Wednesday, March 29, 2023
- 9:00 AM EDT
- 10:45 AM EDT
Moderated by Brent Hueth, USDA Economic Research Service
Input Measurement in Agricultural Productivity: the Case of Seed Use in the United States (Paper 1)
Presentation by Richard Nehring, USDA Economic Research Service
Authors: Richard Nehring, Sam Bailey, Daniel Bonin and Laura Dodson, USDA Economic Research Service
Modern agricultural biotechnology has facilitated the development of biological innovations embodied in new seeds, contributing to sustained agricultural productivity growth and helping ensure an abundance of food and fiber (Fernandez-Cornejo, The Seed Industry in U.S. Agriculture, AIB 786, 2004). Genetically engineered (GE) varieties with pest management traits became commercially available for major crops (corn, soybeans, and cotton) in 1996. My presentation today outlines preliminary empirical results on the estimation of the pricing of seed traits for corn, cotton, and soybeans for 1948 to the present, breaking out the estimation process into three major changes in seed use. More precisely ERS has developed a revised seed input file for the national and state-level productivity accounts that incorporates quality-adjusted price and quantity indices for 1948 to 1970, 1971 to 1995, and 1996 to the present. The first period covers the introduction of hybrid corn into all major corn producing regions. The second period covers the introduction of three-way crosses in corn production. And, the third period covers the introduction of genetically modified organisms (GMOs) into not only corn production, but cotton and soybeans as well, now accounting for more than 90 percent of acres planted in all three crops.
Understanding Productivity Gaps in Kenya and East Africa (Paper 2)
Presentation by Timothy Njagi, Tegemeo Institute
The Global Agricultural Report shows that productivity gaps have been declining in East Africa despite critical investments by government and development partners. I will explain the trends in agricultural productivity, decomposing the drivers and sources of growth, use the Kenya cereal sector as a case study to explain the observed trends. The presentation shall draw lessons on what has worked, existing challenges, and opportunities for improving agricultural productivity.
Measuring Biological Capital Assets (Paper 3)
Presentation by Richard Perrin, University of Nebraska, Lincoln
Authors: Richard Perrin, Adauto Rocha and Lilyan Fulginiti
Although international accounting conventions call for countries to include accounts for farm biological capital (cows, orchards, etc) in their income, wealth and productivity accounts, the U.S. and most other countries do not do so. This is due to two important reasons: investment is not easy to track because the capital assets are produced within the farm sector itself; and the age-productivity profiles of these capital assets do not match the monotonically-decreasing profile implied by the perpetual inventory method employed to account for other capital assets. Both ERS and BEA have explored potential accounts for biological capital, resulting in an ERS cooperative agreement with the University of Nebraska to develop a complete set of biological capital accounts for possible inclusion in the official ERS accounts. In this paper we present our basic approach and describe capital accounts created for two disparate categories: dairy cows and oranges.
Valuing Irrigation Water in World Agriculture (Paper 4)
Presentation by Keith Fuglie, USDA Economic Research Service
The use of water for irrigation is an important environmental resource in agricultural production. However, for most countries, information on the quantities and especially values of irrigation water is incomplete. This work uses differences in land rental rates between irrigated and unirrigated cropland to derive estimates of the shadow value of water by country. Drawing on data from FAO and OECD, estimates of irrigated water volume and area constructed by country over 1987-2017. Estimates of the shadow value of water for irrigation is then estimated using productivity differences between irrigated and dryland agriculture. Growth in agricultural TFP has in many cases raised the value of water used for irrigation. By 2017, the world-wide shadow value of irrigation water was about $140 billion per year, or $48 per cubic meter, with large differences by country.
