Summary of Recent Findings
It is widely agreed that increased productivity is the main contributor to economic growth in U.S. agriculture. The level of U.S. farm output was about 2.7 times its 1948 level in 2019, growing at an average annual rate of 1.42 percent over the period. Aggregate input use increased at a modest 0.06 percent annually in the same period, so the growth in farm sector output was primarily attributed to productivity growth, which increased at an average 1.36 percent per year. But what exactly is productivity?
Single-factor measures of productivity, such as corn production per acre (yield or land productivity) or per hour of labor (labor productivity), have been used for many years because the underlying data are often easily available. While useful, such measures can also mislead. For example, yields could increase simply because farmers are adding more of other inputs, such as agricultural chemicals, labor, or machinery, to their land base. USDA produces measures of total factor productivity (TFP), taking account of the use of all inputs to the production process.
Specifically, annual TFP growth is the difference between growth of aggregate output and growth of all inputs used. TFP, therefore, measures changes in the efficiency with which inputs are transformed into outputs. Input measures are adjusted for changes in their quality, such as improvements in the efficacy of chemicals, or changes in the demographics of the farm workforce. As a result, agricultural productivity is driven by innovations in onfarm tasks, changes in the organization and structure of the farm sector, and research aimed at improvements in farm production. In the short-term, measured agricultural productivity can also be affected by random events like weather.
Summary findings include:
- The level of U.S. farm output grew by 175 percent between 1948 and 2019, growing at an average annual rate of 1.42 percent (table 1). Aggregate input use increased at a modest 0.06 percent annually in the same period, so the growth in farm sector output was almost entirely attributed to total factor productivity growth, which increased at an annual rate of 1.36 percent over the 1948-2019 period.
- Average annual growth in agricultural output slowed from 0.77 percent in the 2000-07 subperiod to 0.61 percent in 2007-19 (the subperiods are measured from cyclical peak-to-peak in aggregate economic activity, and are found in the bottom section of table 1), due mostly to declines in crop production in 2017-19, reflecting adverse weather effects in those years. Livestock and products annual growth rate rebounded from 0.65 percent in 2000-07 to 1.07 percent in 2007-19, with meat animals growing faster than other livestock/products on average.
- Total input growth dropped from 0.13 percent per year in the 2000-07 subperiod to -0.06 percent per year during 2007-19, due primarily to the 0.22-percent average annual decrease in intermediate inputs. The trend of declining labor input seems to end in the last subperiod with the positive average annual growth rate of 0.54 percent during 2007-19. Measured average annual TFP growth, as a result, increased only slightly from 0.64 percent during 2000-07 to 0.67 percent per year during 2007-19.
The full detail of national-level data is available in table 1 and table 1a; a summary of sources of agricultural output growth by subperiods is available in table 2 (see all data tables).
USDA also produced, through 2004, State-level productivity measures (annual growth rates as well as cross-State differences in levels) of productivity, or differences in output per unit of combined inputs. Note that updates of the State-level statistics are suspended.
- Analysis of the individual States reveals a positive and generally substantial average annual rate of productivity growth (table 21). There was considerable variance, however. The median rate of growth over the 1960-2004 period was 1.67 percent per year. However, 9 of the 48 States had productivity growth rates averaging more than 2 percent per year. Only Oklahoma and Wyoming had average annual growth rates less than 1 percent per year. The reported average annual rates of growth ranged from 0.58 percent for Oklahoma to 2.58 percent for Oregon.
- Cumulated over the entire 45-year period covered by the State accounts, productivity growth in Oklahoma was responsible for a 30-percent increase in that State's production. Over the same period, TFP growth in Oregon caused output in that State to increase by 319 percent.
- The wide disparity in productivity growth rates had a significant impact on the rank ordering of States (table 22). A key economic question is whether States with lower levels of productivity tend to grow faster than the technology leaders: are there forces (e.g., the diffusion of technical knowledge from the leading States to the more backward ones) that lead to convergence over time in the levels of productivity? See the States section in The Role of Productivity Growth in U.S. Agriculture for details, and State-level data tables.