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Growth
in Agricultural Productivity Limits
Price Increases
Kathleen
Kassel
James M. MacDonald
Prices across the
U.S. economy rose an average of 3.4
percent per year between 1948 and 2007.
Prices for agricultural inputs such
as seeds, fertilizers, agricultural
chemicals, equipment, and labor rose
3.6 percent annually over the same
period. In contrast, prices of agricultural
outputs such as crops and livestock
rose 1.7 percent per year. The gap
between agricultural input and output
prices reflects productivity growth.
Between 1948 and 2007, the agricultural
output generated from a bundle of inputs
increased significantly, largely offsetting
input price increases. Faced with growing
worldwide demand for agricultural products,
the benefits of continued high productivity
growth include the capability to expand
output while reducing commodity price
escalation and volatility.
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