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Productivity growth has contributed positively to U.S. agricultural output in all sub-periods since 1948

Wednesday, August 26, 2020

The total output—including livestock, crops, and other farm related outputs—produced by U.S. farms nearly tripled between 1948 and 2017, growing at an average annual rate of 1.53 percent. This output growth was primarily attributable to increased productivity, which grew at an average of 1.46 percent per year. Total inputs—including capital, land, labor, and intermediate goods—increased by 0.07 percent annually, by comparison. Though total input use grew slowly during this period, its composition shifted considerably. The use of intermediate goods (such as feed, seeds, and chemicals) increased by more than 130 percent, while agricultural labor declined by 76 percent and the amount of land devoted to agriculture was down by more than 25 percent. The continuing growth in intermediate goods contributed 0.58 percentage points per year to output growth, the highest among all inputs (capital, labor, and intermediate goods). However, the contribution of intermediate goods to output growth has been small (even negative in some years) since 1981. Over the long-term, productivity growth has been the major driver of agricultural growth. Productivity growth—spurred by innovations in animal and crop genetics, chemicals, equipment, and farm organization through research—is the only factor that contributed positively to agricultural growth in all sub-periods (measured from peak to peak between business cycles) since 1948. This chart appears in the July 2020 Amber Waves article, “Productivity Is the Major Driver of U.S. Farm Sector’s Economic Growth.”

Most new antibiotic approvals for food animals have been generic drugs also used for humans

Monday, May 11, 2020

U.S. regulations on antibiotic use in food animal production have focused on antibiotics important for human disease treatment, which the Food and Drug Administration (FDA) terms “medically important.” If current human antibiotics lose efficacy and new ones are not developed, the ability to treat human infections may be hindered. In 2017, FDA policies ended the use of medically important antibiotics for growth promotion in food animals. Antibiotics deemed “currently not medically important” are not used to treat human illnesses and can still be used for animal growth promotion. Other uses of medically important antibiotics in food animal production require veterinarian oversight. These policies follow earlier actions in the European Union (EU) banning medically important antibiotics for growth promotion. Most new antibiotic approvals for food animals have been generic drugs that are also used for humans. Between 1992 and 2015, about 70 percent of antibiotics were considered medically important. This suggests that animal pharmaceutical companies are increasingly developing generic antibiotics for food animals, not new varieties of antibiotics. Although new approvals for non-medically important, non-generic antibiotics for food animals declined, they still averaged about 1.3 per year in 2015. This chart appears in the ERS report, The U.S. and EU Animal Pharmaceutical Industries in the Age of Antibiotic Resistance, released May 2019.

Productivity growth helped accelerate growth in world agricultural output through 2016

Friday, April 3, 2020

The growth rate of the world’s agricultural output has varied over the decades. Output growth slowed in the 1970s and 1980s, but then accelerated in the 1990s and 2000s. In the latest period for which estimates are available (2001-16), global output of total crop and livestock commodities grew by an average rate of 2.45 percent per year. The different bar colors in the chart show the sources of this output growth. In the decades prior to 1990, most output growth came about from intensification of input use (more labor, capital, and material inputs per acre). Bringing new land into agriculture production and extending irrigation to existing agricultural land were also important sources of growth. During the periods of 1991-2000 and 2001-16, however, the rate of growth in input use significantly slowed. Instead, improvements in agricultural productivity—getting more output from existing resources—drove global output growth. Total factor productivity (TFP) grew from the adoption of new technologies, management practices, and other efficiency improvements in farming around the world. Between 2001 and 2016, TFP accounted for 77 percent of the total growth in agricultural output worldwide. This chart appears in the Economic Research Service topic page for International Agricultural Productivity Summary Findings, updated November 2019.

