40
2.4 Productivity Rises, with Room to Grow
TFP accounts for the largest share of growth in global agricultural output today
(Fig. 2.3). In the 1960s, the Green Revolution introduced high-yielding new plant
varieties of wheat and rice to millions of small farmers in Mexico, India, and other
developing countries, along with access to fertilizers, irrigation, and machinery. As
farmers began to use those inputs more efficiently, the contribution of inputs per
land area to agriculture output declined (orange bar), and TFP’s contribution
increased (green bar).
Agricultural productivity supports the needs of producers, consumers, and the
environment. Productive use of inputs and capital helps farmers control costs during
volatile business cycles. Consumers benefit from lower food prices and natural
resources, particularly land and water, are conserved.
However, the most recent 10-year period of available data (2006–2015) reveals
that TFP’s contribution to output growth is declining and more output has been
generated by placing additional land into production. (Compare the two columns,
2001–2010 and 2006–2015, in Fig. 2.3.) Farmers around the world expanded their
production in response to lower global grain stocks and higher prices during
this period.
In high-income countries, improvements in productivity expand output while
reducing inputs used in agriculture and dramatically freezing land expansion
(Fig. 2.4). Innovations that have raised productivity include advanced crop technologies (genetically modified seeds, novel genetic and breeding approaches, and
improved crop protection products) along with advanced livestock breeding,
improved animal feed and care, precision agriculture, and better nutrient management. In the most recent decade, however, the downward trend in productivity
growth can also be seen in high-income countries. (Compare the two columns,
2001–2010 and 2006–2015, in Fig. 2.4.)
Low-income countries have mirrored the global trend in TFP growth and enjoyed
a substantial increase in agricultural output since the 1960s (Fig. 2.5). However,
since the 1980s, opening new land for agricultural production (red bar) remains the
primary driver of agricultural output. TFP’s contribution to agricultural output has
grown during the most recent 10-year period. (Compare the two columns on the
right in Fig. 2.5.)
Nonetheless, economic and political forces have driven land expansion in lowincome countries: transitions to market-based economies, the introduction of input
subsidies and prices supports, growing populations needing more land to cultivate,
and the extension of irrigation. While some land is suitable for agricultural expansion, greater productivity on existing cultivated land needs to be prioritized to minimize agriculture’s impact on soil, water, forests, and wildlife.
Low labor productivity on small-scale farms, predominantly found in lowincome country agricultural systems, largely accounts for the higher inputs per hectare of agricultural land results (Fig. 2.5, orange bar). Small-scale farms are
labor-intensive due to insufficient off-farm or urban employment opportunities that
could absorb the excess labor in rural areas. Small-scale farmers also struggle to
A. Steensland and M. Zeigler
2.4 Productivity Rises, with Room to Grow
TFP accounts for the largest share of growth in global agricultural output today
(Fig. 2.3). In the 1960s, the Green Revolution introduced high-yielding new plant
varieties of wheat and rice to millions of small farmers in Mexico, India, and other
developing countries, along with access to fertilizers, irrigation, and machinery. As
farmers began to use those inputs more efficiently, the contribution of inputs per
land area to agriculture output declined (orange bar), and TFP’s contribution
increased (green bar).
Agricultural productivity supports the needs of producers, consumers, and the
environment. Productive use of inputs and capital helps farmers control costs during
volatile business cycles. Consumers benefit from lower food prices and natural
resources, particularly land and water, are conserved.
However, the most recent 10-year period of available data (2006–2015) reveals
that TFP’s contribution to output growth is declining and more output has been
generated by placing additional land into production. (Compare the two columns,
2001–2010 and 2006–2015, in Fig. 2.3.) Farmers around the world expanded their
production in response to lower global grain stocks and higher prices during
this period.
In high-income countries, improvements in productivity expand output while
reducing inputs used in agriculture and dramatically freezing land expansion
(Fig. 2.4). Innovations that have raised productivity include advanced crop technologies (genetically modified seeds, novel genetic and breeding approaches, and
improved crop protection products) along with advanced livestock breeding,
improved animal feed and care, precision agriculture, and better nutrient management. In the most recent decade, however, the downward trend in productivity
growth can also be seen in high-income countries. (Compare the two columns,
2001–2010 and 2006–2015, in Fig. 2.4.)
Low-income countries have mirrored the global trend in TFP growth and enjoyed
a substantial increase in agricultural output since the 1960s (Fig. 2.5). However,
since the 1980s, opening new land for agricultural production (red bar) remains the
primary driver of agricultural output. TFP’s contribution to agricultural output has
grown during the most recent 10-year period. (Compare the two columns on the
right in Fig. 2.5.)
Nonetheless, economic and political forces have driven land expansion in lowincome countries: transitions to market-based economies, the introduction of input
subsidies and prices supports, growing populations needing more land to cultivate,
and the extension of irrigation. While some land is suitable for agricultural expansion, greater productivity on existing cultivated land needs to be prioritized to minimize agriculture’s impact on soil, water, forests, and wildlife.
Low labor productivity on small-scale farms, predominantly found in lowincome country agricultural systems, largely accounts for the higher inputs per hectare of agricultural land results (Fig. 2.5, orange bar). Small-scale farms are
labor-intensive due to insufficient off-farm or urban employment opportunities that
could absorb the excess labor in rural areas. Small-scale farmers also struggle to
A. Steensland and M. Zeigler