Discussant for Papers 1-2: GianCarlo Moschini, Iowa State University
Discussant for Paper 3: Rachel Soloveichik, Bureau of Economic Analysis
Discussant for Paper 4: Jon Samuels, Bureau of Economic Analysis
- 12:20 PM EDT
Moderated by Michael Roberts, University of Hawai’i at Mānoa
Extreme Weather Events and Agricultural Total Factor Productivity Growth (Paper 1)
Presentation by Wei Zhang, Virginia Tech
Studies of the impacts of climate change on agriculture have so far disproportionately focused on the effects of changes in average seasonal temperature and precipitation on crop yields and production. These studies are limited in terms of evaluating the overall agricultural performance under a changing climate. We use a dynamic panel data model to estimate the impacts of extreme weather events on agricultural TFP growth rate. Our preliminary estimates show that extreme weather events have on average a negative and statistically significant impact on agricultural TFP growth rate. The estimated impacts are all negative across different event types and are statistically significant for storms and droughts. The long-run effects of extreme weather events on TFP growth rate are slightly smaller. Our estimates are robust to an alternative instrumental variable approach and across different subsamples.
Past and Future Climatic Impacts on U.S. Agricultural Productivity Growth (Paper 2)
Presentation by Ruixin Yang, George Mason University
Authors: Ruixin Yang, Sun Ling Wang, Qian Liu, and Mengfei Xin
Climate change is influencing our natural and social worlds in many ways. Higher temperature and the changing precipitation pattern have also affected the agricultural productivity. This study investigated the climate impacts on U.S. agricultural productivity growth using the historical climate data derived from NClimDiv database, the projected climate data from USGS, a panel of total factor productivity estimates for 48 contiguous states from Wang et al. (2022), and yields of selected crops from NASS. We apply both stepwise linear regression (SLR) with nonlinear (quadratic) terms and nonlinear regression tree models in our model building. A commonly used training and validating procedure in machine learning was applied to choose the “optimal” models with tuned hyperparameters. The preliminary results show that the climate change generally would reduce the growth rates of TFP and other major crop yields. As expected, the impacts are not uniform spatially, and crop type changes could also remedy the negative climate impacts due to heterogeneous impacts observed in the tentative results.
Climate-induced Productivity Changes and Agricultural Trade Impacts (Paper 3)
Presentation by Maros Ivanic, USDA Economic Research Service
Authors: Jayson Beckman and Maros Ivanic, USDA Economic Research Service
We analyze the implications of the forecasted changes in the climate for the shifts in the land types across countries, and the associated changes in yields due to the change in temperature and precipitations. We simulate the changes in the countries' agricultural yields in the GTAP model, to evaluate the implications of the climate change for future trade patterns, and the additional market impacts. We find that climate change is likely to have heterogenous impact on countries' agricultural production, resulting in some countries, such as the United States, to expand their exports, while other countries’ production shrinks.
Productivity and climate change in long-term scenarios of global agriculture (Paper 4)
Presentation by Ron Sands, USDA Economic Research Service
Long-term analysis of climate change impacts on agriculture requires use of climate, crop, and economic simulation models. The economic representation of agricultural productivity becomes important in at least two ways: future productivity growth may differ from historical patterns, and output from crop models does not translate directly into economic models. Retrospective analysis of productivity change should inform the structure and parameters used in long-term economic models. Crop models provide a point estimate of change in crop yield with climate change, but economic models allow substitution among inputs and crop yield is endogenous. Future research on climate change impacts on agriculture will benefit from comparing perspectives across econometric analysis, the structure of long-term economic simulation models, and the structure of crop simulation models.
- 2:50 PM EDT
Moderated by Robert Chambers, University of Maryland
Environmental stress, biotechnology, and agricultural productivity (Paper 1)
Presentation by Guanming Shi, University of Wisconsin-Madison
Biotechnology has potential to help adapt to changes in the environment and as a means to improve agricultural productivity. While biotech crops have spread rapidly across the United States, relatively little is known about the interaction between biotechnology and environmental changes. A prominent example is climate change, which has direct and indirect impacts on agricultural productivity. This paper uses observational data to investigate whether biotechnology affects crops' ability to deal with environmental stressors, including ground-level ozone. Using U.S. county-level agricultural production data, paired with remotely sensed ozone estimates, over the period 2003-2020, we estimate a fix effects model with instrumental variable for local ozone concentration. Our results suggest that biotech crops may have a disadvantage in dealing with ozone pollution. Yet, biotech adoption reduces yield distribution risks. Our results highlight the importance of breeding efforts that consider environmental stress, especially those climate change sensitive factors such as ozone pollution.
