For over a century, productivity-enhancing agricultural research has been an important catalyst in creating a vigorous agricultural economy and a plentiful, low-cost supply of food and fiber. Together with extension and education, agricultural research has helped transform U.S. agriculture into a productive, technology-based operation. While each of the three functions has its own purpose, they are interwoven and, hence, are often referred to jointly as the agricultural research, education, and extension system. The research component of the system, devoted to discovering new solutions for food- and agriculture-related problems, is carried out through several agencies in the U.S. Department of Agriculture (USDA)—including over 100 USDA laboratory locations; 74 land grant colleges and universities; other institutions of higher education; and numerous private research facilities. The system’s extension component, which disseminates agricultural research results and related educational information to the public, is implemented by thousands of state and county extension specialists and agents. Land grant colleges and other universities bear the primary responsibility for implementing the education component of the system, which involves providing formal education to future farmers and others who will be employed in the food and agricultural sector. Because of the vast number of participants in the system and the proprietary nature of some of the information, composite funding information for the entire system is difficult to obtain. In fiscal year 1992 (the most recent year for which private sector data were available), agricultural research expenditures totaled about $6.3 billion. The private sector spent about $3.8 billion on agricultural research—about 60 percent of the combined federal, state, and private expenditures for that year. Information on total funding for higher education to support the agricultural sector is not readily available; however, USDA allocated about $12.8 million for higher education in fiscal year 1994. For extension activities, federal, state, and county governments allocated about $1.4 billion in fiscal year 1994. Agricultural research and extension historically have focused on increasing agricultural productivity and improving the economic well-being of a largely rural U.S. population. Initially, research concentrated on (1) mechanical innovations for planting and harvesting that would remove much of the physical labor from farming and (2) improving the output and productivity of crop and animal production on farms. Today, much agricultural research continues to focus on increasing production through ways to better protect crops and livestock from insects, disease, and other hazards. However, along with farmers and producers, users of agricultural research now include consumers, as well as groups interested in the environment, sustainable agriculture, and rural development. Decreasing the use of chemicals in agricultural production, creating sustainable agricultural systems, improving food safety and nutrition, and enhancing the viability of small farms and rural communities are some of the newer research areas being addressed in response to this broadened customer base. The 1914 Smith Lever Act established extension services nationwide to disseminate the knowledge generated by agricultural colleges to farmers and consumers. “University extension” is based on the concept that education and research developments achieved through public funding should be more readily available to those not attending universities. Today, agricultural extension specialists are often located at land grant universities. University-based extension specialists interact with scientists and relay scientific learning and other knowledge to farmers and other research customers. They also serve as the university’s link to county extension agents. As in agricultural research, the customer base for extension services currently includes urban populations as well as farmers. In addition to providing agricultural information, extension programs are aimed at the development of communities, families, youth, and leadership and include diverse programs such as nutrition, 4-H organizations, and youth and families at risk. Education is almost entirely a nonfederal function, but USDA has the responsibility for strengthening higher education in food and agricultural sciences through programs to enhance university teaching programs in agriculture. The origins of higher education in the agricultural sciences date back to the Morrill Act of 1862, which gave the states public lands for use in establishing colleges to teach agriculture and the mechanical arts. Initially, the purpose of these land grant colleges was to meet the educational needs of the nation’s largely rural population and farm-based economy. However, most land grant colleges of agriculture are now full-fledged universities, having expanded well beyond the teaching of agriculture. In addition, legislative actions expanded the system of agricultural colleges to include schools of veterinary medicine and forestry programs. The agricultural research, education, and extension system is supported by numerous federal, state, county, and private sector activities. Many of the participants in the system (particularly those associated with land grant universities), have multiple responsibilities for teaching, conducting research, and providing extension services. While the system’s components (e.g., USDA, the land grant universities and other institutions, and private companies) are autonomous and have no central governing authority, there is some collaboration. For example, USDA scientists and land grant university