of measuring the quality of PHTME research

and to evaluate these techniques (8). The study

evaluated research quality by examining the number of citations of: 1) postharvest technology

patents and 2) postharvest technology articles in

refereed (i.e., peer reviewed) journals. The results

of the study are discussed further below.

● For a detailed discussion of the Pound Report and other reports

see An Assessment of the United States Food and Agricultural

Research System (Washington, D. C.: Office of Technology Assessment, U.S. Congress, 1981).

Transportation and storage requirements of our

mass distribution system have made necessary the

development of plant varieties resistant to bruising and with long shelf life. Some sensory qualities

were relinquished in order for consumers to have

year-round availability of fruits and vegetables.

Patent Citations From Postharvest

Technology Research

The objectives of postharvest technology research programs are generally stated in terms of

the development of new and improved products,

testing of food and food additives. Much of this

research will produce new technology which is

patentable, so in evaluating the quality of postharvest technology research it is important to look

at patents in postharvest technology areas granted

to public agencies and private firms.

Even though patents provide a suggestive measure of innovative activity and quality, at least two

important problems with using patents as such a

measure should be noted. One problem is that a

patent does not necessarily represent a discrete

step forward in the innovation process, nor is the

extent of its contribution directly indicated by the

patenting process. The “quality” of a patent—

whether measured by the research behind it, the

creativity of the invention, its economic value,

or the clarity of its exposition—varies widely. The

Patent and Trademark Office does not make—

in fact, is forbidden to make—any evaluation of

an invention’s contribution to the current stock

of knowledge, beyond its judgment that the invention is original (i.e., has not previously been

patented).

The second problem with using patents as a

measure of innovation reflects the process of

patenting itself. The cost of the patenting process,

the “appropriability” of the returns from an invention, the prospects of litigation, and incentives to

patent vary over time. Thus, the number of patents granted will fluctuate regardless of innovative

activity. Also, the procedural attributes of a patent (e.g., the number and kinds of claims allowed,
58

the number and kinds of patents an examiner cites

in his or her examination) may vary somewhat

from examiner to examiner, from class to class,

as well as from time to time as the Patent and

Trademark Office changes its directives. Thus,

time series analysis of patents cannot claim to hold

all variables in the patenting process constant. For

these reasons, the evaluation of patenting activity

over time must be interpreted as a broad study

of trends rather than a precise analysis (8).

Given these caveats, the study of patenting can

be set in a general context. The investigators recognized that patenting was only a partial measure

of the output of postharvest technology research,

but a very important one. Furthermore, since public postharvest technology research is conducted

in the presence of rather large private investments

in postharvest technology research, the public and

private research should be related. High-quality

public postharvest technology research should

produce pilot inventions. Public patents should

be cited frequently by subsequent private patents

as the private sector conducts further research.

Public publications should also be cited by subsequent private publications and patents.

Detailed data was collected for the years 1966-68

and 1977-79 on all USDA patents in four postharvest technology research fields (food, textiles,

other chemicals, other), and on a sample of 80

private U.S. firms and 61 patents to foreign firms

in two of these fields (food and textiles). Information was obtained on the class of patent, on the

patents and other references that were cited by

patent examiners as “next best art,”* and on the

number of times a patent was subsequently cited

by other patents.

Most of the U.S. patents in postharvest technology were found to be from private firms.

USDA labs accounted for only 5 percent of representative postharvest technology patenting. SAES

accounted for even fewer patents. The number of

patents per dollar expended on research is higher

for USDA than for SAES. No comparative data

exists for private research, but because of the importance of a patent to the private sector a crude

● “Next best art” is the citation for a patent that is closest to the

one under consideration. Such a citation indicates the patent under

examination represents an identifiable step forward.

estimate is that the number of patents per dollar

of research is substantially higher for the private

sector than the number for the public sector.

A high proportion of public and private postharvest technology patents were found to be subsequently cited in other public and private patents.

Of food patents granted in 1966-68, only 22 percent of the USDA patents and 30 percent of private patents were not subsequently cited. For textile patents, only 34 percent of the USDA patents

and 18 percent of the private patents were not

subsequently cited in the same time period. Private patents in both areas were cited slightly more

often than USDA patents, but the data suggest

that most patented innovations do contribute to

technology improvement.

The data also showed that 28 percent of the

patents cited as “next best art” for USDA patents

in 1966-68 were other USDA patents and that 35

percent were other USDA patents in 1977-79.

Domestic-origin private patents cited USDA patents as next best art 19 percent of the time in

1977-79. The latter finding indicates that USDA

patents were a significant part of the invention

structure of the private sector. Foreign-origin

patents cited USDA patents less frequently. USDA

patents also cited fewer total patents than either

U.S. private or foreign patents.

It is difficult to draw general conclusions regarding research quality based on patent data

alone. Nevertheless, the standards of patentability

technique are applied outside the agricultural

research system as well. This wider use of the

technique involving patent data lends support to

the method’s credibility.

Publication Citations of Postharvest

Technology Research

A large part of public postharvest technology

research does not lead directly to patented inventions, but instead provides research potential,

which may subsequently lead to inventions and

technology. One measure of output of this research is publications. With data on publications

that have been subject to quality screening, it is

possible to undertake analysis of differences in

productivity for different research environments

and different time periods. However, good data
59

on quality-screened publications are difficult to

obtain. Since publication data reported in data

files generally are not standardized for quality,

it was concluded that citations in referred journals were a superior measure of quality.

The number of citations is an index of the “importance” of a research contribution. Perhaps

more importantly, citation data can indicate the

usefulness of one research specialization to other

specializations. Thus, a case in which public postharvest technology research publications are subsequently cited only by public postharvest technology researchers would be cause for concern.

Citation analysis to date has been used little in

agricultural research evaluation.

The citation-of-publications study is more comprehensive than the patent study described above

in two respects. First, for this study, the investigators obtained an SAES sample in addition to a

USDA sample; and secondly, published output

is a more complete measure of researcher output

than patents are.

Data sources dictated that data be collected by

individual researchers. A list of research project

principle investigators was obtained from Current

Research Information System data for selected

USDA and SAES postharvest technology research

studies. With this list of names for different periods, the citations abstract was used to collect data

on the number of times the publications of these

scientists were cited in 1979. Data were compiled

both on citations of papers published fairly recently as well as on citations of papers published in

earlier periods. Both publications and citations

were “screened” in the sense that major journals

in four areas covered by postharvest technology

research (i.e., food science, agriculture, materials

science, and other) were chosen from which to

select citation abstracts.

Statistical models were developed to test whether recent citations were related to institutional

affiliations—i.e., USDA or SAES. When citations

of earlier papers and age of investigator were used

as control variables, there was no significant effect of institutional setting on total citations per

scientist-year or on citations per publication.

When expenditures per scientist-year were included as a variable measuring the support per

scientist in terms of equipment, assistants, etc.,

they did not affect publication per scientist-year,

but did positively affect citations per publication

and total publications per scientist-year.

Citations of early work were considered to be

an index of “personal” productivity or quality of

the researcher in question, and these were significant determinants of citations of later work. The

diversity of citations (i.e., citations in fields other

than the field of publication) was also affected by

personal characteristics. Younger scientists have

more influence outside their fields than do older

scientists, and scientists with high early productivity and narrow influence have narrower current

influence.

Conclusions

These two attempts to look at postharvest technology research quality by examining patents and

journal citations do not provide conclusive answers about the quality of public postharvest technology research. In fact, one USDA center having

the lowest journal citation score had the strongest performance in patenting. These efforts do,

however, add to the pool of other less formal and

more judgmental evidence on research quality.

The data are consistent with the view that many

public postharvest technology researchers may

not be aware of relevant research in closely related

disciplines and that some public research programs may be poorly organized. However, the

data are not consistent with the highly critical

view that public postharvest technology research

is producing little of value. Public postharvest

technology research is providing patents that are

subsequently cited by the private sector. It appears

to be providing a body of scientific literature that

is roughly comparable to that produced in other

applied sciences. Furthermore, the SAES system

does not appear to be providing research environments that are superior to those provided by

USDA in this research area.

Peer Review

Assessments of published output of scientists

have been used to evaluate certain aspects of agricultural research, most notably productivity (e.g.,
60

27), but the application of this technique or variations of it for evaluating the quality of agricultural research is fairly recent.

The quality of research is not necessarily a function of numbers of publications or patents that

result from the research. The National Academy

of Sciences considers peer review probably the

best method of estimating quality. Attempting to

use the same scientists to evaluate basic and applied research, or research in different disciplines,

however, seems hazardous. Estimating quality of

any research requires great care.

PRINCIPAL FINDINGS

● Benefits from public PHTME research may include: 1) increased productivity and reduced

real cost of food; 2) improved quality, safety,

and nutrient content of food; 3) new or improved food products; 4) information for decisionmaking; and 5) information on industry

competitiveness.

● The beneficiaries of PHTME research can include: 1) farm producers, through the enhancement of the value of farm commodities and improved marketing services; 2) consumers,

through expanded quantity of food products

and lower prices and improved quality, nutrition, safety, and convenience; 3) marketing

firms, through research results that are available

to small and large firms alike; and 4) labor,

through increased labor efficiency that provides

opportunity for increased wages and salaries

without placing an upward pressure on retail

prices.

CHAPTER 4 REFERENCES

1. Bullock, J. Bruce, “Estimates of Consumer Loss

Due to Monopoly in U.S. Food Manufacturing Industries: Comment,” American Journal of Agricultural Economics, vol. 63, No. 2, May 1981, pp.

290-292.

2. Currie, John Martin, Murphy, John A., and

Schmitz, Andrew, ‘The Concept of Economic SurPeer review should be review of a scientist’s research only by researchers within the same general

area, discipline, or mission. For example, in the

continuum of basic to applied research, peers of

scientists working in basic research can effectively

review quality of scientists working in similar basic areas of research. Scientists working in applied

areas can evaluate quality of other scientists working on similar applied problems.

● The majority of the benefits from PHTME research flow to those regions and States with

high concentrations of population. However,

the bulk of PHTME research is financed by

States in the major farm producing regions,

with the majority of the research supported by

State appropriations. This means that taxpayers

in major agricultural States are subsidizing

PHTME research for consumers in less intensive agricultural States. When such public benefits have an impact on residents of the Nation,

funding for research can be more equitably provided by the Federal Government.

● Publicly funded postharvest technology research seems to provide a body of scientific literature which is comparable with that of other

applied sciences. Some past analyses of the

quality of public research suggested the research

produced little of value (20). Today, however,

evaluation based on analyses of patents and

publications (8) does not support this appraisal.

plus and Its Use in Economic Analysis, ” The

Economic Journal, vol. 81, No. 5, pp. 741-799,

1971.

3. Eddleman, B. R., Impacts of Reduced Federal Expenditures for Agricultural Research and Education, IR-6 Information Report No. 60, May, 1982.

4. Eddleman, B. R., “Importance of Resources to Pro-
61

5.

6.

7,

8.

9.

10.

11.

12.

13.

14<

15<

16

ductivity: Technology, ” Proceedings of the Thirteenth Annual Meeting of ARI, Oct. 6-8, 1981, pp.

61-78.

Eddleman, B. R., Teigen, Lloyd D., and Purcell,

Joseph C., “Productivity in U.S. Food and Agriculture: Implications for Research and Education, ”

Southern Journal of Agricultural Economics, vol.

14, No. 2, December 1982, pp. 1-7.

Evenson, Robert E., “Research Evaluation: Policy

Interests and the State of the Art, ” presented at

the Symposium on Methodology for Evaluation

of Research, Minneapolis, Minn,, May 1980.

Evenson, Robert E., “The Contribution of Agricultural Research to Production, ” Journal of Farm

Economics, vol. 49, No. 5, December 1967, pp.

1415-1425.

Evenson, Robert E., and Wright, Brian, “An Evaluation of Methods for Examining the Quality of

Agricultural Research, ” in An Assessment of the

United States Food and Agricultural Research

System, Vol. II—Commissioned Papers, Part C

(Washington, D. C.: Office of Technology Assessment, U.S. Congress, April 1982).

Evenson, Robert E., Waggoner, Paul E., and Ruttan, Vernon W., “Economic Benefits From Research: An Example From Agriculture, ” Science,

vol. 205, September 1979, pp. 1101-1107.

Gardner, Bruce L., The Governing of Agriculture

(Lawrence, Kans.: The Regents Press, 1981).

Griliches, Zvi, “Returns to Research and Development Expenditures in the Private Sector” (1977),

J. W, Kendrick and B. Vaccava (eds.), New Developments in Productivity Measurement, National

Bureau of Economic Research Studies in Income

and Wealth, vol. 44, 1980, pp. 419-454.

Heady, Earl O., “Welfare Implications of Agricultural Research, ” Resource Allocation in Agricultural Research, Walter L. Fishel (cd. ) (Minneapolis,

Minn.: University of Minnesota Press, 1971), pp.

121-136.

Holmes, A. W., “Substitute Foods—A Practical

Alternative?” Phil. Trans. R. Soc. Lend. B. 267:

157, 1973.

Irving, George W., Senti, Frederick R., Pentzer,

William T., and Purcell, Joseph R., “The Role of

the Public Sector in Agricultural Post-Harvest

Technology Research, ” in An Assessment of the

United States Food and Agricultural Research System, Vol. II—Commissioned Papers, Part C

(Washington, D. C.: Office of Technology Assessment, U.S. Congress, April 1982).

Kramer, Amihud, Food and the Consumer (Westport, Corm.: AVI Publishing Co., 1973).

Mansfield, Edwin, Rapaport, John, Romeo, Anthony, Wagner, Samuel, and Beardsley, George,

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“Social and Private Rate of Return From Industrial

Innovations, ” Quarterly Journal of Economics,

May 1977.

Marion, Bruce W., Mueller, Williard F., Cotterill,

Ronald W., Geitchman, Frederick E., and Schmelzer, John R., “The Price and Profit Performance

of Leading Food Chains, ” American Journal of

Agricultural Economics, vol. 61, August 1979, pp.

420-433.

Musgrave, Richard A., and Musgrave, Peggy B.,

Public Finance in Theory and Practice (New York:

McGraw-Hill Book Co., 1973).

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Nutrition Study, supporting papers, vol. 3 (Washington, D. C.: NAS, 1977).

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Council, Division of Biology and Agriculture, “Report of the Committee on Research Advisory to

the U.S. Department of Agriculture, ” April 1972;

issued by the National Technical Information Service.

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From Farmer to Consumer, Commission Report

(Washington, D. C.: Government Printing Office,

1966).

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Issues and Possible Methods, ” in Evaluation of

Agricultural Research, G. W. Norton, et al. (eds.),

University of Minnesota Agricultural Experiment

Stations Miscellaneous Publication 8-1981, April

1981.

O’Rourke, Desmond A., and Greig, W. Smith,

“Estimates of Consumer Loss Due to Monopoly

in U.S. Food Manufacturing Industries: Commerit, ” American Journal of Agricultural Economics, vol. 63, No. 2, May 1981, pp. 285-289.

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U.S. Food-Manufacturing Industries, ” American

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State Agricultural Experiment Station Svstem: – u J
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Chapter 5

Role of Public and Private

Research Participants
Contents

Private Sector Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Research unpatentable Processes and Techniques . . . . . . . . . . . . . . . . . . . . . . . . 66

Research To Comply With Federal and State Regulations . . . . . . . . . . . . . . . . . 67

Research To Maintain or Gain Clientele . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Public Sector Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Research To Provide Basic Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Research To Support Policymakers and Action and Regulatory Agencies . . . 69

Research To Enhance Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Joint Public and Private Sector Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Research on New Food Sources and Their Development . . . . . . . . . . . . . . . . . . 70

Research on Naturally Occurring Food Contaminants . . . . . . . . . . . . . . . . . . . . 71

Research on Yields in Relation to Productivity v. Nutritional Components. . 72

USDA and SAES Roles.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Principal Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Chapter preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Chapter 5

Role of Public and Private

Research Participants

Throughout the history of agricultural research,

no fixed pattern has developed with respect to the

kinds of research performed by the U.S. Department of Agriculture (USDA), State agricultural

experiment stations (SAES), and industry, and no

principle has emerged to determine the role of

each. Decisions as to where research is done in

the public sector invariably have been decided ad

hoc by discussion and agreement among the concerned parties. The administrative diplomacy required to reach such agreements has reached high

levels of complexity in USDA and SAES. Such

decisions frequently are arbitrary, expedient, inconsistent from year to year, and more influenced

by pressures of the moment than by uniform,

long-range guidelines or principles (1). In the

absence of an accepted rationale for doing differently, these practices will likely continue.

It should be possible, however, to arrive at a

rational and practical plan for assignment of roles

PRIVATE SECTOR DOMAIN

Although different segments of the agricultural

industry perceive their roles differently, most are

motivated by economic incentives. If management

can foresee that the private rate of return is sufficient, funds are set aside for the research program.

As discussed in chapter 4, industry research may

result in benefits for both the private sector and

society.

PHTME research in private industry tends to

be profit oriented. In the food processing sector,

such research primarily takes the form of new

product development and new applications for

products. This includes but is not limited to:

1) product line extension, such as new flavors, colors, package size, or minor variations introduced

to supplement existing products; 2) development

of existing products, such as modifications in the

formulation, minor improvements in processing

to those who conduct postharvest technology and

marketing economics (PHTME) research. Admittedly, whatever guidelines are determined must

be agreed to. However, once articulated, made

public, and used, a plan and guidelines would

make clearer to all concerned the basis and logic

of certain program decisions, encourage USDA

and SAES to focus on the roles expected of them,

and permit periodic reexamination over time.

Ideally, application of the plan and working

guidelines derived from it should result in a sufficiently clear delineation of roles that uncertainties concerning where research should be conducted and how it should be funded would be the

exception rather than the rule. This chapter

presents an analysis of the roles of participants

in PHTME research and provides guidelines for

delineation of roles among participants.

technologies, packaging, etc.; and 3) nonfood uses

of farm products, such as for energy, lubricants,

etc.

In the food distribution sector, the profit orientation includes developments such as improved

truck-trailer design and use to lower transportation costs, development of railroad cars and containers for improved quality preservation, and

electronic checkouts in retail stores to improve

labor productivity.

Profit-oriented research by private industry also

includes economics research. Demand and supply forecasting are used particularly by food processing companies to aid in decisionmaking on purchasing inputs so that the firm’s costs are minimized. Also used are feasibility studies and market

surveys.

65
66

In delineating the role of the private sector in

PHTME research, certain distinguishing characteristics of private sector research in foodprocessing, handling, and marketing should be considered. * First, most private sector research tends to

be focused on short-term applied problems for

which there is an expectation of an acceptable

return on the research investment. Second, it is

unlikely that longer term basic inquiry into how

biological, economic, and social systems function

would be picked up by the private research sector if it were dropped by public research agencies.

Third even though there may be substantial social

benefits from private research activities through

spillover effects, private industry generally is not

concerned with concepts of consumer surplus or

net social benefits from their research endeavors.

And fourth, most private firms are reluctant to

reveal knowledge that might cause existing technologies or processes to become obsolete prior to

extracting the flow of economic returns from past

investments in these techniques. Thus, an incentive exists to delay publication of knowledge

possessing this potential impact, even if the research might have been carried out partly under

the auspices of public funding.

Based on the above, the areas of PHTME research that are or should be primarily in the private sector domain are: 1) processes and techniques that are patentable and accrue into the capitalization of the firm, 2) research to meet Federal

and State regulations, and 3) research to maintain or gain clientele.

Research on Patentable Processes

and Techniques

Research and development pertaining to patentable processes and techniques is probably the most

clear cut in terms of private sector involvement.

Such research most nearly fits the one characteristic of private sector research discussed earlier—

i.e., it is focused on short-term applied problems

for which there is an acceptable return on the research investment.

● These characteristics were identified in the unpublished USDA

assessment “Postharvest Technology Research Assessment, ” March

1979.

Industry research on patentable processes and

techniques commonly leads to gains for the firm

and industry in excess of losses to society. * This

observation is particularly applicable in the case

of mechanization research, which accounts for a

large part of this research activity. Much mechanization research has been induced by long-term increases in the price of labor. The gains to the firm

or industry conducting such research often substantially outweigh the losses to workers (s).

The private sector has been an efficient source

of new mechanical technologies in postharvest

technology as well as in agriculture in general.

Even when public funds have been expended in

the mechanical technology area, many believe

that the firms would have developed the technology without the public sector involvement. The

demand for commercial development has appeared to be more important than the public research effort (4).

In late 1979, former U.S. Secretary of Agriculture Bob Bergland, responding to a concern about

public sector support for mechanization research,

announced that USDA would no longer support

research leading to the “replacement of an adequate and willing work force with machines. ”

Bergland stated that USDA would not put Federal

funds into research when a careful review and

analysis clearly indicate: 1) that the direct and immediate benefits will go to a limited number of

locales while neither serving the national interest

nor benefiting the general public; and 2) that the

research poses a direct or an indirect threat to

social stability, the national resource base, the environment, the national security, or the economic

well-being of a significant number of citizens.

