• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Abstract
 Preface
 Table of Contents
 Introduction
 World food and agriculture...
 The critical role of agricultural...
 Building agricultural research...
 The U.S. advantage in agricultural...
 U.S. development assistance...
 U.S. interest in the world food...
 Recommendations
 Reference






Group Title: ERS staff report ;, no. AEGS820514
Title: U.S. Foreign assistance to agriculture
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00055283/00001
 Material Information
Title: U.S. Foreign assistance to agriculture a proposed redirection
Series Title: Staff report
Physical Description: 37 leaves : ; 28 cm.
Language: English
Creator: Nightingale, Ray W
Urban, Francis S
Hanrahan, Charles
United States -- Dept. of Agriculture. -- Economic Research Service. -- International Economics Division
Publisher: International Economics Division, Economic Research Service, U.S. Dept. of Agriculture
Place of Publication: Washington D.C
Publication Date: [1982]
 Subjects
Subject: Agricultural assistance -- United States   ( lcsh )
Genre: federal government publication   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Bibliography: leaves 36-37.
Statement of Responsibility: by Ray Nightingale, Frances Urban, and Charles Hanrahan.
General Note: Distributed to depository libraries in microfiche.
General Note: "May 1982."
Funding: Electronic resources created as part of a prototype UF Institutional Repository and Faculty Papers project by the University of Florida.
 Record Information
Bibliographic ID: UF00055283
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 001275706
oclc - 10225813
notis - AGC6355

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Title Page
    Abstract
        Abstract
    Preface
        Preface
    Table of Contents
        Table of Contents 1
        Table of Contents 2
    Introduction
        Page 1
        Page 2
    World food and agriculture prospects
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
    The critical role of agricultural research and technology
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
    Building agricultural research and development capacity in developing countries
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
    The U.S. advantage in agricultural development assistance
        Page 24
        Page 25
        Page 26
    U.S. development assistance finding
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
    U.S. interest in the world food problem
        Page 32
        Page 33
    Recommendations
        Page 34
        Page 35
    Reference
        Page 36
        Page 37
Full Text
/3 ?L1


United States
Department of
Agriculture
Economic
Research
Service
International
Economics
Division


IED

Staff

Report


U.S. FOREIGN ASSISTANCE TO AGRICULTURE:
A PROPOSED REDIRECTION
by
Ray Nightingale, Francis Urban,
and Charles Hanrahan






















U.S. FOREIGN ASSISTANCE TO AGRICULTURE:
A PROPOSED REDIRECTION
by

Ray Nightingale, Francis Urban,
and Charles Hanrahan



















May, 1982


Staff Report AGES820514
International Economics Division
Economic Research Service
United States Department of Agriculture
Washington, D.C. 20250













U.S FOREIGN ASSISTANCE TO AGRICULTURE: A PROPOSED REDIRECTION
By Ray W. Nightingale, Francis S. Urban, and Charles E. Hanrahan.
International Economics Division. Economic Research Service, U.S.
Department of Agriculture. ERS Staff Report No. AGES820514, May 1982.


ABSTRACT

Changing attitudes towards international assistance and decreased
development financing necessitate new programming approaches to
insure effective utilization of limited resources. Falling world
food production growth rates in the face of increasing demand, and
increased stress on natural resources, make the acceleration of
technological improvements a critical factor in maintaining and
increasing the availability of food supplies in both food deficit
and food surplus countries. The United States has historically
demonstrated an ability to strengthen institutional capacity for
agricultural research and extension in other countries. However,
this requires continuity and stability in bilateral support.
Renewal of efforts in this direction will yield long-term benefit
for the United States in agricultural trade, resource conservation,
and domestic food costs.


KEYWORDS: Development assistance, agricultural policy, research-
extension, technology change, resource use.


*******************************************************************
* This paper was reproduced for limited distribution to the re- *
* search community outside the U.S. Department of Agriculture. *











PREFACE

The initial draft of this report grew out of a request by the Board for

International Food and Agricultural Development (BIFAD) for recommended

new initiatives in bilateral assistance to agriculture in developing

countries. Underlying this expanded version of the earlier report

are the broader issues of financial and natural resource constraints

to increasing global agricultural production. Central to the issue

is the question of the tradeoff between expanding the use of natural

resources (land and water) and increasing their productivity in order

to increase global food production. Thus, this report also reflects

some background work on the issue of resource productivity and resource

- technology tradeoffs. It focuses on the role of agricultural

research in the developing nations to achieve higher levels of food

production and thus a greater degree of global food security. While

"hard" conclusions and recommendations must await rigorous analysis,

the material presented here implies that more emphasis should be

given to increasing agricultural research capacities in the developing

countries, and that the United States should invest much more of its

limited development assistance monies in this area.













CONTENTS


Page

INTRODUCTION . .. . . . 1

WORLD FOOD AND AGRICULTURE PROSPECTS . . .. 3

Growth in World Food Demand . . . .. 4

World Food Production Gains Level Off . . .. 5

Global Pressure on Natural Resources . . 6

Declining Food Reserves ................. 8

THE CRITICAL ROLE OF AGRICULTURAL RESEARCH AND TECHNOLOGY 9

Technical Change and Agricultural Development . 9

Agricultural Research in Developing Countries . 12

International Research Linkages . . . 15

Returns on Investment in Agricultural Research and
Extension . . . . . 16

BUILDING AGRICULTURAL RESEARCH AND DEVELOPMENT CAPACITY IN
DEVELOPING COUNTRIES . . ...... .. 17

Support for Research Scientists . . . 17

Financing and Managing Agricultural Research . 19

Supporting a National Research Capacity . . 20

AID Policy and Role . . . . 22







CONTENTS


Page

THE U.S. ADVANTAGE IN AGRICULTURAL DEVELOPMENT
ASSISTANCE .. . . . . . 24

The USDA-Land Grant System ... .. .... 24

A Mutual Interest in Agricultural Research . 26

Complementarity with International Assistance
Institutions . . . .... 27

U.S. DEVELOPMENT ASSISTANCE FUNDING . . . 27

U.S. INTEREST IN THE WORLD FOOD PROBLEM . .. 32

RECOMMENDATIONS . ... . . . 34

REFERENCES . . . . . 36










INTRODUCTION

Attitudes in developed countries towards development assistance are

changing and levels of financing for that assistance are decreasing.

