This paper focuses attention on environmental and biological characteristics of agriculture which shape the process of technical innovation. The interaction of natural selection and human purposive selection and experimentation is shown to result in a continuous process of innovation placing farmers in the informal R and D systems as well as scientists in formal R and D systems in an innovative treadmill. The importance and limitations of informal R and D are reviewed. A discussion of the characteristics and potential of formal R and D systems leads to the identification of some major problems of policy inherent in, and specific to, the organization and management of agricultural research resources. These include: genetic vulnerability, choices between environmentally specific or widely adapted technologies, the location of research activity, the linkages between agricultural producers and scientists, and methods for maintaining and strengthening informal R and D systems. 58 references, 2 figures.