Statement of the

American Soybean Association, National Association of Wheat Growers, National Barley Growers Association, National Corn Growers Association, National Cotton Council, National Grain Sorghum Producers Association and USA Rice Federation

Presented by Phil McLain President, National Association of Wheat Growers

Before the Senate Agriculture, Nutrition and Forestry Committee

on Reauthorization of the Agriculture Research Title of the Federal Agriculture Improvement and Reform Act of 1996

March 18, 1997

Mr. Chairman and Members of the Committee:

My name is Phil McLain. I am a producer with a highly diversified farming operation near Statesville, North Carolina and president of the National Association of Wheat Growers. I am pleased to present the consensus views of the American Soybean Association, National Association of Wheat Growers, National Barley Growers Association, National Corn Growers Association, National Cotton Council, National Grain Sorghum Producers Association and the USA Rice Federation at this important hearing on reauthorization of the research title of the 1996 farm bill.

Mr. Chairman, with the permission of the committee, we request that our full testimony, including the individual organization responses to the questions which you posed in January of this year, be made part of the hearing record, and I will attempt to summarize our comments.

We would like to discuss the history of the system of agriculture research in the United States, its importance to the U.S. food and fiber industry, our nation's consumers and the global marketplace, the unique characteristics of agriculture research as compared to other research endeavors. In addition, we will suggest that the future vision of agriculture research, extension and education be based on even greater efficiencies and an orientation toward enhanced economic growth, increased productivity, international competitiveness and greater public/private communication and cooperation.

Over a hundred years ago, the United States embarked on a mission to assist in the further development of its primary industry - agriculture. That mission included the creation of institutions and the development of human resources to improve farmer understanding of the agricultural and mechanical arts, establishment of a basic and applied research capability to enhance short and long term farm productivity by training and employing individuals in agricultural science and technology and insure the transfer of information and technology to farmers through an outreach program of extension personnel. The contribution of this system of research, extension and education cannot be overstated. It has created the opportunity for an ever increasing number of Americans to pursue goals far beyond the objective of providing life's necessities of food and fiber for themselves and their families. The result has been that Americans are the best fed people in the history of civilization. The fact that they are able to do so at a per capita cost which is among the lowest in the world while being assured of a safe and healthy supply of diverse agriculture products is an everlasting tribute to the public commitment over the decades to our system of agricultural research. In addition, countless millions around the world have also directly benefited from the application of the results of these efforts.

The agriculture industry is unique from other endeavors due primarily to the diversity of the physical environment within which it must operate. The system of agriculture research, which in many instances provide the underlying components for industry achievement, must similarly be capable of producing outcomes which are suitable to site specific, unique environments. Failure to provide the opportunity for laboratory or field work which acknowledges this diversity will yield results that have little relevance not only to the producer as the initial, primary stakeholder in the process, but also the consumer who ultimately receives the benefits of scientific and technological advances through the marketplace.

Our extension system plays an important role in the delivery of information and new technology to agriculture's participants. While many of the traditional functions of extension, particularly in specific areas of production technology, are being filled or supplemented by the private sector in many areas of the country, new demands in both traditional and non-traditional areas of agriculture provide the opportunity for outreach programs to continue their relevance. Agriculture is more than simply planting and harvesting crops. Increased emphasis on management and marketing as well as developing knowledge and providing unbiased analysis of privately developed products is a critical function for extension relative to production agriculture. Unfortunately, funding limitations coupled with increased consumer, rural sociological, and non-traditional agriculture demands have tended to reduce the capability of the extension programs to adequately address historic mission responsibilities. We believe that federal funding for extension should be focused on production agriculture, recognizing that the majority of extension funding originates with the States who will establish specific priorities for the non-federal funds. The land grant universities provide an increasingly multi-disciplinary approach to agriculture education. A smaller percentage of those who will be engaged in one of the many aspects of agriculture in the future will have direct knowledge or experience in the industry. Maintaining institutional capability to provide specialized training for both researchers and others who will participate in the industry will be key to achieving future productivity gains, satisfying consumer demands and stimulating economic growth.