The United States Agency for International Development (AID) has long

had a problem maintaining sustained support for its programs. Until

recently, it was possible to bring newly identified development oppor-

tunities to the attention of the Congress and to gain approval of at

least some new initiatives. In Fiscal Year 1980 and 1981, however, AID

programs were funded by continuing resolutions. The Congress was not

willing, or able, to provide a hearing. This was particularly unfortunate

because recent rapidly changing economic circumstances have dictated a

need for change in program objectives and purposes.' For 1982, Congress

increased development assistance by $96 million. However, the largest

share of increased foreign assistance will go to economic support

funds not dedicated to development support, and to security assistance.

The underlying cause of declining support is a growing public and

Congressional perception that foreign aid activities are not cost-

effective.


Hesitancy in foreign aid has been greatly reinforced by the massive

transfer of financial resources from the developed countries to a

small group of petroleum exporters. This caused the non-petroleum

exporting countries of the Third World to accumulate crippling foreign

account deficits and debt burdens which divert financial resources from

agricultural capital investment. The reaction of governments has been










to raise their demands on the industrialized nations for favored

treatment while exercising caution in their dealings with petroleum

suppliers. This attitude has aggravated public dismay in the west

with the pace and direction of economic progress in developing coun-

tries, their exploding populations, continued political instability,

and growing hostility in international fora towards "rich" countries.


These attitudes are accompanied by a financial crisis in both the rich

and the poor countries. For the developing countries, rising energy

prices have meant severely curtailed ability to finance develop-

ment efforts. The developed industrial countries, with aging popula-

tions, have to cope with an increasingly burdensome domestic welfare

bill and huge new investments in restructuring their industries to

adapt them to the new energy situation, while concurrently paying

high petroleum import bills.


Whatever the perceived rights and wrongs of the situation, the basic

fact remains that development funds are likely to be scarce while

assistance needs of developing countries will continue to increase.

This is because of the long-term slowing down in per capital food pro-

duction growth in the world, and particularly in most developing

countries, while demand continues to increase. In many African and

some South Asia countries, per capital food production is actually

declining. There are also increased inter-annual production












fluctuations, steeply increasing resource use costs and balance of

payments difficulties of energy importers (3, 15, and 21). 1/


In this report we focus on the developing country assistance needs

most directly related to agricultural production improvement pro-

grams and recent trends in U.S. assistance programs, and make recom-

mendations for increasing the overall effectiveness of limited

development assistance funds.


In view of this, the authors review and evaluate the current and

prospective state of agriculture worldwide, food demand and

assistance needs in developing countries, the means and institutions

available in the United States and elsewhere to extend technical

assistance, and make recommendations regarding the appropriate

course of immediate action.


WORLD FOOD AND AGRICULTURE PROSPECTS

The need of developing countries for food assistance is on the increase

and becoming critical. This is because in many countries population

growth outstrips food production gains and because the high cost of

energy imports sap their ability to import food. However, the capa-

city of donor countries to extend food aid is becoming more constrained

by leveling of food production gains, growing pressure on their

natural resources, and the low level of world grain reserves.


1/ Underscored numbers in parentheses refer to items in the
References section.










Growth in World Food Demand

The present and likely future world food situation poses a

serious threat to poor countries' economic development pros-

pects. Their demand for food has outpaced increases in pro-

duction so that food imports absorb increasing amounts of

resources. Record-breaking increases in population, rising in-

comes, and declining real prices combined over most of the

last three decades to expand foreign demand for agricultural

products at a 2.9 percent rate, more than double the rate of

the first half of the century (15).


World population increased by over 1.9 billion people during

the three decades from 1950 to 1980, with developing countries

accounting for 84 percent of this increase and developed

countries, 16 percent. Growth in the number of people to be

fed accounted for about half of the period's increase in

demand. Income increases accounted for an additional 1-percent

increase in per capital demand per year, with a large share

directed toward livestock products. In the eighties, worldwide

demand for agricultural products is likely to expand at a

near-record rate of 2.5 to 2.7 percent annually. With growth

rates of this magnitude, absolute increases in the demand for

agricultural products in the eighties would be nearly one and

a half times greater than during the past decade. Developing

countries will account for most of this demand, but their

prospects for concurrent production growth are not promising.








5

World Food Production Gains Level Off

World agricultural production during the postwar period

expanded at a 2.5 percent annual rate, more than double the

rate of the previous half century. A number of different

factors combined to sustain this rate. Chief among these

were growth in the resources allocated to food production,

productivity gains, and what appears in retrospect to have

been abnormally favorable weather. For the postwar period

as a whole, over one-third of the gain in world food produc-

tion was due to expansion of arable land committed to pro-

duction. Expansion was most pronounced in the fifties and

sixties, as new lands were opened up, and again in the middle

seventies as the United States returned large acreage reserves

to cultivation. But the remaining two-thirds of the world's

postwar gains were the result of productivity increases due

largely to improved farming practices and wider use of yield-

enhancing inputs such as fertilizer, pesticides, and improved

plant varieties. As with area expansion, the strongest pro-

ductivity gains were in the fifties and sixties. While the

wider weather fluctuations of the seventies make it difficult

to assess recent yield gains, productivity growth appears

to have slowed over much of this period.


