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AGRICULTURAL RESEARCH, EDUCATION, AND EXTENSION PROGRAMS
WEDNESDAY, JUNE 18, 1997
House of Representatives,
Subcommittee on Forestry, Resource
Conservation, and Research,
Committee on Agriculture,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in room 1300, Longworth House Office Building, Hon. Larry Combest (chairman of the subcommittee) presiding.
Present: Representatives Smith, Lewis, Chambliss, LaHood, Moran, Dooley, Brown, Farr, Stabenow, Pomeroy, Baldacci, Berry, and Stenholm [ex officio].
Also present: Representative Crapo.
Staff present: John E. Hogan, chief counsel; Russell Laird, John Goldberg, Callista Bisek, Anne Simmons, and Wanda Worsham, clerk.
OPENING STATEMENT OF HON. LARRY COMBEST, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. COMBEST. Good morning, and I want to thank everyone for being here. The committee will come to order.
Today is the second in our series of hearings to review agricultural research, education, and extension programs. Yesterday we explored many issues, including the question: why is it so difficult to maintain adequate funding for agricultural research?
In questioning by Representative Brown, it was revealed that part of the problem is the inability of scientists to adequately relate to the American public the benefits that are derived from agricultural research programs.
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For instance, in today's testimony, we will hear about how agricultural research has led to the development of a drug that we consider very basic today, penicillin, and today's leading treatments for AIDS/HIV.
Why is the fact that agricultural research is making significant contributions to the treatment of HIV is confined to this room and not the national news?
We also had an extensive discussion with three major elements of the agricultural research system, Agricultural Research Service, state universities, and the private sector. During this discussion, we focused on the current and future roles each of the entities will play.
In doing so, we asked our witnesses to take a giant step back and tell us if the current system were to be rebuilt would it come out the same way.
Having differentiated the roles of the three major entities, our agenda today is to review several examples of how the entities coordinate their activities. Specifically, we would like to evaluate ongoing partnerships between the public and the private sectors in which minimal resources are leveraged to maximize results.
We will continue with our theme of improving the efficiency of our research and reducing or eliminating any duplication of research efforts in light of the tight budget situation. While the examples we will discuss today are ongoing partnership projects, I would like to explore any possibilities for encouraging the formation of these partnerships whenever possible in all of our research, education, and extension activities.
Again, I would say that I appreciate the efforts of all of you who have come today, and I look forward to hearing those discussions, and would recognize any other members for opening comments they might make.
Mr. Lewis.
OPENING STATEMENT OF HON. RON LEWIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KENTUCKY
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Mr. LEWIS. Thank you, Mr. Chairman.
I do appreciate you holding these hearings. As you know, I am a strong supporter of research and extension programs. I believe they must remain an important source of information for our farmers and ranchers.
I believe that agricultural research holds the key to unlocking the door to long-term farm production, efficiency, productivity, and profitability, while at the same time minimizing the unintended impact on the environment.
We, as members of the Agriculture Committee, have a very important question considering this reauthorization of the research title. Is our country's traditional agricultural research system prepared for the challenges the next century will bring? And if not, what reforms or changes should be made in the law to prepare the research system for the 21st century?
Today is an exciting time, of course, for agriculture production. The research reauthorization must complement the new farm bill and direction of our Nation's agriculture policy. It is vital that we help provide for research so that our farmers and ranchers will continue to be the world's most efficient producers of food and fiber.
Mr. Chairman, I look forward to working with you and our colleagues to prepare agriculture for the challenges that will face them in the future.
Thank you.
Mr. COMBEST. Thank you, Mr. Lewis.
Mr. LaHood.
OPENING STATEMENT OF HON. RAY LAHOOD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Mr. LAHOOD. Mr. Chairman, thank you for holding this series of hearings on the future of agricultural research. As the Federal Government encourages farmers and ranchers to get more of its income from the marketplace, Federal agricultural research becomes a critical catalyst.
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We must maintain a strong public and private effort in order for American agriculture to continue to be profitable and competitive in the global economy. The challenges involved with balancing the Federal budget will continue to force Congress to make difficult spending choices in high priority programs, such as research.
In this country, the partnership between producers and researchers supported by Federal and State money has created an unprecedented level of productivity at which 3 percent of the population feeds the other 97 percent and generates billions in export opportunities for America.
The United States provides the world not only with food, but with the technical skill to produce it better. The need for more of both can easily be read in those population figures.
Before I go further, Mr. Chairman, I would like to acknowledge two gentlemen from my district and from my home town of Peoria. It is a pleasure to have both of them here. They distinguish themselves in their professional careers.
Dr. Peter Johnsen is currently the director of the National Center for Agricultural Utilization Research and the Agriculture Research Center facility in Peoria, and the center is a major research facility of the USDA Agricultural Research Service. Work at the center focuses on the innovation and invention of products and uses of agricultural commodities encompassing three areas: finding new market opportunities for commodities, securing environmental quality and compatibility, and insuring food safety.
As the designated lead USDA technology transfer facility, the lab accelerates commercialization of promising products and technology from the lab to the marketplace through innovative partnership with the private sector, and Dr. Johnsen's leadership has been noted time and time again.
Also with us today is Dr. Grant Brewen, who is a research scientist and has distinguished himself in a number of areas, and both Dr. Johnsen and Dr. Brewen are distinguished members of our community and have contributed so much to the BRDC Program around the country in their innovation and their vision for the future.
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Mr. Chairman, I ask unanimous consent that the remainder of my remarks be placed in the record.
Mr. COMBEST. Without objection. Thank you, Mr. LaHood.
The Chair will recognize a guest member, a former member of this committee, and a very significant member in the area of agriculture, Mr. Crapo.
OPENING STATEMENT OF HON. MICHAEL D. CRAPO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO
Mr. CRAPO. Thank you, Mr. Chairman. I appreciate your allowing me to sit with the committee again and participate in this hearing to discuss the important issues relating to the future direction of agricultural research.
Research extension and education programs have played a critical role in achieving the current productivity and competitiveness of U.S. agriculture, while providing taxpayers a rate of return of 30 to 50 percent per year, and I would first like to welcome Mr. John Martinell, a constituent of mine who will be testifying today.
Agriculture currently faces many challenges and opportunities that extend well beyond the farm gate, and in order to address these multiple and complex needs, we must reinvest in agricultural research, extension, and education, which has in large part been responsible for the current achievements in productivity and competitiveness of U.S. agriculture.
There is a growing need for infusion of resources that will provide problem and opportunity oriented research to meet the needs of the entire agricultural system, and this call for a strong reinvestment in agricultural research, extension, and education has been a resounding theme at every agricultural meeting and forum, hearing or workshop that I have attended over the past 2 years.
The rationale for this new agricultural research initiative is related to the importance of sustaining and even increasing the knowledge and technological base for U.S. agriculture to meet the demands of a global free market.
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Research extension and higher education should focus on both long and short-term issues affecting agriculture. New agricultural research initiatives should be designed as an aggressive, coordinated research and education program between the USDA, universities, national labs, and industry, with agricultural industries playing a pivotal role in setting the priorities.
And I feel strongly about this new research initiative because I, along with many of my colleagues, have devoted significant effort to coordinating and developing legislation for the advancement of what has become know as precision agriculture.
Virtually no aspect of agriculture remains unaffected by recent advancements in precision agricultural technologies. The positive impact precision agriculture promises to have on this Nation's agriculture could well exceed the cumulative gains since the introduction of machines and chemicals to agricultural systems.
I expect that as agriculture stands on the brink of the Information Age, the emergence of precision agricultural technologies and tools, coupled with a strong and appropriate Federal research and education role, can accomplish many of the challenges we face.
And, Mr. Chairman, I would submit the remainder of my remarks for the record, but, again, thank you very much for the opportunity to be with you briefly today, and I encourage your strong consideration of precision agricultural initiatives.
Mr. COMBEST. Thank you, Mr. Crapo.
Without objection, all members' statements will be made a part of the record.
[The prepared statements of Mr. Smith, Mrs. Chenoweth, and Messrs. LaHood and Crapo follow:]
"The Official Committee record contains additional material here."
Mr. COMBEST. Mr. Baldacci, do you have any opening remarks?
Mr. BALDACCI. No, sir. Will we have an opportunity if we do have any more formal remarks to have them entered into the record?
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Mr. COMBEST. Absolutely.
Mr. BALDACCI. Thank you.
Mr. COMBEST. Mr. Brown?
Mr. BROWN. No.
Mr. COMBEST. Mr. Berry?
Mr. BERRY. No. Thank you, Mr. Chairman.
Mr. COMBEST. The record will remain open for 10 days and Members are welcome to submit statements until then.
I, again, thank our witnesses who are at the table. Let me give a short introduction in addition to the very eloquent introduction Mr. Crapo and Mr. LaHood gave.
Dr. Robert Armstrong is Acting Executive Director for the Alternative Agricultural Research and Commercialization Corporation of USDA.
Dr. Bob Robinson is the Administrator for the Cooperative State Research, Education and Extension Service. Dr. Robinson is representing the Agricultural Research and Development Center.
Dr. Peter Johnsen is Director of the National Center for Agricultural Utilization Research of USDA from Peoria, Illinois.
Dr. Grant Brewen is the president and CEO for the Biotechnology Research Development Corporation in Peoria, IL.
Mr. Nyle Wollenhaupt is staff soil scientist and agronomist for the Ag-Chem Equipment Company, Inc.
Mr. John Martinell is the program manager for agricultural programs at Lockheed Martin Idaho Technologies Company.
Mr. Kent Nix is a steering committee member of the Agricultural Complex for Advanced Research and Extension System.
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We will enter all of your complete statements and any other documentation that you would wish for this hearing in the record, would recognize you if it is agreeable in the order that you were announced for any opening comments that you might make, and again, thank you for coming.
Dr. Armstrong.
STATEMENT OF ROBERT E. ARMSTRONG, ACTING EXECUTIVE DIRECTOR, ALTERNATIVE AGRICULTURAL RESEARCH AND COMMERCIALIZATION CORPORATION
Mr. ARMSTRONG. Thank you, Mr. Chairman, and other members of the subcommittee for the opportunity.
What I want to do is just briefly summarize my full remarks, explain who we are at the AARC Corporation, how we interact with the other organizations within USDA, that is, the public-public interaction, and then how we interact with the private sector, especially the capital markets, and then conclude with identifying some unmet research needs that we at AARC see.
AARC is a wholly-owned corporation of the U.S. Department of Agriculture, and we function as a venture capital firm and invest in companies that are commercializing products made from agricultural materials, animal byproducts, and forestry materials that they are bringing into the marketplace.
We grew out of a 1987 task force established by the then Secretary of Agriculture, the Farm and Forest Product Task Force, that identified new crops and new uses for old crops as a goal for revitalizing American agriculture.
Commercialization, as I indicated, is our work at the AARC Corporation, investing in these companies, but research is our life blood, and I will draw on a couple of examples later in my testimony where two of our companies; in particular, have grown out of the USDA research effort.
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On the public-private side, I want to indicate our relationship with private money that comes to these companies. For every $1 that AARC invests in a company, they bring between $3 1/2 to $4 of private sector money to the table. In 5 of our companies, and we now have approximately 60 to 65 investments, 5 of our largest performing companies, which constitutes a total of about a $3.75 million investment on the part of ARC, those companies have been able to raise over $52 million in the private capital markets, just showing the strength of this public-private partnership.
Now I want to talk a bit about the public-public partnership, and that is our interaction with sister organizations within USDA. We rely heavily on ARS when we get a proposal, to advise us on some of the technical aspects of a proposal. Many of their scientists are in our database for technical reviewers, and they share information with us about new technologies with commercial potential. We have a very good working relationship with their technology development group.
Cooperative Research, Education and Extension Service, we rely upon those folks, as well, in our due diligence, again, to do technical reviews of projects that are sent to us.
Forest Products Research Laboratory, and this is really one of my favorite stories of ARC. The Gridcore Corporation, Gridcore Systems International in California, is a company that we have about $2.5 million in. It altogether is capitalized to around the 20-some million dollar level. The product that they make is a strong, light weight building material used for interior panels, construction of display sets for trade shows, that sort of thing.
That is a product that was developed and sitting on the shelf at the Forest Products Research Lab. They licensed the technology. We, with our initial investment, helped get the company going. So there is a very good illustration of the public-public interaction and partnership between us and Forest Products and in the public-private.
The Small Business Innovative Research Program is another good illustration of both that public-public and public-private. Our second largest investment is in a company called Natural Fibers. They are growing a crop, milkweed actually, syriaca, and they take that and blend it with goose down and make comforters and pillows, and the advantage is that they are hypoallergenic.
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Well, they got their start from an SBIR grant, and then we came along as they progressed and have invested money in them, and they have now got sales of in the $2 to $3 million range.
Last year, Secretary Glickman established an Interagency Council to coordinate research, development, and commercialization of products from agricultural materials. This Bio-based Products Coordinating Committee focuses on the functional integration within USDA on all of these issues and policies pertaining to the bio-based value added products.
Members include ARC, SBIR, ARS, Economic Research, Forest Service, Rural Business and Cooperative Development, Agricultural Marketing Service, Foreign Agricultural Service, and Natural Resource and Conservation Service.
So within the Department, there is very much an integrated public-public relationship and interaction to move us towards this bio-based economy that is our vision.
And finally, on the ARC's board of directors, as you know, we have an 11-person board of directors, 8 of whom are from the private sector, but by legislation the incumbent as the Under Secretary for Research, Education, and Economics sits on our board. So that is another tie that we have to the research community and making sure that we continue that public-public partnership.
I want to conclude by just commenting on a few unmet research needs that we at AARC see. Since we are at the end of the pipeline, the commercialization stage, and looking back, what do we need to be working on now so that we have got products to come into the marketplace?
Foremost among them as we see is the development of new fiber crops. We have investments in some of these crops at the moment, as I mentioned, syriaca or milkweed. Kenaf is another fibrous crop with a tremendous potential. At the moment, German car companies are looking at making the door panels out of kenaf. All told, we grow about 2,000 acres of kenaf in this country. There is huge potential for increased kenaf production.
Purdue University has a new crop center, which we work fairly close with, and identifying down the road what other aspects of new crops we need to be looking at. Fiber crops, as I mentioned, is one, but the next big one, in particular, that Purdue has identified as well is in the oilseeds area.
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The oilseeds are bio friendly. They have in many cases superior performance as opposed to petroleum replacements. We have a considerable amount of money in oilseed investment. One, in the State of Oregon, meadowfoam, we have just earmarked a $1 million investment for the development of meadowfoam.
Castor is another example. Castor was grown in the United States until after World War II. Now all of our castor oil is imported. Tung oil, which comes from the nut from the tung tree, exactly the same story. The tung industry was destroyed several years ago by a hurricane, and now whatever tung oil we use we import.
So in closing, I just want to reiterate, as I do in the written testimony, that perhaps it is time to reestablish the New Farm and Products Task Force to look at the integration of these things, where we are in commercialization, where we are in our unmet research needs, the public-public partnerships, for example, those that AARC has with other USDA agencies, and the public-private partnerships, again, as an example, the relationship that we have with private capital markets to get many of these deals done and capitalized and into the marketplace.
And thank you, Mr. Chairman, and I would be happy to answer any questions later.
[The prepared statement of Mr. Armstrong appears at the conclusion of the hearing.]
Mr. COMBEST. Thank you, Dr. Armstrong.
Dr. Robinson, welcome.
STATEMENT OF BOB ROBINSON, ADMINISTRATOR, COOPERATIVE STATE RESEARCH, EDUCATION, AND EXTENSION SERVICE, U.S. DEPARTMENT OF AGRICULTURE
Mr. ROBINSON. Thank you, Mr. Chairman.
I am delighted to be with you again today as you continue the discussions and deal with the very important issues surrounding the reauthorization of the Research, Education and Extension Title to the farm bill.
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I am here today to represent the Department of Agriculture and, at your request, to talk about the Binational Agricultural Research and Development Program. BARD is the result of a 1977 binational agreement between the United States and Israel. Under the belief that greater cooperation between the two countries' scientific communities would synergistically stimulate advances in science and in agriculture, BARD is guided by a board of directors with membership from both countries.
Within the mission of the Cooperative State Research, Education and Extension Service of USDA, BARD is a special research grants program that competitively supports fundamental research in the areas of animal and plant sciences, economics, and engineering that are important to agriculture in both the United States and Israel.
Funds in support of the BARD Program are from two sources. Beginning in 1977, as I mentioned, when the program began, interest paid on an endowment fund jointly established by the United States and Israel has supported the program. Both Israel and the United States have contributed equal amounts on two occasions to create a total endowment fund now of $110 million.
But starting in fiscal 1994, additional funds provided directly by the United States and Israel have significantly increased funding for BARD grants. An additional $2.5 million was provided by the United States in both fiscal years 1995 and 1996, and $2 million was authorized and is provided in fiscal year 1997.
The total amount available to the BARD Program, including the interest earned on the endowment and funds provided by both Governments, is currently over $12 million annually. Prior to the drop in interest rates in 1993, the greatest level of program funds available for BARD was in 1991 with a total of $9.4 million.
Each grant application to the BARD Program must be a joint effort by a team of U.S. and Israeli scientists. Each proposal submitted to BARD receives a peer evaluation. Only those proposals which are reviewed and considered meritorious are funded, and all proposals awarded by the BARD Program must have significance both to the U.S. and to Israeli agriculture.
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While many U.S. institutions receive funding through BARD, the majority of the funding goes to the land grant universities and to the Agricultural Research Service. The Cooperative State Research, Education and Extension Service, direct appropriation used in BARD, is used to fund land grant university grants.
Much of the research supported by the BARD Program concentrates on issues of animal and plant health, including studies of the pests and pathogens of both plants and animals and responses of plants to environmental conditions, particularly crops grown on warm, dry climates.
Many accomplishments in fundamental sciences have been made in these areas that will lead to the development of plants resistant to disease, pests, and hard and harsh environmental conditions, reduction in livestock diseases; and increased livestock production.
BARD research grants have led to the discovery of a powerful antiviral substance in tobacco plants that can be used to protect tomato plants. Also, an accomplishment is the development of a vaccine in Rift Valley Fever, a debilitating disease of cattle and sheep and even humans.
Another accomplishment is the development of a method to help pecan growers in the American Southwest deal with the damaging effects of soil salinity, which has caused premature death and stunted growth of pecan trees, as well as low yields. The new methods save trees and return them to full production.
Of the awards, for your information, for the last few years, 36 awards came to the United States, 30 of these to universities generally, most of which were land grants, and 6 to ARS.
In 1996, 35 of the awards came to the U.S., 33 going to universities and 2 to ARS.
And in 1995, 34 awards came to the U.S., 28 to universities and 6 to ARS, and I point out all of these projects must have cooperating scientists from both countries.
Mr. Chairman, at this time I would like to conclude the summary of my remarks and would be happy to answer questions at the appropriate time.
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[The prepared statement of Mr. Robinson appears at the conclusion of the hearing.]
Mr. COMBEST. Thank you very much, Dr. Robinson.
Dr. Johnsen.
STATEMENT OF PETER JOHNSEN, DIRECTOR, NATIONAL CENTER FOR AGRICULTURAL UTILIZATION RESEARCH, U.S. DEPARTMENT OF AGRICULTURE
Mr. JOHNSEN. Thank you, Mr. Chairman, for inviting me, and thank you, Mr. LaHood, for those kind comments.
Today I would like to describe the importance of public-private partnerships to our program in Peoria and relate how we have developed our long-term fundamental research discoveries into commercial successes using the authorities of the technology transfer legislation.
I would also like to describe a challenge to technology transfer that we have encountered as we have moved science to the marketplace.
My center is one of four USDA utilization laboratories which were among the most successful creations of Congress. Since 1938, our mission has remained to develop new uses in extended markets for farm commodities.
These laboratories have been involved in public-private partnerships for almost 60 years now and have changed American life in very significant ways: through the development of penicillin production, frozen concentrated orange juice, permanent press clothing, and many other familiar products.
But let me focus on our laboratory in Peoria and how we have used the technology transfer legislation. Since 1980, we have received 108 patents, and we have licensed 41 percent of these patents to the private sector.
But before an idea is patented and commercialized, new knowledge must flow from the science of discovery. It is from this fundamental work that practical ideas can be developed for commercial application. Without significant investment in developing new knowledge, the ideas and the technical basis of commercial opportunities would soon dry up.
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This is one of my main points today. The only way to generate the seeds of technology is from fundamental research, and only with partners can this research be commercialized.
The key to our success in Peoria has been a basic understanding of the physical and chemical properties of plant polymers and how to modify them for practical application. I would like to provide some examples of how we have used directed problem solving research, which begins with fundamental knowledge, and have been brought to the marketplace using the existing technology transfer laws.
My first example is fluffy cellulose, which is used as a flour substitute imparting high dietary fiber and low calories. A simple, exclusive license was issued to a company in Cambridge, Minnesota.
