Doing Good by Doing Well: U.S. Gains by Investing in Agricultural R&D
On October 15, the Board on International Food and Agricultural Development (BIFAD) released a report entitled “How the United States Benefits from Agricultural and Food Security Investments in Developing Countries” at a pre-event at the World Food Prize in Des Moines. This report was commissioned by BIFAD in response to a request from USAID Administrator Mark Green a few months after he assumed office in August 2017. The report can be downloaded at https://doi.org/10.2499/p15738coll2.133419
I was privileged to be a co-author of this report, along with Dr. Joseph Glauber of the International Food Policy Research Institute (IFPRI) and Dr. David Kraybill, professor emeritus at Ohio State University. Staff at IFPRI and the Association for Public and Land Grant Universities (APLU) coordinated preparation of the final report.
The report describes a couple of different channels through which federal funding has been expended on global food security activities since the 1940’s. The main agency overseeing this funding has been the U.S. Agency for International Development (USAID), and has consisted of bilateral development projects with USAID staff and contractors working directly with institutions in developing countries, funding to multilateral institutions such as the World Bank, and research funding provided to the 15 agricultural research centers under the CGIAR system and through U.S. universities under the Feed the Future Innovation Laboratory system. In fiscal year 2017, this funding totaled $1.41 billion (more than 70 percent through USAID programs), accounting for 4.2 percent of non-military foreign assistance spending and 0.04 percent of all federal expenditures.
The report looked at several different categories in which U.S. farmers, universities, companies, consumers, and taxpayers have been able to increase income, reduce production costs, build human and institutional capacity, access a greater variety of food and beverages for their diets, or gain other less tangible benefits from the funding that the U.S. government has provided to support international research and development over the last several decades.
Our investments have helped to modernize and improve the agricultural sectors of many developing countries over the last several decades. Since agriculture is such an important part of many of these economies--it accounts for about 15 percent of GDP and 60 percent of jobs in Sub-Saharan Africa on average--strengthening the sector helps a country’s overall economy, leading to increased demand for agricultural imports such as meat and livestock products in many cases.
As a result, over the last few decades, gains in U.S. agricultural exports to developing countries, which have been the beneficiaries of U.S. agricultural development investments over time, have far outstripped gains to developed country markets. U.S. agricultural exports to developing countries in aggregate has increased by 103 percent over the last 20 years, as opposed to only a 19 percent gain in agricultural exports to developed countries over the same period. The developing country markets includes China, which was our second largest market behind Canada in 2017, until the current trade war erupted in mid-2018.
Based on econometric modeling of the U.S. economy, it is estimated that each dollar of agricultural exports generates an additional $1.87 in business activities, and every billion dollars in exports creates 8,619 full-time jobs. For 2018, U.S. agricultural exports to developing countries totaled $90 billion, stimulating an additional $169 billion in economic activity and supporting 779,000 full-time jobs.
U.S. support of international agricultural research also generates significant direct benefits for U.S. farmers and ranchers. In particular, U.S. investments in international research conducted on wheat and rice, two important U.S. crops, has allowed U.S. farmers to benefit from improved yields from productivity work conducted at two of the 15 institutions of the Consultative Group on International Agricultural Research (CGIAR), which the U.S. government has supported since its inception. A study conducted by Dr. Phil Pardey from the University of Minnesota and several colleagues in 1996 found that U.S. rice and wheat farmers received between $3.4 billion and $15.6 billion in benefits from varieties developed by CIMMYT (corn and wheat) and IRRI (rice) over the period 1960-1993. Over that period, the U.S. investment in those two lines of research generated huge returns, so that every $100 of benefits cost U.S. taxpayers only two cents. The report describes similarly large returns to U.S. farmers from investment in research on peanuts, grain sorghum, and edible beans.
U.S. consumers also benefit considerably from having improved access to imported food products from developing countries which are either not produced in the United States (such as coffee, tea, and spices) or are not available in abundance outside of the summer growing season in the northern hemisphere, such as fresh fruits and vegetables grown in Central and South America. U.S. foreign assistance has helped to improve the efficiency and food safety standards of agricultural value chains for these products in developing countries, such as Guatemala and Mexico. In recent years, USAID provided funding for research into combating coffee rust (known as roya in Spanish) that was devastating coffee plantations in Central America.
