Sowing Seeds of Change Informing Public Policy in the Economic Research Service of USDA (1999) / Chapter Skim
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3 The Lessons of History
3 The Lessons of History
Pages 32-69
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From page 32... ...
, have performed in a variety of roles over the three-quarters of a century since the BAE was established in 1922. Much can be learned from this long experience about the limitations and the imperatives facing a government agency responsible for research, secondary data development, and various types of analysis.
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From page 33... ...
Direct public policy intervention in markets to affect farm prices and incomes, i.e., the farm programs, did not occur until the farm crisis of the 1920s and the Great Depression of the 1930s. Social science, primarily economic research, began to develop as part of the USDA's mission only in the first decade of the twentieth century (Baker et al., 1963~.
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From page 34... ...
By the turn of the century, concern for the welfare of farmers, most of whom were quite poor, led to research to understand and deal with the now-chronic economic problems of an industrializing agricultural sector that exhibited immense and repeated price and income instability (Taylor and Taylor, 1952: 1-53; Edwards, 1940; Davis, 1940~. During the late nineteenth century, an academic field of farm management teaching and research had begun to develop in the land grant colleges in response to the growing complexity of farmers' management decisions under the impact of nearly continuous technological change and the commercialization of farm production.
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Following the recovery of European production after the war, U.S. farm prices and land values collapsed in 19201921, creating another major economic crisis in U.S.
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From page 36... ...
As a consequence, many politicians, especially some members of Congress, grew hostile to BAE crop estimates, since they believed it was the estimates and associated price forecasts (not macroeconomic policies and declining demand or increasing supply) that were causing declines in farm prices.
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addressed the multiple problems of agriculture and rural America and led to the creation of numerous action agencies. Created in this period were the Soil Conservation Service, 1935 (now the National Resource Conservation Service)
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From page 38... ...
; the Federal Crop Insurance Corporation, 1938 (now part of the Farm Service Agency) ; the Commodity Credit Corporation, 1933; and the Agricultural Adjustment Administration, 1933 (known then as the AAA or Triple A, later renamed the Agricultural Stabilization and Conservation Service and now part of the Farm Service Agency)
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From page 39... ...
tics, 1 938-1 946 Office of the Secretary Bureau of Agricultural Economics Research and Planning Staff for the USDA * There was only one assistant secretary in USDA.
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Farm management and other economic research went to the Agricultural Research Service (Baker and Rasmussen, 1975:64-65; Wells et al., 1954:1-21~. Under the title "The Fragmentation of the BAE," this event was described and discussed by a distressed agricultural economics profession in its Journal of Farm Economics.
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From page 41... ...
... The Soil Conservation Service reacted much the same ....
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From page 42... ...
Assaults came from any organized interest then unhappy with BAE analysis that did not support its program or policy position. The administration was likewise pleased when BAE research supported current programs, but not when objective research failed to support them.
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From page 43... ...
The price supports and production controls that came out of Congress, some variation of which the nation has lived with ever since, are part of the price paid for the smothering of the radical, if not revolutionary, even demagogic ideas then emerging in national and agrarian political discourse. If there was an error, it was in naively believing that the AAA price and production controls were a temporary expedient.
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From page 44... ...
One of the secretary' s first acts was the creation of ERS and the Statistical Reporting Service (later renamed the National Agricultural Statistics Service, or NASS)
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From page 45... ...
Marketing research expanded further during 1953-1961, the period when economic research in marketing was part of the Agricultural Marketing Service. Over the same period, increased attention was also being given to work on "hired farm workers, local studies concerning old age, health services, levels of living and rural industries" by former BAE economists now in the Agricultural Research Service (Koffsky, 1966:415~.
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From page 46... ...
ERS internal and external organization made in support of the evolving agenda of ERS research and information products. It is also the case that the BAE operated in a relatively closed national economic setting, in which international trade, monetary, and fiscal impacts had little influence on the U.S.
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From page 47... ...
This omnibus legislation now encompasses not only traditional farm programs but also policy for resource conservation and the environment, P.L. 480 subsidized and free foreign food aid, domestic food assistance, rural development, research, and extension.
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From page 49... ...
These concerns began to change the research agenda of ERS. The great expansion in action and regulatory budgets in these new areas, however, did not begin to approach the scale of the USDA farm program budgets until the early 1970s.
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Although over 70 percent of the first ERS budget went to traditional farm economics and marketing work, the initial division-level organization in 1961 had already begun to reflect the new policy agenda in foreign trade and development (Cochrane, 1961:72-73; Bowers, 1990:237~. Then in December 1962 the Resource Development Economics Division was established to focus on rural resource issues and rural development.
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From page 51... ...