Productivity growth is the major source of growth in U.S. agricultural output

Wednesday, February 19, 2020

Technological developments in agriculture have been influential in driving changes in the farm sector. Innovations in animal and crop genetics, chemicals, equipment, and farm organization have enabled continuing output growth without adding much to inputs (including land, labor, machinery, and intermediate goods). As a result, even as the amount of land and labor used in farming declined, total farm output nearly tripled between 1948 and 2017. During this period, agricultural output grew at an average annual rate of 1.53 percent, compared to 0.07 percent for total farm inputs. Output growth was largely driven by the growth in agricultural productivity, as measured by total factor productivity (TFP)—the difference between the growth of aggregate output and growth of aggregate inputs. Between 1948 and 2017, TFP grew at an average annual rate of 1.46 percent. In the short term, TFP estimates can fluctuate from time to time—reflecting transitive events, such as bad weather or oil shocks—but it usually recovers and returns to its long-term trend growth, as has happened in recent years. This chart appears in the ERS data product, Agricultural Productivity in the U.S., updated January 2020.

USDA agencies funded $287.7 million towards 213 research projects on automation or mechanization in specialty crops, 2008-2018

Friday, February 14, 2020

At $64.7 billion, specialty crops comprised one-third of U.S. crop receipts and one-sixth of receipts for all agricultural products in 2017. Many specialty crops are labor-intensive in production, harvesting, or processing. For example, harvest often requires workers to accurately distinguish ripe and unripe fruits and vegetables and gently pick, sort, or package the fruit or vegetable by hand without damage. A long-term decline in the supply of farm labor in the U.S. has encouraged producers to select less labor-intensive crops, invest in labor-saving technologies, and develop strategies to increase labor productivity. A number of USDA programs support the development and use of automation or mechanization in the production and processing of U.S. specialty crops. From 2008-2018 these programs in the Agricultural Marketing Service (AMS), the Agricultural Research Service (ARS), and the National Institute of Food and Agriculture (NIFA) funded $287.7 million toward 213 projects to develop and enhance the use of automation or mechanization in specialty crop production and processing. Projects covered a broad spectrum of technologies, including job aid and machinery automation; machine learning and data analysis; mechanical harvesting and processing; precision agriculture; remote sensing and drones; and sensors. Each of the USDA programs are designed differently to achieve unique objectives, although each program addresses the development and use of automation or mechanization in specialty crops in some form. The data in this chart are available in the February 2020 ERS report, Developing Automation and Mechanization for Specialty Crops: A Review of U.S. Department of Agriculture Programs.

New antibiotics for food animals decreased as a share of overall veterinary drug approvals between 1992 and 2015

Monday, December 16, 2019

Many antibiotics developed for use in animal production are “cast-offs” from products originally intended to be marketed to humans. Therefore, the decline in the development of new human antibiotics suggests there may a similar decline in the development of new antibiotics for food animal production. The share of food-animal antibiotics as a portion of all veterinary drug approvals has declined from 62 percent in 1992-94 to 40 percent in 2013-15. The decline reflects increasing development of new animal drugs approved for companion animals, from 30 percent of all approvals in 1992-94 to 47 percent in 2013-15. Given the overall decline in the number of all animal drug approvals between 1992 and 2015, the decline in the share of food-animal antibiotics approvals also reflects a decline in the number of approvals for such drugs. This chart appears in the ERS report, The U.S. and EU Animal Pharmaceutical Industries in the Age of Antibiotic Resistance, released May 2019. See also the Amber Waves article, “Developing Alternatives to Antibiotics Used in Food Animal Production,” published in May 2019.

