Incentives drive public vs. private agricultural research and development expenditure mix

Across a broad range of topics for agriculture, food, and related issues, research and development (R&D) conducted by U.S. public research institutions (State and Federal institutions) tends to emphasize different themes than R&D conducted by private firms. The two sectors have overlapping research interests in areas related to farm production—crop, animal, and farm machinery innovation. However, in areas where reaping benefits from research results is more difficult for private firms—such as in the environmental impacts of agriculture, and human nutrition/food safety—public sector research dominates. The private sector tends to focus on areas such as food manufacturing, where research benefits are more readily captured by the specific innovator. Much of the private expenditures on food R&D, which does not directly affect farm-level productivity, is on new product development rather than on improved food manufacturing processes. New technologies such as gene transfer, along with intellectual property protection, have increased private incentives for crops research, and private crop research investment has grown. This chart appears in the ERS research report, Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers, ERR-189, released July 2015.

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