Today, our country's efforts in agriculture research, extension and education are expected to meet significantly greater challenges than originally envisioned when the system of land grant universities and agricultural experiment stations was created. The goal of expanded productivity through research and technological development, training of new scientists and agriculturists and providing relevant information about new products and technology through extension programs remains an important, on-going process. Agriculture and its institutions are increasingly confronted with additional issues which must be addressed concerning the efficient use and preservation of our natural resource base, consumer education about the risks and benefits of new technology as they relate to food safety, health and the environment. In addition, the system is being asked to address a wide variety of rural economic and social issues that range from job creation to questions concerning an aging rural population, from industry concentration impacts to health, nutrition and education issues of rural residents, from the development of risk management strategies to global competition and marketing.

In order to successfully address these and new issues as they emerge, the system must accept change as a fact of life and embrace increased flexibility in the way it develops and implement producer driven program strategies for the future. Reauthorization of the research title of the farm bill provides an opportunity to begin this process. This legislation should recognize the changing needs and priorities of agriculture. The system must be flexible in order to address agriculture research, extension and education; and provide a vision which will encourage the system to evolve without causing a loss of system capability in terms of both the historic mission and the new challenges it must address.

We believe that the research, extension and education system must recognize and address several fundamental forces as we enter a new century: The expansion and integration of global markets for products and services has and will continue to force agriculture to adapt to rapidly changing market forces and expectations. Reductions in government intervention in both the agriculture production and marketing functions will yield greater uncertainty and instability in the global marketplace. Technological advancements create both concern and opportunity as these products, processes and services become more readily available and adaptable to a global agriculture.

The primary goal of the system must be to provide societal benefits from U.S. agriculture. These benefits should focus on ensuring a safe, affordable supply of food, fiber, feed and industrial raw material which enhances human and animal health, diet and nutrition in ways that maintain and improve environmental quality.

More specifically, our system should help create opportunities in agriculture through the analysis and application of science-based information that can be integrated with policies, regulations and practices to ensure agriculture economic viability and growth through increased productivity, competitiveness and sustainability. This effort will require the development of improved crop varieties and production systems and techniques to maintain and enhance quality and nutritional value as production moves through the various stages of production, handling, processing and distribution which are compatible with efforts to protect and improve our natural resources. Additionally, in its mission to provide interagency research, USDA must take the lead in providing quality research in regulated areas such as resistance management. Much of this vision is embodied in the mission statements, strategic plans and statements of goals and objectives of the various research services and program initiatives within the Department of Agriculture.

In order to make real progress in the implementation of the vision, the legislation should clearly define the long term blend of funding mechanisms available to the system, an explicit role for the system's primary stakeholders, a process to ensure that specific priorities are being developed and addressed in a cost efficient manner, development of additional capability to react to emergency situations, including production and economic threats, and methodology to measure system outcomes. This Committee and the Congress has the opportunity, through reauthorization of the research title, to significantly influence the ability of the system to confront both immediate and longer term challenges.

The annual rate of return on investment in agricultural research, extension and education is quite high, exceeding 35% in most analysis. This compares with average rates of return for other public projects of less than 10%, and private annual investment returns which rarely exceed 20% over time. These facts indicate two things: The public has generally received good value for its support of agriculture research at both the state and federal level, and both the public and private sectors are under-investing in the system. Although federal funding of these activities represents less than 25% of all investment in this aspect of agriculture; this funding is critical to maintaining a basic capability in research, both basic and applied, extension programs and providing educational opportunities, particularly in those system aspects which produce regional or national benefits. While federal support of the system has remained relatively static in real terms over recent years, demands on each component have and will continue to expand. Recent changes in agriculture policy, both domestically and globally, which have served to reduce government intervention in agriculture and trade will increase the need for greater output from the system and increased cooperation among all public and private research and extension organizations.

