During the next 30 years, the world’s population will grow larger and more prosperous. Demand will soar for food and agricultural goods, including meat, dairy, fruits, vegetables, timber, oilseeds for cooking and industrial uses, and biomass for energy, heat, and cooking.
At the same time, the natural resource base and ecosystems are under stress from climate change, soil degradation, and poor water management.
Poverty, food insecurity, and malnutrition remain stubbornly high, condemning hundreds of millions of people to ill health and unfulfilled potential.
Accelerating productivity growth at all scales of production is imperative to meet the needs of consumers and address current and future threats to human and environmental well-being.
Large farms can maximize their potential productivity thanks to access to the latest innovations and agronomic information. Research shows that small-scale farms in places like Kenya, India, and Vietnam can be just as efficient as large-scale farms in places like Brazil, primarily if they use improved technologies, tools, and services designed for smaller farms. (Fugile et al., 2019)
Using the latest improvements in precision agriculture and data analytics, in combination with high yielding, herbicide-tolerant crops, a large-scale farmer in BRAZIL can produce soy for the global market without cutting down forests to increase output.
With healthier feed and improved housing, a small-scale dairy farmer selling to local markets in KENYA can increase milk output using fewer animals and generating less methane emissions.
By cultivating mangos with drip irrigation, a farmer in INDIA can harvest a robust crop using less land and water.
Integrating pig, feed crop, and aquaculture production enables a small-scale farmer in VIETNAM to sustainably increase output and diversify income sources.
The world’s agricultural producers face a daunting challenge: sustainably produce food, feed, fiber, and bioenergy for a growing population while grappling with a rapidly changing climate, a deteriorating natural resource base, uncertain markets, and evolving consumer tastes.
The task is complicated by the COVID-19 pandemic that upended local and global food systems and increased the already staggering number of people struggling with hunger, malnutrition, and poverty.
In agriculture, productivity increases when more agricultural products are produced with the same amount or fewer resources (Figure 1.) Total factor productivity tracks changes in how efficiently agricultural inputs (land, labor, fertilizer, feed, machinery, and livestock) are transformed into outputs (crops, livestock, and aquaculture products.)
Advanced seed varieties, precision mechanization, efficient nutrient- and water-management techniques, improved animal care practices, and attention to ecosystems services such as pollinators and soil health are the building blocks of productivity growth. Technologies and practices that strengthen productivity growth also support resilience for small-scale farmers vulnerable to climate change.
Productivity growth at all scales of production can reduce greenhouse gas (GHG) emissions, minimize agriculture’s impact on natural resources, and mitigate climate change.
Yield and total factor productivity are ratios of outputs to inputs, but they are not the same, and the distinction matters.
Yield measures output per unit of a single input, for example, the amount of crops harvested on a hectare of land. Yields can increase through productivity growth, but they can also increase by applying more inputs, called input intensification. Therefore, an increase in yield may or may not represent improvements in sustainability.
Total factor productivity captures the interaction between multiple agricultural inputs and outputs. (Ortiz-Bobea et al., 2021) TFP growth indicates that more farmers generate more crops, livestock, and aquaculture products with the same amount or less land, labor, fertilizer, feed, machinery, and livestock. As a result, TFP is a powerful metric for evaluating and monitoring the sustainability of agricultural systems.
Data show that TFP is still the primary driver of agricultural growth. Yet, TFP is growing globally at 1.36 percent (annual average, 2010–2019), less than the GAP Index target of 1.73 percent to sustainably meet the needs of consumers for food, feed, fiber, and bioenergy in 2050 (Figure 2.) Suppose the TFP growth rate remains at current levels. In that case, the “productivity gap” will grow over time, generating higher food prices, lower economic growth, increased food insecurity, and adoption of unsustainable production practices.