With an annual market now exceeding 20 million pounds, the guarantee of an exclusive rights to this invention prompted that company to invest in the production facility and market development needed to launch this product.
A second commercial success, building on our fundamental research on enzyme modification of plant polymers, is Oatrim. This NCAUR invention continues to grow beyond 20 million pounds annually as an ingredient in low fat specialty food items. Oatrim is now being made and marketed under licenses by two joint venturers. Our ability to negotiate complex licensing agreements has been key to our success in this case.
Building on this same fundamental research, a third commercial development has been announced in the past year and was widely reported in the public national media. Z-Trim is a natural dietary fiber food ingredient, so named because it has zero calories. A special feature of Z-Trim was that it was invented under a CRADA, or cooperative research and development agreement.
By early on participation in the cooperative research process, the partner was permitted a first right of refusal to an exclusive patent right under the 1986 Technology Transfer Act.
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Scientists at NCAUR have a history of developing novel materials from fundamental research which lead to an explosion of new products. One of the best examples is Super Slurper, the absorbent gel used in a wide variety of products, most notably disposable diapers.
Recently our scientists have developed another totally novel material which promises to have as many applications as Super Slurper. USDA has coined the name Fantesk for this technology. Its unique properties make it ideal for many commercial applications, and we have recently signed numerous licenses and CRADA agreements to develop the technology.
Additionally, our scientists have made important discoveries in recent years which are now about to pay off with a large-scale commercial application for a unique starch based, biodegradable plastic, and next you will hear Dr. Grant Brewen of BRDC describe this work and the commercial prospects of this invention under a very unique partnership arrangement.
All of these examples are based on fundamental research and involve partnering with the private sector, but let me turn to a difficulty we have experienced in technology transfer. The ability to get from a scientific idea to a commercial concept and then into a marketed product into the marketplace has been difficult, if not impossible, in some cases.
This problem is often referred to as Death Valley, where promising technologies die for a lack of capital needed for commercialization. In a way, it is a classic chicken or egg dilemma. Oftentimes a development facility is needed to produce enough material to convince customers that the product performs as advertised, but without a guaranteed customer, no one can afford the risk to build a plant.
We anticipate the NCAUR will soon have an important tool to bridge Death Valley. This summer we will begin a multi-phased renovation of our pilot plant which will provide flexible space for proof of concept work on NCAUR technologies.
Partnerships with the private sector will enhance technology commercialization through risk sharing, but exactly how this facility will operate under current technology transfer authorities remains to be established.
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Let me summarize by saying that we look forward to continued successes in the science and discovery, the development of this fundamental knowledge, and ultimately bringing innovative products to the marketplace through public-private partnerships. It is in this way that we serve the American people by enhancing the Nation's economy and the agriculture sector, in particular.
Thank you, and I would be happy to answer questions at the appropriate time.
[The prepared statement of Mr. Johnsen appears at the conclusion of the hearing.]
Mr. COMBEST. Thank you very much, Dr. Johnsen.
Dr. Brewen.
STATEMENT OF J. GRANT BREWEN, PRESIDENT AND CEO, BIOTECHNOLOGY RESEARCH DEVELOPMENT CORPORATION
Mr. BREWEN. Mr. Chairman and distinguished members of the subcommittee, thank you for this opportunity, and thank you, Mr. LaHood, for your kind comments.
It was 12 years ago that a group of businessmen and executives in Peoria, IL, and members of the USDA's Agricultural Research Service Laboratory, now called NCAUR, developed a unique concept for a research and development consortium. These individuals recognized that three important entities, the private sector, the Federal Government, and the State through their academic institutions, needed to work much more closely in order to transfer technology more efficiently from the public to the private sector where it could be successfully commercialized.
Unfortunately, at that time it was basically impossible for the private sector to carve out a proprietary position in intellectual property developed in the public sector. Through a considerable effort, led by the Peoria businessmen with the assistance of Mr. LaHood and his predecessor, Bob Michel, who at that time was the Minority Leader of the House, the Technology Transfer Act of 1986 was passed into law.
The vision of these individuals could not have been more on target. Today every Federal research organization is actively engaged in cooperative research and development agreements or CRADAs. There is even a Federal laboratory consortium for technology transfer, and the current administration has suggested that upwards to 20 percent of each agency's research expenditures should be dedicated to cooperative endeavors with the private sector.
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Today, 9 years after its inception, BRDC and ARS have forged a partnership that is viewed as perhaps the most successful example of technology transfer in the Nation. This partnership in research and commercial development will become stronger with the Congress' support and continue to demonstrate that at least one American model can compete effectively with the established Government-industry coalitions that are so prevalent in Europe and Asia.
The partnership provides synergies that arise from the application of seemingly unrelated disciplines and, therefore, put non-U.S. companies at a competitive disadvantage; synergies that lead to efficient commercialization of ARS technologies; leverage for baseline financing during early stages of development; risk reduction on all of the partners' parts; and technology platforms for new business opportunities.
BRDC is privately owned. We are currently owned by seven corporations. They are: Agricultural Research and Development Corp.; Alexion Pharmaceuticals, a start-up biotechnology pharmaceutical company in Connecticut; American Home Products; Dalgety, PLC; the Dow Chemical Company; Mallinckrodt CInc.; and McDonald's Corporation.
Our purpose is to discover and fund technology that holds promise to make a significant impact in the international marketplace. BRDC, by virtue of its founding charter and current partnership with the U.S. Department of Agriculture's Agricultural Research Service, focuses its research and development activities on agricultural based technologies, with an emphasis on finding new opportunities for commercial exploitation of renewable commodity agricultural products, be they plant or animal based.
In this BRDC looks toward development technologies that will provide more environmentally friendly production of crops, new or alternative uses of commodities, and safer methods of production and delivery to the consumer.
To date, BRDC has funded 130 research projects at 37 institutions throughout the country at a cost in excess of $28 million. This research funding has resulted in the filing of over 230 patent applications, 49 of which have been allowed. Forty-three of those have been issued. Many of these patents, both the patented or about to be patented, have been licensed.
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We have entered into 49 license and/or option agreements with the commercial sector and are finalizing negotiations on 4 additional license and option agreements.
The technology involved ranges from a promising therapeutic that is currently in phase 1 clinical trials for the human immunodeficiency virus, the causative agent of AIDS, which you, Mr. Chairman, referred to in your opening remarks; a new genetic regulatory elements for plant genetic engineering that has either been licensed to or is being evaluated by 80 percent of the world's plant biotechnology and seed companies.
Our funding has resulted in a technology that is current in the marketplace that predicts litter size in swine; an effective vaccine against cattle shipping fever, which will be introduced some time early in 1998; a method of cloning swine. You have heard of Dolly. We have a method of cloning swine, and a technology that I will focus on in my later comments, which is based on a starch/synthetic polymer that possesses the mechanical and strength characteristics of polystyrene and polyethylene, and yet is 100 percent biodegradable and compostable.
I have attached in my submitted comments appendices which summarize our financial statements from inception through year 1996, a list of the academic and Government laboratories with which we have done business, and a detailed list of all of the license agreements that we have executed to date.
What I would like to do now is take the remainder of my time and focus in on one example of where an organization like BRDC can be very successful in developing a synergistic effect between the private sector, the academic sector, and the public sector, and in this case, the laboratory in Peoria, NCAUR.
In 1995, the United States consumed approximately 15 billion, pounds of low density polyethylene, linear low density polyethylene, high density polyethylene, and polystyrene. Of this total, approximately 8 billion pounds were used for packaging, agricultural mulch, trash bags, retail bags, food service, food packaging, and so forth.
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For example, before they switched exclusively to paper based packaging, McDonald's Corporation used in excess of 100 million pounds of polystyrene to serve their Big Macs, Quarter Pounders and french fries. If you multiply this by 3, you have a rough estimate of the volume of material that the fast food industry consumes each year.
Twenty years ago scientists at NCAUR began an extended research program to incorporate starches and other plant derived polysaccharides into petroleum based polymers. The objectives were price reduction and environmental considerations and new uses for agricultural commodities, not necessarily in that order.
Although successful in their efforts, the scientists produced a product that had, with a few notable exceptions, less than desirable mechanical and/or strength characteristics and a product that was not biodegradable, but what they did do in those 20 years was to build a platform of basic knowledge on starch polymer chemistry and other polysaccharide chemistry.
Several years ago scientists at the Dow Chemical Company, an original shareholder in BRDC, developed a family of synthetic polyesters that are completely biodegradable and compostable. These polyesters exhibit equal or superior mechanical and strength characteristics as compared to the materials I mentioned earlier. Unfortunately their cost made them commercially noncompetitive.
The Dow scientists tried what was obvious. They blended their materials with inexpensive fillers. They even tried starch. The result was a less than desirable product, and even as the Dow scientists will admit, they do not know starch chemistry.
They came to BRDC. We introduced them to the world's expert, who at that time was still an employee at NCAUR, Dr. William Doane and his group. Within 1 month, BRDC and ARS were working on a research project, and within 2 months we began to file a family of patents to cover the intellectual property that has been developed out of that cooperative research endeavor.
The Dow scientists have worked very closely with the ARS scientists. It is a true collaboration. As I speak, Dow has taken an exclusive license to the technology for the purpose of producing peanuts or loose fill packaging material, which represents about 150 million cubic feet of polystyrene every year.
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BRDC and Dow have reached agreement on the terms of another license in which Dow will license back the technology on a nonexclusive basis for all fields of use. Dow has entered into a joint development project with a major third party to develop this technology for food applications.
Another one of our shareholders, and I think you can figure out who that is, is watching this technology develop very closely. They expect that if it is successful, that is, the development for food delivery, that they will be using in excess of 150 million pounds of the product within a few years.
There is a key point in this. Dr. Johnsen has mentioned the need in his written testimony of the development and the creation of a pilot plant at NCAUR. The Dow Chemical Company addresses markets that will use tens to hundreds of millions of pounds of their polyester resins. There are, however, dozens of applications for the starch polyester technology that will be limited to just a few million pounds.
The companies that will use this technology to develop these unique products are not capitalized to the point that they will be able to afford the development costs, and that is where BRDC and ARS and our partnership come in and play a significant role.
With the appropriate pilot plants, we can do the development work for those niche market applications of this very exciting technology. We consider it key in being able to demonstrate very conclusively the success of the private sector-public sector partnerships that we can, in fact, take new, exciting technologies that have formed a brand new platform for business opportunities, and to develop them into commercial products, not that we are going to go into business ourselves, but our intent is to create businesses, new businesses, in the Peoria and Midwest area.
In closing, I would just like to remind you that Government-private sector partnerships have been profitable to all of the partners and are profitable to everyone, particularly the consumer and the wage earner.
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BRDC and ARS have demonstrated that this partnership can produce results that benefit every segment of our society, from the environmentalists to a Fortune 25 company.
And thank you. I will be glad to answer any questions you may have.
[The prepared statement of Mr. Brewen appears at the conclusion of the hearing.]
Mr. COMBEST. Thank you very much, Dr. Brewen.
Dr. Wollenhaupt.
STATEMENT OF NYLE WOLLENHAUPT, STAFF SOIL SCIENTIST/AGRONOMIST, AG-CHEM EQUIPMENT CO., INC.
Mr. WOLLENHAUPT. Thank you, Mr. Chairman and distinguished members of the subcommittee, for allowing me the opportunity to appear before you today to speak to you about the importance of continuing agricultural research and the exciting technological changes occurring on the farm today and in the near future.
My verbal comments here will be a synthesis of the submitted comments that you have before you.
Ag-Chem is an agricultural machinery manufacturer that markets a line of high floatation, self-propelled equipment used in the application of plant nutrients and crop protectants. Ag-Chem is the industry leader in bringing precision technologies to agriculture to accomplish site specific application of both plant nutrients and crop protectants.
I am here on behalf of the Fertilizer Institute, a voluntary, nonprofit association whose members represent agricultural equipment manufacturers, traders, retail dealers and distributors of plant nutrient materials.
The new technologies and practices I'm referring to include the use of global positioning satellites, digital field mapping, geographical information systems, grid soil sampling, variable rate seeding and fertilizer application, field computers for pest scouting, on-the-go yield monitoring, satellite livestock tracking, and computerized field history and record keeping, and these are just a few of the next generation of tools that are beginning to be used in agriculture today.
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While the technologies have been glamorized in farm magazines and newspaper stories, precision farming is about farming with information. The new technologies allow us to collect detailed information about soil and crop conditions within a farm field, analyze the data, develop management strategies for specific sites within fields, apply crop inputs according to the needs of the site, and then gather more information through electronically aided crop scouting, and finally, yield monitoring.
In short, each farm field using precision technologies becomes a research plot. Crop, soil, and weather data collected over multiple growing seasons become the basis for adjusting important agronomic input, such as drop variety, plant nutrients, crop protectants, irrigation water, fuel, labor scheduling, and again, the list goes on.
The adoption of precision agriculture technology is beginning to proceed at a rapid rate. It is estimated that as many as 25 to 30 percent of our most efficient and productive farmers are utilizing various new technologies, including yield monitors, grid soil sampling, and variable rate nutrient application.
These numbers are consistent with a 1997 Purdue University farm supply dealership adoption survey that shows about 40 percent of the fertilizer and crop protection product dealerships are offering some form of geo-reference soil sampling and about 30 percent offering computer map controlled, variable rate, single product applications. These numbers are up about 20 percent from a similar survey in 1996.
All of this growth has created a large demand for equipment operators with computer and electronic skills and more college graduates in agriculture to assist farmers with the wealth of data that is created with the new technologies.
The rapid growth and adoption of these technologies has created a whole new job sector in agriculture for farm youth and college graduates. The demand has caught most of our land grant research and educational institutions by surprise.
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The benefits of site specific farming on profitability for farmers can vary greatly from region, types of soil, and crops grown. For example, corn in Minnesota. The value added to site specific variable rate and management compared to a conventional program ranges from $5 to $29 per acre. In fact, new research is showing that the optimum nitrogen rate can vary from as little as zero to 180 pounds for optimum corn production within the same field.
Winter wheat in Washington. Results based on field research indicate again variable rate fertilizer application, improving profitability anywhere from 3 to $14 per acre.
Sugarbeets in the Red River Valley of North Dakota and Minnesota. Yield and quality results show a variable rate technology nitrogen management advantage over conventional single rate management, and these returns are over multiple years and multiple locations, range all the way from $48 to $75 per acre improved profit.
Potatoes in Idaho. Returns to risk in management were $368 an acre greater for a precision agriculture managed center pivot irrigation versus conventional managed pivot.
Many of the above studies report profitability for managing only one crop input variable. We know, however, that the more variables that are accounted for and managed in the growing season, the greater the profit potential. Hence, there is a great profit potential remaining.
The greatest benefit from site specific management may be from improved environmental stewardship. Targeting crop inputs to only those locations in a field where they are needed results in unnecessary over and under application association associated with only applying a single rate across an entire field.
Benefits of variable rate fertilizer application based on soil variability include increased fertilizer use efficiency, reduced nutrient overloading and surface water from soil runoff, and potentially the reduction of nitrate movement in groundwater.
Through site specific management areas more sensitive to leeching and surface runoff can be located and treated appropriately.
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The use of precision technologies with automated data collection and the creation of electronic farm plans will help farmers comply with the increasing environmental regulations that are being proposed to be implemented at the far gate. Net gains in environmental stewardship will be achieved with less paper work and bureaucracy.
The earth's population is almost certain to double in the next century. One report estimates that the world's farmers will be asked to produce as much food in the next 40 years as they have in the entire 14,000 year history of agriculture production.
World population is increasing. Third World diets are improving, requiring more meat and grain to livestock. These are facts that must be faced by our agricultural production system and the Federal agricultural research community.
Mr. Chairman, as you well know, Federal funds are limited. With decreasing Federal budgets and numerous new research areas to explore, it is critical that public-private partnerships be expanded for new agricultural research areas.
It is important to maximize involvement, cooperation in the public-private partnerships with private industry, certified crop advisors, and others in USDA and land grant universities on research projects and educational programs.
To conclude, allow me to add that I understand that regarding reauthorization of the farm bill research title there is an overwhelming influence toward the status quo. While research grant recipients are unhappy that more Federal dollars are not available, they are generally happy with the current system and want to keep what they have.
I urge the committee to resist the rubber stamp approach to research reauthorization. There are many new and exciting areas of research in agricultural production that the Department of Agriculture should be capitalizing on and are not.
I believe precision agriculture is one of those areas, and I urge the committee to include H.R. 725, the Precision Agriculture Research Educational Information Dissemination Act, in its passage of agricultural research legislation this year.
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Again, thank you, Mr. Chairman, and I would be happy to answer questions at an appropriate time.
[The prepared statement of Mr. Wollenhaupt appears at the conclusion of the hearing.]
Mr. COMBEST. Thank you very much.
Mr. Martinell.
STATEMENT OF JOHN MARTINELL, PROGRAM MANAGER FOR AGRICULTURAL PROGRAMS, LOCKHEED MARTIN IDAHO TECHNOLOGIES COMPANY
Mr. MARTINELL. Mr. Chairman, members of the subcommittee, I appreciate the opportunity to appear today before you to provide this testimony. I am here representing the Lockheed Martin Idaho Technology Company, who operates the Idaho National Engineering and Environmental Laboratory, which is a DOE laboratory under contract with the Idaho Operations Office.
I am here to discuss some examples of collaborative partnerships that we have underway and provide some examples of things that might help future public partnerships flourish even further.
One of the areas in which the INEEL is focusing these capabilities is precision agriculture systems. As Mr. Wollenhaupt provided an excellent discussion of precision agriculture, simply put it is the integration of new space age information gathering technologies with traditional agronomic tools to better manage individual farming operations.
About 5 years ago as precision agriculture was just beginning to take hold, a group of USDA scientists and university scientists, along with a few farmers and individuals from industry, approached the INEEL. They were seeking a broader range of multi-disciplinary expertise and technologies to begin adapting precision agriculture to crops grown in the Pacific Northwest.
Less than 6 months after that initial contact, this unique partnership developed, tested, and implemented the first ever potato yield monitoring and data management system on a full-scale production farm in Idaho.
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This partnership has evolved into an interagency, public, private sector collaborative effort referred to as the National Site Specific Technologies for Agriculture Project. This project is a comprehensive systems project that includes integrated research and development for site specific technologies, such as yield monitors, geophysical sensors for invasive soil characterization, remote sensing and other environmental characterization techniques, and information management tools required to support farm management decisionmaking and operations within the context of the agronomy and ecology of the cropping system.
On November 2, 1995, partly as a result of the success of this project's collaborative approach, the Departments of Agriculture and Energy signed a memorandum of understanding that provides a framework for the two departments' scientists and engineers to prepare U.S. agriculture for competition in the global marketplace and to reduce agriculture's reliance on fossil fuels and other energy intensive inputs.
The purpose of the MOU is to stimulate greater cooperation and coordination between the departments for the benefit of the agriculture sector. This partnership couples USDA's expertise in plant breeding, biological pest control, soil and water conservation, and other areas, with DOE's expertise in systems integration, physics, engineering, and information sciences.
The complexity of precision agriculture demands the attention of a wide variety of disciplines. No one institution could ever expect to attract this stable of disparate entities necessary to design the model for precision agriculture systems. Therefore, a novel partnership organized around customer needs and system requirements is essential to realize the significant gains in building a precision agriculture system.
These partnerships often result in atypical alliances between those well established in the agriculture sector and those who are relatively newcomers to agriculture, such as the national laboratories, high technology computer and software manufacturers, and aerospace and other defense related industries.
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Fostering these novel partnerships is not only critical to the advancement of precision agriculture, but it is also likely to generate new resources and capabilities that have never before been available to the agriculture community.
Reauthorization of the agriculture research title presents an ideal opportunity for further integration of public-private sector partnerships that expand upon USDA's current portfolio for agriculture research to develop precision agriculture systems.
Existing USDA programs for agricultural research and development have evolved to become very effective in addressing specific elements of the agriculture community. However, the need for a collaborative information intensive effort to integrate precision agriculture research will require innovative applications of systems integration and public-private sector partnerships.
Such innovative approaches would need to consider the following elements:
Expand the applications of systems analysis and engineering techniques to fully define, prioritize, and coordinate necessary research and development with farmer and supplier requirements fully integrated.
Encourage the participation of all elements of the research community, including USDA, other Federal and State agencies, National Laboratories, universities, and the private sector.
Aggressively leverage the private sector investment potential and identify additional Federal funding from nontraditional sources which share an interest in the potential benefits of precision agriculture.
Establish the means to identify funding for specific initiatives of national scope in large, consolidated blocks that will enable multiple jointly funded institutions to work together.
And demonstrate clearly defined end products with quantifiable results and outcomes in a definable period of time with full accountability to USDA and other sources of funding.
