The food crisis in Africa is once again focusing international attention on what Nobel Laureate T.W. Schultz has called “the rare and difficult art. . . of increasing agricultural production.” There are several prerequisites for escaping the low productivity trap of traditional agriculture. The main one is adequate research. Unfortunately, resources being allocated to applied agricultural research in developing countries are inadequate and the design and execution of national research programs leave much to be desired. Of the roughly $5 billion that are spent annually on agricultural research worldwide, only $1.3 billion is spent by developing countries. In many countries, annual public sector spending for agricultural research is no more than 0.5 percent of the gross domestic product derived from agriculture, whereas, based on developed country experience, a target of 1-2 percent would be appropriate. However, for increased funding to be used effectively, the absorptive capacity of national research systems must be enhanced. Well-conceived projects can contribute to this objective and yield high returns by revolutionizing the way in which millions of farmers go about their business. But success depends, in the first instance, on an adequate appreciation by policymakers of the nature of agricultural research and of its role in overall agricultural policy.
It is now widely accepted that technological change in agriculture can be a powerful engine of economic growth. But too frequent references to the “Green Revolution” and “miracle varieties” have fostered the illusion that agricultural innovation is cheap and easy. To be sure, a wide body of basic scientific knowledge is available in the developed world, international research centers, and advanced developing countries. It is neither necessary nor desirable for each developing country to attempt to duplicate the research that produced this knowledge. Yet, there is no shortcut to the development of local research institutions. This is a long and costly process. To bring it to fruition, national authorities must make a long-term commitment to science-based agricultural growth, requiring the mobilization of scarce capital and even scarcer skills.
Even more than such industrial research breakthroughs as the light bulb or the microchip, the birth of a high-yielding variety or any other agricultural innovation does not signal the end of the research effort. Whether a particular seed, chemical, or agricultural practice is suitable for a specific location depends on a multitude of environmental and socioeconomic factors. As these factors evolve, and as new pests and diseases appear, a stream of new varieties and technologies must be developed. Indeed, the lack of ready-made technologies suitable for a wide range of conditions helps to explain the growing disparities in farm productivity between crops and regions. For example, price and marketing policies biased against farming underlie Africa’s poor agricultural performance. Droughts have exacerbated the problem. But, if agriculture in sub-Saharan Africa has stagnated, it is in substantial part because food production in this part of the world depends to a high degree on coarse grains, pulses, roots, and tubers that, until recently, have not been the focus of much research. Without technical packages suitable for rainfed conditions in which these crops are grown, the returns to agricultural investment in Africa have proved disappointing.
Economics of research
The role of research within agricultural policy is to relax constraints on production through use of new inputs or practices that substitute relatively abundant resources for relatively scarce ones. Changes in technology have induced major shifts in crop selection and land allocation in developing countries in a way that demonstrates that small farmers, while poor, are efficient within the constraints they face. Thus, the rapid adoption of new, short-duration cereal varieties has facilitated multiple cropping in Asia, vastly increasing food supply. With the new varieties, two or three crops, instead of one, can be grown on the same plot of land. Within areas enjoying suitable water control, this allows substitution of production factors in abundant supply, such as sunshine and labor, for scarce arable land.
Research, therefore, is a form of agricultural investment. Research costs incurred today can produce innovations that allow increased agricultural output at lower average cost in the future. The benefits last for many years, until the innovations are replaced by more efficient ones. Since prices and availability of production factors vary from place to place and from time to time, no technology is universally appropriate. An extraordinary variety of production patterns in constant evolution must be expected and, indeed, encouraged. This puts a high premium on flexible, market-oriented policies and on the development of indigenous innovative capacity.
The outlays required to establish and maintain an agricultural research establishment are economically justified only if they are exceeded by the value of increased output (net of increased costs) attributable to the research, with both costs and benefit flows discounted at the opportunity cost of capital (i.e., the return on alternative investments). In practice, ex ante economic return estimates for agricultural research projects are subject to a great deal of uncertainty. Future prices and production costs must be forecast. It is difficult to ascertain the portions of the projected benefits that must be ascribed to the research and to complementary investments in supporting services and basic infrastructure. Estimation of the rate of adoption and the yields that would be reached with and without research requires heroic assumptions. The opportunity cost of the scientific personnel employed in the research must be gauged. Finally, the share of research failures that can be expected must be postulated.
Nevertheless, a number of competent and thoroughly documented ex post studies on the economics of agricultural research suggest highly attractive rates of return, typically exceeding 20 percent and often higher than 40 percent. (T.J. Goering, Agricultural Research: Sector Policy Paper, World Bank, June 1981, Annex 3). Although those numbers do not take full account of unsuccessful research programs, they suggest that investment in knowledge creation and dissemination is often more attractive than investment in “hardware.”
To be sure, in agriculture as in other sectors of economic activity, change is neither easy nor painless. Agricultural research produces new technologies that involve costs as well as benefits for those who adopt it, and for the society at large. Increased use of chemicals and large-scale irrigation involve environmental risks. High-yielding varieties may not have the taste preferred by consumers. Certain forms of mechanization (e.g., combine harvesters) may displace labor, while others (e.g., irrigation pumps and threshers) can help raise cropping intensities and therefore increase rural employment.