The TFP trend for small-scale farmers, many of whom live in low-income countries, is alarming. The 2015 GAP Index reported a TFP growth rate in low-income countries of a robust 1.5 percent. Today, TFP in low-income countries is contracting by an average of 0.31 percent per year. These farmers have minimal access to productivity-enhancing technologies or agronomic knowledge, exacerbating their vulnerability to climate change.
Driving the decline in productivity growth are methodological changes made by USDA ERS in the TFP calculation. A new data series from FAO provides a more comprehensive measure of agricultural capital. It shows that investment in capital goods (machinery, structures, breeding stock, tree stock, etc.) is higher than previously thought.
The data also indicates that the impact of climate change on TFP is accelerating. Strategies to improve productivity must incorporate climate resilience as growers grapple with an increase in the incidence and severity of climate change and weather disruptions. (Jayne et al., 2020)
India has seen strong TFP and output growth this century. The most recent data shows an average annual growth rate of 2.54 percent and output growth of 3.05 percent (2011-2019).
The implications of climate change for India’s agricultural sector are profound. By the end of the century, the mean summer temperature in India could increase by five degrees Celsius. This rapidly rising temperature, combined with changes in rainfall patterns, could cut yields for India’s major food crops by 10 percent by 2035. (Naresh et al., 2017)
In addition to the challenges for environmental sustainability, India’s small-scale farmers face significant obstacles to economic and social sustainability. Of the 147 million landholdings in India, 100 million are less than two hectares in size. (India Ministry of Agriculture, 2020) Family members do the bulk of the farm work because there are not enough off-farm jobs available and mechanization rental or ownership are more expensive than family or hired labor. (Fugile, 2017)
Not only is this an inefficient use of labor, but it also contributes to high rates of rural poverty and food insecurity. For example, the income from a one-hectare farm, even if it is high-yielding, must meet the needs of as many as 12 people. Nearly 90 percent of farmers with less than two hectares participate in a government food ration program. (India Ministry of Agriculture, 2020)
Climate change affects many dimensions of agricultural production and could threaten regional and global food security and social stability. In this essay, researchers from Virginia Tech and University of Wisconsin-Madison examine the dynamic relationship between extreme climate events and the resilience of farming systems through the lens of TFP growth.
As climate change tightens its grip on the world’s agricultural ecosystems, it is more important than ever to understand the interaction between the environment and productivity growth. The inputs and outputs incorporated in the TFP metric have a “marketable” value, making them easier to measure and estimate. Still, it does not include elements critical to agricultural productivity, including seeds, water, and ecosystems services.
Many of the world’s farmers do not purchase seeds every year. They use open-pollinated seed varieties, storing the seeds and reusing them for multiple seasons and generations. These indigenous varieties hold genetic secrets to climate change adaptation and mitigation. (See story below.) Nevertheless, it is difficult to calculate the market value of these seeds and incorporate them into the TFP calculation.
Water is equally challenging to value. Eighty percent of agriculture is rainfed, and in most places, the amount and value of irrigation and groundwater used in agricultural production are not measured.
The interaction between agricultural activity and the surrounding plants, water, soil, air, microbes, and animals can create benefits, known as ecosystem services, including pollination, erosion prevention, carbon sequestration, soil fertility, air and water quality control, and pest and disease management. Environmental outputs can also impact the productivity, health, and resilience of ecosystems. Some are desirable, such as soil carbon sequestration (see story below); others are undesirable and often unintended, including GHG emissions, water contamination, and soil degradation.
Total resource productivity (TRP) attempts to integrate ecosystem services and environmental outputs into TFP. TRP has the potential to be a powerful metric for evaluating and monitoring the productivity and sustainability of agricultural systems.
Ecosystem services, water, and seeds are “natural capital” in agricultural production. When combined with innovative technologies and agronomic best practices, they boost and sustain productivity growth and sustainability. (Gaffney et al., 2019) More research is needed to find a reliable way of estimating the cost of environmental inputs and output to be integrated with TFP. (Fuglie et al., 2016)
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