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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.

Productivity has driven the growth in U.S. agricultural output

Tuesday, November 14, 2017

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 while using less inputs. As a result, even as the amount of land and labor used in farming declined, total agricultural output more than doubled between 1948 and 2015. During this period, agricultural output grew at an average annual rate of 1.48 percent, compared to 0.1 percent for total farm inputs (including land, labor, machinery, and intermediate goods). The major source of output growth is the increase 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 2015, TFP grew at an average annual rate of 1.38 percent, accounting for more than 90 percent of output growth over that period. This chart appears in the ERS data product Agricultural Productivity in the U.S., updated October 2017.

Technological innovations have increased corn yields

Tuesday, September 19, 2017

With less labor and land being used in production over time, U.S. agriculture depends on raising the productivity of these resources for growth. Average national corn yield (a productivity measure) rose from around 30 bushels per acre in the 1930s (where it stood since USDA began measuring them in the 1860s) to nearly 180 bushels per acre in the present decade. This sustained growth in productivity was driven by the development and rapid adoption of a series of successive biological, chemical, and mechanical innovations. Every few years farmers adopt the latest hybrid seed variety, for example. These seeds are likely to have multiple genetically modified (GM) traits designed to protect the crop against pests and diseases or infer other valuable qualities—such as resistance to the corn borer, a major insect pest of the crop. Recently, the rapid adoption of tractor guidance systems has greatly improved the speed and efficiency of tillage and planting operations and the precision of seed, fertilizer, and pesticide applications. By 2010, such systems were used on 45 percent of corn planted acres. This chart updates data found in the ERS report, The Seed Industry in U.S. Agriculture: An Exploration of Data and Information on Crop Seed Markets, Regulation, Industry Structure, and Research and Development, released February 2004.

Public sector spending on agricultural research declining in the United States and Western Europe, but rising in China, India, and Brazil

Wednesday, September 13, 2017

U.S. public sector funding for agricultural R&D is falling, both in absolute terms and relative to major countries and regions. Between 1990 and 2013, the U.S. share of spending among nations with major public agricultural R&D investments fell from about 23 to 13 percent. This decline was driven by a combination of falling U.S. spending (lately mirrored in Western Europe) and rapidly rising spending in developing countries such as India and, especially, China. Chinese government spending on agricultural R&D rose nearly eightfold in real (inflation-adjusted) terms between 1990 and 2013, surpassing U.S. spending in 2008 and more than doubling it in 2013. In simple dollar terms, the decline in U.S. public sector funding has been more than offset by a rise in U.S. private research spending, but the two are not substitutes, as each tends to specialize in different kinds of R&D. This chart appears in the November 2016 Amber Waves feature, "U.S. Agricultural R&D in an Era of Falling Public Funding."

Gains in productivity have fueled the growth in U.S. agricultural output

Thursday, May 11, 2017

From 1948 to 2013, U.S. farm sector output grew by 170 percent with about the same level of farm input use over the period. This output growth resulted mainly from gains in productivity, as measured by total factor productivity (TFP)—the difference between the growth of aggregate output and growth of aggregate inputs (such as land and labor). Between 1948 and 2013, total output grew at an average annual rate of 1.52 percent, agricultural TFP at 1.47 percent, and input use at only 0.05 percent. Long-term agricultural productivity is fueled by innovations in animal/crop genetics, chemicals, equipment, and farm organization that result from public and private research and development. This chart appears in the ERS publication Selected charts from Ag and Food Statistics: Charting the Essentials, 2017, released April 28, 2017.

Rising agricultural productivity offsets declining input use in developed countries

Wednesday, October 12, 2016

Boosting agricultural productivity—producing more output from fewer inputs—is key to meeting expanding global food needs. Total Factor Productivity (TPF) offers a complete measure of agricultural performance, accounting for all of the land, labor, capital, and material resources used in the production process. Since the 1960s, agricultural TFP in developed countries has compensated for declining input use as output growth slowed. In more years, between 2001 and 2013, input growth in these countries declined across all factors of production for the first time. ERS estimates TFP growth using data from the Food and Agriculture Organization of the United Nations. This chart uses data from the ERS International Agricultural Productivity dataset.

Gains in productivity drive growth in U.S. agricultural output

Wednesday, September 14, 2016

U.S. agricultural output more than doubled between 1948 and 2013, growing on average at 1.52 percent annually. Total input use (for example, land, labor and materials such as seed and feed) grew at only 0.05 percent per year on average. Improvements in how efficiently inputs are transformed into outputs, known as Total Factor Productivity (TFP), fueled almost all of the output growth. Advancements in technology—such as improvements to machinery, seeds, and farm structures—enabled agricultural TFP to grow an average of 1.47 percent annually. This rate exceeded the productivity growth of most U.S. industries, according to data from the U.S. Bureau of Labor Statistics. In recent years, between 2007 and 2013, TFP growth has kept up with its historic rate. This strong productivity growth has offset the decline in the use of agricultural inputs, allowing agricultural output to continue to grow by 0.91 percent annually. A version of this chart is found in the September 2016 Amber Waves feature, "Productivity Growth Is Still the Major Driver in Growing U.S. Agricultural Output".

Genetically engineered corn and cotton with both herbicide tolerance and insect resistance are now the norm

Thursday, August 18, 2016

Genetically engineered (GE) seeds are widely used in U.S. field crop production. Herbicide-tolerant (HT) crops were developed to survive the application of certain herbicides that previously would have destroyed the crop along with the targeted weeds. Insect-resistant crops contain a gene from the soil bacterium Bacillus thuringiensis (Bt) that produces a protein that is toxic to specific insects. Seeds that have both herbicide-tolerant and insect-resistant traits are referred to as “stacked.” Recent data show that the adoption of stacked corn varieties has increased from 15 percent of U.S. corn acres in 2006 to 76 percent in 2016. Adoption rates for stacked cotton varieties have also grown, from 39 percent in 2006 to 80 percent in 2016. Generally, many different GE traits—each aimed at a specific herbicide or insect—can be stacked; varieties with three or four GE traits are now common. Research suggests that stacked corn seeds have higher yields than conventional seeds or seeds with only one GE trait. This chart is based on data found in the ERS data product, Adoption of Genetically Engineered Crops in the U.S., updated July 2016.

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