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Without some type of mechanism that meets these requirements, the agriculture and research communities will be unable to fully realize the benefits of systems integrated, multi-disciplinary public-private sector collaborations.
As reauthorization of the agricultural research title moves forward, the INEEL looks forward to working with the subcommittee and stands ready to offer its expertise in helping the agriculture sector position itself for the 21st century.
Thank you, again, for the opportunity to present this testimony, and I welcome questions.
[The prepared statement of Mr. Martinell appears at the conclusion of the hearing.]
Mr. COMBEST. Thank you very much, Mr. Martinell.
The chair would recognize the ranking member of the full committee, Mr. Stenholm, for an introduction.
Mr. STENHOLM. Thank you, Mr. Chairman.
I appreciate your indulgence in this. Kent Nix comes from Dawson County, and you used to have the privilege of representing Dawson County. Many still speak very favorably of your representation, and I have enjoyed this privilege for the last several years. I appreciate your letting me introduce the voter in the 17th District, instead of the voter in the 19th District this morning.
Kent Nix is a cotton farmer, grain, sorghum, cattle producer in Dawson County, TX. He was past president of the Lamesa Cotton Growers and in his testimony, members of the committee will hear about a very unique, innovative, public-private research project that has been going on now for several years and doing interesting research. Mr. Chairman, I commend you for holding this segment of these very important hearings on agricultural research, and looking at ways in which we can take scarcer dollars and maximize them to the benefit of producers in various regions of the country.
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And with that, I am just delighted to welcome you to the committee Kent, and we look forward to hearing your testimony.
STATEMENT OF KENT NIX, CHAIRMAN, AGRICULTURAL COMPLEX FOR ADVANCED RESEARCH AND EXTENSION SYSTEM
Mr. NIX. Well, thank you much, Congressman and Mr. Chairman. It is good to see you again, and distinguished members of the committee.
I would like to also introduce Mr. Foy O'Brien, who is president of Lamesa Cotton Growers, and he will be here to help respond to any questions you might have.
The Lamesa Cotton Growers is a regional producer organization that dates back to the 1950s when local agricultural leaders organized to insure that a USDA cotton classing office would remain a part of the infrastructure for cotton in our area.
In 1980, Lamesa Cotton Growers reached agreement with USDA to build a $1.7 million classing facility. This was something that the growers voted to assess themselves on a per bale basis to underwrite.
It was equipped with the latest technological advancement in cotton classing at that time, high volume instrumentation. Under a cost share arrangement with the Federal-State Market Improvement Program, our organization purchased 10 HVI lines, making it the world's first fully automated cotton classing office.
Our early commitment to this new method of classing paved the way for HVI to quickly become the standard in our industry, and it has truly revolutionized the cotton industry.
We retired the debt on the Lamesa classing office in 1990, and our board of directors agreed to invest the cash flow from the rental of that building into agricultural research.
AG-CARES is a cooperative effort involving Lamesa Cotton Growers, the Texas Agricultural Experiment Station, and Texas Agricultural Extension Service. We have now completed our seventh year of operations and submit with this testimony 7 years of annual reports that will document the results of that.
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Lamesa Cotton Growers provides 240 acres of land that is cash leased by LEPA irrigation systems and operation funding. The experiment station provides a system plan and a team of research scientists to monitor the interactions within systems.
The Extension Service provides on site management and extension capabilities to conduct field trials, tours, and reports.
Various farm inputs are contributed by numerous local businesses and private industry.
One key to the success of our operation is the steering committee, made up of members from each organization. The committee reviews past years' results, identifies research priorities, and communicates who does what for the next year.
In 1994, USDA Superior Service Award for Scientific Research was awarded this AG-CARES farm system group. Over time this approach has developed into a very close relationship among the organizations. Each group is accountable to the other for results.
I offer three reasons why we feel AG-CARES has been successful and why we're working on a long-term agreement to continue its operation.
No. 1 the operation of the farm has produced results immediately adaptable by our local producers. This research is conducted where we farm, on our soil types, under our growing conditions. Systems that work here we know are adaptable to our own operations.
No. 2, the farm generates some of its own research priorities. When production problems arise from implementation of the new systems, these problems then become the next research priorities.
And, No. 3, AG-CARE's location allows for quick response to changing conditions.
What is in our future? Extreme yield variations are documented within the short distances across the different cropping systems. New precision monitoring devices, much of what you have heard described here by previous panel members, will be used to isolate and research the factors responsible for those variations. This could allow the precision application of crop inputs that could dramatically improve yields.
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This precision farming project is planned to begin in 1998, and we expect that it would increase the number of private companies who will be participating with us at the AG-CARES project.
Again, we would like to point out our unique funding situation. Without the income that is provided Lamesa Cotton Growers by the rental of the Lamesa cotton classing office, we would not be able to provide that location and continue to participate in the project.
Likewise, public funding sources are necessary for the experiment station and the Extension Service to fulfill their commitments to the project, and private industry always is welcome to participate at AG-CARES.
However, we do feel that it is through the public funding of agricultural research that producers can be assured of objective information and results.
Mr. Chairman, I do remember back with you when these beginnings were in Dawson County in the 19th Congressional District, and we appreciate your support and friendship over the years, and as the Congressman has pointed out, in the 17th Congressional District now, I can assure you that Congressman Stenholm has been on the ground there, and he understands the linkage that exists between Lamesa cotton classing office and the AG-CARES research project.
Congressman, your involvement has been crucial in maintaining both of these projects, and we greatly appreciate both of your efforts to protect something that Lamesa Cotton Growers has worked hard to build over the years.
Thank you very much, and I'll be happy to respond to any question.
Mr. COMBEST. I was going to clarify the record after Mr. Stenholm's comments, Mr. Nix, and you may not want to claim either one of us, but I felt a little better about that following your final comments. Thank you.
Dr. Brewen, I thought I wrote this down correctly, and then I went back and looked back through your testimony. I thought you said toward the end that the relationship in regards to the way you all have done that, and there are some very impressive things coming out of there, I thought you said it was profitable to both the Government and private sector, and I wanted to make sure I got that.
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I looked back, and I believe you said the Government-private sector partnership benefit everyone. You maybe did say profitable, and my question was going to be how does the Government profit, but there is a point to that.
I have wondered, and I would like to get maybe your comments on this. Sort of as a stage setting, I think we are charged on this subcommittee and eventually the full committee and eventually the entire Congress with doing what we can do to make certain that we maximize the amount of money that we spend on research, and we all know we are not going to have as much money as we have had at some times, and we may have substantially less.
But in order to make certain that we are good stewards of the taxpayer dollar, I think it is vital that we do not just recognize we have done this for 20 or 30 years. Actually we have not had a reauthorization, I think, in this bill in 20 years. We are going to look at it. We are going to throw everything out on the table and look at it.
It does not mean by investigating it that necessarily everything about it is bad, but nothing is off limits. We are going to see what can we do better than we might have been doing in the past, and I think that is the only responsible thing we can do.
We may decide a lot of it is great. We may decide a lot of it is not any good at all, but having said that, I have been interested in, and this would be very difficult to implement, but it is something I think we ought to look at; I have been interested for a number of years in looking at the role of the Federal Government's investment into a lot of things, weapons systems or research or whatever, to see if we could move to the role of the Federal Government sort of as a venture capitalist.
Dr. Johnsen, you mentioned that there were some things that were evolving from some research, that you could not find anyone that was able to go in and develop.
But if Government invests in a project that has potential, it may not work; it may fall flat on its face. Unfortunately, one of the things we are going to have to change if that is the case, the people who invest that money may spend the next 6 years before some congressional committee asking why they did it.
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But if it works, which it does in many instances, somebody makes a profit from that. Somebody then begins to commercially develop that. The private sector takes over, and they go out and potentially can make a lot of money.
Well, I think we maybe should explore the idea of the Government acting as a venture capitalist, and if, in fact, a project, a risk, an investment that is made hits, that there is some opportunity then for the Government to recoup their investment, plus possibly interest.
I do not know if that will work or not, but could you give me your thoughts about that?
Mr. BREWEN. I would be glad to comment on it. The gentleman sitting at the other end of the table, I am sure, has some comments because AARC is a venture capital firm, and it is the Government.
The arrangement that BRDC and ARS have is that if a profit is made, the profit is shared between us. It is a partnership. The sharing arrangement is 50–50. In other words, every dollar of income that BRDC generates through its licensing activities is shared 50 cents to BRDC, 50 cents back to the ARS, and through those channels, the inventors, which was part, I believe, of the Technology Transfer Act, that Government inventors are allowed to recover some of the income that is generated from those inventions. That money does come back to the Government.
We have an AARC grant. The BRDC is a recipient of AARC funds, and the provisions of our agreement stipulate that we will share all future revenues, one-third, one-third, one-third, one-third, going to BRDC, one-third to ARS because it is ARS based technology, and one-third to AARC until we have paid back the original AARC investment, and then they get a straight percentage of income forever if that technology is commercialized.
I agree with you. I think the Government should get into business.
Mr. COMBEST. There are some areas that that is done in, in some other areas that are non-agricultural, but I do not think it is as widespread as maybe the potential exists there for it to be.
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And everyone does benefit when something works. I presume this is one of the products. I would say this is a plastic fork, but it is not.
Mr. BREWEN. We did not make that one, but I can assure you that the ones we make are better than that.
[Laughter.]
Mr. COMBEST. Well, I do not know. This one has got an ear of corn on it. So I figured the corn people——
Mr. BREWEN. That is made out of corn starch. I am certain of that.
Mr. COMBEST. Mr. Dooley.
Mr. DOOLEY. Well, when we look at this again it is that the overriding issue here is how do we maximize the investment in research or maximize the Federal dollars that are invested in research, and we do that by insuring that we are going to be identifying the priorities which will benefit the agricultural sector in our rural communities, and we also have to consider how do we leverage additional private investment.
And I think that is what this panel has been focusing on a little bit in terms of how do you develop those private-public partnerships, which again leverage the Federal investment, the taxpayer dollars, by encouraging also the private sector investment.
And from what I gathered when I was listening to most of you talk out there is that outside of maybe having more dollars on the public side that you could invest, that it appears that things are working pretty well, and I guess my basic question to you or initial question is: what would you have us do differently in the reauthorization to enhance, you know, this public-private partnership?
Does anyone have that they would do specifically?
[No response.]
Mr. DOOLEY. Well, moving to a little bit different issue then, I think that, Mr. Wollenhaupt, the bill that you brought up, the H.R. 725, I think, poses kind of an interesting case study for us to look at, and I make this statement because some of us, and Mr. Brown, in particular, have long been champions where we have to be careful in terms of congressional actions which specifically earmark funds that are targeted sometimes even more specifically than what H.R. 725 does for precision agriculture.
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And I guess my first question as it relates to this would be to Dr. Robinson. Is there anything that would preclude an NRI funding under a competitive process, a grant that would deal with precision agriculture?
Mr. ROBINSON. No, Congressman Dooley, there are no provisions, and in fact, in a review of our NRI process and projects which have been funded, just in 1996, for example, we made five awards for programs relevant to precision agriculture, for a total of about $914,000.
Additionally, Congressman, there is also about $4.3 million that is designated for and related to precision agricultural work on the part of the Agricultural Research Service. So both the extramural and intramural funding organizations of the Department are concentrating funds on those areas.
And in fact, the Department of Agriculture has long been a proponent of any type of increased precision and the use of inputs in agriculture both from an environmental point of view, as well as from a production point of view.
The Department, however, does oppose H.R. 725 for some of the reasons you laid out, and that is the earmarking of funds because of the huge demand by different interest groups, and scientific communities, and market areas for the limited funds that are available. The Department feels it should be more in a competitive relationship.
The opposition is not because of precision farming, because the Department is a proponent, but because of potentially what earmarking could do to that program.
Mr. DOOLEY. And I say it is kind of an interesting case study because, in effect, the reason why it is even a viable commercial application today is because some of the investment really in defense and in our space program that allowed us to have the global positioning satellite technology, in the first place, a lot of the investment that was done early on by maybe the Soil Conservation Service in the mapping of our soil types, which has made this a technology.
But I get to the point, too, here that you have some of those investments in really basic research where there was not a commercial application at that time, which was an appropriate Federal investment, and I guess my concern is now should this ever be elevated as a specific priority for NRI grants, and the reason I say that is that our objective here from a Federal policy making standpoint is to insure that we are maximizing the taxpayer dollars, but also have an obligation that we are not displacing private sector investment.
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And as I understand, Mr. Wollenhaupt, you said we already have 30 percent utilization of this precision planning or agricultural technology out there. That obviously communicates to me, and I am a farmer myself, that there is a commercial application that is being marketed because these companies can demonstrate that there is value.
So I just need to understand from you what is your compelling argument in terms of why we need to specifically identify and earmark funds for this when we already have an industry which is growing very rapidly, as your comments, 30 percent adoption of this technology. Why is not this earmarking going to provide Federal funds to this specific task, which actually could displace what would be private sector funding?
Mr. WOLLENHAUPT. I do not see that as a displacement. We have technologies, yes. They are commercialized, yes. They are showing profitability. Hence, commercially we are involved in those markets, but from an agronomic perspective, the prescriptions or recommendations that we use at the farm level are basically from our land grant institutions in ARS, and that research was done in the 1950s and 1960s and early 1970s. That was the heyday of that work.
We have new technologies to deliver products more correctly than we ever have before, but we have recommendation based, based on 1950s and 1960s technology. In recent years, and I was a former university researcher before being in the industry side; in recent years we have seen a shift in our research emphasis to water quality and sustainable issues, which are very important, but that has been at the expense of the production work that was done in the 1950s and 1960s.
Right now we have before us technologies that will improve profitability and environmental stewardship, and yet that recommendation basis that is going to be administrated through these technologies is not there today, and we need to have that public sector or we need to have those recommendations, those strategies updated through our land grant and agricultural research community.
Mr. DOOLEY. Yes, and I want to make it clear. I am a strong proponent of this technology and the adoption of this type of management technique, I guess it would be, and the research that is needed. My only concern is that we have to be cautious that we do not earmark funds that would restrict the ability of USDA to respond to pressing challenges.
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And I will use one example that is very important to agriculture, which is methyl bromide where we have a date certain when we are going to lose this product, which is very important, and I think people in the industry just have to be a little cautious about, you know, earmarking, creating an obligation which restricts the ability of the Department, Congress, the industry, to respond to some specific challenges.
So I appreciated your comments.
Mr. COMBEST. Mr. Lewis.
Mr. LEWIS. Thank you, Mr. Chairman.
Dr. Robinson, only $914,000 will be spent on precision agriculture out of $96 million? That does not seem to be a high priority there.
Mr. ROBINSON. Congressman, the $914,000 is a representation of the successful awards through the NRI last year. It does not necessarily represent the notion that only $914,000 is the appropriate amount for the NRI, but in fact, there are several categories and the large plant science category is one of those that precision agriculture applications would be considered under, and that is several million dollars.
So there is not an attempt here to restrict. It is just if there are more competitive awards in this area, they would certainly be competitive and considered.
Mr. LEWIS. OK. And I think what the legislation actually says is that there is really no earmarking there. It says where appropriate. It encourages the Secretary to look at precision agriculture.
I want to ask Mr. Wollenhaupt. I understand your company has dome some research and work with livestock waste and precision agriculture. Would you expand on the benefits and concerns you have found so far in this work?
Was this work done in cooperation with farmers, industry, or universities?
Mr. WOLLENHAUPT. The work that we have done in terms of developing equipment, utilizing technologies to do variable rate of livestock waste application has been a joint effort. The demand or need was created from the private sector, and when the need came to us, there was work between the custom applicator and a fertilizer dealership that came to us.
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We engineered the technologies that we had for other products into a device that would do variable rate application. In March of this year, this technology was prototyped in North Carolina with livestock, with hog waste, very successfully, and the result was not only was the material injected below the soil surface so that there were no nuisance or odor issues, but also the material was applied in a manner that the rate was applied according to what the crop needs and soil conditions were in that field. So there should be some environmental stewardship there.
So it was a joint effort, although in this case Ag-Chem probably invested substantially on the R&D side of it.
Mr. LEWIS. I want to get into the environment a little bit. I think precision agriculture has a tremendous benefit to the environment.
In your testimony, you mention how precision agriculture technology has potential environmental benefits. Would you expand on how these new satellite systems and electronic tools can help agriculture reduce farm runoff and improve water quality?
Mr. WOLLENHAUPT. All right. Maybe we need to back up here. In our research through the fifties and sixties, we focused on trying to apply the appropriate rate of crop inputs based on field average types of numbers. Today with our technologies we have the ability to target materials within the field boundaries, and in fact, as we've gone out and done sampling, we've found nutrient levels very dramatically, and when we look back on what we've been doing and in many cases are still doing, we're over or under applying input, you know, in various locations in the field.
With the positioning technologies, the use of computers, the use of mapped information, spending more time collecting data, we can direct those inputs where they're needed and where they will benefit the crop, and at the same time we believe it is more desirably beneficial to environmental stewardship.
Mr. LEWIS. Thank you.
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And I think another important thing about H.R. 725 that I would just like to mention is the fact that it links the research and the technology that is developed with educating the producers and getting that information out, and of course, that is what the bottom line really in my opinion is all about.
Mr. WOLLENHAUPT. I agree, and we find from the industry perspective education is the big limiting factor right now. Potential risk associated with adopting the new technologies can only be addressed through strong educational programs.
It has even gotten to the point that in the company I work for we have invested this past year $3 million in building an education facility not only to train people on our technologies, but actually to begin to address the basic agronomics of the data that is being collected by these customers, whether they are dealers or whether they are farmers.
And to me that is a role that extension and the land grants have traditionally been very strong in, and we need them to step back to the table and address the productions issues as well as they have on other issues in recent years.
Mr. LEWIS. Thank you.
Mr. COMBEST. Mr. Brown.
Mr. BROWN. Thank you, Mr. Chairman.
Mr. Martinell, your cooperative program between the lab and the Department of Agriculture is perhaps a model of what the future may hold. Can you give me a general indication in addition to the precision farming initiative of the kinds of things that you think the lab could do in helping agriculture in other ways?
Mr. MARTINELL. I thank you, Mr. Brown, for the opportunity to provide you that information.
The INEEL, as one of many of the Department of Energy's laboratories, has developed a capability that stems from support of the Department of Energy's mission in energy security, environmental stewardship, national security and basic science and technology.
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We have at the INEEL developed expertise in massive data handling systems which are an inherent part of, a necessary component of success in precision agriculture. As the farmers and agribusinesses manage the information coming from these variety of new sensors and control systems, they need to be able to discern what's important in that information and act accordingly with their management strategies.
So information science is one such type of technology.
In addition, systems integration and engineering is an integral part of the Department of Energy's capability associated with the many large scale projects that the Department has been charged with in the past. That capability assures focus on the real issues at hand associated with large projects, allows for a basis for technological prioritization within the myriad of issues that exist in large kinds of systems, et cetera.
So that is an additional capability that I believe can augment that which exists within the current agriculture system.
I think the third area, and the final one which I would like to address, has to do with advanced sensors and control systems and strategies, those associated with such things as robotic sampling and spraying, which could replace the potential for some of the harmful and costly effects of human based systems which currently are used for those kinds of operations.
Those same technologies are essential to the clean-up work that is being done within the Department of Energy at the present time. So there is an excellent opportunity for leverage within the agricultural sector.
Mr. BROWN. I also serve on the Science Committee which deals with the Department of Energy's research program, and your testimony conceivably could be of considerable interest to that committee to indicate the future prospects for the Department of Energy labs.
If I may be permitted to reminisce briefly, I was a part of the first revolution in precision farming which took place about 60 years ago. And down in Imperial Valley we had been leveling land with what we called a Fresno, which was a blade with a handle on it drawn by a mule, and we leveled a lot of land down there back in the 1930s, and then we went to a very long scoop kind of a thing, 30 or 40 feet long, drawn by a tractor, which of course could do a much finer job of leveling the land.
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I used to build those things in my first job out of high school, and that was what really allowed them to begin grading land down to a precision of a fraction of an inch per mile, and now we are just using a different technology to accomplish the same thing.
If I have another moment or two, I would like to ask Dr. Robinson about the BARD operation, if I may. That is a rather old program. It is one that I frequently refer to as an example of an excellent program, but it gets relatively little publicity.
Do you have, Dr. Robinson, annual reports or descriptions of the work that BARD is doing that would be available if requested?
Mr. ROBINSON. There are reports that we can make available to you, yes, sir.
Mr. BROWN. I would like to request those.
Mr. ROBINSON. OK.
Mr. BROWN. BARD, of course, is only one of, I think, two or three corporations or operations of that sort. BIRD, the Bi-national Industrial Research Program, and I think there is another one dealing with the fundamental research, and these are rather unique in that they are funded through the interest from an endowment and, therefore, do not get exposed to the annual congressional scrutiny and criticism that would come about if they were funded from annual appropriations.
