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Economics Research Priorities for the National Research Initiative Competitive Grants Program
Comments by Tracy Irwin Hewitt, Executive Director,
The Council on Food, Agricultural and Resource Economics (C-FARE)
An organization of agricultural economists
Presented to the National Research Initiative Competitive Grants Program Staff,
The United States Department of Agriculture
March 12, 1999
Good morning. It is a pleasure to be here and speak with you on behalf of the Council on Food, Agricultural and Resource Economics (C-FARE). C-FARE is a non-profit association actively working to represent the agricultural economics profession in matters of science policy, priority setting, and budget determination at the federal level, and to collaborate with the other agricultural sciences and government agencies in these activities. C-FARE carries on these activities through the leadership of the C-FARE Board, advisory participation by government agency members, and significant representation from the university agricultural economics department heads.
I greatly appreciate the opportunity to be here and share with you the economics research priorities relevant to the National Research Initiative Competitive Grants Program. Before getting to our list of priorities, I'd like to say a few things about the economics research currently funded by the NRI.
The Economics Research Funded by the NRI is of High Quality and Value
The social science research funded under the National Research Initiative has led to important breakthroughs in a number of areas. Most of this work has been concentrated in the Markets, Trade and Rural Development Divisions (MTRD) with some research done under the Agricultural Systems program.
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Highlights of NRI-Funded Economics Research in The Markets, Trade and Rural Development Division
International Trade Liberalization and Global Competitiveness
The fraction of the world's agricultural output that moves through international markets is
expected to continue growing rapidly. This growth has been facilitated by multilateral trade
agreements that reduce export subsidies, guarantee access for imports, and eliminate non-tariff
barriers in an effort to link internal and world market prices. Economics research is key to
understanding many of these forces for change.
Several research projects concentrated in the area of international trade liberalization
and global competitiveness have greatly improved our understanding of the demand for US
products and how to access it. There is an improved understanding of the costs and benefits
of increased trade, and of different kinds of trade restrictions imposed by the US and other
countries. Innovative policies have been studied to estimate how to stimulate demand for US
agricultural exports and, consequently, improve farm income. We also have an improved
understanding of currency volatilities and other pitfall of globalization and expanded trade.
Risk Management Policies and Programs
Concerns about farm income and risk management have been heightened by changes in
the 1996 farm legislation that decouple farm marketing and production decisions, allow
greater volatility of commodity prices, and shift risk bearing from the public sector to
the private sector. Synthesizing information, improving expectations, and effectively
managing new and traditional sources of risk are essential to the long-term viability
and performance of farm businesses.
NRI-funded economics research has made substantial and important progress in analyzing
existing and new insurance programs that may help producers protect themselves against
crop and revenue losses. Innovative credit programs have been developed, and incentives
for supply management programs have been analyzed.
Understanding the Implications of an Industrializing Agricultural Sector
The U.S. agricultural system is experiencing increasing consolidation of production
units, and greater coordination and concentration among the input, production, and processing,
and distribution stages of the system. To survive and take advantage of the structural changes,
producers need help repositioning themselves, possibly through contracts, alliances, cooperative
arrangements, and other innovative business forms. These changes have profound implications
for economic performance both within and beyond the agricultural system, and raise important
questions about the goals and targets of agricultural and related policies.
Through NRI-funded economics research we have a better understanding of the economic
drivers of this change and its impact on market and pricing efficiencies. Economics research
in this area has also examined the impact of this change on what type of economic information
the public sector should provide. Finally, there has been a substantial increase in understanding
of how agriculture's relationships with the environment, communities and independent farmers
has changed. Each relationship has important implications for agriculture policy.
World Food Supply
The pattern of global demand for food will have a profound impact on U.S. exports. A better
understanding of this pattern will expand opportunities for the U.S. to increase its share of
world markets. A NRI-funded study is analyzing China's food demand and preference for
imported food products via a field survey.
Livestock Waste
Livestock waste continues to be an important issue for many stakeholders in the agriculture
and food system Economics research is examining economically efficient spatial arrangements
of livestock production and the ability of different federal policies to promote efficiency.
Highlights of NRI-Funded Economics Research in The Agricultural Systems Program
Some of the research funded under the Agricultural Systems program has included
economists to help solve critical and emerging issues in agriculture and the food system.
Two examples are described.
Precision Agriculture
Economists are working closely with other scientists investigating the economics,
agronomic, and environmental implications of precision farming. The economic component
of the project will measure the potential economic benefits of precision agriculture so that
farmers can make informed crop production decisions.
Value of Non-Market Goods
Economists are leading the development of research methods that can be used to estimate
the value of non-market goods (i.e., things that are not usually bought and sold in markets,
such as air or water quality). The output from this project will contribute significantly to
understanding how people value different characteristics of non-market goods. Such
information is of essential importance to policy makers when evaluating the costs and
benefits of public projects.
