Better tools, better management, greater benefit

Opinion

Reporters on the farm meeting circuit have been picking up on anecdotal reports of farmers questioning the value of their investments in agricultural research through commodity checkoffs.

These checkoffs, which are based on a percentage of sales, can add up to substantial dollars, depending how much the farmer grows of commodities affected. They are eligible for a research tax credit for those funds, but it still adds up to tens of thousands of dollars out of their pockets at a time when their profit margins are squeezed.

Back in the days when governments did virtually all the research, it mainly took the form of improved crop varieties and genetic resistance to disease. Farmers were among the biggest beneficiaries of those innovations because they helped stabilize or improve their yields. But they didn’t pay for them, except as taxpayers like the rest of us. Consumers also benefited because the increased productivity helped keep food costs low.

The private sector took up the challenge of pest control because companies could recoup their research investments through the pesticide sales. Private research has increasingly taken on genetic improvements as well, again recouping the investments through the sale of seed protected under various intellectual property instruments.

However, it has become clear that better varieties and better tools must be combined with better management, known as agronomy, to capture the maximum benefits.

“Transformative changes are rarely associated with single innovations,” says a 2020 research paper “Making Science More Effective for Agriculture,” produced by an international team of researchers. For example, the “Green revolution” varieties associated with staving off global starvation were also helped by extension efforts showing farmers how to combine them with more fertilizer, irrigation and herbicides.

They note that while biotechnology has reduced the yield lost to pests, this brand of science has done little to improve yield potential or the ability of crops to withstand environmental pressures such as drought. That’s because yield and drought resilience are largely dictated by a complex set of traits and management, rather than a single trait.

Governments are increasingly focused on research that meets public-good objectives such as climate change mitigation and environmental sustainability. This is research that is less likely to produce a commercial application. In fact, they may have to pay farmers to embrace the outcomes.

My point is that agricultural research has multiple stakeholders and beneficiaries, all of whom need to pony up because it’s an expensive, long-term play in food security.

Hearing that producers are reconsidering their commitment is a concern but not a surprise.

Farmers are expected to front their share of the costs associated with agricultural advancements, but they often pay again when the results of that research are commercialized into products, or seed varieties for which they must purchase or pay royalties.

Every expense that gets baked into their cost base increases their risk, with no guarantee of a return.

Their risks have taken a sharp turn upwards lately. Comparing cost-of-production guidelines for 2023 against 2018, which don’t include the cost of checkoffs, farmers have seen the expense of growing an acre of canola jump. This year it’s $703, up from $408. It will cost farmers $629 produce an acre of wheat this spring, up from $364 in 2018.

Granted, farm cash receipts are expected to remain at or near record levels this year. But net profit — if all goes well — shakes out to around $44 for canola, which is strikingly similar to the $42 they would have netted in 2018. The wheat outlook is somewhat better at $42 per acre for wheat, up from $12 in 2018.

This kind of risk profile leaves little margin for error, environmental hits such as another drought, or the market downturn some analysts predict given the potential for global supplies to increase this year.

Farmers could be forgiven for looking critically at every line item that squeezes those net profit margins further.

By the same token, research that helps them connect the dots between innovations and management is bound to pay off in the ways that matter. Eventually.

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at lrance@farmmedia.com