Both the International Maize and Wheat Improvement Center (CIMMYT)

in Mexico, and the International Rice Research Institute (IRRI) in










the Philippines, have encountered yield ceilings in their experimental

work. Some cereal breeders believe we may be approaching the end

of the epoch of significant yield gains in wheat as a result of

research and that during the 1980's yield increases are likely to

reach a plateau. Other breeders, however, anticipate breakthroughs

in plant tolerance to stress or unfavorable growing conditions and

other advances in genetic engineering that will boost productivity

(7). If so, it is in the developing countries, where yields are

far below experimental levels and where the potential for regionally

specific plant research is high, that such plant science breakthroughs

are likely to bring most rapidly increased food production.


If developing countries are forced to expand cultivation into in-

creasingly marginal areas, interannual fluctuation in yields and,

in turn, supply and import demand are likely to widen significantly.

Sharper swings were already evident in foreign grain and oilseeds

production in the seventies. During the middle and late seventies

there was a marked increase in trade, a disproportionally large

share of which was supplied by the United States. This transmitted

foreign production instability into U.S. farm price fluctuations (15).


Global Pressure on Natural Resources

Land, water, fossil fuels and fuelwood resources are rapidly

being depleted worldwide. About 1.5 billion hectares of land

are presently cropped in the world. The total potential arable

land is variously estimated at 2.5 to 3.7 billion hectares (8).

In the next 20 years, arable land is expected to increase by









7

only 4 percent. However, the best land is already under culti-

vation and bringing new lands into cultivation will require

huge investments. Moreover, the new land is usually not in those

countries where the greatest population pressures exist (8).


By the year 2000, population growth alone will have caused

requirements for water to be double 1970 requirements in

nearly half the world (6). In many developing countries

water supplies are likely to become increasingly erratic

by the year 2000 as a result of extensive deforestation.

Development of new water supplies will become more costly

virtually everywhere. Water scarcity is a serious prob-

lem on the U.S. high plains and elsewhere. The Indian

subcontinent, North Africa, the Middle East, the Moslem

republics of the USSR, and Australia are all experiencing

increasing pressure on water resources.


New lands and new water depend on energy, but energy in

its convenient liquid form may be in short supply and

subject to price pressures. Most of the elements that

have contributed to higher yields--fertilizer, pesticides,

power for irrigation, and fuel for machinery--depend

heavily on petroleum and natural gas. During the 1990's,

world petroleum and gas production may peak while their prices

are expected to double in real terms. For the one-quarter of

the world's population that depends primarily on wood for

fuel, the outlook is even bleaker. Needs for fuelwood may

exceed available supplies by about 25 percent before the turn








8

of the century, and they will have to compete on the world

market for increasingly scarce and costly hydrocarbon fuels (6).


Declining Food Reserves

Several factors combined in the 1960's and 1970's to reduce

anxiety about the adequacy of world food supplies. The

United States and other major producers accumulated large

stocks of food and feed grains. The "Green Revolution"

produced large gains in food production in some of the

world's most populous countries. By the early 1970's

world food intake had increased to 108 percent of the

FAO published minimum per capital requirements. This

compared with about 104 percent in the 1960's and slightly

below 100 percent in the 1950's (15). During this period

widespread evidence of continued malnutrition among low

income groups in developing countries caused some donor

institutions to direct increasing amounts of assistance

funds to bring about a more equitable distribution of

economic development gains.


It is now evident, however, that there has been a decrease

in grain reserves during a period of usually good worldwide

growing weather. In fact, grain stocks as a percentage of

utilization declined from 20 percent in the sixties to 12

percent in 1981 (21). Food imports are up sharply in Asian

nations, which have been rapidly increasing production, as








9

well as in African nations where production has actually

declined.


USDA studies indicate that world grain stocks declined from over 20

percent of utilization in the 1960's to just above 12 percent in the

1970's.


THE CRITICAL ROLE OF AGRICULTURAL RESEARCH AND TECHNOLOGY

In the face of growing natural resource and financial assistance con-

straints the only effective approach to utilization of reduced resources

is to increase food production through: (1) the development of technolo-

gies appropriate for the LDC's resource, infrastructural and social

constraints, and (2) the development and implementation of appropriate

economic policies to provide incentives for adoption of these technolo-

gies. This requires development of indigenous research organization

supported through close links with international research organizations.


Technical Change and Agricultural Development

As growing global food demand presses on agricultural production

capacity, additional resources must be drawn into use. But the

decreasing availability and increased cost of natural resources

such as land, water and energy makes the world's future food supply

ever more dependent on continuous advances in agricultural technology.

The agricultural production technology developed for regions having

the best soil and water, and the most favorable climatic and geographic

conditions, may not be suited to production on more marginal lands.








10

All nations, agriculturally rich and agriculturally poor, have a

common interest in the development of technology which will get the

most product out of the world's next best resources. This will permit

avoidance of reduced returns to investment and the instability that

goes with production on ever more marginal lands (16).


Vernon W. Ruttan emphasizes the significance of technical change for

agricultural and for economic development: (1) it permits the sub-

stitution of knowledge for physical resources, (2) it facilitates the

substitution of less expensive and more abundant resources for more

expensive and increasingly scarce resources and (3) it releases the

constraints on growth imposed by inelastic resource systems (18).


Agricultural technology, however, is often very site specific. It is a

function of climate, soil, terrain, energy availability and reserves,

plant and animal diseases, labor availability and cost, level of farmer

skills, and irrigation and transportation infrastructure. Not only do

all of these attributes of agriculture vary among countries, but they

also vary among the many ecological regions within individual countries.

These differences in agricultural production resources and economic

opportunities prescribe a high degree of diversity in technologies to

increase productivity and food output.