Besides, research is not neutral in its income distribution effects. Typically, a new farming technology produces early benefits concentrated on the entrepreneurs who have borne the risks and incurred the costs of innovation. However, as the technology becomes familiar, it spreads and benefits accrue to a wide range of farmers as well as to middlemen, suppliers of inputs, and consumers. On balance, agricultural research is best directed to maximizing returns to the national economy. Social and income distribution objectives are achieved more efficiently through other kinds of programs, fiscal measures, and other policy tools.
National research projects
Investment in national agricultural research involves large returns but substantial risks. The risks can be minimized through careful planning and implementation of research. Hence, the need to consider agricultural research funding proposals as “projects,” subject to systematic feasibility tests.
Research is successful only when it produces new inputs and improved production practices that are actually adopted by farmers. Therefore the feasibility of a research project often hinges on whether there is an extension organization able to disseminate new technologies, validate research results, and provide feedback for future research. In most developing countries, hundreds of thousands of small farmers, often isolated and illiterate, cannot be expected to communicate directly with the research establishment. Without extension, adoption of new practices is haphazard and slow and the returns to research investment are greatly reduced.
Close relations between research and extension are therefore essential. But they are rare; long-standing institutional rivalries and managerial weaknesses often induce each service to isolate itself from the other. While the two services can sometimes be brought together under the umbrella of a single authority, experience suggests that this is not strictly necessary. It is acceptable for each service to retain its autonomy, provided appropriate arrangements for coordination are made. In particular, the research organization should be involved in training extension staff, and the extension establishment needs to participate in the selection of research goals.
The synergism between research and extension is further enhanced if close links can be forged with the universities which supply the manpower for both services. Under the First Agricultural Research Project funded by the Bank in Brazil, a total of 400 researchers received postgraduate training in 30 different disciplines; 1,400 research staff received in-service training; and approximately 40 man-years of consultancy services were committed. In India, early proposals for IDA funding of a national agricultural research institute were set aside when it was recognized that the highest priority was to fill the gap that was developing between central research and the needs of farmers for locally tested and proven technologies. Accordingly the National Agricultural Research Project, funded by IDA in 1978, has helped to strengthen the capability of state agriculture universities to conduct research pertaining to the needs of their own areas.
Thus, agricultural research projects must fit into a deliberate scheme to develop human resources for the agricultural sector. Inevitably, such a strategy is country specific. Without government commitment and indigenous leadership, outside advice or funding cannot be effective. Appropriate legislation must often be introduced against powerful vested interests to secure the institutional autonomy, conditions of service for staff, and the funding arrangements without which quality research cannot proceed. Accordingly, in the Yemen Arab Republic, a new legal entity (the Agricultural Research and Development Authority) was set up in connection with a joint $32 million project funded by IDA, the International Fund for Agricultural Development, and Italy.
Applied research is best directed to the most important crops and relevant to the most significant ecological zones. Yet, too often, scientists are allowed to pursue academic research on topics of limited significance even in situations where resource constraints would justify concentration of effort on priority local problems. For example, research organized along disciplinary lines (e.g., soils, agronomy, plant protection) has often been disappointing because of failure to study the complex links between inputs and outputs. This means that the solution of even the most specific problem involves support from a variety of disciplines, which, in turn, implies the need for a critical mass of research skills and explains the economies of scale of the research enterprise. Even the screening, adoption, and use of international research data requires a substantial investment in scientific capability. The corollary is that small agricultural economies, for example, in Africa and the Caribbean, are at a serious disadvantage. They lack the resources to support a substantial research establishment and they cannot attract the quality scientific personnel needed to lead effective research programs.
Agricultural research differs from industrial research in one fundamental respect. Results cannot often be patented and therefore the successful agricultural scientist captures only a very small portion of the benefits emerging from his work. This is why agricultural research tends to be a public sector activity and also why it is important to design appropriate incentives to attract and retain first rate scientists to work on the agricultural problems of poor countries. There are, of course, important areas where private participation in applied agricultural research is both possible and desirable. Where suitable legislation exists, private seed companies are major participants in the production, adaptation, and diffusion of productive new varieties and their supporting inputs. Similarly, private producers can play a vital role in the adaptation and dissemination of fertilizer, pesticides, and agricultural machinery. In addition, reliance on contractual private research, and involvement of commercial firms and, where they exist, private nonprofit foundations in the definition of public research priorities, can help to forge a broad-based commitment to scientific agriculture. This is the kind of policy framework that Turkey has adopted and within which the recent Bank-financed Agricultural Extension and Applied Research Project is being implemented there.
The Indian experience
Twenty years ago Indian agriculture was reeling from the effects of drought, and the country relied heavily on imports to meet its food needs. Yet today, India is largely self-sufficient in foodgrains. Several factors account for this success. Indian policymakers quickly put in place a program to introduce, adapt, and disseminate new high-yielding food grain varieties. Simultaneously, they channeled considerable resources toward the domestic production of fertilizers.and other modern inputs required by the new technology. An ambitious program to improve water control was also launched, with special emphasis on groundwater development by the private sector.
