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Abstract
Estimates of marginal products and rates of
return to cash grains, dairy, poultry, and other
livestock research in the United States were made
by Bredahl and Peterson using 1969 Census of Agriculture
data. Their results showed national
returns to crop and livestock research to be in
the 36 to 46% range. These estimates of returns,
several times higher than market rates, have
proven useful to agricultural researchers and administrators
in supporting budget requests.
Bredahl and Peterson provided marginal products by
commodity groups by states which have been used
by economists in particular states to calculate
rates of return to research on commodity groups
in those states (Mitchell, Coffey, Babb, and
Pratt). More recently, Davis has provided evidence
that the production coefficient on the research
variable in aggregate agricultural production
functions has declined since the 1950s but
remained stable for the past 10-15 years. Stability
in the aggregate, however, does not necessarily
imply stability over time across commodity
groups or states. Stability of the research coefficient
is an important issue since estimates
from studies such as Bredahl and Peterson's are
used in making projections of returns to future
research spending. Instability over time would
indicate that one should not make projections
which make use of research coefficients from only
one cross-section. The main focus of this paper, therefore, is to
provide additional evidence on the efficiency of
allocation of research resources among commodity
groups and regions within the United States.
Data from the 1969 and 1974 Censuses of Agriculture
are employed in aggregate agricultural commodity
group production functions to test if the
research coefficient for any or all of these groups has remained stable from 1969 to 1974. A
second purpose of the study is to examine the
effects on the research coefficients of certain
variables not tested in the Bredahl and Peterson
study. Variables are included to account for research
spillover, weather differences, and land
quality differences across states. Alternative
research lags are tested and the importance of
the assumed research lag on the rates of return
is also illustrated. The question of research
spillover is an important one and has recently
received increased attention in the literature
(Evenson, White and Havlicek, Davis, Garren and
White). It is really the lag in spillover or the
incomplete spillover of research results from one
state to another that allows one to pick up any
variance with a state level research variable in
a cross-sectional production function. The
spillover that occurs, if unaccounted for, will
likely bias the state marginal products derived
from commodity group production functions.