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ISSUE 121 VOL 19 PUBLISHED 5/2/2008

Lecture touts research

By Aaron Rozanski
Associate Editor

Friday, May 2, 2008

Investment in agricultural research was the focus Monday afternoon as Phil Pardey, professor of applied economics at the University of Minnesota, visited interested students and professors in Holland Hall.

His lecture, entitled "Agricultural Research and Economic Development: Links in a Global Chain," connected the investment in research and the development of countries throughout the world.

"While the past century has seen a tremendous amount of progress, the last few decades have been plagued with a decrease in research funding," Pardey noted. "This is worrisome to the future of the many nations, to which a lot the food produced in the United States and other leading producers goes to aid."

Pardey related the use of research and development (R&D) to trends of agricultural productivity and economic development as a whole. Continuing with trends seen earlier in the century, in 2002 60 percent of output growth was due to productivity gains, and in the last 50 years, 70 percent of the input has moved out.

"If we reexamine productivity development in the U.S., much of the increase in output comes from investment in education and the gentrification of farm operators," Pardey said.

"Agriculture is a very knowledge intensive industry, and investment in knowledge leads to better machinery, fertilizers and an overall specialization."

In 2000, the United States contributed one-third of the world's R&D investment. However, in the last few years, the United States has begun to lose its market share and has diverted those costs to other areas. Pardey is weary of this decrease and alluded to its possible implications for many disadvantaged nations around the world.

"We have successfully turned off the R&D spigot of agriculture, and we need to turn it back on," Pardey said. "With the co-evolution of pesticides and plant genealogy, we need to keep up and continue funding to promote the rightful way of farming."

The crucial elements of the investment in R&D are the spillovers of information that occur between states and countries. For every $1 devoted to R&D, there is a $21 return in Minnesota, which spills over and accrues into other states' and the nation's returns as well, which is a $32 return.

"The world is starting to cleave into two halves, the small groups of R&D have's and the large group of R&D have not's," Pardey said. "We have so far worked to change the structure of investment, but we have yet to collectively incentivise R&D."

Pardey is the author of "Agricultural R&D in the Developing World: Too Little, Too Late?" a book including research about the finance and conduct of global R&D, methods for assessing the economic impacts of research, and the economic and policy aspects of genetic resources. He is currently a member of Harvest Choice, an organization founded by the Gates Foundation aimed at promoting the efficient research of agro-ecologies around the world.

"We are funding billions of dollars throughout the world to facilitate R&D spillovers and intelligently tap technology," Pardey stated. "We can use certain econometric formulas for benefit-cost ratios and work with adapting locally specific agro-ecologies in different areas."

The organization involves remote sensing and satellites meant to create new data sets in order to promote "smart spillovers." One current project involves providing farmers in Africa with free cell phones in order to both collect data and promote the communication between farmers.

"In your lifetime you will have to deal with the need to feed another three billion mouths," Pardey announced to the students in the audience. "Much of the investment that is done today can help alleviate that burden and contribute to a greater welfare around the world."

Pardey's lecture was part of the economics department's lecture series, which has taken place throughout the semester and continues on May 12 with Macalester College Economics Professor Liang Ding.

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