Bergland immediately qualified these remarks by

indicating that he had no objection to research

and development designed to ease the drudgery

of work rather than to replace workers with

machines, but this distinction is not feasible either

technically or analytically (4).

Bergland’s statements gave impetus to a badly

needed debate concerning the appropriate roles

of public and private sector research. Supporters

of public sector mechanization research have fre-

‘It is recognized that there is some research, such as improvements

in products, which has few, if any, losses to society.
67

quently attempted to interpret Bergland’s remarks

as an attack on mechanization rather than on the

more fundamental question of the rationale for

public sector funding of this research. Opponents

of public sector mechanization research apparently are less concerned with the displacement of

labor than with the failure of public institutions

to consider laborers as well as farmers, processors,

and retailers as part of their clientele and the failure to provide parity of treatment for laborers (4).

The implication of the mechanization debate

for public and private research seems reasonably

clear, The private sector has been an effective

source of new mechanical technology. Lack of

knowledge has seldom been a serious constraint

on advances in mechanical and patentable technologies, Public research in this area may be justified primarily for its value in training new scientists and to linking biological and chemical research with mechanical technology.

Research To Comply With Federal

and State Regulations

A firm operating in the United States must adhere to many Federal and State regulations in

order to process and/or market a food product.

These regulations include but are not limited to

regulations concerning food safety, nutritional

claims, shelf life, environmental pollution, and

worker safety. A firm may need to conduct research to meet these regulations or mitigate their

impacts.

For example, the basic purpose of nutrition

labeling of food products is to provide accurate

nutrition information to the consumer. Nutrition

labeling is a voluntary/mandatory program—i.e.,

participation in the program is voluntary, but if

a firm elects to participate, it must follow a mandatory labeling format and provide the necessary

PUBLIC SECTOR DOMAIN

There are certain areas of PHTME research

which logically fall to the public sector. Public

sector research efforts are in both basic and apresearch data to support its label. When a processor makes any kind of labeling or advertising

claim about the food’s nutritional value or when

the food is enriched with any essential nutrients,

compliance with the nutrition labeling program

becomes mandatory.

Another example of research to meet regulatory

requirements is establishing the shelf life of food

products. Many States require that manufacturers

convey to consumers the length of time the product will maintain its quality, especially for perishable products. To develop these time intervals or

dates scientifically, each food manufacturer needs

to conduct shelf-stability studies on each product

and determine the time at which sensory quality

falls below the point of consumer acceptance. Research to comply with such regulations is often

referred to as “defensive research. ”

Research To Maintain or Gain Clientele

A firm interested in maintaining or gaining clientele will conduct or have conducted for it research that is directed toward this end. The most

explicit example is in the area of food quality. A

firm differentiates itself from its competitors by

providing a certain level of food quality. In order

to maintain and ensure this quality level, the firm

conducts research and analysis throughout the

processing cycle. A firm also engages in product

development research for the purpose of expanding its product line, further developing its existing

products, or finding new applications for its products. A firm may also conduct economic research,

such as market surveys, to determine what actions

it may need to take to either maintain clientele

or to gain new clientele. Significant incentives exist

for the private sector to conduct this type of research, because the returns of such research accrue

mostly to the firm.

plied PHTME research. Public sector support of

basic research generally benefits both society and

the private sector. Because the results of basic re-
68

search are difficult to internalize to any particular

private firm, underinvestment in basic research

would result without public support.

In the case of applied and developmental research, however, an important issue that arises

is the appropriate mix of public and private research investments. The private sector will stand

to benefit from public investments in those types

of research whose outputs are embodied in private

sector products. Examples include the areas of

chemical and biochemical research, mechanical

research, the development of seed varieties, and

food processing and fabrication. Although much

of the research responsibility in these areas has

been assumed by the private sector, public research activities are also maintained.

Public sector research may be justified on at

least three grounds. First, because of the spillover

effect, substantial social benefits are derived from

a mixture of public and private research. Second,

in the absence of public sector support, the direction of the research might tend to be biased strongly toward proprietary mechanical and chemical

technologies. And third, for those situations

whereby private research might have a detrimental effect on the structure of the industry (making a competitive structure noncompetitive, or a

noncompetitive structure still more imperfect), a

mix of public and private research may serve to

preserve competition or reduce the amount of

market power. The importance of this last basis

for public investment in research is that most competitive industries provide a larger quantity of the

product at a lower cost to consumers and a higher

price to farm producers than would be expected

from an uncontrolled monopolistic industry (9).

Because of the ease of imitation and lack of patent enforceability, it is likely that the private sector would substantially underinvest in many marketing economics research activities, Thus, much

marketing economics research is supported by the

public sector, even in those areas where substantial inducements exist for product development

by the private sector. Few marketing firms, for

example, conduct much research in aggregate consumer demand for food products. However, public sector research is available to large and small

food marketers alike and to farmers and consumers for improved decisionmaking. Because of the

difficulty of patenting the information gained by

public research institutions, small marketing firms

have been able to exist along with large firms.

Thus, it has been thought to be in the best interest

of society to support public investments in these

types of research activities, because the social benefits would outweigh the costs incurred from an

uncontrolled monopolistic industry (9).

Based on the above considerations, the areas

of PHTME research that are or should be primarily in the public sector domain are: 1) research

to provide basic knowledge, 2) research to support policymakers and action/regulatory agencies, and 3) research to enhance competition.

Research To Provide Basic Knowledge

Basic research may be defined as activity directed toward the production of new knowledge.

The systems may be physical, biological, mechanical, economic, social, or political. Basic research

is directed to specifying and quantifying interrelationships in a cause-effect context. It is concerned

with theoretical concepts, the formulation and

testing of hypotheses, and with enunciating laws

and principles. Basic research is almost universally transferable.

Basic research represents the principal mode for

developing the knowledge base necessary for

future scientific and technological breakthroughs.

These in turn frequently lead to significant economic benefits and improvements in social welfare. Within the academic sector, basic research

also serves an important function in education of

graduate students.

The public sector clearly has responsibility to

fund and conduct some basic research. The private sector also supports basic research by funding and conducting it. Approximately 10 percent

of agricultural industry’s research and development funds are for basic research. However, little incentive exists for the private sector to increase

this amount. For the most part, the results to be

obtained from basic research are unknown and

unquantifiable, and the payoff quite far in the

future. This provides little incentive for private

basic research. Further, even if there were ade-
69

quate incentives, the results of the research would

be proprietary. Thus, for the advancement of science and future technological breakthroughs, the

public sector, which makes known the results of

basic research to the public, has a clear role in

providing the fundamental knowledge on which

these breakthroughs are based.

Research To Support Policy makers and

Action and Regulatory Agencies

There are many users of research within government. Policymakers, both in the executive and

legislative branches of government, are demanding more information from research and policy

analysis before making decisions. In the PHTME

area, policymakers at the Federal level include the

Secretary of Agriculture, Secretary of State, Secretary of Treasury, Secretary of Health and Human

Services, and the respective legislative and appropriations committees in Congress. Decisions these

Federal policymakers need to make include the

appropriate level of support prices for farm products, the level of U.S. farm product exports, the

imposition of tariffs on imported food products,

and the amount of the Federal budget that will

be devoted to food and agricultural concerns. Information developed through research is needed

for policymakers to be able to make informed

decisions.

Action and regulatory agencies depend on research results in implementing their regulatory

and programmatic responsibilities. In the PHTME

area, these responsibilities include decisions on the

use of food additives, the safety of irradiation of

food as a processing technique, the detection of

nitrosamines, chemical methods for detection and

measurement of bacterial contamination of food,

antitrust cases involving food companies, the effectiveness of marketing orders, and necessary

regulations in commodity trading. Equally important to these agencies is research that analyzes the

impact of these regulations. Action and regulatory

agencies need to be informed of the regulations’

benefits and costs. This information is useful in

guiding the agencies in modifying or eliminating

existing regulations, or establishing new regulations.

In the absence of research in the above areas,

policymakers and action and regulatory agencies

would not have an adequate knowledge base to

make appropriate decisions. There seems to be little argument that research is needed to support

these areas. The public sector is considered the

best source for this research since it conducts

research where the benefits accrue to parties other

than those supporting the research.

Research To Enhance Competition

A major function of the U.S. Government is

the maintenance of a free and competitive economic system. The system requires protection

from monopolistic practices that would thwart

competition. Public research can contribute to the

maintenance or enhancement of competition in

the agriculture production and marketing sectors. * For example, the flow of new technology

from public research and development has contributed to competitive behavior in the seed and

fertilizer industries (2). This is because the results

of public research are disseminated to the public,

as opposed to privately supported research, which

is proprietary and has the potential of extracting

monopoly profits to some degree over time.

A basic tenet of government is that it should

not do what the private sector can or will do. This

tenet must be balanced as the private sector becomes more engaged in research and development

while it becomes more monopolistic in character.

The dilemma is particularly evident in applied

and developmental research. For those areas of

the marketing system where firms lack resources

in terms of funds, scientific manpower, and facilities to conduct their own research, public sector

research can provide new technology that not

only increases productivity but enhances competition. Much of this research is of an economic/

engineering nature and involves working with individual firms to test and evaluate the application of a technology to an industrywide problem.

*Public research sometimes does not contribute to the maintenance

of a competitive structure; in some cases, it increases economies of

scale. More public PHTME research needs to consider its influence

on market structure and, hence, on competition.
70

The results of the evaluation are then publicized

for the benefit of all firms in the industry. When

new technology is adopted by a firm that results

in cost savings, competition causes other firms to

adopt the new technology rapidly.

For example, partial or full automation has been

made possible for small dairy processing plants

as a result of public research. Prior to this research, automated procedures were available only

as complete package deals from equipment manufacturers. Research findings made it feasible for

small plants, which cannot afford full automation,

to purchase and install the parts of the system advantageous for their volume. An estimated annual reduction in labor costs of $50 million is possible, if the approximately 1,000 small plants involved adopt the research findings (7).

Much of public marketing economics research

is directed toward providing information that,

when used in decisionmaking, contributes toward

economic competitiveness. Such research ranges

from computers in electronic marketing of farm

products to studies of the effects of policy instruments to maintain or enhance competition.

For example, competitive marketing conditions

do not prevail for many cattle producers. Most

livestock markets are small, with high selling expenses and less than desirable buyer concentration. The vast majority of cattle feeders are too

small to attract bids directly from a number of

competing buyers. Likewise, the small number of

buyers present in many auctions and terminal

markets often leads to fraternalism among buyers,

enhancing the potential for buyer collusion. Most

producers lack timely information on prices in

alternative markets and typically sell too few cattle to make good use of what market information

they do obtain. One alternative to this problem

is public research on conceptualizing and developing electronic markets. * This allows producers to

reach alternative markets with the potential to expose market offerings of each seller to competitive

bids from every buyer and the bids of each buyer

to every seller. It can potentially provide instantaneous information on prices and other terms of

trade and facilitate direct shipment of cattle from

seller to buyer. Research indicates that electronic

markets can perform these functions more rapidly

than the conventional system, with greater accuracy and at a lower cost while increasing competition among buyers at the same time (3).

At the other end of the spectrum of research

to enhance competition is public research that:

1) determines the competitive factors which affect market performance in the food and agricultural sector, and 2) measures the effectiveness of

policy instruments to maintain or enhance competition. Such public research is vital to better understanding of what forces affect market performance

and to determining the effect such policies as antitrust laws and enforcement have on competition.

● Electronic markets are so named because they use modern electronic devices such as telephones, computers, teletype networks,

and TV-like two-way communication devices to create a market.

JOINT PUBLIC AND PRIVATE SECTOR DOMAIN

Some areas of PHTME research exist in which Research on New Food Sources and

there is reason for research activity for both the Their Development public and private sector. These are areas in which

the incentives for private research are not ade- This area is fertile for research from both the

quate, because many of the gains from private private and public viewpoint. From the private

research in these areas are captured by other firms sector side, discovery of new food sources can

and consumers. The public sector may need to possibly mean new and less expensive ingredients

be involved to ensure the conduct of research from in food processing or more efficient usage of bywhich the social gains exceed the private profit. products of the manufacturing operation. The
71

public sector has an interest because of the concern about potential global shortages of food and

concern for environmental pollution.

A good example is the improved utilization of

cheese whey, an important large-volume byproduct in processing cheese whose disposal presented

environmental and physical problems. The private sector incentive for research on cheese whey

was its profit potential. The public sector conducted research on cheese whey because of concern for the environment and as a potential means

of increasing the food supply.

These public and private research efforts had

several results. First, liquid sweet whey could be

combined with full-fat soy flour or soybean isolates to yield a free-flowing powder of good nutritive value. The whey-soy blend was commercially

used by the baking industry, where it demonstrated better functionality than did nonfat dry

milk in doughs processed by continuous baking

equipment. Second, spray-dried whey protein

concentrates could be incorporated into commercial soft drinks and drink powder without detectable change in flavor or appearance and with improved nutritional value from added protein.

Third, low-lactose products from milk and whey

could be readily prepared with conventional dairy

plant equipment. Such products are suitable for

consumption by lactose-deficient individuals (8).

Improved utilization of cheese whey has significantly reduced environmental pollution in many

cheese-producing areas, and has increased economic returns to processors. The development of

new ingredients has increased the variety, nutritional quality, and storage stability of foods,

especially convenience foods, available to U.S.

consumers. Dairy products aimed at a new consuming population, lactose-intolerant consumers,

are commercially available in some areas. Development of whey-soy drink mix as a milk analog

provided economic benefits to the processors

while meeting the demand for this product in

developing countries.

Research on Naturally Occurring

Food Contaminants

Prevalent naturally occurring toxic contaminants in the food chain are mycotoxins. These are

substances produced by molds under special circumstances; some are carcinogenic in animals.

The best known mycotoxin is aflatoxin, which

lowers feed efficiency and weight gain in livestock

and in larger doses can cause death. This effect

on livestock provides an economic incentive for

the private sector to conduct research on mycotoxins.

When aflatoxin-contaminated feed is fed to milk

cows, a related carcinogen can be found in milk.

In humans, there is circumstantial evidence for

its involvement in causing liver cancer. This provides the incentive for public sector research efforts even though the private sector is interested

in the safety issue too. Certainly no company that

intends to stay in business wants to produce an

unsafe product. But whereas the individual firm

is only concerned with that portion of the crop

under its control, the public sector must be concerned with the safety of the entire crop.

These research efforts indicate that aflatoxin in

corn, which is not detectable under ordinary conditions, can now be detected in less than 5 minutes

by a fluorescence test. * Once detected, the

amount in the sample can be determined by analytical procedures. The public sector held workshops for corn handlers (farmer elevator operators, millers, and processors) on detecting and

measuring the toxin. These tests offer anyone in

the marketing chain added protection against the

financial hazard of buying contaminated corn.

They also provide protection for the general public by reducing the chance that aflatoxin will enter

the food chain.

● Research is continuing on this technology to improve its detection capability. Concern exists that ultraviolet gives too many false

positives and thus is not precise enough.
72

Research on Yields in Relation to

Productivity v. Nutritional Components

This area of research relates to the differing orientation of the private and public sectors. The private sector’s first priority is to conduct research

that will increase the output from a given input.

This research can make more food available

through improved processing, upgrading products, preventing waste, and providing for utilization of products previously not considered usable.

The public sector, while interested in increasing productivity, is also concerned with improved

nutrition and health. The primary purpose of food

is to provide nutrients required for body funcUSDA AND SAES ROLES

During the early history of the development of

SAES, them was some concern about the relationship of the research stations to the land-grant colleges. There was even greater concern about the

acquisition of Federal funding through USDA for

support of SAES, free from excessive domination

by the Federal Commissioner of Agriculture. The

Hatch Act of 1887 resolved many of these issues

and provided for a high degree of State autonomy

in designing and conducting research.

Additional legislation providing support for the

establishment and strengthening of SAES clearly

recognizes SAES as entities distinct from the landgrant colleges. In the early years, the SAES were

concerned almost totally with State and local research problems. As the stations grew and additional acts were passed by Congress providing

wider use of funds, however, their research broadened to include regional, national, and international activities.

Meanwhile, USDA has developed a wide network of research laboratories, stations, and activities that not only includes national, regional, and

international activities but at times involves strictly local problems.

This broad base for application of Federal and

State resources to research problems has led some,

including Congress, to question the degree of research planning and coordination that exists, espetions. With the industrialization-commercializetion of the food and agricultural sector, ensuring

the nutritive value as well as the safety of food

has gained in importance because consumers are

further removed from primary production. Processing and preservation technologies that expand

output can improve the nutritional value of food,

retain it in a stable condition, or cause it to

deteriorate. The consuming public cannot know

immediately which of these has occurred. Little

incentive exists for the private sector to take this

into account when attempting to increase yield

or supply of food. Thus, the public sector also

needs to be engaged in this type of research with

multiple objectives.

cially at the top levels of administration. There

seems to be considerable duplication of effort and

vying for funds—including PHTME research—

and Congress and other interested groups have

increasingly been concerned (6).

Most agricultural research administrators—

whether SAES, USDA, or other—recognize there

is not unanimity of thought on how best to manage and carry out U.S. agricultural research and

the appropriate roles of the various actors for an

effective and efficient system.

An important consideration in establishing

these roles in research is the source of funding for

research in relation to the beneficiaries of the

research. USDA is funded primarily by Federal

funds and SAES by State, Federal, and private

funds, and the roles of these research participants

are generally more complementary than competitive. Under the Hatch Act of 1887 and the Research and Marketing Act of 1946, discussed in

appendix D, SAES conduct research on local,

State, and regional problems (cooperatively with

one or more States). SAES have no direct mandate to conduct research on problems of national

importance, although research on State and regional problems may contribute to the solution

of national problems. USDA has responsibility

for assuring the conduct of postharvest technology research directed at problem-solving in the
73

national interest, but to some extent must address

the local and regional aspects of national problems.

The allocation of research responsibilities distributes itself very logically among the major performers. The Federal Government, either intraor extramurally, must give highest priority to

problems of national significance, and must, as

a part of this responsibility, maintain an awareness of and take into account the contributions

of the States and private industry toward national

objectives. SAES, insofar as Federal funds are concerned, must give highest priority to concerns of

the State and to those of the region of which the

State is a part.

These roles have historical precedent and are

logical today. As more is known about the beneficiaries of this research and are better able to

quantify the relationships between funding source

and beneficiaries, there is strong evidence for

major Federal input to PHTME research, because

the benefits of such research go to the general

public and not any one State or region. USDA

should work as a partner with SAES to achieve

complementarily and cooperate with private and

other public universities and industry to coordinate its own contribution to achieve national goals

most effectively. Both USDA and SAES should

collaborate when appropriate to assist the research

PRINCIPAL FINDINGS

●

●

●

There is a role for public and private research

efforts in PHTME research.

The primary domain of private sector PHTME •

research is: 1) research on patentable processes

and techniques (including mechanization research), 2) research to meet Federal and State

food regulations, and 3) research to maintain

or gain clientele. •

Public sector PHTME research should concentrate primarily on: 1) basic research, 2) research

to support policymakers and action and regulaperformance and respect the integrity, role, and

decisionmaking responsibilities of each institution.

In a more general sense, the Federal role in

PHTME research should include:

●

●

●

●

●

providing scientific leadership in the identification of research needs, setting the national

research priorities, and in developing plans

and programs to address those needs and priorities;

supporting SAES in conducting research on

agricultural problems of special concern to

a specific locale, State, or region;

providing substantive leadership and coordination to facilitate the flow of information

among States and between the States and the

Federal Government and to identify opportunities for and conduct or support research

with a regional and national emphasis;

assuring the development of new fundamental knowledge on which future advances depend, by supporting and conducting research

in basic agricultural science; and

maintaining a Federal research capability responsible for conducting basic and applied

research in support of unique Federal missions such as research for regulatory and action agencies and research that enhances

competition in the food and agricultural

sector.

tory agencies, and 3) research that enhances or

maintains competition.

Both public and private research efforts are justified in areas such as: 1) research on new food

sources, 2) research on naturally occurring food

contaminants, and 3) research on yields in relation to productivity versus other objectives.

The Federal role in PHTME research includes

providing leadership in identification of national research priorities and conducting supporting research with a regional or national em98-952 0 - 83 - 6
74

phasis; supporting SAES in conducting research

of special concern to a locale, State, or region;

assuring development of new fundamental

knowledge by supporting or conducting basic

CHAPTER 5 REFERENCES

1.

2.

3.

4.

Irving, George W., Senti, Frederick R., Pentzer,

William T., and Purcell, Joseph C., “The Role of

the Public Sector in Agricultural Postharvest Technology Research, “ in An Assessment of the United

States Food and Agricultural Research System, Vol.

