title:

TransformingAgriculturalResearchSystemsinTransitionEconomies:TheCaseofRussiaWorldBankDiscussionPapers;396

author: Mudahar,MohinderS.;Jolly,RobertWilliam;Srivastava,Jitendra

publisher: WorldBankisbn10|asin: 0821343130printisbn13: 9780821343135ebookisbn13: 9780585232034

language: English

subjectAgriculture--Research--Russia(Federation),Nationalagriculturalresearchsystems--Russia(Federation)

publicationdate: 1998lcc: S542.R8M8351998ebddc: 630/.72047

subject:Agriculture--Research--Russia(Federation),Nationalagriculturalresearchsystems--Russia(Federation)

Pagei

TransformingAgriculturalResearchSystemsinTransitionEconomies

TheCaseofRussiaWorldBankDiscussionPaperNo.396

MohinderS.MudaharRobertW.Jolly

JitendraP.Srivastava

Pageii

Copyright©1998TheInternationalBankforReconstructionandDevelopment/THEWORLDBANK1818HStreet,N.W.Washington,D.C.20433,U.S.A.

AllrightsreservedManufacturedintheUnitedStatesofAmericaFirstprintingAugust1998

DiscussionPaperspresentresultsofcountryanalysisorresearchthatarecirculatedtoencouragediscussionandcommentwithinthedevelopmentcommunity.Thetypescriptofthispaperthereforehasnotbeenpreparedinaccordancewiththeproceduresappropriatetoformalprintedtexts,andtheWorldBankacceptsnoresponsibilityforerrors.Somesourcescitedinthispapermaybeinformaldocumentsthatarenotreadilyavailable.

Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthor(s)andshouldnotbeattributedinanymannertotheWorldBank,toitsaffiliatedorganizations,ortomembersofitsBoardofExecutiveDirectorsorthecountriestheyrepresent.TheWorldBankdoesnotguaranteetheaccuracyofthedataincludedinthispublicationandacceptsnoresponsibilityforanyconsequenceoftheiruse.Theboundaries,colors,denominations,andotherinformationshownonanymapinthisvolumedonotimplyonthepartoftheWorldBankGroupanyjudgmentonthelegalstatusofanyterritoryortheendorsementoracceptanceofsuchboundaries.

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ISSN:0259-210X

MohinderS.MudaharisprincipaleconomistintheRuralDevelopment/EnvironmentSectorUnitoftheWorldBank'sEuropeandCentralAsiaDepartment.RobertW.JollyisprofessorofeconomicsatIowaStateUniversity.JitendraP.SrivastavaisprincipalagriculturalistintheBank'sRuralDevelopment/EnvironmentSectorUnit.

LibraryofCongressCataloging-in-PublicationData

Mudahar,MohinderS.Transformingagriculturalresearchsystemsintransitioneconomies:thecaseofRussia/MohinderS.Mudahar,RobertW.Jolly,JitendraP.Srivastava.p.cm.(WorldBankdiscussionpaper;no.396)Includesbibliographicalreferences(p.).ISBN0-8213-4313-01.AgricultureResearchRussia(Federation)2.NationalagriculturalresearchsystemsRussia(Federation)I.Jolly,RobertWilliam,1944-.II.Srivastava,Jitendra,1940-III.Title.IV.Series:WorldBankdiscussionpapers;396.S542.R8M8351998630'.72047dc2198-27892CIP

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Contents

Foreword vii

Abstract iii

Acknowledgments ix

AcronymsandAbbreviations x

Glossary xii

ExecutiveSummary 1

ChapterI.StrategicImportanceofAgriculturalResearch 6

ResearchasaSocietalInvestment 6

ResearchasaStrategytoIncreaseCompetitiveness 8

ResearchasaToolforFoodSecurity 14

AgriculturalResearchasaPriorityInvestment 14

ChapterII.StatusandPerformanceoftheAgriculturalSector

16

RestructuringProductionAgriculture 16

ChangingCropSector 20

ShrinkingLivestockSector 23

FallingAgriculturalInvestment 24

PersistentSectoralInefficiency 25

ImplicationsforAgriculturalResearch 27

ChapterIII.StatusoftheAgriculturalKnowledgeSystem 28

StructureandOrganization 28

MeetingDemandforHigherEducation 31

AgriculturalResearchManagement 32

ChapterIV.ChallengesFacingtheAgriculturalResearchSystem

36

AttributesofaModernAgriculturalResearchSystem 36

HowDoesRussia'sResearchSystemMeasureUp? 38

FundingandStaffingoftheAgriculturalResearchSystem

43

NeededStrategyforTransformingtheResearchSystem 50

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ChapterV.TransformingtheAgriculturalResearchSystem 56

ConceptualFrameworkforManagingTransformation 56

FinancingResearchtoFacilitateTransformation 60

IssuesinTransformingtheAgriculturalResearchSystem61

AgendaforCapacityDevelopmentandInstitutionalReform

64

SupportofReformbytheInternationalCommunity 72

References 75

Annexes:

A:AgriculturalInstitutesofHigherEducationinRussia 81

B:MainAgriculturalResearchInstitutesinRussia 83

C:RoleofPublicSectorinFinancingResearch 89

D:RoleofPrivateSectorinFinancingResearch 92

E:RoleofInternationalAgriculturalResearchSystem 95

F:FundingAgriculturalResearchbytheWorldBank 99

ListofTextTables,BoxesandFigures

Tables:

1.1:SummaryofEmpiricalStudieswithEstimatedRatesofReturntoR&D

7

1.2:InternalRatesofReturntoResearch,Extension,andEducationintheUS

7

1.3:RateofReturntoAgriculturalResearchinOECD 9

Countries

1.4:RateofReturntoAgricultureResearchinDevelopingCountries

9

1.5:PerceivedShort-TermBenefitstoDomesticProducersandConsumersfromAgriculturalResearch

13

1.6:BenefitsfromAgriculturalResearch:SomeExamplesApplicabletoRussia

13

2.1:AgricultureLandbyType-ofEnterprise,January1,1996

17

2.2:PerformanceIndicatorsfortheSeedSectorinRussia,mid-1990s

23

2.3:ProductionofLivestockProductsinRussia 23

2.4:LivestockInventoriesinRussia

2.5:LivestockProductivityandFeedConversionIndicatorsinRussia

24

2.6:PublicSectorAgriculturalExpenditureinRussia 25

3.1:RAASResearchInstitutes,Staffing,andBudgetsin1991/92

32

3.2:Full-timeEquivalentAgriculturalResearchPersonnel,1991

33

4.1:MeteorologicalComparisonsinNorthDakota,USAandSaratov,Russia

41

4.2:SpringWheatYieldComparisonsbetweenSaratov,RussiaandNorthDakota,USA

42

4.3:FederalBudgetExpendituresontheRussianAcademyofSciencesandtheRussianAcademyof

45

AgriculturalSciences,1994and1995

4.4:FinancingoftheRussianAcademyofAgriculturalSciences,1994and1995

46

4.5:SelectedIndicatorsforFederalResearchInstitutesSubordinatetotheMinistryofAgricultureandFood,1994

47

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4.6:R&DExpendituresattheFederalResearchInstitutesSubordinatetotheMinistryofAgricultureandFood,byResearchProgram,1994

43

4.7:QualificationsofResearchersWorkingattheFederalResearchInstitutesSubordinatetotheMinistryofAgricultureandFood,1994

48

4.8:FinancialSupporttotheAgro-industrialComplexinRussia

49

4.9:DirectSubsidiesasaPortionofTotalGrossRevenuesforIndividualCommoditiesinRussia

50

4.10:AnalysisofIssuesforStrengtheningAgriculturalResearch,HigherEducation,andExtensioninRussia

53

Boxes:

1:AgriculturalKnowledgeSystemwithaParticularFocusonAgriculturalResearchinTransitionEconomies:TheCaseofRussia

2

1.1:PublicGoodsandPublicFinance 10

3.1:InstitutionalReformoftheAgriculturalKnowledgeSysteminOmskOblast

34

3.2:ShiftingFundingandShiftingPriorities 35

4.1:ClosingtheSkillGapinEconomics 40

4.2:DoingResearchforRussianConditions 52

5.1:GuidelinesforAgriculturalResearchPrioritySetting

63

5.2:N.I.VavilovInstituteofPlantIndustry 65

5.3:TimiryazevMoscowAgriculturalAcademy 68

5.4:TheAgriculturalKnowledgeSysteminSaratovOblast

68

Figures:

2.1:ChangesinFarmOrganizationsinRussiafrom1990to1996

18

2.2:ChangesinOutputSharesforDifferentFarmOrganizationsinRussiafrom1990to1994

19

2.3:ChangesinCroppingPatterninRussiafrom1990to1995

21

2.4:ChangesinCropYieldsoverTimeinRussia 22

2.5:WheatYieldsfortheFormerSovietUnionandCanada(1960-96)

26

3.1:AgriculturalKnowledgeSysteminRussia 29

3.2:AgriculturalEducationSysteminRussia 30

4.1:SpringWheatYieldsintheSaratovOblast,Russia(1981-95)

44

5.1:ResearchProgramAssessment:StrategicValueandVulnerability

58

5.2:ResearchProgramAssessment:StrategicValueandProgramQuality

58

5.3:OrganizationalStructureofResearchandEducationalInstitutesinSaratovOblast

69

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ListofAnnexTables,BoxesandFigures

Tables:

C.1:IntensityofPublicSectorInvestmentinAgriculturalResearchintheEarly1990s

89

C.2:ChangesintheIntensityofPublicSectorInvestmentinAgriculturalResearchOverTime

90

C.3:GlobalTrendsinPublicExpenditureforAgriculturalResearch

90

D.1:EstimatedShareofAgriculturalResearchExpenditurebyAlternativeFundingSourcesinSelectedCountriesinLatinAmerica

93

D.2:TrendsinPrivateSectorSpendingonAgriculturalR&DintheUnitedStates

93

D.3:R&DExpenditureforSelectedPrivateCompanieswithaBroadRangeofAgriculturalActivities,1994

94

E.1:ImpactofCGIARonRice,Wheat,andMaizeYields

96

F.1:WorldBankLendingforAgriculturalResearchandExtension

99

Boxes:

C.1:LikelyReasonsforDeclineinFundingforAgriculturalResearch

91

E.1:CGIARSupportedInternationalAgriculturalResearchCenters(IARCs)

96

F.1:AgriculturalResearchandExtension:LessonsfromChina

102

F.2:ProblemsIdentifiedina1997ReviewofAgriculturalResearchProjects

102

Figures:

F.1:GrowthinFinancialSupportforInternationalAgriculturalResearchSystem

100

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ForewordAgricultureisanimportantsectorinRussiaandothertransitioneconomiesofEasternEuropeandtheformerSovietUnion.Awellfunctioningagriculturalresearch,education,training,andtechnologytransferthecomponentsofthenationalagriculturalknowledgesystemarenecessaryincreatingacompetitiveandefficientagriculturalsector.Agriculturalresearchisessentialforreducingproductioncosts,improvingproductquality,creatinguniqueproductcharacteristics,reducingenvironmentaldamage,addingvaluetoprimarycommodities,anddevelopingutilizationtechnologiesthataddvalueorenhancedemandforagriculturalproducts.

Economicanalysisshowshighratesofreturntoinvestmentinagriculturalresearcharoundtheworld.Thus,investmentinagriculturalresearchshouldbeviewedasakeycomponentofaruraldevelopmentstrategydesignedtoaccelerategrowth,alleviatepoverty,andincreasethecompetitivenessofagriculture.However,toachievethesegoals,Russiaandothertransitioneconomiesmusttransformtheiragriculturalknowledgesystemtomakeitfinanciallysustainable,effectiveinproducinghigh-qualityresearchwithapositiveimpactontheagriculturalsector,andappropriateforproducingscientistswiththeskillsneededtoservetheemergingprivateagricultureinamarketeconomy.

Thisreportstemsfromastrongbeliefthatthelong-termproductivity,profitability,andsustainabilityofRussianagriculturewilldependontheabilityandcapacityoftheRussianagriculturalresearchsystemtorespondtoemergingproblemsandopportunities.TheabilitytosustaingainsfromeconomicreformswilldependonRussia'scapacitytosolveagriculturalproblemsinwaysthatareappropriateforprivateagriculture.However,unlesstheagriculturalresearchsystemis

transformed,itsstoresofknowledge,germplasm,data,andknow-howwillcontinuetodeteriorate.

Russia'sagriculturalresearchsystemisimportantnotonlytoRussiabutalsototheworldcommunitybecauseofitsimplicationsforfoodsecurity.ThustheinternationalscientificanddonorcommunityshouldprovidecarefullytargetedassistancetoRussiainordertofacilitatethetransformationofitsagriculturalresearchsystem,stabilizeandprotecttargetedagriculturalresearchassets,anddevelopandrefinemodelsofinstitutionalchangeandhumancapitaldevelopmentthatareappropriateforRussia.Thestrategyproposedhere,alsorelevantforothertransitioneconomies,willmakeapositivecontributionbyimprovingtheefficiency,effectiveness,andsustainabilityofagriculturalresearch.

ThisreportservedasabasisfortheWorldBankworkshoponReformingAgriculturalResearchSystemsinCentralAsiaandtheCaucasus,March5-11,1998.Theworkshopprovidedanopportunityforparticipantsfromseveraltransitioneconomiestodiscusstheconclusionsandrecommendationsofthisreportandtoprovideusefulcomments.IhopethatthiscasestudyonRussiawillcontributetotheformulationofnationalstrategiestotransformtheagriculturalknowledgesystemtoservetheemergingprivateagricultureinRussiaandothertransitioneconomies.

KEVINM.CLEAVERDIRECTORRURALDEVELOPMENTANDENVIRONMENTUNITEUROPEANDCENTRALASIAREGION

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AbstractThisreportexaminesthecurrentstateofRussianagricultureandagriculturalresearchsystem.Itdevelopsaconceptualframeworkformanagingthetransformationandrehabilitationofagriculturalresearchsystemsintransitioneconomies,withaparticularfocusonRussia.ThismodelisusedtospecifyanagendaforcapacitydevelopmentandinstitutionalreformthatwouldstabilizeandpreservecriticalagriculturalresearchassetsinRussiaandbeginthedifficultprocessofincreasingtheefficiency,effectiveness,andsustainabilityofitsagriculturalresearchsystem.Thereportisintendedforagriculturalscientists,researchadministrators,publicofficials,andagriculturalleadersinterestedinthetransformationofagriculturalresearchsystemsinthetransitioneconomies.

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AcknowledgmentsThisreport,althoughitreflectsourownexperienceandjudgment,hasbenefitedfromdiscussionswithourcolleaguesinRussia,theWorldBank,andIowaStateUniversity.WegratefullyacknowledgetheopennessandcandoroffriendsandcolleaguesinRussia'sagriculturalresearchandeducationcommunity,bothinMoscowandintheregions.

Inparticular,theauthorswouldliketothankGaryAlex,JockAnderson,DerekByerlee,DougForno,AlexanderMcCalla,MichaelPetit,andT.V.Sampathforsharingtheirexperience,andforprovidingveryusefulcommentsonanearlierdraft.TheauthorsalsobenefitedfromtheextensiveknowledgeofBobEvenson(YaleUniversity)andWallyHuffman(IowaStateUniversity),whoprovidedhelpfulsuggestionstoimprovethequalityofthisreport.

TheauthorshavebenefitedagreatdealfromdiscussionswithRussiancolleaguesintheMinistryofAgricultureandFood,theRussianAcademyofAgriculturalSciences(RAAS),TimiryazevMoscowAgriculturalAcademy,andseveralregionalagriculturalresearchinstitutes.Theauthorswouldliketoacknowledgethesupport,information,andadviceprovidedbyMessrs.V.Khlystun(formerMinisterofAgriculture),A.Romanenko(PresidentofRAAS),andA.Zhuchenko(VicePresidentofRAAS).

ThemainconclusionsandrecommendationsofthisreportwerepresentedattheWorldBankworkshoponReformingAgriculturalResearchSystemsinCentralAsiaandtheCaucasus,March5-11,1998.Weareindeedgratefulforthevaluableperspectivesandmanyusefulcommentsreceivedfromtheworkshopparticipants.WearealsogratefultoKevinCleaver,LauraTuck,JosephGoldberg,John

Hayward,andCsabaCsakifortheircommentsandadviceandfortheirsupportforthepublicationofthisreport.EvgenyPolyakovprovidedstatisticalassistance,SharifaKalalaandRathnaChiniahprocessedthereport,andMetadeCoquereaumonteditedit.Wegratefullyacknowledgetheircontributions.

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AcronymsandAbbreviations

AIC: Agro-IndustrialComplex

AKKOR: AssociationofPeasantFarmsandCooperativesofRussia

AKS: AgriculturalKnowledgeSystem

ARSRIIMA:AllRussianScientificandResearchInstituteofInnovationandMarketinginAgriculture

CGIAR: ConsultativeGrouponInternationalAgriculturalResearch

CIAT: CentroInternacionaldeAgriculturaTropical(InternationalCenterforTropicalAgriculture)

CIFOR: CenterforInternationalForestryResearch

CIMMYT: CentroInternacionaldeMejoramientodeMaizyTrigo(InternationalCenterforImprovementofMaizeandWheat)

CIP: CentroInternacionaldelaPapa(InternationalPotatoCenter)

CIS: CommonwealthofIndependentStates

EC: EuropeanCommission

EDI: EconomicDevelopmentInstituteoftheWorldBank

ERS: EconomicResearchServiceofUSDA

EU: EuropeanUnion

FIAS: FarmerInformationandAdvisoryServices

FIST: FederationofInternationalSeedTrade

FSU: FormerSovietUnion

GKI: StateCommitteefortheManagementofStateProperty(Russia)

IC: InstituteofCybernetics(Russia)

ICARDA: InternationalCenterforAgriculturalResearchintheDryAreas

ICLARM: InternationalCenterforLivingAquaticResourcesManagement

ICRAF: InternationalCenterforResearchinAgroforestry

ICRISAT: InternationalCropsResearchInstitutefortheSemi-AridTropics

IFPRI: InternationalFoodPolicyResearchInstitute

IIMI: InternationalIrrigationManagementInstitute

IITA: InternationalInstituteofTropicalAgriculture

ILRI: InternationalLivestockResearchInstitute

IPGRI: InternationalPlantGeneticsResourcesInstitute

IPM IntegratedPestManagement

IRRI: InternationalRiceResearchInstitute

ISNAR: InternationalServiceforNationalAgriculturalResearch

ISTA: InternationalSeedTestingAssociation

MIS: MarketInformationSystem

MOAF: RussianMinistryofAgricultureandFood

MOAFCC: RussianMinistryofAgricultureandFoodComputerCenter

NARS: NationalAgriculturalResearchSystem

NSA: NationalSeedAssociation

NSAC: NationalSeedAdvisoryCommittee

OECD: OrganizationofEconomicCooperationandDevelopment

R&D: ResearchandDevelopment

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RAS: RussianAcademyofSciences

RAAS: RussianAcademyofAgriculturalSciences

RSFSR: RussianSovietFederatedSocialistRepublic

SRI: ScientificResearchInstitutes(Russia)

SRIA: SiberianResearchInstituteforAgriculture(Russia)

SRIASE: ScientificResearchInstituteofAgricultureforSoutheastRegion(Russia)

TACIS: TechnicalAssistancetotheCommonwealthofIndependentStates

TMAA: TimiryazevMoscowAgriculturalAcademy(Russia)

UPOV: UnionforProtectionofPlantVarieties

USAID: USAgencyforInternationalDevelopment

USDA: USDepartmentofAgriculture

USSR: UnionofSovietSocialistRepublics

VIR: N.I.VavilovInstituteofPlantIndustry(Russia)

WARDA:WestAfricanRiceDevelopmentAssociation

Pagexii

GlossaryFermerPrivateFarmerSupportProgram

GoskomstatStateStatisticalCommittee

GosseminspektsiaRussianSeedInspectionAgency

GossortkomissiaRussianSeedRegistrationAgency

KolkhozCollectiveFarm

KrayAdministrativeRegion;AconstituentpartoftheRussianFederation

OblastAdministrativeRegion;AconstituentpartoftheRussianFederation

RayonAdministrativeDistrict;Aconstituentpartofakray,oblastorrepublic

SovkhozStateFarm

SPTUAgriculturalVocationalTrainingSchools

VASKhNILAll-UnionAcademyofAgriculturalSciences

VUZAgriculturalHigherEducationalInstitutions

Page1

ExecutiveSummaryReformingRussianagricultureisvitalforthesuccessfultransitiontoamarketeconomy.TheabilitytosustainthegainsfromeconomicreformswillrestonRussia'scapacitytosolveagriculturalproblemsinthefuture,inwaysthatareappropriateforprivateagriculturebasedonmarketprinciples.Furthermore,thelong-termproductivityofRussianagriculturewillbedetermined,toalargeextent,bythecapacityoftheRussianagriculturalresearchsystem,publicandprivate,torespondtoemergingproblemsandopportunities.Despitetheurgencyofproblemsrelatedtopolicyreformandtheneedtodevelopmanagerialandtechnicalcapacitythroughouttheagro-industrialcomplex,ithasproveddifficulttobuildacaseforstrengtheningagriculturalresearchinRussiaanadmittedlylong-termissue.

Russia'sagriculturalresearchsystemisatrisk.Unlessthissystemisquicklytransformedandrehabilitated,itscapacity,alongwithitsstoresofknowledge,germplasm,data,andknow-how,willbelosttofuturegenerations.Russia'sagriculturalresearchsystemisvitallyimportanttoRussiaandtotheworldcommunity.ThusRussiashouldeschewapolicyofbenignneglecttowarditsdeterioratingagriculturalknowledgesysteminfavorofactiveengagementinreorientingandrestructuringitsinstitutionstomeetthenewdemandsofamarketeconomy.Andtheinternationalscientificanddonorcommunity,fortheirpart,shouldtakestepstoprovidetargetedassistancetoRussianscientists,publicofficials,andagriculturalleaderstorestructureandrefocusRussia'sagriculturalresearchsystem.

NumerousproposalstotransformtheagriculturalresearchsystemhavebeendiscussedwithRussianadministratorsandscientistsinthepastfiveyears.Butafterallthestudies,needsassessments,visionstatements,andmemorandaofunderstanding,littleofsignificancehas

occurred.Russia'sagriculturalresearchsystemcontinuestofaceseriousproblems.ThisistheconsequenceofcollectivefailurebytheRussiancentralgovernment,byoblastandmunicipalgovernments,bytheRussianscientificestablishment,andbytheinternationalcommunity.ThereformagendaproposedherebeginswiththeacknowledgmentthattherearenoprovenmodelsofreformintransitioneconomiesandthatcriticalelementsofRussia'sagriculturalresearchsystemareatimmediateriskofbeinglost.Consequently,reformmustfocusonstabilizingandprotectingtargetedagriculturalresearchassetsanddevelopingandrefiningmodelsofinstitutionalchangeandhumancapitaldevelopmentthatareappropriateforRussiancircumstances.ThepriorityactivitiesproposedinthisreportmakeapositivecontributiontowardredefiningrolesandresponsibilitiesforagriculturalresearchinRussia.Andmoreimportant,theywouldhelpensurethatthehuman,biological,andphysicalcapitalinvestedinRussia'sagriculturalresearchsystemisnotlosttofuturegenerations.

AgriculturalKnowledgeSystem

Theagriculturalknowledgesystemconsistsofagriculturalresearch,education,training,andtechnologytransfer.Theagriculturalknowledgesystemneedstobefullyintegratedifitistoberesponsive,efficient,andcosteffective.WhiletheagriculturalknowledgesysteminRussiaisgraduallyadjustingtopolicyreforms,seriousproblemsremain.Theseproblemsneedtobeaddressedwithasenseofurgencybeforethewholesystemcollapses.However,thismustbedoneinthecontextofreformingtheagriculturalsector,promotingefficienteconomicpolicies,andbuildingmuch-neededinstitutionalinfrastructuretosupportprivateagriculturebasedonmarketprinciples.SeeBox1foracomparisonoftheattributesoftheagriculturalknowledgesystempriortoreformandtheneededattributesofthenewagriculturalknowledgesystem,aswellasanoutlineofemergingtrendsandcriticalproblems.

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Box1:AgriculturalKnowledgeSystemwithaParticularFocusonAgriculturalResearchinTransitionEconomies:TheCaseofRussia

AttributesoftheOldSystem·publicsectordominance;·centralizedandquota-drivensystem;·unsustainablesize;·primaryproductionfocus;·isolatedfromglobalnetwork;·excessiveoverlap;·skewedpriorities;·lackoftrainingineconomics;·highqualitybutnarrowlyfocused;·crisismanagementduringtransition.

EmergingTrends·reforminitiativesinhighereducation;·shiftingfocusofresearchpriorities;·clientproblem-orientedresearch;·decentralizationofactivities;·consolidationofinstitutesandprograms;·costconsciousnessandrevenuegeneration;·privatesectorinvolvement.

CriticalProblems·remainshighlycentralized;·departureofhighqualitystaff;·inadequatefinancialsupport;·largeandunsustainablesize;·lackofoveralldirection;·limitedresearchcapabilityineconomics;·seriousinformationandknowledgegaps.

NeededAttributesoftheNewSystem·providesperformanceincentives;·integrated(research,educationandextension);·demanddrivenandresponsivetoclients;·efficientandcosteffective;·decentralized,pluralisticandparticipatory;·globallylinked;·privatesectorinvolvement;·accountabletokeystakeholders;·promotescostrecovery;·sustainable.

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AgriculturalResearch

Issues

ThenationalagriculturalresearchsysteminRussiafacesthefivemajorchallenges:(i)torestructure,rehabilitate,decentralize,andconsolidatethesystemtomakeitsustainableandefficient;(ii)tore-orientthesystemtomakeitserveprivateagriculturebasedonmarketprinciples;(iii)toadoptsocioeconomic,ecological,andbusinesscriteriainplanning,priority-setting,monitoring,andevaluatingagriculturalresearch;(iv)todevelopandstrengthenlinkagesbetweenresearchersandusers,andamongresearch,teaching,andknowledgetransferactivities;and(v)tofacilitateincreasedinvestmentinagriculturalresearchanddevelopment,bothpublicandprivate.

StatusandAchievements

Russiahasanextensivenetworkofmorethan300nationalandregionalagriculturalresearchinstitutesandacademies.Some235oftheseinstitutesaremanagedbytheRussianAcademyofAgriculturalSciences(RAAS),and71bytheMinistryofAgricultureandFood(MOAF).TheRAASbecameapartofMOAFinearly1996.ThenationalagriculturalresearchsysteminRussiawasdesignedtomeetpredeterminedproductiontargetsforindividualcropandlivestockcommodities.However,thissystemisnotsuitablefortheemergingprivateagriculturebasedonmarketprinciples.

Russia'sagriculturalresearchsystemistoolarge,inefficient,andunsustainableundercurrentorprojectedfundinglevels.Inordertoserveprivateagricultureinamarketeconomy,theagriculturalresearchsystemmustbemadesustainable,efficient,demanddriven,decentralized,accountabletokeystakeholders,andintegratedwithhighereducation,knowledgetransfer,andtheworldscientificcommunity.Currentbudgetarysupportissolowthatitisnotadequate

eventofinanceandsustainthemostcriticalresearchprogramsdesignedtoimproveagriculturalproductivity.

Thelong-termnatureofagriculturalresearchshouldnotbeusedasjustificationforinactionorforassigningitalowpriorityinpublicinvestment.Anappropriateanddynamicagriculturalresearchsystemiscriticalforasuccessfultransitiontoamarketeconomy.Most,butnotall,agriculturalresearchcanbeviewedasapublicgoodandthusmeritspublicfunding.Evidencefromaroundtheworldindicatesveryhighratesofreturn(40to80percent)toinvestmentinagriculturalresearch.However,thesehighratesofreturntoinvestmentinagriculturalresearchwillnotberealizedintheabsenceofgoodagriculturalandeconomicpolicies.Russiahasenormouspotentialforexpandingagriculturalproductionandexports.But,thispotentialwillnotberealizedunlessRussianagriculturebecomesefficientandcompetitive.AgriculturaltechnologygenerationanditsapplicationatthefarmlevelareessentialtoimprovetheproductivityofRussianagricultureanditscompetitivenessinworldmarkets.

Withtheintroductionofeconomicreformstoreducethebudgetdeficitandachievemacroeconomicstability,fundingforagriculturalresearchwassubstantiallyreduced.Asaresult,researchhasliterallystoppedsincethebudgetisnotadequatetopayevenstaffsalaries.Scientistsareleavingtofindbetterpayingjobselsewhere.Theresearchfarmsarebeingusedprimarilyforagriculturalproduction,tomeettheneedsofthestaffratherthanforresearchpurposes.Capitalbudgetstoreplaceresearchequipmentandoperatingbudgetstocarryoutresearchhavedeclined.Whilebudgetarypressuresareforcingtheresearchinstitutestomakemuch-neededadjustments,budgetshortagesoveralongerperiodaredoingirreparabledamagetoRussia'scapacitytogenerate,adapt,andtransferappropriateagriculturaltechnologytomeettheneedsofagricultureintransition.Inaddition,thepublicsector'scapacitytoundertakeagriculturalresearchneedstobesupplementedbytheprivatesector,andefforts

mustalsobemadebythepublicsectortorecoverpartofthecost.

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PolicyRecommendations

Russianeedsacompleteoverhaulofitsnationalagriculturalresearchsystem.Thiswillrequirefundamentalchangesindecision-making,priority-setting,incentivesystems,costeffectiveness,revenuegenerationthroughcostrecovery,andaccountabilitytostakeholders.Thesechangesarelongtermandwouldrequirealongtimetoachieve.Asafirststep,however,thereisaneedtodevelopanationalagriculturalresearchstrategytorationalizethestructure,organization,management,andfinancingofthescientificresearchsysteminagricultureatthefederalandregionallevels;tomakeitresponsivetomarketconditionsandtheneedsofnewstakeholders;andtomakeitsustainable.

KnowledgeTransfer

Issues

Thecurrentsystemofagriculturalknowledgetransferisnotadequate,andtheknowledge(particularlyinformationonprices,markets,technology,andreforms)itselfisnotappropriatetotheneedsoftheemergingprivateagricultureandmarketeconomy.Thisistrueatalllevelsofdecision-making,includingproducers,traders,advisors,administrators,andpolicymakers.