Do you think that system has been working adequately, or would you prefer to be subjected to the mercies of Congress every year? [Laughter.]
Mr. ROBINSON. Well, the endowment certainly provides a continuation of funding through earnings to support competitive research projects of interest to both countries, but as I stated in my testimony, starting in 1994 some additional funds were provided above and beyond the earnings of the endowment from both Governments.
Mr. BROWN. Do they go through your budget?
Mr. ROBINSON. Yes, it does.
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Mr. BROWN. Do you think that kind of approach could be used with other countries? And I am thinking specifically of Mexico where we also have a bi-national research foundation that is not nearly as well funded as Israel.
Mr. ROBINSON. Well, certainly this kind of arrangement could be used for a number of programs. I guess the point for consideration is whether it should be authorized specifically and appropriated specifically to that program.
Mr. BROWN. As contrasted with having a foundation or an endowment that could?
Mr. ROBINSON. Well, or in addition to, as is the case with BARD, to the original endowment that was placed there by both Governments.
Mr. BROWN. Mr. Chairman, now may I have permission to submit additional questions to the witnesses in writing?
Mr. COMBEST. Certainly. All members may, and I will just mention to all of the members of the panel, as the hearings go forward we will have several others. There may be other information we would like to come back to you for, and certainly the gentleman may submit those questions.
Mr. LaHood.
Mr. LAHOOD. Mr. Chairman, you had mentioned the idea of venture capital and how we can recoup some of the investment that we make, and one of the things that I think the research lab in Peoria has done with the invention of penicillin many years ago probably improved the health care of our country dramatically, and more recently the use of Oatrim for dietary purposes also, I think, has been a big benefit to the health care and the health of many Americans.
I know that is not exactly what you were referring to in terms of getting something back, but I do think the kind of research that goes on at this lab and other labs around the country is of benefit in so many ways that perhaps we do not really recognize.
And I do appreciate your holding this hearing and allowing a couple of people from my home community to testify today.
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Let me just ask all of you: aside from more money, which all of us would very much like to invest in research, what should we be doing in terms of structuring language to assist all of you with the work that you do?
I know that our lab in Peoria has collaborated so well with the private sector, and there has been a good investment with private dollars with public dollars, and I am sure that your top priority, if you could list it, it would be additional resources from Washington, DC.
Set that aside for a minute, and tell us what we should be doing in terms of structuring language to really assist with the kind of great research that has been going on for so many years, and any of you can respond.
Dr. Johnsen?
Mr. JOHNSEN. I think that the legislation in 1986, Federal Technology Transfer Act, which authorized and made clear the relationships that could take place between the public and private sector, had as much to do with some of our successes as anything beyond infusion of money.
Just making it known to the private sector that they could, in fact, engage in cooperative research with us, that we, in fact, could exchange proprietary information and we could keep it confidential, well, for the life of the information. There is no expiration date on that kind of information.
So authorization that clarifies the relative roles and responsibilities and the authorities of the public sector participant and the private sector participant are extremely important in these leveraging relationships and these sort of marriages which take place, which last for some periods of time.
Some of our technologies take more than a decade to go from the time we say we have something that is near commercial to actually having them be commercial, and so we need a clarification of what authorities we have as a Federal player in the partnership, and also what kind of expectations are of the private sector, much the way in which the Federal Technology Transfer Act of 1986 just clarified relationships and authorized those relationships to be formal and legal.
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So that kind of discussion is something I think would be appropriate to take place.
Mr. BREWEN. Congressman LaHood, I would like to pick up where Dr. Johnsen left off.
It is my understanding that the ARS cannot manufacture in one of their facilities an article for sale. In other words, if BRDC and ARS wanted to go into their pilot plant and to make a prototype device using one of our technologies and then test market it, we could not do that.
I think that a little bit more flexibility is required. The Technology Transfer Act of 1986 provided a wonderful opportunity, but I think in order to expand upon those partnerships, and this addresses perhaps not directly but indirectly the Chairman's question, is it appropriate or can the Government get in the business?
I think here is an opportunity without getting into the business in the sense that a Dow Chemical Company is in the business, but in the sense of being a partner in a business endeavor. AARC is in it. Why not ARS as well?
They have developed the base technologies, and one of those, which I consider to be extremely promising, was developed out in Peoria, and I think we have the opportunity there to apply that technology to niche market opportunities and create small businesses.
But before you can find the capital to support a business, you have to be able to demonstrate that you have got a product that can sell, particularly in this business arena.
Remember we are not in the biotechnology pharmaceutical arena where everything that shows promise someone is willing to throw money at because the return is usually 10 million to 1. We do not have that opportunity here.
But if we had the freedom to operate, then I think that opportunity will present itself.
Mr. ROBINSON. Mr. LaHood, perhaps I can provide a more general response to your question because I think it is an excellent question, and it relates to the point, I think, that the chairman made about venture capital in the research budget.
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The way, quite frankly, that we look at many of our research programs and extension programs are in a venture capital framework because, bottom line, they are funding activities for the public good that are not yet to the point of being funded under a profit motive by the private sector.
So there is a lot of public good research and actually a lot of public good education programs that are funded by virtue of the authorization that you are considering in this committee today, which is a very important one.
I would suggest that one of the things that very often is very important, and it was discussed also at the Senate hearing with regard to the reauthorization, is flexibility. Flexibility of the Department, and I think Congressman Dooley referred to this in his remarks, to be able to move to high priority areas that the Department identifies with stakeholders and moving forward to address the most significant areas are real issues that are critical to the future.
Thank you.
Mr. ARMSTRONG. If I could just add to that, Congressman, I think part of that flexibility, and, Mr. Chairman, this gets back a bit to your point of functioning as a venture capital firm, which is what we do at ARC, and that is provide the opportunity for that Government money to be used in equity investments, which is in large measure what we do.
That attracts private capital like nothing you have ever seen. The debt to equity ratio looks good, and again, we have got a 3 1/2 to 4 to 1 matching rate with private capital, and in 5 of our companies we have seen them get multimillion dollar infusions because they have looked at us; the private investors have looked at us, the due diligence that we did, and essentially got the USDA seal of approval on it.
But it is my understanding, and I may be incorrect in this, that we are the only or certainly one of the few Government organizations that has the capability to make equity investment.
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And, Mr. Chairman, with respect to your point of how do you get out of that, how does the Government recover its money, in every such investment that we do, of course, we are looking at two strategies. Either the company is acquired, in which case we get bought out and recover the money time a multiple, or the company goes public, in which case we cash out times a multiple.
But, in addition, we write in an exit strategy. So we are securing the Government's investment, and if it fails, it fails. Patience and bravery are the watchwords of venture capital. Eighty percent are going to fail, but 20 percent are going to pay all the bills for everybody.
So to get back to your question, that ability to make equity investment with Government money I think is a key factor.
Mr. COMBEST. Mr. Stenholm.
Mr. STENHOLM. As we said about reauthorizing the research title of agriculture, the questions have already been asked about how we set our priorities, how we modify our current research to make it more efficient, how we can maximize the shrinking funds and the concept of public-private sharing. But in the general tenor of you and the other witnesses before this subcommittee, it seems that we are looking at how we can make a good thing better.
There seems to be a general consensus that agricultural research has performed a very vital, important function and has done it well. Now, with the era of farm programs on the downhill slope, a competitive global marketplace, and then research, should we emphasize new crops, better crops, better livestock, environmental benevolence, this area of marketplace research, the consumer? Mr. Wollenhaupt, your comment on education was right on target because those who oppose technology, are doing a very good job of getting into our school systems with anti-technology education at a time when we really need to be more diligent. I could not agree more with your comment.
I have a general question to satisfy my own curiosity. From your own personal vested self-interest perspective, if you had to score agricultural research on a scale of 1 to 10, with 10 the highest, what is needed to prepare us for the next century? I'd like to hear first from Dr. Armstrong, then each of you can give me a number.
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Mr. ARMSTRONG. I am not sure whether to thank you for the opportunity to respond or not, Congressman. [Laughter.]
Mr. STENHOLM. Well, it is not very difficult. You have just got to say 1, 2, 3, 4, 5, 6, 7, 8, 9, or 10. No editorial comment.
Mr. ARMSTRONG. OK. I am sorry. I will choose 8.
Mr. ROBINSON. You may get a lot of consistency, Congressman, because the number that popped in my mind was 7 or 8 because of the current return to the investment in research being 30 to 50 percent, and for every dollar of research or Federal monies going to research or education at the land grants, it is leveraging another $4 or $5. So there is a significant return to those investments.
Mr. JOHNSEN. I agree that we are in that 7 or 8, but I think that one of the things we also need to do is we need to place agricultural research in the perspective of national Federal R&D. When you look at the kinds of discussions that are going on in Federal R&D policy, national science and technology issues, one is struck by the absence of the mention of agriculture in that discussion.
So while we are actually doing pretty well feeding and clothing this nation and managing and performing stewardship of the resources, we do not have our dog in the fight about where the Federal research and development issues are going, and I think that we need to get agriculture into that fight as much as any discussion about whether we are 7 or 8.
We are 7 or 8 among ourselves, but where are we on Federal R&D research? I would say we are 2, 1 in the big picture, and that is a concern of mine in the big deal picture.
Mr. BREWEN. Congress, I assume that this is a priority score. I would have to give it a 9. I disagree with my colleagues here.
We are pretty comfortable with agriculture. We are well fed. We are well clothed. What do we need? Most of us are overweight.
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But if you look around the world, we have got a real problem. Probably 50 percent of the disease worldwide is caused as a result of malnutrition, and sooner or later we are going to have to help feed the world.
A lot of wars have been fought in the past over food. Food is a major staple in life, and this country may not have the capability of exporting grain to feed the whole world, but we certainly have the capability of exporting the technology.
We lead the world in technology, and I am concerned that we may fall behind where we currently are or at least the pace at which we are developing technology, and if we do, who is going to develop it?
I think this country has a responsibility to continue developing the technology. As a person who licenses technology, I do not have a problem with granting a license to a foreign company. If I have a piece of technology that will enable someone to grow a better corn in the Sub-Saharan region, I will grant them a license. I will generate revenue that way. I do not necessarily have to sell them corn. Sell them the technology, and help the rest of the world.
That is a little bit idealistic, but I am serious about this. I think this country really is at a point with agricultural research that is make or break, and that we should not become too comfortable with our own standard of living.
I obviously have not missed many meals, but there are a lot of people out there that have, and we have the technological capability of avoiding a major disaster in the future.
Thank you.
Mr. WOLLENHAUPT. With respect to food and fiber production in the very near future, I would give us a rating of about 5 and losing out very rapidly as the technologies coming into play that do not have the basic agronomic research principles behind them to support them.
Mr. MARTINELL. I would rank the fit, if you will, Congressman, as about a 7. I second the comments that Dr. Brewen made regarding the importance of agriculture research from a priority standpoint.
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Agriculture is the world's largest industry. The population pressures that are upon the world will result in significant potential environmental impact associated with feeding that population base unless we are able to develop and apply the technology to support the production necessary to do so.
I think that opportunities exist for leveraging such technologies more prevalently. It is a matter of providing the opportunities through opening doors for partnerships to do that.
Mr. NIX. Congressman, I guess being the only producer on the panel and, I guess, the only end user of technology generally, the number that comes to my mind is about a 6, and I guess I am concerned that as producers we often hear a lot more about that technology than we actually see available to us immediately.
And I can tell you that from the farm perspective, we need technology to start impacting our bottom line immediately, within the next few years, and I know there is a very delicate balance between applied and basic research, but we need a little bit less hype and more specifics to get to the bottom line of producers.
Mr. Chairman, your comments about investment of Government, I say if you look at the affordable food supply and consistent, wholesome food supply we have in this country, I think that research has paid tremendous dividends for the investment you have made.
Mr. COMBEST. Well, I agree, Mr. Nix, with the comments that were made about how much we have prospered. Mr. LaHood was talking about this country and what has happened just in health from penicillin.
Unfortunately, when we go to the floor with a budget on research, people do not stand up there and talk about doubling it because we came across penicillin, and I totally concur that there have been huge benefits. Unfortunately, people do not always equate those to those research dollars, and so we continue to have to fight for every dollar we can.
And that is why I think it is incumbent upon us as a subcommittee and eventually a full committee to look at every way we can to utilize that, and in that light, I have a question to all of you. There may not be an answer that you want to share with us or there may not be a problem.
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But I would ask you if there are any barriers that you have had to hurdle in order to get to where you are today. What can we do, just through the red tape or the problems that have been created, to make it easier for you, both from the standpoint of USDA's work with the private sector and with universities, and from the private sector's work that you do?
What can we do to make it easier for you?
Just go this way, and maybe everything is perfect, but I doubt it.
Mr. ARMSTRONG. I would like to answer that, Mr. Chairman, from the perspective of the companies that we invest in because I hear this a lot from the companies.
Typically the products that we help get into the marketplace are a little pricier than their substitutes. In other words, what we are putting out there is something based on plant matter or animal byproduct, and it costs a little bit more than the product that is based on petroleum, and this is really not with respect to this committee or subcommittee necessarily, but just Government-wide red tape per se.
In many cases though there are regulations out there, particularly in the environmental area, which if they were enforced, then this product, this environmentally friendly product made from animal byproduct or plant matter, whatever, would then in a lifecycle analysis be much more competitive than that petroleum-based product.
And I get a lot of that from our client firms. The EPA regulations, and I just pick EPA because that is, you know, the one we think of mostly, but there are other regulations, simply are not being enforced, and therefore, it is a little bit of an unfair competitive advantage that these petroleum products gain, and it is very difficult for the companies to crack into the marketplace when they are coming out with a 10 or 15 percent green premium, but again, if regulations were enforced and lifecycle analysis were taken into account, this carbohydrate-based product is actually a lot less expensive than the hydrocarbon-based product.
Mr. ROBINSON. Thank you, Mr. Chairman.
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In the testimony yesterday, I actually stated that the Department felt that we had most of the legislative and administrative authorities that were needed to conduct the research and education program. However, the Congress has created for us two new things.
One is the National Agriculture Research, Education, Extension, and Economics Advisory Board, and the second is GPRA. Despite the negative comments about GPRA, by virtue of that, Congress has asked us to be accountable for what we are doing and to work more closely with stakeholders in setting priorities and to try to address our research program to the highest priority needs that are identified between stakeholders and the Department and scientists.
And I guess one of the largest things then that I would suggest that might prohibit us from full use of those two avenues that have been created for the Department and for the system of research and education is to have more flexibility, more flexibility for resource allocation to the highest and best use and to the most critical of issues that are being identified through that process, and to respond, in turn, when we go through the full cycle of GPRA to the evaluations that are coming out on the benefit of the products to the overall country.
Thank you.
Mr. JOHNSEN. Mr. Chairman, I heard a very important thing for me today, and that is my customer, Mr. Nix on the end, told me that he needs less hype and more immediacy in our responding to his needs, and we have been trying to do that, particularly so in recent years of identifying with each research project that we have who are the next users, we call them, because they may be research people. They may be what we call an implementer. That would be a company that would actually convert the technology into a commercial product that gets to an ultimate customer who actually purchases the product.
But this issue of immediacy and then the time line to develop the fundamental knowledge is one that is an age old problem of everyone needs it yesterday, and we recognize that, but being able to work with a set of priorities for a period of time where we can develop the knowledge needed to meet those needs and stay with them until we have actually met the challenge is reasonably important to the research endeavor.
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If those priority needs change seasonally almost, it is not very efficient. We recognize that there are, in fact, national events. There are climatological events. There are international events which take place which requires an adjustment in the programs.
But if we can get clear signals from our customers about what a long-term need is, then we can meet them in an efficient manner. If we have to chase this year the priority is one direction, next year it is another, and we have to redirect those scientists, that is a difficult situation for us.
So a clear statement of priority need and the ability to stay with it for a while is important to the research endeavor.
Mr. BREWEN. Mr. Chairman, I will simply repeat what I said earlier in response to Congressman LaHood's question. I feel a little awkward here because BRDC, not I individually, but BRDC was, in effect, fairly responsible for the Technology Transfer Act of 1986, and that gave us the freedom to operate as an R&D consortium.
So we sort of have everything that we wanted. We have the ability to work very intimately with the public sector, the ARS, USDA, but to repeat what I said earlier and maybe clarify myself, as Dr. Johnsen indicated, he used the phrase ''Death Valley,'' and BRDC's purpose is to bridge that valley.
We see the promising technology in the ARS. We have a corporate partner out here. Frequently we see technology that is very promising that does not necessarily stimulate our corporate partners because remember who our corporate partners are. They are Dow Chemical Company, Mallickrodt, American Home Products.
I am not talking about small entrepreneurial companies. I am talking about major corporations in this country, $30, $40, $50 billion a year in sales. They are not interested in technology opportunities that are going to create a $5 million or a $10 million a year market, but I am. BRDC conceptually is.
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That is our purpose. Now, we need to be able to work more closely with ARS and anyone that works with Government agencies, even the entrepreneurial spirit that is working with the NIH or DOE. Where there are small financial rewards to be made, there should be an opportunity for those Government agencies to enter into the types of arrangements that basically provide a business opportunity.
ARC is the model, and I think it could be expanded upon, and I know that Peter and I have discussed this at great length in our offices back in Peoria. We see opportunities there, but we are hobbled because of the inability of ARS to get involved in that type of function.
Thank you.
Mr. WOLLENHAUPT. Mr. Chairman, the company I work for, Ag-Chem, is a small company, but even at that, we invest approximately $250,000 a year in public kinds of research to the ARS or land grant researchers.
I also serve on the Food Fertilizer Foundation Research Committee which also allocates monies to do public research. In recent years it is becoming increasingly difficult to find researchers that will conduct this type of research, and not only that; as a result of that, we are seeing fewer and fewer graduates come out of our institutions to step in and fill the roles that need to be met in private industry now and in the near future.
With respect to a hurdle, I do not know that it is a hurdle, but if we could have a signal sent to our agricultural research institutions that it is OK to do food and fiber production research, that could in the long run help us in the private industry side with respect to having people and also accomplishing the education and the basic production research that badly needs to be updated.
Mr. MARTINELL. Mr. Chairman, that is an excellent question, and I think causes us to get right down to the brass tacks of the issues here.
From my perspective, I think there is a fairly formidable barrier associated with assuring that we bring all the capability that the Nation has to the areas where priority research should be focused, and to the extent that there may be opportunities in the reauthorization to suggest and incentivize collaboration across agencies and between the public and private sector partnership, I believe that would be in the best interest of accelerating the results of research to the point where it can be commercialized.
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An example might be to provide an opportunity to overcome the barriers, which are a natural part of our appropriations authorization process, regarding missions associated with the agencies such that if collaboration occurs, there is an opportunity for sharing in your idea associated with the venture capital model across those agencies.
That would be an incentive that would encourage bringing the right people together on the right teams fast, which gets things to the marketplace faster.
Mr. NIX. I just certainly do not feel that from our perspective that wholesale change is needed in what is being done from a research perspective, and I am certainly not a researcher, but from the end source idea, again, the capitalist in me says that somehow in applied research there ought to be investment dollars at the end of that pipeline, down where that final user is, so that the individual researcher up there that is doing basic research can find the highest and best use.
But I think that AG-CARES acts as a source of funding at the end of that pipeline to help pull that research in there, and my 6 rating while ago was no indictment of this research, but I just think some fine tuning in getting it adapted on a more rapid basis is something that is well worth discussion.
Mr. COMBEST. Well, as I had said earlier, we would certainly leave open and offer the opportunity if any of you wanted to make further comments, but I guess I would solicit maybe some comments. If you all, those of you who wish, could be as specific as possible and maybe tell us exactly where the problem lies and how your recommendations might be because we do have an opportunity in this authorization to hopefully be able to fix some things that need fixing.
Obviously we do not want to make it worse. So if you would feel comfortable in following any of that up with written suggestions about how we might specifically deal with some of those problems, I think it would be appreciated.
Mr. Dooley.
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Mr. DOOLEY. Yes. I would just like to get an understanding on how the Department, utilizing the various components of the research opportunities, responds to the real problem of methyl bromide? I mean, when it was triggered with the phase-out by the Montreal protocol, I mean, obviously the potential problem and the magnitude of it from the financial impact becomes apparent.
Does the Department then do an evaluation in their consideration of their NRA proposals on a competitive, as well as their ARS, functions? Did you immediately elevate this in terms of priorities, finding an alternative? What efforts were undertaken by some of the other agencies that were present in terms of soliciting that private-public partnership in order to try to find an alternative?
And what is the magnitude of the financial investment that USDA is making at this time to solve the problem?
Mr. ROBINSON. I can respond to part of your question immediately, and I will certainly get back to you on the investment because that would require looking across those budgets. We certainly will do that, Mr. Dooley.
