Global Public Agricultural R&D Spending in High-Income Countries on a Decline

According to a new report by the USDA’s Economic Research Service, agriculture research systems in numerous high-income countries that are part of the OECD have been experiencing stagnant or declining funding support, notably in the public sector, even though agriculture research costs have been rising. Along with this, social and cultural standards for food production have also changed, with consumers wanting more organic and environmentally friendly produced foods. Because of this, the agriculture industry has had to reform its research systems, with some countries broadening their focus of agricultural research to expand the reach of funding sources.

The report defined high-income countries as nations that “all operate market-based economies, have significant agriculture sectors, are located in primarily temperate zones and share other features that make their experiences in agricultural research policy relevant for the United States.” Of the 35 OECD member countries, 31 were included in the report: OECD countries from North America (Canada and the US), Asia-Pacific (Australia, New Zealand, Japan and South Korea), Northwest Europe (Austria, Belgium and Luxembourg [combined], Denmark, Finland, France, Germany, Ireland, Iceland, Netherlands, Norway, Sweden, Switzerland and the UK), Southern Europe and the Mediterranean (Greece, Israel, Italy, Portugal and Spain), and Central Europe (the Czech Republic, Estonia, Hungary, Poland, Slovakia and Slovenia). Chile, Latvia, Mexico and Turkey were not included in the report.

In 1990, high-income countries accounted for approximately 36% percent of total public and private spending on global food and agricultural research, which was $40.2 billion; however, by 2011, even though total global spending on food and agricultural research rose 88.8% to $75.9 billion, the share of high-income countries’ contribution to such research had dropped to 25%. Instead, developing countries and the private sector drove most of the growth.

Public R&D for agriculture may be moving towards basic science research, which can help generate platform technologies that are broadly applicable.

The private sector has been a major driver of agricultural research funding. Between 1980 and 2011, food and agricultural R&D spending spiked over 220%, jumping from $9.7 billion to $31.2 billion. This was largely due to expanding consumer demands for more varied food products; growth of food and agriculture markets in developing countries; scientific advances in agricultural technology; and improved intellectual property rights.

In the public sector, however, agricultural R&D spending peaked in the late 2000s, and subsequently dropped approximately 1.5% on average each year until 2013. In 2010, aggregate annual public spending on agricultural R&D in high-income countries totaled $18.49 billion, but had dropped 5.3% to $17.51 billion by 2013.

That same year, France, Germany, Japan, South Korea and the US had the greatest public agricultural R&D expenditures, with each spending at least $1 billion. The cause of the decline in public spending is thought to be due to agriculture shrinking to a represent a smaller share of economic output, which has resulted in declining public R&D investments in the sector.

The report concludes that in the US, public R&D for agriculture may be moving towards basic science research, which, although it is a long-term process, can be unpredictable and is difficult to patent, can help generate platform technologies that are broadly applicable. Noncommercial applied research is another area that public R&D may be focusing on more. This category includes R&D to help minimize agricultural effects on the environment, and improve food quality and safety. Also, production research, such as pest management, can be accelerated by public R&D, as the private sector seems to underinvest in breeding for specific crops (i.e., wheat and other small grains, some vegetables and oilseeds, roots and tubers, and grain legumes), and this is an area that farmers are incentivized to improve their R&D programs.