Solid productivity gains fuel U.S. ag sector growth

by Laura Lloyd
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Agriculture
Data show rebound from low levels between 2000-07.

WASHINGTON — Agricultural productivity in the United States during the period of 2007-13 rebounded from low levels in 2000-2007  and is moving ahead almost at the pace during 1990-2000, the Economic Research Service (E.R.S.) of the U.S. Department of Agriculture said in an update of its U.S. agricultural productivity accounts.

Revised and extended data show that, while annual productivity growth dropped from 1.46% in 1990-2000 to 0.6% annual growth in 2000-2007, it rose to 1.45% annual growth in the 2007-13 period.

“Strong productivity growth offset declining use of agricultural inputs (e.g., land and labor) during the latter period and enabled agricultural output (production) to continue to grow at a rate of 0.91% per year, which is comparable to that in 2000-07,” the E.R.S. said.

The E.R.S. defined productivity growth as the difference between the growth of aggregate output and the growth of all inputs taken together, called total factor productivity (T.F.P.), which “measures changes in the efficiency with which inputs are transformed into output,” the E.R.S. added.

Data showed that, from 1948 to 2013, agricultural output grew at an average annual rate of growth of 1.52%. T.F.P. growth accounted for almost all output growth during the period, since total input use grew at an average rate of only 0.05% per year on average.

“At an average annual rate of 1.47%, agricultural T.F.P. growth exceeded productivity growth in most U.S. industries, as reported by the U.S. Department of Labor’s Bureau of Labor Statistics,” the E.R.S. said.

The E.R.S. explained that most long-term productivity growth in agriculture is the result of technology advancement, although short-term productivity growth may be affected by unfavorable weather or other transitory factors. The E.R.S. cited 2012 as a year when use of agricultural inputs increased by about 2.5% but output fell by 1.4% because of a severe drought in the United States, and T.R.P. fell by about 4% that year.

The E.R.S. said the aggregate index of inputs grew little over the past 65 years, but the composition of inputs changed markedly, shifting from labor and land toward machinery and intermediate goods, including energy, agricultural chemicals, purchased services and service buildings.

According to the E.R.S.’s productivity accounts, “the persistent contraction in labor input contributed negatively to output growth over the entire period from 1948 to 2013.” However, in recent years (2007-13), this effect has lessened due to slowing in the decline of farm labor use. Between 1948 and 2013, improved labor quality through educational attainment contributed positively to input growth. Other changes in input trends also contributed to output growth during the period, the E.R.S. said.     
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