II—Commissioned Papers, Part C (Washington,

D. C.: Office of Technology Assessment, U.S. Congress, April 1982).

Moseman, A. H., Robins, J. S., and Wilcke,

Harold, “The Role of the Federal Government, State

Agricultural Experiment Stations, and the Private

Sector in Research,” in An Assessment of the United

States Food and Agricultural Research System, Vol.

II—Commissioned Papers, Part C (Washington,

D. C.: Office of Technology Assessment, U.S. Congress, April 1982).

Rhodes, James V., Henderson, Dennis, Hepp,

Ralph, and Early, John, “Who Will Market Your

Beef-Producer Alternatives,” Texas A&M University Extension Service, March 1978.

Ruttan, Vernon W., Agricultural Research Policy

5.

6

7.

8.

9.

research; and maintaining a research capability

for conducting basic and applied research in

support of unique Federal missions.

(Minneapolis, Minn.: University of Minnesota

Press, 1982).

Schmitz, Andrew, and Seckler, David, “Mechanized Agriculture and Social Welfare: The Case of

the Tomato Harvester,’{ American Journal of Agricultural Economics, vol. 52, November 1970.

U.S. Congress, Office of Technology Assessment,

An Assessment of the U.S. Food and Agricultural

Research System, Washington, D. C., December

1981.

USDA/AMS, written responses by AMS to OTA

letter of inquiry, May 1982.

USDA/ARS, written responses by ARS to OTA letter of inquiry, May 1982.

White, Fred, Eddleman, B. R., and Purcell, Joseph,

“Nature and Flow of Benefits From Ag-Food Research, ” in An Assessment of the United States Food

and Agricultural Research System, Vol. II —Commissioned Papers, Part C (Washington, D. C.: Office of Technology Assessment, U.S. Congress,

April 1982).
Chapter 6

Policy and Management of

USDA Research Programs
Contents

Agricultural Research Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Economic Research service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Agricultural Marketing Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cooperative State Research Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reviews of Research. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Administration of Grants . . . . . . . . . . . . . . . . . . .. . . . . . ........ . . . . . . . . . . .

Regional Research.

Conclusions . . . . . . . .

Principal Findings . . .

Chapter preferences

List of Figures

Figue No.

28. Organization

29. organization

30. organization

31. organization

32. Organization

of

of

of

of

of

. . . . . . . . . . . . . . . . . . . . . . . ● ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎✎✎✎✎☛☛✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎✎☛✎

✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ● ✎✎✎☛✎✎☛ ✎✎✎☛

✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎✎☛☛☛☛☛☛ ✎ ✎ ✎ ✎

✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ● ☛✎✎✎✎✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎

77

80

82

85

85

86

$6

87

87

88

the Agricultural Research Service . . . . . . . . . . . . . . . . . . . . . .

ARS Regional Offices.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the

the

the

National Economics Division of ERS. . . . . . . . . . . . . . .

Agricultural Marketing Service . . . . . . . . . . . . . . . . . . . . .

Market Research and Development Division of AMS ..

78

79

81

84

85
Chapter 6

Policy and Management of

USDA Research Programs

As the research mission in postharvest technology and marketing economics (PHTME) research

becomes more varied, as new priorities vie for attention, and as funding becomes more stringent,

the need arises for finding ways to strengthen

leadership standards and performance at all levels.

Accomplishing such goals will require a thorough

and honest analysis of policy and management

within the public sector PHTME research program.

This chapter focuses on the four research agencies within the U.S. Department of Agriculture

(USDA) that are primarily responsible for conducting or funding PHTME research: 1) the Agricultural Research Service (ARS), 2) the Economic

Research Service (ERS), 3) the Agricultural Marketing Service (AMS), and 4) the Cooperative

State Research Service (CSRS). Three of these four

agencies report to different Assistant Secretaries

in USDA. This situation makes it difficult to plan

and coordinate PHTME research activities. These

agencies are experiencing new challenges and may

need to consider different management organizations and policies in order to maximize their

research potential.

AGRICULTURAL RESEARCH SERVICE

ARS reports to the Assistant Secretary of Science and Education within USDA. The agency’s

mission is to develop through basic, applied, and

developmental research, new knowledge and technology which will result in an abundance of highquality, nutritious, reasonably priced food and

other agricultural products to meet domestic and

world needs while maintaining natural resources

and environmental quality (7).

The research of ARS encompasses animal and

plant protection and production; and the use and

improvement of soil, water, and air; the processing, storage, and distribution of farm products;

and human nutrition. Research activities are carried out at 147 locations nationwide, in Puerto

Rico, the Virgin Islands, and in 8 foreign countries. Much of this research is conducted in cooperation with State partners in the universities

and SAES, other Federal agencies, and private organizations.

ARS was reorganized in 2972 along regional

lines, ostensibly to improve collaboration and efficiency in the relationship between USDA and

SAES (4). The present organizational structure of

ARS is shown in figure 28. Four regional administrators report directly to the Administrator

of ARS and are responsible for activities in each

of four geographic regions: Northeastern, North

Central, Southern, and Western. The organization of ARS regional offices is shown in figure 29.

Responsibility for ARS research programs is

now highly decentralized. The focal point for dayto-day management of the various national research programs assigned to specific field locations

is the regional/area structure comprised of 4

regional offices, 14 area offices, and 7 major research centers. Postharvest technology research

is concentrated in the 4 regional research centers,

at the Richard B. Russell Research Laboratory,

and in 40 smaller laboratories within the area/

research center line management structure.

A national program staff assists the ARS Administrator in planning, budgeting, and management of the overall ARS research program, but

has no line authority to make decisions concerning the allocation of resources, Previously, n a -

tional program investigation leaders with line responsibility and authority could relate to an individual State or group of States and then transcend these boundaries and furnish cohesive and

77
78

Figure 28.—Organization of the Agricultural Research Service

I

Office of Administrator

0301 01 0101 I

I

I

Deputy Administrator

National Program Staff

0301 050501 I

Special Coordinators ~

Assistant to Deputy Administrator

Human Nutrition Program

0301 050508

I

Assistant to Deputy Administrator

Plant Germplasm Program I

1 0301-050506 [

Assistant to Deputy Administrator

Energy Program

0301 050507

1

Biological Safety and Emergency

Preparedness 0301 050509

.

i

Program Planning and

Analysis Group

0301 05050505

I

0301 050520 I0301 050540

Q

I 1 . -f

information Division Radiological Safety

Staff

0301 01 0104 0301010106

\

Pesticide impact

Assessment Staff

0301 01 0107

4 ●

I *

Assistant to Administrator

International Activities

030401 4001

I

New Chart

MISSION Development through basic, applied, and developmental research, new knowledge and technology, which will Increase an abundance of high quality nutritious,

reasonably priced food and other agricultural products to meet domestic and world needs while maintaining natural resources and environmental quality This mission

focuses on the development of technical information and technical products which bear directly on the needs to (1) manage and use the Nation’s SoiI, water, air, climate

resources and improve the Nation environment, (2) provide an adequate supply of agricultural products by practices that wiII maintain a permanent and effective

agriculture, (3) improve the nutrition and well-being of the American people, (4) improve Iiving in rural America, (5) strengthen the Nation’s balance of payments, and

(6) promote world peace

SOURCE United States Department of Agriculture Agricultural Research Service, 1982

coordinating services and functions on a nation- Postharvest technology research is represented

wide scale. The reassignment of these individuals at the level of the national program staff by a

to national program staff positions without line separate staff component on postharvest science

authority, however, has diminished the national and technology (now called commodity converperspective and national technical leadership in sion and delivery), but is not similarly represented

the agency’s postharvest technology and other at the regional and area level. Regional adminisresearch efforts. trators most likely would not possess the technical
79

Figure 29.—Organization of ARS Regional Offices

Region

Office of Deputy Administrator

Program Formulation Participants with the Administrator. Program Analysis

and Coordination Staff, and National Program Staff in developing national

programs research goals, and objective. Develops and implements, in consultation with State research leaders, Industry, and other Federal agencies,

and within national plans and objectives cooperative regional research programs to meet the needs of the region.

Executive Direction Under board delegations of authority and responsibility

from the Administrator, provides administrative and program management

Ieadership, direction, control and coordination for ARS programs within the

region.

Cooperative Relations Represents ARS in planning and coordinating

research programs with the appropriate

periment Station Directors and their

Regional Associations of State Exregional technical committees.

Regional Administrative Office

Provides Administrative management support services for regional research program

including

Budget and Fiscal. Provides financial infomation and assistance to the regional

Deputy Administrator in budget formulation developing current year operating

budgets. Maintains fiscal records and

prepares special fiscal and budgetary

reports.

General Services. Provides general services

support including procurement and

contracting construction, real and personal

property, records management, research

contracts, grants cooperatives agreements,

and related activities.

Personnel. Provides personnel services

support including recruitment and placement position classification, wage administration, employee development, Equal

Employment Opportunity, labor management relations, safety and employee relations.

P,, >wa In Pi.. rwr G .r 6 R<,, Ie.S(,, $, Regional Biometrical and Sttistical Service Staff Information Office

Provides Informational Staff suprort for the

ARS research programs and cooperates

with the information Division in

recommending agency policies relating to

(a) production, editing, anddistribution of

technical and popular publications;

(b) dissemination of research findings to

all media for the benefit of farm

agribusiness, consumer, and other

public interests.

(c) coordination of ARS Information activities with State agricultural editors

Area Offices and Research Centers

Program Formulation Participants with the regional Deputy Administrator and appropriate State research leaders in

the formulation of cooperative research activities at field locations within the region which contribute to, and are an integral component of the ARS National Research Programs.

Program Direction Within broad authorities delegated by the regional Deputy Administrator pprovides administrative

and program leadership, supervision, and coordination of programs within the Area or at the Center.

,.

I

,. ,

., ,,

1 ,

1 ,

f,

SOURCE U.S. Department of Agriculture, Agricultural Research Service, 1982

expertise needed to make judgments on the tech- tional structure, and there is

components of their varied research port- the national program staff from being organized

nothing to prevent

nical

folio, which may include postharvest technology, along interdisciplinary lines.

livestock

and soil,

and veterinary

water, and air

sciences,

sciences.

crop sciences, ARS regions have little relevance to regional

PHTME research problems. These areas correspond to SAES regional areas, which encompass

specific States, and were selected to improve coorA positive aspect

nization of ARS is

of the present regional orgathat it provides an environment for interdisciplinary research. This is true dination with SAES. However, regional research

as long as a national research focus, as opposed problems generally do not follow State lines. Furto a local one,

tional focus is

exists. However, maintaining a na- thermore, different regional research problems

difficult with the present organiza- may involve different clusters of States. ARS
80

scientists at the regional centers and 40 field locations do not have the opportunity to work directly

with national program leaders in finding the best

way for their efforts to become effective and useful

parts of the national and regional efforts. Thus,

the current focus is on State and local problems.

Because the present organization is subject to

pressure by local groups that want research on

ECONOMIC RESEARCH SERVICE

ERS reports to the Assistant Secretary for Economics and conducts marketing economics research relating to production and marketing of

farm commodities. ERS research includes evaluations of the organization and performance of

major commodity subsectors, costs and returns

to farmers and marketers, situation and outlook,

commodity projections, price spreads, and analysis of U.S. farm commodity programs, and international markets. ERS marketing economics

research projects deal mostly with broad questions

about relationships among prices and quantities.

These projects are aimed at helping public policymakers and others make informed decisions

about marketing policies (8).

Marketing economics research is fragmented

within ERS. Domestic marketing economics research is largely concentrated in the nine branches

of the National Economics Division, which are

shown in figure 30. The greatest part of the division’s work in this area is conducted by the three

National Economics Division branches dealing

with various stages of the food system (inputs and

finance, farm sector economics, and food economics). In addition, each of the division’s three

commodity branches (animal products, crops, and

fruits, vegetables, and sweeteners) conducts some

vertical subsector marketing economics research.

Of the three functional specialty branches (economic indicators, agricultural history, and food

and agricultural policy), the economic indicators

branch has the greatest responsibility for marketing economics research; it conducts research on

the marketing bill, marketing spreads, and related

topics.

practical problems, the present organization also

makes it difficult to emphasize basic research (4). *

*ln February 1983, ARS announced the results of an internal review of the agency. ARS developed a long-range plan for research

and an accompanying implementation plan. The plan includes an

increase in PHTME research effort. In addition, the national program staff has been reorganized in an effort to reduce the high administrative overhead. However, little, if any, change was made

in the national program staff’s responsibilities.

International marketing economics research is

conducted by all the branches of the International

Economics Division of ERS. These branches are

organized geographically. The research they conduct generally is aimed at identifying trends in

food demand in foreign countries and drawing implications for export markets in those countries.

Prior to 1973, marketing economics research

in ERS was an identifiable and prominent research

activity, as noted in appendix D. Since then, the

level of support for marketing research has decreased, and the level of research also has decreased. The level of real funding for marketing

economics declined from fiscal year 1970 to fiscal

year 1980, and the number of scientist-years* devoted to marketing economics research in ERS

dropped from 119 to 76 (8).

Changes in the content of the marketing economics research program were significant. Research on new products, merchandising, and promotion, including direct cooperation with the

utilization/postharvest technology laboratories of

ARS, was substantially reduced. Studies of plant

efficiency and interregional competition, which

had been a major component of the research in

the 1950’s and early 1960’s, almost disappeared

in the 1970’s. Subsector studies received major

resources in the late 1960’s and early 1970’s,

especially the hog-pork subsector effort. Studies

of market organization and structure received

major emphasis. In the 1970’s, added emphasis

was put on studies of regulatory impacts, as the

● A scientist-year is the equivalent of one scientist working full

time for 1 year.
81

Figure 30.—Organization of the National Economics

Division of ERS

Office of the Secretary

Asst. Secretary for Economics

I

Office of the Administrator

Economic Research

Service (ERS)

E 1 1

r I I I I

I National I Ilnternationall [ Natural

IEconomicsl I Economics I I Resource

I

Economic

Development

Division

(EDD)

I

m

Director

Associate Director

Assistant to the Director

Inputs and

Finance

Economic

Indicators &

Statistics

■

I

Fruits, Vegetables, and

Sweeteners

Food

Economics

History

SOURCE: U.S. Department of Agriculture, Economic Research Service, 1982.

effects of regulation attracted much more public

attention and regulation proliferated (8).

In addition to being fragmented within ERS,

marketing economics research is also fragmented

between ERS and SAES. There is little communication between ERS and SAES concerning the

role of each on research in general, or on marketing economics research in particular. As discussed in the 1981 OTA report on the U.S. food

and agricultural research system (4), ERS in 1979

convened a national committee of agricultural

economics department chairmen and researchers

to discuss mutual problems and interests. One

issue raised was a perceived misunderstanding

about similarities and differences in the role of

ERS and university departments of agricultural

economics. This lack of understanding was

viewed as a barrier to improving the linkages and

communication between ERS and universities. A

number of stereotypical descriptions indicated the

differing perceptions of the group: 1) ERS works

on national problems, and universities work on

local and regional problems; 2) universities work

on micro problems and ERS on macro problems;

3) universities should conduct basic and methodological research, and ERS should conduct applied research; and 4) ERS serves national policymaker clientele, and universities serve farmers and

State policymakers.

It is clear that the agricultural economics profession is not in agreement on what the roles are

or should be for ERS and the universities. Recently, ERS stated that its role is to concentrate on

questions of national concern, leaving the regional

and particularly local impacts to the universities

(8). However, little unanimity of thought exists

on this by the universities, and there is no coordinating mechanism to put it into practice.

During the long existence of the Bureau of Agricultural Economics (1922 to 1953) and since 1961,

agricultural economics research, including marketing economics research, has been a separate

research component in USDA. (Between the two
82

periods, most of the economics research was integrated into ARS and AMS. ) University departments of agricultural economics also are organized

separately from other disciplines. One result from

this type of organization has been some isolation

from the rest of the agricultural research community. In PHTME research, this is especially the

case between food scientists and agricultural

economists.

The discovery of new knowledge does not come

as easily and in such small disciplinary packages

as it once did. Modern agricultural research is

mission-oriented and interdisciplinary, involving

the commitment of large expenditures over time.

Yet USDA and land-grant universities with some

exceptions are not organized to perform this kind

of research (3).

There is little communication and cooperative

research work between ERS economists and ARS

scientists. In fact, with the exception of some ad

hoc groups that meet sporadically, no coordinating mechanism for planning and conducting interdisciplinary research exists between ARS and

ERS (4). Within PHTME research, closer coordination and collaboration of marketing economics research in the National Economics Division

and the postharvest technology national program

of ARS are warranted.

AGRICULTURAL MARKETING SERVICE

AMS, which was established by the Secretary

of Agriculture on April 2, 1972, under the authority of the Reorganization Plan No. 2 of 1953, reports to the Assistant Secretary for Marketing and

Transportation Services. AMS is an action agency that is responsible for providing services related

to consumer protection, agricultural marketing

and distribution, and regulatory programs as authorized by law.

AMS administers a market news service that

provides information to producers, processors,

distributors, and others on supplies, demand,

prices, movement, location, quality, condition,

and other market data on farm products in specific

markets and marketing areas. It also administers

several regulatory programs in the areas of standardization, grading, and inspection. At least 95

percent of the AMS budget in the 1980’s has been

allocated to distributing market news to the agricultural community and to inspection, grading of

agricultural products, and other regulatory activities. Other ARS activities include market protection and promotion, wholesale market development, and market supervision and assistance.

In the 1980’s, less than 2 percent of AMS funds

has been devoted to market development,

In addition to its other responsibilities, AMS

currently has responsibility for the conduct of

studies of the facilities and methods used in the

physical distribution of food and other farm products; for research designed to improve the handling of all agricultural products as they move

from farm to consumers; and for increasing marketing efficiency by developing improved operating methods, facilities, and equipment for processing, handling, and distributing dairy, poultry,

and meat products* (6).

AMS research is aimed toward improving the

efficiency of the marketing sector for agricultural

products by improving the physical flow, improving productivity, and minimizing rising marketing

costs. AMS research tends to be applied research

of an economic/engineering nature that involves

the application of new technology to marketing

problems to demonstrate the potential savings.

To test and evaluate the application of technology to an industrywide problem, ARS often

works with individual firms; typically, such firms

lack the resources, skills, and funds to do their

own research. At the conclusion of the evaluation, the results are publicized for the benefit of

● From 1964 until 1979, AMS did not have a research program.

In 1979, selected marketing research functions were transferred back

to AMS from ARS. These included the animal research, marketing

operations research, and food distribution research laboratories,

which were a part of the Agricultural Marketing Research Institute

of ARS. For more information on the history of the development

of AMS research, see app. D.
83

all firms in the industry. When an improved method that is adopted by a firm results in costs savings, competition causes other firms to adopt the

new technology rapidly.

AMS marketing research is conducted by the

Marketing Research Branch of the Market Research and Development Division (see figs. 31 and

32). The Marketing Research Branch has three

groups: 1) the animal products group, 2) the food

distribution facilities group, and 3) the marketing

system group. The animal products group conducts studies of marketing facilities and methods

used in the assembly, processing, and distribution

of meat animal, dairy, and poultry products. The

food distribution facilities group is oriented

toward analyzing needs and providing technical

assistance for improvements in wholesale food

marketing facilities in metropolitan areas and,

similarly, for assembly market facilities for fruits,

vegetables, and other crops, The marketing systems group conducts research on methods of receipt, storage, loading, shipping, packaging, palletizing, inventory control, delivery wholesaling,

and retailing of agricultural products. Emphasis

is placed on analysis of new or alternative methods of handling food products under existing or

proposed operating conditions, such as firm size

and location, to improve the efficiency of marketing.

The research activities of the marketing research

branch of AMS represent only one aspect of

PHTME research, the physical handling of products at the wholesale level in the marketing chain.

Although many AMS marketing research activities would benefit from an interdisciplinary approach, the present organization of USDA is not

conducive to interdisciplinary research efforts.

Other research that would complement and support AMS research is scattered among other

USDA agencies, primarily ARS and ERS, and in

many ARS field locations. Little coordination exists between AMS and the other agencies involved

in this research (6).

Another concern is the placement of a research

division in an action agency such as AMS. Historically, such placement has not provided a

favorable environment for research. It usually

results in: 1) administrators who are inexperienced

and unfamiliar with research and problems unique

to research organizations and, thus, less sensitive

to their needs; 2) research directed to short-term

applied problems at the expense of equally important, longer term basic research; 3) research

tending to be less respected by scientific peers

because the agency is oriented to action and less

concerned with research; and 4) research that can

easily be politicized so that research goals and

directions shift with each change in administration (1). The above concerns have some validity. The administration’s 1983 and 1984 budget

proposal recommended the AMS research program be discontinued.