Economic growth ultimately depends on the flexibility and efficiency

of each society in transforming itself in response to technical and

economic opportunities. Farmers in traditional agriculture are









11

poor not because they are irrational or incompetent but because they

have few opportunities to improve their situation. Appropriate eco-

nomic policies and institutions, and agricultural research designed

to produce and continuously improve an economically viable and eco-

logically adaptable technology represents a critical link in agricul-

tural development in many of the developing countries. But the tech-

nology and its link to the farmer must, in many cases, be tailored

specifically for each country and even for each region within the

country. Insufficient investment in development of location-speci-

fic agricultural technologies was a major reason for the lack of

effectiveness of much of the technical assistance effort of national

and international agencies during the 1950's and 1960's.


Technological innovation in today's agriculturally advanced countries

did not occur in a social and institutional vacuum, nor will it do so

in the developing countries. Developing countries need to establish

the institutional basis and the technical capacity for advancing

agriculture. Correspondingly these countries need to develop the

capacity for social and economic analysis and for policymaking so as

to ensure economically sound agricultural research programs, and the

incentives for adopting new technologies. Increased production is

accomplished through a carefully structured set of research and

extension organizations linking the researcher to the farm community.

Both economic policies and extension services must be frequently

reviewed to ascertain their effectiveness in advancing agriculture on

a broad front.








12

Agricultural Research in Developing Counties

The experience of the world's most advanced market economies emphati-

cally demonstrates the need for public sector investment in education

in the biological and social sciences related to agriculture, in

experiment station research capacity and in agricultural extension.

The developing nations must also make this scientific and educational

investment, design appropriate institutions and policies to successfully

test and diffuse the indigenous technology required by their own

farmers, transfer and adapt the agricultural technology developed in

other countries, and conduct the basic and applied research neces-

sary to provide farmers with a continuous stream of new biological,

chemical, and mechanical innovations.


Efforts to achieve agricultural development by the direct transfer

of foreign technology have been largely unsuccessful. Modern agri-

cultural technology has evolved largely in the developed countries

of the temperate zone, and is primarily adapted to their ecology

and factor endowments. While agricultural research and education

assistance was building a solid base for the future, early extension

projects were designed primarily to transfer materials and practices

from the developed to the less developed countries and to implement

multi-purpose and frequently superficial community development

efforts, an activity that has recently resurfaced as integrated

rural development. In reviewing the agricultural efforts of the

1950's and early 1960's, T. W. Schultz points out that extension









13

services developed by donor and host countries soon faded away

because there was little worthwhile technical information for

them to distribute to farmers.(19)


The organization of commodity production programs based on sound

scientific principles and improved technology has been shown to be

effective. Stimulation of agricultural output and increases in

incomes of large numbers of people clearly can also be fostered

through concerted efforts to develop farming systems. There is a

general need to overhaul government services which support acce-

lerated agricultural development. Most national research agencies

were established when the urgency of action was not so apparent as

today. In the Philippines, the required renovation of government

services was implemented by the IRRI. Such centers do not have

the means to do this worldwide, and national governments will need

external assistance.


The experience of India with high-yielding varieties demon-

strates the importance and the feasibility of achieving the

national research capability essential to adoption of new

technology. The Indian experience also demonstrates the

need for broad national research and technology capacity

to ensure against regional disparity in economic benefits.

As new grain varieties entered Indian production, producti-

vity growth rates moved from 2.5 to 20.0 percent in the wheat

growing states. In the mid-fifties the three states with the








14

lowest growth in productivity averaged -1.9 percent; the three

highest, 2.3 percent. By the late sixties, these growth rates

were -1.6 and 14.1 percent, respectively. In the wheat growing

states national research centers collaborated with specialized

international centers to develop locally appropriate new tech-

nology.(22) Dryland areas of India and areas ecologically suited

to other crops will require more decentralized national research

systems than have so far been established. A significant portion

of interstate disparities in the growth of Indian agricultural

productivity are explained by research investment at the State

level. It has been estimated that additional investment in State

sponsored research and extension systems would yield an annual

return of 40 percent.(10)


Soundness of investment is not the sole argument for agri-

cultural research and certainly not the most urgent. The

high cost of failure to achieve rapid productivity growth,

particularly rapid growth in output per hectare in the

densely populated poor countries, cannot be overemphasized.

Unless output per hectare in these countries can be in-

creased at least as fast as demand, there is no possibility

of simultaneously meeting the subsistence needs of expanding

rural and urban population.


In recent years, advocates of rural development have implied a

conflict between productivity growth and the welfare of rural








15

communities. However, the problem of welfare in the rural

areas in most developing countries remains more a problem of

the level of output per person than of distribution. One

cannot approach the problem of distribution without first

addressing the problem of production.(19)

International Research Links

In the last 25 or 30 years there began to emerge what some

call a "three-tiered" system of agricultural research (23).

One tier consists of national programs, large or small, in

each country. A second consists of the international or

regional research installations in the tropics or subtropics

which backstop the national efforts and provide some link-

age to centers of specialization elsewhere. The third tier

consists of the centers of specialization in the developed

countries for the most part, where advances through basic and

supporting categories of research are generated.


While there are problems in effectively linking regional in-

ternational research with advanced countries research systems,

this does not require institution building. It is at the develop-

ing nation level that institution building is essential so that

successful programs of the International Agricultural Research

Centers and other regional research centers can be complemented by

effective national agricultural research and development activity.









16

Returns on Investment in Agricultural Research and Extension

All analyses made of investment in agricultural research

estimate rates of return well above rates realized on

more conventional investments. Studies made of specific

research programs in Latin America and Asia clearly estab-

lish that research programs in developing countries can

be highly productive. Internal rates of return estimated

for developing countries are generally higher than for

developed countries. For example, returns to research on

cotton in Brazil and on wheat in Mexico are estimated at

77 and 90 percent, respectively. The return to research

on hybrid corn in the United States is 35 to 40 percent (9).


