Philip G. Pardey and Julian M. Alston
Over the past 100 years, productivity growth in U.S. agriculture radically reshaped the country’s farm sector and its role in the national economy. In 1900, agricultural output constituted 15.5 percent of U.S. GDP, and it took 5.7 million U.S. farms and 37.9 percent of the national labor force to feed and clothe 76 million U.S. consumers: a consumer-to-farmer ratio of 13:1. By 2017, agriculture had shrunk to 0.9 percent of GDP and the farm labor force to 1.1 percent of the national total. While the number of U.S. consumers had grown to 325 million, the number of farms had shrunk to just 2.0 million, increasing the consumer-to-farmer ratio to 159:1.
U.S. agricultural output increased, in aggregate, 4.6-fold from 1910 to 2007.1 The mixture of inputs changed dramatically. U.S. farms now use greater quantities of purchased inputs (such as seed, energy, and chemicals) than they did a century ago and much less labor: labor use in agriculture fell by 80 percent. With these opposing trends balancing each other, aggregate input use overall increased little (Alston and Pardey 2020). Hence, multifactor productivity (MFP)—the aggregate output relative to the aggregate of measured inputs—increased 3.5-fold, growing on average by 1.42 percent per year from 1910 to 2007.
How can U.S. agriculture now produce so much more output per year with little overall change in the measured use of inputs? The story is complicated. Fundamentally, major labor- and land-saving innovations and the associated structural transformation of agriculture were facilitated by public and private investments in research and development (R&D) and incentivized by changes in the broader economy. But these processes involved complex cause-and-effect relationships that are hard to disentangle.
Our account of the drivers of long-term productivity growth in U.S. agriculture focuses first on the direct role of R&D-driven growth through the stock of scientific knowledge.2 We then turn to the roles of technological innovation and the structural transformation of agriculture—farm size, specialization, what crops are grown where and when, how resources are used, and the roles of off-farm employment and part-time farming. We highlight the uneven evolving time path of U.S. agricultural productivity—in particular, a significant midcentury surge followed by a slowdown—which helps us as we try to identify the relative roles of different drivers at different times. We conclude the paper by considering the prospects for U.S. farm productivity growth in the face of emerging economic and environmental headwinds.