Public agricultural research expenditures as a percentage of agricultural GDP has fallen in high-income countries since 2009

Wednesday, December 4, 2019

One way of comparing research and development (R&D) investment across countries is to measure R&D spending relative to the size of the economy, or as a percentage of Gross Domestic Product (GDP). While the United States spends more on public agricultural R&D than other high-income countries, U.S. expenditures relative to the size of its agricultural sector have been about average. Over time, agricultural R&D spending has tended to rise as a percentage of agricultural GDP in virtually all countries. This tendency reflects the greater technological sophistication of agriculture, as well as the broadening of research agendas beyond production agriculture to include more emphasis on various societal issues, including food safety, rural development, and the environment. In the United States, public spending on agricultural R&D as a percentage of GDP peaked in the mid-2000s at about 3.5 percent of agricultural GDP but significantly declined since 2009. By 2013, public spending fell to 2 percent of agricultural GDP. U.S. agricultural research intensity is now below average for high-income countries. Leading regions, such as Northwest Europe and high-income Asia, have agricultural R&D spending of around 4.5 percent of agricultural GDP. Public agricultural research intensities also leveled off or even fell in the agricultural-exporting countries of Canada, Australia, and New Zealand. Research intensities in Southern European and Mediterranean countries and in Central European countries have been consistently lower than those in other high-income countries. This chart appears in the ERS report, Agricultural Research Investment and Policy Reform in High-Income Countries, released May 2018.

Productivity of farms in the Heartland increased over time, but more slowly for smallest farms

Friday, October 11, 2019

Recent ERS research examined productivity trends in the Heartland region, which includes all of Iowa, Illinois, and Indiana, and parts of Minnesota, South Dakota, Nebraska, Missouri, Kentucky, and Ohio. Findings show that the smallest crop farms (less than 100 acres) fell further behind larger farms in terms of productivity between 1982 and 2012. Total factor productivity (TFP)—a measure of the quantity of output produced relative to the quantity of inputs used—grew at similar rates across farm-size classes except for the smallest, which had slower growth rates. (However, data for 2012 reflects a severe drought in the Heartland region that year and so does not follow historical trend lines.) While the TFP for farms in the four largest size categories increased by 47 to 59 percent between 1982 and 2012, TFP for the smallest farms increased by only 17 percent. Some technological advances in recent decades, such as very large combine harvesters and precision agriculture technologies, were not as advantageous for the smallest farms to adopt due to cost. This may help explain why the farm productivity growth of the smallest farms has lagged behind that of larger operations. This trend has resulted in a deterioration of the competitive position of farms in the smallest size category, and has likely contributed to a decline in their share of total output. This chart appears in the December 2018 Amber Waves feature “Productivity Increases With Farm Size in the Heartland Region.”

Potential effects of climate change on agricultural productivity likely to vary by region

Monday, September 9, 2019

U.S. farm output since 1948 has grown by 170 percent. Increases in total factor productivity (TFP), measured as total output per unit of total input, accounted for more than 90 percent of that output growth. However, TFP growth rates fluctuate considerably year-to-year, mostly in response to adverse weather, which can lower productivity estimates. Recent ERS research modeled a future climate-change scenario with an average temperature increase of 2 degrees Celsius (3.6 degrees Fahrenheit) and a 1-inch decrease in average annual precipitation. Results showed that the “TFP gap index”—the difference in total-factor productivity levels between the projected period (2030–40) and the reference period (2000–10)—varies by State. For some States, those climate changes fall within the range of what is historically observed, while for other States they do not, which accounts for regional variation. States in the latter category are projected to experience larger effects. The States experiencing the greatest impacts would include Louisiana and Mississippi in the Delta region; Rhode Island, Delaware, and Connecticut in the Northeast region; Missouri in the Corn Belt region; Florida in the Southeast region; North Dakota in the Northern Plains region; and Oklahoma in the Southern Plains region. This chart appears in the Amber Waves article, “Climate Change Likely to Have Uneven Impacts on Agricultural Productivity,” released August 2019.