scientists sometimes work together on research projects. Similarly, land grant universities in states with common interests form consortiums that bring together specialized expertise to address problems relating to commodities or problems common to those states. Furthermore, USDA’s Agricultural Research Service (ARS) has established formal arrangements with private companies aimed at developing and commercializing new technologies through the use of Cooperative Research and Development Agreements. Finally, private companies and commodity groups provide funding to land grant universities and, to a lesser extent, to USDA to conduct research. USDA is involved in the research, education, and extension system primarily through ARS and the Cooperative State Research, Education, and Extension Service (CSREES). ARS conducts research at its 107 laboratory locations and 35 worksites throughout the United States, Puerto Rico, and in four foreign countries, while CSREES administers funding for research at the land grant universities and other research institutions. CSREES is also the primary federal agency supporting agricultural education and extension activities. Figure 1.1 shows the location of the ARS facilities, land grant universities established under the Morrill Act of 1862, and universities established under the Second Morrill Act of 1890 (historically black land grant colleges). ARS, USDA’s largest research agency, performs most federal in-house agricultural research. ARS has a broad role to develop the knowledge essential to solving technical agricultural problems that are broad in scope and have high national priority. At the end of fiscal year 1994, ARS had a staff of about 6,500 permanent employees, including over 1,900 research scientists and conducted about 1,500 research projects at 128 laboratory locations nationwide and in several foreign countries. Ten years earlier, in fiscal year 1984, 2,600 ARS scientists worked on about 2,700 projects in 140 laboratory locations. In addition, ARS collaborates with land grant universities and other research institutions—through cooperative agreements, memorandums of understanding, and other means—to address research problems of mutual concern. Finally, ARS has established Cooperative Research and Development Agreements with the private sector aimed at translating research into practical products, processes, and services. Under these agreements, ARS scientists and private companies work together to develop and commercialize new technologies. Since 1987, ARS has entered into over 500 cooperative agreements, 239 of which were active in November 1995. In addition, over 200 licenses for ARS-developed technologies have been granted to industries to make, use, and sell ARS-patented inventions. In addition to ARS, the Economic Research Service (ERS) and the Forest Service conduct research. ERS provides economic and social science analyses relating to agriculture, food, natural resources, and rural America. The Forest Service conducts research on forest biology, ecology, and forest products. CSREES distributes funds for research to state agricultural experiment stations (the research arm of land grant universities), schools of forestry, the 1890 historically black land grant colleges and Tuskegee University, colleges of veterinary medicine, and other institutions. It distributes the funds for research through the formula grants program, competitive grants program, special grants program, and various other programs. Specifically: Formula funds are allocated to the states according to statutory formulas that were established in three separate acts. In fiscal year 1994, about 76 percent of the formula funds was distributed under the authority established by the Hatch Act to state agricultural experiment stations to conduct agricultural research. The experiment stations have wide latitude in deciding how to allocate and use these formula funds. Other acts provide formula funds for forestry research, animal health research, and agricultural research at the 1890 historically black land grant colleges and Tuskegee University. The competitive grants program, known as the National Research Initiative (NRI), awards funds on the basis of peer-reviewed research proposals. Each year, NRI publishes a program description and request for proposals. The program is open to scientists both inside and outside of the land grant university system. In fiscal year 1994, 833 grants were awarded to scientists at colleges and universities, other research organizations, and federal agencies. The grants are awarded for a fixed term—usually 1 to 5 years. The special research grants program was established in 1965 as a general authority for agricultural research grants. Conference committee reports accompanying USDA’s appropriations often direct USDA to fund specific research projects at designated institutions (often referred to as “earmarked” projects). These earmarked projects frequently address constituents’ specific concerns and represent the majority of special grant funding (74 percent in fiscal year 1994). The remaining funds are for projects that CSREES designates as national or regional priorities beyond the normal emphasis of the formula grants program. These projects are in areas such as water quality, aquaculture, and integrated pest management. Some of these non-earmarked projects are awarded competitively. Several other grant programs fund specific research, including research on rangelands, sustainable agriculture, and crops such as canola. The Congress also adds line item appropriations for specific research projects. There is considerable debate in the agricultural research community about the efficacy of the various funding mechanisms.