The failure of developing countries to invest more heavily

in agricultural research is not out of ignorance of prospec-

tive benefits. Agricultural research, which so rapidly

advanced agriculture in the United States and Japan, came

about as agricultural research constituency groups came

into existence. Such groups are unlikely to emerge spon-

taneously until a core of medium-sized farming entrepreneurs,

are established who can influence public policy and research

expenditures. Generally such groups are rare in develop-

ing countries. U.S. development assistance in the vital area

of agricultural research institution building can establish the

foundations of critical technical capability in countries with

agricultural growth potential decades ahead of what would

otherwise be possible.








17

IV. BUILDING AGRICULTURAL RESEARCH AND DEVELOPMENT CAPACITY IN
DEVELOPING COUNTRIES

In the final analysis, a sustained growth in developing country

agriculture depends heavily on implanting a permanent indigenous

innovation machinery. This means appropriate economic policies

and stable institutions supporting local research scientists and

a closely linked core of technical people serving farmers. To

assist in the development of such institutions, AID programs

must be a stabilizing element rather than destabilizing and thus

must be free of shifting short-term political objectives.


Support for Research Scientists

During the last two decades many university graduates of

developing nations around the world have been trained in

the agricultural sciences in leading U.S. and European

institutions. Many of these people are now serving their

countries as researchers, teachers, and administrators

of programs in service of agriculture. Unfortunately many

people have not been able to do the important research for

which they trained and have moved prematurely into admini-

strative and leadership positions, forever losing the opportunity

to employ their critically important scientific and technical

skills. Others have returned only briefly to their homes or

have never returned, instead assuming positions in the developed

countries. The reasons for this are numerous, but for many








18

individuals with scientific training there is too little pre-

sent or perceived future opportunity to be working scientists

in their own countries.


The talented individual in a field of science must be

provided with the opportunity to make the contributions

to science and technology which he or she is confident

of accomplishing, otherwise that talent will be lost.

The institutional setting for such opportunity is un-

fortunately all too often lacking. Where this has

been provided, as in India, the results have been

most rewarding.


Adequately staffed research laboratories and crop or livestock

experiment stations are in no way a guarantee of a developed

agricultural sector. This system must reward scientists for

their familiarity and ability to deal with agricultural problems.

Otherwise researchers can be expected to look excessively to

international recognition and reward. While some industries

in market economies will search out and acquire the needed

scientific knowledge and skills, this is not the case with

agriculture in the developing countries, particularly in

countries where many small farmers produce the bulk of food

staples. But it is critically important that national agri-

cultural research be one element in the network of research,

education, and extension institutions closely linking scientists

to farming communities.








19

Financing and Managing Agricultural Research

Currently, there is no agricultural research system in the

Third World that is comparable in research facilities and scien-

tific staff to those in any of the major advanced agricultural

countries. This is true in spite of the fact that 75 percent of

the world's population lives in developing countries. Even

in middle income countries having fairly long established

research institutes, there is inadequate means to keep abreast

of advances in the biological sciences, laboratory and field

methods, and equipment.


The status of agricultural research in the developing coun-

tries reflects the extremely low overall level of investment

in research and development relative to that in high income

countries. Only four percent of global research and development

expenditures takes place in developing countries. Only one

percent of global research and development expenditures

in health, agriculture, housing, and industrial technology

is in developing countries.(ll) With such a disparity

it is obvious that no public expenditure within the financial

capacity of LDC's can halt the growing technology gap without

a great deal of technical assistance from developed countries.

As prospects for international assistance are poor, aid to

agricultural research must be conducted so as to encourage,

not discourage the international flow of private investment.









20

But both international firms and national private industry

must be encouraged to support research on domestic consumption

as well as export crops.


Many present deficiencies must be corrected in order to bring

about the needed new and vigorous thrust in developing agricul-

tural research capabilities in low and medium income countries.

These include promoting effective links between research

organization, extension services, and the farming community;

determining research priorities; designing necessary organi-

zational and institutional arrangements for carrying out

research programs and projects; identifying sources of

finance for research programs and projects; determining the

facilities required to conduct research; and many others.(5)


Supporting a National Research Capacity

A stable national research establishment is essential to

acquisition and adaptation of advanced national and inter-

national research centers' output. Building national research

institutions is difficult and takes time. Further, fledgling

research organizations need sustained support so that scien-

tists and technicians may maintain and improve their skills

and understanding and have access to newly developed tools,

techniques and research materials. Even the most applied








21

research takes time, requires sustained effort, and bene-

fits from links with the international research network.

Erratic assistance to agricultural research runs a high

risk of being wasted. It does not require large volumes

of assistance to greatly enhance the quality of national

research and technology development, but it does require

stable assistance. It is thus urgently important to make

a maximum effort to insulate this facet of U.S. interna-

tional cooperation from the programs of commodity and financial

assistance which are essential to the conduct of day-to-day

international diplomacy. The global food problem has be-

come too critical for short-term manipulation. Enduring

bilateral agricultural development programs have the

potential to generate goodwill overshadowing the shifting

moods of transient political expediency.


Similarly, national education capacity is needed to provide

scientific manpower for establishment and maintenance of

a critical mass for research. Very few developing countries

have at present educational institutions with sufficient

capacity to provide scientific manpower for the establish-

ment and maintenance of a critical mass of researchers.

Most of the scientists must still be trained in developing

countries. It is essential to gradually expand the scien-

tific training capacity at the national level to supply a








22,

sufficient number of scientists and extension personnel.

This effort must be sustained and long-range, free from

the vagaries of budget appropriations and political climate

in donor countries.