Serious consideration should be given to consolidating the present research functions of AMS

with other major PHTME research efforts. As

noted earlier, over 95 percent of the AMS budget

is for providing market news and implementing

regulatory activities. It seems that if there is a

research component to this agency, the research

it conducts might more appropriately be focused

on the agency’s major mission. This would include, for example, research to evaluate the

benefits and costs of regulations proposed by

AMS and the effect of such regulations on the

postharvest and marketing sector and other sectors of the U.S. economy. Research on the effects

of AMS regulations would provide AMS with an

information base that it could use to improve,

modify, or eliminate regulations to the benefit of

society. ERS states that a part of its mission is to

conduct this research for action agencies such as

AMS. However, little ERS research is conducted

in this area (8).
84

Figure31 .—Organization of the Agriculturai Marketing Servce

I

I

4

02-01-01

1

Administrative Services

Division !

I

Personnel Division 1

1 02-06j

I I

I 02-08-84

The mission of the Agricultural Marketing Service is to provide marketing services such as grading and inspection, market news, marketing agreements and orders, and

related programs for various agricultural commodities, including cotton, milk, fruits and vegetables, grain, Iivestock, poultry, tobacco and related products to administer a program designed to license and bond public warehouseman storing agricultural products and weighers and samplers of such products; and to administer a

said regulatory program.

Supersedes AMS Chart dated July 9, 1979.

SOURCE: U.S. Department of Agriculture, Agricultural Marketing Service, 1982.
85

Figure 32.—Organization of the Market Research and Development Division of AMS

Director

Deputy Director

)

I

4

.

I I I ●

Federal-State

Marketing Marketing Statistics Regulation

Improvement Research Branch Review

Program Branch Staff

Staff

I

.

m

I

#

Animal Food Marketing

Products Distributlon Systems

Group Facilities Group

Group

SOURCE: U S. Department of Agriculture, Agriculture Marketing Service, 1982.

COOPERATIVE STATE RESEARCH SERVICE*

CSRS is responsible for administering Federal

funds that go to States for PHTME and all other

agricultural research. Traditionally CSRS has

developed a close working relationship with

SAES, the schools of forestry, and the 1890 Colleges and Tuskegee Institute. Many of the staff

were former scientists at these universities. The

Administrator is a member of the Experiment Station Committee on Organization and Policy and

meets regularly with it on research matters of interest to the States and USDA.

In coordinating research among the States and

between the States and USDA, CSRS staff represent the States. This representation involves

budgets, research priorities, formula v. grant

funds, coordination, and in fact most problems

the SAES have.

*This is an abbreviated discussion of CSRS that pertains to

PHTME Research. For a more detailed discussion, see ref. 4.

Reviews of Research

Desk Reviews

All research proposals to be financed in whole

or in part from Hatch Act funds are reviewed by

CSRS scientific staff. By mutual consent between

CSRS and the SAES directors, all State-supported

projects are also sent to CSRS. Thus, the CSRS

staff is knowledgeable of all activities at the State

level. To review the hundreds of projects in the

PHTME research area, however, there were only

two food scientists and one marketing economist

on the CSRS staff in 1982.

The CSRS desk project review process sometimes is not productive. Most SAES directors submit good outlines; some do not. Some CSRS staff

members make excellent contributions to the

outline; others do not (2). Under the present administration, attempts are being made to have this

function performed at the State level.
86

Onsite Reviews

CSRS also conducts onsite reviews of research

programs in progress. Onsite reviews are conducted as part of CSRS’ responsibility for coordinating research sponsored by Hatch Actor grant

funds, but by mutual consent between CSRS and

SAES directors these reviews extend to all SAES

research, regardless of the source of funds.

The purpose of CSRS onsite reviews is to serve

the needs of the institution or group that requested

the review. Onsite reviews are conducted every

3 to 5 years and generally cover broad subject

areas such as food science and agricultural

economics research. Such reviews legally are not

required, but most SAES personnel believe they

are beneficial (2). If no request is forthcoming for

a review of an area of work within 3 to 4 years,

CSRS may suggest that a review be undertaken.

Onsite review teams include experts from universities, USDA, and the private sector. At the

close of their review, these teams give an oral and

written report to the scientists, department head,

and the SAES director. Acceptance of recommendations concerning programs for the future—

onsite reviews deal only briefly with the past—is

an option that is left with the client institution.

Administration of Grants

CSRS also administers a research grants program that uses the competitive process in the selection

1.

2.

3.

4.

of grantees. These programs are:

competitive research grants program to support basic research in the food and agricultural sciences,

special research grants program to support

research deemed by Congress and USDA to

be of particular importance to the Nation,

alcohols and industrial hydrocarbons program, and

native latex research program.

A concern raised in the OTA report An Assessment of the United States Food and Agricultural

Research System was whether CSRS was the appropriate agency to administer the Competitive

Research Grants program. All U.S. research institutions and scientists that have expertise and

capabilities are supposed to be (and should be)

considered equally as possible grantees. Having

CSRS, whose main function and purpose is so

closely tied to the SAES (which receives a large

share of the grants), administer these grants gave

reason for concern.

A conclusion from the OTA report was that

the Competitive Grants program be removed

from CSRS and possibly placed under the direct

control of the Assistant Secretary for Science and

Education. The present administration has placed

the program under the Assistant Secretary for

Science and Education, but for budgetary purposes the program remains with CSRS.

Regional Research

The Hatch Act provides that up to 25 percent

of the funds may be used for regional research

to “stimulate and facilitate interstate cooperation

on research of a regional and national character

both among SAES and the United States Department of Agriculture” (5). Much of PHTME research has been supported by these funds.

The regional projects carried out under the

SAES basically involve a group of scientists from

different SAES working on a problem of importance to more than one State. The funds for

regional projects which CSRS allocates give these

scientists an opportunity to get together and exchange information and to coordinate their efforts. Generally, however, there is no one who

is charged with responsibility of allocating

resources (personnel and funds) to any given area

of activity, there is no one who is held accountable, and there is no assurance that all aspects of

the needed research will be covered. * Nevertheless, these regional funds have been extremely

useful. Not only do they benefit the work that

is important to each of the cooperating States, but

they usually result in a greater and more coordinated effort than there would have been without

such funds.

● One exception to this is NC117, a regional project in PHTME

research on the Organization and Performance of the U.S. Food Production and Distribution System. It has a full-time executive director with authority to allocate resources and who is accountable. It

is a model other regional research projects could emulate.
87

CONCLUSIONS

Currently, public sector PHTME research is

fragmented among and within several Federal

agencies and SAES. ARS, ERS, and AMS each

reports to a different Assistant Secretary within

USDA: ARS reports to the Assistant Secretary of

Science and Education; ERS reports to the Assistant Secretary for Economics; and AMS reports

to the Assistant Secretary for Marketing and

Transportation Services. This situation makes it

difficult to coordinate public PHTME research efPRINCIPAL FINDINGS

PHTME research is scattered throughout

USDA. Most of the research is conducted in

three separate agencies-ARS, ERS, and AMS.

The fact that each of these agencies reports to

a different Assistant Secretary inhibits the coordination of the public PHTME research efforts.

ARS conducts most of USDA’s postharvest

technology research. Since 1972, ARS has been

organized along regional lines, with ARS regional offices in regions corresponding to the

SAES regions. While this arrangement is conducive to interdisciplinary research efforts, the

boundaries of ARS regions bear little or no relationship to postharvest technology research

problems, because such problems generally do

not follow State lines. Furthermore, the reassignment of national program investigation

leaders to national program staff positions in

ARS with no line authority has diminished the

national perspective and national technical

leadership in the agency’s postharvest technology research efforts.

ERS conducts most of USDA’s marketing economics research. Since 1973, marketing economics research has been fragmented within

ERS and has not been an organizationally identifiable research activity. This arrangement has

resulted in a loss of financial support for marforts, so that problems of national or regional importance are adequately and efficiently addressed.

Through all the numerous USDA organizational changes described in appendix D, PHTME research has been combined with, separated from,

and recombined with production and other kinds

of research. The frequency of change within the

past decade has made it difficult to sustain an effective PHTME research program in the public

sector.

●

●

●

keting economics research and has impeded cooperation with ARS laboratories and university departments of agricultural economics.

AMS is primarily an action agency that provides market news services and implements regulatory activities, such as grading and inspection. AMS research activities represent only one

aspect of PHTME research-namely, the physical handling of products at the wholesale level

in the marketing chain. Little coordination

exists between AMS and agencies involved in

other related PHTME research. Furthermore,

the placement of a research division in an action agency such as AMS does not provide a

favorable environment for research.

CSRS is responsible for administering Federal

funds that go to States for PHTME and other

agricultural research. CSRS desk reviews of

research proposals have been less than in-depth

examinations, and acceptance of recommendations from onsite reviews of research in progress is an option left to the client institution.

SAES and the land-grant universities are organized by disciplinary areas, and this organization may inhibit interdisciplinary PHTME research activities involving food scientists and

agricultural economists.
88

CHAPTER 6 REFERENCES

1.

2.

3.

4.

Irving, George, Senti, Frederick R., Pentzer,

William T., and Purcell, Joseph C., “The Role of

the Public Sector in Agricultural Post-Harvest

Technology Research, ” in An Assessment of the 5.

U.S. Food and Agricultural Research System, Vol.

II-Commissioned Papers, Part C (Washington,

D. C.: Office of Technology Assessment, U.S. Congress, April 1982). 6.

Lovvron, Roy L., “Effect of Organization, Policy

and Procedure on Research Management, ” in An

Assessment of the U.S. Food and Agricultural Re- 7.

search System, Vol. II-Commissioned Papers, Part

A (Washington, D. C.: Office of Technology

Assessment, U.S. Congress, April 1982). 8.

Phillips, Michael J., and Dalrymple, Dana G.,

"U.S. Food and Agricultural Research Assessment:

Implications for Agricultural Economists,” Amer- 9.

ican Journal of Agricultural Economics, vol. 63,

No. 5, December 1981, pp. 990-996.

U.S. Congress, Office of Technology Assessment,

An Assessment of the United States Food and Agricultural Research System, Washington, D. C., December 1981.

U.S. Department of Agriculture, Food and Agricultural Research Grants, FY 1980, Miscellaneous

Publication No. 1396, Washington, D. C., November 1980.

U.S. Department of Agriculture, Agricultural

Marketing Service, written response by AMS to

OTA letter of inquiry, May 1982,

U.S. Department of Agriculture, Agricultural Research Service, written responses by ARS to OTA

letter of inquiry, May 1982.

U.S. Department of Agriculture, Economic Research Service, written response by ERS to OTA

letter of inquiry, May 1982.

U.S. Department of Agriculture, Agricultural

Research Service, Agricultural Research Service

Program Plan, Miscellaneous Publication No.

1429, Washington, D. C., January 1983.
Appendixes
Appendix A

Research Problem Areas in Postharvest

Technology and Marketing

Economics Research

The particular research problem areas (RPAs) included in postharvest technology and marketing

economics (PHTME) research are presented in table

A-1. Most of the RPAs dealing with PHTME research

are contained in research goals IV, V, VI, and VII. *

None of the RPAs in goals I, II, and VIII were judged

to contain any PHTME research. In some RPAs, all

of the research is concerned with PHTME, while for

other RPAs, only part of the research is really

*The research goals evolved from the long-range study of agricultural

research published by USDA in 1966, under the title, “A National Program

Of Research for Agriculture “

PHTME-oriented. For the latter RPAs, information is

not available to allocate the proportions of the total

expenditure for the RPA to PHTME and to the other

types of research. Thus, the criterion adopted was that

if any part or all of the research in a particular RPA

was concerned with PHTME problems, the entire expenditure for that RPA was considered in PHTME.

This criterion will lead to an overstatement of the

amount of funds allocated to PHTME in some RPAs.

The alternative criterion, which was to exclude RPAs

that were not totally concerned with PHTME, would

result in an understatement of the funds allocated to

PHTME research.

Table A-1.– Research Problem Areas (RPAs) Involved in PHTME Research

Goal 1: Ensure a stable and productive agriculture for the

future through wise management of natural resources

(No RPAs)

Goal 11: Protect forests, crops, and livestock from insects,

disease, and other hazards

(No RPAs)

Goal Ill: Produce an adequate supply of farm and forest products at decreasing real production costs

316 Farm Business Management

Goal IV: Expand the demand for farm and forest products by

developing new and improved products and processes and

enhancing product quality

403 New and Improved Fruit and Vegetable Products and

By-products

404 Quality Maintenance in Storing and Marketing Fruits

and Vegetables

406 New and Improved Food Products from Field Crops

407 New and Improved Feed, Textile, and Industrial Products from Field Crops

408 Quality Maintenance in Storing and Marketing Field

Crops

410 New and Improved Meat, Milk, Eggs, and Other Animal Food Products

411 New and Improved Nonfood Animal Products

412 Quality Maintenance in Marketing Animal Products

Goal V: Improve efficiency in the marketing system

501 Improvement of Grades and Standards—Crop and

Animal Products

503a Efficiency in Marketing Agricultural Products and

Production Inputs

506 Supply, Demand, and Price Analysis—Crop and

Animal Products

507 Competitive Interrelationships in Agriculture

508 Development of Domestic Markets for Farm Products

509 Performance of Marketing Systems

510 Group Action and Market Power

511 Improvement in Agricultural Statistics

Goal Vl: Expand export markets and assist developing nations

601 Foreign Market Development

604 Product Development and Marketing for Foreign

Markets

Goal Vll: Protect consumer health and improve nutrition and

well-being of the American people

701 Insure Food Products Free of Toxic Residues from

Agricultural Sources

702 Protect Food and Feed Supplies from Harmful Microorganisms and Naturally Occurring Toxins

703 Food Choices, Habits, and Consumption

704 Home and Commercial Food Service

707 Prevent Transmission of Animal Diseases and

Parasites to Man

708 Human Nutrition

Goal Vlll: Assist Rural Americans to improve their level of

living

(No RPAs)

Goal IX: Promote community improvement including development of beauty, recreation, environment, economic opportunity, and public services

901 Alleviation of Soil, Water, and Air Pollution and

Disposal of Wastes

a

This RPA Incorporates research formerly included under RPAs 503,504, and 505

SOURCE Office of Technology Assessment

91
Appendix B

Postharvest Technology and Marketing

Economics Research Expenditures for

Selected Commodities

This appendix focuses on comparisons of postharvest technology and marketing economics (PHTME)

and total research expenditures by the State agricultural experiment stations (SAES) and the U.S. Department of Agriculture (USDA) for selected commodities

in order to obtain some insight into the patterns of expenditures on PHTME research for various commodities. The commodities considered were selected on a

judgment basis and included selected vegetables, field

crops, and livestock.

Potatoes

The current dollar expenditures by SAES and USDA

on PHTME and total research on potatoes during the

1966-81 period are presented in figure B-1 and the constant dollar expenditures are presented in figure B-2. *

In both SAES and USDA, the current dollar expendi-

● Data used to construct these and all remaining figures in this appendix

can be found in app. C.

Figure B-1.— Potato PHTME and Total Research

‘Expenditures by SAES and USDA, 1966-81

(in current dollars)

0,000 — S PHTM E

9000 /

— - S Total

---- U Total 8000 /

7000

6000E

/ ’

/

5000 “

/

4

4000 -

3000

2000 -

@o - -

● - ● /*

1000 -@” -

0

Year

Office of Technology Assessment

1965 1970 1975 1980

SOURCE

tures on total research on potatoes increased during

the 1966-81 period, with an overall increase of 267 percent in SAES and 154 percent in USDA. In constant

dollars, the increase in SAES was 25 percent, while

for USDA the constant dollar expenditures decreased

13 percent over the 16-year period.

Current dollar expenditures on PHTME research on

potatoes varied in both SAES and USDA during the

1966-81 period, and decreased from 1977 to 1980 in

both SAES and USDA. In constant dollars, the expenditures from 1966 to 1981 decreased by 5 percent

in SAES and decreased by 23 percent in USDA. The

percent of total research expenditures for potatoes

devoted to PHTME research varied in SAES from

about 27 percent in 1969 to 1971 to 14 percent in 1981,

and in USDA from about 63 percent in 1969 to 42 percent in 1981.

Other Vegetables

The USDA and SAES current dollar expenditures

during the 1966-81 period on PHTME and total reFigure B-2.— Potato PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in constant dollars)

9000 — S PHTM E

- ● _ U PHTM E

8000 -- S Tota l

(n ‘ --- U Tota l

%= 7000

0

1000 ● ~*9.— ● -*

o

1965 1970 1975 1980

Year

SOURCE Off Ice of Technology Assessment

92
93

search on vegetables other than potatoes are presented

in figure B-3, and the corresponding constant dollar

expenditures are shown in figure B-4. The total funds

allocated to all other vegetable research were substantially greater in SAES than in USDA and increased at

a more rapid rate in the SAES. In current dollar expenditures, the overall increase from 1966 to 1981 was

284 percent in SAES and 202 percent in USDA. The

corresponding changes in constant dollar expenditures

were a 31-percent increase in SAES and a 3-percent

increase in USDA.

In SAES, PHTME research expenditures as a percent of total research expenditures on vegetables other

than potatoes reached a peak of 19 percent in 1969 and

decreased to about 14 percent in 1981. From 1966 to

1981, the current dollar expenditures on PHTME research on vegetables other than potatoes increased 305

percent, while the increase in constant dollars was only

38 percent.

In USDA, the current dollar expenditures on

PHTME research on vegetables other than potatoes increased 167 percent from 1966 to 1981, and the constant dollar expenditures decreased 9 percent. PHTME

research expenditures as a percent of total research exFigure B-3.—Other Vegetables, PHTME AND Total

Research Expenditures by SAES and USDA,

1966-81 (in current dollars)

50,000 — S PHTM E

45,000

-- S Tota l I

---- U Tota l

/

40,000~ /

# 0 -

10,000 “

5000 “

o ‘

1965 1970 1975 1980

Year

SOURCE Office of Technology Assessment

penditures on vegetables other than potatoes ranged

from a high of 42 percent in 1975 to a low of 29 percent in 1980, and were 30 percent in 1981.

Corn

Current and constant expenditures on PHTME and

total research on corn by the SAES and USDA for the

1966-81 period are presented in figures B-5 and B-6,

respectively. The current dollar expenditures on total

corn research increased 377 percent from 1966 to 1981

in the SAES and 115 percent in USDA. In SAES, constant dollar expenditures increased 58 percent, but in

USDA the constant dollar expenditures decreased by

27 percent. Also, the expenditures on total corn research during the 16-year period fluctuated more in

USDA than in SAES.

The current dollar expenditures on corn PHTME research from 1966 to 1981 increased 603 percent in

SAES, while the constant dollar expenditures increased

140 percent. With some minor fluctuation, the increases were steady throughout the 16-year period.

USDA current dollar expenditures on corn PHTME

research exhibited a similar pattern, but the overall increase from 1966 to 1981 was 30 percent and constant

dollar expenditures declined 56 percent.

Expenditures in SAES on PHTME research as a percent of expenditures on all corn research ranged from

a low of 8 percent in 1970 to a high of 13 percent in

Figure B-4.—Other Vegetables, PHTME and Total

Research Expenditures by SAES and USDA, 1966-81

(in constant dollars)

35,000 “

* 30,000 “

z

~ 25,000 .

?3

g 20,000 w

c

a

: 15,000 -

s

10,000 “

5,000 -

I

1965 1970 1975 1980

Year

SOURCE Office of Technology Assessment

‘, a - . . _ : — 2
94

Figure B-5.— Corn PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in current dollars)

1965 1970 1975 1980

Year

SOURCE: Off Ice of Technology Assessment.

1973 and 1981. The USDA corresponding percentage

ranged from a high of 59 percent in 1970 to a low of

32 percent in 1981.

Wheat

Current and constant dollar expenditures on

PHTME and total research on wheat by the SAES and

USDA for the 1966-81 period are presented in figures

B-7 and B-8, respectively, SAES current dollar expenditures on wheat research increased much more rapidly

than did total USDA expenditures, and by 1975 exceeded those of USDA. In current dollar expenditures,

the overall increase from 1966 to 1981 was 408 percent in SAES and only 83 percent in USDA. In constant dollars, the SAES increase was 74 percent, and

the USDA expenditures decreased by 38 percent. In

1981, the SAES expenditure on wheat research was 55

percent greater than that of USDA.

Current dollar expenditures on wheat PHTME research for the 1966-81 period increased 220 percent in

the SAES system and 10 percent in USDA. In constant

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.

dollars, these increases translate into a 9-percent increase in the SAES and a 62-percent decrease in USDA.

As a percent of total expenditures on wheat research,

expenditures on wheat PHTME research in the SAES

ranged from a high of 22 percent in 1968 to a low of

12 percent in 1981. The USDA low was 28 percent in

1981, and the high was 65 percent in 1970.

