TESTIMONY

before the

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY
UNITED STATES SENATE

THE HONORABLE RICHARD LUGAR, CHAIRMAN

Regarding

REAUTHORIZATION OF THE FARM BILL RESEARCH AND EXTENSION TITLE

Submitted by

Victor L. Lechtenberg, Chairman
USDA National Agricultural Research, Extension, Education, and Economics Advisory Board
          and Dean of Agriculture, Purdue University

March 11, 1997

Good morning, Mr. Chairman and members of the committee, my name is Victor Lechtenberg, Dean of Agriculture at Purdue University. Today, I am speaking as the chair of the newly-formed United States Department of Agriculture National Research, Extension, Education and Economics Advisory Board. Some of my comments and observations will also draw on my experiences as a dean.

I am honored to come before you today to comment on legislation that is vital to the U. S. agricultural research and education system. Actions of this Congress will determine whether the next century brings a strong collaborative agricultural research and education system dedicated to achieving solutions to both long-term and immediate needs of tomorrow's agriculture, or whether it brings independent state systems with little coordination or national focus.

If it please the Chair, I will submit my full statement for the record and will summarize here. I will touch on five issues: 1) stakeholder input in priority setting at the national level; 2) the importance of the federal role in research and education programs; 3) appropriate partnerships with the private sector; 4) some innovative funding options; and 5) the total investment in research, extension and education.

Stakeholder Input in the Priority Setting Process at the National Level

The USDA National Research, Extension, Education and Economics Advisory Board was created during the 104th Congress, as part of the 1996 Federal Agriculture Improvement and Reform (FAIR) Act. The board is charged to advise the Department of Agriculture and its land-grant partners regarding priorities, expected results, effectiveness and relevancy of programs within the REE mission area. Additionally, the Board is responsible for providing customer input in the formation of the REE Strategic Plan. The board consists of 30 members specified by Congress to represent the broad array of research and education stakeholders.

To date, the Board has provided guidance to the Secretary on a number of different issues, including the Fund for Rural America, the strategic plan and the facilities strategic task force nominees. We have scheduled a users Stakeholder Symposium for March 25, 1997, in conjunction with the next meeting of the Advisory Board. This symposium is to help ensure that broad stakeholder input is incorporated within USDA's priority setting processes. We note also that the Department has held several "listening sessions" across the country on research and education in the past year. The executive committee and I envision an on-going process of stakeholder conferences and are confident that this process will achieve the goals defined by the legislation.

Rationale for Federal Role in Research, Extension and Education

In the climate of today's budget discussions, many question the appropriateness of spending federal dollars for research, extension and education at a time when budget deficits are large. However, I submit that federal investment in these programs is essential to the technological competitiveness of our agriculture and food system; to our economic well-being; and for a safe, nutritious, low cost food supply for our citizens.

1) Federal funds are appropriate, and needed, to achieve national goals. I believe that the U.S. should be a world leader in developing basic, fundamental knowledge as a foundation for the practical and cost competitive food and agricultural systems of the 21st century. Our national policy goals should include being the world leader in both the basic and applied research necessary to fully capture the economic potential--domestic and international--of the nation's food and agricultural system. We have enjoyed this position throughout most of this century. We must not lose it.

2) Our national policy should also, in my opinion, assure the nation has the best educated and trained human resource base in the world. Our leading land grant universities are recognized around the world for their excellence in education. Students around the globe aspire to study at U.S. land-grant universities. This is a tribute to the wisdom and leadership of the Congress in creating and nurturing this system in past decades. The unique marriage of teaching with research and extension education is a major factor in the prominence and reputation of these institutions. The U. S. should retain this pre-eminent position.

3) A significant portion of research carried out at land-grants and USDA produces benefits that accrue well beyond state boundaries. These "spill over" benefits are significant, especially in crop and livestock production. For example, the wheat genetics and breeding program at Purdue has been funded with a combination of federal, state and private funds for many years. A detailed evaluation of the program after 40 years reveals that the total rate of return on research dollars invested was 51 percent per year. Less than 20 percent of the benefits accrued in Indiana, the balance to the rest of the nation. While the research was completed at Purdue, it is unlikely the state of Indiana alone would have invested sufficiently to achieve this overall benefit to the nation. Overall, the economic returns to the nation from this program were many times the total investment in the program. Examples like these abound in the USDA REE mission area and are testimony to the wisdom of the USDA--land grant university partnership.

4) Investments in agricultural research and extension have been shown repeatedly to give economic rates of return of between 30 and 50 percent annually. Returns of this magnitude suggest that the nation is under invested in such activities. Increased investments would pay off handsomely in future decades and will create a better, more economically secure nation and world for our children and grandchildren.

5) Some argue that research and education in agriculture can be privatized -- if the federal government gets out, companies will pick up the slack. While private sector investment in agricultural research has increased in the last decade, the agenda for private research, by necessity, must be driven by a relatively short-term goal of generating profit from the sale of goods and services. An entirely short-term focus would change overall research outcomes significantly. Public sector financed programs can and do step beyond the constraints created when short-term benefits dominate the agenda. Publicly funded programs can address long-term projects of national priority and projects of public benefit. Examples are integrated pest management, soil conservation technologies and many environmental enhancing technologies. Without public funding, these vital, public good technologies are not likely to be developed.

