A recent study by the United States Department of Agriculture's Economic Research Service (USDA, ERS) has shed light on the significant strides in agricultural productivity in the U.S. over the past several decades. The study, focusing on the period from 1948 to 2021, found that total factor productivity (TFP) has been the main driver of growth in the farm sector.
According to the report, total U.S. farm output has grown by an average of 1.46 percent per year since 1948, reaching nearly three times its level at the start of the period. Remarkably, this growth has occurred despite a slight annual decline in total inputs, such as land, labor, capital, and intermediate inputs, which have decreased by 0.03 percent per year on average. This decrease highlights the efficiency gains in the sector, with TFP growing at an annual rate of 1.49 percent.
One of the key findings of the report is the shift in input composition. Over the years, there has been a decrease in the reliance on labor and land, with a corresponding increase in the use of intermediate inputs like fertilizers and pesticides, as well as durable capital assets. These changes reflect a broader trend towards more intensive and technologically advanced farming practices.
The quality of these inputs has also seen significant improvements. For instance, fertilizers and pesticides have evolved considerably, with enhancements in their efficacy and environmental impact. The USDA, ERS tracks these changes by adjusting the measures of input quantities for quality changes, ensuring that the productivity statistics accurately reflect true efficiency improvements rather than just increased input use.
Labor quality, in particular, has seen notable improvements. The study's wage function estimates, which take into account factors such as farmwork experience, education, and language skills, suggest that the quality of purchased contracted labor services has more than doubled over the last three decades. This improvement has contributed an average of 0.11 percentage points to annual output growth since 1948.
However, the report also notes challenges, such as the urbanization and industrialization that have led to the loss of some high-quality farmland. Moreover, the complexity of measuring agricultural productivity is underscored by the need for detailed and quality-adjusted data on various inputs.
Overall, the USDA, ERS report provides a comprehensive look at the factors driving U.S. agricultural productivity, highlighting both the achievements and ongoing challenges in the sector. It emphasizes the importance of continued innovation and efficiency improvements in sustaining the growth and sustainability of U.S. agriculture.
