Agricultural Research and Productivity

It is widely agreed that increased productivity, arising from innovation and changes in technology, is the main contributor to economic growth in U.S. agriculture. ERS data, research, and analyses quantify productivity improvements, the sources of improvement, and investigate the role of the public and private sectors in fostering U.S. agricultural productivity growth through research, education, infrastructure, and technological advances. Research on global agricultural productivity focuses on quantifying comparable productivity growth measures for countries and regions worldwide.

  • ERS' productivity accounts provide estimates of productivity growth for the aggregate U.S. farm sector for the period 1948-2017, and estimates of the growth and relative levels of productivity for the individual States for the period 1960-2004. According to the statistics (see the ERS data product, Agricultural Productivity in the U.S.), growth in farm sector output was due almost entirely to productivity growth over the post-war period.
  • Though total annual use of agricultural inputs has changed little since 1948, the mix of inputs shifted significantly, with intermediate inputs (e.g., agricultural chemicals and purchased services) use increasing and labor/land input use decreasing. The output mix has changed as well, with crop production growing faster than livestock production. See the ERS report, Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers (ERR-189, July 2015) for more information.
  • Studies have shown that public investment in agricultural research has resulted in large economic benefits with annual rates of return between 20 and 60 percent, see Economic Returns to Public Agricultural Research (EB-10, September 2007). The Agricultural Act of 2014 authorized funding for research, extension, and education—including competitive grants and capacity funding (i.e., awarded by formula) to Land Grant institutions and State agricultural experiment stations, and intramural funding for USDA research agencies, and identified high-priority research areas and new research initiatives. See Agricultural Act of 2014: Highlights and Implications and the section under Research for more information.

  • ERS-compiled statistics (see the ERS data product, Agricultural Research Funding in the Public and Private Sectors) show that since about 1980, growth rates in public R&D in the United States have been generally slow. Levels of private investment have generally been higher, but with greater variation. In the early 2000s, public and private agricultural research investments began to diverge more rapidly. Real (inflation-adjusted) spending for private agricultural and food R&D nearly doubled between 2003 and 2013, while real public R&D spending fell. By 2010, private R&D for agricultural inputs alone surpassed the public level for all research.

  • ERS research finds that growth rates in public R&D in high-income countries as a group have also slowed, see Agricultural Research Investment and Policy Reform in High-Income Countries (ERR-249, May 2018). For high-income countries as a group, public agricultural research expenditures (adjusted for inflation) grew rapidly after 1960. However, growth slowed markedly in recent decades and has now turned negative. In constant 2011 dollars, public agricultural R&D spending in these countries grew from $3.9 billion in 1960 to a peak of $18.6 billion in 2009, before declining to $17.5 billion by 2013 (the latest year with complete data). This decline in public R&D spending marked the first sustained fall in agricultural R&D investment by these countries in 50 years, and was most pronounced in the United States and Southern Europe. The United States continues to lead among high-income countries in public agricultural R&D spending, but the U.S. share of the total declined from 35 percent in 1960 to less than 25 percent by 2013. See also the May 2018 Amber Waves article, Agricultural Research in High-Income Countries Faces New Challenges as Public Funding Stalls. Also see the ERS data product, International Agricultural Productivity.
  • To estimate the likely impacts of public research and development (R&D) funding choices on productivity growth, ERS projected future productivity growth with alternative public R&D investment scenarios. This analysis found that declines in public R&D have a more pronounced effects in the longrun than in the short-term. Even if public R&D investment recovers, future productivity growth (in terms of total factor productivity) would take some time to resume due to the lag between research investment and application. See the September 2015 Amber Waves feature, U.S. Agricultural Productivity Growth: The Past, Challenges, and the Future for more information.