ERS found that they had political support or demand for shortrun provision of secondary data development and analysis relevant to current economic problems and political perceptions, but there was little recognition or support for investing in the longer-term foundation of knowledge necessary to sustain high-quality analytic work, whether short-term or long-term (Baker and Rasmussen, 1975:67-68~. What is most commonly not understood is that, especially when developing new problem areas for analytic work, basic research is needed to create the concepts, measurement techniques, and models to address applied problems (Johnson, 1986:Chapter 2~.
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From page 52... ...
Interest in rural development and the failing vitality of many rural communities grew in Congress during the 1970s, but this interest was not shared by the Nixon administration (Daft, 1991:149~. It had by then become clear how fallacious was the traditional assumption that the farm programs constituted a policy sufficient to sustain all of rural America.
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From page 53... ...
Gray. In the 1970s, land use work for policy purposes ranged from major river basin planning efforts with the Soil Conservation Service, the Forest Service, and others, evaluation of major watershed projects, foreign ownership of U.S.
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From page 55... ...
ERS increasingly developed a commodity-oriented organizational framework, which integrated all related intermediate and long-term research (including work on econometric methods) , policy analysis, market intelligence, and the supporting secondary data and information base.
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From page 56... ...
This cosmetic effort removed ERS, the Statistical Reporting Service, and the Farmer Cooperatives Service from agency status and placed them under the direction of the administrator of a new agency, the Economics, Statistics and Cooperatives Service (ESCS)
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132.7 55.5 10.0 65.5 1996 55.1 (est) 136.6 55.1 7.2 62.3 Source: Information Services Division of the Economic Research Service, U.S.
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From page 58... ...
The resulting large and growing federal budget deficits had to be financed in part from international capital markets, putting further pressure on interest rates (Council of Economic Advisers, 1998:247-248~. As effective demand for U.S.
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From page 59... ...
price support loan rates to stay well below world market prices. This recovery coincided with the start of the Uruguay round of trade negotiations under GATT (1986-1994)
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As a consequence, the radical notion of the early 1980s of forcing farmers to comply with conservation requirements to be eligible for commodity program support became law in the Farm Security Act of 1985. This form of cross-compliance provided assurance that farm and environmental policies were consistent, muting environmental criticism of farm programs.
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From page 61... ...
This broader agenda meant that, besides agriculture, ERS was also doing work on food stamps, direct food distribution, and food safety, rural community development and welfare problems, and rural-urban land use, and it was putting more effort into environmental and natural resource issues, often in collaboration with other agencies in federal and state government. Political and policy support for rural community development, which had increased in the late 1970s, began to wane in the 1980s (Daft, 1991: 150~.
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From page 62... ...
As a consequence of the farm crisis, USDA expenditures on farm programs again grew to be the largest USDA budget category through the mid-1980s. Despite their high rate of growth, food stamp and nutrition programs exceeded farm program budgets in only four years in the 1970s and five years in the 1980s.
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From page 63... ...
The assistant secretary subsequently had other uncomfortable occasions to defend ERS research from attack, including pressure to kill an ERS research project.
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From page 64... ...
From the Washington, D.C., point of view, the field staff had become too involved in university research agendas and was disconnected from the national mission of ERS. Field staff, in contrast, saw their role as one of helping to maintain good university-ERS relations, providing ERS with direct access to university research, facilitating joint work and also creating greater ERS capacity to understand and analyze local and regional problems, which the growing complexity of the farm programs required ERS to address.
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From page 65... ...
AID has continued to depend on ERS research capacities, most recently contracting $2-3 million per year with ERS from 1992 to 1996. The Soil Conservation Service (now the Natural Resources Conservation Service)
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From page 66... ...
It is also worth noting that in the BAE and in the early ERS days, all, or practically all, economists on USDA's rolls worked in the BAE and ERS. Today, however, the majority of USDA economists are employed outside ERS in other USDA agencies, most significantly in the Foreign Agriculture Service, the Natural Resource Conservation Service, and the Forest Service.
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From page 67... ...
Economic Research Service Foreign Agriculture Service Natural Resource Conservation Service Forest Service Rural Business and Cooperative Service Agricultural Marketing Service Office of the Chief Economist Farm Services Agency Animal and Plant Health Inspection Service Others (9 agencies) Total 306 113 66 47 26 25 18 16 12 29 658 Note: There are many more economists in the USDA, a significant portion with M.A.
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From page 68... ...
First, the history of the BAE-ERS demonstrates the important value of a cadre of professionals in government capable of providing reliable primary data, secondary data and analysis, short-term problem analysis, and longer-term research products especially when faced with new problems or in conflicted periods of rapidly changing conditions (e.g., see Finegold and Skocpol)
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From page 69... ...
Fifth, a federal research agency should be organized and managed to take advantage of the strong complimentarily between research products, problem analysis and secondary data development, and its analytic structures (Schultz, 1954:20-21)
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