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CFFO: Do Farmers need to Increase their Support for Applied Research?

Jul 04, 2013

Applied research in agriculture is tremendously important. This is the second commentary on the importance of agricultural research. This commentary looks at who pays for the research and considers that the mix may need to be re-examined. The real question that farmers need to consider is if they want more control in the direction of agriculture research, and more importantly, if they do, if they are willing to back it up with more direct contributions to research in areas that other players are unwilling to look at on their own.

In the last commentary, a number of the benefits of applied research were outlined. They demonstrated that targeted research into practical questions leads to economic benefits for all farmers of a particular commodity type, if the farmer is interested in this type of incremental improvement. The bottom line is that incremental savings have a huge impact when spread across millions of acres of production.

The issue of agricultural research is complex, with funding coming from the public sector, private firms, and a small amount from check-offs paid to commodity groups. If we look at where research in the agriculture sector has moved in the last twenty years, the level of funding from government has been vastly reduced. University professors now need to actively pursue partnerships with industry and farmers. To expect a sudden resurgence in public funding in an era of tightening government budgets and food abundance at home is probably not realistic.

Private firms appear to pursue some areas of research very well. The development of the latest bio-technology is a natural fit for profit seeking firms that are willing and able to take the financial risk of developing new products. It is important to recognize that farmers pay for that new technology through the price of the eventual product. This is balanced by the fact that if the new product is ineffective, farmers won’t pay, and the firm loses out on an opportunity. Farmers influence but do not have control over the direction of research by these firms.

The reduction of government funding over time and private industries pursuit of profit maximizing new technology leaves a lot of gaps in potential research that have long and short term implications. Farmers need to consider whether these gaps are acceptable or not. Sticking with short-term practical research, one example is that profit seeking firms are interested in optimizing new technology to the point where it is better than the competition, because that is the point where it will sell to farmers. The firm is not interested in the highest optimal use of the product because that may mean reduced total use of the product. If farmers want to know that answer, they need to decide if it is worth funding this type of project for themselves.

As we look to the future of agricultural research, there is the need to recognize that government is taking on a smaller role, that private firms now fulfill areas where profit can be maximized, and that this leaves gaps in our understanding. The question that farmers and their organizations need to consider is whether it is important to address these gaps, and if they are willing to find the way to fund the research necessary to answer these questions.

Source: CFFO