The State of the GlobalThe State of the GlobalThe State of the Global The State of the Global Crop Innovation SystemCrop Innovation System
Julian M. Alston University of California, Davis
Conference on the Future of Farms and Food in CanadaCo e e ce o t e utu e o a s a d ood Ca adaChateau Laurier, Ottawa, Canada
January 13‐14, 2011
Department of Agricultural and Resource Economics
University of California Agricultural Issues Center
Key PointsKey Points
1. High rates of return to agricultural R&DImplies persistent underinvestment—why is it so?
2. Shifting patterns of public support for R&DHigh‐income countries
Slowdown in spending growth
Diminishing share for on‐farm productivity enhancement
A different pattern in Brazil, China, and Indiap
3. Shifting productivity patternsProductivity slowdown in high‐income countries
A different pattern in Brazil, China, and India
4. Implications—institutional reform required?Enhance rates of research investment, restore productivity growth, reduce pressure on natural resource stocks
Rates of return to agricultural R&DRates of return to agricultural R&DRates of return to agricultural R&DRates of return to agricultural R&D
Stylized Representation of Research Benefits and CostsStylized Representation of Research Benefits and Costs
Gross annual benefits (dollars per year)
Research Benefits
0 5 10 15 20 25 300 5 10 15 20 25 30
Research CostsYear
R&D Lag
Adoption Process
Meta Evidence from Literature Prior to 2000Meta Evidence from Literature Prior to 2000
Mean : 82.1 % per annum, real
1 821 b ti1,821 observations
292 studies
Source. Alston, J.M., C. Chan‐Kang, M.C. Marra, P.G. Pardey, and T J Wyatt. A Meta‐Analysis of the Rates of Return to Agricultural R&D: Ex Pede Herculem. IFPRI Research Report No. 113, 2000.
Key Points from the MetaKey Points from the Meta‐‐AnalysisAnalysis
Challenge:Whi h h d t d b h d h ibl f– Which research, conducted by whom, and when was responsible for observed productivity growth?
Attribution Issues– Long time lags in knowledge creation and adoption
Spatial spillovers among states and countries– Spatial spillovers among states and countries
– What is the relevant counterfactual alternative?
Studies have tended to overstate rates of return as a result of attribution biases . . . but true returns are still very large
New EvidenceNew EvidencePersistence Pays: U.S. Agricultural Productivity Growth and the B fi f P bli R&D S diBenefits from Public R&D Spending.J.M. Alston, M.A. Andersen, J.S. James, and P.G. PardeySpringer, January 2010
Agricultural Technology Timelines Agricultural Technology Timelines Hybrid Corn Bt Corn
1877Beal conducts first controlled crosses/hybrid vigor 1901
Bacillus thuringiensis (Bt) discovered in Japan (and 1911 in Germany)
1905‐1912Shull developed correct understanding of inbreeding and cross breeding 1950s Bt used as a control agent and registered1905 1912 inbreeding and cross breeding 1950s
1917 James developed double cross‐hybrid 1986 Cry1Ab gene sequence published
I St t t ti b i b di C 1Ab l d i t t l i1922
Iowa State station began corn in‐breeding program 1986
Cry1Ab cloned into root colonyzing Pseudomonas bacteria
1933First commercial planting of Hybrid Iowa 939 developed by Merle Jenkins 1992
YieldGard insect protected corn event Mon810 produced by "gene gun"
1936
First release of a widely popular double‐cross hybrid developed at Purdue University
1996 FDA, USDA & EPA approvals for Yield Guard
Vastly improved in‐breds led to shift to Bt corn (corn borer protection) 1960
ast y p o ed b eds ed to s t tosingle‐cross hybrids 1997
t co (co bo e p otect o )commercialized in U.S.
1960 95 percent of U.S. corn acreage in hybrids 1998Stacked with other traits (e.g. herbicide tolerance)
2004U.S. patent issued to Monsanto for Mon810
2008 Regulatory approval in 20 countries
Source: Alston et al. (2010).