NRI-Funded Economics Research Important, But Too Narrow
There is no doubt that NRI-funded economics research has led to important breakthroughs
on a number of topics. Economics provides fundamental knowledge about the people and institutions
that make up our food and agriculture system. And while we believe that the economics research
currently supported through the NRI is of high value and quality, it represents only a shadow
of the potential contributions the science of economics can offer society and the scientific
community in research areas relevant to the objectives of the NRI.
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Economics Research Priorities for the National Research Initiative
A couple of years ago, C-FARE led the agricultural economics profession through a structured, multi-year priority-setting process that resulted in a set of economics research priorities for the US food and agriculture system. Input on priorities was collected from agricultural economists and other scientists, as well as stakeholders of agricultural economics research and extension system. The results are captured in the document, "Economics Research Priorities for an Efficient and Sustainable Food System," (C-FARE, 1997).
Table One describes five agricultural economics research priorities that are based in large part on the 1997 priorities document, with some recent updating by representatives of the profession.
Table 1.
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Agricultural Economics Research Priorities
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- Develop new knowledge about economic and social consequences of environmental regulation.
- Enhance knowledge and improve understanding of the economic and social impacts
of biotechnology and agricultural genomics.
- Expand the science and application of economics to improve food safety.
- Improve farm income and risk management tools: farm efficiency and profitability.
- Examine the impacts of the changing farm and agribusiness structure.
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Develop New Knowledge About Economic and Social Consequences of Environmental Regulation
Agricultural economics research can improve our understanding of the economic and
social consequences of environmental regulation. This should include research programs to:
- enhance existing and develop new methods to assess the benefits and costs of government
regulation affecting agricultural production and the environment,
- develop, design and evaluate integrated policies and institutions to mitigate negative
environmental impacts of production agriculture, and
- expand scientific knowledge about quantitative and qualitative assessment tools that
can be applied to non-market goods such as environmental quality.
Enhance Knowledge and Improve Understanding of the Economic and Social Impacts of Biotechnology and Genomics
Biotechnology
Research is needed to enhance our knowledge and understanding of the economic and social
impacts of new and emerging applications of biotechnology. Economists can develop integrated
models to analyze how biotechnology affects farm size, production efficiency, competitiveness,
trade potential, and other elements of economic performance in agriculture. Economics methods
can be used to further understanding about the appropriate roles of the public and private sector
in biotechnology research. The costs and benefits of biotechnology can only be fully understood
and estimated by developing innovative economic research programs.
Economics can be used to understand how the consolidation among agricultural chemical,
seed and biotechnology companies will affect producers, consumers and environmental quality,
for example. Economic methods can promote understanding of how changes in the industry will
affect the types of technologies produced and who benefits from these products. Secondary
impacts of biotechnology can be assessed with economic models. For example, the adoption of
new seed products may have a significant impact on chemical use and environmental quality.
Economic analysis of international trade regulations and consumer acceptance of genetically
modified organisms will help promote acceptance of U.S. products oversees.
Genomics
There are at least three important contributions economists and other social scientists
can make to a national genomics research program. First, economic methods can be developed
to help select target species for gene sequencing. The criteria for selecting the most informative
and cost-effective agricultural target species have yet to be identified and agreed upon. In
choosing future target species, is genome size as important a criterion as agricultural importance?
Agricultural economists need to work with biologists and other scientists to provide information
that can be used to make decisions about target species that meet the goals of the public and the
scientific community.
Second, economic models can be developed to answer questions about the trade-offs
consumers are willing to make between food characteristics such as taste, nutritional value,
and shelf-life. Economists and other social scientists can identify public interests and ensure
that eventually biological genomics research produces product valued by the consumers and
producers.
Third, economics and other social sciences can be used to develop new knowledge about
potential social, economic and ethical objections of various types of genomics research. As
noted in a recent workshop at the National Academy of Sciences, the public will not automatically
embrace scientific efforts to improve agriculture through the use of molecular biology. An
agricultural genome project will be more successful if it has a social science component aimed
at the social, economic, and ethical implications of the research product.
Expand the Science and Application of Economics to Improve Food Safety
Economics can improve our understanding of the benefits and costs of options to reduce
foodborne illness from pathogens, and pesticide residues in fresh and processed foods.
Agricultural economists can generate new knowledge about how changes in consumer
demand affects food safety, health and nutrition. Through economic research, we can
better understand the choices consumers, retailers, and producers make in food production
and preparation practices and their responses to food safety information. Economic models
could then be developed to evaluate the effectiveness of public and private efforts to
promote safer food production, transportation, handling and preparation.
Economics research aimed at developing new ways to strengthen economic incentives to
encourage producers to supply safer food could greatly enhance the success of food safety
initiatives. Economic research on risk assessment is also important to enhance basic knowledge
about the benefits and costs of options to reduce foodborne illnesses. Economic risk assessment
models and data can provide decision makers with better information necessary to promote
food safety.