There are about three or four things that enter into the decision process that you just outlined. For example, in the NRI, despite the fact that it is looked upon as a scientist controlled agenda simply for scientists, one of the criteria that panels use in assessing the viability and the competitive nature of projects is the relevancy of those projects to current issues, and those current issues are part of the discussion process that goes on.
The second area in terms of both formula funding and often targeted funding that go to universities through the Cooperative State Research Service; then the research committees, both at the university level, the regional level, and through the various committees that deal with the research community, begin to look at the highest priority issues and begin to encourage the science community address those issues.
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Let me give you a very specific one. The interaction between the regional experiment station directors and the CARET organization is an interface between users and the research community. That is one example. Many others are with the producer groups, both in States and regional and national levels, that help address the research better.
The Agricultural Research Service goes through its agenda using the same kind of planning and review process to address the flexibility to those highest priority research areas. Yet one of the responses that I had to the Chairman's question had to do with flexibility, and often within both of those budgets the constraints for use of funds in specific categories over time—actually they are cumulative over time—have reduced somewhat the flexibility of the Department to address those very high priority issues.
But I will get back with you in terms of the specific magnitude of funds addressed in methyl bromide.
Mr. DOOLEY. When we have a problem, again, with methyl bromide, what is the coordination between EPA and some of their priorities, some of their research, and USDA?
I mean it really gets back to some of the points, I think, that were made by others. I think maybe Mr. Martinell made the point that we almost need a more programmatic response to some of these problems that go over interagency, multi-discipline, and how is that incorporated, again, with the methyl bromide example?
I mean, how does USDA interact with EPA in order to try to resolve this problem?
Mr. ROBINSON. It is a good question, and let me answer it both ways. Within the Department itself, a new policy advisory group has been established for the research, education, and economics area, mission, which is composed of the leadership from all of the other mission areas.
One of the purposes of that is to continue to monitor and think through the research program with respect to the high priority problems or issues or, in fact, sometimes disasters that are arising because of pests, because of natural disasters, and so forth.
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Additionally, the Department of Agriculture reacts and acts with on a regular basis the Environmental Protection Agency and the Food and Drug Administration with regard to various aspects of research that are needed, including a more recent memorandum of understanding that has been developed between the Department of Agriculture and the Environmental Protection Agency, particularly with regard to a series of issues surrounding pesticides.
Mr. JOHNSEN. If I might add something sort of from the field perspective about how it trickles down into an actual research location, one of the strengths of ARS is that, in fact, it has a sort of resident population of agricultural scientists working in a wide variety of areas, and for example, in Peoria, we have a group working in what we call bioactive agents, and these are people interested in understanding the chemical ecological impacts of compounds that are produced by plants.
And as the methyl bromide problem became more visible, even before the action started, our national program staff began to have consultations with scientists in diverse areas of research asking what perspective they had to lend to finding a solution for the problem.
And, in fact, we have a fair effort in my laboratory looking at methyl bromide alternatives. Yet they will not be included in any numbers that you get from Dr. Robinson because they are still working on other areas, but they have their eye on that methyl bromide ball, in addition to their assigned responsibility, because they are able to bring a variety of techniques and technologies to addressing the problem.
But that sort of overall communication from national program staff right down to the bench level scientist, I think, is important to having this sort of grounds-up generation of solutions and technical approaches to a problem, which is the strength of the larger system.
Mr. COMBEST. Mr. Lewis.
Mr. LEWIS. Yes. Thank you, Mr. Chairman.
Dr. Robinson, I want to just ask you a question on a critique by the USDA on H.R. 725. They said that the NRI does not have authority to provide education, information dissemination, but in the law itself, in current law, it provides for the transfer of such research to on farm or in market practice. It does provide for that, or am I misunderstanding that part of the legislation?
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Mr. ROBINSON. Actually there are two components to that, and I think you have got a very valid point, Congressman Lewis.
The NRI was originally established or it was projected to be established at a $500 million level. That level had a lot more flexibility and components in it than I think the system that has been operating in the course of the NRI's life.
The NRI has never been funded for more than about $112 million, as best I can recall, and I can get the very specific information for you. As a result of that, the NRI has concentrated on mission oriented or mission oriented fundamental research and relied on a partnership with the extension community in terms of leveraging that research into an educational program that could be utilized on farms and with producers.
Actually the reorganization that occurred in the Department of Agriculture a few years ago, which I think is 3 or 4 years ago now, which combined the old Extension Service and the Cooperative State Research Service, was another move in that direction to try to look in sort of a tandem way, given this far more modest funding of things like the NRI and with the Extension Service, to try to combine objectives and move ahead.
But the Department's view is that H.R. 725 has the potential of making a major shift at least in emphasis towards educational programs, and it does have a problem with that.
Mr. LEWIS. I would just like to follow up on that and say really H.R. 725 does not affect that from the standpoint that it does not change the current law.
One more question. You had mentioned, Dr. Robinson, earlier that you had had some research done on tobacco, and as we all know, Federal law prohibits the use of Federal dollars in tobacco research.
Of course, I do not support that particular law. I think we should, but I would just like to ask you: were Federal dollars used in that research? And if so, how were you getting around Federal law on that?
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Mr. ROBINSON. The one that I reported on, Congressman Lewis, had to do with a result or an accomplishment historically out of BARD. One, I cannot give you the date of that, but I could certainly go back and look it up, and whether it was pre or post the decision to eliminate any research directly to tobacco.
But more particularly, that project was actually devoted to the discovery of an antiviral substance actually in the tobacco plant, which was used, in turn, with tomato plants as an effort to control diseases, and my colleague just says that the law indicates that tobacco research is permissible if it is using tobacco for a model or using substances to address other problems in the arena.
Mr. LEWIS. OK. Thank you.
Mr. ROBINSON. Certainly.
Mr. COMBEST. Gentlemen, we appreciate very much your taking the time to come today, and as indicated earlier, we would welcome any additional comments on this portion of these hearings or other that you become aware of. We do want to make certain we do not leave any stone unturned.
Mr. COMBEST. The hearing is adjourned.
[Whereupon, at 12:17 p.m., the subcommittee was adjourned, subject to the call of the Chair.]
[Material submitted for inclusion in the record follows:]
ANSWERS TO QUESTIONS FROM CONGRESSMAN GEORGE BROWN FROM NYLE WOLLENHAUPT, STAFF SOIL SCIENTIST, AG-CHEM EQUIPMENT CO.
Question No. 1
Please provide specific examples of the environmental benefit of precision agriculture technologies. Are amounts of fertilizer, pesticides, or herbicides reduced through the use of these tools? If so, by what percentages?
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Response
When one rate of fertilizer is applied across a field, portions of the field are usually under- or over-fertilized. Site-specific application has generally neither increased or decreased fertilizer application. Fertilizer is reallocated from areas of the field that need low amounts of additional nutrients, to those areas requiring high amounts of nutrients for optimum crop production. Fertilizer is therefore applied at rates appropriate for specific site conditions.
The site-specific application of pesticides and herbicides to pests that only occur in specific locations of a field will logically lead to lower pesticide applications. The amount of reduction will be dependent on crop, field and pest type. If a pest only occurs in 20 percent of the field, the reduction in pesticide use could potentially be 80 percent for the specific pest.
Question No. 2
You provide several examples where variable fertilizer application rates increased net returns over conventional management practices. What proportion of the increase in net returns is due to cost savings derived from decreases in the amounts of fertilizer inputs used, and what proportion is due to increased yields? The values you provided are net increases in return per acre. What percent increase in returns per acre do these values represent for the crops you mentioned (winter wheat, sugarbeets).
Response
In the examples I provided, the net returns are due to increased yield and/or quality, with essentially no change in fertilizer rates. The net returns are profit to farmers. I do not know the percent increase per acre. The number would be very farmer/crop specific. The return for each additional dollar invested to accomplish site-specific management ranges from 10 to 200 percent .
Question No. 3
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On pages 6 and 7 of your written testimony you provide impressive data on the current utilization of these technologies and on the rate of adoption. Taxpayers have already invested a great deal of resources in the research and development of GPS technology already through the Department of Defense. If this technology is already achieving the rate of adoption you report, why are dedicated research funds needed to support it through a program such as the National Research Initiative, which is more, directed to basic research? Why shouldn't we use CRADAS to support further research in this program area?
Response
If you remove yield monitoring as a new technology, fewer than 5 percent of farmers have adopted ''precision technologies''. GPS technology only deals with locating oneself on the earth's surface. The investment in the Department of Defense has not contributed to food and fiber production.
Understanding and responding to the biological, physical and chemical conditions that influence crop production and environmental stewardship, has been and needs to continue to be the focus of agricultural research. This research helps maintain low cost, high quality food and fiber for consumption while maintaining or enhancing the quality of our natural resources. The benefits are to society as a whole, and are generally not commercializable. The development of a specialized sensor for determining nitrogen needs in a specific crop is an example of something that could be advanced with CRADAS. The response of a crop to varying soil nutrient levels and response to additions of nutrients, however, needs to evolve from ''unbiased'' University research, at which point the fertilizer industry can participate in carrying this knowledge to individual farmers.
If researchers are only encouraged to conduct research on projects that are supported with private sector money, the basic and applied non-commercializable research will not be conducted. This shift is already being felt in production agriculture with the shift in agricultural research from basic applied soil chemistry, soil fertility and soil biology research, to biotechnology.
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Question No. 4
The Federal Government investment in technologies of use to precision agricultural systems has been considerable, from GIS and GPS systems to agronomic models being used in the field. Given that the development of precision agriculture systems are already in commercial use, and given that future developments will have a ready commercial market, shouldn't there be a commercial match required for this research, as there is in other technology development programs in the Federal Government.
Response
Private industry has spent and continues to spend considerable money to work around ''selective availability'', so that the military GPS system can be used in agriculture. Even other Federal agencies are spending taxpayer dollars to find ''work arounds'' to the taxpayer/military GPS system. I personally am not sure the Federal Government GPS system is an asset, or taxpayer liability.
I am not aware of any Federal Government GIS systems research that is available for agriculture.
The agronomic models such as the cotton growth model, developed by Federal Government supported agricultural research, have grown out of many years of research and serve to guide future research. While excellent research tools, few have shown widespread applicability at the farm field level.
Until Federal agencies like the Department of Defense and Department of Energy catalog and make available information on the technologies they have developed or are developing, it will be difficult to determine what new technologies may be suitable for commercial development and what will need to be supported primarily by taxpayer investment.
The company I work for uses a military technology to sense when approaching orchard trees, to turn on and off a sprayer and to adjust the spray pattern. This technology was made available to the private sector through a small business grants program, I believe administered by the Department of Defense. Perhaps in addition to CRADAS, this is another model for transfer of government funded technologies to the private sector, with private sector investment.
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I concur that private sector investment is important in moving new technologies to production agriculture. Other panel members cited some excellent examples. However, basic and applied research on food and fiber production through a better understanding of how crop, soil and climatic factors affect crop production, must come primarily from federally funded research. This latter research is critical to low cost, high quality food production, but does not lend itself to commercialization. This research is also the foundation of knowledge needed by college students in preparation for jobs in agriculture, now and in the future.
Question No. 5
What do you consider the magnitude of the research needs to be in this area, over the next five years? What portion of that legitimately can be assigned to the Federal Government?
Response
The following is a personal best estimate, without input from of The Fertilizer Institute. The basis for many of our crop production recommendations comes from research conducted in the 1950s to the 1970's. The adoption of new and emerging technologies has leaped ahead of our basic soil and crop production science knowledge. Eighty percent of the Federal research budget needs to be allocated to basic/applied research on food and fiber production. Ten to twenty percent on new and emerging technologies, with expectations of commercial matches on new technologies that have or may have commercialization potential.
FROM USDA
Question: Would it be possible to have achieved this level of cooperation between US and Israeli scientists in the absence of the dedicated funding that BARD has supplied to these efforts?
Response: The availability of funds dedicated to the BARD program has played a critical role in our efforts to achieve cooperation and communication between US and Israeli scientists. Research on agricultural production under types of environmental conditions that are shared between the two countries is of particular priority for the program. It should be noted that the fundamental sciences funded under BARD are in problems areas also supported by the National Research Initiative Competititve Grants Program. However, the NRICGP address problems of United State Agriculture and not agriculture in
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other parts of the world.
Question: What is the proportional contribution of the U.S. and Israeli governments to BARD?
Response: The U.S. and Israeli governments contribute equally to BARD.
Question: Describe the peer review process used by BARD to evaluate and award grants? Does the peer review panel contain both US and Israeli scientists?
Response: Each proposal is initially reviewed by two panels of scientists, one in the US and one in Israel. Each of these panels has a panel manager who is responsible for assigning reviewers. There are eleven sets of panels in the U.S. and an equal number in Israel, corresponding to eleven discipline areas. The discipline categories are (1) Agricultural Engineering, (2) Animal Production, (3) Animal Protection, (4) Aquaculture, (5) Fruit Tree Crops, (6) Field & Garden Crops, (7) Post Harvest, (8) Soil & Water, (9) Agricultural Economics, (10) Cellular & Molecular Biology, and (11) Plant Protection. Each panel ranks their proposals in priority order for the discipline and summarizes their comments and recommendations in an evaluation form.
These evaluation forms are made available at the next level of review of proposals, which is done by BARD's Technical Advisory Committee (TAC). The TAC is composed of U.S. and Israeli scientists. The purpose of the TAC is to recommend whether or not research proposals in the various scientific disciplines should be funded. Those proposals that they recommend for funding are also ranked by the TAC with regard to funding priority. The final decisions regarding support or non support of proposals is made by BARD's Board of Directors. BARD's Board of Directors contains three Israeli members and three members from the United States.
TESTIMONY OF DR. ROBERT E. ARMSTRONG, ACTING EXECUTIVE DIRECTOR, ALTERNATIVE AGRICULTURAL RESEARCH AND COMMERCIALIZATION CORPORATION
Thank you, Mr. Chairman, for the opportunity to appear today before this distinguished Committee. I appreciate the deep interest that this Committee has taken in the Alternative Agricultural Research and Commercialization (AARC) Corporation.
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Congress created AARC in the 1990 farm bill as an independent corporation. Its mission is to expedite the development and commercialization of bio-based industrial products made from agricultural and forest materials and animal by-products. This mission was reaffirmed by Congress in the 1996 farm bill.
The creation of the AARC Corporation followed a 1987 report by the New Farm and Forest Products Task Force which recommended adoption of the following national goal: To develop and commercialize, within 25 years, an array of new farm and forest products, utilizing at least 150 million acres of productive capacity, to meet market needs representing net new demand for agricultural and forestry production. The Task Force identified development of new crops and new uses for existing crops as the only way to revitalize ailing segments of American agriculture and realize its full economic potential for our nation.
Last year, Congress began the 7-year phaseout of commodity price supports. This added to the urgency to develop and commercialize new crops and new uses for existing ones. The United States must create and sell bio-based, value-added products if we are to maintain our global market share for agricultural products. The AARC Corporation and the companies in which it invests are leading this process.
The AARC Corporation is a venture capital firm, the only one that is wholly-owned by the Federal Government. It invests in private companies that commercialize emerging technologies created through public and private research. The AARC Corporation provides start-up or early-stage capital to firms. We negotiate repayment arrangements with the companies in our investment portfolio. The AARC Corporation negotiates an equity position in the companies, a royalty repayment, or a combination of the two. These repayments go into a revolving fund and are reinvested in additional companies.
The AARC Corporation's emphasis is on commercialization—that is, on translating new technologies into products that can compete profitably in the marketplace. In accordance with the Department of Agricultural Reorganization Act of 1994, the AARC corporation shifted on the USDA organizational chart from the research mission area to the rural development mission area. Agricultural research and rural development receive equal set-asides from the Fund for Rural America, evidence of the close link between these two mission areas within USDA.
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Although the AARC Corporation did not make its first investment until 1993, some of its firms already have entered both the domestic and foreign marketplace. We are on-course with the projected sales and subsequent repayments that were established by the AARC Corporation's Board of Directors in its long-range business plan for the Corporation.
Congress has given the AARC Corporation a mandate to privatize by the year 2002. To fulfill this charge, the Corporation must invest in companies that will generate an income stream for AARC before 2002. Companies that meet this criterion generally are beyond the research stage. Our capital investments enable them to scale-up production and market their innovative, bio-based products. However, this does not mean AARC companies do not do research. Indeed, most are heavily involved in ongoing research and development; activities that AARC, as a shareholder, strongly supports.
Within the USDA, the AARC Corporation works with a number of sister organizations to further the development and commercialization of bio-based products. For example, scientists from the Agricultural Research Service (ARS) advise us on the technical merits of investment opportunities. ARS shares with us information about new technologies with commercial potential and it has integrated the AARC corporation into its technology transfer program.
Additionally, the AARC Corporation works closely with the Cooperative Research Education and Extension Service, whose scientists assist us with the technical review portion of our due diligence. They also inform us of promising new crops or technologies.
Another example of inter-agency cooperation is the commercialization of technology developed by the Forest Products Research Laboratory (FPRL). Gridcore Systems International, a California firm, uses FPRL technology to make lightweight furniture, office dividers, and stage sets from the fibers of kenaf and other plants. The AARC Corporation funded the initial development of the company. They have subsequently secured nearly $20 million in additional funding from private sector sources.
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USDA's Small Business Innovative Research (SBIR) agency makes grants to companies to bring them to the cusp of commercialization. SBIR often improves the operation and technology of companies so they are prime candidates for next-stage financing from the AARC Corporation.
Last year, Secretary Glickman established an inter-agency council to coordinate research, development, and commercialization of products from agricultural materials. This Bio-based Products Coordinating Committee focuses on functional integration within USDA on issues and policies pertaining to bio-based, value-added products made from agricultural ingredients. Committee members include the AARC Corporation, SBIR, Agricultural Research Service, Economic Research Service, Forest Service, Rural Business and Cooperative Development Service, the Agricultural Marketing Service, Foreign Agricultural Service, and the Natural Resource and Conservation Service.
Additionally, the incumbent Under Secretary for Research, Education, and Economics, by legislation, is a member of the AARC Corporation Board of Directors. This ensures open communication and full cooperation between AARC and the various USDA research agencies at both the staff and board levels.
The AARC Corporation would strongly support increased efforts within the USDA to help expedite the process of moving innovative products from the research bench to the marketplace.
As a participant in the ongoing research, development, and commercialization efforts of USDA, we have identified some unmet research needs. Foremost of these is Agricultural Research Service assistance with the development of new fiber crops. For example, one of the most promising AARC companies, Natural Fibers Corporation of Ogallala, Nebraska, mixes syriaca, or milkweed, fiber with goose down to make hypoallergenic pillows and comforters. We believe syriaca has great potential as a commercial crop. But it urgently needs agronomic assistance from ARS to become viable.
One of the most promising new fiber crops is kenaf. USDA has supported development of a budding kenaf industry in the U.S. AARC companies use kenaf fiber to make paper, erosion-prevention mats, and a lightweight building material that replaces wood. KEN-GRO Corporation of Greenwood, Mississippi, uses kenaf to produce a soil-free potting mix. This product replaces peat, of which there is a finite supply.
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The State of Mississippi currently has the most kenaf acreage. Our contacts there tell us the Japanese are ready to buy a million metric tons per year of kenaf fiber. Demand for kenaf clearly is on the rise. But there are fewer than 2,000 acres of kenaf in Mississippi, with smaller crops in Texas, California, Florida, and Delaware. This nascent crops has enormous commercial potential for the U.S., but more agronomic research must be done to expand kenaf's range and production.
In Texas, farmers and ranchers earn an extra $15,000 - $20,000 on average by selling wheat straw to Agriboard Industries which compresses it into load-bearing walls. Without such new uses, wheat straw would be a very low value crop.
Purdue University views the development of new crops as vital to the future of American agriculture. It has established the Indiana Center for New Crops and Plant Products. The Center has a massive data base that enables researchers worldwide to access the most current information about new crops. This is an endeavor that clearly needs continuing support.
Another significant category of new crop development is oil seeds. Several AARC companies product lubricants and cleaning products from vegetable and seed-based oils. They are environmentally friendly, commercially viable, superior performance replacements for products made from non-renewable resources such as imported petroleum. These new products are made from canola, crambe, rapeseed, and other plants. Several others are under investigation. For example the AARC Corporation is working with a farmer group in Oregon to develop Meadowfoam as a new oil seed crop. We have earmarked $1 million for investment in this project. Again, much of the Meadowfoam research has been done by ARS. Additional research funds are necessary if we are to continue to improve the agronomics of commercial production of meadowfoam.
Castor oil is another example. Castor was grown in the U.S. until after World War II. Today, all castor oil is imported into the U.S., about 42,000 metric tons a year. The price varies widely because of variable weather patterns in India, Brazil, and China, the main sources. Tung oil is another crop formerly grown domestically, but now imported. We believe it is ready for revival in the U.S. and test plots are being grown in Mississippi and Florida. Again, additional agronomic research could speed the process of developing or revitalizing these industries in the United States.
