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Agricultural Productivity in the United States - Summary of Recent Findings

Total Factor Productivity (TFP) growth is the difference between growth of total output and growth of total inputs used. Total output comprises the aggregate of farm production including crops, meat and dairy products, whereas total inputs comprise land, labor, physical capital, and intermediate inputs such as fertilizers and pesticides. Therefore, TFP, measures changes in the efficiency with which inputs are transformed into outputs. The level of U.S. farm output was nearly three times its 1948 level in 2023, growing at an average annual rate of 1.52 percent over the period. Aggregate input use increased modestly at 0.12 percent annually. Meanwhile, total factor productivity growth increased at an average 1.40 percent per year over the full period.

Ag Productivity Summary of Recent Findings

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How does TFP differ from other productivity measures?

Alternative measures of productivity have often been used because the underlying data are readily available - such as single-factor productivity, e.g., corn production per acre (yield or land productivity) or per hour of labor (labor productivity). While useful, such measures can mislead because the measures mask other input changes. For example, yields may increase simply because farmers add more inputs (such as agricultural chemicals, labor, or machinery) to their land base. Economists at USDA produce measures of total factor productivity, which accounts for the use of all major inputs in the production process.

Furthermore, in ERS's U.S. productivity accounts, input measures are adjusted for changes in their quality, (such as improvements in the efficacy and potency of chemicals, depreciation of machinery and equipment, and changes in the demographics of the farm workforce). By accounting for all major inputs and their quality changes, it is clear that long run agricultural productivity growth is driven by innovations in on-farm tasks, changes in the organization and structure of the farm sector, and research and development aimed at improvements in farm production. In the short-term, however, agricultural productivity change can also be affected by random events like weather.

The full detail of national-level data is available in table 1 and table 1a (see all data tables).

Summary findings include:

  • According to the latest update, U.S. total factor productivity growth increased at an annual average rate of 1.40 percent. The level of U.S. Farm output in 2023 was 210 percent more than in 1948, growing at an average annual rate of 1.52 percent. Over the period 1948–2023, aggregate input use increased at a rate of 0.12 percent annually. 
  • ERS also examines trends by subperiods (measured from cyclical peak-to-peak in U.S. aggregate economic activity). A slight increase in total inputs was seen in the 2019–2023 subperiod, at 0.14 percent per year on average. On the other hand, average annual growth in agricultural output was 3.33 percent, led by a rebound in crop production after a decline in the 2007-2019 period. Crop output increased by 2.89 percent on average annually in the 2019–2023 subperiod. Livestock and products output growth increased from an annual average 1.11 percent in 2007–2019 to 4.06 percent in 2019–2023.
  • Looking at the latest subperiods, measured average annual TFP growth increased from 0.51 percent in 2007–2019 to 3.19 percent per year over the period 2019–2023.
  • USDA also produced—for the years 1960 through 2015—State-level outputs, inputs, and total factor productivity measures (annual growth rates as well as cross-State differences in levels). The full detail of State-level data is available in table 2 (see all data tables). State estimates are not made for Alaska and Hawaii, as some major data are not available for the entire period.
  • According to the estimates, every State exhibited a positive average annual productivity growth rate between 1960 and 2015, ranging from 0.23 percent for New Mexico to 1.95 percent for Ohio.
  • In 2015, the top 5 States with the highest TFP levels were California, Florida, Delaware, Iowa, and North Carolina.
  • TFP growth is the major source of agricultural output growth from 1960 to 2015 for all States except New Mexico, Nevada, and Oklahoma, where average annual input growth rates were higher than TFP growth rates.