Productivity Has Replaced Resource Intensification as the Primary Source of Growth in World Agriculture
The figure below decomposes global agricultural growth (measured by the height of the bars, in average annual percent growth) into growth due to expanding the use of resources and to raising TFP. The chart shows that output growth was slowing in the 1970s and 1980s but then accelerated in the 1990s and 2000s. In the latest period (2001-16), global output of total crop and livestock commodities grew by an average rate of 2.47 percent per year. During this period, global agricultural TFP increased an annual rate of 1.91 percent.
The different colors of the bars show how much of total output growth came from bringing new resources into production, including expansion of agricultural land, extension of irrigation to existing cropland (a form of land augmentation), and the intensification of input use (more labor, capital and material inputs per acre), and how much came about by raising the TFP of these resources. In the decades prior to 1990, most output growth came about from intensification of input use. Bringing new land into agriculture production and extending irrigation to existing agricultural land were also important sources of growth. In the 1991-2000 and 2001-2016 periods in the chart, the rate of growth in agricultural resources (labor, capital, etc.) significantly slowed. What allowed agricultural output to continue to grow despite this slowdown in agricultural resources is productivity—getting more output from existing resources. TFP growth results from the adoption of new technologies and management practices and other efficiency improvements in farming around the world, and since 2001 has accounted for 77 percent of total growth in agricultural output worldwide.
Acceleration in Recent Global TFP Growth Has Come About Largely Because of Improved Productivity Performance in Developing Countries
While productivity has been the major source of agricultural growth in developed countries for at least half a century, the acceleration of global TFP growth since 1990 came about largely because of improved productivity performance in developing countries and, to some extent, in the transition economies of the former Soviet Union and Eastern Europe. Figure 2 shows annual average agricultural TFP growth rates by country since 1971. Agricultural TFP grew most rapidly in the dark-colored countries, and most slowly (or not at all) in the yellow-colored countries. Strengthening the capacity of national agricultural research and extension systems to develop and deliver new agricultural technologies to farmers have been key factors in raising agricultural productivity (Evenson and Fuglie, 2010). Long-term investments in agricultural research were especially important to sustaining higher agricultural TFP growth rates in large, rapidly developing countries such as Brazil (Rada and Valdes, 2012) and India (Rada and Schimmelpfennig, 2015). Chinese agriculture benefited enormously from institutional and economic reforms as well as technological changes resulting from investments in research (Fan, 1991; Lin, 1992; Jin et al., 2002). Russian agriculture rebounded following the early 1990s economic transition from a planned to a market economy, and the southern region of the country achieved substantial productivity improvement while other regions have lagged (Rada et al., 2017). Under-investment in agricultural research remains an important barrier to stimulating agricultural productivity growth in Sub-Saharan Africa (Fuglie and Rada, 2013).
Productivity and Agricultural Output Growth Vary Across Country Income Groups
Another view of agricultural output and productivity performance is given in the figure below, which shows trends in agricultural output and input use from 1961 to 2016 for countries grouped by their 2017 per capita income level (as classified by the World Bank). The indexes show the growth in total agricultural outputs and total input use relative to 1961 levels. In high income countries, agricultural output has grown relatively slowly (but doubling over 1961-2016) while total input use has declined. Agricultural output has grown most rapidly in middle income countries, where productivity began to take off in the 1990s. Output has also grown fairly rapidly in low income countries (many of which are in Sub-Saharan Africa), but growth here has relied heavily on bringing more inputs into production rather than on raising productivity.