The American Journal of Agricultural Economics has recently published several new and important papers on agricultural productivity. Whether agriculture is becoming more or less productive is a critical question as it relates to sustainability (are we getting more while using less?), food security (can food production outpace population growth?), and consumer well-being (are food prices expected to rise or fall?).
These papers focus on "total" or "multifactor" productivity rather than just yield. Yield is a partial measure of productivity - it is the amount of output per unit of one input: land. One can increase yield by adding more of other inputs such as water, fertilizer, labor, etc. What we want is a measure of how much output has increased once we have accounted for uses of all inputs, and this is total or multifactor productivity.
The first paper by Matthew Andersen, Julian Alston, Phi Pardey, and Aaron Smith is worrisome. They write:
The second paper by Alejandro Plastina and Sergio Lence provides a deeper understanding behind the causes of productivity growth. They present a straightforward way to decompose multifactor productivity into six different factors: technical change, technical efficiency, allocative efficiency, returns to scale, output price markup, and the input price effect. They write:
Finally, there is Julian Alston's fellow's address from last year's AAEA meetings. In addition to providing an excellent literature review, he makes several important points. He argues that agricultural research is significantly under-funded relative to the benefits it provides in increased productivity:
Alston also points out that the main beneficiaries of productivity growth are consumers, and the farmers may or may not benefit. He writes:
This suggests something of a paradox. Farmer groups have often been some of the biggest supporters of agricultural research and are proponents of productivity growth, while consumers have been skeptical if not hostile toward many productivity-enhancing technologies on the farm. Yet, it is likely food consumers that have received the lion's share of the benefits from increases in agricultural productivity through greater food security and lower food prices.