Productivity Growth in strongUstrong.S. Agriculture - USDA ERS.pdfVIP

UUnniitteedd SSttaatteess DDeeppaarrttmmeenntt ooff AAggrriiccuullttuurree EEccoonnoommiicc RReesseeaarrcchh SSeerrvviiccee Productivity Growth in U.S. Agriculture Keith O. Fuglie, James M. MacDonald, and Eldon Ball ECONOMIC BRIEF NUMBER 9 • September 2007 Gains in productivity have been a driving force for growth in U.S. agriculture. The effects of these changes over the second half of the 20th century were dramatic: between 1950 and 2000, the aver- age amount of milk produced per cow increased from 5,314 pounds to 18,201 pounds per year, the average yield of corn rose from 39 bushels to 153 bushels per acre, and each farmer in 2000 pro- duced on average 12 times as much farm output per hour worked as a farmer did in 1950. The devel- opment of new technology was a primary factor in these improvements. ERS has extended its productivity accounts to cover the period from 1948 through 2004. This sta- tistical series can be used to identify the separate roles of changes in input use and changes in tech- nology, as measured by total factor productivity growth, in driving growth in U.S. agricultural out- put. While measured agricultural productivity growth can fluctuate sharply from year to year, large- ly in response to weather developments, the longrun trends have remained quite high, particularly when compared with the private nonfarm economy. After 1980, capital, land, labor, chemical, and energy inputs to agriculture fell, even as agricultural output continued to grow, and increased pro- ductivity hence drove all of the output growth. In turn, high rates of productivity growth limited price increases—between 1948 and 2004, agricultural commodity prices rose at less than half the rate of economywide prices. This bulletin is one of two new products by ERS on productivity in U.S. agriculture. The other bul- letin reviews the return to public investment in agricultural research and its impact on producti