Public Agricultural Research Investment Helps Determine Productivity Growth

By Heisey, Paul; Wang, Sun Ling et al. | Amber Waves, March 2012 | Go to article overview

Public Agricultural Research Investment Helps Determine Productivity Growth


Heisey, Paul, Wang, Sun Ling, Fuglie, Keith, Amber Waves


Nearly all U.S. growth in agricultural output has come from increased productivity. Between 1948 and 2009, U.S. agricultural output rose 170 percent, but the aggregate of total inputs used in agriculture, such as land, labor, capital, and intermediate inputs like seed and fertilizer, has remained essentially unchanged. Rising output from existing inputs implies growth in agricultural productivity, which was 152 percent higher in 2009 than in 1948. The main driver of agricultural productivity growth is the application of new technologies to fanning. Robust productivity growth has allowed U.S. agriculture to hold down the cost and environmental consequences of growing more food and fiber.

Statistical models have found a strong relationship between public agricultural research and development (R&D) spending and agricultural productivity growth. Investments in productivityoriented research at public institutions affect productivity growth with a time lag, but the impacts persist for decades. Public agricultural R&D complements other factors, such as agricultural extension, farmer education, rural infrastructure, and private agricultural R&D, that contribute to agricultural productivity growth. However, productivity-oriented public agricultural research expenditures - excluding R&D on post-harvest, environmental, and rural development issues - have been declining since the mid-1990s (after adjusting for inflation).

Continued growth in U.S. agricultural productivity may depend critically on public investments in agricultural research.

ERS researchers used statistical models to simulate future agricultural productivity growth based on three possible scenarios for public agricultural R&D expenditures.

Scenario 1: Public research spending remains constant in today's (nominal) dollars and therefore declines in real (inflation-adjusted) terms. …

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