Total Factor Productivity drives growth in agricultural output. My translation: Increases in productivity are driving increases in total production, at a level more than three times larger than the impact of increasing inputs. Labor inputs are decreasing subtantially, which capital use is almost the same/marginally decreasing. Yet another nice chart of note from USDA Economic Research Service that merits some study (staring at).
Main source of U.S. agricultural output growth is productivity improvement. Learn more in today’s Chart of Note: https://lnkd.in/gKCXZmrD.
Ok, now explain this like I am 5. 😅
Michael Roberts
5mo
So, what drives TFP growth? Fundamentally, I don't think we have any idea (it's the "Solow residual"). A few pieces: lower ozone concentrations, higher CO2 concentrations, better weather in places that matter most, labor and chemical input saving technologies (GM crops and bigger tractors and combines). What share of TFP do these explain? Someone ought to write a paper on that. I expect the uncertainty bounds would be large.
Boehlje Chair for Managerial Economics in Agribusiness, Purdue University
6moUSDA charts of note are the flipping best.