Impacts of undesirable inputs and output on state agricultural productivity (Paper 2)
Presentation by Roberto Mosheim, USDA Economic Research Service
Authors: Roberto Mosheim and Sun Ling Wang
Crop and livestock operations produce a large amount of excess nutrients and greenhouse gases. The interaction between fertilizer uses and subsequent benefits and costs is complex. On the one hand, crop plants require inorganic nutrients such as nitrogen, potash, and phosphate for crop production. On the other hand, excessive application of nutrients can damage air and water resources through soil erosion, runoff, volatilization, and leaching. According to EPA agriculture accounted for 11.2 percent of U.S. greenhouse in 2020. ERS notes that climate change has the potential to adversely impact agricultural productivity at the local and regional scale.
We use a production function augmented with four environmental variables with various panel data models both spatial and non-spatial. We employ data for spatial N, P, K from the fertilizer institute and State GHG Emissions and Removals data from EPA as well as a panel of multilateral outputs and inputs data at the U.S. state-level from USDA in the analysis.
Productivity and environmental sustainability growth (Paper 3)
Presentation by Ben Henderson, OECD
Increasing agricultural productivity growth sustainably is necessary to provide sufficient affordable and nutritious food for a growing global population, while supporting sector livelihoods and improving environmental outcomes. Innovations to grow agricultural total factor productivity (TFP) are often touted as a solution for simultaneously deliver on all these dimensions. This study compares and examines TFP and agri-environmental indictor (AEI) data to shed some light on the veracity of these claims. Following this an initial attempt is made to construct an environmentally-adjusted measure of TFP.
Accounting for environmental factors in measuring TFP (Paper 4)
Presentation by Robin Sickles, Rice University
We will explore how the directional distance function method can be modified to analyze productivity growth and to explicitly evaluate the role that undesirable outputs of the economy, such as carbon dioxide and other greenhouse gases, have on the frontier production process. We decompose productivity growth into efficiency change (catching up) and technology change (innovation) and explore implications of environmental accounting on the total factor productivity of OECD and Asian economies (Jeon, and Sickles, 2004). We also discuss a more disaggregated method utilized by Mosheim and Sickles (2020) to allow for environmental spillovers based on spatial econometric methods. The theoretical underpinnings of the methods are discussed in detail in Sickles and Zelenyuk (2019).
- 4:40 PM EDT
Moderated by Spiro Stefanou, USDA Economic Research Service
Robert Chambers, University of Maryland - Agricultural TFP and the Environment: Accounting or Adjusting?
Chris O'Donnell, University of Queensland - Sustainable productivity change in the U.S. dairy sector
Ben Henderson, OECD - Can we measure sustainable productivity growth with a single indicator?
Sun Ling Wang, USDA Economic Research Service - Accounting for environmental factors in U.S. agricultural productivity measurement
Robin Sickles, Rice University - General Discussion
- 4:45 PM EDT
Thursday, March 30, 2023
- 10:45 AM EDT
Moderated by James MacDonald, University of Maryland
Startups, private finance, and innovation in U.S. agriculture (Paper 1)
Presentation by Gregory Graff, Colorado State University
Authors: Gregory Graff, Charles DeGrazia, and Nicholas Rada
The funding and conduct of research and development (R&D) for agriculture by small and medium sized enterprises (SMEs) has historically been limited. Yet, over the last decade, private investments have poured into startups created to pursue a wide array of technologies and business models across agriculture, including development of high technologies such as software, robotics, or biotechnology as well as more traditional lines of business. We investigate the extent and the mechanisms by which private investments in startups impact innovation in the agricultural industry. How prevalent are innovative startups versus more traditional startups? How do the early-stage lifecycles of more and less innovative startups differ, in terms of growth rates, financing, rates of failure, and types of exit? Ultimately to what extent are innovative startups acquired by corporate incumbents or succeed to become competitive new entrants?
