Productivity Drives Growth in U.S. Agriculture
Keith
Fuglie
Achieving higher productivity has
been a driving force for growth in U.S. agriculture.
The effects of productivity growth over the second
half of the 20th century were dramatic. Between
1950 and 2000, the average amount of milk produced
per cow increased from 5,314 lbs/year to 18,201
lbs/year, the average yield of corn rose from 39
bushels/acre to 153 bushels/acre, and each farmer
produced on average 12 times as much farm output
per hour worked.
There are many reasons for these
improvements in productivity. For example, corn
yields have improved through greater use of agricultural
inputs, such as fertilizers and machinery, per acre
of land. However, yields were also improved through
the development of new technology. For example,
the development of precision agriculture has allowed
farmers to target fertilizer more efficiently, achieving
higher crop yield per amount of fertilizer applied.
An index of Total Factor Productivity (TFP), developed
by ERS, measures the contributions of changes in
input use, technology, and other factors to agricultural
output growth. The TFP index points to three striking
patterns in agriculture.
First, new technologies have strongly
influenced agricultural output growth. Between 1948
and 2004, total agricultural output grew 170 percent,
while total input use fell by 2 percent. Therefore,
growth in output per unit of inputs, or TFP, accounted
for all output growth. Second, agricultural TFP
has grown about twice as fast as the comparable
Bureau of Labor Statistics measure for the U.S.
nonfarm business sector since the mid-1960s. Third,
in agriculture, productivity growth has driven the
expansion in production, while most other U.S. industries
have relied primarily on input accumulation as a
source of growth.
Between 1960 and 2004, the average
growth rate in output from all industries was almost
double that of agriculture, reflecting the shrinking
share of the farm sector in the national economy.
Growth in TFP accounted for 13 percent of industrial
output expansion, compared with 117 percent of growth
in agricultural output. High TFP growth in agriculture
helped free farm labor for employment in the rest
of the economy and also reduced the need for more
nonlabor inputs like land and capital to sustain
increases in agricultural production. Improvements
in agricultural TFP also contributed significantly
to the overall productivity growth of the U.S. economy.
A 2006 Harvard University study found that while
agriculture comprised only 1.8 percent of the Gross
Domestic Product produced by private industry between
1960 and 2004, it accounted for 12.1 percent of
total TFP growth in the private business economy
over the same period.
Sources of growth in
agriculture and all U.S. industries, 1960-2004 |
|
|
|
| |
|
Average annual growth in output |
1.7 |
3.2 |
Share of output growth due to: |
|
|
Growth in nonlabor inputs
|
11.8 |
54.1 |
Growth in labor hours
|
-34.2 |
23.7 |
Growth in labor quality
|
5.6 |
8.8 |
Growth in Total Factor Productivity
|
116.8 |
13.4 |
| |
|
100.0 |
Sources: Statistics
for agriculture, USDA, Economic Research Service;
statistics for all U.S. industries, “The
Industry Origins of the American Productivity
Resurgence,” in Productivity,
Volume 3: Information Technology and the
American Growth Resurgence, by Dale W.
Jorgensen, Mun S. Ho, and Kevin J. Stiroh,
The MIT Press, 2005, and subsequent updates. |
|
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