Less well known, but perhaps more significant in the long run, was the rejuvenation of India’s agricultural research, training, and extension system. A nationwide system of national and state agricultural agencies was available. But this framework was poorly adapted to the task of modernizing India’s agricultural economy. The involvement of the Rockefeller and Ford Foundations, followed by major financial and technical assistance from the US Agency for International Development and the World Bank, helped reshape and modernize these agencies. The resulting network of institutions uniquely devoted to technical change and development of human capital laid the foundation for self-sustaining agricultural innovation and growth. What the Indian experience illustrates was previously demonstrated by other countries, especially Japan: farmers, whether large or small, are able to innovate and to move agriculture forward, once relevant technical know-how is supplied to them together with the supporting services, the physical materials, and the price and marketing incentives required to make their investment profitable.
World Bank support for agricultural research
At the global level, the World Bank, together with the United Nations Development Program and the Food and Agriculture Organization, is a sponsor of the Consultative Group on International Agricultural Research. Founded in 1971, this informal association of countries, multilateral organizations, and foundations has encouraged research on food crops on which 70 percent of the world’s population depends. CGIAR finances 13 international centers and programs. The Bank provides the chairman and the secretariat, which serves both the international centers and the donors. A Technical Advisory Committee of distinguished scientists drawn from developed and developing countries is jointly financed by the Bank, the UNDP, and the FAO. On the basis of annual program and budget reviews, funding is arranged for approved research and extension programs, including foodcrop production, livestock production and disease prevention, the conservation and use of plant genetic resources, and food policy. The Bank now provides about 15 percent of the funds needed to operate the system after other donors have made their commitments. In fiscal year 1984, Bank support to CGIAR amounted to $24 million.
A weak link in the global agricultural research system is the research effort at the national level in developing countries. Accordingly, the international centers have expanded their cooperative activities with national research agencies and CGIAR has provided financial support for the International Service for National Agricultural Research, created in 1980 to help build national research institutions through technical assistance, training, and public information programs.
The first national research project supported by the Bank started in 1970 in Spain. Since then, support of agricultural research and extension has increased, consistent with the priority accorded to agriculture and rural development in overall Bank activities and the mounting evidence that weak institutions and lack of technology better explain lags in rural growth than inadequate capital investment in major infrastructure.
The Bank’s agricultural research portfolio currently involves 13 national research projects; another 7 are in preparation, and there are over 60 extension projects. All these projects involve relatively small loans. In the aggregate they account for about $1.6 billion, or 5 percent of total agricultural lending by the Bank from 1974 to 1984. However, substantial resources have also been devoted to adaptive research and extension components of area development or crop development projects, and to lending for education projects with agricultural training components.
Over 1981-84, agricultural research was financed in 11 countries. Bank support for these projects amounted to $371 million, out of total project costs of some $1.1 billion. All the projects emphasize commodity programs, improved linkages with extension, technical assistance, training, and cooperation with international centers. Over the same period, about 40 percent of Bank agricultural and rural development projects located in 56 countries had adaptive or applied research components. Education projects in eight countries also had major agriculture components, including one to set up a national rice research institution in China.
Like other public sector schemes, agricultural research projects call for careful appraisal of organization and management arrangements. Proliferation of public research agencies can be a serious problem. That is why in Bangladesh, for example, the focus of two IDA-funded agricultural research projects has been to reinforce the role of the Bangladesh Agricultural Research Council as the main organization for planning and coordinating agricultural research. Clear, practical, and time-bound goals must be ensured, both as a tool for research administration and as a means of coordination between those responsible for agricultural research, extension, and education. Flexible programming that translates long-term strategies into workable plans and realistic budgets is also needed to encourage sensible expectations from the clientele and enforce appropriate accountability on the research workers. Under the Zimbabwe Agricultural Research and Extension Project, funded by IDA, a new organizational structure was created to give management greater capability and the tools needed to plan.
Given budgetary constraints, the allocation of funds to agricultural research must be weighed against other priorities. This is why it makes sense to use the discipline of the project approach to enhance the impact of agricultural research funding. Equally, it is desirable to require regular monitoring of research projects to highlight constraints, trigger remedial action, trace the impact of each research scheme on the others, and ensure that the overall research program remains geared to the future requirements of the national economy. Periodic monitoring by international experts is also desirable to ensure that national research is suitably linked to the international research effort. Such management systems should, however, not be stifling and should help to liberate rather than restrict the imagination and the creativity of scientists.
The creation of new agricultural technologies forms an integral part of the economic adjustment process in developing countries. But it remains a neglected aspect of economic inquiry. While substantial international experience of agricultural research has been gathered over the past decade (see box), the art of assessing national agricultural research projects is still in its infancy. For agricultural research to receive the attention and the resources it deserves, it is critical to break this isolation. Continued efforts to refine assessment methodologies for research projects are called for, especially regarding the impact of alternative agricultural research strategies on economic growth, regional development, and income distribution.