II The Changing Role of Advisory Services 1945-1995
Philip Journeaux
Introduction
Agricultural research and extension has now moved from almost completely public provision to almost complete privatisation. The former national departments of agriculture and science have been restructured into subject matter research institutes and the advisory services sold to private enterprise. Research institutes are subject to private sector disciplines and financial controls. Public funding of research has been restricted and made contestable between science providers under stricter criteria. The share of public funding has been falling since 1986 and so far the contribution of the private sector has not kept up with national income.
Though the reform of agricultural science and extension delivery has been driven by the search for fiscal savings, the principle behind the privatisation of these services (and the reason for their reform) lies in the characteristic nature of such services as public goods. In the past, it was assumed that they would be under-provided without government intervention, and the state assumed responsibility for funding and delivery from early settlement days. Characteristically, and different from most other countries, both the universities and the private sector were excluded from these developments. The result was the emergence of monolithic, inclusive, and hierarchical organisations, with multiple layers of management and widely dispersed responsibilities both in subject matter and in location. In effect, the public provision of service became a goal in itself such that needed reform was prevented from emerging.
This development may be contrasted with the same process at the same time in the USA. The land grant system of agricultural education, experimentation and extension was introduced in the years before the first world war. Federal funds were provided for every state in the union to establish combined and integrated agricultural universities with science skills, experimental facilities, and extension services. Out of this bold initiative emerged extremely strong progress in agricultural science, methodologies, and the emergence of the separate profession of agricultural economists. Just and Rausser (1993) call the land-grant university system one of the most successful innovations in the history of education. This success is attributed to the two-way interaction whereby research scientists are well-informed of field problems and relevant solutions are communicated to the field. Phenomenal gains in productivity was due to dispensing and commercialising these technologies widely in a dominant sector in the economy. The system supplied products with public characteristics such as new crop varieties, improved breeding stock, and improved management practices. These products were easily reproducible and did not lend themselves to private market development and appropriation.
The Department of Agriculture was established in 1892 and developed into a large inspection, science, extension and policy organisation in subsequent years. In 1984, there were 5000 employees functioning in 9 subject matter divisions and located in over 70 locations throughout the country. From 1984, this hierarchical structure was under attack from the Treasury reformists in the name of fiscal conservatism. The principal arguments were: emerging exceptions to the public goods coverage of the state’s activities, and the [gradual] emergence of appropriable products within the system. Principal among these latter products or services were the advisory services employing some 310 professional staff and other supporting staff before the reforms. This paper traces the history of the Department and assesses the arguments for privatisation in the light of the reforms undertaken.
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Rural Affairs Coordinator
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Ministry of Agriculture and Forestry
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