AID Policy and Role

While the Agency for International Development has repeatedly

acknowledged the importance of agricultural research, according

to T. W. Schultz, it is "inefficient in providing funds to help

build national agricultural research experiment stations and

laboratories in low income countries "(19). Nonetheless, the

1978 Agricultural Development Policy Paper again reaffirms

AID's commitment to research support and identifies three

types of agriculture research-related projects: (a) con-

tract projects with U.S. institutions, (b) contributions to

multilateral support of agricultural research centers, and

(c) support of low income countries' national programs. The

greatest need identified by AID, in 1978, was to strengthen LDC

nationwide adaptive research systems, including local research

stations and extension service. Proposed support included

financing physical construction and equipment as well as

training and technical assistance, while focusing research on

needs of low-income farmers--the crops, livestock and fish

they grow, or potentially might grow and profitably market;

the constraints they face and farming systems they employ;








23

and the kinds of inputs and implements within their reach.

Research was proposed on farming systems of agricultural

producers and the relationship between new technology,

production, equity, social organization--including the

roles of individual and collective incentives, and the

ecological impact of new technology (1).


The Agricultural Development Policy Paper expressed concern

that direct AID support for national research systems might be

constrained by availability of qualified professional staff

in the agency. This concern proved to be well founded. A late

1980 report titled A Strategy for Focusing AID's Anti-Hunger

Efforts (2) prepared by the AID Technical Program Committee

for Agriculture (TPCA) in response to the Report of the

Presidential Commission on World Hunger of 1978 (17) states

that 13 missions now have no agriculture officers; there are

at least five contractors for every field staff person; 45

agriculture officers have retired in the last 3 years and 30

of the 244 foreign service positions in agriculture are vacant.

With $300 million in assistance to irrigation, AID has only

6 professional irrigation positions. The TPCA report notes

two observations made in the USDA response to the World Hunger

Commission Report: (1) AID does not have the number and qua-

lity of agriculture and rural development staff to make reliable

final approval judgments in regard to rural development projects;








24

(2) under the circumstances, these judgments should continue

to be a USDA/AID-shared responsibility so as to utilize the

joint professional expertise in the agencies.


THE U.S. ADVANTAGE IN AGRICULTURAL DEVELOPMENT ASSISTANCE

Many advanced countries have instituted effective foreign assistance

programs. The United States may be best situated, because of its

history and institutions, to help the developing countries establish

agricultural research and extension systems.

The USDA-Land Grant System

Over the last three decades many advanced countries have

extended agricultural development assistance to low in-

come countries. Among these are Canada, Great Britain, France,

Belgium, and the Netherlands. However, the United States has

had the largest and broadest involvement in terms of personnel

numbers, the scope of natively based technology development

and transfer, and the number of private and government insti-

tutions involved.


The obvious reason for this is the success and adaptability

of the peculiarly American institution that was built and

adapted to foster economic and scientific development in

agriculture, the USDA-land grant system, based on direct

links among the U.S. Department of Agriculture, Land-Grant

Universities, and State experiment stations. This system

has proved tremendously successful in making American agri-








25

culture the most scientifically advanced and productive

in the world. It brought similar benefits where it was trans-

planted and adopted, notably in Canada and Japan.


Over the last 30 years a large number of foreign tech-

nical and scientific personnel have been trained in the

USDA-land grant system, which itself has adapted to meet

their needs. Also, a large number of scientific and

technical personnel responded to the needs of newly devel-

oping countries, training, consulting, designing, and

managing agricultural research and training facilities

in the developing countries. Many of them have direct

and prolonged experience in service abroad.


The USDA-land grant system is large and flexible, based

on government, universities, and experiment stations that

can rapidly train and expand the number of experts avail-

able for international agricultural development assistance.

However, efforts must be made to sustain the capability

of the system by maintaining the pool of experts avail-

able for service abroad. This is particularly important

during the period of sharp budget cutting exercises.

Short-term expediency may often constrain our future

and flexibility in international relations.


The scientific establishment in the system is spread over

a wide geographic area of the country. While most of the








26

work and resulting scientific advancements occur in temperate

zones of the country, a large and increasing part of it is

carried out in warm and subtropical zones--Florida, California,

Hawaii, and Puerto Rico. Increasingly, U.S. scientists par-

ticipate in cooperative and exchange arrangements in research

on tropical zones and tropical plants. Thus, rapid advance-

ments in biological and other sciences in the United States

provide a broad foundation for geographically targeted research

breakthroughs.


A Mutual Interest in Agricultural Research

Because of our extensive involvement abroad over a prolonged

period of time, numerous institution-to-institution and scien-

tist-to-scientist linkages are in place and the potential

exists to use them to expand collaboration with the develop-

ing nations. This will not only improve U.S. relationships

with the Third World but also bring direct benefits to

scientific advancement in the United States. Such problems

as severe erosion on dry lands in North Africa or large-scale

deforestation conditions on the Saharan Atlas High Plateau

are being experienced elsewhere, including the United States,

though not yet on such a scale. In large parts of the Third

World, water is the resource limiting greater food production.

As urban and industrial needs grow, the industrialized and

the developing countries will share in the search for water

conserving agricultural technology and farming systems.








27

Complementarities with International Assistance Institutions

U.S. assistance to agriculture in low income countries, if based

on agricultural research, development of technology, and insti-

tution building, would be highly complementary to the program of

the World Bank and the regional development banks which are oriented

towards investments in capital intensive and infrastructure pro-

jects such as transportation, irrigation, and processing. By

instituting closer consultation between AID and the World

Bank and regional development banks, complementarities can be

achieved which will increase the return to U.S. investment in

both bilateral and multilateral assistance.

U.S. DEVELOPMENT ASSISTANCE FUNDING

In spite of the apparent urgency, real levels of U.S. develop-

ment assistance have declined and may continue to decline. U.S.

bilateral development assistance is at the same level today as

it was over 15 years ago. The appropriated development

assistance in 1981 was $1.67 billion, or one-third of the $4.98

billion total appropriations for International Security and

Development Cooperation (formerly the Foreign Aid appropriation).

