Ag productivity hasn't slowed, but needs to step up to meet new demands

Ag productivity hasn't slowed, but needs to step up to meet new demands

ERS research finds agriculture productivity has changed, but hasn't slowed; should speed up to meet growing demand and maintain U.S. contribution globally

Agriculture productivity in the U.S. hasn't slowed down recently – and has actually doubled since 1948 – but total factor productivity should increase to maintain the pace and U.S. contribution to global food demand, a new USDA report says.

Related: Investment in ag research needs to double in next 10 years

The performance of U.S. farm production in the past 60 years has been driven mainly by TFP – or output per unit of total inputs – growth. From 1948 to 2011, TFP grew at an average annual rate of 1.42%.

How U.S. ag productivity has changed

ERS research finds agriculture productivity has changed, but hasn't slowed; should speed up to meet growing demand and maintain U.S. contribution globally

At the same time, agricultural input composition has shifted significantly, with increasing use of intermediate goods and less use of labor and land.

The output mix changed as well, with crop production growing faster than livestock production, and the share of farm revenue resulting from crop production increased from 52% in 1948 to 56% in 2011.

Fruits and nuts, vegetables and melons grew faster than the production of grains during this time period, while poultry and eggs also outpaced growth of meat and dairy.

"The shifts of input composition and output mix reflect the combined effects of changes in technology, factor endowments, and consumer preference," USDA researchers explained in the report, Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers.

How changes impact inputs
Until the early 1980s, the growth of labor and land productivity reflected the increasing use of intermediate goods and capital inputs in addition to technical change, while labor and land inputs declined.

Since 1981, intermediate input use has grown more slowly, and capital inputs have declined, increasing the importance of TFP growth to output growth.

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USDA found no statistical evidence of a recent productivity slowdown, but government pressures have restricted investment in public agricultural science research, extension, and infrastructure, which the study finds may limit TFP growth in the future.

FAO projects that by 2050, global agricultural demand will rise by 70-100% due to population growth and rising incomes in developing countries.

Related: AGree releases plan for food and ag research reform

"Meeting this demand from existing or declining agricultural resources, such as rural labor and land, will require raising global agricultural TFP by a similar or larger level," the report said. "Maintaining the U.S. contribution to global food supply would require a similar rise in U.S. agricultural TFP."

Stepping up research
Based on a scenario analysis, the report says projections show that TFP growth will not be affected much by slowing or declining public R&D investment within 10 years. However, in the long run, TFP growth is projected to slow significantly in response to reduced public R&D investments.

Researchers estimate it will become increasingly difficult to increase the rate of TFP growth even if public R&D investment should increase again because of the long time periods between research investment and the effect of the research on TFP.

"Encouraging private-sector investment in productivity-related science may help leverage an even more complementary partnership between public and private sectors to pursue the objective of continued advances in agricultural productivity," the report said.

Read the full report, Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers, on the USDA ERS website.

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