As farmers and agri-business become more reliant on market forces to maintain economic viability with greatly reduced government sponsored safety nets; productivity growth, competitive capability and the satisfaction of consumer needs in terms of product diversity, food health, safety, supply and cost will further challenge our efforts in agriculture research, extension and education. As federal, state and private sector budget priorities are established, expanded funding for the system should receive serious consideration. However, given the current funding outlook from all sources, federal support for system programs should be utilized to address priority topics which have multi-state or national relevance or will not be readily pursued by other entities. In addition, federal spending for research, extension and education should be used to leverage state and private support in creative ways to produce an outcome based orientation which will help ensure that the investors in the system continue to realize a high rate of investment return while addressing both current and future research issues.

While there has been a significant amount of discussion concerning the method by which federal money is spent within the system to achieve greater efficiency, formula funds, competitive grants and special grants have and will continue to produce high rates of return. Given the diversity of issues, regional interests and differences in scale of our institutions, each funding component contributes an important function to the research mission. We believe however, that the discussion should continue and each element of the system should be required to demonstrate how its contribution to the desired outcomes is necessary and/or unique. Comprehensive implementation of the goals of the Government Performance and Results Act is critical to the maintenance and expansion of our research capability. In addition, Secretary of Agriculture Dan Glickman will shortly announce the members of the Strategic Planning Task Force. We believe this is an important "first step" in a process to evaluate the long term viability and necessity of maintaining the existing level of federally funded facilities.

Beyond the discussion of research funding, we believe the legislation should address other issues which can improve the current and long term performance of the system. If the general vision noted earlier is to become reality, greater emphasis must be placed on insuring that the partnership which exists between the federal government, state governments and the private sector is strengthened. This can be accomplished by advancing the strategic planning agenda for research, extension and education to the next logical step of establishing and implementing specifically designed priorities and projects for the system components.

Currently, the goals and objectives of the various USDA agencies and their services such as the ARS, CSREES, ERS, APHIS, and NRCS as well as many of its major programs including the National Research Initiative (NRI) and the Fund for Rural America are so broad and general that they may be construed to mean whatever an interested party wishes them to be. USDA is in the best position to create an ongoing process which will add specificity and relevance to these goals, ensure cooperation among participants, reduce duplication of effort and coordinate activities to address emergency situations. We believe these types of activities can enhance both the efficiency and the output from the system. They are desirable regardless of the level of available funding, and are an absolute necessity given current budget constraints.

A key issue in establishing research priorities is determining who should "drive" the process, and developing the means by which that process can maintain its relevancy on an on-going basis. The National Advisory Board for Research, Education and Economics, established by Congress in 1996, was designed as a replacement for several advisory committees which had either become redundant or failed in their efforts to provide advice. In our view, the primary cause of failure of the advisory committee system was the concentration of membership being vested in the system personnel - administrators and scientists, who may regard process as being equally important as outcomes. Unfortunately, this same error is being repeated with the make-up of the new Advisory Board. In order for the system to be responsive to real world research, extension and education needs, the system stakeholders must play a larger role in establishing priorities and reviewing the system's progress in achieving results. We believe a majority of the Advisory Board membership should be composed of producers and industry representatives. In addition, the appointment responsibility should be equally shared among the Secretary of Agriculture, the House Agriculture Committee and the Senate Agriculture, Nutrition and Forestry Committee. Private sector, industry wide advisory groups, including consumers, organized around specific commodities would be a better approach to determining the specific problems which need to be addressed. The scientific community should participate in this process by providing technical guidance, ensuring a open line of communication exists among all participants and through improved coordination in identifying current activities both in the U.S. and abroad. The creation of these groups does not necessarily need to be a function of government. They could be organized under the auspices of private sector organizations. Key to this approach however, is the willingness of the system to accept and act on the advice such groups provide.

We all agree that improvement to the Department's Current Research Information System (CRIS) to ensure that research information is current, comprehensive and offered in a more user friendly format is critical. We will continue to work with the system to increase efficiencies and improve reporting requirements. In addition, the Advisory Board could act as a forum to bring sectoral interests together ensuring that the broader goals and objectives for both basic and applied research, extension and education are being addressed.

The current system of peer review of specific proposals by the scientific community for scientific excellence would continue, but in addition to judging on the basis of scientific merit, the review process would be expected to provide a higher rating to those research proposals which were designed to meet the priorities identified by the private sector stakeholders.