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In the decade since the New Farm and Forest Products Task Force report was issued, we have validated its recommendation for development and commercialization of new, bio-based, value-added products. We have established new companies and even industries around new uses and new crops. The potential that the Task Force and Congress foresaw clearly has been proven. Equally clear is the need for additional research in this field if we as a nation are to achieve our potential.
Now may be a propitious time to reconvene the New Farm and Forest Products Task Force. It could examine the collaborative efforts within government and between the public and private sectors to research, develop, and commercialize new crops and new uses. And it could recommend ways to accelerate development of the bio-based economy.
Mr.Chairman, I will be pleased to answer any questions that you and your colleagues have on this topic.
STATEMENT OF DR. PETER B. JOHNSEN, AGRICULTURAL RESEARCH SERVICE
Mr. Chairman, thank you for your kind invitation to address this committee on agricultural research issues. My name is Dr. Peter B. Johnsen. I am Director of the National Center for Agricultural Utilization Research of the USDA's Agricultural Research Service in Peoria, Illinois.
Today, I would like to describe the importance of the current technology transfer legislation and the impact it has had on the program of the National Center for Agricultural Utilization Research. I will describe how we have developed our long-term, fundamental research discoveries into commercial successes using the authorities provided by the legislation. I would also like to describe some challenges to technology transfer as we have moved science to the market place in order to enhance the agricultural economy and improve the nation's global competitiveness.
As the in-house research arm of the USDA, the Agricultural Research Service (ARS) develops new knowledge to solve agricultural problems of broad scope and high national priority. The activities of the Agency serve to meet the nutritional needs of the American consumer, sustain a viable food and agricultural economy, and maintain a quality environment and natural resource base. The research of the National Center for Agricultural Utilization Research addresses all of these mission areas.
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USDA UTILIZATION LABORATORIES. The USDA Utilization Centers have been successful in implementing their mission. Starting with a four million dollar appropriation in 1938, the Secretary of Agriculture was instructed to establish, equip and maintain four regional research laboratories, one in each major farm producing area ''to develop new scientific, chemical, and technical uses and new and extended markets and outlets for farm commodities.'' The laboratories were constructed in Philadelphia, Pennsylvania; New Orleans, Louisiana; Albany, California; and Peoria, Illinois.
Scientists from these laboratories responded to the mandate by developing the soybean from animal forage to a crop worth approximately 14 billion dollars at the farm-gate. With a host of new uses for its oil and protein, soybeans have found their way into thousands of household and industrial products based on their work. The Laboratories greatly helped the U.S. cotton industry be more competitive with synthetics with the invention of the permanent press treatment, created a standard feature of the American breakfast with frozen concentrated orange juice, and produced foods that sound so ordinary, such as the instant potato flake, that we forget that they were invented within our lifetime. The entire frozen food industry is based on the TTT (time-temperature-tolerance) work of the labs. Millions of lives have been saved due to the technology for the mass production of penicillin and several blood replacers and extenders. These laboratories have contributed a number of innovations that are helpful in everyday life.
TECHNOLOGY TRANSFER LEGISLATION. Congress and the Department have recognized the value of public private partnerships long before Technology Transfer was a common concept in government. The original charter for the utilization laboratories specifically included the authority to work directly with industry and the location of the laboratories in industrial communities rather than on college campuses reflected this Congressional intent. The four labs have been extremely successful in transferring new knowledge to the private sector for commercialization.
In many cases, however, this new knowledge results in intellectual property protected by a patent which, in turn, controls how the new knowledge can be implemented and commercialized. Until 1980, all federally owned inventions were available for licensing only on a non-exclusive basis. Many ARS inventions developed to address specific commercial problems and market needs were never adopted by industry. The inability of the U.S. government to grant an exclusive license to its patented inventions prevented industries from making the significant financial investments needed to commercialize the technologies. Without the necessary legal protection, industries passed-up promising technology. In 1980, two important technology transfer laws were passed by Congress which influenced both Federal and academic research programs.
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First, Congress added technology transfer to the mission of Federal Laboratories in the Stevenson-Wydler Technology Innovation Act (Public Law 96–480). A second law, the Bayh-Dole Act (Public Law 96–517), provided that small businesses and non-profit contractors (and grantees) could own title to inventions developed with Federal funds and gave Federal laboratories authority to grant exclusive patent licenses on its patents to private industry.
Following the 1980 Act, ARS was quick to take advantage of the new authority to grant exclusive patent licenses and technology transfer activity increased. This new authority has greatly expanded the agency's ability to contribute meaningful solutions to industry needs. Since the law was passed in 1980, ARS has received more than 850 patents. More than 300 licenses have been granted on ARS patented technology with approximately 200 active licenses in effect now. Of these, approximately 40 percent are licensed to small business. In calendar year 1996, ARS granted 28 licenses to the private sector.
In theory, exclusive patent licenses could ensure that market-ready technologies could be commercialized with the direct assistance of ARS scientists. However, the gap between basic agricultural research findings and its application could be reduced by increased private sector involvement in developmental research. The lack of legal mechanisms for industrial research and development scientists to work closely with ARS scientists in the joint development of commercial technology was an impediment to commercialization of ARS scientific inventions. Exchange of confidential and proprietary information necessary for collaborative research efforts was not possible under existing U.S. law.
Congress addressed this gap in 1986 with passage of the Federal Technology Transfer Act (FTTA) of 1986 (Public Law 99–502) which provided the authority for cooperation between the Agency and the private sector. This act establishes the legal mechanisms for cooperative research and development agreements (CRADA's) allowing direct collaboration between Federal laboratories and private companies to commercialize technology based on the scientists' research. The law specifically allows such cooperative research to cover the full range of research ''from fundamental to applied to developmental'' and even through commercialization. In 1987, ARS became the first Agency in the Federal Government to sign a CRADA with a private firm under FTTA authority. ARS developed a new method to immunize poultry by injecting vaccines into the egg. This technology was exclusively licensed to Embrex, Inc., a start-up company with two employees in Research Triangle Park, North Carolina. The ARS technology allowed Embrex to develop and patent the INOVOJECT system. The INOVOJECT can inoculate 20 to 50 thousand hatchery eggs per hour. Today this method protects 65 percent of the U.S. poultry flocks and 70 percent of Canadian. Embrex now employs more than 120 people, and recently opened an international operation in London where it has entered the European and African markets. The company is also working on similar arrangements with the Japanese to enter the Asian market.
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The ARS continues to be one of the most successful agencies in the Federal Government in using CRADA agreements to link research programs with the private sector. In July 1995, ARS executed its 500th CRADA when the National Center for Agricultural Utilization Research and Mycotech Corporation agreed to develop environmentally friendly biological control agents to kill insect pests of cotton, nursery crops and melons. The ARS has developed more than 650 CRADAs with the private sector since 1987, demonstrating the popularity of this kind of partnership. Of those CRADAs, 34 percent are with small business. In calender year 1996, ARS signed 78 CRADAs with the private sector.
TECHNOLOGY TRANSFER AT NCAUR. The National Center for Agricultural Utilization Research (NCAUR) located in Peoria, Illinois, is the largest of four ARS utilization laboratories and operates with base funding of $23 million; 110 research scientists, 160 scientific support personnel, and 50 contract employees for operations and maintenance. Our mission at NCAUR is to develop and commercialize new uses of agricultural commodities for industrial and food products, to develop new technology to improve environmental quality, and to provide technical support to Federal regulatory and action agencies.
While all the Utilization Laboratories have outstanding records of accomplishment, I would like to focus on the activities of the National Center for Agricultural Utilization Research (NCAUR). Like all ARS research facilities, we conduct long-term, fundamental research to solve high priority, national problems and then involve private sector partners to convert these findings into practical and commercially viable solutions which benefit the public and the environment.
The National Center for Agricultural Utilization Research is one of the power houses for Federal technology transfer. In the past year Center scientists filed 17 patent applications on new inventions. Since 1980 the Center has received 108 patents for its inventions. Of these, 41% have been licensed for commercialization by the private sector demonstrating the ability of Center scientists to address real world problems. In fact, 25% of all technologies licensed by the USDA, Agricultural Research Service in the past year came from Peoria.
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But before an idea is patented and commercialized, new knowledge must flow from the science of discovery. It is from this fundamental work that practical ideas can be developed for commercial application. In a very direct way, fundamental problem solving research is the seed-stock for commercial applications work. Without this significant investment in developing new knowledge, the ideas and technical basis for commercial opportunities would soon dry up.
To generate these seeds of knowledge and technology, scientists in Peoria conduct fundamental and applied research and published 356 scientific articles in peer-reviewed journals in the past year. In addition, they wrote 66 book chapters and review articles, and another 415 short reports of research results. This achievement speaks highly of our scientists' productivity and the respect afforded them by the scientific community. Many of our scientists are National and International leaders in their field.
THE SCIENCE OF DISCOVERY AND COMMERCIAL APPLICATION. These efforts in understanding scientific fundamentals have allowed the Center's scientists to develop numerous successful products. A basic understanding of the physical and chemical properties of polymers found in plants and how to modify them for practical application has been the key to our success. By using this scientific information and exploiting the legal authorities of the technology transfer laws, NCAUR scientists have brought science to the marketplace. I would like to provide some recent examples of this approach to illustrate our experiences.
All plants contain significant amounts of cellulose and hemicellulose. Fundamental research into the chemical composition of these materials and how they might be modified has led to a number of successful commercial products. The first is Fluffy Cellulose. Initially envisioned as a way of producing inexpensive animal feed, the technology of refining the plant material led to a process which yields a superior dietary fiber and bakery ingredient. This technology was patented and, using the authority of the 1980 Bayh-Dole Act, a simple exclusive license was issued to Canadian Harvest of Cambridge, Minnesota. With an annual market exceeding 20 million pounds now, Fluffy Cellulose is used in specialized foodstuffs as a flour substitute imparting high dietary fiber and low calories. The guarantee of exclusive rights to this invention prompted the licensee to invest in the production facility and market development work needed to launch this product just as the Congress had envisioned with its 1980 legislation.
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A second commercial success building on NCAUR's fundamental work on enzyme modification of plant polymers is Oatrim. This NCAUR invention continues to grow as an ingredient in low-fat, specialty food products. First announced in 1990, the product was named one of the 100 most significant new technologies of 1993 by Research and Development Magazine. Oatrim joins other well known products which have gone on to become part of our everyday life including the video recorder, antilock brakes, the automated bank teller and halogen lamps.
Oatrim is now being made and marketed under exclusive licenses by two partnerships in the food industry. One partnership is between Quaker Oats and Rhone-Poulenc. The other is a joint venture between the ConAgra and A.E. Staley called Mountain Lake Speciality Ingredients Co. The ability to negotiate exclusive terms in complex licensing agreements serves the public interest by having the technology come to the market place in the broadest possible way.
Mountain Lake is selling Oatrim under the trade name of TrimChoice and is found in ConAgra's Healthy Choice line of products including, hot dogs, bologna, cheese and 96% fat-free ground beef. Smaller companies are using the fat-replacer in baked products, such as muffins and cookies, and in chocolate candy. While functioning as a fat replacer, Oatrim has the potential to have a significant positive impact on public health; it is our goal to see the widest possible distribution of the technology. Numerous nutritional studies demonstrate the health benefits from Oatrim. Because it contains beta glucan which lowers cholesterol, consumers show responses to the lowered calories as well as decreasing ''bad'' LDL without increasing HDL cholesterol when consuming products made from Oatrim.
The production of a plant in Minnesota built to produce Oatrim exceeds 20 million pounds. Oatrim sells wholesale for about $2.00 per pound, but most of this product is used in high-value specialty foods, making the economic impact on American agribusiness far greater than $40 million. A wide variety of retail food products have now reached the marketplace as the product finds further application.
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Building on this same work, a third commercial development has been announced in the past year and was widely reported in the national media, such as CNN and USA-Today. Z-Trim is a natural dietary fiber food ingredient made from the hulls of oats, soybeans, peas and rice or bran from corn or wheat. So named because it has zero calories, Z-Trim is a different type of fat substitute made as a purified, insoluble fiber. When mixed with water, it makes a smooth gel and can be substituted for conventional cooking fats. A person who normally eats 3,500 calories a day could cut as many as 700 calories by eating the same kinds of food in the same volume, while ingesting about half an ounce of Z-Trim to replace fat.
A special feature of the development of Z-Trim is that it was developed under a CRADA with Mountain Lake Speciality Ingredients Co., a licensee for Oatrim. The industrial partner's commercial processing facilities were critical for the development and refinement of the process. By its participation early-on in the research and development process, they were permitted a ''first-right-of-refusal'' for exclusive patent rights to the technology under the 1986 Federal Technology Transfer Act and was rewarded for its risk-taking early on during the invention process.
Scientists at NCAUR have a history of developing novel new materials which lead to an explosion of new products. On of the best examples is Super Slurper. By attaching a synthetic polymer to starch, NCAUR scientists produced a material which is capable of absorbing hundreds of times its own weight in water. The invention has found commercial life over the years in products as varied as seed coatings, wound dressings, automobile fuel filters and plastic barriers used at construction sites. Extension of the invention by the private sector has led to the most successful application, the absorbent gel used in disposable diapers.
Recently our scientists have developed another totally novel material which promises to have as many applications as Super Slurper. A non-separable starch/oil composite that mixes with water to form a stable emulsion has been developed and patented by scientists at the National Center for Agricultural Utilization Research. USDA has coined the name Fantesk for this technology. Its fat-mimicking properties coupled with its inherent emulsifying and encapsulating properties make it ideal for many commercial applications. Foods such as ice cream, salad dressings and processed meats have been prepared successfully. Opta Food Ingredients of Bedford, Massachusetts, licensed the technology for a variety of food applications. Fantesk is licensed to Seedbiotics Inc. of Caldwell, Idaho, to manufacture seed coatings of fertilizers, herbicides and pesticides. Union Camp Corp. of Wayne, New Jersey, licensed the technology to manufacture environmentally-friendly adhesives, glues and coatings, and is working under a CRADA to develop other industrial uses for Fantesk.
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While the previous examples of invention and technology transfer have demonstrated our uses of patent license and CRADA legislation, I would like to briefly introduce another avenue we have used, which was made available by Congress. The Biotechnology Research and Development Corporation (BRDC) was created with seed money from Congress to be a link between government and private industry for the development of new public technologies. The Corporation's Board of Directors consists of representatives from member companies with an observer from the Agricultural Research Service.
This public-private partnership leverages research dollars with member companies playing an important role in the development and maturation of technologies for which they envision an immediate commercial potential and which solve agricultural problems and contribute to the farm economy, but which probably would not be done by industry laboratories. By the member companies providing commercial insight to research projects, technology transfer is enhanced and accelerated.
Generally, these projects involve early-stage, enabling technologies for solutions to long- term problems. This kind of research is hard to justify to the member companies' stockholders, but nevertheless is needed for a vibrant agricultural economy. BRDC is now nine years old and is developing an independent income stream from returns on commercialized public inventions involving genetic engineering tools, bioplastics and biological control agents.
Starch based plastics have been a goal of NCAUR's scientists for years. In fact, the first patent issued to our scientists was in 1976. However, practical application required much more knowledge which has been hard won over the years. Our scientists have made fundamental discoveries in the recent years which are now about to pay off with a large-scale commercial application for a unique biodegradable plastic. Later today you will hear Dr. Grant Brewen, President of BRDC, describe this exciting work and tell you more about his organization and the commercial prospects for these inventions.
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DEATH VALLEY AND TECHNOLOGY TRANSFER. While I have related some of our successes in technology transfer, let me turn to a difficulty which we have seen during our work over the past decade. It has been our experience in several technologies that the ability to get from a scientific idea, to a commercial concept and then to a marketed product has been difficult if not impossible. This problem area is often referred to as ''Death Valley'', where promising technologies die for a lack of investment capital needed for commercialization. In a way, it is the classic chicken or egg dilemma. Often times a development facility is needed to produce enough material to convince customers that the product performs as advertised. But without a guaranteed customer, no one can afford the risk to build a plant.
In the course of commercialization, ARS CRADA partners or potential licensees must conduct Demand Analyses for the product or process being developed under technology transfer agreements. This means that the differential advantages in product or process performance must be demonstrated and measured to establish the relative commercial value of the technology. To do this, the technology must be implemented or used in a customer's manufacturing system to make appropriate comparison tests to determine the financial benefit of the invention. In addition, the partner must determine if the scaled-up technology can be produced or operated in a profitable manner.
This process to establish the value and demand of a technology is often very difficult for many small business partners and entrepreneurs who work with ARS. These partners are at an extreme disadvantage in this regard compared to large, well capitalized companies. The problem is that small amounts of samples can be produced in ARS laboratory pilot plants and provided without charge to potential customers. However, in many cases substantial amounts of material must be produced to convince the customer that the material can be manufactured as claimed and that it will perform in the customer's operation. In addition, test marketing often requires that materials be sold to determine how much customers will actually pay for the material. Once the partner has determined that the demand and value of the technology warrants commercialization, the actual production facility can be built. It is common, however, that committed customers are required before financing can be obtained for the construction of this facility. Thus, without the capability to produce commercial product to test market, technologies often fail in this final step of the technology transfer process.
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Currently, government facilities are not used to produce products to be sold in the market place. This final step in the transfer and commercialization of ARS technology is very important. By test marketing products, customers can be lined-up and commercial commitments made so that financing can be obtained to construct the actual production facility. When this happens, the technology transfer process is completed as the private sector partner builds and operates a production facility.
We anticipate that NCAUR may soon have an important tool to bridge Death Valley. We will soon begin a multi-phase renovation of our pilot plant. A modular pilot plant for chemical and biological processing has been designed with four flexible bays for scale-up research and proof of concept work, along with laboratories for materials testing and evaluation. Through partnership agreements, the private sector will share in providing funds, manufacturing and production equipment, and technical support to advance the commercialization of specific ARS technologies. This approach will enhance technology commercialization through sharing of both resources and risk.
Exactly how the new pilot plant facility, and others like it, will operate under current technology transfer authorities remains to be established. However, ARS has shown that it can develop technologies from fundamental research findings and use legislative authorities for successful technology transfer to the private sector for enhancing the agricultural economy and increasing the nation's global competitiveness.
SUMMARY. Today I have tried to sketch the history of technology transfer legislation as it impacts the Agricultural Research Service and the National Center for Agricultural Utilization Research. We have been successful in using the laws as Congress intended to ensure that publicly funded, fundamental research is made available to the private sector and that the American people benefit. Research is a sound investment. The four USDA Utilization Laboratories offer outstanding examples of how directed, problem solving research, which begins with fundamental knowledge, can be brought to the marketplace.
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With just more than 10 years experience with the FTTA, we have demonstrated the benefits of that legislation. We look forward to continued success in the science of discovery, the development of this fundamental knowledge and ultimately bringing innovative products and processes to the marketplace, thus, serving the American people by enhancing the nation's economy and the agricultural sector in particular.
STATEMENT OF DR. BOB ROBINSON, ADMINISTRATOR, COOPERATIVE STATE RESEARCH, EDUCATION, AND EXTENSION SERVICE, U.S. DEPARTMENT OF AGRICULTURE
Mr. Chairman, I am delighted to be with you today to talk to you about the binational Agricultural Research and Development program (BARD). I am Dr. Bob Robinson, Administrator of the Cooperative State Research, Education, and Extension Service (CSREES).
The mission of CSREES is to achieve significant and equitable improvements in domestic and global economic, environmental, and social conditions by advancing creative and integrated research, education, and extension programs in food, agricultural, and related sciences in partnership with the public and private sectors. Within the CSREES mission, BARD is a competitive research grants program that supports fundamental research in the areas of animal and plant sciences, economics, and engineering that are important to agriculture in both the United States and Israel.
FUNDING HISTORY. Funds in support of the BARD program are from two sources: beginning in 1977 when the program began, interest paid on an endowment fund jointly established by the United States United States and Israel. Both Israel and the United States have contributed equal amounts on two occasions to create a total endowment of $110 million. Starting in FY 1994, additional funds provided directly by the United States and Israel have significantly increased funding for BARD grants. An additional $2.5 million was provided by the United States in both FY 1995 and FY 1996, and $2 million in FY 1997. The total amount available to the BARD program, including the interest earned on the endowment and funds provided directly from Israel and the CSREES, is currently over $12.0 million annually. Prior to the drop in interest rates in 1993, the greatest program funding available for BARD grants was in 1991, with a total of $9.4 million.
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FUNDING PROCESS. Each grant application must be a joint effort by a team of U.S. and Israeli scientists. Each proposal submitted to BARD receives a peer evaluation. Only those proposals which are reviewed and considered meritorious are funded, and all proposals awarded by the BARD program must have significance to both U.S. and Israeli agriculture. While many U.S. institutions receive funding through BARD, the majority of funding, however, goes to the Land Grant Universities and the Agricultural Research Service. The CSREES direct appropriation to BARD is used to fund Land Grant institution grants.
