Productivity growth in crops and livestock and implications to world food trade

Carlos E Ludena, Purdue University

Abstract

Previous research on the analysis of productivity growth in agriculture on world food trade patterns has been limited to the use of partial factor productivity (PFP) measures. However, PFP is an imperfect measure of productivity that sometimes can provide a misleading picture of performance. A more accurate measure of productivity is total factor productivity (TFP) which accounts for all relevant inputs and gives a more comprehensive assessment of productivity. However, TFP measurement has the problem of requiring a complete allocation of inputs to specific types of agricultural production. New developments in productivity measurement now allow calculating TFP growth at the sub-sector level without allocating all inputs to specific outputs. This research has extended previous work on productivity growth in livestock, estimating disaggregated productivity measures ruminants (beef and milk) and non ruminants (pigs and poultry). It then follows up with tests for convergence amongst regions, and provides forecasts for future farm productivity growth to the year 2040. Finally, we introduce these historical and forecasted TFP measures into a general equilibrium model to understand to what extent productivity growth in crops, ruminants and non-ruminants has affected world food trade patterns and the food processing sector. The results show that most of the regions in the sample evidence larger productivity gains in livestock than in crops. Within livestock, the non-ruminant sector is more dynamic than the ruminant sector, driving most of the productivity growth within the livestock aggregate. Given the rapid rates of productivity growth observed recently, non-ruminant and crop productivity in developing countries may gradually converge to the productivity levels of developed countries. For ruminants, the results show that productivity levels may be diverging between developed and developing countries. Our forecasts indicate higher TFP growth in livestock in the developing world, while TFP growth in crops in the industrialized countries is forecast to exceed that for ruminants, but fall short of non-ruminants. Finally, the results show that TFP growth in crops and livestock are able to explain part of the historical change in the composition of food trade, and perform better than PFP measures. In the context of trade projections, we show that there are significant differences between TFP and PFP measures.

Degree

Ph.D.

Advisors

Hertel, Purdue University.

Subject Area

Agricultural economics

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