Soybeans

Current and constant dollar expenditures on

PHTME and total research on soybeans by the SAES

and USDA for the 1966-81 period are presented in figures B-9 and B-10, respectively. Current dollar expenditures of the SAES on all soybean research increased

by 1,205 percent from 1966 to 1981, and in USDA increased by 454 percent. In constant dollars, the increase in SAES was 346 percent and in USDA, 89

percent.

Current dollar expenditures on soybean PHTME research for the 1966-81 period increased over thirteenfold in SAES, and in constant dollars the increase was

390 percent. In USDA, the increase from 1966 to 1981

in current dollars was 223 percent, but in constant dollars this increase was only 10 percent. USDA expenditures on soybean PHTME research steadily decreased

in constant dollars from 1978 to 1981. In SAES, expenditures on soybean PHTME research as a percent

of total expenditures on all soybean research ranged

from a high of 10 percent in 1968 to a low of 7 per-
95

Figure B-7.— Wheat PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in current dollars)

20,000, A

/

-*- U PHTME /

—— S Total

--- U Total /

o

1965 1970 1975 1980

Year

SOURCE Office of Technology Assessment

Figure B-9.—Soybean PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in current dollars)

35,000

— S PHTM E

*—* U PHTM E

30,000 “ — — S Tota l

---- U Total

i

/

:

: 15,000 -

:

/

#

c

1-

/

/

, 0

10,000 “

/

0

/.4$0

5,000 -

- “ -

*

0 ~

1965 1970 1975 1980

Year

SOURCE Office of Technology Assessment

Figure B-8.— Wheat PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in constant dollars)

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.

Figure B-10.—Soybean PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in constant dollars)

o

1965 1970 1975 1980

Year

SOURCE Off Ice of Technology Assessment
cent in 1981. In USDA, expenditures on soybean

PHTME as a percent of total expenditures on all soybean research ranged from a high of 46 percent in 1969

to a low of 26 percent in 1981.

Rice

Current and constant dollar expenditures on

PHTME and on total research on rice by the SAES and

USDA for the 1966-81 period are presented in figures

B-II and B-12, respectively. Current dollar expenditures in the SAES on all rice research increased by 667

percent and in USDA by 185 percent. In constant dollars, the overall increase for the 16-year period was

162 percent in the SAES, while the constant dollar expenditures in USDA decreased 2 percent. From 1977

to 1981, both current and constant dollar expenditures

on total rice research increased in the SAES.

Current dollar expenditures on rice PHTME research

for the 1966-81 period increased about 463 percent in

the SAES, while constant dollar expenditures increased

94 percent. In USDA, the increase from 1966 to 1981

was 185 percent in current dollar expenditures and a

decrease of 3 percent in constant dollar expenditures.

The decrease in USDA expenditures occurred during

the last 4 years of the 16-year period. In the SAES,

Figure B-n .—Rice PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in current dollars)

VJ 3,000 m 1 -

~ 2,000 -

9

#“

1,000

0,

1965 1970 1975 1980

Year

SOURCE Office of Technology Assessment,

expenditures on rice PHTME research as a percent of

total expenditures on all rice research ranged from a

high of 13 percent in 1966 to a low of 7 percent in 1970,

and the proportion for 1981 was 10 percent. In USDA,

expenditures on rice PHTME research as a proportion

of total expenditures on all rice research ranged from

a high of 67 percent in 1977 to a low of 51 percent

in 1966 and 1981.

Cotton

The SAES and USDA PHTME and total research

expenditures on cotton for the 1966-81 period in current and constant dollars are presented in figures B-13

and B-14, respectively. For all commodities discussed

thus far, the total SAES expenditure in current dollars

exceeded that of USDA. However, this is not true for

cotton, The total USDA expenditures on cotton research were approximately 65 percent greater than

those of the SAES.

The expenditures by USDA on cotton research increased 131 percent in current dollars from 1966 to

1981, but the constant dollar expenditures decreased

by 21 percent. In the SAES, the current dollar expenditures increased by 148 percent from 1966 to 1981, while

the constant dollar expenditures decreased by 15

percent.

USDA current dollar expenditures on cotton PHTME

research varied considerably over the 1966-81 period,

and increased only 2 percent. The corresponding conFigure B-12.— Rice PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in constant dollars)

— S PHTME

-*- U PHTME

gJ 4,000

---- U Total

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.
97

Figure B-13. —Cotton PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in current dollars)

5,000 -

1985 1970 1975 1980

Year

SOURCE” Off Ice of Technology Assessment.

stant dollar expenditure declined by 65 percent. In the

SAES, the increase in current dollars on cotton PHTME

research for the same period was 150 percent, while

the corresponding constant dollar expenditure declined

14 percent, USDA expenditures on cotton PHTME research relative to total expenditures on cotton research

ranged from a high of 44 percent in 1970 to a low of

19 percent in 1981. In the SAES, the corresponding

proportions ranged from a high of 5 percent in 1968

and 1981 to a low of 3 percent in 1979.

Dairy

Current and constant dollar expenditures by the

SAES and USDA on PHTME and all dairy research

for the 1966-81 period are presented in figures B-15

and B-16, respectively. Current dollar expenditures on

all dairy research in the SAES increased 193 percent

from 1966 to 1981, while the constant dollar expenditures remained level. The current dollar expenditures

in USDA increased by 116 percent, but the constant

dollar expenditures for the same 16-year period declined 26 percent. The total expenditures in the SAES

on all dairy research during the 1966-81 period were

from 74 percent to approximately 165 percent greater

than the expenditures in USDA.

Figure B-14.—Cotton PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(In constant dollars)

1985 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.

Current dollar expenditures in the SAES on dairy

PHTME research, which includes marketing research,

increased 170 percent from 1966 to 1981, but corresponding constant dollar expenditures declined 8 percent, For the same period, the current dollar expenditures on dairy PHTME research in USDA increased

21 percent, while constant dollar expenditures declined

59 percent. In the SAES, expenditures on dairy PHTME

research as a percent of expenditures on all dairy research ranged from a high of 22 percent in 1970 to a

low of 17 percent in 1973 and 1981. In USDA, the comparable percentages for the 16-year period ranged from

a high of 37 percent in 1972 to a low of 13 percent

in 1981,

Beef

Current and constant dollar expenditures by the

SAES and USDA on PHTME and all beef research for

the 1966-81 period are presented in figures B-17 and

B-18, respectively. Current dollar expenditures for all

beef research in the SAES increased 333 percent from

1966 to 1981, and constant dollar expenditures increased 48 percent. The current dollar expenditures in

USDA increased 213 percent, but the constant dollar

expenditures increased only 7 percent. In a pattern

similar to that of dairy research, total expenditures in

the SAES on all beef research during the 1966-81 period

were from 63 percent to 145 percent greater than the

expenditures in USDA.
98

Figure B-15. —Dairy PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in current dollars)

1965 1970 1975 1980

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.

Figure B-18.— Beef PHTME and Total Research

Expenditures by SAES and USDA, 1966-81

(in constant dollars)

1965 1970 1975 1980

Year

SOURCE: Office of Technology Assessment.
99

Current dollar expenditures in the SAES on beef tures on beef PHTME research as a percent of expendiPHTME research increased 265 percent from 1966 to tures on all beef research ranged from a high of 12 per1981, while the corresponding constant dollar expendi- cent in 1968 to a low of 6 percent in 1981. In USDA,

tures increased 25 percent. During the same 16-year the comparable percentages for the 1966-81 period

period, the current dollar expenditures on beef PHTME ranged from a high of 33 percent in 1969 to a low of

research in USDA increased 142 percent, but constant 17 percent in 1980. The 1981 proportion for USDA

dollar expenditures declined 18 percent. SAES expendi- was about 18 percent.
Appendix C

Statistics on Agricultural

Research Expenditures*

Table C-1 .—Combined SAES and USDA Research Expenditures on PHTME, Production, Other, and Totai

Agricuiturai Research in Current and Constant Doiiars, 1966-81 (thousands of dollars)

Total PHTME Production Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $ 358,300

1967 . . . . . . . . . . . 373,100

1968 . . . . . . . . . . . 401,840

1969 . . . . . . . . . . . 423,160

1970 . . . . . . . . . . . 459,000

1971 . . . . . . . . . . . 497,310

1972 . . . . . . . . . . . 571,250

1973 . . . . . . . . . . . 614,950

1974 . . . . . . . . . . . 670,790

1975 . . . . . . . . . . . 755,120

1976 . . . . . . . . . . . 830,130

1977 . . . . . . . . . . . 949,310

1978. . . . . . . . . . . 1,043,185

1979. . . . . . . . . . . 1,139,419

1980. . . . . . . . . . . 1,246,355

1981a . . . . . . . . . . 1,399,578

$375,971

373,100

380,891

378,159

379,339

384,023

414,249

417,765

416,578

429,289

443,446

475,371

485,654

491,341

490,112

501,282

$87,187

91,991

94,274

99,183

104,909

116,753

133,751

143,791

154,973

165,978

180,966

198,470

215,553

228,510

236,844

259,574

$91,487

91,991

89,359

88,883

86,702

90,157

96,991

97,684

96,498

94,359

96,670

99,384

100,351

98,538

93,136

92,971

$237,706

243,012

267,026

276,815

304,591

323,257

367,757

394,389

429,987

493,299

542,818

619,699

680,888

754,490

848,977

964,685

$249,429

243,012

253,105

247,377

251,728

249,619

266,684

267,927

267,725

280,443

289,987

310,315

316,987

325,351

333,849

345.518

$33,406

38,096

40,537

47,159

49,498

57,298

69,742

76,769

85,852

95,842

106,344

131,147

146,743

156,420

160,534

175,319

$35,054

38,096

38,424

42,144

40,907

44,246

50,574

52,153

53,457

54,487

56,808

65,672

68,316

67,451

63,128

62,793

aPreliminary.

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vo;. II.

Table C-2.—USDA Expenditures on PHTME, Production, Other, and Total Agricultural Research

in Current and Constant Dollars, 1966-81 (thousands of dollars)

USDA Total USDA PHTME USDA Production USDA Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $153,084 $160,634 $54,306 $58,985 $87,887 $92,221 $10,891 $11,428

1987 . . . . . . . . . . . 165,424 165,424 57,783 57,783 94,945 94,945 12,696 12,696

1968 . . . . . . . . . . . 159,150 150,853 56,273 53,339 91,197 86,443 11,680 11,071

1969 . . . . . . . . . . . 163,865 146,439 57,634 51,505 93,691 83,727 12,540 11,207

1970 . . . . . . . . . . . 176,896 146,195 62,268 51,461 100,578 83,122 14,051 11,612

1971 ......, . . . . 197,084 152,188 70,642 54,550 109,052 84,210 17,390 13,428

1972 . . . . . . . . . . . 224,308 162,680 79,196 57,430 124,093 89,988 21,019 15,242

1973 ......, . . . . 236,291 160,524 82,339 55,936 131,078 89,047 22,874 15,540

1974 . . . . . . . . . . . 240,183 149,554 86,683 53,974 132,826 82,706 20,674 12,873

1975 . . . . . . . . . . . 265,604 150,997 93,786 53,318 144,936 82,397 25,804 14,669

1976 . . . . . . . . . . . 302,531 161,608 100,618 53,749 173,632 92,752 29,235 15,617

1977 . . . . . . . . . . . 343,859 172,188 107,653 53,907 202,235 101,269 33,971 17,011

1978 . . . . . . . . . . . 380,557 177,168 117,892 54,885 228,838 106,535 33,826 15,748

1979 . . . . . . . . . . . 391,738 168,925 117,261 50,565 241,694 104,223 32,784 14,137

1980 . . . . . . . . . . . 417,305 164,099 116,665 45,877 263,824 103,745 36,816 14,477

1981a . . . . . . . . . . 483,246 173,082 132,244 47,365 308,173 110,377 42,829 15,340

aPreliminary.

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vol. II.

● Many of the current and constant total dollar figures will not be the same as those found in the OTA report An Assessment of the United

States Food and Agricultural Research System. This is because of revisions made by USDA to current dollar figures and the changes In the

deflator made by the U.S. Department of Commerce.

100
101

Table C-3.—SAES Expenditures on PHTME, Production, Other, and Total Agricultural Research

in Current and Constant Dollars, 1966-81 (thousands of dollars)

SAES Total SAES PHTME SAES Production SAES Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . .

1967 . . . . . . . . . . .

1968 . . . . . . . . . . .

1969 . . . . . . . . . . .

1970 . . . . . . . . . . .

1971 ....., . . . . .

1972 . . . . . . . . . . .

1973 . . . . . . . . . . .

1974 . . . . . . . . . . .

1975 . . . . . . . . . . .

1976 . . . . . . . . . . .

1977. . . . . . . . . . .

1978. . . . . . . . . . .

1979. . . . . . . . . . .

1980. . . . . . . . . . .

1981a . . . . . . . . . .

$205,215

207,675

242,687

259,292

282,101

300,224

346,942

378,658

430,609

490,054

527,120

605,455

662,628

747,681

829,050

916,332

$215,336

207,675

230,035

231,718

233,141

231,833

251,590

257,240

268,125

278,598

281,581

303,182

308,486

322,415

326,013

328,199

$32,881

34,208

38,001

41,549

42,641

46,111

54,555

61,452

68,290

72,192

80,348

90,817

97,661

111,249

120,179

127,330

$34,503

34,208

36,020

37,130

35,240

35,607

39,561

41,747

42,522

41,042

42,921

45,477

45,466

47,973

47,259

45.605

$149,819

148,067

175,829

183,124

204,013

214,205

243,664

263,311

297,141

347,824

369,663

417,464

452,050

512,796

570,486

585,153

$157,208

148,067

166,663

163,650

168,606

165,409

176,696

178,880

185,019

197,740

197,470

209,046

210,452

221,128

224,336

230,103

$22,515

25,400

28,857

34,619

35,447

39,908

48,723

53,895

65,178

70,038

77,109

97,176

112,917

123,636

138,385

123,718

$23,625

25,400

27,353

30,937

29,295

30,817

35,332

36,613

40,584

39,817

41,191

48,661

52,568

53,314

54,418

48,650

aPreliminary.

SOURCE: Compiled from the U.S Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81 Vol II.

Table C-4.—SAES Expenditures on PHTME and on

Total Agricultural Research as a Percent of

Combined USDA/SAES Expenditures on PHTME and

Total Agricultural Research, 1966-81* (percentage)

Total SAES PHTME SAES

Year research research

1966. . . . . . . . . . . . . .

1967. . . . . . . . . . . . . .

1968. . . . . . . . . . . . . .

1969. . . . . . . . . . . . . .

1970. . . . . . . . . . . . . .

1971 . . . . . . . . . . . . . .

1972. . . . . . . . . . . . . .

1973. . . . . . . . . . . . . .

1974. . . . . . . . . . . . . .

1975. . . . . . . . . . . . . .

1976. . . . . . . . . . . . . .

1977. . . . . . . . . . . . . .

1978. . . . . . . . . . . . . .

1979. . . . . . . . . . . . . .

1980. . . . . . . . . . . . . .

1981b 

. . . . . . . . . . . . .

0.573

0.557

0.604

0.613

0.615

0.604

0.607

0.616

0.642

0.649

0.635

0.638

0.635

0.656

0.666

0.655

0.377

0.372

0.403

0.419

0.406

0.395

0.408

0.427

0.441

0.435

0.444

0.458

0.453

0.487

0.507

0.491

aSAES is SAES and other cooperating institutions.

bPreliminary,

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81 Vol.

II.
102

Table C-5.—Private Industry Funds for Applied Research and Development of Agricultural Chemicals,

Farm Machinery, and Food and Kindred Products in Current and Constant Dollars, 1963-75 (millions of dollars)

Food and Farm Agricultural Total private

kindred machinery chemicals agricultural research

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1963 . . . . . . . . . . . . . . . . 102 118 76 88 45 52 223 258

1964 . . . . . . . . . . . . . . . . 118 133 79 89 48 54 245 277

1965 . . . . . . . . . . . . . . . . 131 144 96 105 64 70 291 320

1966 . . . . . . . . . . . . . . . . 130 136 100 105 77 81 307 322

1967 . . . . . . . . . . . . . . . . 134 134 102 102 92 92 328 328

1968 . . . . . . . . . . . . . . . . 165 156 96 91 99 94 360 341

1969 . . . . . . . . . . . . . . . . 179 160 99 88 104 93 382 341

1970 . . . . . . . . . . . . . . . . 204 169 89 74 126 104 419 346

1971 . . . . . . . . . . . . . . . . 207 160 90 69 130 100 427 330

1972. . . . . . . . . . . . . . . . 222 161 92 67 108 78 422 306

1973. . . . . . . . . . . . . . . . 234 159 117 79 114 77 465 316

1974 . . . . . . . . . . . . . . . . 269 167 127 79 137 85 533 332

1975. . . . . . . . . . . . . . . . 292 166 145 82 165 94 602 342

SOURCE National Science Foundation, “Table E-51 Research and Development In Industry 1975,’’ Surveys of Science Resources Series, NSF77-324, p 72.

Table C-6.—Agricultural Research Service (ARS) Expenditures on Total PHTME, Production, and

Other Agricultural Research uncurrent and Constant Dollars, 1966-81 (thousands of doilars)

ARS Total ARS PHTME

—

ARS Production ARS Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966. . . . . . . . . . . $136,761 $143,506 $46,211 $48,491 $85,214 $ 89,416 $ 5,336 $5,599

1967. . . . . . . . . . . 145,716 145,716 49,356 49,356 90,055 90,055 6,305 6,305

1968. . . . . . . . . . . 142,405 134,981 46,331 43,916 88,642 84,021 7,432 7,045

1969. . . . . . . . . . . 146,801 131,189 47,570 42,511 91,181 81,484 8,050 7,194

1970. . . . . . . . . . . 161,113 133,151 53,560 44,264 98,828 81,676 8,725 7,211

1971 . . . . . . . . . . . 176,076 135,966 59,240 45,745 106,396 82,159 10,440 8,062

1972. . . . . . . . . . . 192,617 139,679 63,315 45,914 117,850 85,460 11,452 8,305

1973. . . . . . . . . . . 200,322 136,088 66,310 45,048 122,354 83,121 11,658 7,920

1974. . . . . . . . . . . 206,995 128,889 69,010 42,970 124,831 77,728 13,154 8,190

1975. . . . . . . . . . . 224,096 127,400 72,335 41,123 137,235 78,019 14,526 8,258

1976. . . . . . . . . . . 252,514 134,890 76,734 40,990 159,503 85,205 16,278 8,696

1977. . . . . . . . . . . 292,956 146,698 84,070 42,098 190,045 95,165 18,841 9,435

1978. . . . . . . . . . . 323,147 150,440 90,685 42,218 212,373 98,870 20,089 9,352

1979. . . . . . . . . . . 338,032 145,766 91,615 39,506 227,363 98,044 19,054 8,216

1980. . . . . . . . . . . 360,347 141,702 95,225 37,446 243,291 95,671 21,831 8,585

1981= . . . . . . . . . . 419,356 150,199 107,825 38,619 285,774 102,355 25,757 9,225

‘Preliminary.

—

SOURCE: Compiled from the U.S Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY l966-81, Vol, II,
103

Table C-7.—Economic Research Service (ERS) Expenditures on Total, PHTME, Production, and

Other Agricultural Research in Current and Constant Dollars, 1966-81 (thousands of dollars)

ERS Total ERS PHTME ERS Production ERS Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . .

1967 . . . . . . . . . . .

1968 . . . . . . . . . . .

1969 . . . . . . . . . . .

1970 . . . . . . . . . . .

1971 . . . . . . . . . . .

1972 .., ... . . . .

1973 . . . . . . . . . . .

1974 ....., . . . . .

1975 . . . . . . . . . . .

1976 . . . . . . . . . . .

1977. . . . . . . . . . .

1978. . . . . . . . . . .

1979. . . . . . . . . . .

1980. . . . . . . . . . .

1981a. . . . . . . . .