Share of acreage planted to different types of corn Share of acreage planted to different types of corn varietiesvarieties——years to reach 80 % adoptionyears to reach 80 % adoption
100Percentage
varietiesvarieties years to reach 80 % adoptionyears to reach 80 % adoption
80
90
Hybrid corn
50
60
70y
19 years 13 yrs
30
40
50
GE corn
19 years 13 yrs
0
10
20GE corn
0
1920 1930 1940 1950 1960 1970 1980 1990 2000
Agricultural Technology Timelines Agricultural Technology Timelines
1970 Glyphosphate shown to have herbicidal activity 1992 Project initiated by Ingo Potrykus
Roundup Ready Soybean Golden Rice
1976 Roundup herbicide commercialized in U.S. 1999One daffodil and one soil bacterium introduced to Japonica rice to express beta‐carotene
1980 Idnetification of 3 mechanisms to infer 2001 Humanitarian lisence agreement with 1980 Idnetification of 3 mechanisms to inferglyphosphate tolerance 2001 Humanitarian lisence agreement with
Syngenta
Late 1980s Several genes encoding glyphospate insensitivity isolated 2002 Trait expressed in Indian rice
1987 First soybean transformation achieved 2004 First field trial in Louisiana
1990 & 91 Glyphosphate tolerant seeds evaluated 2005 Enhanced expression of beta‐carotene
1996 Roundup Ready Soybeans commercialized 2007 Bioavailability studies launched
2012 Anticipated commercialization of technology
Source: Alston et al. (2010).
R&D Lags (United States)R&D Lags (United States)
Panel a: Varietal Adoption Lags
90
100
Panel b: Aggregate R&D‐Productivity40
50
60
70
80
percen
t
Hybrid corn
Semidwarf wheat
GE corn
0.10Weight
Panel b: Aggregate R&D‐Productivity
0
10
20
30
40
0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 1 4 7
Semi‐dwarfrice
GE soybeans
0.06
0.08
Trapezoidal
1920
1923
1926
1929
1932
1935
1938
1941
1944
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
0.02
0.04
Gamma
0.00
0 10 20 30 40 50Years
Source: Pardey and Chan‐Kang (2011) and Alston et al. (2010).
The Tyranny of the Red QueenThe Tyranny of the Red Queen
Crop varietal innovations masked by– Changing location of production => adaptive research
– Co‐evolving pests and diseases => maintenance research
The “Red Queen” effect
"Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else — if you run very fast for a long time, as we've been doing.“
"A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"
– Through the Looking Glass
Marginal Returns to U.S. Public Agricultural R&EMarginal Returns to U.S. Public Agricultural R&E
R t t
Benefit‐Cost Ratio (3% real discount rate)Returns to (3% real discount rate)
Own‐State National
ratioState R&E 48‐State Average 21.0 32.1 48‐State Minimum 2.4 9.9 48‐State Maximum 57.8 69.2
USDA Research 17.5
Benefit cost ratios seem very bigBenefit cost ratios seem very big
Marginal Returns to U.S. Public Agricultural R&EMarginal Returns to U.S. Public Agricultural R&E
R t t
Benefit‐Cost Ratio (3% real discount rate)
Real Internal Rate of ReturnReturns to (3% real discount rate) Rate of Return
Own‐State National Own‐State National
ratio percent per yearState R&E
p p y
48‐State Average 21.0 32.1 18.9 22.7 48‐State Minimum 2.4 9.9 7.4 15.3 48‐State Maximum 57.8 69.2 27.6 29.1
USDA Research 17.5 18.7
Benefit cost ratios seem very big . . . but the implied IRRs are comparatively modestBenefit cost ratios seem very big . . . but the implied IRRs are comparatively modestreflecting the very long lags and other modeling details (improvements)reflecting the very long lags and other modeling details (improvements)