Agricultural research spending from the private sector has increased while spending from the public sector fell

Tuesday, July 9, 2019

Historically, public institutions often played a direct role in developing new agricultural technologies and encouraging their commercialization and adoption by farmers. Levels of public investment in research and development (R&D) increased through the early 1980s. However, since then, growth rates in public-sector R&D have been generally low. Until 2003, private-sector investment was comparable to, or moderately higher than, public-sector investment—though growth in private-sector investment had been more variable. After 2003, however, public and private research investments began to diverge rapidly. Total private agricultural and food R&D doubled between 2003 and 2014, while public R&D fell. By 2010, private R&D for agricultural inputs alone surpassed the public level for all agricultural research, which also includes research in areas not directly related to crop and livestock production. Public and private agricultural research efforts are often complementary, rather than competitive. The private sector focuses mainly on R&D related to marketable goods and technologies, with a large share of investments going to the food manufacturing industry, which has little impact on agricultural productivity. The private sector also dominates farm machinery research. On the other hand, public-sector research efforts are more likely to be applied to areas with large social benefits, such as environmental protection, nutrition, and food safety. This chart appears in the ERS data product Agricultural Research Funding in the Public and Private Sectors, updated February 2019.

New nongeneric human drug approvals have increased while new animal drug approvals declined

Monday, June 3, 2019

The human and animal pharmaceutical industries are closely linked, with similar research processes and business structures. However, although animal pharma is a large global presence ($23.9 billion in sales in 2014), human pharma is 42 times larger (nearly $1 trillion in sales in 2014). Because the human pharma market is more lucrative, many drugs are originally explored for use in humans. Human drug innovations historically also have been a source of new products in animal pharma. Conversely, trends in the numbers of new drug approvals in the United States for humans versus animals have diverged over time. Between 1971 and 2015, the number of new nongeneric drug approvals for animal use dropped from 154 to 30 annually, while those for human use climbed from 136 to 392 annually. The higher number of approvals for human drugs reflects the larger size of the human pharma market. This divergence in the numbers of drug approvals may also be driven by changes in the focus of human medicine, which increasingly demands palliative care drugs that have fewer applications in the animal pharmaceutical market. This chart appears in the ERS report, The U.S. and EU Animal Pharmaceutical Industries in the Age of Antibiotic Resistance, released May 30, 2019. See also the Amber Waves article “Developing Alternatives to Antibiotics Used in Food Animal Production,” published in May 2019.

Crop production in the Heartland has shifted to farms with at least 1,000 acres

Tuesday, March 19, 2019

Past ERS research on consolidation in the U.S. farm sector has documented a widespread shift in agricultural production to large-scale operations. This structural change has likely been partly driven by productivity advantages enjoyed by larger operations. Recent ERS research examined consolidation trends in the Heartland region—which includes all of Iowa, Illinois, and Indiana, and parts of Minnesota, South Dakota, Nebraska, Missouri, Kentucky, and Ohio. Between 1982 and 2012, the Heartland’s largest crop farms (more than 1,000 acres) increased their share of total production in the region from 17 percent in 1982 to 59 percent in 2012. In contrast, over the same period, the share of total production declined for the four smaller farm size categories. Midsized farms (250–500 acres) experienced the largest decline in market share, falling from about 30 percent in 1982 to 10 percent in 2012. In aggregate, the productivity of crop farms in the Heartland region increased by 64 percent, or 1.5 percent per year, between 1982 and 2012. ERS researchers estimate that about one-sixth of this productivity growth was attributable to the shift in production to larger farms. This chart appears in the December 2018 Amber Waves feature “Productivity Increases With Farm Size in the Heartland Region.”

Government matching funds can incentivize producers to support agricultural research

Wednesday, March 13, 2019

Over the years, some high-income countries have sought to diversify funding sources for their public agricultural research and development (R&D) systems. For example, the United States uses producer levies (or “checkoffs”) to raise funds for both research and market promotion. In 2014, 19 national and dozens of State producer levies raised about $1 billion in assessments on farm commodity sales. About 18 percent (or $180 million) of these levied funds were allocated to support research, mainly at State agricultural universities. By comparison, the Australian Government agreed in the 1980s to match the funds raised by producer levies to support agricultural research. By 1993, producer levies accounted for 18 percent (or 44 percent with matching funds and other grants) of total public agricultural R&D spending in Australia. The matching provision appeared to significantly strengthen the incentive for producers to establish levies to support research. In 2008/09, producer levies for agricultural research in Australia amounted to more than 0.6 percent of the gross value of commodity production (GVP). By comparison, total Federal and State producer levies raised in the United States in 2014 amounted to less than 0.05 percent of GVP. This chart appears in the ERS report Agricultural Research Investment and Policy Reform in High-Income Countries, released May 2018.