$16,323

17,711

14,775

15,064

14,089

18,361

19,191

20,569

21,605

24,497

28,520

29,000

33,702

37,141

42,626

46,546

$17,128

17,711

14,005

13,462

11,644

14,178

13,916

13,974

13,453

13,927

15,235

14,522

15,690

16,016

16,762

16,671

$ 8,095

8,427

9,832

9,950

8,567

11,227

12,213

12,354

13,366

15,757

17,097

17,051

20,296

22,392

18,229

21,354

$8,494

8,427

9,319

8,592

7,080

8,669

8,856

8,393

8,323

8,958

9,133

8,538

9,449

9,656

7,168

7,648

$ 2,673

2,893

865

737

336

324

361

973

3,087

1,535

2,223

1,920

4,661

2,755

10,673

9,486

$2,805

2,894

820

659

278

250

262

661

1,922

873

1,188

962

2,170

1,188

4,197

3,398

$5,555

6,391

4,078

4,378

5,187

6,810

6,617

7,242

5,152

7,205

9,201

10,029

8,745

11,993

13,723

15,706

aPreliminary

SOURCE Compiled from the US Department of Agriculture, Science and Education Administration, Inventort of Agricultural Research FY 1966-81 Vol II

Table C-8.—Marketing Research Expenditures by

Agricultural Marketing Service, 1947-81

(thousands occurrent dollars)

Year Thousands of dollars

1947-53 . . . . . . . . . . . . . . Unable to determine conclusively

1954 . ...............3,884

1955 . . . . . . . . . . . . . . . . 5,105

1956 . . . . . . . . . . . . . . . . 5,652

1957 . . . . . . . . . . . . . . . . 6,446

1958 . . . . . . . . . . . . . . . . 7,197

1959 . . . . . . . . . . . . . . . . 7,460

1960 . . . . . . . . . . . . . . . . 7,211

1961 . ...............4,214

1982 . . . . . . . . . . . . . . . . 4,306

1963 . . . . . . . . . . . . . . . . 4,787

1964 . . . . . . . . . . . . . . . . 2,915 (part year)

1965-78. . . . . . . . . . . . . . O

1979 . . . . . . . . . . . . . . . . 1,237

1980 . . . . . . . . . . . . . . . . 1,277

1981 . . . . . . . . . . . . . . . . 1,418

$5,829

6,391

3,865

3,912

4,287

5,259

4,798

4,920

3,208

4,096

4,915

5,021

4,071

5,172

5,396

5,625

SOURCE: Agricultural Marketing Service, 1982
104

Table C-9.—SAES Expenditures from Hatch Act Funds on Total, PHTME, Production, and Other

Agricultural Research in Current and Constant Dollars, 1966-81 (thousands of dollars)

Hatch Total Hatch PHTME Hatch Production Hatch Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $48,017

1967 . . . . . . . . . . . 48,694

1968 . . . . . . . . . . . 52,449

1969 . . . . . . . . . . . 53,912

1970 . . . . . . . . . . . 56,439

1971 . . . . . . . . . . . 62,743

1972 ......., . . . 70,587

1973 . . . . . . . . . . . 77,220

1974 . . . . . . . . . . . 82,127

1975 . . . . . . . . . . . 90,302

1976 . . . . . . . . . . . 102,505

1977 . . . . . . . . . . . 116,761

1978 . . . . . . . . . . . 132,179

1979. . . . . . . . . . . 154,033

1980. . . . . . . . . . . 160,416

1981a . . . . . . . . . . 171,803

$50,385

48,694

49,715

48,179

46,644

48,450

51,187

52,459

51,138

51,337

54,757

58,468

61,536

66,422

63,081

61,534

$10,877

11,286

11,505

11,877

12,420

14,124

16,465

18,940

20,284

20,802

24,810

28,216

28,793

31,307

31,273

30,617

$11,413

11,286

10,905

10,614

10,264

10,907

11,940

12,867

12,630

11,826

13,253

14,129

13,405

13,500

12,298

10,966

$31,287

30,882

34,418

34,459

36,042

38,117

41,440

44,126

45,975

52,173

57,020

66,347

79,226

94,699

101,189

111,183

$32,830

30,882

32,624

30,794

29,787

29,434

30,051

29,977

28,627

29,661

30,459

33,223

36,884

40,836

39,791

39,822

$5,853

6,526

6,526

7,576

7,977

10,502

12,682

14,154

15,868

17,327

20,675

22,198

24,160

28,027

27,954

30,003

$6,142

6,526

6,186

6,770

6,593

8,110

9,197

9,615

9,880

9,850

11,044

11,116

11,248

12,086

10,993

10,746

aPreliminay.

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81 Vol II.

Table C-10.—SAES Expenditures From Cooperative Grants and Cooperative Agreements (CGCA) Funds for Total,

PHTME, Production, and Other Research in Current and Constant Dollars, 1966-81 (thousands of dollars)

CGCA Total CGCA PHTME CGCA Production CGCA Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $6,008 $6,304 $1,559 $1,636 $3,926 $4,120 $ 523 $ 549

1967 . . . . . . . . . . . 6,260 6,260 1,707 1,707 4,004 4,004 549 549

1968 . . . . . . . . . . . 9,594 9,094 1,835 1,739 6,850 6,493 909 862

1969 . . . . . . . . . . . 7,784 6,956 1,611 1,440 5,310 4,745 863 771

1970 . . . . . . . . . . . 6,837 5,650 1,467 1,212 4,727 3,907 643 531

1971 . . . . . . . . . . . 6,320 4,880 1,170 903 4,495 3,471 655 506

1972 . . . . . . . . . . . 6,850 4,967 1,548 1,123 4,548 3,298 754 547

1973 . . . . . . . . . . . 7,476 5,079 1,527 1,037 4,721 3,207 1,228 834

1974 . . . . . . . . . . . 8,631 5,374 1,639 1,021 5,364 3,340 1,628 1,014

1975 . . . . . . . . . . . 10,773 6,125 1,814 1,031 6,827 3,881 2,132 1,212

1976 . . . . . . . . . . . 9,882 5,279 1,423 760 6,998 3,738 1,461 780

1977 . . . . . . . . . . . 11,758 5,888 1,912 957 7,138 3,574 2,708 1,356

1978 . . . . . . . . . . . 14,783 6,882 2,541 1,183 8,705 4,053 3,537 1,647

1979 . . . . . . . . . . . 19,141 8,254 3,156 1,361 11,282 4,865 4,703 2,028

1980 . . . . . . . . . . . 24,362 9,580 3,833 1,507 14,984 5,892 5,545 2,180

1981a 

. . . . . . . . . . 29,821 10,681 5,479 1,962 18,872 6,759 5,470 1,959

aPreliminary.

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vol. II.
105

Table C-11 .—SAES Expenditures From Other Federal Sources for PHTME, Production, Other, and

Total Agricultural Research in Current and Constant Dollars, 1966-81 (thousands of dollars)

OTH Federal

OTH Federal Total OTH Federal PHTME Production OTH Federal Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . .

1967 . . . . . . . . . . .

1968 . . . . . . . . . . .

1969 . . . . . . . . . . .

1970 . . . . . . . . . . .

1971 . . . . . . . . . . .

1972 .., . . . . . . . .

1973 . . . . . . . . . . .

1974 . . . . . . . . . . .

1975 . . . . . . . . . . .

1976 . . . . . . . . . . .

1977 . . . . . . . . . . .

1978 . . . . . . . . . . .

1979. . . . . . . . . . .

1980. . . . . . . . . . .

1981a . . . . . . . . . .

$24,522

23,566

28,602

27,834

26,440

25,957

27,299

28,748

31,205

34,236

37,772

51,760

53,590

60,967

67,622

77,911

$25,731

23,566

27,111

24,874

21,851

20,044

19,796

19,530

19,430

19,463

20,177

25,919

24,949

26,290

26,591

27,905

$5,050

5,158

6,561

6,785

5,782

6,581

6,243

6,739

6,117

6,573

7,744

10,741

9,967

13,398

13,187

12,793

$5,299

5,158

6,219

6,063

4,779

5,082

4,527

4,578

3,809

3,737

4,137

5,379

4,640

5,777

5,186

4,582

$16,584

15,517

18,900

16,545

17,613

16,514

17,462

18,680

20,010

23,153

24,952

34,234

33,782

37,539

44,299

53,892

$17,402

15,517

17,915

14,786

14,556

12,752

12,663

12,690

12,460

13,163

13,329

17,143

15,727

16,188

17,420

19,280

$2,888

2,891

3,141

4,504

3,045

2,862

3,594

3,329

5,078

4,510

5,076

6,785

9,841

10,030

10,136

11,258

$3,030

2,891

2,977

4,025

2,517

2,210

2,606

2,262

3,162

2,564

2,712

3,398

4,581

4,325

3,986

4,032

aPreliminary.

SOURCE: Compiled from the U.S Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vol II

Table C-12.—SAES Expenditures From State Appropriations on Total, PHTME, Production, and

Other Agricultural Research in Current and Constant Dollars, 1966.81 (thousands of dollars)

State Total State PHTME State Production State Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $117,942 $123,759 $14,022 $14,714 $91,751 $96,276 $12,169 $12,769

1967 . . . . . . . . . . . 120,610 120,610 14,573 14,573 91,667 91,667 14,370 14,370

1968 . . . . . . . . . . . 142,276 134,859 16,428 15,572 109,628 103,913 16,220 15,374

1969 . . . . . . . . . . . 157,526 140,774 19,018 16,996 118,610 105,996 19,898 17,782

1970 . . . . . . . . . . . 178,666 147,658 20,512 16,952 136,491 112,802 21,663 17,803

1971 .., . . . . . . . . 190,892 147,407 22,057 17,032 145,126 112,066 23,709 18,308

1972 . . . . . . . . . . . 226,185 164,021 27,825 20,178 169,339 122,798 29,021 21,045

1973 . . . . . . . . . . . 247,691 168,268 31,127 21,146 184,132 125,090 32,432 22,033

1974 . . . . . . . . . . . 288,022 179,341 36,471 22,709 212,300 132,192 39,251 24,440

1975 . . . . . . . . . . . 331,270 188,329 39,031 22,189 250,655 142,499 41,584 23,641

1976 . . . . . . . . . . . 349,502 186,700 42,086 22,482 261,459 139,668 45,957 24,550

1977 . . . . . . . . . . . 393,359 196,975 45,344 22,706 288,371 144,402 59,644 29,867

1978 . . . . . . . . . . . 428,489 199,483 51,307 23,886 308,001 143,390 69,181 32,207

1979 . . . . . . . . . . . 477,787 206,031 57,913 24,973 345,447 148,964 74,427 32,094

1980 . . . . . . . . . . . 530,524 208,621 65,738 25,851 390,941 153,732 73,845 29,039

1981 a 

. . . . . . . . . . 585,822 209,822 70,722 25,330 437,225 156,599 77,875 27,892

aPreliminary.

SOURCE: Compiled from the US Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vol. II.
106

Table C-13.—SAES Expenditures From Private Industry Funds on Total, PHTME, Production, and

Other Agricultural Research in Current and Constant Dollars, 1966=81 (thousands of dollars)

Private Total Private PHTME Private Production Private Other

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $8,726 $9,156 $1,373 $1,441 $6,271 $6,580 $1,082 $1,135

1967 . . . . . . . . . . . 8,545 8,545 1,484 1,484 5,997 5,997 1,064 1,064

1968 . . . . . . . . . . . 9,766 9,257 1,672 1,585 6,033 5,718 2,061 1,954

1989 . . . . . . . . . . . 12,236 10,935 2,258 2,018 8,200 7,328 1,778 1,589

1970 . . . . . . . . . . . 13,719 11,338 2,460 2,033 9,140 7,554 2,119 1,751

1971 . . . . . . . . . . . 14,312 11,052 2,179 1,683 9,953 7,686 2,180 1,683

1972 . . . . . . . . . . . 16,021 11,618 2,474 1,794 10,875 7,886 2,672 1,938

1973 . . . . . . . . . . . 17,523 11,904 3,119 2,119 11,652 7,916 2,752 1,870

1974 . . . . . . . . . . . 20,624 12,842 3,779 2,353 13,492 8,401 3,353 2,088

1975 . . . . . . . . . . . 23,473 13,345 3,972 2,258 15,016 8,537 4,485 2,550

1976 . . . . . . . . . . . 27,459 14,668 4,285 2,289 19,234 10,275 3,940 2,105

1977 . . . . . . . . . . . 31,819 15,933 4,604 2,305 21,374 10,703 5,841 2,925

1978 . . . . . . . . . . . 33,587 15,636 5,053 2,352 22,336 10,399 6,198 2,885

1979. . . . . . . . . . . 35,753 15,417 5,475 2,361 23,829 10,276 6,449 2,781

1980. . . . . . . . . . . 46,126 18,138 6,148 2,418 33,740 13,268 6,238 2,453

1981a . . . . . . . . . . 50,975 18,258 7,719 2,765 35,372 12,669 7,884 2,824

aPreliminary.

—

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81 Vol II.

Table C-14.–Potatoe PHTME and Total Agricultural Research Expenditures by SAES and USDA

in Current and Constant Dollars, 1966-81 (thousands of dollars)

SAES PHTME SAES Total USDA PHTME USDA Total

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1986 . . . . . . . . . . . $ 488 $512 $2,758 $2,894 $ 880 $ 923 $1,838 $1,929

1967 . . . . . . . . . . . 575 575 2,924 2,924 1,022 1,022 2,007 2,007

1968 . . . . . . . . . . . 653 619 2,630 2,493 1,068 1,012 1,839 1,743

1969 . . . . . . . . . . . 833 744 3,053 2,728 1,333 1,191 2,103 1,879

1970 . . . . . . . . . . . 936 773 3,466 2,864 1,149 950 2,177 1,799

1971 . . . . . . . . . . . 1,027 793 3,808 2,941 1,342 1,036 2,332 1,801

1972 . . . . . . . . . . . 980 711 3,941 2,858 1,482 1,075 2,617 1,898

1973 . . . . . . . . . . . 1,069 726 4,334 2,944 1,693 1,150 2,777 1,887

1974 . . . . . . . . . . . 1,092 680 4,862 3,027 1,928 1,200 2,999 1,867

1975 . . . . . . . . . . . 1,359 773 5,398 3,069 1,943 1,105 3,222 1,832

1976 . . . . . . . . . . . 1,554 830 6,319 3,376 1,967 1,050 3,497 1,868

1977 . . . . . . . . . . . 1,610 806 7,197 3,603 2,288 1,146 4,222 2,114

1978 . . . . . . . . . . . 1,477 688 8,002 3,725 2,286 1,064 4,201 1,956

1979 . . . . . . . . . . . 1,362 587 8,765 3,780 2,146 925 4,242 1,829

1980 . . . . . . . . . . . 1,464 576 9,189 3,613 1,896 746 4,205 1,654

1981a . . . . . . . . . . 1,367 489 10,131 3,629 1,978 709 4,668 1,672

aPreliminary.

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vol. II.
107

Table C-15.—Other Vegetables PHTME and Total Agricultural Research Expenditures by SAES and USDA

in Current and Constant Dollars, 1966-81 (thousands of dollars)

Year

SAES PHTME

research expenditure

Current Constant

dollars dollars

SAES Total

research expenditure

Current Constant

dollars dollars

USDA PHTME

research expenditure

USDA Total

research expenditure

Current Constant

dollars dollars

Current

dollars

Constant

dollars

1966 . . . . . . . . . . .

1967 . . . . . . . . . . .

1968 . . . . . . . . . . .

1969 . . . . . . . . . . .

1970 . . . . . . . . . . .

1971 . . . . . . . . . . .

1972 . . . . . . . . . . .

1973 . . . . . . . . . . .

1974 . . . . . . . . . . .

1975 . . . . . . . . . . .

1976 . . . . . . . . . . .

1977 ....., . . . . .

1978 . . . . . . . . . . .

1979 . . . . . . . . . . .

1980. . . . . . . . . . .

1981a . . . . . . . . . .

$1,839

1,863

2,513

2,875

2,430

2,515

2,564

2,728

3,357

3,670

4,555

4,959

5,314

5,765

6,352

7,444

$1,930

1,863

2,382

2,569

2,008

1,942

1,859

1,853

2,090

2,085

2,433

2,483

2,474

2,486

2,498

2,666

$13,660

14,401

13,933

14,815

15,590

16,669

17,317

19,067

23,125

26,295

30,818

33,530

37,093

42,453

46,740

52,425

$14,334

14,401

13,207

13,240

12,884

12,872

12,558

12,953

14,399

14,949

16,463

16,790

17,269

18,307

18,380

18,777

2,001

2,143

2,196

2,393

2,549

2,848

3,474

3,623

3,777

4,190

4,597

4,942

5,493

5,311

4,411

5,340

$2,099

2,143

2,082

2,139

2,107

2,200

2,519

2,461

2,352

2,382

2,456

2,474

2,557

2,290

1,735

1,913

$5,911

6,072

5,561

6,014

6,531

7,388

8,492

9,090

9,503

9,925

11,116

12,280

14,713

15,820

15,400

17,837

$6,203

6,072

5,271

5,374

5,398

5,705

6,158

6,175

5,917

5,642

5,938

6,149

6,850

6,821

6,056

6.389

aPreliminary,

SOURCE Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vol. II.

Table C-16.—Corn PHTME and Total Agricultural Research Expenditures by SAES and USDA

in Current and Constant Dollars, 1966-81 (thousands of dollars)

SAES PHTME SAES Total USDA PHTME USDA Total

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $ 532 $ 558 $5,783 $6,068 $3,330 $3,494 $6,164 $6,468

1967 . . . . . . . . . . . 531 531 5,690 5,690 3,415 3,415 6,100 6,100

1968 . . . . . . . . . . . 664 630 6,332 6,002 3,054 2,895 5,433 5,150

1969 . . . . . . . . . . . 736 658 6,975 6,233 3,044 2,720 5,457 4,877

1970 ....., . . . . . 557 460 7,153 5,912 3,600 2,975 6,106 5,046

1971 . . . . . . . . . . . 1,014 783 8,477 6,546 3,930 3,248 7,911 6,109

1972 . . . . . . . . . . . 1,165 845 9,455 6,856 4,162 3,018 8,166 5,922

1973 . . . . . . . . . . . 1,350 917 10,424 7,082 4,036 2,742 7,645 5,194

1974 . . . . . . . . . . . 1,369 852 11,492 7,156 3,973 2,474 7,888 4,912

1975 . . . . . . . . . . . 1,450 824 13,071 7,431 4,568 2,597 8,590 4,883

1976 . . . . . . . . . . . 1,457 778 14,794 7,903 4,371 2,335 9,187 4,908

1977 . . . . . . . . . . . 1,546 774 15,578 7,801 4,679 2,343 9,608 4,811

1978 . . . . . . . . . . . 2,247 1,046 18,411 8,571 4,936 2,298 11,434 5,323

1979 . . . . . . . . . . . 2,452 1,057 20,673 8,915 5,299 2,285 12,815 5,526

1980 . . . . . . . . . . . 3,193 1,256 24,697 9,712 4,535 1,783 12,322 4,845

1981a . . . . . . . . . . 3,739 1,339 27,595 9,884 4,311 1,544 13,270 4,753

aPreliminary

SOURCE” Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vol I.
108

Table C-17.–Wheat PHTME and Total Agricuiturai Research Expenditures by SAES and USDA

in Current and Constant Doiiars, 1966-81 (thousands of dollars)

SAES PHTME SAES Total USDA PHTME USDA Total

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $ 774 $812 $3,928 $4,122 $3,344 $3,509 $ 7,077 $7,426

1967 . . . . . . . . . . . 731 731 3,826 3,826 3,825 3,825 7,376 7,376

1968 . . . . . . . . . . . 862 817 3,999 3,791 4,115 3,900 6,313 5,984

1969 . . . . . . . . . . . 870 777 4,547 4,063 3,797 3,393 6,083 5,436

1970 . . . . . . . . . . . 868 717 5,266 4,352 4,385 3,624 6,777 5,601

1971 . . . . . . . . . . . 712 550 5,526 4,267 4,492 3,469 7,077 5,465

1972 . . . . . . . . . . . 893 647 5,889 4,270 4,530 3,285 7,645 5,544

1973 . . . . . . . . . . . 1,213 824 6,524 4,432 4,451 3,024 7,584 5,152

1974 . . . . . . . . . . . 1,145 713 6,904 4,299 4,491 2,797 7,945 4,947

1975 . . . . . . . . . . . 1,408 8,186 4,654 4,825 2,743 8,434 4,795

1976. . . . . . . . . . . 1,650 882 9,925 5,302 4,883 2,608 9,099 4,861

1977. . . . . . . . . . . 1,734 868 11,601 5,809 5,400 2,704 10,106 5,061

1978. . . . . . . . . . . 1,871 871 12,717 5,920 4,483 2,087 10,709 4,986

1979. . . . . . . . . . . 2,025 873 14,130 6,093 4,292 1,851 10,813 4,663

1980. . . . . . . . . . . 2,156 847 17,536 6,896 3,652 1,436 10,868 4,274

Lila. . . . . . . . . . 2,475 886 19,970 7,153 3,684 1,319 12,923 4,629

aPreliminary.

