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MSU Ag Summit (Nov 10 2016)

created using Mundus Presentation template
published by Anton Bekkerman

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AG R&D INVESTMENT

A CONSISTENTLY VALUE-ADDING VENTURE

More people + More money Greater need for food

The Great Food Challenge

HOW HAS

The U.S. Agricultural Industry

RESPONDED?

In Brief: Food in the U.S. is More Affordable than Ever

The U.S. Agribusiness Sector

Largest agribusiness sector in the world

Largest part of U.S. economy

Biggest user of biotech

Safest and lowest cost food in the world

Largest selection of food

11,000+ new foods annually

Why the Biggest and Best?

Came from U.S. Private Sector (1994-2010)

Who Funds Ag R&D?

Globally, 1 in 3 dollars for Ag R&D

Source: USDA ERS

Source: USDA ERS

Less land, Less labor...

Source: USDA ERS

...More output

U.S. Ag Output Increased by Nearly 300%

By the Numbers

Analysis of 289 studies on ag R&D returns—

Average return on investment:  44.3%

(Long-term average IRR in U.S. stock market: 7%)

Represents annual internal rate of returns of 9.0–10.5%

Spatial knowledge spillovers from  ag research centers:

Shown to increase R&D benefits by 45%

Made for the Short and Long Run

R&D impacts visible as soon as 2 years

Returns shown to last as long as 30 years

Private R&D: higher short-run ROI

Public R&D: higher long-run ROI

Robust, repeated evidence that returns to R&D have not fallen over time

BUT:

Perpetual challenge is to continue these successes

Persistent underinvestment in agricultural R&D, despite proven high rates of return

Challenges to Continued Growth

Overall, public investment in agricultural R&D has been reduced over time

Public investments in agricultural R&D have increasingly become re-directed away from farm productivity research

Anton Bekkerman

[email protected] 406-994-3032 http://www.antonbekkerman.com

Literature Cited

Alston, J., et al. 2000. "Research returns redux: a meta-analysis of the returns to agricultural R&D." Aust. J. Ag. Res. Econ.

Evenson, R. 2001. "Economic impacts of agricultural research and extension." Handbook of Ag. Econ.

Fuglie, K., P. Heisey. 2007. "Economic Returns to Public Agricultural Research." Econ Brief 10. USDA ERS.

Alston, J., J. Bedow, P. Pardey. 2009. "Agricultural research, productivity, and food prices in the long run." Science.

Pardey, P., B. Craig. "Causal relationships between public sector agricultural research expenditures and output." Am. J. Ag. Econ.

Pardey, P. J. Alston, R. Piggott, Eds., 2006."Agricultural R&D in the Developing World: Too Little, Too Late?" International Food Policy Research Institute, Washington, DC.