StatusandAchievements

Inthepast,informationservicesforagriculturalproducerswerecentralized.Thissystemresultedinthedevelopmentofalargenumberofnarrowlyfocusedspecialistswhoprovidedadvicetothemanagersofstateandcollectivefarms.Thisknowledgewassupplementedbyresearchandfieldapplications.Mostoftheresearchresultswereintroducedthroughdirectives.Therewerefewincentivestopromotenewinnovations.Whilethissystemworkedreasonably

wellwithalimitednumberofclients(about25,000stateandcollectivefarms),itisnotadequatetomeettheneedsofthemorethan280,000privatefarmers,50,000restructuredfarmenterprisesand40millionhouseholdplotholdersthathavealreadybeenestablishedinRussiaandtheirnumbercontinuetoincrease.AWorldBank-financedAgriculturalReformImplementationSupport(ARIS)projectissupportingtheestablishmentofFarmInformationandAdvisoryService(FIAS)centersinthemainagriculturalregionsofthecountry.Thecentersaredesignedtoprovidetimely,reliable,user-friendly,easilyaccessible,andpracticalinformation(agronomic,technical,management,business,legal,andenvironmental)tonewlyemergingprivatefarmers,restructuredfarmenterprises,andagro-businessenterprisestohelpthemmakeinformeddecisionsinamarketenvironment.Thisapproachisbasedonuseoftheinformationalreadyavailableinanextensivenetworkofagriculturalresearchinstitutes,agro-chemicaltestingstations,landdatabanks,academies,anduniversities,anditcapitalizesonRussia'shighlyskilledandliterateworkforce.TheFIAScenters,whichwillbelocatedattherayonandoblastlevels,willbesupportedbyanetworkofregionalandfederaltrainingcentersandtheagriculturalresearchsystem.

Inaddition,theARISprojectisalsosupportingtheestablishmentofanationalnetworkofMarketInformationSystem(MIS)centers.Thesecentersaredesignedtocollect,process,anddisseminaterelevant,timely,andreliablemarketandpriceinformationforthebenefitoffarmers,traders,andpolicymakers.Accesstosuchmarketinformationiscrucialforthesuccessfulfunctioningoftheemergingmarketeconomysinceitincreasesmarkettransparency,transmitsincentivesandopportunitiesforagriculturalproducers,improvesproducersbargainingposition,stimulatescompetitionamongtraders,expandsproducers'andconsumers'choicesinproductselection,andfacilitatesrationaldecision-makingbyproducers,traders,andpolicymakers.

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PolicyRecommendations

Clearly,thereisaneedtoacceleratetheestablishmentofFIASandMIScentersandtomaketheinformationavailabletoproducers,traders,andpolicymakers.Thesecentersneedtobesupplementedbytheestablishmentofanationalcenterformonitoringprogressinagriculturalreformsandconductinganalysisoncriticalagriculturalpolicyissues.Thefederaltrainingcenter(beingestablishedundertheARISproject)shouldalsobeusedtotrainpersonneloffederalministries,regionaldepartments,andotheragenciesinvolvedintheagriculturaladjustmentandineffortstoimproveproductivity,profitability,andsustainabilityoftheagriculturalsector.

InstitutionalReform

Issues

TheagriculturalresearchinstitutionsundertheMinistryofAgricultureandFood,includinginstitutionsunderRAAS,needtoberestructuredtomakethemmoreresponsiveandrelevanttotheneedsofanemergingagriculturedominatedbytheprivatesectoranddrivenbymarketforces.

StatusandAchievements

TheagriculturalinstitutionalstructureinRussiaiscomplex,withmanylayersofdecision-making,policyformulation,andprogramimplementationauthority.ThenewConstitutionhasdecentralizedmuchpowerfromthefederaltotheoblastauthorities.However,thedivisionofresponsibilitiesandrolesisnotyetclearlydefined.AndinadditiontotheMOAFatthefederallevelandagriculturaldepartmentsattheoblastlevel,alargenumberofotheragenciesalsodealwithdifferentaspectsoftheagriculturalsector.Alltheseagenciesaregraduallybeingreorganizedtomeettheneedsofaprivatesector-

dominatedmarketeconomy.However,theslowpaceofthisinstitutionalchangeremainsamajorbarriertoadjustment.

PolicyRecommendations

Thisprocessofinstitutionalchangeneedstobeacceleratedbyabolishingolddepartmentsandagenciesthatweredesignedtomeettheneedsofcentralizedagricultureandcreatingafewwell-equippeddepartmentsandagenciestomeettheneedsofprivateagriculturebasedonmarketprinciples.Afirststepistodevelopanactionplantoreorganizetheinstitutionsthatserveagriculture,withafocusontheagriculturalknowledgesystem.Implementationofsuchanactionplanwouldimprovethepublicsector'scapacitytoprovideappropriatenewservicestoagricultureinatimelyandcost-effectivemanner.

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ChapterIStrategicImportanceofAgriculturalResearchThestrategicroleofagriculturalresearchinRussiaderivesfromthecriticalimportanceofagricultureintheoveralleconomyandRussia'slargenaturalresourcebase.Theagro-industrialcomplexislargeandaccountsforabout20percentofGDPandemploymentinRussia.Agriculturealsohasalargeexportpotentialandconsiderablescopeforimportsubstitution.Atpresent,Russias'agricultureresourcesarenotbeingusedefficiently.Becauseagriculturecontinuestoabsorbalargeshareofbudgetaryresources,anyimprovementinitsperformancecouldhavealargeimpactonbudgetdeficitsandthusonmacroeconomicstability.

Despitethesector'spotentialforhigherefficiencyandgrowth,overallagriculturalproductionremainsinefficient.Productionhasdeclined,yieldsarelow,physicallossesarehigh,pricesremaindistorted,profitabilityislow(particularlyforthelivestocksector),andsubsidiesremainhigh.Unfavorabletermsoftrade,inefficientfarmstructuresandlackofadequateincentives,competitivemarkets,technicalandmarketinformation,andawell-functioningcreditsystemhavecombinedwiththeprevailingmacroeconomicimbalancesoffsettheexpectedbenefitsofreform.Theseproblemsaregraduallybeingaddressedthroughreformanddevelopmentofinstitutionalinfrastructure,butimplementationofreformhasbeenslow.

Russianagriculturehasembarkedonadifficultandprotractedtransition.Theshort-termproblemsinagriculturepolitical,social,andeconomicseemalmostoverwhelming.Why,then,worrynowaboutagriculturalresearchinRussiawhich,toparaphraseT.W.Schultz(1964)isadmittedly''long-termbusiness."Itwouldseemreasonable

toplacetheseactivitiesonthebackburnerandfocusonthecomplexitiesofprivatization,priceliberalization,thedevelopmentofmanagerialskills,oreventheimprovementofmechanismstotransferexistingresearchknowledgeortechnology.ItisdifficulttoarguewiththeneedforRussiatoaggressivelyaddressthiscomplexsetofimmediatetransitionissues.However,theabilitytosustainthegainsachievedfromshort-termreformwillrestonRussia'scapacitytosolveagriculturalproblemsinthefutureinwaysthatareappropriateforprivateagriculturebasedonmarketprinciples.ThusagriculturalresearchisvitalinensuringRussia'ssuccessfultransitiontoamarketeconomy.Itslong-termnatureshouldnotbeusedasajustificationforinactionorlowpriority.Agriculturalresearchcapacityisastrategicresourcethatcanbejustifiedfromanumberofperspectives.

ResearchAsaSocietalInvestment

Nomatterwhichmeasureofreturnisselectedorwhichanalyticalmethodisapplied,anextensiveliteratureinagriculturaleconomicsconvincinglydemonstratesthatinvestmentinagriculturalresearchyieldshighpayoffs.1EvensonandWestphal(1995)recentlysummarized156studiesofestimatedrealratesofreturntoagriculturalresearchanddevelopment(Table1.1).Forpublicsectoragriculturalresearch,averagereturnswere48percentfordevelopedcountriesand80percentfordevelopingcountries.FortheUnitedStates,HuffmanandEvenson(1993)showthatreturnsdiffer

1Returnstoinvestmentinagriculturalresearchcanbemeasuredbyfollowinganeconomicsurplusapproachoranaggregateproductionfunctionapproach.Economicsurplusapproachisrelativelymorepopular.ExamplesforthelatterapproachareGriliches(1964),Binswangeret.al.(1987),Pardey(1989),andMundlak(1996).

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significantlybetweenappliedandmorebasicorpretechnologyresearch,betweenresearchandextension,andbetweenthepublicandprivatesector(Table1.2).

Table1.1:SummaryofEmpiricalStudieswithEstimatedRatesofReturntoR&D

StudieswithRangeofEstimatesforRatesofReturn(%)

Activity/RegionsNumberofStudies 1-24 25-49 50-75 75+ Mean

PublicSectorAgriculturalResearchAfrica 10 2 3 3 1 41LatinAmerica 36 14 22 13 13 46Asia 35 7 20 23 25 56Alldevelopingcountries

85 23 45 40 44 80

Alldevelopedcountries

71 21 54 26 29 48

PrivateSectorIndustrialResearchDevelopingcountries 5 0 3 3 2 58Developedcountries 35 10 20 10 5 44

PublicSectorAgriculturalExtensionDevelopingcountries 17 4 2 4 6 50Developedcountries 6 1 0 3 2 63aIncludesinternationalagriculturalresearchcenters

Source:EvensonandWestphal(1995).

Table1.2:InternalRatesofReturntoResearch,Extension,andEducationintheU.S.

TypeofActivity(SectorSpecific)

InternalRatesofReturn(%)a

Publicresearch 41Pretechnology 74PrivateR&D 46Publicextension 20Farmers'schooling 40

aReferstobothcropandlivestocksectoraggregates,1950-82.

Source:AdaptedfromHuffmanandEvenson(1993).

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Theratesofreturntoinvestmentinagriculturalresearcharegenerallyveryhigh.However,themagnitudeoftherateofreturnvariesfromonecroptoanother,fromonelivestockproducttoanother,fromcropsectortolivestocksectororaggregateagriculturalproduction,fromonecountrytoanother,andfromdevelopedtodevelopingcountries(Table1.3and1.4).Therateofreturntoinvestmentinresearchvariesfrom22to42percentforpotatoesinPeru,to45percentforagriculture(cropsandlivestock)intheUnitedStates,to97percentfordairyinCanadaand191percentformaizeinSouthAmerica.Thenatureofagriculturaltechnology,thelevelofagriculturalproductivityandappropriatenessofagriculturalpoliciesgreatlyinfluencepayoffstoinvestmentinagriculturalresearch.Carefulandinformedresearchmanagementandpublicinvestmentareessentialandmusttakeplacewithinasetofconstraintsdefinedbyacountry'sresourcesandpolicies.

Muchofagriculturalresearchcanbeviewedasapublicgood(Box1.1).Missingmarkets,particularlywhenprivateresearchandneededinstitutionssuchasintellectualpropertyrightsarerelativelyunderdeveloped,canresultinsystematicunderinvestmentinagriculturalresearch.Thefactthattheestimatedsocialpayofftoresearchishighsuggeststhatsystematicunderinvestmentisstilloccurring,evenindevelopedcountrieswithwell-establishedprivatesectorresearch.

Positiveandhighratesofreturnmeanthatthestreamofsocietalbenefitsfromresearchoutweighthecostsoveraplanninghorizonofseveralyears.Thecostsoftheseinvestmentsarerepaidbecausetheeconomygrowsasaconsequenceofthereducedfoodandfibercoststhatbenefitbothconsumersandproducers,thereallocationofphysicalandhumancapitalintohigherandbetteruses,andincreasedeconomicactivity,includingtrade.Butaswithanyinvestment,thereisfrequentlyalagbetweenexpenditureandreturn.Foragriculture,the

lagmaybe10-20years.Evenallowingforthelonglag,however,theexpectedreturnoninvestmentinagriculturalresearchandextensionispositiveandhigh.2

ResearchAsaStrategytoIncreaseCompetitiveness

Publicsupportforagriculturalresearchcanalsobeanimportantpartofanation'sstrategytoincreasethecompetitivenessofitsagriculturalsector,whetherthroughdirectedpublicinvestmentorpublicactiontofosterprivateresearch.Operationally,increasedcompetitivenessmeansthattheagriculturalsectorisbetterabletosellproductsabroadortoproducesubstitutesforproductsbeingimported.Increasedcompetitivenessisdesirablebecauseitresultsinimprovedstandardsoflivingforthegivennationorregion.

Ourunderstandingoftheroleofresearchandtechnologicalchangehasbeeninfluencedbyconceptsofcomparativeadvantagethatunderlietradetheory.Inthisframework,anation'sfactorendowmentstockofland,labor,naturalresources,orcapitalwillinfluenceitsproductionandconsumptiondecisions.Nationswillchoose,forexample,toexportproductsthatmakemoreintensiveuseoffactorsofproductionthatarerelativelyplentiful.Inthiscontext,researchwillbedirectedtowarddevelopingtechnologiescapableofaugmentingscarcefactorsofproductionorreducingcosts.Research

2Thereisvastamountofpublishedliteraturedealingwithdifferentaspectsofagriculturalresearchanddevelopmentor,morebroadly,withthegenerationanddisseminationofagriculturaltechnology.FewselectedexamplesareAlstonandPardey(1996);Alston,NortonandPardey(1995);Anderson(1994);BinswangerandRuttan(1978);ByerleeandAlex(1998);EvensonandPray(1991);HayamiandRuttan(1995);Pardey,RoseboomandAnderson(1991);Pinstrup-Andersen(1982);PurcellandAnderson(1997);Ruttan(1981);RuttanandPray(1987);Tabor(1995),andtheWorldBank(1981,1983,1996b).

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Table1.3:RateofReturntoAgriculturalResearchinOECDCountries

Country Study Commodity PeriodRateofReturn(%)

Australia Duncan(1972) PastureImprovement

1948-69

58-68

Canada Fox,etal.(1989) Dairy 1968-84

97

Canada Widmer,etal.(1988) Beef 1968-84

63

Canada Zachariah,etal.(1988) Broilers 1968-84

48

Finland Sumelius(1987) Aggregate 1950-84

21-62

Germany Burian(1992) Aggregate 1950-87

21-56

Ireland Boyle(1986) Aggregate 1963-83

26

Japan HayamiandAkino(1977)

Rice 1932-61

73-75

NewZealandScobieandEveleens(1987)

Aggregate 1926-84

15-66

UnitedKingdom

ThirtleandBottomley(1988)

Aggregate 1950-81

70

UnitedStatesHuffmanandEvenson(1992)

CropandLivestock

1949-85

45

UnitedStatesLyu,WhiteandLu(1984)

Aggregate 1949-81

66-83

Source:Alston,ChalfantandPardey(1995).

Table1.4:RateofReturntoAgriculturalResearchinDevelopingCountries

Country Study Commodity RateofReturn(%)

Mexico Ruvalcaba(1986) Maize 78-91SouthAmerica Evenson(1989) Maize 191Indonesia Pardey(1993) Rice 60-65India Evenson(1990) Rice 65

Pakistan Nagy(1983) Wheat 58Brazil Ayers(1985) Soybeans 46-69

Philippines Librero(1987) Sugarcane 51-71Peru Norton(1987) Potatoes 22-42

Senegal Schwartz(1989) Cowpeas 60-80Source:Bonte-Friedheim,TaborandRoseboom(1994).

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Box1.1:PublicGoodsandPublicFinanceAgriculturalresearchisoftendescribedasapublicgoodandasaconsequencemeritspublicfunding.Thediscussionofthistopicisfrequentlycarriedoutusingtheratherarcanelanguageofpubliceconomics.Buttheunderlyingissuesarefairlystraightforward.Astheevidenceshows,investmentsinagriculturalresearchyieldhighratesofreturns.Wouldtheseinvestmentsbemadeifthetaskwerelefttoprivatefirms?Furthermore,wouldsufficientfundsbeinvestedtomeetsociety'sneeds?Andwouldthecorrectmixofprojectsbeundertaken?Theanswertoallthreequestionsisprobablynot.

Aprivatefirmaseedcompany,chemicalcompanyorafarmerforthatmatter,willonlyinvestinresearchifthebenefitsfromdoingsoexceedthecosts.Inmanycases,thismeansthatthefirmconductingtheresearchmustbeabletoearnreturnsfromresearchtotheexclusionofcompetitors.Accesstotheearningsfromresearchmightbeobtainedfromapatent,asatradesecretorthroughphysicalcontroloftheinvention.Ifafirmcannotbereasonablyassuredthatitcancaptureasufficientportionoftheincomestreamfromaresearchproject,itwon'tmaketheinvestment.Alternatively,thefirmmightnotcarryoutaresearchprojectinhopesthatacompetitorwouldmaketheinvestment.Wheneitherofthesetwosituationsexist,whenfirmscannotdirectlyandsufficientlybenefitfromresearchinvestments,publicactioncanbejustified.Economistsdescribethisactionasoneofcorrectingamarketfailure.Hereareafewsimpleexamplesofresearchareasthatmightnotbeadequatelyundertakenbytheprivatesector.·Basicresearchisoftenfundedbythepublicsector.Forexample,inordertobreedsoybeanvarietieswithalteredfattyacidcomposition,itmightbenecessarytounderstandthesynthesispathways.Aprivatefirmmightbeunwillingtoinvestinthisbasicresearchbecauseitcannotdirectlycapturethebenefits,orbecausetheexpectedreturncannotcompetewithreturnsfromothershort-terminvestmentalternatives.Inthiscase,itmakesmoresenseforsocietytofundtheresearchandmaketheresultswidelyavailabletosupportcommercialapplication.·Researchthatincreasesknowledgeormanagerialskillsmightnotbeadequatelyfundedbytheprivatesector.Apesticidecompanywithproductstosell,wouldprobablynotinvestindevelopingintegratedpestmanagement(IPM)systemsthatreduceapplicationratesofitsproduct.Buttheselowinputtechnologiesclearly

benefitthesocietyandtheenvironment.Iftheresearchistobecarriedout,thepublicsectormighthavetopayforitorfindwaysforcostrecoveryfromthebeneficiaries.·Someappliedresearchisdifficulttoprotect.Patentscreateapartialmonopolyandprotectafirm'sreturnonresearchinvestmentatleastforaperiodoftime.Thisworksfairlywellforpesticidesormachinery.Cornhybridscanbeprotectedbecauseaccesstotheinbredparentscanbephysicallycontrolledasatradesecret.Self-pollinatedcropssuchaswheatorsoybeansaremoredifficulttocontrolsincefarmerscansavetheirownseed.Consequentlyitcanbedifficultforaprivatefirmtocapturethereturnonitsresearchinvestment.Inthiscase,publicfundingorinterventionmaybeneededifthesebeneficialinvestmentsaretobemade.

Theseexamplesillustrateafewofthereasonswhyprivatefirmsmightnotinvestorunderinvestinresearchthatsocietywouldfinddesirable.Toresolvethisdilemma,publicactionisoftenjustified.However,publicactioncantakemanyforms.Thepubliccanfundandconductresearchdirectly.Thepublicmightfundtheresearchbuthaveitconductedbytheprivatesectorundercontract.Orthepublicmightpasslegislationtocreatecommodityorexporttaxprogramstofundresearchthatfirmswouldfindintheirbestinteresttopursue.Inmanydevelopedcountries,fundingofresearchhasevolvedfromlargelyapublicresponsibilitytoasharedresponsibilitywiththeprivatesector.ForRussia,agriculturalresearchwilllikelyremainapublicfunctionuntiltheprivatesectorandtheneededinstitutionsarewell-developedtopermitasharedrole.Thiswilllikelytakeadecadeormore.

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attemptstoeaseconstraintsthatarelargelytheconsequenceofresourceendowments(ThirtleandRuttan1987).

Oneofthemostimportantinsightsfromthislineofinquiryisthatresearchproductivityandhenceagriculturalproductivitycanbeenhancedby"gettingpricesright"intransitioneconomies.Marketsignalsthatarerelativelyfreeofdistortionscausedbydomestictaxesortradeinterventionwillresultinefficientproductionandtherebydriveresearchintheproperdirection.Thismeansthatresearchmanagerscanmaketheirinvestmentdecisionslargelyonthebasisofwelfaremeasuresthatreflectthenetgaintoproducersandconsumers(Alston,Norton,andPardey1995).Competitivenessandresearchstrategyinthisframeworkaretheconsequencesofwell-functioningcommoditymarketsandeconomicallyliterateresearchmanagers.

Porter(1985,1990)hassynthesizedandextendedanalternativetotheresource-basednotionofcomparativeadvantagethathecallscompetitiveadvantage.Itistheconsequenceofadeliberatestrategybyfirms,industries,ornationstoachievecostleadershiporproductdifferentiation.Costleadership,orconsistentlyachievinglowunitproductioncosts,includestheentiresequenceorvaluechainrequiredtoproducegoodsandservicesfrombasicmanufacturingtotransportation,distribution,marketing,andcustomerservice.Differentiationreferstotheabilitytoproduceandmarketgoodsorserviceswithuniquecharacteristics.Throughdifferentiation,afirmisabletoexactpricepremiumsandearnhigherthannormalprofits.

InPorter'smodel,nationalcompetitiveadvantagefollowsthefirmorindustryandistheresultofconditionsinfactorandproductmarkets,firmstrategyandrivalry,andthecharacteristicsofsupportingindustries.AgriculturewouldseematfirstglancelesssuitedforPorter'smodel,whichhearguesismostappropriateforhightechnologyindustriesratherthanresource-basedindustries.However,

inindustrialcountriesandinmoreadvancedtransitioneconomies,agricultureisanincreasinglyhigh-technologyindustry,wherecompetitivestrategycanoffersomevaluableinsightsonindustrylocation,productivitygrowth,andresearch.ThecutflowerindustryintheNetherlands,thedairyindustryinDenmark,andrecentdevelopmentsintheporkindustryinNorthCarolina(intheUnitedStates),Singapore,orChilearecasesinpoint.ThemajorbuildingblocksinPorter'smodelofnationalcompetitiveadvantageasitappliestotheroleofresearchanddevelopmentarefactorconditions,demandconditions,relatedandsupportingindustries,andfirmstrategy,structure,andrivalry.

Factorconditions.Porter'smodelincludesfactorendowmentsasoneofthekeydeterminantsofnationalcompetitiveadvantage.Factorendowmentsconsistofhuman,physical,natural,knowledge,andcapitalresourcesaswellasinfrastructuretransportation,communication,andhealthcare,forexample.Relativelyfewoftheseendowmentsarereallyfixedorgiven;technologyandresearchcanaltermanyofthemovertime.Competitiveadvantageiscreatedandsustainedwhenfactoraugmentationprovidesbenefitstospecializedindustriesbenefitsthatarenoteasilytransferredtorivals.Researchclearlyisoneofthedrivingforcesbehindthisfactor-augmentingtechnologychange.

Demandconditions.Domesticdemandconditionsarethesecondmajordeterminantofnationalcompetitiveadvantage.Thelargerandmorevisiblethedomesticdemandforaproduct,thegreatertheincentivestoincreaseanindustry'scompetitiveness.Domesticdemandforproductsthatreflectuniquephysicalorculturalcharacteristicsisalsoimportant.IntheUnitedStates.,forexample,theincreasinghouseholdincomesoftwo-careerfamilieshavesignificantlyalteredthedemandforservicesembodiedinretailfoodproducts.Inanotherexample,thescaleoftheU.S.cornindustryhasresultedinalarge

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domesticdemandforhybridseedadaptedtomanyclimaticormaturityzones.Thishas,inturn,fosteredaninternationallycompetitiveseedindustryintheUnitedStates.

Relatedandsupportingindustries.Porteridentifiestheimportanceofindustry"clusters"indeterminingnationalcompetitiveadvantage.Clustersaregroupsofindividualfirmsthatprovidematerials,services,orexpertisetoagivenindustry.Supportingfirmsmayformpartofanintegratedorcoordinatedindustryforexample,linkingfeedprocessing,nutrition,livestockproductionandmeatprocessing.Ortheymaysimplyberelatedorrelevanttoaparticularsituation.Thestrong,ubiquitouscomputersoftwareindustryintheUnitedStateshascertainlyfosteredthedevelopmentofimprovedfarmmachineryinstrumentsandcontroldevices.ThecommonpracticeofoutsourcingmaterialsorservicesbuildscapacityinsupportingindustriesandcanleadtocostreductionsandqualityimprovementthroughscaleeconomiesandjointR&D.Japan'ssuccessinautomobilesandelectronicshas,inpart,beenachievedthroughstrengtheningitssupportingindustrialbase.

Firmstrategy,structureandrivalry.Porter's"diamond"offirmstrategy,structure,andrivalryreferstothecharacteristicsofmanagementandcompetitionwithintherelevantindustry.Itincludessuchdiverseaspectsascorporateculture,societalvaluesandtradition,andthedegreeofrivalryamongfirmswithinanindustry.

Porter'sworkincorporatesmanyoftheearliernotionsofcomparativeadvantageandinducedinnovation.Hisprimarynewinsightisthatnationalcompetitiveadvantageistheconsequenceoffourinter-relatedforceslinkedtofactorsofproduction,demandconditions,theexistenceandperformanceofalliedindustries,andthecharacteristicsofmanagementandfirmbehaviorwithinanindustry.Further,inPorter'smodel,researchanddevelopmentplaysacriticalroleinall

fourareasaspartofdeliberatestrategiestoreducecosts,increaseproductdifferentiationandquality,orreduceadverseenvironmentalconsequences.Agriculturalresearchandtechnologicaldevelopmentcreatecompetitiveadvantagebyimprovingtheabilityoftheagriculturalsectortocreatevaluefordomesticandinternationalcustomers.Theconsequencesoftechnologicalandmanagerialinnovationfosteredbyagriculturalresearcharesustainedhighratesofreturnandincreasingmarketshare.

Evenson(1986)offersanadditionalperspectiveonagriculturalresearchandcompetitiveadvantagewithinaframeworkthatincludesproducersandconsumersasinterestgroups.Evensonintroducesasimpletypologythatdistinguishesbetweenagriculturalproductsthataretradedornontradedandtechnologicalchangethataffectsagriculturalproductionorutilization(processing).Finally,Evensondistinguishesbetweentechnologiesthatcanorcannotbetransferredintocompetingnations(spillovers).ThetypologyissummarizedinTable1.5.

Mostagriculturalcommoditiesaretradedorarepotentiallytradable.Grains,protein,meat,cheese,farmmachinery,bullsemen,andpreparedfoodsarecasesinpoint.However,somecommoditiessuchasfreshmeat,forages,ormilkmorecloselyresemblenontradedgoods.Thekeyissueishowsensitivecommoditypricesaretochangesinoutput.Productionresearchisfocusedonincreasingoutputorimprovinginputqualityorefficiency.Utilizationresearchimprovestheefficiencyofstorage,transportation,andprocessingofagriculturalcommodities,leadingtoimprovedproductionqualityordifferentiation.Transferabilityofresearchcanbeinfluencedbyanumberoffactors.Productiontechnologiesthataresuitableforspecificsoilorclimaticconditionsorrequirespecialmanagementskillsarenotparticularlytransferable.Otherssuchasdairygeneticsorwet-millingtechnologiescanbeeasilytransferredtocompetitors.Institutionalrestrictionssuchaspatentsorhealthregulationslimit

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transferability.Andlocaleconomicconditionsorpricedistortionscanalsobeimportantlimitingfactors.Table1.6listsafewexamplesapplicabletoRussiathatareconsistentwiththistypology.

Table1.5:PerceivedShort-TermBenefitstoDomesticProducersandConsumersfromAgriculturalResearch

CommodityaResearchFocus TradedGoods NontradedGoods

ProductionResearchTransferable C+ P- C++ P-Nontransferable C+ P++ C++ P-

UtilizationResearchTransferable C- P+ C+ P+Nontransferable C+ P+ C+ P+

aThedefinitionofthesesymbolsisasfollows:

C+=consumerbenefitsC-=consumerlosesP+=producerbenefitsP-=producerloses

Source:DerivedfromEvenson(1986).

Table1.6:BenefitsfromAgriculturalResearch:SomeExamplesApplicabletoRussia

CommodityResearchFocus TradedGoods NontradedGoods

ProductionResearch

Transferable Newwheatvarieties Highproteinforagecultivars

NontransferableSustainablewheatproductionsystems

fortheVolgaHills

Improvedbeefgrazingsystems

UtilizationResearch

Transferable Improvedflourmillingtechnologies

Improvedfreshmilkhandlingsystems

NontransferableImprovedflourmillingtechnologies

protectedbypatentortradesecrets

Processingtechnologiesforethnic

foodsorfoodsforlocaltastes

Source:Authors'compilation,basedonEvenson(1986).

ThebenefitsofresearchtodomesticproducersandconsumershighlightedinTables1.5and1.6areconjectural.Butthetypologydoesillustratesomekeypointsaswellassomecontroversies.Consumersappeartobenefitfromalmostalltypesoftechnologicalchangeinagriculture,whileproducersbenefitaswell,butmoreselectively.Farmerswouldlikelysupportnontransferableproduction

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researchintradedcommodities.ForRussia,givenitsrangeandvariabilityofagroclimaticregionsanditshighlyeducatedagriculturallaborforce,site-specifictechnologieswithhighmanagerialrequirementswouldseemtoofferclearadvantages.Iftheseproductiontechnologiescanbedevelopedaroundagroecologicalprinciplestoreduceenvironmentaldegradationandothersocialcosts,Russia'slong-termcompetitiveadvantagecouldbesignificantlyenhanced.Farmersalsobenefitfrom,andwouldprobablysupport,investmentsinutilizationresearch.Butwhetherutilizationresearchshouldbefundedpubliclyorprivatelyiscertainlysubjecttodebate(AlstonandPardey1996).Finally,eveninsituationswherethereseemstobeamixtureofwinnersandlosers,aswithproductionresearchonnontradedgoods,thenetbenefitstosocietyarestilllikelytobepositive.Thegainstoconsumerssimplyoutweighthelossestoproducersandresultinpositiveratesofreturnontheseresearchinvestments.

ResearchAsaToolforFoodSecurity

Thefirsttwoperspectivesonagriculturalresearchareadmittedlyinwardlyfocusedonthegainstoanationorregion.However,thereisaglobalperspectivetoagriculturalresearchthatisparticularlyimportant.Inarecentstudy,McCalla(1994a)juxtaposesplausiblegrowthratesinworldpopulationandincomeagainsthistoricalgrowthratesinagriculturalproductivity.Whatemergesisasimpledisquietingfact:agriculturalproductivitymustcontinuetoincreaseworldwideatorabovehistoricalratesiffuturefooddemandsaretobemetwithoutpotentiallydirehumanconsequences.McCallamakesasecondandequallyominousobservation:inmostcountriesthroughouttheworld,developingandindustrial,nationalprioritiesareshiftingawayfromagricultureandfromagriculturalresearch.Thismyopicperspectivefurtherdiminishestheworld'scollectiveabilityto

achievetheneededincreasesinagriculturalproductivityinamannerthatcanbesustainedintothefuture.

FoodsecurityisrelevanttoRussiaintwoimportantways.First,Russia(andtheothertransitioneconomies)cangoalongwaytowardrealizingitsvastpotentialinagriculturalproductionandinmeetingfuturefoodneedsbyincreasingtheintensityandproductivityofasustainableagriculturalproductionsystem,improvingefficiencyandqualityinagriculturalprocessinganddistribution,andeasingproductionconstraintsindifficultagroclimaticregions.Byactivelycontributingtotheresolutionofglobalfoodproblems,Russiacanalsoimproveearningsfromitsagriculturalsectorandcontributetoruralwell-being.Second,thereisanimportantdomesticdimensiontofoodsecurity.Russiaisnot,byworldstandards,apoorcountry.Nordoesthespecterofhungerthreatenitspopulation.ButnationalfoodsecurityisanimportantissueforRussiainthatiteffectsRussians'standardsofliving.Thetransitiontoademocraticandcivilsocietyissignificantlyinfluencedbythepriceofsausagesandbread.Agriculturalresearchplaysanimportantroleinimprovingproductivity,increasingstandardsoflivingforruralaswellasurbanpeople,andconcomitantlysupportingdemocratization.