The total appropriation includes $665 million for military

assistance, $2.06 billion for the economic support fund

(largely Egypt and Israel), and $580 million for the Peace

Corps, other activities, and operating costs. In 1978 and

1979, $1.9 billion was obligated in development assistance

funds, only $200 million more than in 1964. Development








28

assistance obligations were below $1 billion in 7 of the

last 15 years, dropping to the lowest point of $625 million

in 1974 (14).


In an era of rapid inflation, the nominal value of aid is a

poor measure of capacity to carry out development assist-

ance. In real terms, development assistance has been below

$800 million since 1971 and dipped to $357 million in 1974. 2/

(Fig. A). Although assistance funding has declined, during

the last 10 years both the range of activities conducted and

the number of participating countries has expanded rapidly

with the placement of increasing emphasis on meeting basic

human needs at the village level in the poorer countries.

In commenting on the state of U.S. foreign assistance, John

Mellor observes that expenditure has been increasing for

things that consume tremendous amounts of recurrent expendi-

ture on the contributions side from the receiving country.

This puts their own budgets in great difficulty, and also

consumes a great number of trained people in the receiving

countries. He finds that all the direct poverty-oriented

programs are incredibly labor-intensive with respect to

highly trained people (13).






2/ AID funding data adjusted for price changes by the
World Bank Index of International Inflation. The base
year is 1970.



















Figure A:


2.0


Real Value of U.S. Programmed Development Assistance
(billions of dollars at 1970 prices)


64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80


Based on AID/OFM Expenditure data adjusted
the IBRD Index of International Inflation


for price change by


Source: The Changing Content of U.S. Agricultural and Rural
Development Assistance, Ray W. Nightingale, IED Working
Paper, 1981








30

In spite of the increased urgency of the world food situation

the share of total development assistance going to agricultural

production programs increased from 16 percent in 1969/73 to

only 19 percent in 1975/79. The value in 1970 dollars of

assistance expenditures to agricultural production declined

from a 1969-73 annual average of $85 million to a 1975-79

annual average of $65 million, though the corresponding real

value of overall rural assistance increased by $4 million

(Fig. B).


While many relatively advanced middle income countries in

Latin America no longer receive development assistance,

numerous African states have been added. The number of AID

assisted countries in Africa grew from 10 in 1976 to 27 in

1980, but the real value of development assistance to these

countries has dropped from an average of $695 million in

1970-74 to $591 million during 1975-79.


Use of food aid under P.L. 480 has added to resources for

development, but if only the Title III program is considered

concessinal, very little additional resources have been

transferred to developing countries.


Consequently, with the prospect of a declining real level of

assistance, the United States should target its aid in areas

of the highest return on the funds it makes available. Assist-

ance to agricultural research, technology development, and

institution building meets this requirement.





















Figure B: Total AID Expenditure on Rural Assistance and
Assistance to Production Agriculture, 1969/73 & 1975/79
(millions of dollars at 1970 prices)


total rural
production agriculture .....


'
* '


I I
r I
r I
/


64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80
64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80


Based on AID/OFM Expenditure data adjusted
the IBRD Index of International Inflation


for price change by


Source: The Changing Content of U.S. Agricultural and Rural
Development Assistance, Ray W. Nightingale, IED Working
Paper, 1981


140

120

100

80

60

40

20








32

U.S. INTEREST IN THE WORLD FOOD PROBLEM

U.S. foreign assistance to agriculture has long been accepted as

an important element in the conduct of foreign relations. The

problems of hunger have continuously been emphasized by AID. In

1979, the Presidential Commission on World Hunger urged that

addressing this problem be the central thrust of U.S. foreign

policy, for the effectiveness it would have in expressing U.S.

humanitarian concern and in contributing to political stability

around the world. However, there are immediate U.S. economic

interests which are served by agriculture and food assistance.


Don Paarlberg recently pointed out that, "experience has demonstrated

that supply creates demand for food, and the great amount of

genuine economic growth that can be generated in foreign lands

will simply create more and stronger markets for the United

States" (20). The introduction of preferred foodgrains into

developing country markets has consistently resulted in a growing

demand for these grains and an accompanying introduction of new

wheat or rice based food items, or adaptation of traditional food

preparations to the newly available grains. In most developing

countries there is an income level-related distinction in household

grain consumption. With general growth in income levels,

consumption shifts from root crops or coarse grains to wheat,

rice, and livestock products. Coarse grains are increasingly

used as livestock feed. Thus, with greater availability of

improved grains and resultant changes in relative prices, the

demand for grains, in all their uses, rapidly expands.








33

In countries with large numbers of nearly subsistence farmers,

increased production results directly in increased consumption by

the farm families as they are able to market a lesser share of

production. Also, consumption is increased in the households of

agricultural laborers paid in kind. In both cases, this reflects

a high elasticity of demand for foodgrains among lower income

rural people.


In a more commercialized developing country agriculture, payments

going to resources employed in increasing production generate

income increases which result in increased demand for a broad

spectrum of agricultural products, from grains to meats.


Agricultural growth in the Third World is a prerequisite for

general economic growth and participation in international trade.

It is these economies that currently provide the best prospects

for economic growth and for increased demand for agricultural

imports. Between the early 1960's and the mid-1970's increases

in staple food production averaged 58 percent in the 16 develop-

ing countries experiencing most rapid growth in agriculture.

During the same period these countries increased net imports of

food 133 percent. The prospects are thus very good for countries

which are now being assisted to improve their agriculture and to

make the transition from aid recipients to trading partners (12).


