• Agricultural statistics

Agricultural statistics and commodity prices

Over the past 50 years, public agricultural research has contributed enormously to humanity. Nonetheless, the world has continued to collectively underinvest in agricultural research and development (R&D), and many countries have witnessed declining public support for agricultural R&D. In this paper, the factors contributing to persistent global underinvestment in agricultural R&D are described from a developing country perspective. Additionally, incentive mechanisms for increasing rates of investment in agricultural R&D are also discussed.

The paper notes that under-funding of agricultural R&D in developing countries (DCs) is clearly problematic, and the stage is set for the problem to worsen. In the past, DCs benefited from technological spillovers from developed countries. However, because of changes occurring in developed countries, spillovers from developed countries may not be available to DCs in the same extent as before. Decreasing spillover potential is caused by several trends:

• the types of technologies being developed may no longer be as readily applicable to DCs as they were in the past
• those that are applicable may not be as readily accessible
• technologies that are applicable and accessible are likely to require more substantial local development, calling for more extensive forms of scientific R&D than in the past.

Economists often call for governments to address the under-funding problem simply by increasing the total amount of government revenues committed to agricultural R&D. However, the paper finds that it costs society measurably more than a dollar to provide a dollar of general taxpayer revenues to finance public expenditures on agricultural R&D. The authors note that a number of options can be used instead of general government funds to finance agricultural R&D undertaken in the public sector or the private sector.
These include:

• incentives for private innovation
• institutions to encourage collective action by producers

The paper further adds that economic efficiency is likely to be promoted by funding research. Thus the costs can be borne in proportion to the benefits to the greatest extent possible. Consequently, in those cases where the fruits of invention are only partially appropriable, a case can be made for partial support from general government revenues in conjunction with commodity levies. The paper also highlights the need to transmit knowledge across borders.

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