AgriculturalResearchAsaPriorityInvestment

Thelogicforsupportingagriculturalresearchasapriorityinvestmentisstraightforwardandcompelling.Agriculturalresearchhasbeenshowntobeasoundsocietalinvestment.Fewpublicgoodscanshowabetterrateofreturn.

·Agriculturalresearchcancreateandsustainnationalcompetitiveadvantageand,thereby,increaseearningsfromagriculturalassetsandtheincomesofruralpeople.

·AgriculturalresearchisneededifRussiaistocontributewithitsvastpotentialtotheresolutionofglobalfoodandenvironmentalproblems.

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·AgriculturalresearchisneededifRussiaistoproperlymeetitsnationalfoodsecurityobjectives,whichsupportdemocraticreform.

Russiafacesthischallengewithanextensiveagriculturalknowledgesystemandalonghistoryofinvestmentinresearchandeducation.ThissituationischaracteristicofmosttransitioneconomiesinEasternEuropeandtheformerSovietUnion.Agriculturalresearch,education,training,andtechnologytransferweregivensomepriorityundercentralplanning.However,theagriculturalknowledgesystemthatemergedwasnotdesignedtomeettheneedsofprivateagricultureinamarketeconomy.FortheWorldBankandotherinternationalfinancialinstitutionsanddonors,thisfactcreatesnewchallenges.Mostoftheirexperienceisindevelopingnationalagriculturalresearchsystemsfromthegroundup.Theproblemsoftransitionoftransforminganextensiveandcomplexknowledgesystemappropriatetoacommandeconomytoonesuitableforamarketeconomyareunprecedented,andthetaskoftransformingtheagriculturalresearchsystemwillnotbeeasy.3

Inmaturemarketeconomies,agriculturalknowledgesystemsarealsointransitioninthedivisionoflaborbetweentheprivateandpublicsectors,inthetrainingandexpertiseofscientistsandeducators,amongotherways.ThusthefutureconfigurationofagriculturalknowledgesystemsinNorthAmerica,Europe,orAustraliamay,ingeneral,beappropriatefortransitioneconomieswhilethecurrentstructurefoundinindustrialmarketeconomiesmaynotbe.ThetransitionofRussia'sagriculturalknowledgesystemmaythusfollowapathtowardwhichindustrialmarketeconomiesarealsomoving.SothevisionforRussia'sagriculturalresearchandeducationsystemmustbeorientedtowardthefuture.

TheproblemsRussia'sagriculturalresearchsystemfacesareespeciallyurgent.Agriculturalresearchisproperlyviewedasalong-

terminvestmentaninvestmentinacountry'sabilitytomeetfuturefoodneeds,exploitcommercialopportunities,orprotectenvironmentsandpeople.Butaswithanyotherhigh-returninvestment,thelossresultingfromadollarnotspenttodayismagnifiedmanytimesinthefuture.Withagriculturalresearchsystems,passiveneglectnotonlyreducesreturnsfromcurrentinvestments,italsoerodescapacity.ForRussia,thelossofresearchcapacityinbothphysicalandhumantermsposesoneofthegreatestthreatstofuturereturns.Whatisneededisactionnowhuman-scale,concrete,doablestepstolimitthelossesincapacity,todevelopworkablestrategiesforreformduringtransition,andtomakeneededinvestmentstosecureRussia'sagriculturalfuture.

Agriculturalpolicymakersmustbeawarethatpotentiallyhighratesofreturntoinvestmentinagriculturalresearchwillnotberealizedintheabsenceofreformsintheagriculturalresearchsystemandagriculturalsector.ThisreportassessesthecurrentsituationofRussia'sagriculturalknowledgesystem,withanexplicitemphasisonagriculturalresearch,andoutlinesasimpleconceptualmodeltoaddressthestrategicmanagementofagriculturalresearchduringthetransition.AspecificsetofrecommendationsismadethatcanbeimplementedquicklyandcancontributetoabetterunderstandingofhowRussia'sagriculturalknowledgesystemcanberehabilitatedandtransformedtoimprovetheefficiencyandproductivityoftheagriculturalsector.

3Russiahasmademajorprogressinstabilizingandreformingtheeconomyandtoalesserdegreeinreformingtheagriculturalsector.AnoverviewofthecurrentstatusofagriculturalreformsandperformanceoftheagriculturalsectorisprovidedinBrooks,Krylatykh,Lerman,PetrikovandUzun(1996),Mudahar(1996a,1996b),MudaharandPolyakov(1996),MudaharandSchaeffer(1996),MudaharandSahota(1996),andtheWorldBank(1992a,1994a,1994b).

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ChapterIIStatusandPerformanceoftheAgriculturalSectorDespitearichnaturalresourcebase,Russia'sagriculturalproductionperformancehasbeenfarbelowitspotential.Inmanyways,Russianagricultureisastudyincontrasts:

·Russiaoccupiesnearlyaseventhoftheearth'slandareaover1.7billionhectares.Yetonly220millionhectaresaredevotedtoagriculturalpurposes(about13percent)andofthat,about60percentisconsideredarable.Andmostofthearablelandissubjecttosomesignificantlimitationinadequaterainfall,excessivesalinityormoisture,limitedgrowingseason,ordifficultterrain.Only2millionhectaresofRussia'svastbeltofblacksoilshasadequaterainfallandgrowingconditions.

·Russia'sfarms,there-registeredstateandcollectivefarms,arehugebyNorthAmericanorEuropeanstandards.Yettheyviewithtinyprivatelyownedhouseholdplotsformarketshare.

·MostofRussia'sfoodprocessingsystemisspatiallydispersed,relativelysmallscale,andantiquated.Yetprocessingfirmscontinuetomaintaintheirmonopsonypowerinregionalcommoditymarkets,exactingrentsfromproducers,delayingpayments,andimpedingincentivesforreform.

·RussiahasmadeassignificantacommitmenttoagriculturalresearchandeducationasherEuropeanneighborsorNorthAmerica.YetRussia'sagriculturalproductivityandtechnologylagsignificantlybehindtheWest's.

·Sincetheearly1990s,Russiahasenactedasteadystreamofeconomicreformsintendedtofacilitateprivatesectorparticipation

andtotransformtheeconomyandtheagriculturalsector.Yetagriculturaloutputremainslowandcontinuestofluctuate,particularlylivestockproduction.

TheparadoxesthatcharacterizeRussianagriculturealsoestablishthecontextwithinwhichreformoftheagriculturalknowledgesystemmustoccur.ThefollowingoverviewofthestatusandperformanceofRussianagriculturefocusesonagriculturalorganization,production,productivity,technology,andresearch.

RestructuringProductionAgriculture

Fornearly70years,largestateandcollectivefarmshavebeenemblematicofRussianagriculture.Sincethecollapseofcentralplanning,however,severaldecreesandlawshaveestablishedanewlegalframeworkforprivatizingproductionagriculture.Theimpacthasbeenstrikingatleastonpaper.ByJanuary1996,stateownershiphadfallentoapproximately34percentofallland,andonly8percentofarablelandwascontrolledbystateagriculturalproductionenterprises.Transformedcollectivesoperatingasjointstockcompanies,limitedliabilitypartnerships,orwithrevisedchartershavebecomethedominantformofownershiporcontrol(Table2.1).

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Table2.1:AgricultureLandbyTypeofEnterprise,January1,1996Item TotalLand) AgriculturalLand(millionha)

(millionha) Total ArableMeadows Pastures

Totalland(territory) 1708.2 221.0 129.8 23.9 63.7Landusedbyownersandusersfor 694.6 209.6 127.6 20.1 58.6agriculturalproductionReservelandandforestry 843.4 9.0 1.6 3.3 4.0Landforotheruses 70.7 3.6 0.2 1.8 1.7

Landofagriculturalenterprisesand 544.7 171.2 113.2 13.6 42.8organizationsCollectivefarms 63.1 31.3 21.0 2.1 8.0Jointstocksocieties,agricultural

cooperativesandotherorganizations181.4 93.6 64.4 8.0 20.3

Statefarmenterprises 236.5 20.9 10.6 1.5 8.6Privatefarms 36.2a 10.4 7.5 0.7 2.1Personalhouseholdplots 5.8 5.4 3.4 1.7bCollectiveorchards 1.2 1.2 1.2Collectivevegetablegardens 0.6 0.6 0.6aIncluding17.1millionhaofcariboupasturesandforests.bIncludingpastures.

Sources:GoskomstatofRussia.

Agriculturalproductionenterprisesaregraduallyrestructuring(Figure2.1).In1990,almost99percentofarablelandwasunderstateandcollectivefarms,withtheremainder(about1.3percent)operatedashouseholdplots.By1996stateandcollectivefarmsaccountedforjust29percentofthearableland.Theremainingarablelandisownedandoperatedbycooperativesandjointstockcompanies(59percent),privatefarms(7percent),andhouseholdplots,includingcollectiveorchardsandvegetablegardens(5percent).Thenumberofprivatefarmsincreased

veryrapidlyfromabout4,400inJanuary1991to270,000inJanuary1994,buttheprocesshassloweddownsincethen.However,newlyemergingprivatefarmersarefindingitverydifficulttosurviveduetoeconomichardshipsandlackoffarmmachinery,inputs,credit,markets,andknowledge.

Thesedramaticchangesinlegalstructureandorganizationhavenotbeenaccompaniedbymeaningfulchangesinoperationormanagement.1Outputsharesofagriculturalenterpriseshavebeendecliningrelativetothoseofhouseholdplotsandprivatefarms(Figure2.2).Thissuggeststhat

1AdditionalinformationonrestructuringofstateandcollectivefarmsinRussiaanditsimpactontheiroperations,managementandproductivityisavailableinBrooks,Krylatykh,Lerman,PetrikovandUzun(1996),andBrooksandLerman(1995).Accordingtothem,mostrestructuredfarmsarestillmangedlikecollectivefarmsofthepast,butwithmoreadministrativeautonomyandlessfinancialsecurity.Furthermore,theresultsbasedonfarm-levelsurveyin1994/95indicatethatshareholdersareawareoftheirrightsbutperceivelittletangiblegaintoshareownership.This,ofcourse,islikelytochangeasagricultureproceedswithtransitionandbecomesrelativelymoreprofitableovertime.

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Figure2.1:ChangeinFarmOrganizationsinRussiafrom1990to1996

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Figure2.2:ChangeinOutputSharesforDifferentFarmOrganizationsinRussiafrom1990to1994

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privatizationandreorganizationofthestateandcollectivefarmshavenotcreatedtheincentivesnecessarytoincreaseproductionorimproveefficiency.

Theanalysisshowstwocleartrends.First,about40percentofagriculturalproduction(slightlylessforcropsandslightlymoreforlivestock)originatesprimarilywiththehouseholdplots(38percent)andprivatefarms(2percent),whichaccountforonlyabout12percentofthearableland.Agriculturalproductivityismuchhigheronhouseholdplotsthanontheformerstateandcollectivefarms.However,thehouseholdplotsproduceprimarilyfruits,vegetables,potatoesand,toalesserextent,livestockproducts.Theformerstateandcollectivefarmsaccountformostofgrain,sunflowerseed,sugarbeet,meat,milk,andeggs,themainstaplesinRussiaandthemainsourceofrawmaterialforagro-industry.Second,theformerstateandcollectivefarmsaccountfor78percentofarableland;ofthis,unrestructuredfarmsaccountfor29percentandrestructuredfarms,includingcooperativesandjointstockcompaniesfor59percent.Clearly,thelong-termfutureofagricultureinRussialiesnotasmuchwiththehouseholdplotsbutwithimprovingtheefficiencyandproductivityoflargefarms.Astheadjustmenttakesplaceovertime,theroleofhouseholdplotsinagriculturalproductionislikelytodecline.

ChangingCropSector

ShiftingCroppingPattern.Theareasownundercropshasdeclinedfrom115.5millionhectaresin1991to102.5millionhectaresin1995,an11percentdecline(Figure2.3).Inaddition,thecroppingpatternischanginginfavoroffruits,vegetables,potatoes,andhigh-valueindustrialcrops,suchassunflowerseed.Theareaunderfeedcropshasdeclinedsignificantly,from44millionhectaresin1991to32millionhectaresin1995.Thisdeclineisdueprimarilytotherapiddeclinein

livestockinventories.Aspartoftheeconomictransitiontoamarketeconomy,thedemandforfruitsandvegetablesisincreasingwhiledemandforlivestockproductsisdeclining.

DecliningCropYields.Cropproductionisdeterminedbysownareaandyields.Bothaggregatesownareaandsownareaundermajorcropshavedeclined,ashaveyieldsformostcropsexceptpotatoes,whicharegrownprimarilyonhouseholdplots(Figure2.4).AveragecropyieldsinRussiaaremuchlowerthanaverageyieldsintheUnitedStatesandCanada,whichhavesomesimilaritiesintheagroclimaticconditions.EventhoughpotatoyieldsinRussiaincreasedslightlyinthemid-1990s,theyarestillonlyabout29percentofaverageyieldsintheUnitedStatesand40percentofyieldsinCanada.Clearly,thereisalargepotentialtoimprovecropyields.

FallingInputUse.Oneofthemainreasonsfortherapiddeclineincropyieldshasbeenareductionintheuseofcriticalfarminputs.Mostfarmmachineryisinpoorcondition.Therehasbeenashortageofspareparts.Fuelsupplyhasalsobeenaseriousproblem,interferingwithtimelysowingandharvestingoperations.Fertilizerusehasdroppedfromabout11milliontonsofnutrientsin1990toabout1.4milliontonsin1994.Theuseofpesticides,fungicides,andherbicideshasalsodeclinedsignificantly.Themainreasonsforthisdeclineininputusehavebeenlackofavailabilityfollowingthecollapseoftheoldinputdistributionsystemandlackofcreditandhighpriceswheninputsareavailable.Althoughinputuseintheoldsystemwastoohightobesustained(frombotheconomicefficiencyandenvironmentalprotectionpointsofview)ithasnowdroppedtolevelsthatarenotadequatetomeetminimumcropnutrientneedsandefficientcropproduction.

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Figure2.3:ChangesinCroppingPatterninRussiafrom1990to1995

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GrainCrops

Non-GrainCrops

Figure2.4:ChangesinCropYieldsoverTimeinRussia

Source:Goskomstat.

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InefficientSeedSector.Thefoundationofanefficientcropproductionsystemisthesupplyanduseofhighqualityseed.TheseedsectorinRussiaisnotveryefficient(Table2.2).AverageseedratesaremuchhigherinRussiathanintheUnitedStates,mainlybecauseofpoorseedquality(lowgerminationrates)andpoorcropmanagementpractices.Thebulkoftheseedrequirementsismetbyproducersfromtheirownproduction.Becauseofthehighseedrateandlowcropyields,theamountofseedisamuchhighershareofindividualcropyieldsthan,forexample,intheUnitedStates.Clearly,improvementsinseedquality,aswellascropandlandmanagementpractices,havethepotentialforachievingsubstantialgainsintheformofreducedseedrequirements,highercropyields,lowerproductioncostsandimprovedagriculturalefficiency.

Table2.2:PerformanceIndicatorsfortheSeedSectorinRussia,mid-1990s

Crop SeedRateinRussiaas%ofUSA Seeduseas%ofProductionRussia USA

Wheat(winter) 298 11 4Wheat(spring) 237 21 4Barley(spring) 256 16 3Oats 247 18 8Corn(grain) 111 1 0.2Sunflower 160 1 0.4Potatoes 145 30 6

Source:Mudahar,Sampath,andPray(1997).

ShrinkingLivestockSector

Priortotheintroductionofreformintheearly1990s,thelivestocksectorwastoolargeandwassustainedprimarilybylargesubsidiestoproducersandconsumers.Withtheintroductionofreforms,thelivestocksector

andconsumers.Withtheintroductionofreforms,thelivestocksectorbegantoshrinkaslivestockinventoriesandlivestockproductivitydeclined.Outputoflivestockproductsdeclined41percentformeat,30percentformilkand29percentforeggsfrom1990to1995(Table2.3).

Table2.3:ProductionofLivestockProductsinRussia

(milliontons)LivestockProducts 1990 1991 1992 1993 1994 1995 %Changeover1990Meata 10.11 9.38 8.26 7.51 6.86 5.93 -41Milk 55.72 51.89 47.24 46.90 42.80 39.31 -30Eggs 47.47 46.88 42.90 40.35 37.48 33.71 -29

aCarcassweightforbeef,pork,poultryetc.,includingfat.

Source:GoskomstatofRussia,Mudahar(1996a)andUSDA(1995a).

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Livestockinventoriesdeclined16percentfordairycowsand54percentforsheepandgoatsfrom1990to1996(Table2.4).Livestockproductivityalsodeclinedsignificantlyoverthesameperiod,asindicatedbyyieldsperanimal,weightgain,feedconversionefficiency,andmortalityrate(Table2.5).Mostofthechangesreflectthecombinedimpactofpriceliberalization,subsidyreduction,poormanagement,andinefficienciesininputandoutputproduction.

Table2.4:LivestockInventoriesinRussia

(millionheadonJanuary1)Livestock 1990 1991 1992 1993 1994 1995 1996 %Changeover1990Cattle(includecows) 58.8 57.0 54.8 52.2 48.9 43.3 39.7 -33Cows 20.8 20.6 20.6 20.2 19.8 18.4 17.4 -16Hogs 40.0 38.3 35.8 31.5 28.6 24.9 22.7 -43Sheep&goats 61.3 58.2 55.3 51.4 43.7 34.5 28.3 -54Poultry 654.0660.0652.2568.2565.0507.8439.0-33

Source:GoskomstatofRussia,Mudahar(1996a)andUSDA(1995a).

Table2.5:LivestockProductivityandFeedConversionIndicatorsinRussiaIndicator Unit 1990 1994%Changeover1990Eggsperlayer Number 236 214 -9Milkpercow kg 2731 2195 -20Annualweightgainpercattlea kg 121 98 -19Annualweightgainperswinea kg 118 101 -14FeedusepercenterofweightgainCattlea kg 13500 18.9 40Swinea kg 8300 12.5 51Feeduseper100kgofmilkproduced kg 1400 1.7 21Mortalityrate(%ofherd)Cattlea % 3.0 6.1 103Swinea % 6.9 15.1 119

Swinea % 6.9 15.1 119Sheep/goata % 7.9 13.7 73

aStatesectoronly.

Source:AdaptedfromGoskomstatofRussiaandUSDA(1995a).

FallingAgriculturalInvestment

Aspartofthemacroeconomicstabilizationprogram,budgetallocationstotheagriculturalsectordeclinedsubstantiallyafter1991fallingfrom37.4billionrublesin1991to3.9billionrublesin1994(Table2.6).Thebudgetallocationswereusedprimarilytofinancelargesubsidies,currentexpenditure

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(suchassalaries,benefits,supplies,andotheroperationsandmaintenanceexpenditures),andcapitalinvestments.Whilethepreviouslevelsofbudgetallocationwouldbedifficulttojustify,agriculturalexpendituresince1991hasdeclinedsodrasticallythatitislikelytohurtprospectsforimprovingagriculturalefficiencyandproductivityandthelong-termpotentialforagriculturalproductioningeneral.

Table2.6:PublicSectorAgriculturalExpenditureinRussia(billion1991rubles)TypeofExpenditure 1985 1990 1991 1992 1993 1994

Totalagriculturalexpenditure 28.9 39.5 37.4 13.0 8.1 3.9Livestockbuildings 4.2 3.1 3.0 0.8 0.5 0.3Landamelioration 3.9 2.6 1.5 0.6 0.4 0.2Electrification 0.7 0.9 0.7 0.7 0.5 0.2Plantations 0.3 0.2 0.2 0.07 0.05 0.06Tractors,machinery,andequipment 11.6 15.3 14.3 2.8 2.2 0.9

Source:GoskomstatofRussia.Sel'skoeKhoziaistvoRossii1995.

PersistentSectoralInefficiency

Byanystandardofefficiency,Russianagriculturefallsshort.Themainreasonsforlowproductivityarethefollowing:

·limitedentrepreneurialandeconomicskillsofagriculturalworkersandmanagerssuitabletoamarketeconomy

·collectiveownershipandpoorlydefinedpropertyrightsthatprovideweakincentivestomanagersandworkers

·lackofcompetitionintheinputandprocessingindustries

·outdatedagriculturalproductionandprocessingtechnology

·pricedistortionscausedbygovernmentinterventionparticularlysubsidiesonkeyinputsorincompletepriceliberalization

·inadequateruralinfrastructureforstorageandtransportofcommoditiesfromfarmtomarket

·lackofeconomic,market,andlegalinformation.

2.14.ThecumulativeeffectoftheseandothershortcomingshasbeenpersistentinefficiencyinRussianagriculture.Figure2.5illustratessomeoftheproblemsforwheat,thedominantgraininRussia,usingwheatyieldsfortheformerSovietUnionfor1960-95asaproxy.Russianwheatyieldshaveshownsignificantvariability,withaslowupwardtrendof0.02tonsperhectareperyear.Bycomparison,Canadahasshownapproximatelythesamerateofyieldincrease,butthegapbetweenthem

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Figure2.5:WheatYieldsfortheFormerSovietUnionandCanada(1960-96)

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hasbeenaround0.4metrictonsperhectareformuchoftheperiod,thoughithasbeenwideningsincethebreak-upoftheSovietUnion.Thegappartiallyreflectsdifferencesinclimateandsoils,butmostlyitisduetodifferencesintechnologyandeconomicincentives.

RussianlivestockproductivityalsolagsbehindthatinEuropeandNorthAmerica.Outputlevelsinmilkandswineenterprisesare60percentthoseintheWest.FeedefficiencyincattleandswineproductionisjusthalfthatinEurope.GiventhehistoricalimportanceofmeatintheRussiandietandthedecliningoutputlevelsinfeedgrainsandoilseeds,lowfeedefficienciesinlivestockproductionareparticularlyworrisome.

TheseproductivitygapsinRussianagriculturehavepersistedforalongtime.ButtheproductivepotentialofRussianagricultureshouldnotbeoverlookedsimplybecauseofthesector'spastperformance.Withimprovedtechnologyandstrongereconomicincentives,agriculturaloutputinRussiacanbesignificantlyincreased.However,thiswillrequirenotonlyimprovedagriculturalincentivesandpoliciesbutalsoimprovedaccesstomoreefficientagriculturaltechnology.Thustheneedforthegenerationanddisseminationofappropriateagriculturaltechnologyisgreat.

ImplicationsforAgriculturalResearch

ReformofRussia'sagriculturalknowledgesystemmustbeplannedandimplementedagainstthisbackdropofmassivestructuralchange,decliningoutput,andlaggingproductivity.Theurgencyofthesectoralreformandefficiencyproblemswilllikelyswampattemptstofundorreformagriculturalresearchandeducation.Russianagriculture'sreputationoflowproductivityandinefficiencyisnotlikelytoattractinvestors(localorforeign)inresearchpublicorprivateatthisstage.However,thesearetheconditionsunderwhichthecaseforreform

andimprovedagriculturalresearchmustbemadetoprivateinvestors,internationalfinancialinstitutions,bilateraldonors,andnationalpolicymakers.

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ChapterIIIStatusoftheAgriculturalKnowledgeSystem

StructureandOrganization

Althoughthisreportfocusesprimarilyonagriculturalresearch,itisimportanttoplacethisactivitywithintheoverallstructureofRussia'sagriculturalknowledgesystem.Theagriculturalknowledgesystemisdefinedbroadlytoincludeagriculturaleducation,training,retraining,extension,andtechnologytransferaswellasagriculturalresearch.Bothpublicandprivatesectorinstitutionsplayaroleinstrengtheningtheagriculturalknowledgesystem.

Russia'sagriculturalknowledgesystemwasdesignedspecificallytoserveagricultureunderthesystemofcentralplanning(OECD1994).Itstillretainsmostofitsoriginalcharacteristicsandobjectives:

·generateanadequatesupplyofsemi-skilledandskilledagriculturalworkersforspecificindustriesorenterprises

·generateanadequatesupplyofagriculturaltechniciansandmanagersforagriculturalenterprises

·providetheinstitutionalcapacitytoretrainandimprovetheprofessionalskillsofworkers,technicians,andmanagers

·developandadaptagriculturalproductionandutilizationtechnologiesthroughresearch

·transferthesetechnologiesdirectlytoproductionorprocessingenterprises

·providepolicyanalysisandinformationtocentralplannersandgovernmentofficials

·produceanadequatesupplyofagriculturalscientistsandeducators.

ManagementandoperationalresponsibilityfortheRussianagriculturalknowledgesystemissharedbyatleastthreefederalagenciestheMinistriesofEducation,AgricultureandFood,andScienceandTechnologyPolicy(Figure3.1).TheprimaryinstitutionalbuildingblocksforRussia'sagriculturalknowledgesystemareagriculturalvocationaltrainingschools,technikumsoragriculturalcolleges,agriculturalhighereducationsinstitutions,scientificresearchinstitutes,andretraininginstitutes.However,theconsiderableresearchactivitiesoftheRussianAcademyofAgriculturalSciencesinstitutesfalloutsidethejurisdictionofhighereducation.TheeducationalpathwaysthatcanbefollowedbyqualifiedstudentsaresummarizedinFigure3.2.

Agriculturalvocationaltrainingschools.Studentstypicallyentertheagriculturalvocationaltrainingschoolsingrade8or9andcompletethetrainingprogramwithacertificateasaskilledagriculturalworkerinoneofthe200to300professions.Theschoolsarefinancedattheoblastandrayonlevel.In1992,therewerenearly2200agriculturalvocationalschoolsinRussia.However,enrollment,aswellasthenumberofofferedprofessions,havefallensharplysince1992.

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Figure3.1:AgriculturalKnowledgeSysteminRussia

Source:BasedonOECD(1994).

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Figure3.2.AgriculturalEducationSysteminRussia

Source:OECD(1994).

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Tekhnikumsoragriculturalcolleges.Thereareapproximately300tekhnikumsoragriculturalcollegesprovidingsecondaryvocationaleducation.Graduatesoftheseprogramsmayenteracareerasanagriculturaltechnicianorpursuefurthereducation.Since1992,thetekhnikumshaveintroducednewcurriculathatfocusonretrainingrecentgraduatesinmanagementandeconomics.Curriculumandfundingforthetekhnikumsarecontrolledlargelyatthefederallevel.

Agriculturalhighereducationalinstitutions.TheagriculturalhighereducationinstitutionsresembleagriculturalcollegesoruniversitiesinEuropeandtheUnitedStates.Studentsenteraftercompletinggeneraleducationoraftergraduatingfromatekhnikumoragriculturalcollege.Studentstraditionallyreceivedadvanced,butverynarrowlyfocusedtrainingrelatedtoaspecificoccupation,suchasacropproductionmanagerorfoodprocessingspecialist.Thereareapproximately60agriculturalhighereducationinstitutionsinRussia,consistingof8universities,2nationalacademies,and53institutes.AcompletelistofagriculturalinstitutesofhighereducationinRussiaisprovidedinAnnexA.Althoughtheinstitutionstendtoemphasizeundergraduateeducation,theymayalsoofferpostgraduatedegrees.Manyoftheirfacultymembersconductagriculturalresearchaswell.

Scientificresearchinstitutes.Agriculturalresearchisconductedinover300researchinstitutesacrossthecountry.MostoftheresearchinstitutesfallunderthedirectionoftheRussianAcademyofAgriculturalSciences(RAAS).However,approximately80aresupervisedbytheMinistryofAgricultureandFood.ThisgroupofresearchinstitutestendstobemorenarrowlyfocusedthanthoseunderdirectionoftheRAAS.Inaddition,thereareafewscientificresearchinstitutesundertheRussianAcademyofSciences(RAS)thataddressruraloragriculturalproblems.Severalofthescientificresearchinstitutesalsoconferadvanceddegrees.Mostscientificresearchinstituteshaverudimentarytechnologytransferandadvisory

capabilities.AlistofthemainagriculturalresearchinstitutesinRussiaisprovidedinAnnexB.

Retraininginstitutes.RetrainingorupgradingprofessionalskillshasbeenanimportantelementofRussia'sagriculturalknowledgesystem.In1992severalregionalretraininginstituteswereestablishedbytheMinistryofAgricultureandFoodbymergingthecontinuingeducationprogramsofseveralagriculturalacademies.Theretraininginstitutesoffershortcoursesinupgradingtechnicalagriculturalskillsandknowledge.However,theyhavealsointroducedtrainingprogramsinfarmmanagement,accounting,agriculturallaw,andotheremergingfields.Theretraininginstitutestypicallyhaveonlyasmallresidentstaff.Theyfunction,toalargeextentaseducationalbrokersorganizingshortcourses,recruitingstudents,andhiringinstructorsfromacademies,tekhnikums,ortheprivatesector.

MeetingDemandforHigherEducation

Undercentralplanning,educational,training,andprofessionalimprovementneeds,werefairlypredictableandundercompletecontrolofthestate.Theeducationsystemwasdesignedtotrainpeopletofunctionunderverynarrowjobdescriptions,andemploymentwasguaranteedforlife.ThisorientationdifferedmarkedlyfromthatofEuropeanandNorthAmericaninstitutions,whichareorientedtowardjobmobilityandmultiplecareerpaths.

TheMOAFhasinitiatedaseriesofstudiesundertheauspicesoftheScientificResearchInstituteofSocialProblemsintheAgro-IndustrialComplexondemandforagriculturalmanagersandspecialistswithahighereducation.Thepreliminaryresultsindicatethatdemandwillslowlydeclinefrom37,000specialistsin1995to34,000by2005.Theexpectedsupplyis25,000-30,000graduateseachyear.Thisestimatedsupplyreflectsadropoutrateof25-30percentandthefactthatonly30percentofthestudentsgraduatingwithanagriculturaldegreeactuallyenteranagriculturalprofession.Preliminaryreportsby

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theMinistryindicatethatinearly1996over130,000agriculturalgraduatesunderage30wereunemployed.However,theMinistryconcludedthathighereducationforagriculturewouldstillneedtooperatenearcurrentlevels.

AgriculturalResearchManagement

IntheformerSovietUnion,agriculturalresearchmanagementwastheresponsibilityoftheV.I.LeninAll-UnionAcademyofAgriculturalSciences(VASKhNIL).Thishugescientificcomplex,establishedin1929,playedtheroleofresearchinstitute,fundingagency,professionalsociety,andextensionservice.TheRussianAcademyofAgriculturalSciences(RAAS)originatedfromVASKhNILandwasformallyestablishedin1992.