Failure to increase food production to meet rising demand has

placed a great burden on developing countries' generally scarce








34

supplies of foreign exchange. These exchange reserves are critic-

ally important for the purchase of a wide range of capital inputs

needed to modernize their agriculture, industry, communications,

and transportation. Many of these inputs are supplied by the

United States. The advancement of agricultural production in

these countries thus has a broad impact on U.S. trade prospects.

Alternatively, continued agricultural production shortfalls can

cancel economic development gains, increase political instability

and erode international security.


RECOMMENDATIONS

In view of the preceding analysis of the evolving world food

situation, development assistance needs, development assistance

effectiveness, and recent and likely trends in development

assistance funding the following specific recommendations for

agricultural production improvement programs emerge:

1. The United States should continue and expand its assistance

to the development of agriculture in developing countries,

especially as the total real level of development assistance

funding declines.

2. To be most effective, bilateral assistance should be concen-

trated on national agricultural research, technology develop-

ment, transfer and adaptation, and institution building.

This implies the support of viable local research institutions

and the design and emplacement of the institutional network








35

to link research capacity to agricultural policymaking, on

farm technical needs, training, and extension.

3. The United States should support the growth of foreign national

education capacity in agricultural sciences to provide scienti-

fic manpower for establishment and maintenance of critical

mass of scientists for effective research.

4. There must be increased collaboration between U.S. and inter-

national agricultural research establishments, particularly

in exchange of personnel and methods.

5. The USDA-Land Grant system needs to be encouraged and supported

to maintain a broadly based pool of experts available for serv-

ice abroad either in national or international agricultural

research establishments.

6. The United States should continue to fund international agri-

cultural development assistance agencies, and specifically

international agricultural research institutions.

7. U.S. technical assistance programs in agriculture should be

coordinated and carried out in collaboration with international

development banks which mobilize financing and provide invest-

ments in capital intensive and infrastructure projects. The

two activities are highly complementary.








REFERENCES

1. Agency for International Development, Agricultural Development
Policy Paper, Washington, D.C. June 1978.

2. Agency for International Development, A Strategy for Focusing
AID's Anti-Hunger Efforts, AID Technical Program Committee for
Agriculture, Washington, D.C. January 1981.

3. Barr, Terry N. "The World Food Situation and Global Grain
Prospects," Science, Vol. 214, Washington, D.C., December 1981.

4. Foreign Agriculture Circular, FAS/USDA, Washington, D.C.,
August 14, 1981.

5. Committee on the International Service for National Agricultural
Research, Proceedings, ISNAR, Washington, D.C., October 26, 1979.

6. Council on Environmental Quality and the Department of State,
The Global 2000 Report to the President, Washington, D.C., 1980.

7. Dalrymple, Dana. Development and Spread of Semi-Dwarf Varieties
of Wheat and Rice in the United States, Agricultural Economic
Report No. 455, OICD/USDA, Washington, D.C. June 1980.

8. Dregne, Harold E. The Impact of Land Degradation on World Food
Production. Economic Research Service, USDA, Washington, D.C.,
1982.

9. Evenson, Robert. "Technology Generation in Agriculture" in
Lloyd G. Reynolds, ed., Agriculture in Development Theory,
Yale University Press, New Haven, 1975.

10. Evenson, Robert. "Comparative Evidence on Returns to Investment
in National and International Research Institutions" in T. M.
Arndt, D. Dalrymple, and V. W. Ruttan, eds., Resource Allocation
and Productivity. University of Minnesota Press, Minneapolis,
1977.

11. Institute for Scientific and Technological Cooperation, FY 1981
Congressional Presentation, Washington, D.C., February 1980.

12. International Food Policy Research Institute, Rapid Food Pro-
duction Growth in Selected Developing Countries: A Comparative
Analysis of Underlying Trends, 1961-75, IFPRI Research Report
No. 11, Washington, D.C., October, 1979.

13. Mellor, J. W., "The World Food Problem and BIFAD--The Need for
Production and Research." Speech before the Board for Interna-
tional Food and Agricultural Development, August 1980. Un-
published.










14. Nightingale, Ray. The Changing Content of U.S. Agriculture
and Rural Development Assistance. IED Working Paper, ERS-
USDA, Washington, D.C., 1981.

15. O'Brien, Patrick M., "Global Prospects for Agriculture" in
Economics and Statistics Service, Agricultural Food Policy
Review, Perspectives for the 1980's, AFPR-4, USDA, Washington,
D.C., 1981.

16. Paarlberg, Robert. "A Food Security Approach for the 1980's:
Righting the Balance," U.S. Foreign Policy and the Third World
Agenda 1982. Overseas Development Council, Washington, D.C.,
pp. 90-93.

17. Presidential Commission on World Hunger, Preliminary Report of
the Presidential Commission on World Hunger, Washington, D.C.,
December 1979.

18. Ruttan, Vernon W. "The Role of Research in Agricultural
Development." Address to the Board for International Food
and Agricultural Development, Washington, D.C., December 21,
1979.

19. Schultz, Theodore W. "Economic Distortions by International
Donor Community," Agricultural Economics Paper No. 80:32,
University of Chicago, Chicago, October 17, 1980.

20. Seaborg, Don. Mandate for Leadership Project Report for the
U.S. Department of Agriculture. The Heritage Foundation,
Washington, D.C., Octbber 28, 1980.

21. Urban, Francis S. "Changing Patterns in World Agriculture."
Remarks prepared for the seminar on Strategic Resources Policy
Analysis, Industrial College of the Armed Forces, Washington,
D.C., October 8, 1981.

22. World Bank. Investment in International Agricultural Research:
Some Economic Dimensions. World Bank Staff Working Paper No.
361, Washington, D.C., October 1979.

23. Wortman, Sterling. "World Food and Nutrition: The Scientific
and Technological Base." Science, Vol. 209, Washington, D.C.,
1980.




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