May 29, 2008

U.S. Agricultural Research in Dangerous Decline

Prices of basic foods like rice and wheat have risen rapidly around the world. This refocuses attention on two related policy questions long thought important but largely ignored recently: Should government fund agricultural research? What should wealthy nations do to increase food production in poor countries?

Both involve a basic economic question. Is improving agricultural production a "public good"? That is, do the benefits of ag research spill over to the public at large? Would private entities carry out an optimal level of such research without action by government?

In the United States, we decided long ago that improving farm output benefits the general public. Because private entities carrying out research cannot capture many of the benefits, they won't spend as much money on this as society needs.

That conclusion produced the 1862 Morrill Act, which provided grants of land and later money to state colleges, whose "leading object" would be to teach subjects "related to agriculture and the mechanic arts."

It also produced the 1887 Hatch Act that established agricultural experiment stations and the 1914 Smith-Lever Act that set up agricultural extension services.

These laws turned out to be some of the most important legislation ever enacted in the United States. Agricultural research, extension and education here became a model for the rest of the world. It contributed enormously to economy-wide higher productivity, as higher output per person, per acre freed farm workers to move into industry without endangering food supplies.

After World War II, we thought it in our national interest to help rebuild the economies of war-ravaged countries with the Marshall Plan. In the 1950s, we extended such aid to developing countries.

It was not altruism on our part. We were scared of the Communists. Successive Republican and Democratic administrations implemented dual programs of military and civilian aid with broad bipartisan support in Congress.

I played a tiny role. In 1969, as a soldier, I worked in a little Army Post Office that served some 4,000 Americans working for the U.S. mission in Brazil. These included substantial numbers of faculty from Purdue University, the University of Arizona, Oregon State-Corvallis and other U.S. schools implementing U.S. foreign aid projects.

Among these was Ed Schuh, professor and dean at the University of Minnesota from 1979 until his death last month. In retrospect, U.S. policy was audacious. Our government went to Purdue and said, in effect, "Here are millions of dollars; go and build a world-class agricultural research university in Brazil." And so, Schuh and other determined young Purdue faculty turned the dusty regional town of Vicosa in the state of Minas Gerais into a center of ag research and education.

The same happened in many other countries. North Carolina State and Iowa State were in Peru. The University of Minnesota worked in Morocco. Thousands of bright young people from every continent came to get masters and doctorate degrees here. Returning to their home countries, they formed a cadre of educated, influential people generally very sympathetic to the United States.

Together with foundations and governments in Canada and Western Europe, we also funded a set of international ag research centers. These included the International Rice Research Institute in the Philippines, the International Potato Center in Peru, the International Center for the Improvement of Corn and Wheat in Mexico and many others.

It has become fashionable to discount the effectiveness of foreign aid. Yes, much foreign aid was wasted. Yes, foreign aid by itself has never turned a poor country into a rich one. Yes, much aid went to prop up friendly but brutal kleptocrats like Mobutu Sese Seko in Zaire or Suharto in Indonesia.

Nevertheless, the agricultural, health and educational programs we funded in the first 30 years after World War II made an enormous difference in the lives of billions of people. The famines common in South Asia largely disappeared. Health and education improved, particularly in countries like Taiwan and South Korea. Brazil and other countries developed their own highly successful ag research and extension systems.

Perhaps success bred complacency, both in terms of funding our own domestic ag research and ag aid abroad. Perhaps the collapse of communism erased any urgency. In any case, adjusted for inflation and relative to the size of the U.S. economy, we spend much less on domestic ag research than in the 1960s and vastly less on assisting food production capacity in poor countries.

Fifty years ago, when we were much poorer than now, we thought it important to spend money to fight hunger, promote education and foster sympathy for the United States in poor countries. Now, somehow, we don't think we can afford it anymore.

St. Paul economist and writer Edward Lotterman can be reached at [email protected]