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The importance of improving agricultural productivity
By Keith Fuglie, Economist, Economic Research Service, USDA
Disclaimer: The views expressed are the author’s own, and should not be attributed to the U.S. Department of Agriculture or the Economic Research Service.
|Dr. Keith Fuglie will be one of the panelists for the release of Global Harvest Initiative’s 2015 Global Agricultural Productivity Report® (GAP Report®): Building Sustainable Breadbaskets at the World Food Prize in Des Moines, Iowa, on October 14th at 11:00 AM Central Time. To attend the event or watch online, register here.|
Raising agricultural productivity – producing more food from fewer resources – has been humankind’s primary defense against the threat of a Malthusian crisis, where in a world of finite resources the food needs of a growing population outstrip food supply. While the prospect of food scarcity may seem remote in twenty-first century America, there continues to be a strong case for continued improvement in agricultural productivity in the United States and world-wide. For industrialized countries like the United States, improving agricultural productivity keeps U.S. farmers competitive, helps stabilize world food prices, and relieves pressure to convert forests into farmland. For low-income countries, where most of the population depends directly on farming for their livelihood, raising the productivity of their farms provides a direct pathway out of poverty. It also promotes broader economic development by releasing resources from agriculture to other sectors while keeping food affordable for the growing non-farm population.
The USDA’s Economic Research Service (ERS) tracks agricultural productivity trends in the United States and world-wide using a measure called “total factor productivity,” or simply “TFP.” TFP is a ratio of the total output of crop and livestock products to the total inputs of land, labor, capital, and materials used to produce that output. An increase in TFP implies that fewer total resources are needed to produce a given amount of output. Improvements in TFP come about through the adoption of new farming technologies and practices that raise yields and save inputs. Such improvements come in myriad forms, such as improved crop varieties, better livestock breeds, integrated pest management, drip irrigation, conservation tillage, satellite-guided tractors, targeted fertilizer application and other techniques of precision agriculture. TFP captures the combine effects of thousands of adoption decisions made by millions of farmers every year to raise productivity and efficiency in agriculture.
Earlier this year ERS released a new report on long-term trends in agricultural productivity in the United States. This report, by ERS economists Sun Ling Wang, Paul Heisey, David Schimmelpfennig and Eldon Ball, examines progress in raising productivity on U.S. farms between 1948 and 2011. It finds that U.S. agricultural TFP more than doubled over this period – meaning that farmers were able to produce twice as much food from the same amount of resources, or equivalently, they maintained output using fewer resources. This rise in productivity enabled the U.S. farm sector to be very competitive internationally, and it runs a large positive trade balance as a result. This productivity growth has also saved environmental resources – both the amount of cropland and irrigation water withdrawals have declined since 1980 even as output continued to grow. The authors find that the primary driver of long-run improvements in U.S. agricultural productivity have been public and private investments in agricultural research and development (R&D).
The Global Harvest Initiative through its annual GAP Report examines the implications of agricultural productivity for the long-term future of the world food economy. Using creative graphics and clear language, the GAP Report explains TFP and drills down on policies needed to raise agricultural productivity in different regions and countries.
The GAP Report uses indexes of international agricultural TFP produced by ERS. These indexes compare the growth rate of agricultural TFP over time and among different countries and regions of the world. These measures reveal that every region of the world except Sub-Saharan Africa now relies on raising agricultural productivity, rather than bringing new resources into production, as the primary means of raising food supply. Although even Sub-Saharan Africa has achieved some improvement in its agricultural TFP, its agricultural sector remains the least productive globally. As a consequence, poverty, food insecurity, and resource degradation plague the region. Recent ERS reports by Stacy Rosen and her colleagues and myself with Nicholas Rada examine implications of low agricultural productivity – and what might be done about it – for Sub-Saharan Africa.