U S science spendingU S science spendingU.S. science spendingU.S. science spending
U.S. Science Spending, 2008U.S. Science Spending, 2008
Other
Total Science By Performer
Food and Agriculture $9.6 billion,
2%Academic
Government$42b, 11%
Other$16b, 4%
Government(USDA) $1.5b, 16%
$51b, 13% Academic(SAES)$3.7b, 39%
Business$289b, 73%
Business$4.4b, 46%
T t l F d d$ Total Science
Food and Agriculture
$398 billion
Source: NSB (2010), USDA, CRIS (various years), and Dehmer and Pardey (2011)
Public and Private Agricultural R&D, 1950Public and Private Agricultural R&D, 1950––20092009
9
10 Total
Billions of dollars (2005 prices)
$9.6 billion (nominal dollars)
5
6
7
8
Private
1
2
3
4
Public
80Percentage
Food processing shareof private
0
1950 1960 1970 1980 1990 2000
40
50
60
70of private
46%
59%
0
10
20
30Private share of total agricultural R&D
0
1970 1975 1980 1985 1990 1995 2000 2005
Source: Dehmer and Pardey (2011)
U.S. Agricultural Research Spending, 1950U.S. Agricultural Research Spending, 1950‐‐20092009
% per earAverage Annual Growth Rate
3.5
4.0
% per year
2.0
2.5
3.0
1.0
1.5
0.0
0.5
1950s & 1960s 1970s & 1980s 1990s & 2000s
Source: Pardey et al. (2011) with data from USDA, CRIS (various years)
USDA Role in Funding SAES Research, 1970USDA Role in Funding SAES Research, 1970––20092009
70
80
percentage
USDA share of total federal
60
70
NIFA cum CSREES share of total federal
40
50
Federal share of SAES
20
30
0
10
1890 1905 1920 1935 1950 1965 1980 1995
NIFA cum CSREES share of SAES
20091890 1905 1920 1935 1950 1965 1980 1995
Source: Pardey et al. (2011) with data from USDA, CRIS (various years)
Farm Productivity Share of SAES Research, 1976Farm Productivity Share of SAES Research, 1976‐‐20092009
69
71
percentage
65
67
61
63
57
59
55
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Source: Pardey et al. (2011) with data from USDA, CRIS (various years)
Farm Productivity Share by State, 1976 and 2009Farm Productivity Share by State, 1976 and 20091976
1012141618
1976Number of states
U.S. overall = 65%
0246810
45 50 55 60 65 70 75 80 00<4
45 to
5
50 to
5
55 to
6
60 to
6
65 to
7
70 to
7
75 to
8
80 to
10
2009Number of states
U S overall = 56%
68
101214
16U.S. overall = 56%
0
24
6
<45
to 50
to 55
to 60
to 65
to 70
to 75
to 80
o 10
0
45
50
55
60
65
70
75
80 t o
Source: Pardey et al. (2011) with data from USDA, CRIS (various years)
Global science spendingGlobal science spendingGlobal science spendingGlobal science spending
Global Science Spending Landscape, 2000Global Science Spending Landscape, 2000
Low+middle income
Total Science Food & Agricultural R&D
Agricultural R&D, 5%
income private, 2%
Low+middle income
public, 27%
Other High income public (excl. U.S.),
27%
U.S. public, 11%
Other R&D, 95%
Other High income
private (excl. U.S.), 24%
U.S. private, 9%
$782 7 billion $37 5 billion$782.7 billion $37.5 billion
Note: Spending in 2005 prices
Source: NSB (2010), USDA, CRIS (various years), and Dehmer and Pardey (2011)
Food and Agricultural Research Intensity RatiosFood and Agricultural Research Intensity Ratios
Panel a: Public Panel b: Public and Private
4.0
5.0
6.0
ge
4.0
5.0
6.0
e
1.0
2.0
3.0
percen
tag
1.0
2.0
3.0
percen
tage
0.0
Low and middle income countries
High income countries
0.0
Low and middle income countries
High income countries
1970s 1980s 1990s 2000s
Source: Pardey and Pingali (2010).