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administrationl Inventory of Agricultural Research FY 1966-81 Vol, II

Table C-18.–Soybean PHTME and Total Agricultural Research Expenditures by SAES and USDA

in Current and Constant Dollars, 1966.81 (thousands of dollars)

SAES PHTME SAES Total USDA PHTME USDA Total

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966. . . . . . . . . . . $ 155 $162 $2,340 $2,455 $1,346 $1,413 $2,986 $3,133

1967. . . . . . . . . . . 171 171 2,572 2,572 1,258 1,258 3,227 3,227

1968. . . . . . . . . . . 335 317 3,217 3,049 1,478 1,401 3,366 3,190

1969. . . . . . . . . . . 672 600 4,200 3,753 1,682 1,503 3,636 3,249

1970. . . . . . . . . . . 408 337 4,976 4,112 1,524 1,260 3,379 2,793

1971 . . . . . . . . . . . 488 376 5,491 4,240 1,922 1,484 4,373 3,377

1972. . . . . . . . . . . 435 315 6,309 4,575 1,950 1,414 5,144 3,730

1973. . . . . . . . . . . 502 341 7,118 4,836 1,987 1,350 5,786 3,931

1974. . . . . . . . . . . 601 374 8,570 5,336 2,156 1,342 6,579 4,097

1975. . . . . . . . . . . 909 516 11,312 6,431 2,465 1,401 7,331 4,168

1976. . . . . . . . . . . 1,246 666 14,515 7,754 2,978 1,591 9,329 4,983

1977. . . . . . . . . . . 1,655 829 17,913 8,970 3,502 1,753 10,877 5,447

1978. . . . . . . . . . . 1,827 851 21,550 10,033 3,939 1,834 12,650 5,889

1979. . . . . . . . . . . 2,273 980 25,367 10,939 3,931 1,695 13,484 5,815

1980. . . . . . . . . . . 2,391 940 28,398 11,167 4,228 1,663 14,579 5,733

1981a . . . . . . . . . . 2,213 793 30,541 10,939 4,346 1,556 16,533 5,922

aPreliminary.

SOURCE: Compiled from the U.S. Department of Agricultural Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vol. I.
109

Table C-19.– Rice PHTME and Total Agricultural Research Expenditures by SAES and USDA

in Current and Constant Dollars, 1966-81 (thousands of dollars)

SAES PHTME SAES Total USDA PHTME USDA Total

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . .

1967 . . . . . . . . . . .

1968 . . . . . . . . . . .

1969 . . . . . . . . . . .

1970 . . . . . . . . . . .

1971 . . . . . . . . . . .

1972 . . . . . . . . . . .

1973 . . . . . . . . . . .

1974 . . . . . . . . . . .

1975 . . . . . . . . . . .

1976 . . . . . . . . . . .

1977 .., . . . . . . . .

1978 ...., . . . . . .

1979. . . . . . . . . . .

1980. . . . . . . . . . .

1981a . . . . . . . . . .

$90

86

86

120

77

128

154

142

212

236

333

367

374

362

454

507

$ 94

86

82

107

64

99

111

96

132

134

178

184

174

156

179

182

$ 673

728

987

1,067

1,138

1,407

1,363

1,660

2,374

2,881

3,114

3,069

3,469

3,966

4,554

5,161

$ 706

728

936

954

940

1,086

988

1,127

1,478

1,638

1,663

1,537

1,615

1,710

1,791

1,848

$ 420

462

621

629

646

701

822

771

773

905

1,167

1,466

1,423

1,210

1,199

1,196

$440

462

589

562

534

548

596

524

481

515

623

734

662

522

471

429

$ 823

838

956

1,019

1,049

1,187

1,341

1,336

1,233

1,410

1,794

2,205

2,332

2,019

2,298

2,369

$863

838

906

911

867

917

972

908

768

802

958

1,104

1,086

871

904

848

aPreliminary

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81 Vol I.

Table C-20.—Cotton PHTME and Total Agricultural Research Expenditures by SAES and USDA

in Current and Constant Dollars, 1966-81 (thousands of dollars)

SAES PHTME SAES Total USDA PHTME USDA Total

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $337 $353 $6,895 $7,235 $5,252 $5,510 $12,102 $12,698

1967 . . . . . . . . . . . 373 373 7,414 7,414 5,485 5,485 13,062 13,062

1968 . . . . . . . . . . . 349 330 6,406 6,072 6,222 5,897 14,427 13,675

1969 . . . . . . . . . . . 373 333 7,137 6,378 5,830 5,210 14,780 13,208

1970 . . . . . . . . . . . 381 315 7,745 6,401 7,037 5,816 15,825 13,079

1971 . . . . . . . . . . . 353 273 7,899 6,100 6,581 5,082 17,184 13,269

1972 . . . . . . . . . . . 389 282 8,701 6,310 7,210 5,229 20,377 14,777

1973 . . . . . . . . . . . 481 327 10,407 7,070 6,938 4,714 20,658 14,034

1974 . . . . . . . . . . . 432 269 10,753 6,696 7,270 4,527 19,357 12,053

1975 . . . . . . . . . . . 393 224 12,211 6,942 7,200 4,093 20,193 11,480

1976 . . . . . . . . . . . 449 240 11,115 5,938 6,365 3,400 22,014 11,760

1977 . . . . . . . . . . . 477 239 13,175 6,597 5,491 2,750 23,099 11,567

1978 . . . . . . . . . . . 440 205 12,071 5,620 6,276 2,922 24,082 11,211

1979 . . . . . . . . . . . 458 198 12,947 5,583 5,838 2,517 23,099 9,961

1980 . . . . . . . . . . . 575 226 15,337 6,031 5,371 2,112 22,676 8,917

1981a . . . . . . . . . . 842 302 17,100 6,125 5,377 1,936 27,997 10,028

aPreliminary

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81, Vol. I.

98-952 0 - 83 - 9
110

Table C-21 .–Dairy PHTME and Total Agricultural Research Expenditures by SAES and USDA

in Current and Constant Dollars, 1966-81 (thousands of dollars)

SAES PHTME SAES Total USDA PHTME USDA Total

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966 . . . . . . . . . . . $3,487 $3,659 $19,324 $20,277 $2,352 $2,468 $9,869 $10,356

1967 . . . . . . . . . . . 3,503 3,503 18,607 18,607 2,471 2,471 10,162 10,162

1968 . . . . . . . . . . . 4,030 3,819 18,463 17,500 3,493 3,311 10,048 9,524

1969 . . . . . . . . . . . 4,160 3,718 19,541 17,463 3,440 3,074 10,022 8,956

1970 . . . . . . . . . . . 4,491 3,711 20,686 17,096 3,973 3,283 11,014 9,102

1971 . . . . . . . . . . . 4,328 3,342 21,190 16,363 4,386 3,387 12,295 9,494

1972 . . . . . . . . . . . 4,292 3,112 21,824 15,826 5,075 3,680 13,640 9,891

1973 . . . . . . . . . . . 3,914 2,659 23,566 16,010 4,735 3,217 13,176 8,951

1974 . . . . . . . . . . . 4,632 2,854 27,074 16,858 3,869 2,409 12,794 7,966

1975 . . . . . . . . . . . 5,775 3,283 29,748 16,912 3,929 2,234 14,245 8,098

1976 . . . . . . . . . . . 6,378 3,407 34,068 18,199 3,869 2,067 14,726 7,866

1977. . . . . . . . . . . 7,323 3,667 37,362 18,709 3,808 1,907 17,567 8,797

1978. . . . . . . . . . . 7,738 3,602 39,708 18,486 2,978 1,386 16,338 7,606

1979. . . . . . . . . . . 7,644 3,296 45,428 19,589 3,344 1,442 21,608 9,318

1980. . . . . . . . . . . 8,834 3,474 51,670 20,319 2,540 999 19,992 7,862

1981a . . . . . . . . . . 9,402 3,368 56,677 20,300 2,846 1,019 21,361 7,651

aPreliminary.

SOURCE: Compiled from the US. Department of Agriculture, Science and Education Administration, lnventory of Agrlcultural Research FY 1966-81, Vol. I.

Table C-22.–Beef PHTME and Total Agricultural Research Expenditures by SAES and USDA

uncurrent and Constant Dollars, 1966.81 (thousands of dollars)

SAES PHTME SAES Total USDA PHTME USDA Total

research expenditure research expenditure research expenditure research expenditure

Current Constant Current Constant Current Constant Current Constant

Year dollars dollars dollars dollars dollars dollars dollars dollars

1966. . . . . . . . . . . $1,438 $1,508 $18,677 $19,598 $2,408 $2,527 $10,445 $10,960

1967. . . . . . . . . . . 1,484 1,484 17,729 17,729 2,491 2,491 10,862 10,882

1968. . . . . . . . . . . 2,216 2,100 19,050 18,057 3,330 3,157 10,316 9,778

1969. . . . . . . . . . . 2,094 1,872 20,121 17,981 3,427 3,063 10,460 9,348

1970. .4....... 1,902 1,572 22,637 18,708 3,388 2,800 11,338 9,370

1971 . . . . . . . . . . . 1,883 1,454 23,385 18,058 3,888 3,002 13,078 10,099

1972. . . . . . . . . . . 2,306 1,672 25,739 18,665 4,062 2,945 14,416 10,454

1973. . . . . . . . . . . 2,402 1,632 28,872 19,614 4,739 3,220 15,163 10,301

1974. . . . . . . . . . . 2,918 1,817 34,978 21,780 4,892 3,046 15,922 9,914

1975. . . . . . . . . . . 3,247 1,846 37,596 21,374 5,971 3,395 18,751 10,660

1976. . . . . . . . . . . 4,266 2,279 44,178 23,599 6,307 3,369 23,212 12,400

1977. . . . . . . . . . . 4,348 2,177 55,179 27,631 5,751 2,880 24,131 12,084

1978. . . . . . . . . . . 4,504 2,097 57,557 26,796 9,163 4,249 29,818 13,882

1979. . . . . . . . . . . 4,999 2,156 66,594 28,717 5,152 2,222 28,631 12,346

1980. . . . . . . . . . . 5,244 2,062 75,363 29,635 5,056 1,988 29,525 11,610

1981a . . . . . . . . . . 5,243 1,878 80,864 28,963 5,822 2,085 32,669 11,701

aPreliminary.

SOURCE: Compiled from the U.S. Department of Agriculture, Science and Education Administration, Inventory of Agricultural Research FY 1966-81 Vol I.
Appendix D

Development of Public Postharvest

Technology and Marketing

Economics Research*

Early agricultural societies created considerable interest in agricultural experimentation in the first half

of the 1800’s. Independently and nearer the middle of

the century, a number of American scientists who received graduate training in Europe brought back the

idea of agricultural experiment stations. This concept

was presented to the agricultural societies and other

such groups. But little resulted in formal terms except

for some institutionalization of fertilizer analyses.

Two major steps toward creation of agricultural research systems were taken in 1862, when: 1) the President signed a bill on May 15 establishing the U.S. Department of Agriculture (USDA), and 2) Congress

passed the Merrill Act on July 2, which provided the

basis for the land-grant colleges of agriculture. Neither

bill said much about research, which was to be a

source of some difficulty, but they did create the basic

institutions that could foster research. Little was accomplished in forging research efforts until 1887.

The Hatch Act of 1887 was undoubtedly the most

important legislative step taken in the development of

agricultural research in the United States. In one

stroke, it brought about the establishment of the modern network of State agricultural experiment stations

(SAES), and it bound USDA and the States together

in the process, The Hatch Act set the stage for the Federal-State agricultural system as we know it today. It

led to the establishment of an SAES in each State and

provided the basis for continuing Federal support. Its

impact on the role of research within USDA itself was

less immediate.

In February of 1889, USDA was given Cabinet status, but only modest increases were made in Federal

agricultural research under the first two Secretaries of

Agriculture (excluding N. J. Colman who served only

3 weeks). Under the two secretaries who served from

1889 to 1897, agricultural research in USDA continued

at a relatively modest level and was severely handicapped by limited facilities.

The research situation began to change dramatically,

however, when James Wilson was named the third

‘The material m this appendix draws heavily from the reports, Marketing

Research and Its Coordination in USDA, by Vivian Wiser and Douglas

Bowers; and An Assessment of the United States Food and Agricultural Research System, prepared by OTA.

Secretary of Agriculture in 1897. Wilson took charge

of scientific and regulatory work (previously under an

Assistant Secretary), and during his 16-year regime,

seven new scientific bureaus were established in the

place of the Bureau of Animal Industry, which existed

before his arrival. Four of the bureaus were established

in 1901 alone: Plant Industry, Forestry (which became

the Forest Service in 1905), Soils, and Chemistry.

Three were established in subsequent years: Statistics

(1903), Entomology (1904), and Biological Survey

(1905). Staff increased more than sixfold between 1897

and 1912, and expenditures on USDA research increased from $800,000 in 1900 to $4 million in 1910

(2). Wilson clearly got USDA solidly on its feet in agricultural research.

Early Marketing Studies

From its establishment, USDA had published information about exports and imports of agricultural commodities, and on occasion, sent representatives abroad

to protect or extend markets for U.S. farm products.

For example, when exports of cattle were being rejected

because of charges of infection with pleuropneumonia

in 1879, Charles Lynam, a prominent veterinarian, was

sent to Britain to determine the validity of the charges.

During Secretary J. M. Rusk’s administration (1889 to

1893), an agent was sent to Germany and Denmark

to promote the exportation of corn. In 1893, a report

on world production and distribution of agricultural

commodities was submitted to the Secretary of Agriculture by Jacob R. Dodge, a statistician and editor,

This publication represented a compilation of information collected over a number of years and was considered to be “the beginning of serious study of world

markets for agricultural products by the Department”

(19).

Another milestone publication was prepared for the

Secretary by George W. Hill in 1897, Marketing Farm

Produce described the importance of proper handling

by the producer, the need for a uniform product, quality, and the value of proper packing. It gave directions

for specific commodities and suggested proper types

of containers. This publication is considered a landmark, the first marketing publication.

111
112

In 1898, the U.S. Industrial Commission was appointed to collect information on immigration, labor,

agriculture, manufacturing, and business. This commission published three volumes of testimony and reports on distribution of farm products, agriculture and

agricultural labor, and agriculture and taxation. A

number of USDA officials appeared before the commission. John Crowell, an economist, prepared the

volume 3 on distribution of farm products which was

described as the “best book on agricultural marketing

available at the beginning of the twentieth century. ”

For two decades after its publication, Crowell’s report

on marketing set the pattern for many studies made

by the SAES. The report’s recommendations included

inspection and grading of agricultural commodities

and livestock, inspection of nursery stock, and establishment of a food section in USDA’s Bureau of Chemistry. The implementation of these recommendations

meant an expansion of USDA in research and regulatory activities (20).

Formal Marketing Research

Organizations, 1900-45

In the early 1900’s, a number of SAES, as well as

some USDA bureaus, increasingly began preparing

studies with an economics orientation. In some instances, they related to the development of an industry, growing and marketing specific crops, livestock,

or related products, costs of production, etc. These

studies raised problems between those educated as biological and physical scientists and those trained in

economics. The new field of agricultural economics

was defined as “that branch of agricultural science

which treats of the manner or regulating the relations

of the different elements composing the resources of

the farmer” (8).

With the new interest in economics and in finding

markets for the crops that were increasing through

scientific research, there came a campaign for an agency within USDA to perform marketing services and

research (1). This led to the establishment in 1913 of

USDA’s Office of Markets, The Office of Markets pursued three main lines of activity: research, regulatory,

and service. Research activity included studies of

cooperative marketing associations, transportation

and storage of farm products, marketing by parcel

post, motor transportation of farm products, city

marketing and distribution, and marketing methods

and costs.

Generally, SAES continued to emphasize production

research under the general direction of the Office of

Experiment Stations. While research in the SAES had

been expanded under the Adams Act of 1906, economics, home economics, and sociological research were

underwritten in both the experiment stations and

USDA under the Purnell Act of 1925. Efforts to integrate these new areas with production research were

initiated but without much success.

Finding outlets for farm products and increasing

their utilization were matters of concern in the 1920’s

and 1930’s. The Bankhead-Jones Act of 1935 addressed

these concerns by establishing nine regional laboratories to study particular subjects in cooperation with

the States: Plant, Soil, and Nutrition (Ithaca, N.Y. ),

Pasture Research (State College, Pa.), Vegetable Breeding (Charleston, S.C. ), Poultry Research (East Lansing,

Mich.), Soybean Research (Urbana, Ill,), Sheep Research (Boise, Idaho), Salinity (Riverside, Calif. ),

Plant-Growth-Regulating Substances, and PhotoPeriod and Plant Development (Beltsville, Md.).

The Agricultural Adjustment Act of 1938 provided

for four additional regional research laboratories

(Philadelphia, Pa.; Peoria, 111.; New Orleans, La.; and

Albany, Calif. ) to develop new uses for surplus agricultural commodities. Although USDA and SAES had

previously done some utilization research, this new

authorization provided for research into new uses for

agricultural commodities that would open new channels for marketing agricultural surpluses.

The Agricultural Adjustment Act of 1938 charged

the utilization laboratories “to conduct research into

and to develop new scientific, chemical, and technical

uses and new and extended markets and outlets for

farm commodities and products and by-products

thereof. Such research and development shall be devoted primarily to those farm commodities in which

there are regular or seasonal surpluses, and their products and by-products. ” Although the outbreak of war

in Europe diverted attention of the new regional laboratories to war-related research, this objective—to

carry out research to relieve pressures of surplus farm

commodities—held steady in the 1940’s and into the

1950’s.

A reorganization of USDA in 1938 saw the shifting

of commodity divisions and service and regulatory activities from the Office of Markets to the new Agricultural Marketing Service. Within the Agricultural Marketing Service research was redirected to meet wartime needs and to postwar planning; one aspect of this

research was marketing economics research. Responsibility for coordinating USDA economics research was

given to the Bureau of Agricultural Economics, and

responsibility for scientific research was given to the

Agricultural Research Administration, in which the

scientific bureaus were grouped in 1942. The new approach was to be aimed at solving marketing problems.
113

Postwar planning activities had involved a considerable amount of research on the part of USDA and the

land-grant colleges at a time when greater emphasis

was placed on production and marketing and distribution in an emergency. Members of Congress showed

their concern about marketing as bills were sponsored

in most sessions to improve marketing procedures for

the benefit of farmers and consumers. In 1943, the

House of Representatives authorized its Agriculture

Committee to conduct a study of agricultural marketing, but little was accomplished. In 1945, the work was

revived, and a detailed study made. This provided the

background for the Research and Marketing Act of

1946 (20).

Interest in agricultural research increased substantially during World War II. While the war effort focused more attention on research, the substantial rise

in agricultural productivity proved how valuable agricultural research could be. This new appreciation of

research was visible in many ways. In 1944, the National Research Council established a separate Agricultural Board to consider agricultural questions. Simultaneously, preliminary discussions began that would

lead to the establishment of the National Science Foundation.

Congress turned its attention to agricultural research

after the war. Because production had jumped by 30

percent during the war, it was widely anticipated that

there would be massive surpluses when demand declined, surpluses that would require greater Federal expenditures to keep farm prices from plummeting.

Thus, of all the different fields, marketing was considered the most urgent.

Federal aid for production research had achieved impressive gains. If a similar effort were devoted to marketing research, it was reasoned, marketing costs and

consumer prices could be lowered and farm prices

raised. In addition, research might uncover new ways

of utilizing agricultural products that would absorb

some of the increased production and hold down the

anticipated surpluses. The utilization laboratories

authorized in 1938 and diverted to war-related research

could once again turn to the purposes for which they

were established. The fear of surpluses became the

chief motivation behind marketing research (4). By the

end of the war, sentiment in Congress was nearly

unanimous that the Federal Government should initiate a major new research program with marketing at

the center,

The Research and Marketing Act of 1946

The Research and Marketing Act of 1946 (RMA)

was a major innovation in the conduct of agricultural

research. RMA provided a 5-year research and marketing program with substantial increases in appropriations that would raise the total appropriations from

$9.5 milk in 1947 to $61 million in 1951. RMA funds

were intended for new research rather than existing

programs. RMA initiated contract work and put greater emphasis than before on regional cooperation, A

unique feature of RMA was the combination of private

initiatives with government planning. Those closest to

the problems at the local level—farmers, industry

groups, agricultural colleges, and SAES—had a major

input in planning and reviewing research. RMA provided for the first national system of agricultural

research advisory committees to meet with Federal

officials.

RMA was intended to be a bold push forward for

agricultural research. However, instead of reorganizing

the entire research program in line with RMA, Congress made it a separate research and marketing program while continuing regular research. From the beginning, there was confusion in funding. In reality,

there were three research funds—RMA, regular research, and special research—and the boundaries between them were unclear.

In addition, the complexity of RMA itself added to

the difficulty of administration. RMA was the result

of two acts that were combined more for convenience

than because they represented a unified program. As

a result, there were overlapping sections in the act that

duplicated appropriations in other sections. The funds

were to be divided as follows: 20 percent was to be

divided among the States equally; 26 percent was to

be allocated by rural population; 26 percent was to

be allocated by farm population; and up to 25 percent

was to be allocated for cooperative regional research

involving two or more SAES; 3 percent was reserved

for USDA research administration. At least 20 percent

of the money spent under section 9 (all types of research) had to be directed toward marketing research

(20).

