Date posted: March 15, 2006

Global perspective on research funding

Canada finds itself in a vulnerable position, as the world enters a watershed period for agricultural research and development.

The state of global funding for agricultural research took centre stage at the 2006 PRRCG meeting, as Dr. Phil Pardey of the University of Minnesota delivered an assessment of the latest trends and numbers.

"We are at a watershed, not just in Canada, but around the world, in terms of re-thinking the financing of agricultural research and development, and varietal improvement research in particular," says Pardey, a professor of applied economics, with extensive international experience measuring and assessing global investments in agricultural research.

Key trends

Pardey's presentation unveiled several key developments for Canada to keep its eye on, as the grains industry in particular aims to remain competitive in a fast-changing global environment.

Asia leads charge for total R&D. China in particular has seen tremendous growth in its Gross Domestic Expenditures on research and development, investing at three times the level of Canada, says Pardey. India is another fast riser, now funding slightly more Canada.

These trends reflect a changing of the guard, where these countries are poised to surpass member countries of the Organization for Economic Co-operation and Development (OECD), which includes the world's leading economically developed countries.

"China and India are starting to leap over the OECD countries," he says. "We're seeing a major shift eastward to Asia."

Agricultural spending in flux. Public investment in agricultural research and development has risen from $15.3 billion in 1981 to $23.1 billion in 2000, which generally represents a relatively stable level of investment. However, in developed countries, investment has actually decreased in real terms over the period.

When both public and private investments are considered, the total investment globally rises to $37 billion in 2000. "In the rich countries, there is now slightly more private investment than public investment," says Pardey.

Despite the increase in investment from developing countries that are now flexing more economic muscle on the global stage, OECD countries still lead in terms of research intensity, meaning those countries get more bang for each investment buck. "Research and development in the OECD tends to be more highly skilled," says Pardey. "The gap in research intensity between OECD and developing countries has actually grown."

Aussie grain challenge for Canada. Pardey, who is originally from Australia, used that country as an example of the modern evolution of research and development investment. Australia, particularly in agriculture, is viewed as a world leader in terms of both the level it invests and the model by which it invests. It is also Canada's key competitor for many grain export markets.

"Back in the mid-80s, there was a feeling that business as usual for financing Australian agricultural research wasn't sustainable, and for a period of about a decade there were a lot of new institutional changes," says Pardey.

The result was the creation of a number of semi-government, commodity-specific research and development councils, which evolved into Research and Development Corporations (RDCs). Each RDC was characterized by a defined industry, funding through a producer levy, agreements with government to match producer investment, producer involvement in goals and priorities and a strong emphasis on specific commercial applications. Also, in a key feature of the model, producer funding was quarantined from promotion and directed specifically to research and development.

The model has proven very successful as a funding mechanism for grains research, notes Pardey, with the GRDC now operating an annual budget of over $120 million annually. The vast majority of those funds directed toward research, at a level at least several times more than what Canada invests on a comparative basis.

© 2006 Meristem Information Resources Ltd.
Meristem® is a registered trademark of Meristem Information Resources Ltd. All rights reserved.
Legal Disclaimer