RAASmanagessome235cropandlivestockresearchinstitutesandexperimentstations.Ofits28,000researchers,700holdtheDoctorofsciencedegreesand8,700candidatesofsciencedegrees.Morethan400state-runexperimentalfarmsandnearly100designoffices,seedplants,andagroprocessingfactoriesareundertheRAASumbrella.Approximately250,000peopleareemployedinlaboratories,fields,farms,andshopsthatRAAScontrols.About1.7millionhectaresofarableland(andtotallandholdingsof7.6millionhectares)arepartofitsexperimentalfarmnetwork.RAASlandholdingsannuallyproducelargequantitiesofseedsforcereals,vegetables,andpotatoes;fruitcuttings;andpedigreeyoungstock.

ThemaintaskoftheRAASresearchersistoprovidescientificsupportforRussia'sagroindustrialcomplex.However,someofitsinstitutesarealsoresponsibleforstafftraininganddoctoralthesispreparation,supportedbyresearchwork.Thisinvolvessome600researcherseachyear.Fiftyspecializedboardsareresponsibleforconferringdoctoralandcandidatedegrees.SomeRAASresearchersareinvolvedasteachersinthehighereducational,training,andqualificationimprovementsystem,andthe

educational,training,andqualificationimprovementsystem,andtheleadingresearchersdeliverlecturesatuniversities,academies,andotherinstitutes.AnestimateofRAASinstitutes,staffingandfundingallocationsfor1991/92ispresentedinTable3.1.

Table3.1:RAASResearchInstitutes,Staffing,andBudgetsin1991/92TypeofResearch

InstitutesNumberofResearch

InstitutesResearchStaffa

BudgetProportions

Livestock 54 10,800 30Crops 181 19,200 70Total 235 30,000c 100

aMostoftheresearchstaffarewelltrainedandholdPh.D.,doctorofscience,candidateofscience,orM.Sc.degrees.bBudgetsmaynothavebeenreceivedinfullbyinstitutions.cEstimatedtohavebeenreducedby40percentin1993.

Sources:OECD(1994),MOAF,andWorldBankestimates.

AcomparisonofagriculturalresearchpersonnelinRussia,UnitedStates,andtheFederalRepublicofGermanyshowsthatin1991,therewere0.46researchersforevery$1millioninagriculturalGDPinRussia(almostthreetimes),0.14researchersintheUnitedStatesand0.16researchersintheFederalRepublicofGermany(Table3.2).Russiahadamuchlowershareofresearchersworkingintheuniversitysystem,however,andtheuniversityfacultydevotedrelativelylesstimetoresearchinstitutes.ResearchintheprivatesectorwasalmostnonexistentinRussiabutitisbeginningtoemerge.

Table3.2:Full-timeEquivalentAgriculturalResearchPersonnel,1991Category Russia

(1991)USA(1991)

FederalRepublicofGermany(1989)

Researchinstitutes 23144 3687 13000Universities ? 7525 2410Privateindustry 0 14188 404Total 23144 25400 4114

Researchers/100,000haofarableland 175 136 57Researchers/millionUS$AgGDP 0.46 0.14 0.16

Source:PrayandAnderson(1997).

ResearchmanagementunderRAAShaschangedrelativelylittlesincethedaysofVASKhNIL.Intheory,researchersidentifypotentialprojectsandsubmitthemtoRAASforapprovalandfunding,alongwithaneconomicjustificationfortheresearchhowtheprojectisexpectedtoimproveRussianagriculture.Inpractice,however,researchmanagementtendstobedrivenfromthecenter,sinceresearchprioritiesandfundingarecontrolledthere.

ResearchmanagementunderRAASischaotic.Theoriginalstructureforresearchmanagementhasremainedinplace,butthefundinghasnot.AtypicalresearchinstituteunderVASKhNILwouldhavereceived80-95percentofitsbudgetdirectlyfromMoscow.Theremainderwouldhavecomefromproduct

budgetdirectlyfromMoscow.Theremainderwouldhavecomefromproductsales,fees,orresearchcontractswithproductionorprocessingindustries.Theseresearchcontractsservedbothasamechanismfortechnologytransferandasasourceofgraduatestudentresearchprojects.Overthepast2-3years,fundingsupportfromRAAShasfallensignificantlyoftento50-70percentoforiginallevels.Thereducedfundinglevelshavenotbeensufficienttocoverevenstaffsalaries.Operatingbudgetstoperformresearcharealmostnonexistent.TheRussianagriculturalresearchcommunityisfightingforitssurvival.

Thefundingcrisishastriggeredawiderangeofresponses.Someresearchershavequitforbetterpayingjobsintheprivatesector,frequentlyoutsidetheirfieldofexpertise,andsomehavetakenonpart-timejobsoutsidetheirowninstitutes.Othershavebeguntoteachpart-timeatagriculturalacademiesorretraininginstitutes.Someresearchinstituteshavemergedwithotherinstitutesorteachingacademies(Box3.1),andsomehaverefocusedtheirresearchprogramsontopicsoflocalinterest,withanaccompanyingshiftinfundingfromfederaltooblastsources(Box3.2).SomeresearchinstitutesareaggressivelyseekingresearchgrantsfromtheMOAForothersources,includingtheprivatesector.

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Researchinstitutesinurbancentersfrequentlyrentbuildingandlaboratoryspacetotheprivatesector,whileresearchinstituteswithexperimentalfarmsareincreasingagriculturalproductionontheseplotsandsellingittohelpsupportresearchandstaffremuneration.

Box3.1:InstitutionalReformoftheAgriculturalKnowledgeSysteminOmskOblast

AgriculturewasexpandedinOmskOblastinwesternSiberiaduringthenewlandprogramsofthe1950sand1960s.Agricultureisanimportantindustryandhasalwaysbeengivenemphasisbytheoblastadministration.TheagriculturalknowledgesysteminOmskwastypicalofthatinmanyotheroblastsaresearchinstitute,twoagriculturalacademiesofhighereducationreportingtoMOAF,andaretraininginstitute.InApril1994,threeoftheeducationalinstitutestookanunusualsteptheymerged.OmskStateAgrarianUniversitywasformedbycombiningOmskAgriculturalInstituteofHigherEducation,OmskInstituteofVeterinaryMedicine,andOmskInstituteforRetrainingAgricultureSpecialists.Themergerwasundertaken,inpart,toaddressthefinancialproblemsexperiencedbyallthreeinstitutions.Butitwasnotanewidea.Instituteadministratorsandoblastofficialshadbeendiscussingamergerforthepast10years.Themergerhasledtoincreasedefficienciesinteachingcommonsubjects.Andthemergedinstitutionshavebeenabletointroducenewsubjects,suchasmarketeconomics.Themergerhasnotbeeneffortless,however,andthethreeinstitutionsstilltendtorefertothemselvesasseparateentitiesmuchlikecollegeswithinauniversity.Butthemergerwasfacilitatedbecauseallthreeinstitutionshad,historically,reportedtoMOAF.Thishasbeenastepintherightdirectionsinceithasreducedoverlapoffunctions,ledtobetterutilizationofresources,andimprovedcostconsciousness.TheSiberianResearchInstituteforAgriculture(SRIA)isthemajorresearchinstitutioninOmskOblast.ItreportstoMOAFandhasnotyetformallymergedwiththehighereducationalinstitution.However,over50percentofSRIA'sresearchersnowteachatOmskStateAgrarian

University.SRIAisalsohavingtofacefundamentalchoicesaboutitsresearchprogram.Inthepast,someresearchfocusedondesigningirrigationsystemsforKazakhstan.Thisneednolongerexits.Theinstituteisattemptingtoturnitsattentiontoissuesoflocalinteresthorticulture,forexample.OmskStateAgrarianUniversityappearstobewellonitswaytocombiningtheresearch,teaching,andextensionfunctionsfoundatlandgrantuniversitiesintheUnitedStates.

Thisprocessofaccommodationtoreducedfundinglevelshasnotresultedinstrongresearchprogramsdesignedtomeetfutureagriculturalneeds.Rather,agriculturalresearchandresearchmanagementinRussiaareindisarrayandatrisk.Theoldsystemofprioritysetting,funding,andoversightisnotappropriateforRussia'stransformationtoamarketeconomy.Themoraleoftheagriculturalsciencecommunityisextremelylow.Thecurrentstateofcrisismaychangeindividualattitudestowardagriculturalresearch,butitwillnotnecessarilyleadtoadesirableoutcome,intermsofbothresearchprioritiesandresearchproductivity.

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Box3.2:ShiftingFundingandShiftingPrioritiesTheScientificResearchInstituteofAgriculturefortheSoutheastRegion(SRIASE)istheVolgaregion'spremierwheatbreedinginstitute.Establishedin1909,SRIASEhasaverygoodreputationfordevelopinghigh-qualitycultivarsofdurum,hardspring,andhardwinterwheats.Thesecultivarsareseededonmillionsofhectaresthroughoutthisregion.In1989,81percentofSRIASE'sbudgetcamefromthefederalgovernmentthroughVASKhNIL.Theremaining19percentcamefromitsownfundsearnedthroughthesaleofseedandfarmproduction.In1993,SRIASEbeganreceivingsupportfromtheoblastgovernmentabout16percentofitsbudget.Ayearlater,theoblastwasprovidingnearly40percentofthebudget,almostequaltothefederalcomponent.By1995,theoblastcontributionwasapproximately50percentofthetotalbudget.Asaconsequenceoftheoblast'scommitmenttoresearch,SRIASEhasbeensparedsomeoftheseverefinancialdifficultiesexperiencedbyotheragriculturalresearchinstitutes.Howdidthischangeoccur?ItwastheresultofaneffectiveworkingrelationshipbetweenSRIASE'sadministrationandtheoblastgovernment.However,SRIASEhasalsoredirecteditsresearchprogramtofocusmoreontheneedsofSaratovOblast.Ithasbecomemoreappliedandproblem-oriented.Researchontillagesystemsanderosioncontrolhasincreased.Andlinkageswithextensionandhighereducationinstitutionshavebeensignificantlystrengthened.Inaddition,SRIASEhasdivesteditselfofexperimentalfarmsinneighboringoblasts.ThechangesinitiatedbySRIASEareveryconsistentwithchangesoccurringinnationalagriculturalresearchsystemsthroughouttheworldincreasinglocalfundingandaccountabilityandsolvingrealproblemsfacedbycommercialagriculture.

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ChapterIVChallengesFacingtheAgriculturalResearchSystem

AttributesofaModernAgriculturalResearchSystem

ThefundamentalchallengefacingRussia'sagriculturalresearchsystemistotransformitselffromasystemdesignedtoworkundercentralplanningtoonethatwouldworkundermarketconditionsanextremelydifficultprocess.ButitwouldbeimprudentforRussiatochooseanyotherpath.Russia'sinvestmentinitsentireagriculturalknowledgesystemissignificant.Thereisgreatpotentialforinstitutionalreformifhumanandfinancialobstaclescanbeovercome.However,merelypreservingandstrengtheningtheexistingsystemisnotanoption.

Itwouldalsonotbeprudenttoselect,forexample,anationalagriculturalresearchsysteminNorthAmericaorEuropeandsimplypatternRussia'ssystemafterit.Russia'sagriculturalresearchsystemmustreflectitsuniquehistory,resourcebase,andneeds.Inaddition,thenationalagriculturalresearchsystemsinmostcountriesarethemselvesundergoingscrutinyandreform,makingthemamovingtargetratherthanastaticmodeltobereplicated.ItisextremelyimportantforRussianstounderstandthedirectionsofchangeaswellasthelikelycharacteristicsoftransformedagriculturalresearchsystemsinotherdevelopedcountries.Basedoninternationalexperience,ByerleeandAlex(1998)provideasummaryof''goodpractices"forresearchpolicyandresearchmanagementineffortsforstrengtheningnationalagriculturalresearchsystems.

Someofthemajorchangesoccurringinnationalagriculturalresearchsystemsaroundtheworldincludethefollowing:

·increasedemphasisoncosteffectivenessofagriculturalresearch,oftenrequiringreductionsinstaffandstreamliningofbureaucracies;

·resourcecommitmentsbasedonanticipatedappliedresearchoutcomes;

·increasedinvolvementbyusersofresearchindecision-making,includingresourceallocation,privatesectorparticipation,andreductionofgovernment'srole;

·moreaccesstoresearchresourcesbythoselikelytobenefitfromitsoutcomes,includingfarmers,processingfirms,andseedproducers;

·consolidationofagriculturalresearchactivitiesinselected,well-equippedregionalcenterswithappropriatefinancialsupport,physicalequipment,andhumanresourcestolinkresearcherswithmajorstakeholders,educators,producers,processors,marketers,andconsumers;

·responsibilityandsubstantialautonomyformanagementofresearchinmaincenters,withpolicyandfundingbodiesprovidingonlyoverallguidelinesonprogramsandoutcomes;

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·fundingofspecialresearchinstitutesfornational-interestprojectsandmajornationalindustries,withfundsincreasinglysuppliedfromindustryand,inmanycases,managedcompetitively;

·shiftfrombasictoappliedresearchwhileensuringpublic-goodlinkagebetweenbasicandappliedresearch,withsuchresearchactivitiessupportedbygovernment.

Porter(1990)makessomehelpfulobservationsaboutthecharacteristicsofeffectivescienceandtechnologyandthedevelopmentofnationalcompetitiveadvantage,basedonindustrialcountryexperience:

·Researchisconsistentwiththenation'scompetitiveadvantageitadvancesclustersofindustries.Tosomedegree,researchseekstoretainandexpandhigh-performingindustriesalreadyoperatinginthecountry.

·Researchislocatedprimarilyinresearchuniversitiesratherthangovernmentlaboratoriesorresearchinstitutes.Universityresearch,becauseofinstitutionalopennessandindustrycontact,generallyoutperformsspecializedgovernmentresearchinstitutes.

·Researchemphasisisgiventotechnologiesthathavecommercialrelevance.

·Stronglinksexistbetweenindustryandtheresearchcommunity.Theselinksmaytaketheformofspecializedresearchinstitutionsdevotedtospecificindustriesorclusters,researchcontracts,orformaltechnologytransfermechanisms.

·PrivateR&Disencouragedthroughdirectincentivesorintellectualpropertyinstitutions.

·Sciencepolicyencouragesinnovationratherthanprovidingextensiveprotectionofpropertyrights.Thissuggestsabalance

betweenprotectionandinnovationincentives.

ThesecommondirectionsofchangealsoimplyasetofcommoncharacteristicsforRussia'sagriculturalresearchsystem.Inthefuture,Russia'sagriculturalresearchsystemwilllikelybemore:

·decentralized,withincreasedlocalautonomy;

·accountabletokeystakeholders;

·demanddrivenandresponsivetoclients;

·efficient(rightsized,flexible,entrepreneurial,andcoordinatedwithotherinstitutions);

·linkedwiththeglobalresearchcommunity;

·sustainable,initsabilitytoproducenewscientists,maintainanappropriatefoundationinbasicsciences,generateacceptableratesofreturn,andacquireadequatefundinglevels;

·coordinatedandcomplementarywithprivateresearchentities;and

·integratedwithmultipletechnologytransferandeducationalinterfaces,bothpublicandprivate.

ThisdescriptionhighlightstheexpectedcharacteristicsofRussia'sagriculturalresearchsystem.Nothing,however,hasbeensaidabouthowtheRussianagriculturalresearchsystemachievesthesegoals.Theprocessoftransformationisfraughtwithuncertainty.Themacroeconomicandpoliticalenvironment,whichiswelloutsidethecontrolofRussia'sagriculturalresearchmanagers,will

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significantlyinfluencethesuccessofmanyreforms.Moreimportant,fewmodelsofinstitutionalreformthatarerelevanttoRussia'sconditionsexist.Transformationstrategiesmust,therefore,beundertakeninsuchawaythatinstitutionallearningcanoccur.Thiswilltaketimeandmoneytoachieve.

HowDoesRussia'sResearchSystemMeasureUp?

Inmanycountries,publicagriculturalresearchsystemsarebecomingmoredemand-driven,efficient,andcloselycoordinatedwiththeprivatesector.Ifthesecharacteristicscanserveasabenchmark,itisclearthatRussiahasalongwaytogo.Transformationstrategiesneedtobebasedonaclearanalysisofthecurrentsystem'sstrengthsandweaknessesandtheopportunitiesandthreatsitfacesnowandinthefuture.

StrengthsandOpportunities

ThedifficultchallengesfacedbyRussia'sagriculturalresearchsystemshouldnotobscureitsmanystrengths,assets,andopportunities:

·Russia'sagriculturalresearchsystemisextensiveandhascomparativelyhighlevelofinvestmentinhumanandphysicalcapital.

·Russia'sagriculturalresearchsystemisdistributedthroughoutitsmajoragroclimaticzones.Itwasdesignedtobedecentralizedandclosetostakeholders.

·Thebasictrainingofitstechnicalagriculturalscientistsisgood.Fundamentalskillssuchasmathematics,statistics,chemistry,andphysicsarewelldeveloped.

·Agriculturalresearchersinregionalinstitutionshavealongtraditionofenteringintojointprojectsorconsultancieswithagriculturalenterprises.Thiscanformafoundationformoreeffectiveproblem

recognitionandtechnologytransfer.

·Despitelowsalaries,dwindlingoperatingfunds,andisolationfromtheworldscientificcommunity,manydedicatedRussianagriculturalscientistscontinuetoworktheirtradeasbesttheycan.

·Russia'sstockofagriculturalresearchproductshasnotbeenwidelysharedwiththerestoftheworld.Thepotentialforcollaborationandmutualbenefitinresearchwithotherscientists,publicorprivate,aroundtheworldhasscarcelybeenexplored.Thisstockincludesknowledge,expertise,newtechnologiesaswellasdata.

·Therearemanyreform-mindedinstitutionsandindividualsinRussia'sagriculturalresearchsystem,andmanypositiveexamplesofinstitutionalinnovationandreform.Manyofthereforms,suchasincreasingcontractresearch,aredrivenbyfinancialnecessity.Others,suchasredirectingresearchawayfromminorcropsandirrigationtoworkonimprovedtillagesystemsanderosioncontrolpractices,arebeingdrivenbyscientists'responsetoclientdemands.

·Manyagriculturalresearchersandinstitutionsareseekingcollaborativearrangementswithforeignuniversities,governmentagencies,andprivatefirms.Thesearenewactivitiesfor

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manyRussianscientists.Despitethenoveltyoftheserelationships,however,theentrepreneurialdrivetocreateopportunitiesinresearchisclearlyevident.

·ManyRussianagriculturalresearchinstitutescontrolextensivelandholdings.Theseassetsmayformthebasisforreal"landgrant"institutions.Well-managedfarmscanprovideneededcashflowstosupportresearchactivities.Furthermore,itmaybepossibletosellexcesslandandreinvesttheproceedsinneededresearchfacilitiesorasanendowmentforfinancingresearch.

·Sincetheearly1990s,thefederalgovernmenthasdevolvedmanyfinancialdecisionstoregionalgovernments.Theoblastsnowhaveauthoritytotaxandspend,animportantstepformovingagriculturalresearchclosertostakeholders.

WeaknessesandThreats

ThefundamentalweaknessoftheRussia'sagriculturalresearchsystemisthatitcannotbefinanciallyorpoliticallysupportedandsustainedasitiscurrentlyconfigured.Manyofitsweaknessesarelegaciesofcentralplanningthatweakenthevitalityoftheagriculturalresearchsystem:

·Centralizedmanagementisstillthenorm.ResearchmanagersandscientistsarelargelyaccountableandresponsivetothecentertoMOAFandRAASratherthantoendusers.Onlytotheextentthattopadministratorscorrectlyanticipateenduserneedscanthecurrentsystembeviewedasdemanddriven.

·TheorganizationofRussia'sagriculturalresearchsystemisextremelycomplex.Scientificcouncils,boards,andcommitteesabound.Theeffectivenessofthissysteminestablishingappropriatepriorities,incentives,andoversightisquestionable.

·Thesystemappearstohaveagreatdealofoverlapandduplicationofresponsibilitiesandalackofcoordinationamongresearchinstitutesaswellasinstitutionsofhighereducationwithresearchprograms.Duplicationisdifficulttopinpointinanynationalagriculturalresearchsystem,butthesheersize,isolation,andlackoflocalaccountabilityinRussiawouldsuggestthatduplicatedeffortislikely.

·Researchhasfocusedonincreasingprimaryagriculturalproduction.Researchobjectivestendedtobequota-driven,withlittleregardforeconomicefficiency,productquality,environmentalconsequences,orthesafetyofagriculturalworkers.Thisorientationisstillevidentthroughoutthesystem.

·Little,ifany,researchcapabilityexistsinagriculturaleconomics,agribusinessmanagement,orrelatedsocialsciences.Thisfactremainsdespitethelargenumberofeconomistsworkinginseparateresearchinstitutesinmanyoblasts.Forideologicalreasons,therehadbeenlittlecontactbetweenRussianandwesternagriculturaleconomistsinthepast.Thetwogroupsprobablyshareaknowledgeofconstrainedoptimization.Beyondthat,however,thereappearslittleinthetrainingororientationofRussianeconomiststoallowthemtotackletheproblemsofmarket-basedagricultureorthenecessarytransition(Box4.1).

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Box4.1:ClosingtheSkillGapinEconomicsEconomistsemployedinRussia'sagriculturaleconomicsresearchinstituteshavehadlimitedexposuretomodemmicroeconomictheory,thefoundationofagriculturaleconomics.Withoutmodernmicroeconomictheoryandeconometrics,aswellasahealthydoseofeconomicintuition,RussianeconomistscannotfunctionatthesameleveloftheirWesterncolleaguesbecausetheylackthescientificskillstoexamineproblemsincommoditymarketing,technologyassessment,industryperformanceandcompetition,finance,riskmanagement,trade,andagriculturalpolicy.Russianeconomistsweretrainedinaccounting,labormanagement,mathematicalprogramming,statistics,law,andMarxisteconomictheory,valuablecomponentsofaneconomist'stoolkitbutnotsufficient.

Russianeconomistsalsohavelimitedknowledgeofmacroeconomics,itslinkwiththeagriculturalsector,intersectoraleconomiclinkages,andtheimpactofmacroeconomicstabilityondecision-makingandprofitabilityatthefarmandenterpriselevel.Knowledgeofmoderntheoryofeconomicgrowthandinternationaltradeisessentialfordesigningstrategiesforagriculturaldevelopment,especiallyinthecontextoftransitiontomarketeconomy.Theseskillgapscanonlybeclosedwithin-depthtraining,ampleaccesstoWesterneconomicliterature,andupgradingofcomputersandappropriatesoftware.

·Agriculturalscientistshavehadalmostnoexposuretoconceptsinagriculturaleconomicsorfarmmanagement.Limitedeconomicliteracymakesitdifficultforthemtounderstandincentivesforfarmerstoadoptnewtechnologies.Consequently,thedesignattributesofnewproductiontechnologiesdonotreflecttherealitiesofdecentralized,profit-orientedfarmmanagement.

·Researchcapacityinutilization,foodscience,storage,transportation,logistics,andmarketingisrudimentaryatbest.Itisfoundmainlyinspecializedinstitutes,withlittlecontactwith

agriculturalscientistsorendusers.

·Theintegrationofproductionresearchwithenvironmentaldisciplinesisextremelylimited.Tosomedegree,thisreflectsthelimitedscientificdevelopmentofagroecologyinRussia.However,someenvironmentallyrelevantresearchcapacitydoesexistinsoilconservationandlandreclamation,forexample.Againthevertical,discipline-basedstructureofRussia'sagriculturalresearchsystemlimitsopportunitiesformultidisciplinaryresearch.Thisworkingenvironmentisessentialifintegratedproductionsystemsaretobedevelopedandsuccessfullytransferred.

·LawsgoverningintellectualpropertyrightsarebeingdevelopedinRussia,butevenwithestablishedlawenforcementcapacity,theselawswillbeextremelydifficulttoenforce.Asaconsequence,publiclyfundedintellectualpropertyoftenintheformofcropvarietiesoranimalbioticscanwindupinprivateconcernswithoutpaymentofroyaltiestotheinstitutionsthatdevelopedit.Alongsimilarlines,thelackofstrongenforceableintellectualpropertylawsinhibitsthegrowthofprivatelyfundedresearchandtechnologytransfer.

·CentralplanninghasdeterminedthelocationandstructureofRussianagriculturalenterprises.ThesedecisionshaveinturninfluencedthestructureandorientationofagriculturalresearchinRussia.Priceliberalizationandothereconomicreformswillchangethescope,scale,andlocationofRussianagriculturetosomelargelyunknownextent.The

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currentconfigurationofRussia'sagriculturalresearchsystemdoesnotnecessarilyreflecttheemergingchangesinagriculture.

WhyHastheSystemBeenSoUnproductive?

Theproductivityofapublicagriculturalresearchsystemisdeterminedbyseveralinterrelatedfactors.Amongthemoreimportantare:

·themanagementoftheresearchenterpriseitself,includingprioritysetting,problemfocus,scientisttraining,andmotivation;

·thelevelsofsupportandinvestmentforscientists;

·theefficacyofpubliceducationandtechnologytransfersystems;

·thecapacityofandincentivesfortheprivatesectortocommercializeresearchfindings;and

·theefficiencyandprofitabilityoftheagriculturalsector.

Russia'sagriculturalresearchsystemappearsunproductivebecausemanyoftheseconditionsarenotmet.SomeofthemajorfactorsthatinfluenceRussianresearchproductivityareevidentinacomparisonofyieldsforcontinuousorstubble-croppedhardspringwheatinnorthwesternNorthDakotaintheUnitedStatesandSaratovOblastinRussia.Thetworegionsareroughlycomparableintermsofagroclimaticcharacteristics(Table4.1)butquitedifferentintermsofwheatyields(Table4.2).Thoughitisnotpossibletoapportionyielddifferencesspecificallyamongtechnology,management,andtheregionalenvironment,itispossibletodrawsomeinferencesaftermakingafewassumptions.

Table4.1:MeteorologicalComparisonsinNorthDakota,US,andSaratov,RussiaAgroclimaticIndicator Williston,NorthDakota Saratov,Russia

Latitude(°N) 48.11 51.34Precipitation(mm)

May-August 215 177Total 365 465

MeanTemperatureMay-August 17.7 19.4December-February -11.2 -8.9WholeYear 4.8 6.1

DaysAbove0°C 177.2 206

Sources:Murganov,1992andHighPlainsClimateCenter,UniversityofNebraska.

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Table4.2:SpringWheatYieldComparisonsbetweenSaratov,RussiaandNorthDakota,US

Yields(100kg/ha)Yields Saratova NorthDakota YieldGap

A.Farmers'average 7.5 22.6b 15.1(201%)

B.Experimentalfarms 11.8 - -

C.Experimentalplots 15.0 34.1c 19.1(127%)

YieldGaps(B-A) 4.3 - -

(57%)(C-B) 3.2 - -

(27%)(C-A) 7.5 11.5 -

(100%) (51%)

Note:YieldsinSaratovarereportedatthefarmoroblastlevelforlarge-scaleexperimentalfarmsoperatedbytheRussianwheatbreedinginstituteandatthevarietaltestplotlevel.YieldsinNorthDakotaarereportedatthefarmorregionallevelandfromreplicatedvarietaltrialsinthesameregion.a1981-1993average.b1991-1994average,continuouscrop.c1991-1994average,areasemi-dwarf,varietaltrials.Sources:ScientificResearchInstituteofAgricultureforSoutheastRegion,Saratov,RussiaandL.A.Spilde,DepartmentofPlantSciences,NorthDakotaStateUniversity,Fargo.

ForSaratov,theyieldgapbetweenfarmers'fieldsandtheexperimentalfarmsisduelargelytotechnology.Farmorganization,management,andeconomicincentivesaresimilarontheresearchinstitute'sfarmsandon

large-scalecollectivesfarms.Regionalproductiondifferencesarealsolikelytobesmall.Theyieldgapbetweentheexperimentalfarmsandtheexperimentalplotsreflectsdifferencesinmanagementandenvironmentduetosmallplotsizeandlocation.Iftheplotorenvironmentaleffectsincreaseyieldsby,say,10percent,thenmanagementdifferencesaccountforayieldgapofroughly1.7quintal/ha(=13.5-11.8;onequintal=100kg=onecentner).Thissuggeststhatmostoftheobservedgapofabout6quintal/ha(=13.5-7.5)betweenmaximumfeasibleyieldsandyieldsobtainedonfarmers'fieldsisduetotechnologytransferratherthanineffectivemanagementofexistingtechnologies.

Theyieldgapsbetweenfarmers'fieldsinSaratovandNorthDakotaarequitelarge,muchlargerthantheaggregateyieldestimatespresentedearlierinFigure2.5.Theyieldgapbetweenplotsisalsolargebutsmallerproportionallythanthegapbetweenfarmers'fields.Partoftheplotgapislikelyattributabletoinherentproductivityandweatherdifferencesbetweenthetworegions.Butgiventhesizeofthegap,itseemslikelythatthebestRussiantechnologylagsU.S.technologybyasignificantamount.

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Finally,theyieldgapbetweenfarmers'fieldsandexperimentalplotsislargerinabsolutetermsinNorthDakotathaninSaratov,thoughproportionallyitisonlyhalfthatobservedinSaratov.

TheyieldgapanalysisisbasedonaveragesandthereforemaskstheproductivitytrendsexperiencedinRussia.AtimeseriesplottingofspringwheatyieldsinSaratovatthreelevelsofaggregationshowsaprecipitousdeclineinproductivity(Figure4.1).Thedeclinestemslargelyfromalackofinputs.Inadequatemachinerycapacityduetomechanicalfailureandalackofsparepartshavereducedthetimelinessofplantingandharvesting.Fertilizerandpesticideinputshavebeencutsharply,whiletheuseoflow-qualityseedhasreducedstandssignificantly.Asaconsequence,thehistoricalyieldgapsbetweenfarmers'fields,experimentalfarms,andexperimentalplotsinSaratovhavebeenclosing,butforthewrongreasons.

Thoughincompleteandadmittedlysomewhatconjectural,theforegoinganalysissuggeststhattheRussianresearchestablishmenthasnotbeenabletoeffectivelytransferexistingtechnologiestofarmersortokeeppacewithresearchadvancesinsimilaragroclimaticregionsinNorthAmerica.

Theagriculturaltechnologiesbeingadoptedtodayaretheresultofinvestmentsmadeyearsearlier.Lagsinresearchandtechnologyadoptioncandistributetheimpactoftheseinvestmentsoverasignificantlengthoftimeupto30yearsinsomecases(PardeyandCraig1989).Evenallowingfordifferencesinlevelsofscientificsupport,privateresearch,andscientisttraining,Russiaappearsoverthepast35yearsorsotohaveinvestedinagriculturalresearchatlevelscomparabletothoseinWest.Lackofresearchproductivitydoesnotappeartobesimplyamatterofinadequateresearchinputs.Thiswouldsuggestthatinadequatemotivationandcoordinationofresearchersandextensionpersonnelhavecontributedtolowresearch

productivity.