ACCOMPLISHMENTS. Much of the research supported by the BARD program concentrates on issues of animal and plant health (including studies of the pests and pathogens of both plants and animals), and responses of plants to environmental conditions (particularly crops grown in warm, dry climates). Many accomplishments in fundamental sciences have been made in these areas that will lead to the development of crop plants resistant to disease, pests, and hard environmental conditions; reduction in livestock diseases; and increased livestock production. BARD research grants have led to: the discovery of a powerful antiviral substance in tobacco plants that can be used to protect tomato plants; the development of a vaccine against Rift Valley Fever, a debilitating disease of cattle, sheep, and even humans; andthe development of a method to help pecan growers in the American Southwest deal with the damaging effects of soil salinity, which previously caused premature death and stunted growth of pecan trees as well as low yields. The new method saved the trees and returned them to full production.
TESTIMONY OF J. GRANT BREWEN
My name is J. Grant Brewen, president and CEO of Biotechnology Research and Devleopment Corporation in Peoria, Illinois.
It was 12 years ago that a group of businessmen and executives from Peoria, IL and the USDA, Agricultural Research Center in Peoria developed a unique concept for a research and development consortium. These people recognized that three important entities, private, Federal, and State, needed to work much closer in order to transfer technology more efficiently from the public to the private sector where it could be successfully commercialized.
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The need to carve out proprietary positions by the private sector led to the Technology Transfer Act of 1986 which was initiated by Rep. Robert Michel, Minority Leader of the House, with support from Senator Robert Dole and Rep. Richard Durbin.
The vision of these individuals could not have been more on target. Today every Federal research organization is actively engaged in Cooperative Research and Development Agreements. There is a Federal Laboratory Consortium for Technology Transfer, and the administration has suggested that twenty percent of each agency's research expenditures should be dedicated to cooperative endeavors with the private sector.
Today, nine years after its inception, BRDC and ARS have forged a partnership that is viewed as perhaps the most successful example of technology transfer in the nation. This partnership in research and commercial development will become stronger with the Congress' support and continue to demonstrate that at least one American model can compete effectively with the established government/industry coalitions prevalent in Europe and Asia. This partnership provides:
Synergies that arise from the application of seemingly unrelated disciplines and therefore put non-US companies at a competitive disadvantage.
Synergies that lead to efficient commercialization of ARS technology.
Leverage for base-line financing during early stages of development.
Risk reduction.
Technology platforms for new business opportunities.
The Biotechnology Research and Development Corporation is a privately owned for profit corporation. Its principle purpose is to discover and fund technology that holds promise to make a significant impact in the international market place. BRDC, by virtue of its founding charter and current partnership with the United States Department of Agriculture's Agriculture Research Service focuses its research and development activities on agricultural based technologies with an emphasis on finding new opportunities for commercial exploitation of renewable commodity agricultural products be they plant or animal based. In this sense BRDC looks toward developing technologies that will provide more environmentally friendly production of crops, new, or alternative, uses of commodities and safer methods of production and delivery to the consumer.
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To date BRDC has funded 130 research projects at 37 institutions at a cost of $28,325,500. This research funding has resulted in the filing of 230 patent applications. Forty-nine of these have been allowed with 43 issued and 84 currently being actively prosecuted. Many of the patented, or to be patented, technologies have been licensed; BRDC has entered into 49 license and option agreements and is finalizing negotiations on an additional 4 license and option agreements. The technology involved ranges from a promising therapeutic, that is currently in clinical trials, for human immunodeficiency virus the causative agent of AIDS, to a new genetic regulatory element for plant genetic engineering that has either been licensed, or is being evaluated, by 80 percent of the worlds plant biotechnology/seed companies. BRDC funding has resulted in technologies that predict litter size in swine, an effective vaccine against cattle shipping fever, a method of cloning swine and a brand new starch/synthetic polymer that possesses the mechanical and strength properties of polystyrene and polyethylene and is 100 percent biodegradable.
Time and space constraints prohibit a lengthy monologue on the positive metrics of the BRDC/ARS/academia partnership. Instead Appendices A through C provide a detailed accounting of revenues received, research and intellectual property protection expenditures, licensing activities and BRDC's widespread geographic and technology activities. The remainder of the time will be dedicated to one particular technological advance that has been the product of the synergistic partnership of BRDC, one of its private sector shareholders, and National Center for Agricultural Utilization Research.
In 1995 the United States consumed approximately 15 X 109 pounds of low density polyethylene, linear low density polyethylene, high density polyethylene and polystyrene. Yes, 15 billion pounds of nondegradable plastics. Of this total, approximately 8 billion pounds were used for packaging, agricultural mulch, trash bags, retail bags, food service and food packaging. For example, before they switched exclusively to paper based packaging, McDonald's Corporation used in excess of 100 million pounds of polystyrene to serve their Big Macs, Quarterpounders etc. Multiply this by three and you have a rough estimate of the volume of material the fast food industry consumes each year.
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Twenty years ago scientists at NCAUR began an extended research program to incorporate starches, and other plant derived polysaccharides, into petroleum based synthetic polymers. The objectives were price reduction, environmental considerations, and new uses for agricultural commodities, not necessarily in that order. Although successful in their efforts, the scientists produced a product that had, with a few notable exceptions, less than desirable mechanical and/or strength characteristics and that was not totally biodegradable.
Several years ago scientists at The Dow Chemical Company, an original shareholder in BRDC, developed a family of synthetic polyesters that are completely biodegradable and compostable. These polyesters exhibited equal, or superior, mechanical and strength characteristics as compared to the materials I mentioned earlier. Unfortunately their cost made them commercially non-competitive. The DOW scientists tried what was obvious, they blended their materials with inexpensive fillers. The result was a less than desirable product. DOW brought the problem to BRDC and we went to the world's recognized experts in starch polymer technology, Dr. William Doane et al at NCAUR. Within one month BRDC was funding a research and development project designed to explore the use of starches and flours as inexpensive fillers in starch/polyester composites. Two months later BRDC began filing a family of patents on materials that exhibit mechanical and strength properties equal to, or greater, than polystyrene and are totally biodegradable and compostable. DOW has exclusively licensed the patents for the purpose of making loose fill packaging (packing peanuts, current volume is greater than 150 million cubic feet per year) and BRDC and DOW have agreed, in principle, to the terms of a nonexclusive license for all fields of use for these materials. DOW has entered into a joint development agreement with a third party to develope the technology for food applications and another BRDC shareholder is monitoring these developments very closely.
It is not unreasonable to expect that within the next five to ten years 10 to20% of the 15 billion pounds of environmentally unfriendly petroleum based products will be replaced by this technology that is substantially based on a renewable resource grown by American farmers.
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This brings me to a significant point in this testimony. Dr. Johnsen's comments clearly delineate the strategy and benefits of the establishment of a pilot plant at NCAUR that will enable ARS to interact with private sector partners to develope and scale up promising new technologies. To be specific, let us examine the starch/polyester technology. DOW addresses markets that will use tens to hundreds of millions of pounds of their polyester resins. There are, however, dozens of applications for this technology that will utilize several millions of pounds of the blend. Some of these uses are, for example, planting pots that major forestry companies can use in planting seedlings, shotgun shell wadding, disposable pen blanks, ink cartridges for printers and copy machines etc., etc.. Each of these applications will present its own unique developement requirements. The NCAUR pilot plant will enable ARS and BRDC, in their partnership, to address these niche applications of this technology through cooperative development agreements with small companies. In addition, it is our mutual intent to spin off start-up companies in the Midwest that will address these market opportunities either as a seller of product or a provider of custom blends that will be used to manufacture a consumer product.
Please be reminded that government/private sector partnerships benefit everyone, particularly the consumer and wage earner. BRDC and ARS have demonstrated that this unique partnership can produce results that benefit every segment of our society, from environmentalist to a Fortune 25 corporation.
TESTIMONY OF NYLE WOLLENHAUPT, STAFF SOIL SCIENTIST AND AGRONOMIST FOR AG-CHEM EQUIPMENT CO. INC.
Mr, Chairman, distinguished members of the Subcommitee, thank you for allowing me the opportunity to appear before you today to speak to you about the importance of continuing agricultural research and the exciting technological changes occurring on the farm today and in the near future. My name is Nyle Wollenhaupt. I am the staff soil scientist and agronomist for Ag-Chem Equipment Co. Inc. Ag-Chem is an agricultural machinery manufacturer, which markets a line of high flotation, self-propelled, farm input application equipment primarily to fertilizer dealers and custom applicators. Ag-Chem is a leader in bringing precision technologies to agriculture to assist in the site-specific application of plant nutrients and crop protectants. I am here on behalf of The Fertilizer Institute, a voluntary, non-profit association whose members represent manufacturers, traders, retail dealers and distributors of plant nutrient materials.
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Mr. Chairman, as you know, agricultural research and America's food and fiber production system is a corner stone of the productivity, wealth and security of our nation. During World War II, American consumers spent as much as 40 percent of their income on food. Today, the average consumer in this country spends only about 7 percent of their disposable income on food. Instead of using the bulk of their incomes to buy the necessity of food, Americans now have far more disposable income to buy newer, larger and better homes, new cars and sport utility vehicles, travel, college education for their children and even home computer systems. One can think of this transition as a huge financial transaction over the past 50 years'the American farmer giving the U.S. Baby Boomer generation a multi-trillion dollar gift to improve their lives, educate their children, have more leisure time and grow our economy to the world leader it is today. And it all started with agricultural research.
In just 50 short years, American farmers have gone from horse and animal power to complete mechanization, from moldboard plowing in the 1950's to conservation tillage in the 1990's. And as important as these revolutions are, we're discovering that they are only the beginning. The latest revolution is the use of emerging technologies that allow farmers to gather information for each area of a field, and to manage each area according to its needs and limitations. We call this site-specific management using precision technologies.
These new technologies and practices include the use of global positioning satellites (GPS), digital field mapping, geographic information systems (GIS), grid soil sampling, variable rate seeding and fertilizer application, field computers for pest scouting, on-the-go yield monitoring, satellite livestock tracking, and computerized field history and record keeping. And these are just a few of the next generation tools that are beginning to be used in agriculture today.
These technologies allow the agricultural producer to document the many variables that influence crop production and make adjustments within the farm field, with a spatial accuracy of 3 to 5 meters. Today, farmers are beginning to map crop yield as the combine travels across the field. In the future, soil properties and crop pests may also be mapped while driving across a field or from remote sensing. In short, each farm field using precision technology becomes a research plot. Crop, soil and weather data collected over multiple growing seasons becomes the basis for adjusting important agronomic inputs such as crop variety, plant nutrients, crop protectants, irrigation water, fuel, time the list goes on.
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These precision farming tools are already proving to help farmers increase field productivity, improve input efficiency, protect the environment, maximize farm profitability and create computerized field histories and farm plans that have the potential to help increase land values, aid in getting farm credit loans and reduce regulatory bureaucracy. Collectively, these and other emerging technologies are being used in a holistic, site-specific systems approach called Precision Agriculture. Progressive and production minded farmers are already using some of these technologies. In a decade they may be as common place on the farm as air-conditioned tractor cabs and power steering.
The benefits of site-specific farming can vary greatly by farming region, types of soil and crops grown. The following examples illustrate how areas and conditions can benefit from site-specific agriculture.
Corn Minnesota
Potential added value associated with site-specific N rate management ranged from $4.45 to $29.15 per acre above conventional uniform rate recommendations.
Spring Wheat-Montana
Gross return for variable an fertilization when nitrogen rate was based on test from the top two feet of soil.
Winter Wheat-Washington
Results based on field research indicate that variable fertilizer rates increased net returns over conventional management practices in Eastern Washington by $14.80 and $3.39 in 1990 and $11.92 and $10.00 in 1992.
Corn-Kansas. Variable rate technology was shown to reduce the number of acres in the field that are either over- or under-applied.
Sugar Beets-Red River Valley, North Dakota and Minnesota. Yield and quality results show a Variable Rate Technology nitrogen management advantage over conventional single rate management. Net return per acres results are Univ. of MN (1994) at $75/ac, Univ. of MN (1995) at $48/ac, NDSU (1994) at $51/ac and (1995) at $52/ac.
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Potatoes-Idaho. Returns to risk and management were $368.17/acre greater for a ''precision ag'' managed center irrigation pivot versus a ''conventional'' managed pivot.
Many of the above studies report profitability from managing only one crop input variable. The more variables managed in a growing season the greater the profit potential.
The greatest benefit from site-specific management may be from improved environmental stewardship. Targeting crop inputs to only those locations in a field where they are needed results in unnecessary over- or under-application associated with only applying a single rate across an entire field. In their work at Kansas State University, J.B. Sisson and J.L. Havlin have shown that the benefits of variable fertilizer application based on soil variability include; Increased fertilizer use efficiency, reduced nutrient overloading in surface water from soil runoff and potentially the reduction of nitrate movement in groundwater. Through site-specific management, areas more sensitive to leaching or surface runoff can be located and properly managed.
The adoption of precision ag technologies is beginning to proceed at a rapid rate. It is estimate that as many as 25 to 30 percent of our most efficient and productive farmers are utilizing various new technologies including yield monitors, grid soil sampling and variable rate nutrient application. These numbers are consistent with a Farm Chemical/Purdue University dealership adoption survey that shows about 40 percent of the fertilizer and crop protection product dealerships offering geo-referenced (grid) soil sampling and about 30 percent offering computer/map controlled variable rate, single product applications. These numbers are up about 20 percent from a similar survey in 1996. ''Growth in variable rate application is expected to continue, with the biggest expansion foreseen in multi-nutrient controller-driven application'' (Farm Chemicals, June 1997). All of this growth has created a large demand for equipment operators with computer and electronic skills to more college graduates in agriculture to assist farmers with the wealth of data that is created with the new technologies. The demand has caught many education institutions by surprise.
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The growth of dealerships offering various new technology based services means that most farmers will be able to obtain the benefits of precision ag technologies with little or no capitol investment. Learning how to use precision ag technologies and the data created by these technologies to make better agronomic decisions will create new opportunities for colleges, universities and the Extension system.
Legislatively, Ag-Chem Equipment Co. Inc., The Fertilizer Institute, and its members in the agricultural input retail sector support H.R. 725, ''The Precision Agriculture Research, Education, and Information Dissemination Act of 1997.'' We commend the leadership of Rep. Lewis and Rep. Crapo for introducing the legislation and their leadership and foresight in this important new area of agricultural research. We also commend the many members of the House Agriculture Committee for cosponsoring this important piece of legislation.
Many farmers and the agricultural input retail dealers that serve them are already using new space-age technologies to map farm field and variably apply nutrients and other crop inputs. These technologies work to reduce unwanted runoff, protect the environment and to make farming operations more efficient, productive and profitable. It is important for the Department of Agriculture and the Federal agriculture research community to keep pace with farmers and the private sector regarding these innovative and advancing electronic farm tools.
As I understand the bill, H.R. 725 introduces and emphasizes precision agriculture in the USDA National Research Initiative. The bill most importantly defines precision agriculture as a system designed to increase long-term, site-specific and whole farm production efficiencies, productivity and profitability. And the bill works to maximize involvement, cooperation and public/private partnerships with private industry, certified crop advisers and others in USDA research projects and education programs regarding precision agriculture.
As you well know Mr. Chairman, Federal resources are limited and agricultural research opportunities are vast and becoming increasingly more important. Public/Private research partnerships are becoming increasingly more important in order for American agriculture to maintain and advance its cutting edge advantage of feeding the world in the most environmentally sensitive way possible.
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American farmers in the next century will depend on these new technologies and all the other available tools at their disposal to compete in the international auction ring that is today's global market place. American farmers will, without hesitation, step up to the challenge to feed and serve the growing number consumer whose very lives depend on this nation's agricultural productivity.
As Congressman Lewis has pointed out in many of his statements, the United Nations estimates the world's population could climb from 5.6 billion people last year to more than 9.8 billion people by the year 2050. The planet's population is projected to grow by about 85 million people a year for two to three decades. Ninety percent of that will occur in the Third World, approximately doubling the demand for food there by the year 2025.
The earth's population is almost certain to double in the next century. One report estimates that the world's farmers will be asked to produce as much food in the next 40 years as they have in the entire 14,000 year history of agricultural production. World population is increasing, third world diets are improving requiring more meat and more grain to feed livestock. Those are facts that must be faced by our agriculture production system and the Federal agriculture research community.
Efficient and productive American farmers will be called upon to feed this tired and hungry world'as they have done in the past, as they do today and as they will no doubt will be called upon to do in the years and decades to come.
To conclude, allow me add that I understand that regarding reauthorization of the farm bill research title, there is an overwhelming influence toward the status quo. While research grant recipients are unhappy that more Federal dollars are not available, they are generally happy with the current system and want to keep what they have. I urge the committee to resist the rubber stamp approach to research reauthorization. There are many new and exciting areas of research and agriculture production that the Department of Agriculture should be capitalizing on and are not. I believe Precision Agriculture is one of those areas and I urge the Committee to include H.R. 725 in its passage of a agricultural research legislation this year.
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Again, thank you Mr. Chairman for the honor and opportunity to be with you here today. I'm happy to answer any questions the committee may have at the appropriate opportunity.
TESTIMONY BY LAMESA COTTON GROWERS
Lamesa Cotton Growers is a regional producer organization representing cotton producers on the South Plains of Texas. Our beginning dates back to the 1950's. Local agricultural leaders organized to insure that a USDA cotton classing office would be part of the cotton infrastructure in our area. Through the years our organization has successfully worked to keep a classing office at Lamesa.
In 1980 Lamesa Cotton Growers reached agreement with USDA to build a new $1.7 million cotton classing facility. It was equipped with the latest technological advancement in cotton classing, High Volume Instrumentation (HVI). This new method of classing gave us more accurate and detailed information about cotton fiber than ever before. Our organization purchased 10 HVI lines making it the worlds first fully automated classing office. Our early commitment to this new method of classing paved the way for HVI to quickly become the standard in our industry. It has truly revolutionized the cotton industry.
Our organization retired the debt on the Lamesa Cotton Classing office in 1990. The Board of Directors agreed to invest the cash flow from the building rental in agricultural research. The Agricultural Complex for Advanced Research and Extension Systems (AG-CARES) is a cooperative effort involving the Lamesa Cotton Growers (LCG), the Texas Agricultural Experiment Station (TAES), and the Texas Agricultural Extension Service (TAEX). Several private businesses and suppliers of agricultural products also participate. We have now completed our seventh year of operation and submit with this testimony seven years of annual reports documenting the results of that operation.
AG-CARES brings enhanced scientific technology to focus on the sandy soils of Dawson County. Advancement from over six years of Farming Systems research comes together at AG-CARES. These advancements came out of small plot work done at the Lubbock Experiment Station. These systems are incorporated at full scale, under our growing conditions.
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This 240-acre research farm is well located and easily accessible to area producers. LCG provides the land that is cash leased, a Low Energy Precision Application (LEPA) irrigation system, and operations funding. TAES provides the systems plan and a team of research scientists to monitor the interactions within the systems. TAEX provides on site management and extension capabilities to conduct field trials, tours and reports. Various farm inputs are contributed by local businesses and private industry.
One key to success of our operation is the steering committee made up of members of each organization. The committee reviews past year's results, identifies research priorities and communicates who does what the next year. In 1994, the USDA Superior Service Award for Scientific Research was awarded to the AG-CARES Farming Systems Group. Over time this approach has developed into a close working relationship among the organizations. Each group is accountable to the other for results.
I offer three reasons why we feel AG-CARES has been successful and why we are working on a long term agreement to continue its operation.
(1) Operation of the farm has produced results immediately adaptable by local producers. This research is conducted where we farm, on our soil types and under our growing conditions. Systems that work here are adaptable to our operations. When we began in 1990 there was less than 50 irrigation systems in Dawson County. As of January 1, 1997 there were 429 LEPA irrigation systems covering 52,524 acres. This has stabilized production in our area and provided more crop alternatives to producers.
(2) The farm generates its own research priorities. When production problems arise from the implementation of new systems, those problems become the next research priorities. Supplemental additions of phosphate fertilizer are being used, a practice widely thought to be profitable for our area. However, researchers here have not measured any economic benefit from this practice. Why? What are the interrelated factors preventing phosphates from working here as they do under small plot trials? This becomes a research priority for the future.
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(3) AG-CARES location allows quick response to changing conditions. For the first time in our history, the boll weevil has established itself on the High Plains of Texas. Confirmation came early this year by observing overwintering trap data. As a result the steering committee has set aside dry land acreage at AG-CARES to receive a variety of boll weevil treatments. We need to quickly determine what level of control is possible and affordable on lower yielding dry land cotton. These treatments begin this week.
