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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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