Finally,theagriculturalresearchestablishmentcannotbeproductiveiftheagriculturalindustryisinefficient.Thereisanextensiveliteraturedocumentingthenegativerelationshipbetweenagriculturalproductivityandpricedistortions(FulginitiandPerrin1993,1996;AlstonandPardey1996).ForRussia,thelessontobelearnedfromthisliteratureisthatagriculturalproductivitywillbedepressedifpricesignalsorstateordersfailtoprovidecorrectincentivestomotivateandcoordinatemanagersandworkers.This,inturn,reducesincentivestoadoptnewtechnologyandmanageitappropriately.Clearly,researchincentivesanddirectionswillbeadverselyaffectedbydistortedeconomicsignalsaswell.ThelackofproductivityofRussia'sagriculturalresearchestablishmentmaybeattributablelargelytotheinefficienciesinherentincentralplanning(WongandRuttan1990).

FundingandStaffingofAgriculturalResearchSystem

ItisdifficulttoaccuratelyestimatetotalexpenditureontheagriculturalresearchsysteminRussia,forseveralreasons.Thesystemislargeandcomplex,withvariedresponsibilitiesthatoftenextendbeyondtheagriculturalresearchfunctionandmanydifferentsourcesoffinancing(thoughtheprimarysourcehasbeenthefederalgovernment).Incompleteestimatesofactualexpenditurerelatedtoagriculturalresearchandproblemsofthetransitiontomarketeconomyfurthercomplicatetheprocess.Thebestandrelativelycompleteestimatesonactualagriculturalresearchexpenditureareavailablefor1994,andthefollowinganalysisisbasedontheseestimates.ThisinformationclearlydemonstratestheprecipitousdeclineinRussianagriculturalresearchfunding.

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Figure4.1:SpringWheatYieldsintheSaratovOblast,Russia(1981-95)

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FundingforAgriculturalResearch

Byinternationalstandards,totalR&Dexpenditureonagriculturalresearchwasverysmallin1994.Ithasdeclinedevenfurthersincethen.In1995,totalbudgetaryfundingforagriculturalresearchwasabout15percent(inrealterms)of1991levels.Clearly,fundingforagriculturalresearchinRussiaiswellbelowglobaltrends.In1994,totalnominalfundingforagriculturalRandDwas94.6billionrublesforinstitutesunderthedirectionoftheRussianAcademyofAgriculturalSciences(RAAS)and31.0billionrublesforthoseundertheMinistryofAgricultureandFood(MOAF),foratotalof126billionrubles,orabout0.25%ofagriculturalGDP.

FundingtheRussianAcademyofAgriculturalSciences.FederalfundingforRAASwas123billionrubles($55.6million)in1994(Table4.3).Plannedallocationsdroppedto$33millionin1995,bringingtheRAASbudgetexpenditureasashareofRussianAcademyofSciences'expenditurefrom26percentin1994to21percent.OfthetotalbudgetaryfinancingforRAAS,$42.8million(about75percent)wasusedforagriculturalR&D(Table4.4).TherequiredpaymentsbytheRAAStothebudget(suchastaxesandsocialsecuritypayments)wereestimatedtobe1.7timesmorethanthefundingforRAASfromthebudgetduring1994.Itisnotclearwhetherthesepaymentswereinfactmade,however.

Table4.3:FederalBudgetExpendituresontheRussianAcademyofSciencesandtheRussianAcademyofAgriculturalSciences,1994and1995

1994 1995(est)FederalFundingfor Billion

rublesMillionUS$

Billionrubles

MillionUS$

RussianAcademyofSciences(RAS)Basicfunding 438.9 198.4 687.0 150.5Additionalfinancinga 28.0 12.7 22.0 4.8

Total 466.9 211.1 709.0 155.3RussianAcademyofAgriculturalSciences(RAAS) 122.9 55.6 150.3 32.9

AshareofRASfunding(%) 26 21

aFundsearmarkedforitsUrals,SiberiaandFarEasterndivisions.

Source:TheRussianAcademyofAgriculturalSciences.

FundingresearchundertheMinistryofAgriculture.SelectedindictorsforagriculturalresearchinstitutesundertheMinistryofAgricultureandFoodarereportedfor1994/95inTable4.5.TotalexpenditureonagriculturalR&Dwas51billionrubles(about$23million).Thebulkofthebudgetaryallocationswasusedtomeetcurrentexpenditures,suchaspayroll,socialsecuritytaxes,supplies,andequipment.

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Table4.4:FinancingoftheRussianAcademyofAgriculturalSciences,1994and1995

(Billionsofrubles;U.S.dollarsinparentheses)

Financing 1994(Actual)

1995(est.)

Totalfinancingfromthebudget 126.2(57.1) n.a.R&Dfinancing 94.6(42.8) 150.3(32.9)Experimentalproduction 29.6(13.4) n.a.Industry 2.0(0.9) n.a.Totalpaymentstothebudgetandsocialsecuritya 341.7(154.5) 255.4(115.7)

a.Itisnotclearwhetherreportedpaymentstothebudgetandsocialsecuritywereinfactmadeinfull.

Source:TheRussianAcademyofAgriculturalSciences.

FundingofResearchPrograms

ThreeprogramsreceivedalloftheagriculturalR&DexpenditureforinstitutionsundertheMinistryofAgricultureandFood:agriculturalsciences(86percent),naturalsciences(10percent),andengineeringsciences(4percent;Table4.6).Fromthetotalresourcesallocatedto''internal"R&D,53percentwasallocatedtoappliedresearch,35percenttodevelopmentalresearch,and12percenttofundamentalorbasicresearch.ThoughsimilarinformationwasnotavailableforresearchprogramssupportedbyRAAS,thebroadallocationsarelikelytobeofsimilarmagnitude.

Althoughagriculturalresearchhasbeenfinancedprimarilybythepublicsector,thereareindicationsoflimitedparticipationbytheprivatesector.Thereisalsosomeevidencethatmostresearchinstitutesarenowinvolvedinsomecommercialactivities(productionandsaleofseedsor

involvedinsomecommercialactivities(productionandsaleofseedsoragriculturaloutput)tomeetsomeofthecostsofresearchactivitiesandstaffsalaries.Clearly,agriculturalresearchisnotreceivingthepriorityitdeservesduringthisperiodoftransitionduetoseriousbudgetproblems.

QualificationsofAgriculturalResearchPersonnel

Overall,thetrainingandqualificationsofR&DstaffinRussiaareofreasonablyhighquality(Table4.7).About60percentofR&DpersonnelworkinginthefederalresearchinstitutesundertheMinistryofAgricultureandFoodhavedoctorofscience,candidateofscience,orcollegedegrees.ThequalityofpersonnelworkingintheRAASinstitutesissimilar.However,researchstaffgenerallylackstraininginsocialsciences,particularlyeconomicsandbusinessmanagement,whichareimportantdisciplinesforguidingappropriateagriculturalresearchandestablishingresearchprioritiesforemergingprivateagriculture.Averagesalariesforagriculturalresearchersarelowerthaninothersectorsoftheeconomy.Forexample,in1995theaveragesalaryinRAASwasone-thirdtheeconomy-wideaverage.Asaresult,researchersareleavingforotherjobs.Asofmid-1995,one-thirdofresearchershadleftRAASduringtheprevious2.5years.

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Table4.5:SelectedIndicatorsforFederalResearchInstitutesSubordinatetotheMinistryofAgricultureandFood,1994

Indicator Level EquivalentUS$

R&DactivityNumberofR&Dpersonnel 8,380Fixedassets(millionrubles) 141,760 64.1

Scientificequipment(millionrubles) 21,593 9.8Workingcapital(millionrubles) 23,903 10.8TotalR&D(millionrubles) 50,868 23.0R&Dconducteddirectlybyinstituteswithout

subcontracting(millionrubles)44,509 20.1

R&Dcoststructure(%)payroll 46materialsandequipment 20

Averagemonthlywage(rubles) 161,200 73Averagemonthlywagesofresearchers(rubles) 193,800 88

ProductionandeconomicactivityaFixedinvestment(millionrubles) 16,989 7.7Profits/losses(millionrubles) 4,987 2.3

Memo:Averageexchangerate(rublesperUS$) 2,212Notes:TheRAASisnotincludedinthistable.aProductionactivitiesrefertoproductionofcrops,livestock,orseed

forsale.

Source:MinistryofAgricultureandFoodofRussia.

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Table4.6:R&DExpendituresforFederalResearchInstitutesSubordinatetotheMinistryofAgricultureandFood,byResearchProgram,1994

ResearchFunding PercentageShare

ResearchProgram: 86.0Agriculturalsciences 10.4Naturalsciences 3.6Engineeringsciences 0.03Medicalsciences 0.0Socialsciences 0.0HumanitiesProgramtotal 100

FundingSources: 78InternalR&DstatebudgetaExtrabudgetaryfund 7Commercialsector 5Ownfinancing 5Othersources 5

Total 100

aOfthis,85percentofspendingwasonagriculturalsciences,8percentonnaturalsciences,and7percentonengineeringsciences.

Source:MinistryofAgricultureandFoodofRussia.

Table4.7:QualificationsofResearchersWorkingatFederalResearchInstitutesSubordinatetotheMinistryofAgricultureandFood,1994

LevelofEducation Number PercentageShare

Collegedegrees 3,517 42Doctorofscience 160 2

Candidateofscience 1,256 15Specializedsecondaryeducation 1,076 13Othera 2,371 28Total 8380 100

aCalculatedasaresidual.

Source:MinistryofAgricultureandFoodofRussia.

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FinancialSupporttotheAgro-industrialComplex

Financialsupporttotheagro-industrialcomplex,whiledecliningovertime,remainslarge(Table4.8).In1994,totaldirectfinancialsupport(federalandlocal)wasabout$4.6billion,oralmost20percentoftheagriculturalGDP.Ofthis,69percentwasforsubsidies(Table4.9),14percentforcapitalinvestment,and17percentforotherexpenditure.Onlyafractionofdirectfinancialsupport(1.2percent)wenttofinanceR&Dforagriculture.Thereisnoeconomicjustificationforlargesubsidiestoloss-makingagro-industrialenterprises.Thesubsidiesnotonlydelayneededadjustmentstoimprovetheefficiencyofagriculturalenterprisesbuttheyarealsotooexpensivetofinance.

Table4.8:FinancialSupporttotheAgro-industrialComplexinRussiaActual Estimated

TypeofSupport 1992 1993 1994 1995 1996(Billionrubles)

Totaldirectsupport 703 3,966 10,158 13,000 13,170Capitalinvestment 178 935 1,375 2,893 4,918Otherexpenditures 112 526 1,811 2,477 3,104Subsidies 413 2,505 6,971 7,630 5,148

Totalindirectsupport n.a. n.a. n.a. 55,692 73,356Taxdiscounts n.a. n.a. n.a. 20,000 20,000Commoditycredits n.a. n.a. n.a. 13,000 18,900Forgivenandrescheduledloans n.a. n.a. n.a. 17,500 26,100Electricitydiscounts n.a. n.a. n.a. 5,192 8,356

Totaldirectandindirectsupport n.a. n.a. n.a. 68,692 86,526(Percent)

Totaldirectandindirectsupportasshareof:Consolidatedbudgetexpenditure n.a. n.a. n.a. 14.1 n.a.

Federalbudgetexpenditure n.a. n.a. n.a. 24.9 19.9GDP n.a. n.a. n.a. 4.1 3.8

Memo:Ruble-dollarexchangerate 223 934 2,203 4,562 4,799n.a.isnotavailable.Note:For1992-94,thetotalsincludebothfederalandlocalsupport;for1995and1996,totalsincludeonlyfederal

support.Thedataareinnominalterms.

Source:InstitutefortheEconomyinTransition,GoskomstatofRussia;USDA(1995a).

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Table4.9:DirectSubsidiesasaPortionofTotalGrossRevenuesforIndividualCommoditiesinRussia

(Percent)Commodity 1993 1994 1995

Grain 0.3 0.6 5.4Sunflowerseed 0.0 0.3 0.4Sugarbeets 0.0 1.6 3.2Potatoes 0.0 0.6 5.6Vegetables 0.0 4.3 1.9Flax 59.2 73.0 n.a.Milk 25.5 22.8 11.2Cattle 19.8 27.4 8.6Hogs 18.8 22.9 10.9Sheep 24.9 44.5 19.0Poultry 17.7 20.5 10.9Wool 31.4 55.5 40.0Eggs 14.6 13.1 6.9

n.a.isnotavailable.Note:Dataarebasedonasampleofeightformerstateorcollectivefarms.Source:RussianMinistryofAgricultureandFood;USDA(1995a).

NeededStrategyforTransformingtheResearchSystem

SohowdoesRussia'sagriculturalresearchsystemmeasureup?Usingthecharacteristicsandorientationofemergingnationalagriculturalresearchsystemsinotherindustrialcountriesasabenchmark,severalbroadareasofchangeareevident.Overthenext4-5yearsRussiamust:

·Fundamentallyreorientitsresearchdecision-making,prioritysetting,andincentivesystemtowardtheneedsofend-usersratherthandemandsfromthetop.

·Significantlyincreasetheefficiencyandeffectivenessoftheagriculturalresearchsystem,byreducingcosts,increasingrevenues,andimprovingthequantityandqualityofresearchoutput.

·Rapidlyincreaseexpertiseincriticalresearchareasnotadequatelyrepresentedtoday,especiallyinagriculturaleconomics,farmandagribusinessmanagement,financialmanagement,agro-ecology,modernbiology(biotechnology),foodtechnology,logistics,andextension.

·AlterthelegalstatusandrelationshipsofresearchinstitutionstofederalagenciessuchasMOAFandRAAS.

·Improveandmodernizetechnicalknowledgeandeconomicliteracythroughouttheagriculturalresearchcommunity.

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·Modernnationalagriculturalresearchsystemsshouldemploymultipleoutletsfortechnologytransfer,bothpublicandprivate.Theagriculturalresearchsystemdoesnotneedtocontrolthetechnologytransfersystem,butitdoesneedtoknowhowtouseit.Russia'sagriculturalresearchsystemmustdevelopthecapacitytotransferitsproductstoend-usersthroughthemostappropriateandcost-effectivemeans.

·Redefinefederalandoblastpartnershipsandrolesinfinancing,coordinating,andprovidingoversighttoagriculturalresearch,education,andextension.Thegoalofmovingresearchclosertothecustomersuggeststhatfundingandaccountablybemovedtotheoblastlevel.Ontheotherhand,researchspilloversresearchresultsfinancedinoneregionthatbenefitanothersuggestacontinuingroleforthefederalgovernment.Opportunitiesto"freeride"canalsocausesystematicunderinvestmentinagriculturalresearchwhenlocalfundingsourcesareemployed.

·Reduceprofessionalisolationthroughincreaseduseoflow-costcommunicationtechnologies.ManyRussianresearchinstitutescannotaccesstheInternetbecausetheylackmodems.Asimple,low-costsystemtoallowRussianscientiststosearchdatabases(suchasAGRICOLAorCABAbstracts)andcommunicatewithcolleaguesshouldbeadoptedassoonaspossible.

·Significantlyupgradescientificequipmentandfacilitiestomeetworld-classstandards.Giventhehighcostofthisinvestment,itmustfollowapriority-basedstrategythatisconsistentwithreformobjectivesfortheentiresystem.

·Developappropriatetechnologyandeffectivetransfermethodsforsmallholders.Privatefarmsandhouseholdplotswillplayacriticalroleintransformingproductionagricultureandmeetingfuturefoodneeds,andRussianagriculturalresearchmustensurethattheneedsof

smallholderproducersarebeingmet.

·Importandadaptappropriateagriculturaltechnology,wherepossible.Researchknowledgeandtechnologytransferabilityarequitehighinsomeareasbasicanimalnutritionandfoodtechnology,forexample.Russianeedstoseekoutcost-effectivetechnologiesthatcanbeusedtorapidlyincreaseproductivityinkeyareas(Box4.2).

·DeveloplinkswiththeConsultativeGrouponInternationalAgriculturalResearch(CGIAR)andotherinternationalresearchinstitutions,particularlythoseservingsimilaragroclimaticregions.

·Continuetoreformtheagriculturalsectortoreducepricedistortionsandredirectfundsfromsubsidiestoactivitieswithpotentiallyhigherpayoffs,suchasresearchandextension.

Anumberoflonger-termissuesofRussia'sagriculturalknowledgesystemthatmustbeaddressedtoincreasetheeffectiveness,efficiency,andsustainabilityaresummarizedinTable4.10.

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Box4.2:DoingResearchforRussianConditionsOnestatementfrequentlymadebyRussianagriculturalscientistsisthatcertainresearchprojectsareneededtodeveloptechnologiesthatwork"underourconditions."Forsomeproductionenterprisesthismakessense.Croppingorgrazingsystemscertainlyneedtobetailoredtothecharacteristicsofsoils,climate,orlandscape.Often,however,"ourconditions"simplymeansdevelopingtechnologiestoaccommodatedistortedpricesignals,inadequatemanagerialskills,orinputshortages.Changingtheconditionsisclearlythebetterwaytogo.Thisillustratesanotherpoint,however.TheRussianagriculturalestablishmentneedstocarefullyassesswhenresearchisneededandwhenknowledgeandtechnologycanbeimportedandadaptedtolocalconditions.Foodprocessing,transportation,andlogisticsisnotoriouslyinefficientinRussia.However,asizablestockofresearchfindingsandtechnologiesisavailablefromothercountries.Thesameholdstrueinanimalnutritionandgenetics.Itmakeslittlesensetoinvestinbasicgeneticornutritionresearchatthisstageofscarceresourceswhensuchinformationcaneasilybeobtainedfromsimilarresearchdoneelsewhere.Inareaswhereresearchortechnologiescanbeimported,Russianscientistsneedtobecomeskilledintechnologyevaluation,adaptation,marketing,andtransferandinintellectualpropertyissues.Undertakingresearchfor"Russianconditions"iscertainlynecessarybutonlyinspecificsituations.Acquiring,evaluating,andadaptingexistingtechnologiesparticularlygermplasmandmanagementpracticesusedinsimilaragroclimaticregionsinothercountrieshavethepotentialtorapidlyadvanceRussianagriculturalscienceandtechnology.

Table4.10:AnalysisofIssuesforStrengtheningAgriculturalResearch,HigherEducation,andExtensioninRussia

Issue ApproachtoSolution CommentPOLICY1.Analyticalcapabilityforpolicyanalysislimitedbydatainadequaciesandscarcityofhumanresources.

Bolstereconomicandsocialscienceresearchcapabilitiesanddevotemoreresourcestothecollectionofsocio-economicdataonthesector.

Existinginstitutionshaveverylimitedlinkstomainstreamagriculturalresearchinstitutesandagriculturaluniversities.

2.Littleornointegrationofresearch,highereducation,andtechnologytransfer.Thepotentiallydiverseclientbaseofproduction,processing,andmarketingisomittedfromsectoralplanning.

Focusononeintegratedagriculturalknowledgecenterperregion,providingservicesofhighereducation,research,andtechnologytransferforsmall,medium,andlargeproducers,processors,andmarketersinbothpublicandprivatesectors.

Anyincrementalfundingtothesubsectormustbewellfocused.

3.Benefitsofresearchandextensionnotreapedunlesstheprofitabilityofinnovationisclear.

Implementpricingpolicyreforms,stateprocurementreforms,realistictaxationregimesforagriculture,andlandtenuresecurity.

Otherinterventionsaddressthesewiderissues.Theirimpactisassumedwithinanappropriatetimeframetobenefitagriculturalresearch,highereducation,andextension.

INSTITUTIONS4.Inadequatelinkagesbetweenresearchandhighereducation.

Focusdiminishedresourcesonasinglecenterofagriculturalknowledgeforeachregion,togaincostefficiencies.

Returningtothepastsituationwillnotprovidemaximumbenefit.Focusingonintegratedsystemswillfosterlinkages.

5.Lossofirreplaceablehumancapital.

Preserveessentialelementsoftheexistingsystemtoavoidtheneedformassivefutureinvestment.Increasestaffsalaries,researchresources,andgraduatestudentstipendsandfellowships.

Thisisunlikelytooccurwithoutexternalassistance.

6.Inadequateresearchfundingleadsinstitutestodivertlimitedresourcesforproductionpurposesortoseekexternalresearchcontractswhichdonotreflectthecost/valueofresearchorfurthertheirobjectives.Integrationwithhighereducationisreducedbythistrend.

Introducecontractresearchforagreednationaland,inparticular,regionalappliedresearchthatencouragesjointinvolvementofeligibleuniversitiesandresearchinstitutes.Separateincomegeneratingactivitiesfromresearch.

Currentresearchgrantsmaynotmeettherequiredcriteriaofobjectivityinselection,orientationtousers,andinvolvementofexternalandindependentpersons.

(Tablecontinuedonthenextpage)

(Tablecontinuedfrompreviouspage)

Issue ApproachtoSolution Comment7.Difficultyinintegratingresearchinstitutesanduniversitiesandinincludingextensionactivitiesbecauseofthegeographicandinstitutionalseparationofresearchinstitutesanduniversities.

Focusonresearchinstitutesthatareclosetouniversitiesandencourageinstitutionalintegrationthroughjointprofessionalpositions,students'research,andotherteaching.Introducetheextensionconcepttoresearchersasauserorientationandtouniversitiesasanewsubjectarea.

Existinginstitutionalarrangementsrenderdecisionsonthefundingofdistantresearchinstitutesdifficult.Earlyinvestmentmaybeneededinordertostrengthensuchdecision-making.

8.Financialinefficienciesatthecentrallevelthatreducefundsreceivedatregionallevel;central-levelinstitutionalresponsibilityunclear.

Asfaraspossible,allocateprojectfundstotargetedinstitutionswhilerecognizingtheobjectiveofstrengtheningRussiancapabilitytoadministerfundsundernewcircumstances.

Regionalinstitutionshavelimitedadministrativeexperience.

9.Absenceofagriculturaleconomics,marketing,agribusiness,andextensioninuniversitycurricula.

Introducenewcoursesanddepartmentsatappropriateuniversitiesandreorientmanagementtoaccommodatetheseareastogreatestbenefit.

Managementstylesatuniversitiesappeartobetop-down,whichhasadampeningeffectonthebenefitsofdiverseprofessionalinput.

10.Inefficientproliferationofresearchandhighereducationinstitutesinsomeregions.

Combineinstitutestoformanagriculturaluniversityinregionsthatlackone.

Efficienciescanbegainedthroughclosemanagementofsuchmergers.

11.Toomanyresearchinstitutesandinsufficientlinkagesbetweenthem;toomuchstaffandineffectiveinstitutionalsystems.

Conductamanagementreviewofresearchinstitutes.Allocatebudgetstoparticipatingresearchinstitutes(closetoagriculturaluniversities)thatmeetselectioncriteria.

Implicationsofcombininginstitutesarestaffreductionsandreorientationofinstituteobjectivesandstrategies.

12.Conceptofextensionispoorlyunderstood.Someelementsof

Introduceextensionattheuniversitylevel,initiallytotrainextensioneducatorsandtodevelopanextension

Theroleoffarmertrainingcentersinhigheragriculturaleducation

Someelementsofextensioninfarmertrainingcenters,butwithoutfullaccesstoagriculturalknowledgeresources.

educatorsandtodevelopanextensionservicelinkedtotheresearch-highereducationcomplex.Focusextensionattheregionallevel.

agriculturaleducationrequiresclarification.

13.Inadequateequipmentandfacilitiesforresearchandhighereducation;insufficientbudgetstoaddresstheseneeds.

Investsubstantiallyinresearchandhighereducationequipmentandrenovationofexistingfacilities.Providematerials,equipment,andfacilitiesforextension.

Qualityandmaintenanceofexistingbuildingsishighlyvariable.

(Tablecontinuedonthenextpage)

(Tablecontinuedfrompreviouspage)

Issue ApproachtoSolution Comment14.Managementsystems,styles,capabilities,andtoolsnotorientedtochangedcircumstances.Professionalmotivationandsatisfactiongivenalowpriority.

Providemanagementtrainingandassistance.Improvestaffsalariesandconditions,includingaroleindecision-making.

Goodwillexistsamongstaffandshouldberetainedthroughsensitivehandlingofmanagementtraining.

15.Inadequatefinancialsupportforagriculturalresearch,increasingriskthatirreplaceableelementswilldisappear.

Providefinancialsupporttooperationstopreservekeyelements.

Entrenchedattitudesthatincrementalfundsshouldpreservethestatusquoconflictwiththerealityofstructuralchange.

TECHNOLOGY16.Lackofinformationtechnologyandequipmentforteaching.

Provideappropriateequipment.

Specificneedsarestilltobedetermined.

17.Outdatedtextbooksandtechnologyatuniversitylevel;notconnectedtointernationalsystem.

Provideandtranslatetextbooks,supportstaffexchangeswithforeignuniversities,andprovidelibrarysupport.

Languageisaconstrainttogainingaccesstointernationalknowledge.

18.Inadequateresearchequipment.

Provideadequateequipment.Specificneedsarestilltobedetermined.

19.Lackofinternationalexposurebyresearchersandunnecessaryduplicationofexperiments.

Supportexchangesofresearchers,jointprograms,librarysupport,andadvisers.

Languagetrainingmaybenecessary.

20.Technologypromotedtofarmersandotherusersnotsuitabletotheiractualneeds.

Introducethetwo-waycommunicationconceptofextension,initiallythroughhighereducationandlaterthroughpilotadvisoryservices.

ImplementationshouldbeslowtoallowagradualunderstandingoftheprocessanditsadaptationtoRussianrequirements.

21.Objectiveconsiderationsoffinancial,economic,and

Supplementresearchfundsthroughanobjective

Theimplicationthatsomeresearchareasmaynot

financial,economic,andadoptionfactorsnotincludedinresearchproposals.

throughanobjectivecompetitivegrantsystem.Provideassistanceforappliedresearchproposalpreparation.

researchareasmaynotreceivefundingshouldbemadeclear.

22.Depletionandpollutionofnaturalresourcebaseforagriculture.

Includesustainabilityandresourceprotectioncriteriainresearchplanningcriteriaanduniversitycurricula.

Thesewillrequireinternationalcollaboration.

Source:AdaptedfromWorldBank(1994c).

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ChapterVTransformingtheAgriculturalResearchSystemReformofRussia'sagriculturalresearchsystemwillbeanuphillbattleunderthebestofconditions.Hereareafewofthemajorobstacles.

·Itwillbedifficulttodevelopaviableconstituency,particularlyintheMinistryofFinance,thatsupportsagricultureandiscommittedtotheneedforagriculturalresearch.

·Fundstosupporttheneededrestructuringandreinvestmentwillbeinshortsupply.Competitorsforpublicfundsabound.Privatefundswillbedifficulttoattractuntiltheneededreformshavebeenmade.

·Notestedmodelexistsforrestructuringacomplexnationalagriculturalresearchsystemdevelopedundercentralplanningtooneappropriateforamarketeconomy.

AnumberofreviewsofRussia'sagriculturalknowledgesystemhavebeenconductedoverthepastfewyears(OECD1994;WorldBank1994c).Whattypicallyhasemergedfromthesereviewsisamind-numbinglistofproblemsandanequallydiscouraginglistofbroadrecommendations.Atapracticallevel,itisdifficulttotranslatesuchrecommendationsintomanageableprograms.Tosomedegree,thisdifficultyarisesbecausetheneededstepscombineshort-termcrisismanagementwithlong-terminstitutionalreformforRussia'snationalagriculturalresearchsystem.Whatisneededisaframeworkthatbreaksdownanenormouslydifficulttaskintosmaller,coordinatedsteps.

ConceptualFrameworkforManagingTransformation

ConceptualFramework.SupposethatitwerepossibletoexamineeachscientificresearchinstituteinRussia,orevenbetter,eachresearchprogramandrankthemonthebasisofthefollowingthreeattributes:strategicvalue,vulnerability,andprogramquality.DoingsowouldshedlightonthestrategyneededfortransformingtheagriculturalresearchsysteminRussia.Thesethreeattributesmightbedefinedasfollows:

·StrategicvaluereflectsthepresentvalueoffuturebenefitsgeneratedbyaninstituteorprogramtoRussiansocietyortheworldscientificcommunity.Thisvaluemightariseinanumberofways:Throughasignificantincreaseinproductivityorreductioninlossesinmajoragriculturalenterprisesthatdirectlyaffecttheeconomicwell-beingofproducersandconsumers;throughagriculturalresearchassetssuchasgermplasmorscientificknow-howthatareuniqueandhavevaluetobothRussiaandtheworldcommunity;throughongoingresearchprogramsthatmaintainagriculturalproductivity(forexample,breedingcropsfordiseaseandpestresistance);andthroughresearchprogramsthataddresscriticalnationalandregionalneeds,suchasagriculturalsustainability,ruraldevelopment,policyevaluation,foodtechnology,transportationandlogistics,andfarmmanagement.Strategicvalueisnotindependentofitstimecontext.Forexample,apubliclysupportedmaintenanceresearchprogramforwheatrustresistancemightbestrategicallyveryimportantintheshortrun,but

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itsstrategicvaluemaydeclinewiththedevelopmentofprivatewheatbreedingcompaniesormayberedirectedtowardmorebasicaspectsoftheproblem.

·Vulnerabilityisashort-termconceptreflectingthelikelihoodorriskofsignificantlossofresearchassetsbiological,physical,andhumanwithin,say,thenext1-3years.

·Qualityisalonger-termconceptandisbothaninputandanoutputmeasure.Howgoodisthesciencebeingproducedrelativetoworkconductedelsewhereintheworld?Howskilledandwell-trainedarethescientists?Howgoodaretheresearchfacilities,fieldplots,equipment,ordatabases?

StrategicValueandVulnerability.ThehypotheticalresultsforanagriculturalresearchsystemconsistingoffiveresearchinstitutesorindividualprogramsthathavebeenrankedonthebasisofstrategicvalueandvulnerabilityarepresentedinFigure5.1.Withinthisshort-termcontext,theresearchmanagermustdevelopastrategyforstabilizingtheresearchsystem,givenafixedordecliningfundingbase.Herearesomepossibleapproachesforthefiveinstitutions.

InstitutesAandBarerankedlowinstrategicvaluebutdifferintheircurrentvulnerability.Mostresearchmanagers,ifconfidentintheirassessmentofstrategicvalue,wouldterminatebothprograms.

InstitutesDandEareassessedtohavehighstrategicvalue,butdifferinvulnerability.ForinstituteD,fundingatcurrentlevelsseemsreasonable.Certainly,low-costoptionstoenhanceinstitutionaleffectivenessshouldbeexploredcostcontrol,programreview,staffexchanges,orstepstoovercomeprofessionalisolationsuchasconnectionwiththeInternet.InstituteEisobviouslyatriskandmeritsaggressiveintervention.Grantstoprotecthigh-valueresearchassetswouldseemtobejustified.Additionalfinancialsupportforprogram

orsalariesmightberequired.AssistancetolowercostofthesortprovidedtoinstituteDwouldbeappropriate

InstituteCisclearlystuckinthemiddlenotveryimportant,notterriblyvulnerable.Benignneglectisoneattractiveoption.Institutescientistscouldbeconsideredforsomelow-costassistancebutnotmuchmoreshouldbeoffered.Measuresofstrategicvaluemightbedifficulttomake,andtheirrevocablestepofterminatingtheresearchprogramwouldnotbeundertakenimmediately.

