Public Agricultural Research Spending and Future U.S. Agricultural Productivity Growth: Scenarios for 2010-2050

• By 2050, global agricultural demand is projected to grow by 70-100 percent due to population growth, energy demands, and higher incomes in developing countries. Meeting this demand from existing agricultural resources will require raising global agricultural total factor productivity (TFP)1 by a similar level. Maintaining the U.S. contribution to global food supply would also require a similar rise in U.S. agricultural TFP. • TFP growth in U.S. agriculture is predicated on long-term investments in public agricultural research and development (R&D). Productivity growth also springs from agricultural extension, farmer education, rural infrastructure, private agricultural R&D, and technology transfers, but the force of these factors is compounded by public agricultural research. • The rate of TFP growth (and therefore output growth) of U.S. agriculture has averaged about 1.5 percent annually over the past 50 years. Stagnant (inflation-adjusted) funding for public agricultural research since the 1980s may be causing agricultural TFP growth to slow down, although statistical analyses of productivity growth trends are inconclusive. • ERS simulations indicate that if U.S. public agricultural R&D spending remains constant (in nominal terms) until 2050, the annual rate of agricultural TFP growth will fall to under 0.75 percent and U.S. agricultural output will increase by only 40 percent by 2050. Under this scenario, raising output beyond this level would require bringing more land, labor, capital, materials, and other resources into production. • Additional public agricultural R&D spending would raise U.S. agricultural productivity and output growth. Raising R&D spending by 3.73 percent annually (offsetting the historical rate of inflation in research costs) would increase U.S. agricultural output by 73 percent by 2050. Raising R&D spending by 4.73 percent per year (1-percent annual growth in inflation-adjusted spending) would increase output by 83 percent by 2050