Chinese science & tech policies and their impact on agricultural productivity (Paper 2)
Presentation by Carl Pray, Rutgers, the State University of New Jersey
The Chinese government recognizes the importance of increasing agricultural total factor productivity in reaching their food security goals. The paper lists the government investments and science and technology policies of Chinese governments aimed at increasing productivity. The paper then presents empirical evidence that some of these policy instruments have been effective in increasing research, innovation and productivity of agribusiness firms. The next part of the paper, using a new data set of provincial policy and TFP data for the period 1980 to 2018, shows that public sector R&D and extension services of increased agricultural TFP and that private sector innovation is gradually increasing its contribution agricultural TFP growth. The concluding section brings together evidence on technology and policy changes that are likely to contribute to Chinese productivity growth in the near future.
Patent knowledge stock and U.S. agricultural productivity growth (Paper 3)
Presentation by Sun Ling Wang, USDA Economic Research Service
Authors: Matthew Clancy, Institute for Progress and Sun Ling Wang, USDA Economic Research Service
Research findings have shown positive effects of public R&D on regional agricultural productivity growth. However, there is little study on identifying the role of private R&D in agricultural productivity growth at the local level due to data limitation. Neither do we know much about how R&D in different subsectors interact with each other and affect agricultural productivity growth. Amid declining public agricultural research (in real terms), a better understanding of what kinds of research are most related to agricultural productivity is crucial. For this study we use rich new patent data to develop knowledge stock variables for various science and technology fields. We also employ a multilateral total factor productivity (TFP) panel for 48 contiguous U.S. states so we can identify the roles of different patent knowledge stocks on regional TFP growth. The paper will first discuss trends in agricultural patenting and productivity growth at the U.S. state level. Second, we examine the impacts of private R&D on US agricultural productivity growth using a state-by-year panel spanning 1976-2015 period.
R&D Lags in Economic Models (Paper 4)
Presentation by Julian M. Alston, University of California, Davis
Authors: Schanchao Wang, Julian M. Alston, and Philip G. Pardey
Quite different R&D lag structures predominate in studies of agricultural R&D compared with studies of R&D in other industries, and compared with studies of economic growth more broadly. Here we compare the main models and their implications using long-run data for U.S. agriculture. We reject the models predominantly used in studies of economic growth and industrial R&D both on prior grounds and using various statistical tests. The preferred model is a 50-year gamma lag distribution model. The estimated elasticity of MFP with respect to the knowledge stock is 0.28 and the implied marginal benefit-cost ratio is 23:1.
Discussant for Papers 1-2: Paul Heisey, USDA Economic Research Service, retired
Discussant for Papers 3-4: Nicholas Rada, US Patent and Trademark Office
- 12:20 PM EDT
Moderated by Lilyan Fulginiti, University of Nebraska, Lincoln
Global agricultural productivity under climate change and implications for food security (Paper 1)
Presentation by Madhur Gautam, World Bank
The World is off course to meet the targets for SDG2. Food insecurity has been on the rise since 2016, with acute food insecurity at its highest level since 2016, when formal monitoring started. COVID-19 and the more recent shocks to global food markets caused by the war in Ukraine have brought food insecurity, and particularly the prospects of large-scale famines, to the top of the global policy and development agendas, climate change is one of the key drivers of the emerging longer-term crisis in food insecurity, along with conflict and recurring economic shocks. This presentation will discuss some implications of the climate-productivity-food security nexus on global policy and development strategic priorities.
Policies and Productivity in Argentinian Agriculture: A Long-Term Perspective (Paper 2)
Presentation by Stephen Morgan, USDA Economic Research Service
Authors: Stephen Morgan, USDA-Economic Research Service, Eugenia Saini, Inter-American Institute for Cooperation in Agriculture (IICA-FONTAGRO) and Keith Fuglie, USDA-Economic Research Service
Argentina has a competitive agricultural sector that has consistently provided significant surpluses of crop and livestock commodities for export. However, both over time and across commodities, agriculture’s growth performance has been uneven. This paper presents long-term indexes of output and total factor productivity for Argentine agriculture covering the period from 1914 to 2020. For 1961 to 2020, the paper develops separate total factor productivity indices for the crop and beef sectors and examines technological and policy drivers of TFP growth in these sectors. Since the 1930s, productivity improvement rather than resource expansion has been the primary driver of growth in the country’s agriculture. Since the 1960s, crop output and productivity have grown much more rapidly than productivity in the cattle sector. The effect of agricultural and trade policies, which have generally reduced the country’s agricultural terms of trade, on long-term productivity performance is also explored.