StrategicValueandProgramQuality.Thesamehypotheticalresearchinstitutionsarenextassessedfromtheperspectiveofprogramqualityandstrategicvalue(Figure5.2).Programqualityisalonger-termcharacteristic.Inthissituation,theresearchmanagermustdevelopastrategythatfocusesoninstitutionalreformanddevelopment.

Inthisexample,instituteCremainsstuckinthemiddle.Benignneglectstillseemslikeareasonableapproach.InstituteAshouldbeclosed.Thefactthatitcansurviveintheshortrundoesnotcompensateforitslackofstrategicvalueorprogramquality.Continuingtooperatethisinstitutionconsumesresourcesthatareneededtosupporthigher-priorityprograms.

InstituteBhasahigh-qualityprogram,butisstrategicallynotveryimportantandisquitevulnerable.ThissituationmightberepresentativeofamorebasicorpretechnologyresearchinstituteandisfairlycommoninRussia,wheremissiondrifthasresultedinhigh-qualityprogramsthatdonotsupporthigh-priorityobjectives.Oneoptionmightbetoseekaforeignpartner,publicorprivate,thathasneedofthisinstitute'sscientificexpertiseandprivatizeit.Alternatively,itmightbepossibletohelp

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Figure5.1:ResearchProgramAssessment:StrategicValueandVulnerability

Source:Author'sData

Figure5.2:ResearchProgramAssessment:StrategicValueandProgramQuality

Source:Author'sData

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scientistsfromtheinstitutefindworkopportunitiesabroadorinotherprogramsandthenclosetheinstitute.

WhataboutinstitutesDandE?Onthebasisofshort-termsurvivability,instituteDrequiredmodestassistance.However,wenowseethatthisinstitute'sprogramsareofhighqualityandstrategicallyimportant.Inthiscase,long-terminvestmentandprogramdevelopmentareprobablywarranted.InstituteEisatoughcallhighstrategicvaluebutwithaveryvulnerable,low-qualityprogram.Anexampleofthissituationmightbefoundwithaneconomicsresearchinstitute.EconomicsisclearlyofhighvaluetoRussia.However,mostRussianeconomistsaresimplynotcompetitivewiththeirWesterncounterparts.Startingovermaybewarrantediftheexistinghumanorphysicalcapitalcannotbeupgradedcost-effectively.Alternatively,iftheinstituteistobemaintained,acombinedstrategyofstabilization,reform,andreinvestmentmustbedeveloped.

5.12.ActionPlan.Theforegoingdiscussionillustratessomeofthekeyconsiderationsthatresearchmanagers,governmentofficials,andscientistsmusttakeintoaccountindevisingappropriatestrategiesfortransformingRussia'sagriculturalresearchsystem.Theexerciseisadmittedlyeasiersaidthandone.Butitdoesclarifythefollowingfouractionstepsthatshouldformthebasisofanystrategyforreformingtheagriculturalresearchsystem:

·Evaluateandscreenresearchinstitutesonthebasisofstrategicvalue,vulnerability,andprogramquality.

·Stabilizehighlyvulnerableprogramsthatmeetspecificstrategicvalueandqualitystandards.

·Reformandredirecttargetedinstitutesandprogramsthatmeetminimalstandardsforstrategicvalueandquality.Terminateprograms

thatdonot.

·Reinvestinphysicalandhumancapitaltobringtheresearchestablishmentuptoneededstandards.

·Theoverallmanagementobjectivesforthisactionplanarestraightforward.

·Buytime.Identifyandstabilizehigh-value,vulnerableprogramsandinstitutions.ThisprotectsRussia'sagriculturalresearchsysteminacost-effectivewayandprovidesneededbreathingroomtotransformthesystem.Furthermore,itprovidesameanstoseparateshort-termcrisismanagementfromthetime-consumingactivitiesrequiredtoreformandrefocuskeyagriculturalresearchinstitutions.

·Facilitateorganizationallearning.Reforminganationalagriculturalresearchsystemestablishedundercentralplanningisunchartedterritory.Russianeedstodevelopandpilotmodelsofinstitutionalreform.Organizationallearningcannotproceedifacrisismentalityexistsorifoverallprioritiesandstrategyarepoorlyarticulated.

·Developneededhumancapital.SeveralareasofsciencethatarecriticaltoamodernagriculturalresearchsystemarenotsufficientlydevelopedinRussia.Economicsandagroecologyarethemostobviousomissions.Furthermore,generalupgradingoftraditionalagriculturalfieldsissorelyneeded.Finally,itisimperativethatRussia'sagriculturalscientificcommunitybere-integratedwiththerestoftheworld.

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·Implementappropriatelong-termchanges.Resourcereallocationandreinvestmentmustbemadeslowlyoveranumberofyears.Closingfacilities,mergingstaff,andrebuildingresearchcapacityallrequirecarefulplanning,politicalaction,andstaffsupport.Thesechangescannotbemadeovernight.

FinancingResearchtoFacilitateTransformation

ConventionalwisdomandthemostinternationalreviewsholdsthatRussia'sagriculturalresearchsystemisovergrownandtoocomplexandmustlearntooperateonaleanerbudget.Tightbudgetscancreateincentivestoreform.Whileitwouldseemreasonabletoexpectreformtooccurwithinexistingbudgetconstraints,stubbornadherencetoexistingbudgetsoftenstymiesinstitutionalchange.Thefollowingargumentsjustifysupportingmodestandcarefullytargetedincreasesinfunds.

·Stabilizingthesystem.Anumberofhigh-valueagriculturalresearchassetsandprogramsareatrisk.Theymustbeidentifiedandstabilizedquickly.Thisprocesscannotproceedrapidlyenoughiftherequiredfundshavetobecarvedoutofexistingprograms.InterventiontostabilizetargetedelementsofRussia'sagriculturalresearchsystemrequiresnewfunding.

·Overcominginstitutionalinertia.Largeorganizationsrarelyactdecisively.Intimesoffinancialadversity,thetypicalresponseofadministratorsistopreservealltheelementsofanorganizationandreducefundingproportionately.Sharingthepainseemstobepoliticallymoreexpedientthanmakingclearallocativedecisionsbasedonpriorities.Thisacross-the-boardmentalitypreventsmeaningfulinstitutionalchangeandensuresfuturemediocrity.Yet,itisextremelydifficult,particularlywhenahighdegreeofuncertaintyexists,tomakedecisionstoterminatesomeactivitiesandshift

resourcestoothers.Manyresearchprogramshaveacertain''optionvalue"thatwilljustifycontinuationuntilthelong-termvaluebecomesmoreapparent.Intheshortrun,itisfrequentlymuchmoreeffectivetostrengthenhigh-priorityprogramsandthentobeginthemoredifficult,long-termprocessofredirectingfundsandscientistsorsheddinglabor.Clearlythisstrategyrequiresadditionalfunds.

·Creatingincentives.Russia'sagriculturalresearchsystemmustbecomemoredemand-driven,coordinated,andefficient.Thisrequiresafundamentalchangeinresearchers'behaviorandcorporateculture.Thesechangescanbegreatlyfacilitatedbycreatingtheproperincentives.Oneoptionistointroduceacompetitivegrantsprogramthatsupportsthedesiredresearchortechnologytransferactivities.Well-craftedandadministeredgrantsprogramscanchangeresearchinstitutionsmuchmoreeffectivelythandirectivesandjawboningevercould.Inaddition,smallsalarybonuses,travelfunds,andnewscientificequipmentcanalsodowonderstochangecorporateculture.Thistoorequiresadditionalfunds.

·Rewardinghighlyqualifiedresearchadministrators.Institutionalreformcannotbeaccomplishedthrougharelianceoncompetitivegrants.Atbest,agrantsprogramwillresultinahigh-qualitypatchworkofscientificprojects.Skilledresearchmanagementisessentialifprogramsaretofittogetherinwaysthatactuallysolveproblems.Integrationandcoordinationofthevariousresearchprogramscanonlybeaccomplishedthroughadministration.Consequently,salariesforeffectiveresearchmanagersmustbesufficientlyhightoattractandretaintheminthesepositions.

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·Improvingresearchfacilitiesandequipment.Russia'sresearchcapitalstockdoesnotmeetmodernstandards.Asignificantcapitalexpenditureisrequiredtomodernizefacilitiesandequipment.Themajorstumblingblockisdecidingwhichfacilitiesshouldbeimprovedandwhoshouldpayforit.Thesedifficultdecisions,however,shouldnotobscureasimplefact:newinvestmentinagriculturalresearchfacilitiesandequipmentisneededifRussia'sagriculturalresearchsystemistobeviable.Furthermore,thislong-terminvestmentwilllikelyrequiredebtfinancing.Fewagriculturalresearchsystemsinindustrialcountriescanhandlemajorcapitalinvestmentsoutofoperatingbudgets.Capitalexpendituresmustbeamortizedoveratimehorizonthatiscompatiblewithoperatingbudgetsanddebtservicecapacities.

·Seekingalternativefinancingsources.Inadditiontobudgetaryallocationsbyfederalandoblastgovernments,theagriculturalresearchinstitutesmustexplorealternativefundingsourcestofinancespecificresearchprograms.Possiblealternativefundingsourcesincludemultinationalcompanies(forinputs,seeds,chemicals,biotechnology,foodtechnology);domesticprivatecompanies;andendowmentssetupfromthesaleofsurplusland(mostagriculturalresearchinstituteshaveexcessland)andcommercialenterprises.However,useofthesealternativefinancingsourceswouldrequireinstitutionalandprogramreforms.

Thislistofjustifications,whilenotcomplete,doesdemonstratewaysinwhichnewfundscanincreasetheeffectivenessandefficiencyofRussia'sagriculturalresearchsystem.Societalgainsfromimprovedresearchoutputandcostsavingsfromimprovedresearchmanagementcanbeexpectedtomorethanoff-settheincrementalfundingincreasesrequiredtofacilitateinstitutionalchangeandrecapitalizethereformedagriculturalresearchsystem.Theextensiveevidenceonreturnstoagriculturalresearchassuresusofthisfact.Buttheadditionalfunds

obtainedthroughloans,credits,orgrantsmustgotoreformRussia'sagriculturalresearchsystem,notsimplymaintainthestatusquo.

IssuesinTransformingtheAgriculturalResearchSystem

BeyondtheimmediateneedstostabilizeandtransformRussian'sagriculturalresearchsystemlieseverallonger-termissuesthatmustbeconfronted.Twoofthemostpressingaredevelopingobjectiveguidelinesandmechanismsforsettingresearchprioritiesandestablishingtheappropriatelevelandmixofresearchinvestment.TogainsomeinsightintotheseissuesforRussiaandothertransitioneconomies,weturnonceagaintotheexperienceoftheinternationalagriculturalresearchcommunity.

GuidelinesforEstablishingResearchPriorities

AsdiscussedintheUSTaskForceonResearchInnovationsforProductivityandSustainability(1995),FalconiandElliot(1995),PurcellandAnderson(1997),andtheWorldBank(1996b),researchadministratorstypicallydistinguishbetweenthefollowingfourtypesofresearch:

·Basicresearch,whichcreatesnewscientificknowledgetoachievenewunderstandingbutwithnoimmediatecommercialapplication.

·Strategicresearch,whichprovidesknowledgeandtechniquestosolvespecificproblemsthathaveawiderapplicability.

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·Appliedresearch,whichdevelopsnewtechnologiesandtangibleinventionsbyadaptingbasicandstrategicresearchtosolvespecificfieldproblems.

·Adaptiveresearch,whichinvolvesselectingandevaluatingtechnologicalinnovationstoassesstheirperformanceinaparticularagriculturalsystemandadjustingtechnologiestofitspecificenvironmentalconditions.

Thereisaneedforanappropriatebalanceamongthesefourtypesofresearchinordertodeveloptechnologiestosolvespecificagriculturalproblems.Basicresearchgenerallyrequiresfinancingbythepublicsector,whereasappliedandadaptiveresearchcouldgenerallybefundedbyboththepublicandprivatesectors(Umali1992;ThirtleandEcheverria1994).Finally,thegenerationoftechnology(agriculturalresearch)mustbecloselyintegratedwithasystemtotransfertechnology(agriculturalextension)sothatitisresponsivetotheproblemsfacedbyclients(farmers).

Giventhelimitedfinancialresourcesallocatedbythepublicsectorforagriculturalresearchandeverincreasingdemandsontheselimitedresources,thereisaneedforclearguidelinesforestablishingresearchpriorities(seeBottomleyandContant1988;McCalla1994b;McCallaandRyan1992;Collin1989;CollinandKissi1995;andAlston,Norton,andPardey1995).Basedoninternationalexperience,guidelinesforsettingagriculturalresearchprioritiesaresummarizedinBox5.1.TheseguidelinesareespeciallyimportantfortransitioneconomiessuchasRussia,wheretheagriculturalsectorispassingthroughamajorstructuraltransformationandthefinancialresourcesforagriculturalresearchareverylimited.Followingtheseguidelineswillnotonlyresultinacost-effectiveandtransparentapproachtoreformagriculturalresearchsystembutwillultimatelyleadtohigherreturnstoinvestmentinagriculturalresearch.AccordingtoPurcell

andAnderson(1997),thekeyelementsofaviableagriculturalresearchsystemare:

·humanresourcedevelopment;

·provisionofresearchfacilitiesandequipment;

·organization,management,planning,andlinkagesamongresearchentities;

·linkageswithclientandrelevanttechnology;

·fundingofnationalagriculturalresearchsystems;and

·incentivesforresearchperformance.

FinancingAgriculturalResearchInvestment

Inadditiontotheprioritiesassignedtoagriculturalresearch,howtheinvestmentisfinanced,atwhatlevel,andbywhomallcontributetotheefficiencyoftheresearchenterprise.Therearefourbasicaspectstothesechoices:

·Nationalorregional?Ingeneral,fundingofagriculturalresearchbythebeneficiariesmakessense.Thisisoneofthemajorforcesdrivingdecentralizationofagriculturalresearchworldwide.Localfundingtranslatesintolocalaccountability.Butbecausethebenefitsofagriculturalresearchdonotrespectpoliticalboundaries(Khanna,Huffman,andSandler,1994;Alston,Norton,andPardey1995)somelevelofnationalfundingisjustifiabletoaccountforthetransferabilityofresearchbenefitsintoandoutofaregion.Thegreaterthespillover,thegreaterthecasefornationalsupport.However,increasednationalfundingcanattenuatelocalaccountabilityandtheextenttowhichresearchisdemanddriven.Therearenosimplerulestoresolvethisdilemma.

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Box5.1:GuidelinesforAgriculturalResearchPrioritySettingMarketfailurePrioritiesforpublicresearchfundingshouldbeinareasinwhichtherearehighsocialreturnsandlowprivatereturns.Wheremarketfailureexistsbutreturnsaccruemainlytotheprivatesector,formsofgovernmentinterventionotherthandirectfundingbecomeappropriate(Lloyd,Harris,andTribe1990).Efficiency

Domesticnetpresentbenefitsfromresearcharehigher:·thelargerthetotalpre-researchvalueofproductionofthecommodity;·thefastertheexpectedgrowthoftheindustry;·thegreatertheproportionalreductioninunitcostsinducedbyresearch;·thehighertheprobabilityofresearchsuccess;·thehighertheceilingrateofadoptiondomestically;·thefastertheadoptionoftheresearchresultsdomestically;·thelowertheadoptionofresearchresultsinothercountries;·thesoonerthereductioninunitcostisrealized;·thelowertherateofresearchdepreciation;·thelowertheresearchcost;·thelowertheinterestrate;·thelowertheopportunitycostofgovernmentfunds;·thesmallerthedomesticproductionasashareofglobalproductionofthecommodity;·thegreatertheeffectofresearchonreducingdistortingeffectsofpricepolicies;and·thegreatertheeffectofresearchonreducingdistortingeffectsofexternalities.Netdomesticresearchbenefitsarenotaffectedbymanyprice-distortingpolicies,althoughthedistributionofbenefitstendstobeshiftedtowardthosebeingassistedbythepricepolicy.Distribution

Researchisarelativelyblunttoolformeetingdistributionalobjectives,suchasforincomeornutrition,comparedwithpolicyinstrumentssuchastaxesandsubsidies.Researchtendstobebothanineffective,andaverycostlymethodforpursuing

socialpolicyobjectives.Domestic"producer"benefitsareincreasedasashareoftotalbenefits:

·thehigherthedomesticpriceelasticityofdemandforthecommodity;·thelowerthepriceelasticityofsupplyofthecommodity;·thesmallerthedomesticproductionasashareofglobalproductionofthecommodity;·whenthetechnologyappliesfartherdownthemarketingchaintowardsfarm-levelproduction;·thelowertheadoptionofresearchresultsinothercountries;and·thefastertheadoptionofresearchresultsdomesticallyrelativetoothercountries.

Source:PurcellandAnderson(1997);originallyfromAlston,NortonandPardey(1995).

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·Privateorpublic?Publicfundingofresearchisjustifiableonlywhentheprivatesectorisunableorunwillingtomakeinvestmentsatlevelsdesiredbysociety.Again,nosimpleallocationruleexists.Andtheallocationbetweenpublicandprivateresearchisclearlyevolutionary.Itchangesasfirmsbecomemoreablethroughexperienceorinstitutionalinnovationtoextractrentsfromtheirresearchinvestment.TheprivatesectorinRussiaisnotyetdevelopedenoughtomakesignificantcontributionstoagriculturalresearch.(seeAnnexCfortheroleofpublicsectorinfinancingresearch,andAnnexDfortheroleofprivatesectorinfinancingresearch.)

·Russiaortheinternationalcommunity?Ideally,Russiashouldhavethebestagriculturalresearchsystemitcanaffordtosupport.However,thereareclearlyrolesfortheinternationalcommunityinsupportingthereformandtransformationofRussia'sagriculturalresearchsystem.Mostoftheserolesareshort-terminnature,primarilytosupportstabilizationandrestructuringinitiatives.However,thesamespilloverargumentthatjustifiesamixofregionalandnationalsupportwithinRussiacanalsobemadebetweenRussiaandtheinternationalcommunity.ItmakessenseforRussianscientiststoreceivepartialfundingfrominternationalagenciesforagriculturalresearchthatbenefitsotherregionsorcountries.(SeeAnnexEfortheroleofinternationalagriculturalresearchsystemandAnnexFforfundingofagriculturalresearchbytheWorldBank.)

·Budgetarysupportorloans?Thefinalfindingdilemmaembodiesmostoftheforegoingchoicesanddependsonthemixofregional,national,andinternationalsupportaswellasontherelativerolesofthepublicandprivatesectors.Budgetaryallocationsfromregionalornationalgovernmentsfinanceongoingprogramsthroughoperatingbudgets.Budgetaryallocationscanalsobeused,inalimitedway,forcapitalinvestmentordebtservice.Thetwousescompetewitheachother,andresearchadministrationmustattempttomaintainan

appropriatebalance.

AgendaforCapacityDevelopmentandInstitutionalReform

Aship'srudderworksonlywhentheshipismoving.Sotoowithinstitutionalreform.Gettingafewthingsstartedismoreimportantthanwaitinginhopesthatsomeoptimalplancanbedevelopedandadopted.Inthissectionweproposeandbrieflydescribesixpriorityareasthatbuildoninternationalexperiencebutareintentionallylimitedinscope.Bylimitingprojectscope,webelievethattherequiredcourseofactioncanbedeterminedandimplemented.AndalthoughtheprojectsfocusdirectlyonneededactioninRussia,theyareappropriateforagriculturalresearchreforminothertransitioneconomies.

Theoverarchingobjectivesfortheproposedprojectsaretostabilizecriticalelementsoftheagriculturalresearchsystemandtodevelopworkablemodelsofinstitutionalreform.Inadditiontotheselonger-termobjectives,itisimportantthattheworldscientificcommunitystayengagedwiththeirRussiancounterpartsdespitethepoliticalandeconomicuncertaintiesthatwillprevailinRussiaforthenextseveralyears.Inbrief,theobjectivesofsixpriorityareasareasfollows:

·Todevelopandimplementaplantostabilizespecificagriculturalresearchprogramsthatareconsideredtobeofhighstrategicvalueandareextremelyvulnerabletoloss(seeBox5.2).

·TodevelopwithinRAAS,MOAF,andtheRussianagriculturalscientificcommunitythecapabilitytoestablishandimplementappropriatesciencepolicyandadvocacy.

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·ToreconnecttheRussianagriculturalscientificcommunitywiththerestoftheworld.Inparticular,toseekoutandimplementcost-effectivewaystoreducetheimpactonRussianagriculturalscientistsofyearsofprofessionalisolation.

·TodevelopandpilotmodelsofprofessionaldevelopmentthatcanrapidlyintroducecriticalskillsintoRussia'sagriculturalresearchsystem.Theseskillsincludeagriculturaleconomics,agribusinessmanagement,agroecology,extensionmethods,andadultlearningbehaviorandresearchmanagement.

·Todevelopandpilotmodelsofinstitutionalreformattheoblastlevelthatsignificantlyincreasetheeffectivenessandefficiencyofresearchdirectedtowardacriticalneedwithintheoblastthathasnationalimportanceandconsequences.

·Todevelopandpilotmodelsforresearchinstitutemergers,closures,downsizing,orprogramtermination.

Box5.2:N.I.VavilovInstituteofPlantIndustryTheN.I.VavilovInstituteofPlantIndustry(VIR)inSt.Petersburg,foundedin1894,holdsoneoftheworld'slargestandmostimportantgermplasmcollectionsover340,000accessionsofmorethan2,500species.VIRprovidesresearchsupporttoallofRussia'splantbreedingcenters.FundingforVIRcomesdirectlyfromthefederalbudget.Severefundingshortageshaveput,VIR'sresearchprogramanditsgermplasmcollectionatrisk.VIR'svulnerabilityhasbeenrecognizedbytheWorldBankandotherinternationalagencies,whichhaveaccordinglyprovidedsupport.

Thesestepsarenecessaryantecedentstoanylarge-scaletransformationofRussia'sagriculturalresearchsystem.Thereislittledoubtthatlong-termsocialreturnsfromagriculturalresearchwillsignificantlyexceeddebtservicerequirementsfromanyinvestment

financedbyborrowedfunds.However,prudentallocationofloanfundsrequirestimeandmanagementexperiencebothlackingintheRussianagriculturalresearchestablishment.Incertainsituations,therefore,pilotprojectssupportedbydonorgrantfinancingmightbejustified.

StabilizingAgriculturalResearchSystem

TheRussianagriculturalresearchsystemneedstoidentifypriorityagriculturalresearchinstitutions,assets,andprogramswithhighstrategicvaluethatarevulnerabletosignificantorirreplaceablelossoverthenexttwotofiveyears.Eachpriorityprogramneedsanappropriatestabilizationplan.Along-termplanisalsoneededtoensurethefutureviabilityoftheresearchprogram.

MajorparticipantsinthisprojectwouldbeasmallmanagementteamrepresentingMOAF,RAAS,financingentities,andinternationalconsultantsonsciencepolicyorspecificareas-ofscience.ThesuccessofthisprojectdependsentirelyonthecommitmentoftheMOAFandRAAStoreformtheagriculturalresearchsystem.Researchmanagersmustbewillingtoobjectivelyevaluateeachinstitute'sprogramusingcleareconomiccriteria.Furthermore,theymustbewillingtoconsiderstrategiesinwhichtheydeliberatelysharepowerwithotherentitiesanddecentralizedecision-making.Itisnotpossibleto

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evaluatethestrategicvalue,vulnerability,andqualityofaresearchprogramwithoutconfrontingdecisionstocloseordownsizeinstitutions,shiftpriorities,orredirectscientificactivities.

Expertconsultationandadvicecanplayacriticalroletoensureobjectiveevaluationandprovideneededscientificexpertise.ConsultantsshouldbedrawnfromtheranksofscientistsandadministratorsinleadingagriculturalresearchuniversitiesandselectedresearchinstitutesfromtheCGIAR.

Fundingthisactivityistrickybusiness.Incentivestomisrepresentinstitutionalvulnerabilityandvalueareobviouslyhigh.Fundingmightbebasedonsomeofthefollowingcriteria:

·RequirecostsharingbetweenMOAFandRAAS,theinternationalfundingagency,theoblastgovernment,ifappropriate,andthespecificinstitutionreceivingassistance.

·Captotal,one-timefundsavailablefromthefundingagencyatarelativelylowlevel.

·Providefinancialassistanceprimarilyintheformofloans.Loanswouldseempreferabletograntssincetheintentistopreserveresearchassetsthathavehighfuturevalue.Loansalsocreatearepaymentobligation,whichshouldreducetheincentivetomisrepresentprogramvulnerability,value,orquality.However,debtservicerequirementsandoperatingbudgetrequirementsmustbecarefullyreviewed.Totheextentthatstrategicvalueaccruestotheworldscientificcommunity,limitedgrantfundingwouldalsobeappropriate.

StrengtheningtheCapacityforAgriculturalSciencePolicy

DuringtheSovietera,agriculturalsciencepolicyandadvocacywerethedomainofVASKhNIL.WiththecollapseoftheUSSR,the

establishmentofRAASand,morerecently,itsmergerwithMOAF,thelinesofauthorityforsciencepolicyandadvocacyhavebecomeblurredandinsomecasesobliterated.Russianagriculturalscienceneedsabodythatcandevelopandclearlyarticulatesciencepolicyandstrategy.Russianagriculturalsciencealsoneedsabodythatcanclearlypresenttolegislativebodiesandotherstakeholdersthecaseforagriculturalresearchandthebenefitsityields.Itislikelythatthetwobodiesneedtobedistinctandindependent.Russianagriculturalsciencealsoneedstoreestablishfield-basedprofessionalsocietiesthatarewellconnectedtothemajorinternationalprofessionalassociations.Finally,RussianscienceadministratorsinRAASandMOAFneedatechnicalassistanceprogram,possiblysupportedbydonorgrants.Technicalassistancewouldbeprovidedbyresearchadministratorsandstafffromleadingagriculturalresearchinstitutions.Keyareasofassistancewouldinclude:

·studytoursofleadingagriculturalresearchinstitutions,universities,andagriculturalresearchadvocacygroups

·trainingprogramsonagriculturalresearchadministrationandevaluation.Thiswouldincludechoicesinfundingmechanisms,publicandprivatesectorresearch,establishmentofpriorities,andmonitoringandevaluation

·trainingprogramsonagriculturalresearchadvocacyandlegislativestrategy

·preparationofapolicydocumentgoverningagriculturalscienceinRussia.

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AstransformationofRussia'sagriculturalresearchsystemproceeds,supportandaccountabilitywillbecomecloselytiedtooblastgovernments.However,nationalrepresentationandcoordinationofresearchwillstillbeneeded.AndRussia'sscientificcommunityneedstodevelopleaderswithastrategicperspectiveonagriculturalresearchwhocanseekopportunitiesandreacttopotentialthreats.Strengtheningagriculturalsciencepolicy,ultimately,seekstodevelopthisstrategiccapability.

ProvidingInternetAccesstotheAgriculturalResearchCommunity

Politicalideology,distance,poorcommunicationsystems,anddecliningbudgetshaveisolatedRussianagriculturalscientistsfromcolleagueselsewhere.AtatimewheninstantaneousglobalcommunicationovertheInternetisalmostcommonplace,Russianscientistsarenearlycutofffromtheworld'sscientificcommunity.

AlthoughanetworkofmajorRussianuniversitiesdoesexist,fewagriculturalinstitutionshaveaccesstoitusuallybecausetheylackdedicatedphonelineoramodemorthefundstocoverthecostofaccesstothetelephonenetwork.ThesearesmallobstaclescomparedwiththebenefitsthatwouldaccruewereRussianagriculturalscientiststogainfullaccesstotheInternet.Internetaccessiscertainlynotaperfectsubstituteforjournalsubscriptions,attendanceatprofessionalmeetings,scientificexchanges,orjointresearch.Butitiscosteffective.Andonadailybasis,InternetaccesscanplayamajorroleinreunitingRussianagriculturalscientistswiththeircolleaguesbothinsideandoutsidethecountry.

DevelopingCriticalScientificSkills

Therearetwobasicapproachestodevelopingcriticalscientificskills.Thefirstwouldrelyonacentralinstitutionthatwouldreceiveneededtrainingandthentraintrainersatspecificagriculturalacademiesor

researchinstitutes.Thesecondapproachwouldbemoredecentralizedandoffertrainingincriticalneedsdirectlytofacultyandresearchersatspecificinstitutions.

Thefirstapproachwouldlikelybemorecosteffectiveintheuseofdonorfunds.However,itwouldalsotendtocentralizeexpertiseandinformationathrow-backtoSovieterapolicies.Thiswouldclearlybeanunfortunateconsequence,sinceavibrantresearchandeducationalcommunityrequiresprofessionalindependence,institutionalfreedom,andcompetition.Butwithpropersafeguards,thepitfallsofcentralizationcanbeavoided.

TheTimiryazevMoscowAgriculturalAcademy(TMAA)hasawell-establishedtraditionofprovidingsupportandeducationalmaterialsthroughoutRussia'sagriculturalknowledgesystem,anditsadministrationandstaffhaveclearlystatedtheirwillingnesstoengageinsuchactivity(Box5.3).Mentoringisanessentialcomponentofthiseffort.TMAAcouldbelinkedwithacounterpartoneNorthAmericanandaEuropeanuniversitythatcouldprovidetrainingtoselectedTMAAfacultymembers.CentersofexcellencecouldbeestablishedinTMAAinareasthatarenotadequatelyrepresentedinRussianagriculturalresearch.SelectedresearchinstitutionsinRussiacouldthenpilottrainingprogramsdevelopedbyTMAAanditscounterparts.

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Box5.3:TimiryazevMoscowAgriculturalAcademyTimiryazev,MoscowAgriculturalAcademyisoneoftheoldestagriculturaleducationalinstitutionsinRussia.Establishedin1865,ithasbeenhometosomeofRussia'smostdistinguishedagriculturalscientistsoverthepast130years:K.A.Timiryazev,D.N.Pryanishnieav,N.I.Vavilov,V.R.Williams,N.D.Kondratiev,andV.S.Nemchinov,amongothers.TimiryazevAgriculturalAcademyhasawell-establishedtraditionintrainingRussianagriculturalscientistsandeducators.Approximately70percentofalltextbooks,laboratory,andotherteachingmaterialsinuseinRussiawerepreparedbytheacademy'sfaculty.Recently,theacademy'sadministrationhasattemptedtoestablishinternationalcontactstoupgradeprogramsineconomics,agribusinessmanagement,agroecology,extensioneducation,andresearchmanagement.Becauseofitshistoricalposition,TimiryazevisuniquelysuitedtoserveasRussia'straininginstituteforthesecriticalareas.