Developing countries, such as China and Brazil, lead global productivity growth

Wednesday, December 12, 2018

Raising the productivity of existing agricultural resources—rather than bringing new resources into production—has become the major source of growth in world agriculture. The total productivity of agricultural inputs, or TFP (total factor productivity), has been rising steadily in most industrialized countries at between 1 and 2 percent a year since at least the 1970s. Among developing countries and transition economies of the former Soviet bloc, agricultural TFP growth rates have been much more uneven. Some developing countries have had agricultural TFP growth rates of over 2 percent per year since the 1970s, while other countries (especially in Sub-Saharan Africa) have seen little productivity growth at all. For the developing countries that were able to accelerate agricultural TFP growth rates, key factors have been market reforms and greater capacity of national agricultural research and extension systems. Long-term investments in agricultural research were especially important to sustaining higher productivity growth rates in large, rapidly developing countries such as Brazil and India. Chinese agriculture benefited enormously from institutional and market reforms as well as from technological changes made possible by investments in research. Following the economic transition from a planned to a market economy in the early 1990s, Russian agriculture rebounded because of substantial productivity growth in the southern region of the country. Under-investment in agricultural research remains an important barrier to stimulating agricultural productivity growth in Sub-Saharan Africa. This chart appears in the ERS data product for International Agricultural Productivity, updated October 2018.

The public sector of high-income countries accounts for a shrinking share of global spending on food and agricultural R&D

Monday, September 10, 2018

In high-income countries—such as the United States, Australia, and France—investment in agricultural research and development (R&D) has been a key factor in producing the new technologies that have raised output and reduced input use in agriculture. Recent ERS research found that public sectors in high-income countries accounted for a significant but declining share of total global spending on agricultural R&D. As recently as 1990, public-sector R&D spending by high-income countries accounted for about 36 percent of total public and private spending on food and agricultural research worldwide. That share had fallen to less than 25 percent by 2011. Although public agricultural R&D spending by high-income countries rose in 1990-2011, it rose much faster in developing countries. Total private R&D spending also rose much faster than public agricultural R&D spending in high-income countries during this time period. After adjusting for inflation, aggregate public agricultural R&D spending by high-income countries peaked in 2009, and subsequently declined. This chart appears in the ERS report Agricultural Research Investment and Policy Reform in High-Income Countries, released May 2018.

Since the late 1970s, agricultural productivity growth in high-income countries has raised output and reduced farm input use

Monday, August 6, 2018

In high-income countries—such as the United States, Australia, and France—increases in productivity typically account for nearly all growth in agricultural outputs. Productivity growth may also reduce the amounts of land, labor, capital, or other inputs used in farm production. Between 1961 and 2014, aggregate agricultural outputs in high-income countries increased by 98 percent (nearly doubling), while total inputs declined by 14 percent. Total inputs grew slowly until the late 1970s and have declined ever since. The mix of inputs also changed, with capital and material inputs substituting for labor and land. Overall, the growth in agricultural outputs and the decline in inputs implies that total factor productivity—the total productivity of the land, labor, capital, and material inputs employed in production—more than doubled over this 54-year period. Investment in agricultural research was a key factor in producing the new technologies that have raised productivity. This chart appears in the ERS report Agricultural Research Investment and Policy Reform in High-Income Countries, released May 2018.

Public spending on agricultural R&D by high-income countries grew after 1960, but is now in decline

Wednesday, May 30, 2018

On May 30, 2018, the Chart of Note article “Public spending on agricultural R&D by high-income countries grew after 1960, but is now in decline” was reposted to correct an error in the third sentence, which cited the spending peak as $18.7 billion instead of $18.6 billion.