Unravelling the effects of weather and climate induced shocks on farm labor wages in the United States (Paper 3)
Presentation by Eric Njuki, Research Agricultural Economist, USDA Economic Research Service
This study evaluates the channels through which changing patterns in weather and climate are transmitted to hired farm workers’ wages. The central argument is that changing patterns in weather and climate negatively impact agricultural output and yields, altering the marginal product of labor, and subsequently farm workers’ wages. The extent of these reductions is an empirical question that we seek to establish. By exploiting variations in nonlinear measures of temperature and precipitation—growing degree days, harmful degree days, and precipitation— distinct channels through which workers’ wages are impacted are identified. Findings indicate that the net effect of a one standard deviation change in growing degree days, harmful degree days, and excess precipitation is a 7 percent decline in hourly wages for the average worker.
- 3:00 PM EDT
Moderated by Keith Fuglie, USDA Economic Research Service
Estimating the Impact of CGIAR Research and Development on Global Poverty (Paper 1)
Presentation by Will Martin, IFPRI
Poverty reduction is a key goal of the agricultural research and development (R&D) undertaken by the CGIAR system. A great deal of work has demonstrated substantial productivity increases and high rates of returns from this R&D but providing reliable estimates of the resulting poverty reduction has proven challenging. This study builds on new estimates of productivity gains from Keith Fuglie and Ruben Echeverria. It uses a global Computable General Equilibrium model to capture impacts on commodity outputs and prices and then assesses the impacts on household incomes and poverty. To allow for changes in the marginal impacts of productivity growth on outputs, prices and household incomes, poverty impacts are estimated at five-yearly intervals by projecting the structure of households and economies back to the founding of the CGIAR system in 1971.
Estimating the effects of weather and climate change on agricultural productivity (Paper 2)
Presentation by Chris O'Donnell, University of Queensland
Explaining changes in productivity involves explaining changes in output and input quantities. Several economic models can be used for this purpose. This paper considers a model that accounts for weather and output price uncertainty. Changes in productivity are then explained in two steps. First, a stochastic frontier model is used to decompose a proper productivity index into measures of technical progress, environmental change, technical efficiency change, scale-and-mix efficiency change, and changes in statistical noise. Second, a system of input demand equations is used to further decompose the measure of scale-and-mix efficiency change into a measure of technical progress, a measure of input price change, and various measures of changes in expectations, allocative efficiency and statistical noise. The methodology is applied to U.S. agricultural data. The effects of weather and climate change on agricultural productivity are found to be small relative to the effects of changes in input prices.
The Link Between Extreme Heat and Crop Yields: Mechanisms, Consequences, & Practical Applications (Paper 3)
Presentation by Michael J. Roberts, University of Hawai’i at Mānoa
A fairly substantial literature now documents a strong and pervasive association between rainfed crop yields and extreme heat, a link that is not especially clear in agronomic models. This talk will review what we know about the underlying mechanisms of this link, how it varies over time and space, debate about its implications for climate change, and some practical applications link, including research into productivity enhancement, climate adaptation, crop forecasting, and risk management using weather-index insurance. The link can also be used as an instrument to identify supply and demand elasticities of agricultural commodities, which are essential for the evaluation of government policies.
- 4:45 PM EDT
Moderated by Spiro Stefanou, USDA Economic Research Service
Elise Golan, USDA - Productivity, Sustainability, and Policy
Julian Alston, University of California, Davis - Are Ideas Getting Harder to Find?
Ruth Bradley, Tyson Foods - The agri-business case for pursuing agricultural productivity and sustainability
Jennifer Billings, Corteve Agriscience - Collaborating for the Future – increasing farmer access to sustainable innovations through public-private partnerships
Madhur Gautam, The World Bank - General Discussion
- 5:00 PM EDT
This workshop is supported in part by USDA’s Economic Research Service (ERS) and National Institute of Food and Agriculture (NIFA). The findings and conclusions in the presentations are those of the author(s) and should not be construed to represent any official USDA or U.S. Government determination or policy.