Foreachcriticalarea,thecounterpartinstitutionandTMAAwilldevelopandconductatrainingprogramtoupgradescientificskillstoanacceptablebasiclevel.Withsupportfromthecounterpartinstitution,TMAAwoulddevelopappropriatetrainingmaterialsandprograms,andTMAAstaffmemberswouldpilotbasicscientifictrainingprogramsatselectedresearchinstitutes.TMAAfacultytrainedincriticalskillareaswouldalsoparticipateinselectedresearchprogramsthroughpilotconsultancyprograms.Forexample,TMAAfacultymightcollaborateonprojectsontechnologyevaluation,commoditymarketing,orenvironmentalmanagement.

RestructuringAgriculturalResearchattheOblastLevel

InmostoblastsorkraysinRussia,theagriculturalknowledgesystemresemblesaminiatureversionofthenationalsystem.Researchinstitutes,agriculturalinstitutesofhighereducation,tekhnikums,agriculturalvocationaltrainingschools,retraininginstitutes,andanumberofgovernmentagenciesareallrepresented,eachreportingthroughverticalchannelstoMoscowanditsrespectiveministry(Box5.4andFigure5.3).Thisisthesettingwithinwhichmodelsofinstitutionalreformforagriculturalresearchmustbedevelopedandtested.

Box5.4:TheAgriculturalKnowledgeSysteminSaratovOblastTheagriculturalknowledgesystemisSaratovOblastistypicalofthatinmanyoblasts.ItsmajorcomponentsarefourresearchinstitutesreportingtoRAAS,tworesearchinstitutesreportingtotheRussianAcademyofSciences,andtworesearchinstitutesandthreeeducationalacademiesreportingtoMOAF.Addtothislisttworetraininginstitutes,ateachingacademyforgeneraleconomics,andSaratovStateUniversity,amajoreducationalinstitutionwithover20,000students,andthedifficultywithinstitutionalreformisclearastheorganizationchartinFigure5.3showsaswell.

Althoughthereisclearlyaroleforthefederalgovernmentinidentifyingnationalprioritiesandaccountingforexternalities,responsibilityforfinancingandmanagingadecentralizedagricultural

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Figure5.3.OrganizationalStructureofResearchandEducationalInstitutesinSaratovOblast

Source:BasedonUngenfucht(1996).

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researchprogrammustultimatelydevolvetotheoblasts.Therefore,experimentswithinstitutionalreform,whetherattheproject,enterprise,orregionallevels,mustfocusontheoblast.Institutionalreformhastodowithcreatingnewwaysofdoingbusinessnewproducts,customers,collaborators,incentivesandmethodsofplanning,implementation,andcontrol.Institutionalchangecanbebestfosteredbycreatingincentivesthatencourageoblastagriculturalresearchinstitutionsandscientiststorefocustheiractivitiesinordertodevelopacomprehensiveagriculturalresearchprogramthatis:

·consumer-oriented

·demand-driven

·client-focusedandparticipatory

·multidisciplinary

·costeffective

·linkedtoendusersthroughappropriatechannels,bothpublicandprivate.

Inshort,theincentivesystemshouldmovetheoblastresearchcommunityinthedirectiontowardwhichagriculturalresearchisheadedelsewhereintheworld.

5.37.Indesigningapilotprojectforinstitutionalreformattheoblastlevel,severalissuesneedtobeconsidered:

·Participatingoblastsshouldbecarefullyscreenedtoensurethattheoblastgovernmentiscommittedtothereformsandthatagricultureisanimportantsectorwithintheoblast.

·Theprojectshouldbeorganizedaroundanagriculturalproblemofsignificancetotheoblastandthatcanquicklydemonstratesignificantsocietalbenefits.Forexample,researchtoimprovetheoverall

profitabilityandenvironmentalperformanceofbreadwheatproductionsystemsinSaratovandneighboringoblasts.Aprojectwiththisscopewouldrequireintegrationofplantandsoilscienceswithmarketing,farmmanagement,conservationplanning,farmpolicy,andagriculturallaw.Furthermore,itrequiresdirectattentionontospill-overandspill-inproblemsandassociatedgovernmentresponsibilities.Thistypeofprojectwouldbeappliedinnatureandwouldrequiresynthesisandadaptationofexistingresearchresults.

·Theprojectshouldworkwithexistinginstitutionsintheoblast.Aprojectthatproposeseliminatingormergingspecificorganizationsislikelytobemetwithhostilityandtoinvolveapainful,protractedprocess.Toomuchenergywouldbeexpendedandlittlewouldbelearnedaboutnewwaysofworkingtogether.

·Theprojectshouldestablishaconsortiumofresearchinstitutionsandindividualsthatclearlyhavesomethingtooffer.Thiswouldrequireawell-supportedprojectmanagementstructurewiththeauthoritytosetclearlimitsandexpectations.

·Longer-termrelationshipsbetweentheoblastconsortiumandoneortwocarefullychosenWesternagriculturalresearchinstitutionsshouldbeestablished,toprovidetheoblastconsortiumwithamodelofeffectiveorganizationalbehavior,opportunitiesforprofessionaldevelopment,scientificexpertise,mentoring,andotherformsofsupport.SelectedCGIAR

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institutionsmightalsobeinvolvedparticularlyfortechnicalsupportintargetedresearchareas.

·Fundingneedstobeprovidedjointlybyparticipantsandtheinternationalcommunity.Allpartiesneedtobecommittedtotheproject'ssuccess.Sharedfinancinghelpsestablishthatcommitment.

Aprogramofbroadinstitutionalreformrequiresbroadparticipation.Thisinclusiveapproachcertainlyaddsmanagerialcomplexitytotheproject,butitshouldalsoresultinincreasedcommitment.Keyparticipantsmightinclude:

·Administratorsandscientistsofselectedoblastorregionalresearchinstitutesorinstitutesofhighereducationwithresearchprograms.

·AdministratorsandscientistsfromMOAFandRAAS,whoseinvolvementisparticularlyimportantifthepilotprojectistoresultinnationalreformstrategies.

·Representativesofoblastadministration.Itisexpectedthattheoblastwillincreasefundingforresearch.Inturn,itmustplayagreaterroleinresearchplanningandoversight.

·Representativesofend-users,includingparticipatingfarms,processingplants,andinputsuppliers.End-userscouldparticipatethroughadvisoryorreviewbodies.Theymightalsoexploredirectparticipationinresearchandfundtargetedresearchgrants.

·Representativesofstakeholderswithintheoblast,includingconsumersandenvironmentalists.Thiswouldlikelytaketheformofanadvisoryorreviewboardfortheproject.

·RepresentativesfromWesterncounterpartresearchinstitutions.Effectiveandcommittedcounterpartsareessentialtothesuccessofthisproject.

Giventhelevelofuncertaintythatsurroundspilotprojects,grantfundingalongwithin-kindcontributionsbyparticipantsmightbeconsidered.Withbettermodelsofinstitutionalreformandprovenresults,debtfinancingmightbeattractivetooblastandfederalgovernments.Fundingmustbeaccompaniedbyaclearcommitmentbyallpartiestorealreformoftheagriculturalresearchsystemwithintheoblast.Preservingtheexistingsystemisnotanoption.

ConsolidatingResearchInstitutesandPrograms

Elimination,downsizing,andmergingofresearchinstitutesandfacilitiesmustoccurifRussiaistoachieveareasonablebalancebetweenbudgetandprogram.Becauseofthepoliticalandpersonnelproblemsassociatedwiththeseactions,neededinstitutionaladjustmentsareoftenavoided.Thishesitationcostsmoneyandoftenexacerbatespersonnelproblems.Theobjectiveofthisactivityisto:

·developandtestmodelsofresearchinstituteorprogramclosure,downsizing,ormerger

·developandtestmodelstousesurplusland,buildingsandotherassetstogenerateincometosupportresearch

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·developandtestproceduresforretrainingorrelocatingdischargedstaff

·developandtestproceduresforreallocatingorliquidatingassetsfromterminatedprograms.

Theprojectwouldinvolverepresentativesfromtheprivatesector,MOAF,andRAASaswellasfromoneortwonationalagriculturalresearchsystemsinothercountrieswithexperienceindownsizingandprogramtermination.Forexample,researchadministratorsfromNewZealandorAustraliamightbeinvolved,aswellasstaffmembersfromselectedCGIARcenters.ItisessentialthatMOAFandRAASadministratorsplayanactiveroleinidentifyinginstitutionsforclosureordownsizingandtakeresponsibilityfortheseactions.

SupportofReformbytheInternationalCommunity

ThequestionofhowtofinancereformofRussia'sagriculturalresearchsystemhasarisenrepeatedlyinthisreport.Atissueis''howtobestfinance"theprocessofreform,restructuring,andrehabilitationoftheRussianpublicagriculturalresearchsystem.Itisexpectedthattherestructuredsystemwouldbesustainablewithfundingfromfederalandoblastbudgetsandotherresearchsponsors,bothpublicandprivate.Ultimately,operatingandcapitalbudgetswillbebroughtintolinetosupportthebestagriculturalresearchsystemRussiacanafford.

Restructuringandreformoftheagriculturalresearchsystemcanbefinancedby:

·costreduction,recovery,andreallocationofexistingbudgets

·increasedappropriationfromfederaloroblastsources

·agriculturalresearchfoundations

·grantsfrominternationaldonorsortheprivatesector

·loansfrominternationalfinancialinstitutionssuchastheWorldBank.

Intheshortterm,financingreformthroughreallocationwilltaketimeandagreatdealofpoliticalcapital.Increasedappropriationsseemratherunlikelyifthereformprocessistobeexpedited.Researchfoundationsdonotyetexist.Whatremainsaregrantsandloans.

Grantfundingisnormallyjustifiedonthebasisofpublicgoodsarguments.InthecaseofagriculturalresearchinRussia,thereareseveralpublicgoodselementsembeddedinthereformprocess:

·FoodsecurityinRussiasupportsdemocratizationandthedevelopmentofcivilsociety.

·GlobalfoodsecuritywillbeenhancedifRussia'sagriculturalsectorbecomesmoreefficientandsustainable.

·ThevalueofRussia'sagriculturalresearchassets,suchasgermplasm,know-how,orresearchproducts,maybelosttotheworldcommunitywithoutdirectintervention.

Thatsaid,however,itisquestionablewhetherthevalueofinternationalpublicgoodsissufficienttosupporttheuseofgrantfundsforagriculturalresearchreforms.Andevenifitwere,itcanbeverydifficulttocreateincentivesoradequatelymonitorgrant-fundedprojectsthatwouldensurethatthedesiredreformsoccur.

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Whataboutloans?Fundstofinancereformandtherestructuringoftheagriculturalresearchsystemcanbeborrowedatmarketratesofinterestfarbelowtheratesofreturnthatinvestmentsinagriculturalresearcharecapableofgenerating.Borrowingtheneededcapitalisclearlyprofitable.Furthermore,borrowingmoneywouldalignincentivestoinvestinresearchreformsandprojectsthatgeneratethemostsocietallybeneficialincomestreams.YetRussiaauthoritieshaverepeatedlydemonstratedareluctancetofinanceagriculturalresearchwithdebt.Thereareseveralpossiblereasonsforthisreluctance:

·ThecaseforcompetitiveratesofreturnfrominvestinginagriculturalresearchprojectshasnotbeenadequatelymadetotherelevantRussianauthorities,particularlyintheMinistryofFinance,MOAF,RAAS,andtheoblastgovernments.

·PersistentinefficiencyinRussia'sagriculturalsectorisperceivedtoreduceactualratesofreturnwellbelowratesestimatedforothercountries.

·Uncertaintiesassociatedwiththebenefitsfromreform,ortheabsenceofprovenmodesofreform,aresogreatthatRussianauthoritieswillnotacceptloanobligations.

·AgencyproblemsunderminetheprocesstheMinistryofFinanceisreluctanttotakeondebtbecauseitsagents,MOAForRAASorotherresearchbodies,maynotbeabletoimplementtheneededreformsormaychoosetopreservetheexistingsystem.

·Thetermsoftheloandonotmatchtheexpectedincomestreamfromtheinvestmentinagriculturalresearch,therebyresultinginseriousliquidityproblems.

Undertheseconditions,acasecanbemadeforusingsmall,targetedgrant-fundedpilotprojectstodevelopandtestreformprojectsandtodeveloptheneededskillsforRussianstodesignandmanagethe

projects.However,thegrantfundscanserveonlyasacatalysttojumpstartthereformprocess.Ultimately,responsibilityforfinancingthetransitionandongoingoperationsofthereformedRussianagriculturalresearchsystemrestswiththeRussians.

Agriculturalresearchinterestsarewellrepresentedintheinternationalcommunity,intheWorldBank,OECD,bilateraldonors,theEuropeanCommunity,andNorthAmericanandEuropeanagriculturaluniversities,amongothers.TheveryrealprospectofRussia'svastagriculturalknowledgesystemcollapsingjustwhentheworldcommunitywillneeditmostshouldbesufficienttoprovokearesponse.YettheresponsefromtheinternationalcommunitytoRussia'sagriculturalresearchcrisishasbeenlimitedandfragmented.Little,ifany,efforthasbeenmadetoassistRussiawiththetransformationofitsagriculturalresearchorhighereducationsystems.Long-termcapacitycannotbeallowedtofallvictimtoshort-termexpediency.

Ashasbeenarguedfromseveralperspectives,theRussianagriculturalresearchsystemmeritsassistanceeveninthemidstofadifficulteconomicandpoliticaltransition.Thisassistanceneedstobeginwithtwobasicstepstostabilizeandprotecttargetedagriculturalresearchassetsandtodevelopandpilotmodelsofinstitutionalchangeandhumancapitaldevelopment.Newfinancingisrequiredtoimplementboththesesteps.However,thefinancingmustbeprovidedinawaythatensuresdeliberatetransformationandreform.Usingfundstopreservethepastisunacceptable.Itisalsoessentialthatfundsextendedtosupportstabilizationandinstitutionallearningreflecttheuncertaintyoftheprocessand

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outcomeinbothareas.Forthisreason,bothgrantsandloansshouldbeconsideredaspossiblefundingmechanismsinthenearterm

ProjectstosupportagriculturalresearchprogramshavebeendiscussedwithRussianadministratorsandscientistsforthepastfiveyears.Yetafterallthestudies,needsassessments,visionstatements,andmemorandaofunderstanding,littleofsignificancehasoccurredtorelievetheseriousproblemsfacingRussia'sagriculturalresearchsystem.ThisisaconsequenceofcollectivefailurebytheRussiangovernment,byoblastandmunicipalgovernments,bytheRussianscientificestablishment,andbytheinternationalcommunity.ThepriorityactivitiesproposedheremakeapositivecontributiontowardredefiningrolesandresponsibilitiesforagriculturalresearchinRussia.Andmostimportant,theywouldhelpensurethatthehuman,biological,andphysicalcapitalinvestedinRussia'sagriculturalknowledgesystemisnotonlyusedeffectivelyduringtransitionbutalsoisnotlosttofuturegenerations.

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AnnexAAgriculturalInstitutesofHigherEducationinRussiaNumber AgriculturalAcademiesand

InstitutionsLocation

1 All-RussiaAgriculturalInstituteofExtra-MuralTraining

Balashikha

2 TimiryazevAgriculturalAcademy Moscow

AgriculturalUniversities1 GorskyStateAgriculturalUniversity Vladikavkaz2 KrasnoyarskStateAgricultural

UniversityKrasnoyarsk

3 KubanStateAgriculturalUniversity Krasnodar4 NovosibirskAgriculturalUniversity Novosibirsk5 St.PetersburgStateAgricultural

UniversityPushkin

6 VoronezhStateAgriculturalUniversity

Voronezh

7 AltaiStateAgriculturalUniversity Barnaul8 BashkirAgriculturalUnivesity Ufa

AgriculturalInstitutes1 BelgorodAgriculturalInstitute Maiski2 BlagovestchenskAgricultural

InstituteBlagovestchensk

3 BryanskAgriculturalInstitute Kokino4 BuryatAgriculturalInstitute Ulan-Ude5 ChuvashAgriculturalInstitute Cheboksari6 DaghestanAgriculturalInstitute Makhachkala7 DonAgriculturalInstitute Persianovka8 IrkutskAgriculturalInstitute Molodezhny9 IvanovoAgriculturalInstitute Ivanovo

10 IzhevskAgriculturalInstitute Izhevsk11 Kabardino-BalkarAgricultural

InstituteNalchik

12 KazanAgriculturalInstitute Kazan13 KirovAgriculturalInstitute Kirov14 KostromaAgriculturalInstitute Kostroma15 KurganAgriculturalInstitute Lesnikovo16 KurskAgriculturalInstitute Kursk17 NizhegorodskyAgriculturalInstitute Novgorod18 NovgorodAgriculturalInstitute Novgorod19 OmskAgriculturalInstitute Omsk20 OrenburgAgriculturalInstitute Orenburg21 OryolAgriculturalInstitute Oryol22 PenzaAgriculturalInstitute Penza23 PermAgriculturalInstitute Perm24 PrimorskyAgriculturalInstitute Primorsky

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(AnnexAcontinuedfrompreviouspage)

Number AgriculturalAcademiesandInstitutions Location

25 RyazanAgriculturalInstitute Ryazan26 SamaraAgriculturalInstitute Kinel27 SaratovAgriculturalInstitute Saratov28 SmolenskAgriculturalInstitute Smolensk29 StavropolAgriculturalInstitute Stavropol30 TumenAgriculturalInstitute Tumen31 TverAgriculturalInstitute Tver32 UlyanovskAgriculturalInstitute Ulyanovsk33 UralAgriculturalInstitute Ekaterinburg34 VelikolukskiAgriculturalInstitute VelikieLuki35 VolgogradAgriculturalInstitute Volgograd36 YakutskAgriculturalInstitute Yakutsk37 YaroslavlAgriculturalInstitute Yaroslavl

AgriculturalEngineeringInstitutesandUniversities

38 Azovo-ChemomorskyInstituteofAgriculturalMechanization

Rostov

39 ChelyabinskAgriculturalEngineeringStateUniversity

Chelyabinsk

40 MoscowInstituteofAgriculturalEngineers

Moscow

41 SaratovInstituteofAgriculturalMechanization

Saratov

42 TabmovInstituteofChemicalMachineBuilding

Tabmov

DairyInstitutes43 VologdaDairyInstitute Molochnaya

FruitandVegetableGrowingInstitutes44 MichurinFruitandVegetableGrowing Michurinsk

Institute

LandImprovementInstitutes45 MoscowInstituteofLandImprovement Moscow46 NovocherkasskEngineeringandLand

ImprovementInstituteNovocherkassk

LandUseUniversities47 MoscowStateUniversityofLandUse Moscow

VeterinaryAcademiesandInstitutes48 KazanStateVeterinaryInstitute Kazan49 OmskStateVeterinaryInstitute Omsk50 MoscowVeterinaryAcademy Moscow51 SaratovStateZooveterinaryInstitute Saratov52 St.PetersburgVeterinaryInstitute St.Petersburg53 TroitskyVeterinaryInstitute Troitsky

AnnexBMainAgriculturalResearchInstitutesinRussiaNo. AgriculturalResearchInstitute Location

1 All-RussiaResearchInstituteofEconomics,Labor,andManagementinAgriculture.

Moscow

2 ResearchInstituteofEconomicsandOrganizationoftheAICoftheCentralBlack-EarthZone.

Voronezh

3 VolgaResearchInstituteofEconomicsandOrganizationoftheAIC

Saratov

4 All-RussiaResearchInstituteofAgriculturalEconomics Moscow5 All-RussiaResearchInstituteofCyberneticsofAIC Moscow6 All-RussiaResearchInstituteofEconomicsandNorms Rostov-on-the-Don7 AgrarianInstitute Kursk8 KurskResearchInstituteofAgro-IndustrialProduction. Moscow9 PotapenkoAll-RussiaResearchInstituteofWine-Growingand

Wine-Brewing.Novocherkassk,RostovOblast

10 All-RussiaResearchInstituteofCorn Piatigorsk,StavropolKrai

11 ResearchInstituteofAgricultureofSouthEast Saratov12 All-RussiaResearchInstituteofVegetableGrowing Mytischi,Moscow

Oblast13 All-RussiaResearchInstituteofPotatoGrowing Korenevo,Moscow

Oblast14 KrasnodarResearchInstituteofVegetableandPotatoGrowing Krasnodar15 All-RussiaResearchInstituteofSelectionofHorticulture Oryol16 LukianenkoKrasnodarResearchInstituteofAgriculture Krasnodar17 DonZoneResearchInstituteofAgriculture Rassvet,Rostov

Oblast18 SamaraResearchInstituteofAgriculture Bezenchuk,Samara

Oblast19 OrenburgResearchInstituteofAgriculture Orenburg20 NorthCaucasusZoneResearchInstituteofHorticultureand Krasnodar

Wine-Growing21 TambovResearchInstituteofAgriculture Chakino,Tambov

Oblast22 StavropolResearchInstituteofAgriculture Shpakovskoe,

StavropolKrai23 SouthUralsResearchInstituteofFruit,Vegetable,andPotato

GrowingCheliabinsk

24 ResearchInstituteofAgricultureofCentralRegionofNon-BlackEarthZone

Nemchinovka,MoscowOblast

25 TulaResearchInstituteofAgriculture MolochnyeDvory,TulaOblast

26 All-RussiaSelectionandTechnologicalInstituteofHorticultureandPlant

Moscow

27 Nursery.VavilovAll-RussiaResearchInstituteofCropGrowing

St.Petersburg

28 All-RussiaResearchInstituteofAgriculturalBiotechnology Moscow29 PustovoitResearchInstituteOfOilCrops Krasnodar30 All-RussiaResearchInstituteofBeansandGroatsCrops Oryol31 All-RussiaResearchInstituteofIrrigationVegetableGrowing

andMelonsKamyziak,AstrakhanOblast

32 MichurinAll-RussiaResearchInstituteofHorticulture Michurinsk,TambovOblast

33 All-RussiaResearchInstituteofFlowGrowingandSubtropicalCrops

Sochi,KrasnodarKrai

34 All-RussiaResearchInstituteofSelectionandSeedGrowingofVegetableCrops.

LesnoiGorodok,MoscowOblast

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(AnnexBcontinuedfrompreviouspage)

No. AgriculturalResearchInstitute Location

35 MichurinAll-RussiaResearchInstituteofGeneticsandSelectionofFruitPlants

Michurinsk,TambovOblast

36 All-RussiaResearchInstituteofMedicineandAromaticPlants

Moscow

37 BashkirResearchInstituteofCropGrowingandSelectionofFieldCrops

Ufa

38 PovolzhieKonstantinovResearchInstituteofSelectionandSeedGrowing

Kinel,SamaraOblast

39 Karachaevo-CherkessResearchInstituteofAgriculture Kavkazskiy,Karachaevo-CherkessRepublic

40 ViliamsAll-RussiaResearchInstituteofFodder Lugovaia,MoscowOblast41 All-RussiaResearchandTechnologicalInstituteof

LucerneandRapeGikalo,ChechenRepublic

42 All-RussiaResearch,Design,andTechnologyInstituteofRape

Lipetsk

43 All-RussiaResearchInstituteofLupine. Briansk44 PenzaResearchInstituteofAgriculture Penza45 BashkirResearch,Design,andTechnologyInstituteof

AnimalHusbandryandFodderProductionUfa

46 TatarResearchInstituteofAgriculture Kazan47 All-RussiaResearchInstituteofBiosynthesisofProteins. Moscow48 All-RussiaResearch,Design,andTechnologyInstituteof

ChemicalisationofAgricultureNemchinovka

49 NorthCaucasusInstituteofMountainAgriculture Mikhailovskoe,RepublicNorthOssetia

50 UlianovskResearchInstituteofAgriculture Timiriazevskoe,UlianovskOblast

51 LowVolgaResearchInstituteofAgriculture NovozhiznenskiyVolgogradOblast

52 DagastanResearchInstituteofAgriculture Makhachkala53 CheliabinskResearchInstituteofAgriculture Timiriazevskiy,

CheliabinskOblast54 NorthCaucasusResearchandTechnologyInstituteof Krasnodar

54 NorthCaucasusResearchandTechnologyInstituteofAgro-ChemistryandSoils

Krasnodar

55 CaspianResearchInstituteofAridAgriculture Astrakhan56 AdygeyResearchInstituteofAgriculture Maikop57 All-RussiaResearchInstituteofAgricultureand

ProtectionofSoilsfromErosionKursk

58 Agro-PhysicsResearchInstitute St.Petersburg59 PrianishnikovAll-RussiaResearchInstituteofFertilizer

andAgroSoilScienceMoscow

60 DokuchaevSoilInstitute Moscow61 All-RussiaResearchInstituteofAgricultural

MicrobiologySt.Petersburg

62 All-RussiaResearchInstituteofAgriculturalRadiologyandAgro-Ecology

Obninsk,KalugaOblast

63 All-RussiaResearch,Design,andTechnologyInstituteofChemicalAmeliorationofSoils

St.Petersburg

64 All-RussiaResearch,Design,andTechnologyInstituteofMineralFertilizers

Viatkino,VladimirOblast

65 DokuchaevResearchInstituteofAgricultureoftheCentralBlackEarthZone

VoronezhOblast

66 All-RussiaResearchInstituteofPlantProtection St.Petersburg67 All-RussiaResearchInstituteofPhyto-Pathology B.Viazemy,Moscow

Oblast

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No. AgriculturalResearchInstitute Location

68 All-RussiaResearchInstituteofBiologicalProtectionofPlants Krasnodar69 All-RussiaResearchInstituteofIrrigationAgriculture Vologograd70 All-RussiaResearchInstituteofAgriculturalUseofAmeliorated

LandsTver

71 All-RussiaResearchInstituteofHydro-TechnologyandAmeliorationMoscow72 All-RussiaResearchInstituteofAgroForestAmelioration Volgograd73 All-RussiaResearch,Design,andTechnologyInstituteof

MechanizationandElectrificationofAgricultureZernograd,RostovOblast

74 All-RussiaResearch,Design,andTechnologyInstituteofAnimalHusbandryMechanization

ZnamiaOktiabria,MoscowOblast

75 All-RussiaResearch,Design,andTechnologyInstituteofMaintenanceandExploitationoftheMachineandTractorPark

Moscow

76 All-RussiaResearch,Design,andTechnologyInstituteofElectrificationofAgriculture

Moscow

77 All-RussiaResearch,Design,andTechnologyInstituteofTechnologyandEconomicsofStorage,transportation,andMechanizationofFertilizerApplication

Riazan

78 Research,Design,andTechnologyInstituteofLiquidFertilizers Klin,MoscowOblast

79 All-RussiaResearch,Design,andTechnologyInstituteofUseofMachinesandPetroleumProductsinAgriculture.

Tambov

80 All-RussiaresearchInstituteofTechnologyofStrengthening,Rehabilitation,andproductionofParts

Moscow

81 All-RussiaResearchInstituteofOrganization,Economics,andTechnologyofMaterialProcurementinAIC.

Riazan

82 All-RussiaResearchInstituteofAnimalHusbandry Dubrovitsy,MoscowOblast

83 All-RussiaResearchInstituteofHorseBreeding InstituteKonevodstva,RiazanOblast

84 All-RussiaResearchInstituteofPhysiology,Biochemistry,andNutritionofAgriculturalAnimals

Borovsk,KalugaOblast

NutritionofAgriculturalAnimals KalugaOblast85 All-RussiaResearchInstituteofSheepandGoatBreeding Stavropol86 All-RussiaResearchandSelectionInstituteofAnimalHusbandry Bykovo,

MoscowOblast87 All-RussiaResearchInstituteofMeatHusbandry Orenburg88 All-RussiaResearchInstituteofGeneticsandBreedingof

AgriculturalAnimalsSt.Petersburg

89 All-RussiaResearch,Design,andTechnologyInstituteofPoultryBreeding

SergievPosad,MoscowOblast

90 NorthCaucasusResearchInstituteofAnimalHusbandry Znamenskiy,KrasnodarKrai

92 StavropolResearchInstituteofAnimalHusbandryandFodderProduction.

Stavropol

93 VolgaResearchInstituteofAnimalHusbandryandBiotechnology Saratov94 KalmykResearchInstituteofAgriculture Elista95 All-RussiaResearch,Design,andTechnologyInstituteofPig

BreedingTogliatti,SamaraOblast

96 AfanasievResearchInstituteofAnimalandRabbitBreeding Rodniki,MoscowOblast

97 All-RussiaResearchInstituteofIrrigationFishery Vorovskogo,MoscowOblast

98 All-RussiaResearchInstituteofPoultryProcessingIndustry Rzhavki,MoscowOblast

99 ZhitkovAll-RussiaResearchInstituteofGameandAnimalBreeding Kirov100KovalenkoAll-RussiaResearchInstituteofExperimentalVeterinary Moscow101SkriabinAll-RussiaResearchInstituteofHelminthology Moscow102All-RussiaResearchInstituteofVeterinaryVirusologyand

MicrobiologyPokrov,VladimirOblast

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No. AgriculturalResearchInstitute Location

103All-RussiaResearchVeterinaryInstituteofPathology,PharmacyandTherapy

Voronezh

104All-RussiaResearchInstituteofVeterinarySanitation,HygieneandEcology

Moscow

105All-RussiaResearchVeterinaryInstituteofPoultryBreeding St.Petersburg106NorthCaucasusZoneResearchVeterinaryInstitute Novocherkassk,

RostovOblast107CaspianZoneResearchVeterinaryInstitute Makhachkala108All-RussiaResearchInstituteofMeatIndustry Moscow109All-RussiaResearchInstituteofMilkIndustry Moscow110All-RussiaInstituteofButterandCheeseIndustry Uglich,Yaroslavl

Oblast111All-RussiaResearchInstituteofPreserveandDryVegetable

Industry.Vidnoe,MoscowOblast

112ResearchInstituteofBabyNutrition Istra,MoscowOblast

113All-RussiaResearchInstituteofRefrigerationIndustry Moscow114ResearchInstituteofFoodConcentrateIndustryandSpecialFood

TechnologyMoscow

115All-RussiaResearchInstituteofStarchProducts Konevo,MoscowOblast

116All-RussiaResearchInstituteofSugarIndustry Kursk117All-RussiaResearchInstituteofTobacco,MakhorkaandTobacco

ProductsKrasnodar

118All-RussiaResearchInstituteofFats St.Petersburg119All-RussiaResearchInstituteofBeerBrewing,SoftDrink,and

Wine-MakingIndustryMoscow

120ResearchInstituteofConfectioneryIndustry Moscow121All-RussiaResearchInstituteofFoodBiotechnology Moscow122All-RussiaResearchInstituteofFoodAromatizers,Acidsand

ColorsSt.Petersburg

123ResearchInstituteofInformationandTechnologicalandEconomicResearchinFoodIndustry.

