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Global Ag Growth is Both Robust, Uneven

November 12, 2012
By: Ed Clark, Top Producer Business and Issues Editor
 
 

Regions vary in total factor productivity

Global agriculture has an impressive growth story to tell, but the pace of growth is markedly  uneven, both country to country and even within countries. One important productivity measure—total factor productivity (TFP)—is showing rapid growth at the global level led by improved  performance in China and Brazil, although the global rate of growth in harvested yield for major grains and oilseeds has slowed, according to a report by the USDA–Economic Research Service.

During the past 50 years, industrialized countries have consistently achieved the highest levels of agricultural output per worker and per acre of land. However, the developed countries of  Southeast Asia have the world’s highest yields, while North America and Oceania have the highest output per agricultural worker. Developing countries lag far behind productivity measures but have narrowed the gap. Southeast Asia, China and Latin America are now approaching the land and  labor productivity levels achieved by today’s industrialized nations in the 1960s.

Global agricultural output growth has remained remarkably consistent throughout the past five decades—2.7% per year in the 1960s and between 2.1% and 2.5% average annual growth in each decade that followed. However, the growth rate in cereal yield per acre harvested showed signs of slowing after 1990. One reason for the decline is that area harvested yield is not refl ected in  total agricultural yield because of land-use intensifi cation. More double-cropping and less idle cropland means more harvests per year. This can keep cropland productivity rising even if yield per harvest is stagnant. Because of that, economists argue that TFP is a better measure of  technological change.

The research shows wide differences in TFP. In the U.S., productivity growth is moderately strong in the Corn Belt and Lake States, but low in the Plains States, Appalachia and the major horticultural states of California and Florida. China, meanwhile, shows strong TFP growth in  coastal areas but less so in the interior. Brazil has robust TFP growth in coastal areas and in some  parts of the interior, such as Mato Grosso, in the Cerrado. Productivity growth in the former  Soviet Union countries, which was practically nonexistent during the Soviet era, began taking off after 2001. By 2009, however, gross agricultural output was still below Soviet-era levels except in Central Asia and Caucasia.

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FEATURED IN: Top Producer - November 2012

 
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