For high-income countries as a group, public agricultural research expenditures (adjusted for inflation) grew rapidly after 1960. However, growth slowed markedly in recent decades and has now turned negative. In constant 2011 dollars, public agricultural R&D spending in these countries grew from $3.9 billion in 1960 to a peak of $18.6 billion in 2009, before declining to $17.5 billion by 2013 (the latest year with complete data). This decline in public R&D spending marked the first sustained fall in agricultural R&D investment by these countries in 50 years, and was most pronounced in the United States and Southern Europe. The United States continues to lead among high-income countries in public agricultural R&D spending, but the U.S. share of the total declined from 35 percent in 1960 to less than 25 percent by 2013. This chart appears in the ERS report Agricultural Research Investment and Policy Reform in High-Income Countries, released May 2018.

Farm inputs have shifted over time toward less use of labor and land, and more use of capital and intermediate goods

Monday, April 9, 2018

Between 1948 and 2015, total farm output nearly tripled, while farm inputs grew little. However, input composition has shifted considerably toward more use of farm machinery (part of capital inputs) and intermediate goods, such as seed, feed, energy use, fertilizer, pesticides, and purchased services. Inputs of intermediate goods and capital inputs (excluding land) grew by 134 percent and 78 percent, respectively. By comparison, labor inputs declined by 75 percent and land inputs fell by 24 percent. Many factors contributed to these input changes. For example, competing uses for labor and land from other sectors or purposes have raised the costs of those inputs. Technological advancements have also made inputs like machinery and agricultural chemicals more effective and affordable for farmers. This chart appears in the March 2018 Amber Waves data feature, "Agricultural Productivity Growth in the United States: 1948-2015."

U.S. agricultural productivity continued to grow over time, while the real price of agricultural outputs tended to decline

Tuesday, March 6, 2018

Productivity growth in the U.S. farm sector has implications for both U.S. and global food markets. The United States is one of the largest consumers and producers in world agricultural commodity markets. Slowing productivity growth that fails to keep pace with increasing food demand may lead to rising food prices. It may also put pressure on low-income households, as these households spend a greater share of their income on food. Transitory events—such as energy shocks or supply shortages due to bad weather—may cause agricultural commodity prices to rise, the long-term growth trend in U.S. agricultural productivity has enhanced food security and benefited consumers by reducing the real (inflation-adjusted) price of agricultural outputs over time. Between 1948 and 2015, total factor productivity increased by 152 percent, while real agricultural output price declined by nearly 65 percent. This chart appears in the March 2018 Amber Waves data feature, "Agricultural Productivity Growth in the United States: 1948-2015."

Intellectual property rights for new plant varieties have expanded

Monday, January 8, 2018

Intellectual property rights are intended to offer incentives for innovation by protecting new inventions from imitation and competition. When the modern U.S. Patent and Trademark Office was established in 1836, new plant varieties were considered products of nature and, therefore, not eligible for protection under any form of intellectual property. In 1930, asexually reproducing plants were the first to receive protection through plant patents, which have been issued primarily for fruits, tree nuts, and horticultural species. The remainder of the plant kingdom, including a broad range of commercial crops, became eligible for protection in 1970 with the introduction of plant variety protection certificates (PVPCs). However, PVPCs had exemptions for farmers to save seeds and for research uses. Full patent protection (without these exemptions) arrived in 1980 with the U.S. Supreme Court decision Diamond v. Chakrabarty. This ruling extended utility patent protection—the type of protection provided to most inventions in other areas—to plants. Despite being available for the least amount of time, annual utility patent grants for plant cultivars and lines have rapidly overtaken PVPCs and reached similar levels as plant patents. The rapid rise of utility patents mirrored the rapid rise in private research and development in the seed and agricultural biotech sector over a similar period. This chart updates data found in the ERS report Agricultural Resources and Environmental Indicators, 2006 Edition.

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