Improve Farm Income and Risk Management Tools: Farm Efficiency and Profitability
Agricultural economics research can improve the efficiency of farm income and risk
management tools. Economics can enhance our understanding of how to measure and manage
risk in a new, globalized, vertically coordinated food system for an expanded clientele base.
Economics can be used to develop new knowledge about risk management strategies, instruments,
and portfolios and adapt them to meet current challenges within the agriculture sector. Finally,
economics can improve producers' ability to manage complex financial accounting and reporting systems.
Examine the Impacts of the Changing Farm and Agribusiness Structure
The impacts of the changing farm and agribusiness structure are profound. Economic research
can improve our understanding of the forces driving structural change and concentration, and
the impacts of this change on the economic performance of vertically coordinated farming and
agribusiness. Economic models of vertically coordinated systems can answer important questions
about market access, bargaining power, concentration, location of production, financial arrangements,
rural communities and the environment. Finally, economic research on the relationships between
value-added for agricultural commodities, and new product development, producer profitability,
risk and market access would greatly contribute to our understanding of major influences on the
changing structure of agriculture.
Agricultural Economics Priorities Go Beyond Markets, Trade and Rural Development
In general, the important economic priorities related to our food and agriculture system do
not fit well within the confines of the Markets, Trade and Rural Development Divisions of the
NRI. And, unfortunately, the other divisions of the NRI program have also been so narrowly
defined that economics proposals are all but excluded from the program. In 1996, for example,
only one project out of 96 in the NRE area had any social science in it.
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Other Science Groups Acknowledge the Value of Economics Research
Moving to a broader context of scientific research priorities by non-economists, in particular, those generated by the FAIR'95 and the CROPS'99 meetings, you'll notice that they are issue-based and require interdisciplinary teams of scientists that include scientists from the biological, physical and social sciences. Both of these points are somewhat different that the current NRI programs. The NRI programs are neither issue-based, nor do they encourage or interdisciplinary research that crosses the biological, physical and/or the social sciences. For example, in the NRE division, only 7% of the projects funded in 1996 involved interdisciplinary teams that had both biological and physical scientists involved. Most projects are wholly within applied biology, molecular biology, and/or microbiology. One percent of the projects funded included both biological and social scientists.
Table 2.
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FAIR'95 Priorities
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CROPS'99 Priorities
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- Enhance industrywide responsiveness to consumer and societal concerns.
- Meet market demands through increased efficiency and competitiveness.
- Develop integrated food animal management systems.
- Maintain and enhance environmental quality.
- Improve food quality control in terms of safety, desirability, and
nutritional composition.
- Enhance animal well-being throughout the life cycle of food-producing animals.
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- Expand the science and application of plant genomics, which will provide the basic
knowledge and technology required to increase the productivity and utility of plants.
- Develop practical, sustainable production management systems for the protection
of the food and fiber supply and other natural resource base.
- Develop mechanisms to enhance producer profitability while minimizing financial
risks and ensuring food safety and security.
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Interestingly, both the FAIR '95 and the CROPS'99 activities identified priorities that are wholly outside the expertise of the disciplines they represent. In fact, they both identified priority research areas that can only be investigated by economists and other social scientists. The first and second FAIR'95 priorities beg research questions that are largely within the realm of the social sciences. The discussion within the supporting FAIR'95 document lists specific social science research questions such as "determine why consumers in domestic and international markets choose the foods they do (p. 4);" and "quantify the value that consumers place on food-product attributes (p. 7)." Agricultural economists and other social scientists are well-equipped to initiate projects and expand related work to answer these and other important questions.
The third CROPS'99 priority also raises research issues that can only be solved by economics research. Agricultural economists have a long and established history of providing information and answering policy questions about "producer profitability" and "minimizing financial risks." Additionally, questions about food safety and security should always be addressed within an economic and social context.
Closing
Thank you once again for the opportunity to be here. Again, I commend you for the job you've done in the past to support high quality and valuable research.
I would ask that you consider expanding the NRI program areas to accommodate the types of economics research priorities described to you today. There is strong support for more economics research across scientific societies and among policy makers.
References:
The Coalition for Research on Plant Systems. 1998. "Crops and Plant Systems Research Priorities for the 21st Century." Proceedings from CROPS'99 workshop held in November 1997. Wisconsin: Madison.
The Council on Food, Agricultural and Resource Economics. 1997. "Economics Research and Education Priorities for an Efficient and Sustainable Food System." Washington, DC.
The Federation of American Societies of Food Animal Sciences and The Forum for Animal Agriculture. 1992. "Linking Science and Technology to Societal Benefits: Research Priorities for Competitive and Sustainable Food Production From Animals." Proceedings from the Food Animal Integrated Research for 1995 (FAIR'95) Symposium, October 1992. Illinois: Champaign.
Current Research Information System (CRIS). Database searches, July 1998. The CRIS reports track the disciplines involved in NRI-funded research projects.
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