Public Food and Agricultural Research ExpendituresPublic Food and Agricultural Research Expenditures
8.0
% per year
Average Annual Growth Rate
6.0
2 0
4.0
0.0
2.0
Low and middle income SSA High income
‐2.0
1970s 1980s 1990s 2000s
Source: Pardey and Pingali (2010).
Productivity patternsProductivity patternsProductivity patternsProductivity patterns
Sources . . . Sources . . . The Shifting Patterns of Agricultural Production and Productivity Worldwide March 2010 (CARD Iowa State University MATRIC e book)March 2010 (CARD, Iowa State University, MATRIC e‐book)
Julian Alston, Bruce Babcock, and Philip Pardey (editors)
23 authors, 15 chapters
5 h l b l i l i5 chapters => global overview, general issues
10 country‐specific chapters– Argentina– Australia and New ZealandAustralia and New Zealand– Canada– China– India– Indonesia– Former Soviet Union and Eastern Europe– South Africa– United KingdomUnited Kingdom– United States
Sources . . . Sources . . .
Diverging Agricultural Productivity Paths—International Competitiveness and Food Security in the Long Run (theme in Choices, Fall 2009)
Julian Alston and Philip Pardey (theme editors)Six articles:Six articles:
– Theme overview
– Global patterns
Canada– Canada
– China
– Former Soviet Union and Eastern Europe
– United States
Main pointsMain pointsEvidence of a significant pervasive slowdown in agricultural productivity growth since 1990 or thereabouts
China is an important exception with faster growth reflecting institutional change and other factors
The converse applies for FSU and Central European countries
Similar patterns emerge using various measures– Commodity prices
– Crop yields
Production per unit of land or labor– Production per unit of land or labor
– Multifactor productivity measures where available
Australia Canada United States United KingdomAustralia, Canada, United States, United Kingdom
Global Crop Yield Growth Rates, 1961Global Crop Yield Growth Rates, 1961‐‐20072007
Maize Wheat Rice Soybeans
Group 1961‐90 1990‐07 1961‐90 1990‐07 1961‐90 1990‐07 1961‐90 1990‐07
(percent per year)(percent per year)
World 2.20 1.77 2.95 0.52 2.19 0.96 1.79 1.08
High Income 2.34 1.48 2.47 0.06 1.07 0.54 1.14 0.02
Middl I 2 41 2 12 3 23 0 85 2 54 0 81 3 21 2 08Middle Income 2.41 2.12 3.23 0.85 2.54 0.81 3.21 2.08
Low Income 1.07 0.65 1.32 2.15 1.46 2.16 2.63 0.00
Source: Alston, Beddow and Pardey (2010).
Growth in Agricultural Land and Labor Productivity, 1961Growth in Agricultural Land and Labor Productivity, 1961‐‐20052005
Land Productivity Labor ProductivityGroup
Land Productivity Labor Productivity1961‐90 1990‐05 1961‐90 1990‐05
World 2.03 1.82 1.12 1.36excl. China 1.90 1.19 1.21 0.42excl. China & USSR 1.91 1.57 1.13 0.73
Latin America 2.17 2.83 2.15 3.53Asia 2 56 3 01 1 83 2 72Asia 2.56 3.01 1.83 2.72
excl. China 2.45 1.83 1.69 1.24China 2.81 4.50 2.29 4.45
Africa 2.18 2.21 0.68 0.90
Source: Alston, Beddow and Pardey (2010).