Appropriate Partnerships with the Private Sector

My experiences with the Advisory Board and as Dean have convinced me of the need to find innovative ways for the public and private sectors to work more effectively together. However, the research and education community finds itself in a classic catch 22 situation. On one hand, we must ensure that programs are not branded as corporate welfare. While on the other, we must guard against a disconnect between REE programs and stakeholder needs and relevance.

USDA REE must ensure that new knowledge and technology are developed into useful products, information, and services. To achieve this, effective mechanisms to facilitate collaboration and cooperation between the private and public sector should be encouraged. Requiring federal, state and private sector co-funding on certain projects or programs would encourage such collaboration. However, as mechanisms are designed, they should encourage development of new businesses, grow small businesses, and be open to participation by educational and research institutions of all sizes. Matching industry fund requirements could be targeted to specific projects with an anticipated short path to commercialization, so that industry would have clear incentive to participate. This would ensure "buy-in" and relevance assessment from important stakeholders.

Research, Extension, and Education Funding Mechanisms

The Fund For Rural America was established by Congress in the 1996 FAIR Act as an innovative new approach to funding multidisciplinary, multifunctional applied research. The possibilities provided by the Fund have caused a swell of optimism from the research and education community. This new funding source holds great promise for the food and agricultural system and rural America. The current legislation, however, contains a sunset clause that will terminate the Fund for Rural America at the end of three years. As chairman of the Advisory Board and as a member of the research and education community, I ask that you consider extending the authorization of this innovative program to the full seven year period covered by the 1996 FAIR Act. As this program develops, linkages among agricultural production, processing and trade issues will be strengthened and expanded. Congress has the opportunity to endorse multi-state joint research-extension-education projects by continuing its commitment to this program.

A balanced funding portfolio that includes base program support, competitive grants and special grants contributes to the strength of the system. Some recommend that federal funding be awarded solely on a competitive basis. Many of my colleagues and I support competitive grant programs such as the National Research Initiative. This method of funding assures high quality, merit reviewed research, and is an excellent funding approach for basic research to achieve national priorities and goals. Research to achieve long-term, high priority national or multi-state regional goals should, in my opinion, be funded primarily by federal funds. A matching fund requirement on national-goal programs diverts state funds from state and local projects which could otherwise enhance the development and adaptation opportunities flowing from the fundamental research.

Base program funding is important to maintain the cooperative partnership between USDA and Universities and to provide a coordination framework that helps achieve national as well as state and local research and education goals. These funds help sustain the intellectual capacity of the university based agricultural research and education system as well as support the infrastructure necessary to address important national, state, and local issues. Reductions in base program funding would reduce the capacity of the system.

Special grants are an important funding mechanism to address regional and technology directed goals. Unfortunately, due to reductions in core program funding and lower funding in many states, pressures have mounted to use federal special grant funds to address many state and local goals. While these projects are meritorious, in my view, federal funds would be more wisely invested in multi-state, regional projects and programs and in ways that encouraged effective cooperation among research and education institutions. Some problems of a strictly local nature might be of such national importance to justify federal funds but, in my view, these would be rare and would be prime candidates for a matching fund requirement.

Total Investment in Research, Extension and Education

The reauthorization of the Farm Bill Research and Extension Title will set the funding landscape for agricultural research, extension and higher education for at least the next decade. Federal funding for agricultural research and extension is about $1.8 billion dollars, only three percent of total appropriations for all federal research and development. The agriculture and food industry that this research supports is commonly estimated at 15-18 percent of the nation's domestic economic output. Thus, the federal investment in agricultural research and extension, relative to the economic value of the industry, is low compared to other sectors of the economy. Additionally, several countries today invest more than twice as much per dollar of agricultural output as the U.S.

Federal appropriations for university programs have generally not kept pace with inflation since 1980. Base (formula) funds, which support core programs at universities in partnership with state and local funds, have declined almost 20 percent. These statistics along with very high annual rates of return, suggest that the U.S. is under funding agricultural research and education. This has occurred during a time when federal funds for research and development in other areas, have been growing more rapidly than inflation. I believe agricultural research and education is being short changed.

I sincerely hope the members of this committee will carefully consider the positive impact of research, extension and education on the future competitiveness of American agriculture. The restructuring of commodity programs, the advent of new technologies, elevating public expectations, and increasing globalization of markets portends a new era for our farmers, ranchers and rural communities. These realities will require greater reliance on new technologies and management strategies backed by strong research and education programs. USDA REE programs will pay handsome dividends in terms of the future economic health of the agricultural industry and the nation. Regardless of budget allocations, we must do all we can to assure U.S. farmers and producers always enjoy the world-leading technology to which they have become accustomed, and that American consumers continue to enjoy the safest, most nutritious and least costly food in the world. Members of the Advisory Board and I, as well as the research and education community, stand ready to work with the committee in charting a path to the next century through a strong and improved research and education system.

Thank you for the opportunity to share these ideas with you.