A little-noticed section in the Bush administration's fiscal 2007 budget would change funding methods for U.S. agricultural research programs that could result in losses to Mid-South state agricultural experiment stations.

Mississippi, Tennessee, and Louisiana would be among the largest losers, while Arkansas and Missouri would have smaller losses. Texas, Florida, California, Arizona, Oregon, several Midwest states, and several Northeast states would be major gainers.

This would occur as a result of a move toward broader use of competitive grant funding for agricultural research and less use of federal “formula” funding, established by the Hatch Act in 1887.

State agricultural experiment stations now conduct about 60 percent of public ag research, while competitive grant research is carried out under the National Research Initiative (NRI). Over the period 1980-2003, federal formula funding for ag research dropped by $124 million (57 percent), while NRI funding increased by almost that amount, $120 million. The Bush budget proposal would eventually eliminate formula funding.

In an article in Choices, the magazine of the American Agricultural Economics Association, economists Wallace E. Huffman, George Norton, Greg Traxler, George Frisvold, and Jeremy Foltz note that, while Congress probably will reject the proposal, “it seems likely to resurface in the future.”

A larger federal competitive grants program “might have the advantage of leveraging state and federal formula funding” to state agricultural experiment stations to focus on medium-term needs, they note, but would come “at the cost of reduced opportunities for long-term research.”

In some states, a significant reduction in formula funds “might erode their capacity to undertake agricultural research” and could “mean closing campus and outlying research facilities and research farms.”

Research for locally important crops could also be adversely impacted — “local research interests would lose and national research interests would gain.”

The authors conclude, “We believe the very considerable risks associated with future discoveries in agricultural research will be best diversified by maintaining a portfolio of Cooperative Research, Education, and Extension Service-administered formula and competitive grants funding.”

Further, they say, “A case can be made for continuing, and possibly increasing, federal formula funding because of the high payoff, and at the same time expanding competitive grant funding to address selective high priority national, or perhaps regional, needs.”

In a March hearing by the Senate Agriculture, Nutrition, and Forestry Committee, three proposals were discussed for revamping USDA's agricultural research programs. They are:

  • The Bush administration proposal.

  • A proposal to create a National Institute of Food and Agriculture within the USDA. The present research structure would be basically left alone, but there would be created a new program of competitive, merit-based grants for basic agricultural research that would boost funds for competitive ag research by $1 billion over five years.

  • A proposal, called Create-21 (Creating Research Extension and Teaching Excellence for the 21st Century), which would utilize parts of the other two proposals. It would include modest increases in formula funds from 2007 levels and much larger increases in competitive funds. The proportion would, over seven years, change from 90 percent formula/10 percent competitive to 58 percent formula/42 percent competitive.