Growth in Agricultural Land and Labor Productivity, 1961Growth in Agricultural Land and Labor Productivity, 1961‐‐20052005
Land Productivity Labor ProductivityGroup
Land Productivity Labor Productivity1961‐90 1990‐05 1961‐90 1990‐05
World 2.03 1.82 1.12 1.36excl. China 1.90 1.19 1.21 0.42excl. China & USSR 1.91 1.57 1.13 0.73
Latin America 2.17 2.83 2.15 3.53Asia 2.56 3.01 1.83 2.72Asia 2.56 3.01 1.83 2.72
excl. China 2.45 1.83 1.69 1.24China 2.81 4.50 2.29 4.45
Africa 2.18 2.21 0.68 0.90
Low Income Countries 2.00 2.39 0.46 1.03Middle Income Countries 2.35 2.30 1.51 2.02
excl China 2 18 1 37 0 39 0 81excl. China 2.18 1.37 0.39 0.81High Income Countries 1.61 0.72 4.26 4.18
Top 20 Producers 2.11 2.16 1.17 1.77excl. China 1.98 1.38 1.33 0.63
Other Producers 1.74 0.88 1.00 0.07
Source: Alston, Beddow and Pardey (2010).
MFP Growth Rates, 1949MFP Growth Rates, 1949‐‐2002 and 19902002 and 1990‐‐20022002,,
1949‐2002 1990‐20021949‐2002 1990‐2002
Pre‐1990 Post‐19902.02% per year
Post 19900.97% per year
Real U.S. Commodity Prices, 1924Real U.S. Commodity Prices, 1924‐‐2008 2008 (Deflator = (Deflator = CPICPI‐‐U )U )
160
180Period
CommodityMaize Wheat Rice Soybean
1924-2005 -1.08 -0.73 -1.53 -1.17
Index = 100 in 1924Index = 100 in 1924 Growth Rates, Percent per YearGrowth Rates, Percent per Year
120
140
160Rice
Soy
Wheat
Maize
1924 2005 1.08 0.73 1.53 1.171950-2005 -2.61 -2.16 -2.51 -1.561975-2005 -3.93 -3.30 -3.68 -2.59
1975-1990 -4.45 -3.59 -4.84 -2.891990-2005 -3 22 -0 63 -1 96 -2 28
80
100
120 1990 2005 3.22 0.63 1.96 2.282000-2005 -2.04 1.59 1.10 1.31
60 percent decline since mid 1970s!
40
60What will commodity prices do over the next 40 years?
A return to the rapid real declines of
0
20
the 1970s and 1980s?
A continuation of the recent pattern?
What are the key determinants?
1924
1927
1930
1933
1936
1939
1942
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
What are the key determinants?
Alston, Beddow, and Pardey (2009). Mendel versus Malthus: Research, Productivity and Food Prices in the Long Run
U.S. Policy OptionsU.S. Policy Options
Reinvesting in agricultural R&D
Redirecting federal tax revenue to agricultural R&D
Priorities within the agricultural budget
nutrition vs farm subsidies vs R&D
Co‐financing arrangements
Research levy with a public match
F i li f biFarmers , input suppliers, post‐farm processors, bio‐energy and other industries that benefit from R&D
Si il id b l t f C dSimilar ideas may be relevant for Canada
Selected Sources
Alston, J.M., M.A. Andersen, J.S. James, and P.G. Pardey. Persistence Pays: U.S. Agricultural Productivity Growth and the Benefits from Public R&DSpending. New York: Springer, 2010.
Alston, J.M., BA. Babcock and P.G. Pardey. The Shifting Patterns of Agricultural Production and Productivity Worldwide, Ames IA: Iowa State University, CARD‐MATRIC e‐book, 2010.
Pardey, P.G. and J.M. Alston. U.S. Agricultural Research in a Global Food Security Setting. A Report of the CSIS Task Force on Food Security. y g p yWashington D.C.: Center for Strategic International Studies, January 2010.
Pardey PG and PL Pingali “Reassessing International Agricultural ResearchPardey , P.G. and P.L. Pingali. Reassessing International Agricultural Research for Food and Agriculture.” Report prepared for the Global Conference on Agricultural Research for Development (GCARD), Montpellier, France, 28‐31 March 2010 .