What is in our future? Extreme yield variations are documented within short distances across the different cropping systems. New precision monitoring devices will be used to isolation and research of the factors responsible for these variations. This could allow the precision application of crop inputs and could dramatically improve yields. This precision farming project is planned to begin in 1998. We expect that this will increase the number of private companies who participate with us.
Again we point out our unique funding situation. Without the income provided LCG by the rental of the Lamesa Cotton Classing Office, we could not provide the location for this project. Likewise, public funding sources are necessary for the Experiment Station and the Extension Service to fulfill their commitment to this project. Private industry is most welcome to participate with us at AG-CARES. However, we feel it is through public funding of agricultural research that producers can be assured of objective information and results.
ANSWERS TO QUESTIONS FROM CONGRESSMAN GEORGE E. BROWN, JR., FOR JOHN MARTINELL:
(1) You indicate on page 2 of your testimony that one of the objectives of the joint efforts of USDA and DOE scientists is ''to reduce agriculture's reliance on fossil fuels and other energy intensive inputs.'' What projects has INEL undertaken with USDA that are focused on this particular goal?
As stated in your question, energy efficiency is one of the collaborative objectives of the Memorandum of Understanding between the Departments of Agriculture and Energy. INEEL's Site Specific Technologies for Agriculture project (SST4Ag), which is a collaborative effort among INEEL, USDA/ARS, university and private sector scientists, engineers and producers, addresses this objective through research and development directed at decreasing the amount of energy required to support production of farm commodities through better understanding and management of planting, irrigation, chemical application and harvesting operations. Intrinsic to this research and development effort are integral benefits associated with environmental stewardship of the natural resources required for continued production of increasingly larger amounts of food and fiber needed to support global population increases, and enhanced economic efficiency for the US producers in an increasingly competitive international economic environment.
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(2) In your testimony you refer to ''the model for a precision agriculture system.'' Please define what your vision of this model is.
Our vision of the ''precision agriculture system'' is a system that enables the almost instantaneous collection and utilization of increasingly detailed information at every point along the production and marketing chain, and should empower ALL producers, suppliers, processors, retailers and consumers to benefit each other while acting in their own enlightened self-interest. The realization of such a vision requires more than a few new high technologies. Thus a realistic precision agriculture model for the food and fiber production, processing and distribution system of the 21st century, must harnesses computer, telecommunications, remote sensing, global positioning and other advanced technologies with the tools of agronomy, finance, marketing, machinery and education to better characterize, define and manage the food and fiber chain from the farm gate to the kitchen table. To achieve these purposes, research, and particularly education and extension, must include growers and agri-industry as partners to achieve rapid and effective adoption of such a precision agriculture system. This is essential since discovery and innovation often occur at the user level, and the user community's understanding of new non-traditional processes and technologies must expand to reap the benefits of precision agriculture in all sectors of society.
(3) On page 3 of your testimony you state: ''the need for a collaborative, information-intensive effort to integrate precision agriculture research will require innovative applications of systems integration and public/private partnerships focused on a defined end product to generate a usable precision agriculture system in a shorter period of time and at less cost to the Nation.'' GPS technologies, traditional farm equipment technologies, GIS and other information technologies appear to have been integrated with agronomic research over the past few years to meet farmers needs. What specific deficiencies are you referring with regard to the integration of precision agriculture research? What is the ''defined end product'' you envision? Precision agriculture is already in use. What are you specifically referring to when you refer to a ''usable precision agriculture system?''
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Gaining the full potential benefits of precision agriculture management approaches is dependent upon much improved, science-based understanding of many phenomena and their interactions. Integrated development and refinement of a number of tools, both analytical and hardware, is also required. There is an incomplete understanding of the inter-relationships between components of the agri-ecosystem climates, soils, crops, water, air, pests, and other conditions and organisms. Remote and in situ sensors, computer-based modeling and analysis technologies, decision-making tools, and information collection, organization, and dissemination are all increasing our ability to study and understand these complex agronomic systems. However, an ''end product'' of a widely applied and effective precision agriculture system, as described in the answer to question #2, that empowers producers, suppliers, processors, retailers, and consumers to benefit each other and the environment while acting in their own enlightened self-interest will require the integration of these tools along with the science-based information and data bases to support them. The precision agriculture system is only ''usable'' to the extent such an integrated science-based understanding exists, and per our vision, application of fertilizers is just the beginning.
The measurable benefits of a precision agriculture system usable by the entire agriculture system are legion. For the farmer and livestock producer, precision agriculture could result in increased profitability by lowering production costs and identifying new markets for his commodities. For the processor, precision agriculture could help locate commodities that best fit manufacturing specifications and assure their timely arrival at the processing facility. For the retailer, precision agriculture could generate a more flexible distribution infrastructure that responds rapidly to changing consumer tastes and weather-driven supply problems. For the environmentalist, precision agriculture could help mitigate degradation of the soil, water and air and preserve other natural resources by prescribing and delivering precise, site-specific consumption/applications of petroleum, chemical and other inputs. For the consumer, precision agriculture could enhance the safety and nutritional quality of food by precisely managing and accounting for the usage of pesticides and fertilizers, tracing and preventing the origins of bacteria that have contaminated a food item and assuring appropriate handling practices that preserve nutrients and guard against the introduction of pathogens into the food supply.
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(4) On page 4 of your testimony you state, ''Use of systems analysis and engineering techniques will assure focus on the real issues;'' What are the real issues?
The rapid globalization of the U.S. economy and decreasing Federal role in agricultural markets are increasing the risks the agriculture industry must manage. These risks are further compounded by an increasing regulatory role of governments regarding agriculture's impacts on the natural environment and human health. Precision agriculture, strongly supported by industry and being adopted by leading growers, is expected to address these stresses.
However, the greatest barriers to using precision agriculture are the complexity of the system relationships and the holistic systems-level integration required to develop solutions. The use of systems analysis and engineering techniques will focus on integrating systems to manage the increasing burden of risk associated with producing and getting agriculture products to market.
Using this collaborative systems-based approach is required for achieving solutions to interrelated problems, and this approach can be focused on the integration of precision agriculture systems. Furthermore, a systems-based approach will promote collaborations to reduce redundancy, open communications to improve efficiency, and brings together a unique critical mass of multidisciplinary expertise to define interfaces and relationships among elements of the system This approach is also a cost-effective strategy for integrating and applying our national wealth in research, education and extension to more effectively respond to customer needs for integrated technology products and to get those products to market sooner and at less cost.
(5) We currently have an extensive system of agricultural experiment stations and Agricultural Research Service laboratories, being supported at a rate of many hundreds of millions of public dollars per year. Why is this existing agriculture research system not meeting the needs outlined in your testimony? What changes should we make to this system in order to meet the needs of precision agriculture?
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The current mix of USDA funding mechanisms for agriculture research and development—formula funds, competitive grants and special grants—were developed to address problems of the agricultural industry and have served our nation well. However, as the U.S. food and fiber system positions itself to enter the 21st Century, a new set of challenges has emerged that require new approaches that build up on the strengths of these existing mechanisms.
These new approaches must provide incentives for cooperation and collaboration between the private and public sectors, among State and Federal Governmental organizations, between Federal and university research facilities, and among diverse academic disciplines to bring together the resources and disciplines necessary to address complex national problems. These new approaches would build a secure linkage between basic and applied research, as well as securing strong linkages between the development of new technologies and the development of education and training programs to transmit new technologies. Furthermore, through multi-institutional collaborations, individual institutions could become more specialized and at the same time enhance available expertise and services to local constituencies.
Precision agriculture is a mission area that requires this new level of coordination and integration. However, it is important to emphasize that this approach could be applied to other subject mission areas that are national in scope and require the pooling of resources and a wide variety of expertise in order to achieve desired outcomes. Examples of such mission areas include food safety, food and fiber genome mapping, livestock waste reduction and disposal, hypoxia, and alternative uses for crops and livestock products.
A proposal for such a new approach is outlined in an attached white paper entitled, ''Mission-Oriented Research, An Innovative Funding Opportunity For National Missions Such as Precision Agriculture.'' This proposal is included in this response as an attachment since it has already been submitted to the Subcommittee for the record of this hearing.
(6) You describe the need for public-private partnerships in technology development. Isn't the basis of a cooperative research and development agreement (CRADA)? Does your laboratory currently have CRADA's in the area of precision agriculture? Do other Department of Energy laboratories? If so, please provide a brief description of these CRADA's and their size.
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INEEL has several CRADA's in place supporting precision agriculture product development and commercialization. Current CRADA's are individually focused per market drivers of the private sector and program requirements of the public sector. The SST4Ag project is the current means to integrate these individual efforts. Each INEEL CRADA supporting precision agriculture leverage equipment and labor (estimated in the $100,000's) provided by the partners with INEEL's equipment and labor (estimated in the $100,000's ) and are briefly summarized as follows:
Local Farmer-experimental methods and developmental component evaluation site, supporting sensor, controls, information management and operational technique research and development.
Irrigation Sensors and Controls Company-irrigation and other farm operational equipment command and control systems.
Geographic Information Systems Company-information management, analysis and display systems.
Agricultural Sensors and Controls Company-farm equipment sensor, command and control systems.
Aerospace Sensors and Controls Company-farm equipment sensor, command and control systems.
A full inventory of all DOE laboratory CRADA's supporting precision agriculture technology development will require additional time. Such an effort would be enhanced through a request made directly to DOE
Mention of specific company names requires the approval of the cooperating partners per the CRADA agreement, which could be provide with additional time.
(7) If the goal of this program is development of commercially viable systems of precision agriculture, developed in partnership with industry, why can't we handle the work through CRADA's? Isn't this the reason CRADA's were established?
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Currently, the precision agriculture system is being developed on an ad hoc basis by many different groups who must satisfy their own requirements and who have little ability to control or address overall system requirements, and non-integrated individual investments in CRADAs is no exception. Without a research and development program to design the model for a nationally integrated precision agriculture system, individual CRADAs focus on the requirements of the few involved parties and lacks the resources or scope to integrate beyond their own market (private sector) or mission-focused (public sector) program constraints. This fragmented approach does not provide the synergy needed to build on the collective knowledge of all stakeholders in the system, nor integrate the efforts of several related CRADAs. A consciously-designed R & D initiative that concentrates on systems development, grows technologies that are needed to fill the gaps in the system and synthesizes new knowledge in cyclic iterations would be more likely to generate a usable precision agriculture system in a shorter period of time at less cost . The CRADA is a valuable tool in developing these public/private partnerships, particularly when managed as part of an focused R & D initiative for systems integrated products.
(8) Do you feel that industry funding match is warranted on grants and CRADA's in this area, given the maturity of the technology?
The maturity of a given technology is relative to the desired end or vision (see questions #2 and #3). The current maturity of precision agriculture systems is analogous to the telegraph and telephone systems of years gone by, while the vision is analogous to the telephone, Internet and other high-speed communications systems of today. Given the vision there is much to be done, therefore, not only is industry matching funds warranted, but required.
Historically, the Federal Government's investment in agriculture research and development has yielded some of the greatest returns on any Federal dollar spent. Yet the need and challenge to increase the return on that investment is ever increasing. The development of precision agriculture systems through partnerships between Federal agencies and the public and private sectors provides a path forward for achieving the greatest benefit from scarce Federal resources. In fact, the absence of such a collaborative systems approach could diminish the returns on current and future investments in agricultural research.
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The Federal Government is ideally situated to serve as the catalyst for the development of a precision agriculture system. By providing some leadership and a modest amount of R & D funding, the government could encourage the formation of public/private sector partnerships to design a precision agriculture model in a more timely and efficient fashion and leverage private investment in the project so as to limit taxpayers' exposure. As a first step, solidifying the Federal partnership between the U.S. Departments of Agriculture and Energy, which partnership was created by a memorandum of understanding signed in November 1995, and making joint Federal investments in this collaborative partnership will enable a quantum leap in more efficient and responsible resource management and address immediately solvable problems faced by American agriculture in a global economy.
Mission-Oriented Research, An Innovative Funding Opportunity For National Missions Such as Precision Agriculture
New Challenges
Since World War II, the dramatic increases in agricultural productivity have been fueled by biological and chemical technologies. In the next half century, the prospects for advancements in the productivity of the food and fiber chain will be determined by the development of systems approaches and information technologies. These management tools will make ever-growing quantities of data available to the user by enabling the almost instantaneous collection and utilization of increasingly detailed information at every point along the production and marketing chain.
This systems-based, information-intensive management of the food and fiber chain is referred to as precision agriculture. Precision agriculture can empower producers, suppliers, processors, retailers and consumers to benefit each other while acting in their own self interest. Precision agriculture holds the promise of enabling the agriculture sector to increase its productivity and competitiveness in the global market place, while minimizing the degradation of the environment and enhancing the safety and nutritious quality of our nation's food supply. However, the understanding and application of such detailed information is not simple. There is an incomplete understanding of the inter-relationships between components of the agri-ecosystem '' soil, crops, water, air, pests and other interacting organisms in the system.
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Currently, the precision agriculture system is being developed on an ad hoc basis by many different groups who must satisfy their own requirements and who have little ability to control or address overall system requirements. This fragmented approach does not provide the synergy needed to build on the collective knowledge of all stakeholders in the system, nor the critical mass of capabilities and resources to overcome system integration barriers. What is required is a determined effort to organize these components into a usable system that can be easily accessed on a real-time basis and readily applied by users up and down the agricultural production and marketing chain.
In order to realize the potential benefits of precision agriculture, it is critical to initiate a research and development program to design a science-based model, including associated decision support tools and hardware, of a precision agriculture system that is applicable to the diversity of this nation's agriculture sector.
Funding Mechanisms
The current mix of USDA funding mechanisms for agriculture research and development—formula funds, competitive grants and special grants—were developed to address problems of the agricultural industry and have served our nation well. However, as the U.S. food and fiber system positions itself to enter the 21st Century, a new set of challenges has emerged that require a new funding approach. A new funding approach, which builds on the strengths of the existing mechanisms, is proposed herein to address complex problems that require cooperation and collaboration between the private and public sectors, among State and Federal Governmental organizations, between Federal and university research facilities, and among diverse academic disciplines. This new approach seeks to build a secure linkage between basic and applied research, as well as securing strong linkages between the development of new technologies and the development of education and training programs to transmit new technologies. Precision agriculture is a mission area that requires this new level of coordination and integration. However, it is important to emphasize that this approach could be applied to other subject mission areas that are national in scope and require the pooling of resources and a wide variety of expertise in order to achieve desired outcomes. Examples of such mission areas include food safety, food and fiber genome mapping, livestock waste reduction and disposal, hypoxia, and alternative uses for crops and livestock products.
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An Innovative Funding Approach
Mission-Oriented Competitive Grants
The upcoming re-authorization of the Research, Extension and Education Title of the farm bill represents a unique opportunity for the Congress to develop new funding opportunities for mission-oriented research, including precision agriculture. This proposal is to authorize a mission-oriented competitive grant program at $100 million a year for five years.
These grants would be managed by USDA/CSREES. A special ''Precision Agriculture Advisory Panel'' would be created as a subunit of the existing National Agriculture Research, Extension, Education and Economics Advisory Board. Using precision agriculture as the example, this panel would augment the Board in the specific areas of expertise required for precision agricultural research, and would function only for the performance period of the precision agriculture grants. Leadership for this Precision Agriculture Advisory Panel would be selected from the National Agricultural Research, Extension, Education and Economics Advisory Board membership. This Advisory Panel leadership would then select panel members that would include mission-relevant representation from farm, commodity and livestock groups, other agribusiness organization, and private industry; with appropriate public sector representation from land-grant universities, Federal agencies and national laboratories. This new Panel would make recommendations to the Secretary of Agriculture and the Administrator of CSREES for the products to be solicited in a request for bids under this new funding mechanism. Based on these recommendations, USDA/CSREES would solicit bids for defined products. Advisory panels would be established for other priority mission areas, and all panels would follow the same procedure for making recommendations regarding the products that should be the outcome of work supported by the grants awarded in these mission areas.
The entire $100 million per year in this new program would be distributed among not more than five priority mission areas in any given year, and no less than $90 million per year would be targeted to large-scale multi-State and multidisciplinary projects. For these large mission-oriented research grants, the minimum size of grants would be $5 million each, with the maximum size being $25 million. The recipient(s) of the award(s) would have a performance period, to deliver the products of the proposed scope, of not more than five years. Of the $100 million, not more than $10 million per year could be targeted to a general call in support of the larger mission-oriented research grants for the respective priority mission areas.
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Mission-Oriented Grant End Product
In the case of precision agriculture, the large multi-State and multidisciplinary grants could be targeted to designing the science-based model, including associated decision support tools and hardware, for integrating precision agriculture systems that are applicable to the diversity of this nation's agriculture system. The successful grantee's performance would be measured against the grantee's ability to develop and deliver the delineated end product.
Issuance of Large Scale Mission-Oriented Research Grants to National Consortia
The USDA/CSREES would publish a request for proposals from national consortia to execute and deliver the product(s) of the mission-oriented grant(s). The request for proposals would clearly define desired products and outcomes. Selection of a grantee would involve a rigorous competitive merit review process. Eligible grantees would be national consortia that demonstrate the partnerships and mechanisms to access and integrate regional, multi-State and multidisciplinary resources, institutions and capabilities necessary to develop and deliver the products of the mission-oriented grant. This would include, but would not be limited to, system requirements driven subcontracting, competitive peer-reviewed processes to access best performers of work for subcontracts, and an ability to integrate products of subcontracts and initiate subcontract change controls as system requirements evolve. The successful national consortium would be solely responsible and accountable to USDA/CSREES, and other funding entities, for the cost, schedule, scope and integrated delivery of the product(s) of the grant. Institutions performing work on the mission-oriented grant would be accountable to the national consortium for their respective defined scope, and the national consortium would have such oversight responsibilities only for the duration of the grant.
The USDA/CSREES shall require that the successful consortia leverage and integrate funds, infrastructure and capabilities. The intent of this requirement is to maximize the leveraging of other funds, infrastructure and public sector missions for the greatest return to the agriculture sector. The successful national consortium shall demonstrate capabilities and intent to meet the following requirements:
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All projects must be multidisciplinary, multi-institutional, multi-State and include research, extension and education components.
Appropriate Land-Grant Universities in the involved regions/States shall be members of the consortium. Accordingly, the involved Land-Grants should be able to show an appropriate match in State and/or Federal base (formula) funds that they are contributing to the project. EPSCORE-like requirements shall also apply when selecting participating land-grant institutions. Established mechanisms and commitment to obtain matching funds must be clearly demonstrated by the national consortium, but fluctuations in annual funding cycles will be allowed for.
Appropriate private sector entities in the involved markets (technology, commodity, etc.) shall be members of the consortium. The private sector entities shall be responsible for an appropriate match of USDA / CSREES funds. Established mechanisms and commitment to provide private sector matching funds must be clearly demonstrated by the national consortium.
Appropriate Federal agencies and national laboratories (government-owned contractor operated or government-owned government operated) shall be members of the national consortium. The national consortium shall obtain appropriate matching funds from other Federal agencies, such as DOE, DOD, EPA or Interior for the duration of the contract. . Established mechanisms and commitment to leverage other public sector funding must be clearly demonstrated by the national consortium.
The mission-oriented competitive grant funds provided by USDA/CSREES are project funds. These funds cannot be used to purchase or build physical buildings or facilities; however, building and equipment overhead costs should be factored into proposals of this size. Funds for purchase or construction of buildings or facilities may not be counted as matching funds by the national consortium. These mission-oriented competitive grant funds may be used for equipment purchases as well as program activities.
The national consortium will be responsible to USDA/CSREES, as well as other public and private sector entities providing funding, to meet the respective mission-oriented requirements and maintain a full accountability of all funds. The national consortium shall be allowed to issue subcontracts of awarded funds to any qualified organization including Federal agencies, national laboratories, colleges or universities or research foundations maintained by a college or university, and private research organizations.
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Linkage to Other Funding Mechanisms
The national consortium shall be required to submit an annual report to the USDA/CSREES to describe its progress in accordance with the Government Performance and Results Act and also to describe additional research and education needs that have been identified as a result of ongoing projects. This identification of research and extension needs will be provided to the National Advisory Board and the managers of the National Research Initiative (NRI).
Mission-Oriented Competitive Grant Funds
Funding for the mission-oriented competitive grants will come from the Fund for Rural America, which was created for the purpose of providing producers and processors with the technology and tools they need to compete and prosper. The objectives and intent of the Fund for Rural America are most closely related to this funding proposal, and precision agriculture achieves in great measure the missions set forth by the Fund for Rural America e.g., enhanced international competitiveness, rural development, and conservation of natural resources. Funding for this mission oriented competitive grant program through the Fund for Rural America should be for not less than 5 years.
"The Official Committee record contains additional material here."
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