By allowing the industry a more clearly defined and lead role in identifying specific system priorities, it would also be expected that those industries would establish criteria to rank its priorities relative to sector needs and available funding from all sources, a review process to reduce the potential for duplication across the whole of the system, including private research and a methodology to measure performance. This approach is not unlike that which currently exists at many land grant institutions relative to local priorities and in some instances on a regional basis across the country. The process of development of proposals to address local, regional and national priorities should be streamlined to reduce the time and money required by scientists, educators and extension personnel in seeking grant funds for specific projects. We would suggest that proposals be initially submitted in a brief outline form to be reviewed for relevancy by the appropriate scientific and advisory groups. Upon a positive review, the developer would further define the scope of the proposal and prepare it for the next step in the review process. This would serve to reduce the amount of time and money spent pursuing grants which have little relevancy or chance of final approval. The initial review process could also be utilized to suggest modifications to the proposal or encourage collaboration among those interested in pursuing similar or related projects.

Regardless of how well we develop and implement goals, objectives and priorities; agriculture will continue to be subject to the unexpected. Environmental conditions, changes in production practices, evolution or introduction of new pests, market opportunities and a host of other events which for the most part may be unforeseen and uncontrollable will continue to occur. USDA and its agencies must have the flexibility to react quickly and decisively to such emergency situations when they arise. While the Secretary has certain existing authority to shift funds from one agency to another in those instances, we believe he needs additional authority to allow the research, extension and education services to focus on specific emergencies which are deemed to severely impact production or markets. In addition, the Secretary should be able to provide longer term commitments to addressing those situations after the imminent threat has been resolved.

In conclusion, this nation developed a structure for agriculture research, extension and education which has served it well and which we believe is still appropriate for the future. The original mission of creating opportunities for increased agriculture production and productivity through training in science and technology, creating a capability in basic and applied research and developing a system to ensure the transfer of that knowledge to those involved in the industry is an understated success story.

The system must however adapt to new challenges which better reflect concerns about the health, safety, nutrition and environmental aspects of the agriculture industry. It must also continue to recognize the unique character of the industry in terms of the natural environment in which it functions.

Reauthorization of the research title of the farm bill provides the opportunity to develop a vision for the future. This vision should recognize that forces such as market expansion and integration, reduced government intervention, and rapid technological change impact the goal of providing a safe, diverse and affordable supply of food, feed, fiber and industrial raw materials in ways which maintain and enhance environmental integrity. As it has in the past, science can create the opportunity for economic growth, increased productivity, global competitiveness and economic sustainability.

The return on funds invested in agriculture research, extension and education are high. This indicates that the consumer/taxpayer has received good value for their investment. It also indicates the both the public and private sectors are underinvesting in agriculture research. All parties should consider increasing this investment level while at the same time seeking to create a more efficient system which accepts change and utilizes available flexibility to adapt to the new demands on the system. Federal research funding should address priority issues which have national or multi-state significance or which will not be pursued by others. In addition, these funds should be used to leverage state and private resources to create a more efficient, outcome based system.

Those directly involved in the industry, as the primary stakeholders, should be charged with determining specific priorities and ensuring their relevance on a sector by sector basis. Additionally, the stakeholders would seek ways to reduce duplication of research efforts, attempt to match priorities with available funding and develop an approach to measuring outcomes. This can be accomplished by changing the current advisory board and scientific review process to require greater cooperation and coordination throughout the system.

Additional efficiencies can be achieved by establishing a streamline procedure for the research grant application process based on an initial relevancy test and utilizing limited planning grants to fund project development upon preliminary selection. Finally, the Secretary should have new authority to react to production and market emergencies which will allow him to shift a specified percentage of the research, extension and education budget to those situations when they occur.

Mr. Chairman, and Members of the Committee, we look forward to working with you, your colleagues in the House of Representatives and the Department of Agriculture as this important legislation is developed, passed by the Congress and implemented. I would be pleased to respond to any questions you may have at your convenience.