Agricultural research ‘excellent investment’

Press, 29 August 1986, Page 15

Agricultural research ‘excellent investment’

Government expenditure on agricultural research and development is an excellent investment as several studies had shown that its annual rate of return is 30 per cent or greater, according to a report on agricultural funding. The report, published by the New Zealand Institute of Agricultural Science, claims there are no good arguments on economic grounds for reducing Government expenditure on research and development. The report was prepared by M. J. Ulyatt in response to the Government’s user-pays philosophy of reducing its expenditure on research and development by transferring some costs to the private sector. Government departments involved in research and development have been pressured by the Treasury Department to reduce expenditure by up to 45 per cent over the next five years.

If these departments wish to maintain their present activities or to grow, they must find the resources from industry, which, the Government argues, will result in research and development being more marketled.

If the Government continues on its present course of reducing expenditure on agricultural research and development, and the national base of scientific knowledge is allowed to run down, the immediate ef-

fects would be small, but in the long term they would be devastating in terms of national profitability, says the report. “It takes 10 to 30 years for an innovation in science to be utilised ,by industry, so if the investment in basic research is reduced, productivity will eventually decline.” The institute agrees with funding procedures that encourage a closer association between scientists and the users of scientific information, but notes the difficulty in obtaining payment from the users. Industry and society as a whole benefited from agricultural production research and development. If funding from taxation is . reduced, a system based on levies should be introduced, says the report. Otherwise the balance in research and development will shift from basic to short-term problem solving, and from production to processing.

If the Government reduces by 50 per cent its current expenditure on agricultural research and development, a levy of 0.6 per cent on gross agricultural production, raising S4OM, will be required to maintain the present research and development effort. In the current economic climate, the institute cannot see industry supporting such an increased cost. The alternatives are for the Government to continue supporting research and development because it is in the

national interest, or to reduce its support which would be a dangerous course in terms of national productivity. The report says pastoral production had responded magnificently in recent years to calls from successive Governments to increase production and had been ably stimulated by successful research and development programmes.

New Zealand’s pastoral production was already efficient by world standards, especially to the farm gate, but there was tremendous scope for further improvements. “The challenge is to produce, process and market more efficiently to provide products the world wants — it is vital that this effort is supported by a strong research and development programme.” The report says research and development cannot always be market led. Market forces may not be able to read the signals early enough and basic research and much applied research must be well ahead of the market.

"Market-led research and development will tend only to modify or improve an existing system. Keeping ahead of the market involves innovative research which can lead to discoveries that change the market.”

It is in the national interest, particularly at this time, to continue research and development into agricultural problems, says the report.