Moscow

ResearchinFoodIndustry.124ResearchInstituteofWoolProcurementandPrimaryProcessing

KraiNevinnomyssk,Stavropol,

125.NorthCaucasusResearchInstituteofSugarBeetandSugar Krasnodar126KrasnodarResearchInstituteofStorageandProcessingof

AgriculturalOutputsKrasnodar

127VolgogradResearch,DesignandTechnologyInstituteofMeatandMilkHusbandryandProcessingofLivestockProducts

Volgograd

128AltaiResearchInstituteofAgricultureandCropSelection Barnaul129AltaiResearch,DesignandTechnologyInstituteofAnimal

HusbandryBarnaul

130BuriatResearchInstituteofAgriculture Ulan-Ude131InstituteofExperimentalVeterinaryofSiberiaandFarEast Krasnoobsk,

NovosibirkOblast

132KemerovoResearchInstituteofAgriculture Kemerovo133KrasnoiarskResearchInstituteofAgriculture Krasnoiarsk134KurganResearchInstituteofGrainEconomy Sadovoe,Kurgan

Oblast135ResearchInstituteofHorticultureinSiberia Barnaul136ResearchInstituteofFarNorth Norilsk137ResearchInstituteofAgricultureofNorthernTrans-Urals Tiumen138ResearchInstituteofVeterinaryofEastSiberia Chita139SiberianResearchInstituteofAgricultureandChemicalisation Krasnoobsk,

NovosibirskOblast

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No. AgriculturalResearchInstitute Location

140SiberianResearchInstituteofFodder Krasnoobsk,NovosibirskOblast

141SiberianResearchInstituteofMechanizationandElectrificationofAgriculture

Krasnoobsk,NovoribirskOblast

142SiberianResearch,DesignandTechnologyInstituteofAnimalHusbandry

Krasnoobsk,NovoribirskOblast

143SiberianResearch,DesignandTechnologyInstituteofCropGrowingandSelection

Krasnoobsk,NovorisbsirskOblast

144SiberianResearchInstituteofAgriculture Omsk145SiberianResearchInstituteofAgriculturalEconomics Krasnoobsk,

NovosibirskOblast

146YakutResearchInstituteofAgriculture Yakutsk147IrkutskResearchInstituteofAgriculture Pivovarikha,

IrkutskOblast148SiberianResearch,DesignandTechnologyInstituteofPhysicsand

TechnologicalProblems.Krasnoobsk,NovosibirksOblast

149SiberianResearch,DesignandTechnologyInstituteofProcessingofAgriculturalOutput

Krasnoobsk,NovoribirskOblast

150KrasnoiarskResearch,DesignandTechnologyInstituteofAnimalHusbandry

Krasnoiarsk

151Trans-BaikalResearchInstituteofAgriculture Chita152ResearchInstituteofAgriculturalProblemsinKhakassia Zelionoe,

Khakassia153ResearchInstituteofAmeliorationandRationalNatureUse Tiumen154.SiberianResearchInstituteofPeat Tomsk155All-RussiaResearchInstituteofVeterinaryEntomology Tiumen

155All-RussiaResearchInstituteofVeterinaryEntomology Tiumen156All-RussiaResearchInstituteofTuberculosisofAnimals Omsk157MountainAltaiResearchInstituteofAgricultureMountainAltai

ResearchInstituteofAgricultureMaima,AltaiRepublic

158NorthWestResearchInstituteofAgriculture Belogorka,LeningradOblast

159RudnitskiyResearchInstituteofAgricultureofNorthEast Kirov160UralsResearchInstituteofAgriculture. Yekaterinburg161OryolResearchInstituteofAgriculture Znamenka,

OryolOblast162PskovResearchInstituteofAgriculture Radian,Pskov

Oblast163NovgorodResearch,DesignandTechnologyInstituteofAgriculture Borki,

NovgorodOblast

164PermResearchInstituteofAgriculture Lobanovo,PermOblast

165MariResearchInstituteofAgriculture. Ruem,Mari-EL166RiazanResearch,DesignandTechnologyInstituteofAIC Podviazy,

RiazanOblast167NizhegorodResearch,DesignandTechnologyInstituteofAIC Roika,

NizhegorodOblast

168NorthWestResearchInstituteofMilkandPastureEconomy Vologda169YaroslavlResearchInstituteofAnimalHusbandryandFodder

ProductionMikhailovskoe,YaroslavlOblast

170ResearchVeterinarianInstituteofNon-BlackEarthZoneofRussianFederation

NizhnyNovgorod

171Research,DesignandTechnologyInstituteofMechanizationandElectrificationofAgricultureofNon-BlackEarthZoneofRussianFederation

St.Petersburg

172ResearchInstituteofEconomicsandOrganizatinofAgriculturalProductioninNon-BlackEarthZoneofRussianFederation

St.Petersburg

173Research,DesignandTechnologyInstituteofAICofKomiRepublic Syktyvkar

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No.AgriculturalResearchInstitute Location

174KalugaResearch,DesignandTechnologyInstituteofAIC

Kaluga

175ArchangelResearchInstituteofAgriculture Archangel176KaliningradResearchInstituteofAgriculture Slavinskoe,Kaliningrad

Oblast177VladimirResearchInstituteofAgriculture Seltso,VladimirOblast178ChuvashResearchInstituteofAgriculture Ivanovo,Chuvashia179IvanovoResearchInstituteofAgriculture Bogorodskoe,Ivanovo

Oblast180SmolenskResearchInstituteofAgriculture Smolensk181KostromaResearchInstituteofAgriculture Minskoe,KostromaOblast182All-RussiaResearchInstituteofSoy Blagoveshchensk183FarEastResearchInstituteofAgriculture Khabarovsk184FarEastZoneResearchInstituteofVeterinary Blagoveshchensk185SakhalinResearchInstituteofAgriculture NovoaleksandrovskSakhalin

Oblast186MagadanResearchInstituteofAgriculture Magadan187PrimorskiyResearchInstituteofAgriculture Timiriazevskiy,Primorskiy

Krai188FarEastResearchInstituteofMechanizationand

ElectrificationofAgricultureBlagoveshchensk

189FarEastResearchInstituteofPlantProtection Kamen-Rybolov,PrimorskiyKrai

190FarEastResearchInstituteofEconomicsandOrganizationofAIC

Khabarovsk

191KamchatkaResearchInstituteofAgriculture Sonosnovka,KamchatkaOblast

192Kabardino-BalkariaResearchInstituteofAgriculture Nalchik193All-RussiaResearchInstituteofGrainandProcessed

ProductsfromGrainMoscow

194StateResearchInstituteofBakeryIndustry Moscow195MainComputingCenter Tver196ScientificandTechnologicalCenterofFoodIndustry Moscow

196ScientificandTechnologicalCenterofFoodIndustry Moscow197ArchangelExperimentalAmeliorationStation Archangel

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AnnexCRoleofPublicSectorinFinancingResearchThelevelofpublicsectorinvestmentinagriculturalresearchanddevelopmentvariesagreatdealfromonecountrytoanotherandfromregiontoanother.Thestatusandemergingtrendsinthelevelofinvestmentinagriculturalresearcharethefollowing:1

·Publicinvestmentinagriculturalresearch(measuredaspercentofagriculturalGDP)inthedevelopingcountriesaswellasthetransitioneconomiesismuchlowerthaninthedevelopedcountries(forgloballevelsandtrendsseeTablesC.1andC.2).Theinvestmentlevelsindevelopingcountriesarealmost20percentofthecorrespondinglevelsindevelopedcountries.

·Generally,therehasbeenanincreaseinthelevelsofinvestmentinagriculturalresearchinbothdevelopinganddevelopedcountriestillmid-1980s.Sincethentherehasbeenadeclinebuttheactualchangevariesfromonecountrytoanotherandfromoneregiontoanother(seeTableC.3).

TableC.1:IntensityofPublicSectorInvestmentinAgriculturalResearchintheEarly1990s

Countries/regions Nominalinvestmentinagriculturalresearchas%ofthenominalagriculturalGDP

Developingcountries

0.50

Developedcountries

2.50

Russia 0.25China 0.42

UnitedStates 2.22UnitedKingdom 3.80Australia 5.00Canada 5.30

Sources:Alston,PardeyandRoseboom(1997);Alston,ChalfantandPardey(1995);andAuthors'calculations.

1Thereisacontinuingdebateonthebestmechanismsforfundingagriculturalresearch(NationalResearchCouncil,1994).Competitivegrantsarebeingconsideredasoneofthebestwaystoallocatescarceresourcestofinanceagriculturalresearch.However,accordingtoHuffmanandJust(1994),theempiricalevidencefromtheUnitedStatesindicatesthatthecurrenttrendtowardcompetitivegrantsandearmarkedfunding,asopposedtoformulafundingfromfederalsources,apparentlyreducedproductivityofresearchexpenditure.

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TableC.2:ChangesintheIntensityofPublicSectorInvestmentinAgriculturalResearchOverTime

(PercentageofAgriculturalGDP)Region 1971-75 1976-80 1981-85 1986-90 1991

DevelopingCountries 0.38 0.47 0.50 0.49 0.51Sub-SaharanAfrica 0.78 0.84 0.86 0.74 0.70China 0.40 0.48 0.41 0.38 0.36AsiaandPacific(excl.China) 0.26 0.36 0.44 0.50 0.55LatinAmericaandtheCaribbean 0.43 0.51 0.59 0.49 0.54WestAsiaandNorthAfrica 0.50 0.49 0.52 0.52 0.52

IndustrialCountries 1.38 1.60 1.98 2.18 2.39Totala 0.67 0.76 0.81 0.79 0.81

aExcludingCubaandtheformerSovietUnion.

Source:Alston,PardeyandRoseboom(1997).

TableC.3:GlobalTrendsinPublicExpenditureforAgriculturalResearch

RegionExpenditures

(millionin1985dollars)AnnualGrowthRates(percentperyear)

1971 1981 1991 1971-81 1981-91

DevelopingCountries 2985 5535 8017 6.4 3.8Sub-SaharanAfrica 699 927 968 2.5 0.8China 457 934 1494 7.7 4.7AsiaandPacific(excl.China) 862 1922 3502 8.7 6.2LatinAmericaandtheCaribbean 508 1008 951 7.2 -1.1WestAsiaandNorthAfrica 459 738 1102 4.3 4.0

IndustrialCountries 4298 5713 6941 2.7 1.7

Totala 7283 11248 14958 4.4 2.8

aExcludingCubaandtheformerSovietUnion.

Source:Alston,PardeyandRoseboom(1997).

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AccordingtoWorldBank(1981),averagepublicexpenditureasaproportionofagriculturalGDPindevelopingcountriesasagroupshouldrisefromlessthan0.5%to2%.Agricultureismuchmoreefficientandproductiveincountrieswithhigherlevelsofinvestmentinagriculturlresearchanddevelopment.Onelessonforthedevelopingandtransitioneconomies,includingRussia,isthatthepolicymakersmustconsiderincreasingthelevelsofinvestmentinagriculturalresearch.However,thisinvestmentmaynothaveeconomicpayoffscomparabletothoseindevelopedcountriesunlesstheagriculturalresearchsystemisreformedandmademoreresponsivetoclientneeds.

However,forvariousreasonstheinvestmentinagriculturalresearchinallcountries,butparticularlyinthetransitioneconomies,isdeclining.AssummarizedinBoxC.1,therearemanyreasonsforthisdecline.Thereisaneedtoconvincethenationalleadersofpotentialpayoffstoinvestmentinagriculturalresearchorthelostoutputfornotmakingsuchinvestments.However,itmustberecognizedthatmerelyincreasingbudgetallocationsisnotlikelytogeneratethedesiredresults.Clearlythereisaneedforimprovingefficiency,consolidatingresearchfacilities,establishingresearchprioritiesthatrespondtolocalandnationalneedsandincreasingaccountability.

BoxC.1:LikelyReasonsforDeclineinFundingforAgriculturalResearchBasedontheinternationalexperience,thelikelyreasonsfordeclineinfundingforagriculturalresearcharethefollowing:·budgetcutsasaresultoffiscalausterity;·lackofunderstandingbynationalleadersofthecrucialroleofagricultureinoveralldevelopmentpolicies;·lackofrecognitionofthepublic-goodnatureofmuchagriculturalresearch;·withdrawalofsupportbydonors;·inefficiencyofresearchsystemandlackofaccountability;

·lackofrelevantresearchoutputsfrommanyresearchprograms;·along-termdeclineinagriculturalcommodityprices,whichactsasadisincentivetoinvestmentintheagriculturalsectorSource:ByerleeandAlex(1998)

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AnnexDRoleofPrivateSectorinFinancingResearchTheroleofprivatesectorinfundingagriculturalresearchisgraduallyincreasing.Thisisparticularlytrueformodernagricultureindevelopedcountries.Thepublicsector,however,remainsthedominantsourceoffundingagriculturalresearchindevelopingcountriesandintransitioneconomies.Forexample,thealternativesourcesforfundingagriculturalresearchinLatinAmericaarenationalagriculturalresearchinstitutes,universities,farmergroupsandtheprivatecompanies(TableD.1).Theavailableinformationindicatesthatalmost25percent(inChile)to50percent(inMexico)oftotalagriculturalresearchexpenditurewasaccountedforbyacombinationofuniversities,farmergroupsandprivatecompanies.1

AsreportedinTableD.2,themainagriculturalresearchareasinwhichtheprivatesector(multinationalprivatecompanies)isactiveare:

·agro-chemicals

·agriculturalmachinery

·veterinarypharmaceuticals

·plantbreeding(e.g.hybridseeds)

·postharvestfoodprocessing.

Inotherwords,theprivatesectorinvestmentistargetedtothoseareasinagriculturalresearchwheretheprivatecompaniesareabletocaptureallormostofthereturnsfromtheirinvestment.IntheUnitedStates,theprivatesectorexpenditureonagriculturalresearchwas27percenthigherthanthecorrespondingamountspentbythepublic

sectorin1992.Beginningin1975,privateexpenditureonagriculturalresearchhasbeenlargerthanthepublicexpenditureonagriculturalresearchintheUS(HuffmanandEvenson,1993).TheprivatesectorhasbecomeamajorpartnerandafundingsourceforresearchonbiotechnologyintheUSlandgrantuniversities.Goodoverviewsofthestatus,progress,opportunities,constraintsandpotentialpayoffsforinvestmentinbiotechnologytosolvespecificagriculturalproblemsareavailableinPersley(1990a,1990b)andHobbelink(1991).ThemajormultinationalcompanieswithabroadrangeofagriculturalactivitiesarereportedinTableD.3.ThetotalamountspentonagriculturalR&Dbythesemultinationalcompaniesissubstantial,rangingfrom2-14percentoftheirannualrevenue.AtthisstagethereislimitedscopeforagriculturalresearchbytheprivatesectorinRussiaandinothertransitioneconomies.However,theroleoftheprivatesectorinresearchisexpectedtoincreaseovertimewiththeintroductionoftheenablingpolicyenvironmentandgenerationofdemandforresearchintheprivatesector.

1Echeverri,Trigo,andByerlee(1996)addresstheissueoffinancingagriculturalresearchinLatinAmerica.Theyidentifysuccessfulelementsofastrategytofundresearchthroughjointventures,saleofresearchproducts(commercializethem),competitivefunds(throughbiddingschemes),researchfoundations,farmers'contributions(e.g.,levyonagriculturalproduction)andprivatesectoragribusinessresearch.Theyalsoadvocateneedforflexiblesystems,bettermanagementandincreasedbudgetaryallocationsforagriculturalresearch.

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TableD.1:EstimatedShareofAgriculturalResearchExpenditurebyAlternativeFundingSourcesinSelectedCountriesinLatinAmerica

PercentageofTotalExpenditureCountry NationalResearchInstitutes Universities

GroupsFarmer

CompaniesPrivate Total

Argentina 89 5 0 6 100Brazila 63 29 0 8 100Chile 75 20 1 4 100Colombiab 61 2 29 8 100Ecuador 52 5 7 36 100Mexico 50 17 5 28 100Peru 65 20 10 5 100Venezuela 80 10 1 9 100

a1991b1993

Source:AdaptedfromEcheverria,Trigo,andByerlee(1996).

TableD.2:TrendsinPrivateSectorSpendingonAgriculturalR&DintheUnitedStates

(millionsofcurrentdollars)Input-Oriented

YearChemicals

AgriculturalMachinery

Veterinary/Pharmaceuticals

PlantBreeding

PostharvestFoodProcessing Total

1960 10 76 6 6 80 1771970 126 89 45 26 206 4931980 1390 287 111 97 456 13411992 1123 394 306 400 1088 3311

aPrivatesectoragriculturalresearchexpenditureofUS$3.3billionin1992

aPrivatesectoragriculturalresearchexpenditureofUS$3.3billionin1992was27%morethanthecorrespondingamountspentbytheUSpublicsector.

Source:James(1996);originallyfromUSDA(1995b).

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TableD3:R&DExpenditureforSelectedPrivateCompanieswithaBroadRangeofAgriculturalActivities,1994

Company AnnualRevenuea($million)

R&DExpenditurea($million)

Expenditureas%ofRevenue

AmericanCyanamid

4276 595 13.9

DeKalbGenetics

320 44 13.7

SandozAG 15870 1635 10.4ZenecaAG 2420 242 10.0Ciba-Geigy 19341 1931 9.8Pioneer 1478 114 7.7Monsanto 8272 609 7.4HoechstCelanese

7794 313 7.3

SumitomoChemical

9798 554 5.7

Dupont 39333 1404 3.6Unilever 45419 831 1.8

aAnnualrevenueandR&Dexpenditureareavailableonlyforthepubliclytradedcompanies.

Source:James(1996).

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AnnexERoleofInternationalAgriculturalResearchSystemTheinternationalagriculturalresearchsystemconsistsoftheConsultativeGrouponInternationalAgriculturalResearch(CGIAR),theTechnicalAdvisoryCommittee(TAC)toCGIARandanetworkofInternationalAgriculturalResearchCenters(IARCs).Atpresent,therearesixteenCGIARsupportedInternationalAgriculturalResearchCentersandthesearelocatedindifferentpartsoftheworld(BoxE.1).Themainfocusofresearchinthesecentersisimprovementinproductivityforcrops,livestock,inputs(irrigation),farmingsystems,agro-forestry,researchmanagementandfoodpolicy.CGIAR'sresearchexpenditureduring1993($235million)wasallocatedasfollows,expressedinpercentterms:

Institutionalbuilding 25.3Productionsystems 23.7Germplasmenhancement 21.9Naturalresources 19.0Agriculturalpolicy 10.3Total 100.0

AccordingtoCGIAR(1997),themajoragriculturalresearchprioritiesoverthenext20yearsare:

·reducingpoverty

·improvingproductivity;

·protectingtheenvironment;

·savingbiodiversity;

·improvingpolicies;and

·strengtheningnationalprograms.

TheCGIARsystemwasestablishedinearly1960s.Newinternationalagriculturalresearchcenterswereaddedovertime.Theeconomicimpactofagriculturalresearchinthesecentershasbeenenormous,intheformofimprovedyieldsandhigheragriculturaloutputandfoodproduction.TheimpactofCGIARonrice,wheatandmaize(threeimportantgraincrops)yieldsindevelopingcountriesfrom1970to1990isreportedinTableE.1.Thefollowingarethethreemainconclusions:

·First,between50percent(rice)to100percent(wheat)increaseincropyieldsover20years'periodfrom1970to1990isattributedtovarietiesdevelopedattheCGIARcenters.

·Second,anincreaseinyieldsforrice,wheatandmaizeduetoCGIARgermplasmhasavoidedpotentialencroachmentofabout200,000haofarableland.Thisisveryimportantinthelightofincreasingdemandforfoodandthelimitstogoodqualitylandundercultivation.

·Third,theestimatedannualvalueofincrementalproductioninrice,wheatandmaizethatisattributabletoCGIARisabout$4.6billion.

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ThesearesignificantcontributionsoftheCGIARsystem.Anincreaseinfoodproductionaloneindevelopingcountrieshadamajorimpactonavoidinghungerandmalnutritionandcontributingtomuchneededfoodsecurity.

TableE.1:ImpactofCGIARonRice,Wheat,andMaizeYieldsIndicator Rice Wheat Maize

AreainDevelopingcountries(000ha) 143569 105794 83623Areaundermodernvarieties(%) 74 70 57CGIARGermplasminmodernvarieties(%) 20 49 45Yields(ton/ha):1970 2.3 1.2 1.51990 3.5 2.4 2.6Yieldincrease(%) 52 100 73PotentialLandEncroachmentAvoidedby 60,000 90,000 50,000YieldIncrease(000ha)AnnualvalueofProductionincreaseattributabletoCGIAR($billion)

1.5 1.6 1.5

Source:CGIAR(1996a).

BoxE.1:CGIARSupportedInternationalAgriculturalResearchCenters(IARCs)

CIATCentroIntenacionaldeAgriculturaTropical.Cali,Colombia.Founded1967.FocusoncropimprovementandecoregionalapproachestodevelopingagricultureinthelowlandtropicsofLatinAmerica.Researchcoversrice,beans,cassava,foragesandpasture.CIFORCenterforInternationalForestryResearch.Bogor,Indonesia.Founded1992.Focusonresearchonforestconservationandsustainabledevelopment.CIMMYTCentroInternacionaldeMejoramientodeMaizyTrigo.MexicoD.F.Mexico.Founded1966.Focusoncropimprovement.Researchcoversmaize,wheat,barleyandtriticale.

oncropimprovement.Researchcoversmaize,wheat,barleyandtriticale.CIPCentroInternacionaldelaPapa,Lima,Peru.Founded1971.Focusonpotatoandsweetpotatoimprovement;specialattentionpaidtoecoregionalaspectsofmountainareaagriculture.IPGRIInternationalPlantGeneticResourcesInstitute.Rome,Italy.Founded1974.Focusonconservinggenepoolsofcurrentandpotentialcropsandforages.ICARDAInternationalCenterforAgriculturalResearchintheDryAreas.Aleppo,Syria.Founded1977.FocusonimprovingfarmingsystemsforNorthAfricaandWestAsia.Researchcoverswheat,barley,chickpea,lentils,pasturelegumesandsmallruminants.

(Boxcontinuesonthenextpage)

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ICLARMInternationalCenterforLivingAquaticResourcesManagement.Makati,MetroManila,ThePhilippines.Foundedin1977.Focusonresearchonallaspectsoffisheriestoimproveefficiencyandproductivityofcultureandcapturefisheries.ICRAFInternationalCenterforResearchinAgroforestry,Nairobi,Kenya.Founded1977.Focusoninitiatingandsupportingresearchonintegratingtreesinland-usesystemsindevelopingcountries.ICRISATInternationalCropsResearchInstitutefortheSemi-AridTropics.Patancheru,AndhraPradesh503324,India.Founded1972.Focusoncropimprovement;croppingsystems.Researchcoverssorghum,millet,chickpea,pigeonpeaandgroundnut.IFPRIInternationalFoodPolicyResearchInstitute,WashingtonD.C.,20036-3092,USA.Foundedin1975.Focusonfoodpolicyandsocio-economicresearchrelatedtoagriculturaldevelopment.Providespolicyresearchandinstitutionbuildingassistancetodevelopingcountries.IIMIInternationalIrrigationManagementInstitute.Colombo,SriLanka.Foundedin1984.Focusonperformanceofirrigationindevelopingcountries.Researchcoversinstitutionalconditionsformanagingirrigationsystemsandfacilities;managementofwaterresources,irrigationsupporttofarmers.IITAInternationalInstituteofTropicalAgriculture.Ibadan,Nigeria.Founded1967.Focusoncropimprovementandlandmanagementinhumidandsub-humidtropics;farmingsystems.Researchcoversmaize,cassava,cowpea,plantain,soybean,riceandyam.ILRIInternationalLivestockResearchInstitute.Nairobi,Kenya,andAddisAbaba,Ethiopia.Foundedin1994.Focusonresearchtoimprovelivestockproductivityandanimalhealth.Is

responsiblefortheSystem-WideLivestockResearchProgram.IRRIInternationalRiceResearchInstitute.Manila,Philippines.Founded1960.Focusonglobalriceimprovement.ISNARInternationalServiceforNationalAgriculturalResearch.TheHague,Netherlands.Founded1979.Focusonstrengtheninganddevelopingnationalagriculturalresearchsystems.WARDAWestAfricaRiceDevelopmentAssociation.Bouake01,Coted'Ivoire.Founded1970.FocusonriceimprovementinWestAfrica.Researchcoversriceinmangroveswamps,inlandswamps,uplandconditions,irrigatedconditions.Source:CGIAR(1996a,1996b,1997).

ThemainsourcesoffundingforCGIAR-supportedinternationalagriculturalresearcharebilateraldonors,privatefoundationsandtheWorldBank.TheannualfinancialsupportfortheCGIARsystemhasincreasedfrom$21millionin1972to$304millionin1996.TheWorldBank'sshareintotalfundingfortheCGIARsystemhasincreasedfromabout10percentinthe1970s,toalmost15-20percentinthe1990s.Clearly,theCGIARsystemhasplayedaverysignificantroleininternationalagriculturalresearchnotonlyintheformofdevelopingnewplantvarietiesandprovidingsupporttothenationalagriculturalresearchsystems(NARSs)butalsoinfacilitatingincreasedparticipationinagriculturalresearchbytheprivatesector.TheWorldbank,ontheotherhand,hasplayedanimportantroleinfinancinginternationalandnationalagriculturalresearch.

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During1996,CGIARestablishedaTaskForceonCentral/EasternEuropeandtheformerSovietUnion(CGIAR,1996b).TheTaskForcehasrecommendedthatCGIARextenditsmandatetoincludetheseregions,withaparticularfocusonthefollowingfiveactivities:

·Accesstoinformation

·Accesstogeneticresources

·TransformationofNARSs

·Intensificationofexistingactivities

·CGIARstrategyfortheregions

AsfarasRussiaisconcerned,therearealreadyagreementsoncollaborativeresearchwithseveralCGIARcenters.Theseagreementsinclude:

·CIMMYTandVASKhNIL(nowreplacedbythenewRussianAcademyofAgriculturalSciences),September1990;

·ICARDAand(i)theVavilovAll-RussianScientificResearchInstitute,May1993;(ii)KrasnodarResearchInstitute,May1993;and(iii)theSouth-EasternRegionalAgriculturalResearchInstitute,1994.

·ICRISATandVASKhNIL(nowreplacedbythenewRussianAcademyofAgriculturalSciences),April1990;

·IRRIandAll-RussianRiceResearchInstitute,June1995.

Itisexpectedthataspartofthenewmandate,theseexistingarrangementswillbestrengthenedandnewagreementsoncollaborativeagriculturalresearchwillbedeveloped.

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AnnexFFundingAgriculturalResearchbytheWorldBankInadditiontofinancinginternationalagriculturalresearchthroughtheCGIARsystem(ashasbeenreportedinFigureF.1),theWorldBankhasbeenamajorsourceoffinancingnationalagriculturalresearchinthedevelopingcountriesthroughcredits(IDAcredits)andloans(IBRDloans).AsshowninTableF.1,thetotalWorldBanklendingforagriculturehasdeclinedfrom31percentin1977-80to14percentin1993-96.However,theshareofagriculturalresearchandextensionintotallendingforagriculturehasincreasedfrom7.5percentin1977-80($0.9billion)to14percentin1993-96($1.9billion).Inthe1970s,agriculturalresearchaccountedforonly25percentoftheBanklendingforagriculturalresearchandextension;thisshareincreasedto50percentinthe1990s.

TableF.1:WorldBankLendingforAgriculturalResearchandExtensiona(US$billion)

ForAgriculture ForResearchandExtensionPeriod Total Amount %of

TotalTotalAmount

%ofAgriculture

%forResearch

%forExtension

1977-80 37.04 11.56 31.2 0.87 7.5 26 741981-84 56.21 14.03 25.0 1.29 9.2 48 521985-88 70.73 16.09 22.7 1.43 8.9 36 641989-92 87.82 14.75 16.8 1.75 11.9 46 541993-96b

95.79 13.80 14.4 1.94 14.1 50 50

Total 347.59 70.22 20.2 7.27 10.4 43 57

aIntermsofcommitmentswhichrefertothenominalBankloanandcreditfundsapproved.

bEstimate.Source:PurcellandAnderson(1997);withadditionalcalculationsbytheauthors.

AssummarizedinByerleeandAlex(1998),theWorldBankfundingforagriculturalresearchoverthepast25yearsfrom1981to1996isasfollows:

Overall:

·Totalprojectswithresearchcomponets 458

·Fullresearchprojects 145

·Totalfundingforresearch(US$million) 3868

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FigureF.1:GrowthinFinancialSupportforInternationalAgriculturalResearchSystem

Page101EuropeandCentralAsia(ECA):

·Totalprojectswithresearchcomponents 30

·Fullresearchprojects 11

·Totalfundingforresearch(US$million) 198

·ShareofECAisoverallfundingforresearch(%)

5

TheOperationsEvaluationDepartment(OED)oftheWorldBankhasreviewedBank-financedagriculturalresearchportfolioin32developingcountries(WorldBank1996b;PurcellandAnderson1997).Theexaminationofagriculturalresearchprojectsfinancedinthe1980sand1990sindicatesthattheBankfinancedagriculturalresearchprojectshavemadeasignificanteconomicimpact.However,deficienciesintheNARSspersistwithrespectto:(i)developmentofsoundresearchplanning,prioritysettingandevaluationhasbeenslow;and(ii)thesustainabilityoftheNARSshasoftenbeenweak.Thefollowingfourrecommendations,thataremadetoimprovequalityofBankassistancetotheNARS,areveryrelevantforRussia:

·Theremustbeaclearcommitmenttoappropriatepolicies,adequatebudgetallocationandscientificrigor.

·ThereisaneedforstrategicalliancestoenhanceeffectivenessofresourceuseintheNARSs.

·ThereisaneedforgreateruseofeconomicanalysistoassistinprioritysettingamongvariousprogramsinNARSs.

·Thereisaneedtosupportmonitoringandevaluationsystemstofacilitateresearchplanningandex-postevaluation.

Otherimportantlessonsforagriculturalresearchandextension,that

arebasedonBankfinancingofthreeagriculturalresearchandextensionprojectsinChina,arereportedinBoxF.1.AsummaryofthestatusofexistingWorldBankinvolvementintheagriculturalknowledgesysteminthetransitioneconomiesofCentral/EasternEuropeandtheformerSovietUnionisprovidedinSrivastavaandReinhard(1996).Finally,theproblemsidentifiedina1997reviewofWorldBank-supportedagriculturalresearchprojectsaresummarizedinBoxF.2;furthersupportingtheproblemsidentifiedbyOEDexamination.

Thefinalfundingdilemmaembodiesmostoftheforegoingchoicesanddependsonthemixofregional,nationalandinternationalsupportaswellastherelativerolesofthepublicandprivatesectors.Budgetaryallocationsfromregionalornationalgovernmentssupportongoingprogramsthroughoperatingbudgets.Budgetaryallocationscanalsobeused,inalimitedway,forcapitalinvestmentordebtservice.Thetwousescompetewitheachotherandresearchadministrationmustattempttomaintainanappropriatebalance.