The administration of RMA was awkward and confusing, Although Congress had intended that marketing research be administered by a new agency within

USDA that would combine all marketing functions,

USDA kept marketing work divided among several

agencies. This division made cooperation difficult. According to Harry C. Trelogan of the Agricultural Research Administration, there was “no clearly defined

underlying philosophy as to what should be done other

than what is in the Act itself” (9). And, as Trelogan

pointed out, “it is evident that the Act means different

things to different people” (9). There was more concern with coordinating than planning. At no time was

a long-range research plan made. Research plans
114

tended to come from a variety of sources and were

never fitted into a comprehensive marketing research

strategy. Those areas backed by strong pressure

groups, such as cotton and fruits and vegetables, developed the strongest research programs.

Despite RMA’s slow beginning, the new funding put

a strain on the research system. The most immediate

problem was finding enough scientists qualified to do

marketing work. Early critics of RMA charged that

marketing researchers were inadequately trained,

tended to confine their work to farms rather than later

points in the marketing process, and concentrated on

descriptive research to the neglect of theoretical problems (10).

Coordination was especially difficult for marketing

research because it involved so many different disciplines. For example, in regional research, many of the

regional commodity committees were comprised entirely of agricultural economists. It was not easy to

convince scientists used to following their own lines

of work to cooperate with others outside their own

field (7). Furthermore, there was not a satisfactory way

to coordinate between regions, a common situation in

marketing work.

Complicating RMA’s early years were disagreements

between State and Federal officials. USDA wanted

RMA used for work of national, or at least regional,

interest. SAES marketing advisory committees, however, strongly supported local research under RMA.

SAES hoped that some RMA regional research funds

would be distributed on a formula basis to make appropriations more predictable, but USDA decided

against using a formula. When regional funds were

divided among the States, it tended to be spread so

thinly that no one experiment station had more than

a small part of the work. This arrangement satisfied

SAES directors, who wanted funds from as many

sources as possible. At the same time, however, it

made it difficult to coordinate research and often

meant that existing facilities were not adequately used.

Furthermore, the States were suspicious of the role of

Federal employees in State work, and the Federal Government found it difficult to get the information it

needed to support SAES appropriations (7).

Finally, some difficulty existed about the place of

economics research in the research and marketing program. RMA gave a boost to economics research, but

that work was still coordinated separately from postharvest technology. Some SAES directors complained

that the two types of research were not well integrated

(4).

Marketing Research Coordination,

1953=81

In 1953, a far-reaching reorganization of USDA

came closer to placing marketing research in one agency than any organizational structure had since RMA’s

enactment. The new Secretary of Agriculture abolished

the old bureaus and established a smaller number of

agencies to allow more of a team approach to major

issues and clearer lines of authority (6).

One of the most sweeping changes involved economics research. In 1953, the Bureau of Agricultural

Economics, which had conducted nearly all of USDA’s

economics research since 1922, was divided between

two new organizations: the Agricultural Marketing

Service (AMS) and the Agricultural Research Service

(ARS). The new ARS was basically a continuation of

the Agricultural Research Administration, but the

scientific bureau chiefs of the latter disappeared in

name and were replaced by deputy administrators (l).

The new AMS pleased supporters of a single marketing administration because it was in line with the intent of RMA, AMS combined the marketing functions

of the Production and Marketing Administration with

marketing economics research from the Bureau of

Agricultural Economics and the marketing areas of

Agricultural Research Administration. Within AMS,

the Marketing Research Division and the Agricultural

Economics Division both reported to the Deputy Administrator for Marketing Research and Statistics, so

economic and noneconomic research were grouped

more closely than at any time since RMA’s establishment (l).

The overall coordination of research was left within

ARS, where it had been previously. ARS directly administered both title I and title III of RMA-the SAES

funds and the advisory committee structure. Much of

this work involved marketing research, which had to

be checked against the work conducted by AMS.

Despite the consolidation of most marketing research within AMS, it was clear by the mid-1950’s that

RMA as a separate program was on the wane. The

continuing failure to use the program as a unified

research effort led Congress and administrators alike

to think increasingly of RMA as simply another part

of USDA’s research work. After 1950, even the advisory committees established especially to oversee RMA

were involved in the entire agricultural research program.

Marketing research prospered under AMS despite

RMA’s demise. USDA found it easier to obtain appro-
priations when research was part of an action agency,

especially when the administrator had good relations

with Congress. Appropriations for marketing research

increased from $3.7 million in 1953 to $6.9 million in

19.58.

Despite the reorganization of USDA, coordination

of research remained a problem in the 1950’s. Regional

research was an area of particular difficulty. Regional

projects expanded rapidly throughout the 1950’s, from

70 active projects in 1950 to 198 in 1958. The regional

research program was so popular that it attracted from

State sources 21/2 times the amount of Federal investment (11 ). Under law, the Committee of Nine, composed of two SAES directors from each of the four

regions and a home economics representative, had

great discretion in allocating funds. To stop the scramble for funds that occurred early in the program, the

committee in 1953 adopted a strict formula distribution between regions. Within regions, a formula distribution was also often used. Because each State desired to participate in a maximum number of projects,

it was common for the funds to be spread too widely.

Projects involving more than one region were not well

handled (4).

The 1960’s brought new initiatives on research, A

reorganization of USDA went in the direction of

grouping work by discipline, In the process, marketing

research was once again divided. Economics research

was reestablished in a separate organization. The Economic Research Service (ERS), created in 1961, brought

together economics work in AMS, ARS, and the Foreign Agriculture Service. The AMS Divisions of Marketing Economics Research, Agricultural Economics,

and most of marketing development research and the

economics research functions of the Transportation

and Facilities Research Division were separated from

other marketing work and placed in ERS. ERS reported

to a director of agricultural economics, whereas the

rest of AMS marketing research was under the Assistant Secretary for Marketing and Foreign Agriculture.

During this reorganization, the SAES directors also

succeeded in getting the State Experiment Stations

Division transferred from ARS to a Cooperative State

Experiment Station Service under the Assistant Secretary of Federal-State Relations. Thus, marketing research was under three separate individuals in USDA. *

This arrangement was awkward for marketing research. Not only was coordination difficult, but the

relationship between marketing and some other types

of research was so close that it was hard to draw the

line between them. This was especially the case with

● Gains were made when economic researchers were placed in proximity

to one another However, this led to an isolation of economics from the other

disciplines and is a barrier to interdisciplinary research today.

market quality research where the condition of agricultural produce was related to crop improvement

work done by ARS. It was necessary for entomologists

to work in both ARS and AMS. In 1964, over the protest of several Senators who felt that marketing research could not be separated from other regulatory

and service work, the Divisions of Market Quality and

Transportation and Facilities were removed from AMS

and placed in ARS (12).

Coordination of research received greater attention

as part of a governmentwide effort to better manage

scientific information in the 1960’s. Dissatisfaction with

previous attempts at coordination was evident. Congress favored coordination, and USDA moved in this

direction, In 1963 and again in 1965, the Senate Appropriations Committee urged USDA to establish a joint

USDA-SAES research review committee to perform

a thorough evaluation of all government agricultural

research.

USDA created the Agricultural Research Planning

Committees to examine long-range research needs in

1965. The committee’s 1966 report, “A National Program of Research for Agriculture, ” the so-called LongRange Study, was the most important statement of its

type since RMA. In addition to recommending an expanded research program, the committee concluded

that the diverse USDA-SAES cooperative research system was better than any single, unified arrangement,

but cited the “need for better balance and coordination among the various research efforts. ” The report

made a number of administrative suggestions, including the appointment of an Assistant Secretary for Science, broader utilization of contracts and grants beyond the land-grant university system, and use of ad

hoc committees of the Agricultural Research Planning

Committee to study particular subject areas on a continuing basis. The Long-Range Study spurred further

studies in specific areas. For example, a 1969 report

by the Joint Task Force of Marketing and Competition not only asked for more money for marketing economics research, but urged a broader systems-oriented

approach that would bridge the gap between disciplines.

During the late 1960’s, the balance of power within

the research establishment also changed. Advisory

committees were put under greater USDA control in

1964, and most were finally abolished in 1969. With

the formation of the Agricultural Research Policy Advisory Committee (ARPAC) in 1969, USDA’s advice

was clearly coming from administrators rather than

researchers and farmers as had previously been the

case. On the State level, power shifted away from

SAES and toward university administrators. Nonagricultural parts of the land-grant colleges and universities had been growing rapidly since before World
116

War II. As SAES were considered less important by

legislators, SAES directors had to rely more on university administrators to lobby for funds; however, such

administrators often gave a low priority to agriculture.

In the late 1960’s and early 1970’s, the agricultural

research program continued to receive favorable treatment from Congress, but marketing researchers increasingly felt that their role was diminishing. The

Long-Range Study did not place a very high priority

on marketing work, recommending a decrease from

6 to 5 percent of the total scientist man-years devoted

to marketing. Marketing research came under attack

in this period for its fragmentation and lack of

theoretical underpinning. Much of the debate among

agricultural economists in the 1960’s centered on the

need to broaden the scope of research to meet changing social needs. This concern seemed to leave less of

a role for traditional marketing research (14).

Funds for marketing research to SAES increased

from $10.6 million in 1965 to $14.4 million in 1971,

but this increase was due mainly to the requirement

that 20 percent of Hatch Act money be used for marketing research, Furthermore, in order to meet the 20

percent requirement, the definition of what constituted

marketing was broadened in the 1960’s to include recreation, pesticides, marketing of inputs, and other

areas (16).

A survey published in 1973 found that while SAES

directors supported greater emphasis on marketing research, heads of agricultural economics departments

wanted to reduce marketing research. These attitudes

were reflected in a shift of funds from the economics

of marketing to marketing technology and a decline

in the number of students in marketing economics.

Marketing research devoted to technology increased

from 39 to 57 percent between 1960 and 1970. Remaining marketing economics research centered around

macro and systems problems rather than studies of individual firms which had characterized the research

up to this point (5). One area of marketing research

that came in for a reduction was wholesaling and

retailing research. During the 1960’s, USDA repeatedly

proposed eliminating this research, but each year Congress restored the funds. By 1970, the administration

was witholding some of the money appropriated for

wholesaling and retailing research (20).

In 1971, the 25th anniversary of RMA, Congress

held hearings to reassess the act and its accomplishments. While USDA officials were elated about the

progress under RMA, industry representatives almost

uniformly criticized the marketing research program

as inadequate and uncoordinated and many asked for

a return to a single marketing administration.

In 1972, ARS was reorganized along regional lines

in a way that displeased those congressional leaders

who favored more centralized control of research. The

reorganization came as a surprise. USDA admitted that

only about 10 people in ARS knew about it (15).

Following the reorganization and assignment of research to regional offices, ARS established a Marketing

Research Coordinating Committee, headed by the National Program Staff, with marketing research representatives from each region. They received recommendations for research, but no increase in funds was requested. The committee was abolished in 1976. An interagency board was also established to coordinate

USDA marketing research, but was not utilized. This

led the American Farm Bureau Federation to charge

that research was fragmented and that production-oriented leadership further reduced the effectiveness of

the research program (13).

The report of a special investigation directed by the

House Appropriations Committee in 1972 brought out

some of the problems that existed in ARS under the

new organization. Marketing research in ARS was described as being directed toward increasing marketing

efficiency by reducing product losses and costs and by

improving methods of quality identification and measurement, including solutions to problems encountered

in handling, storage, grading, and distribution of products from farm to retail store. ERS officials reported

that its studies covered the complete range of activities

from inputs to retailing. Cooperative State Research

Service (CSRS) impact had shifted, the report noted,

as visits to SAES became less frequent. It became more

difficult to terminate unsuccessful projects or to shift

priorities, since states would continue projects under

other funds.

Metzger’s extensive in-house evaluation of the SAES

research program in 1973 found marketing research

“languishing,” with marketing economics especially

lacking vigor, He recommended the establishment of

marketing research centers at selected stations and

closer working relations with government agencies. He

advocated that SAES strengthen their ties with their

clientele, adopt a systems orientation, and shift emphasis to new problem areas pertaining to marketing

organization and structure (20).

A major reorganization in ERS occurred in 1973.

The Divisions of Farm Production Economics, Marketing Economics, and Economic and Statistical Analysis

were abolished. In their place were established the

Commodity Economics and National Economics Analysis

Divisions with a less formal structure of groups, and

later, program areas in place of branches. Task forces

or matrix groups would conduct particular assignments, drawing on personnel from the program areas.

A net result was an increase in the staff of the Administrator and the division directors.

Priorities in ERS were shifted from marketing re-
117

search to other areas. By 1978, the Economics, Statistics, and Cooperatives Service (ESCS) (successor agency to ERS) budget included a proposed decrease of

$600,000 for analysis of marketing of farm products,

Some activities were slated to be dropped and others

cut, reflecting the radically changed nature of the markets. The Federal-States Relations Committee drew up

a resolution deploring USDA’s role in allowing the

marketing efficiency research program to deteriorate

to its lowest point since the 1946 RMA. Marketing

studies had declined from 1,046 scientist-years in 1969

to a proposed 648 in 1979 (20).

Marketing research within ARS placed much emphasis on technology, such as improvements in processing and handling and insect detection methods.

Marketing research within ERS emphasized market

structure and performance, including estimating marketing margins, studies of the sugar industry, the

away-from-home food market, the impact of rail reorganization, and a review of marketing orders. Marketing research under the general supervision of CSRS

tended to be geared more to scientific rather than economic questions. Thus, in 1975, the SAES worked on

such topics as uniform ripening of fruit, apple packing, vacuum-packed beef, and mechanical harvesting.

In 1977, ERS, the Statistical Reporting Service, and

the Farmer Cooperative Service were combined into

ESCS, cutting the number of agencies reporting to the

office of the Secretary, but adding another administrative layer at the top (15). In 1978, ARS, the Extension

Service, the CSRS, and the National Agricultural

Library were consolidated into the Science and Education Administration,

Some of these changes were in line with the Food

and Agriculture Act of 1977. Under this act, USDA

was designated as the lead agency for agricultural research. The Joint Council for Food and Agricultural

Sciences was established under this act. The Council

decided to retain main features of the previous programs, including five ARPAC committees. One of

these was the Committee on Coordinating Marketing

Research.

Criticism of agricultural research surfaced at the

1977 appropriations hearings, The food industry came

together to defend USDA marketing programs scheduled for reduction or termination. USDA defended

these reductions by stating that much of the research

dropped by USDA would be continued by private industry or the States (13).

Congress restored much of the funding for marketing research that USDA had proposed for deletion.

However, the 20 percent earmarking of Hatch formula

funds for marketing research was eliminated by Congress. Then, in 1979, selected marketing research functions of the Agricultural Marketing Research Institute,

a part of ARS, were transferred to AMS. These included the Animal Products Research, Marketing

Operations Research, and the Food Distribution

Research Laboratories. The Transportation and Packaging Research Laboratory was transferred to the Office of Transportation, which further added to the

problem of coordinating marketing research. In AMS,

the units were consolidated in the Market Research and

Development Division.

The change of administrations in 1980 shifted the

policy direction of USDA. In 1981, the new administration announced a number of organizational changes.

Among these was the abolition of the Science and

Education Administration. Its constituent parts became

separate agencies reporting to the Director of Science

and Education (now the Assistant Secretary for Science

and Education). ERS was reestablished as a separate

agency reporting with the Statistical Reporting Service

to the Assistant Secretary for Economics. The Farmer

Cooperatives Service was renamed the Agriculture Cooperative Service reporting to the Assistant Secretary

for Marketing and Transportation Services.

Reviews of Marketing Research

Because of the debate concerning the virtues of marketing research, three studies were undertaken, In

1977, the Office of Management and Budget asked

USDA to undertake a study of marketing research programs to assure that only that research would be performed which would not otherwise be done by the

private sector. CSRS was to evaluate research conducted by SAES with Federal funds, ARS was to study

postharvest technology research in USDA, and the Industrial Research Institute (IRI) was to conduct a

review from the viewpoint of industry.

For its assessment, IRI convened a panel that interviewed representatives of industry and trade associations. Although a limited number of representatives

were interviewed and these did not represent a very

wide spectrum, their consensus was that any reduction in USDA research would not be supported or assumed by private industry. Many stated that the government should conduct the research for new knowledge in support of national objectives and to satisfy

government regulations. The IRI report concluded that

the industry believed that Federal research must provide the technical bridge between university science

and practical consumer needs (3).

CSRS prepared its evaluation of postharvest technology research in the States. It found that major support was for research on productivity and product

quality, but more research was underway on new areas
118

such as health and safety, energy conservation, environmental protection, and reduction of losses. It concluded that the private sector would not finance the

research needed to meet societal needs (17).

The report done by ARS summarized research in the

various areas and centers with a view of its importance. It concluded that ARS had played an important role in basic research in technological aspects of

marketing research and that such research should remain in the public domain with Federal and State financial support (18).

Principal Findings

The high point in public PHTME research came in

the years immediately after the passage of the 1946

RMA, which placed emphasis on this type of research and required that at least 20 percent of Federal research funds authorized under RMA to SAES

be directed for PHTME.

RMA gave a boost to public marketing economics

research, but that work was still coordinated

separately from postharvest technology research.

When RMA regional funds were distributed among

the States, they were spread so thin that no one

SAES had more than a small part of the work. This

arrangement made it difficult to coordinate research

and often meant that existing facilities were not adequately used.

USDA in a major reorganization in 1953 came the

closest ever to placing PHTME research in one

USDA agency. However, in practice RMA was

never regarded as a unified research effort.

The Food and Agricultural Act of 1977, eliminated

the 20 percent requirement under RMA of Federal

funds for PHTME research. However, coordination

of food and agricultural research supported by Federal funds was written into the law. Since then,

PHTME research has nevertheless been deemphasized and dispersed throughout USDA.

Appendix D References

1.

2.

Baker, G. L., et al., Century of Service: The First 100

Years of the U.S. Department of Agriculture, U.S. Department of Agriculture, Washington, D, C., 1963.

Hagami, Yujiro, and Rutten, Vernon W. Agricultural

Development: An International Perspective (Baltimore:

The Johns Hopkins Press, 1971), p. 144.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

Industrial Research Institute, Industry Assessment of

USDA Post-Harvest Technology Research, USDA contract No. 53-32 R6-8-O 0005, St. Louis, Me., 1978.

Mainzer, Lewis C., “Science in a Political Context: The

Agricultural Research and Marketing Act Program,” Ph.

D. Dissertation, University of Chicago, 1956.

Metzger, H. B., Marketing Research at State Agricultural

Experiment Stations, Past, Present, and Future, Cooperative State Research Service, Washington, D. C., 1973.

Moore, Ernest G., The Agricultural Research Service

(New York: Frederick A. Praeger, 1967).

Shepherd, Geoffrey, and Goldman, Alan, “Methods and

Procedures in Planning Regional Marketing Research, ”

Journal of Farm Economics, vol. 34, December 1952.

Taylor, Henry C., and Dewess, Anne, The Story of Agricultural Economics (Ames, Iowa: Iowa State College

Press, 1952).

Trelogan, Harry C., “Federal Projects Submitted Under

the Research and Marketing Act of 1946, ” Journal of

Farm Economics, vol. 29, Part 2, November 1947.

Trelogan, Harry C., “Marketing Research in the United

States During the Past Five Years,” Journal of Farm Economics, vol. 33, November 1951.

U.S. Congress, House Committee on Appropriations,

Hearings . . . Agricultural Appropriations, 1961, Parts

1 and 2, 1961.

U.S. Congress, Senate Committee on Appropriations,

Hearings . . . Agricultural Appropriations, 1965, supp.

1, June 1964.

U.S. Congress, House Committee on Appropriations,

Hearings . . . Agricultural Appropriations, 197.5; 1979,

Part 8.

U.S. Congress, House Committee on Agriculture, Marketing Research Activities of U.S. Department of Agriculture, 1971.

U.S. Congress, Office of Technology Assessment, An

Assessment of the United States Food and Agricultural

Research System, Washington, D. C., December 1981.

U.S. Congress, Senate Committee on Appropriations,

Hearings . . . Agricultural Appropriations, 1967 House

Committee on Appropriations, Hearings . . . Agricultural Appropriations, 1973, Parts I and III.

U.S. Department of Agriculture, Cooperative Research

in Post-Harvest Technology Research, Science and Education Administration, Washington, D. C., 1979.

U.S. Department of Agriculture, Post-Harvest Technology Research Assessment, Science and Education Administration (unpublished), Washington, D. C., 1979.

Wiser, Vivian, Protecting American Agriculture, AER

No. 266. U.S. Department of Agriculture, 1974.

Wiser, Vivian, and Bowers, Douglas E., Marketing Research and Its Coordination in USDA, U.S. Department

of Agriculture, Economic Research Service, AER #475,

1981.

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