What is happening to EU agricultural productivity growth?

Agricultural growth can come about through bringing new resources into production (new land, extension of irrigation, or input intensification per hectare) or through raising the productivity of existing resources. The appropriate measure of productivity growth in this context is Total Factor Productivity (TFP) growth, which is defined as the aggregate quantity of outputs produced by the agricultural sector divided by the aggregate quantity of inputs used to produce those outputs.

This measure contrasts with partial productivity measures such as growth in labour productivity or land productivity (yields per hectare) because an increase in these partial productivity measures can be achieved by increasing the intensity of use of other inputs (for example, crop yields can be increased by applying greater amounts of fertiliser or using more labour).… Read the rest

Impact of CAP subsidies on productivity

I recently had an exchange on Twitter with Martin Crowe, an Irish dairy farmer and agri-consultant, over the apparent stagnation in Irish agricultural output over the past 20 years (follow on @xAlan_Matthews and @martincrowe). I attributed this, in part, to the role that direct payments play in Irish farm incomes. I argued that “If 70% of your income is coming as a cheque in post there is less incentive to innovate to grow the remaining 30%” (direct payments make up around 70% of Irish farm income in an average year). Martin tweeted back that the “70% gives the security and confidence to try and improve the 30%”.… Read the rest

More thoughts on the European Innovation Partnership for Agriculture

One of the more widely-welcomed elements of the Commission’s legislative proposals for the CAP post 2013 was a greater emphasis on promoting innovation. In an earlier post in January, I discussed the three main components of this strategic emphasis, namely:
• Continued Pillar 2 support for investment in physical assets and farm extension services.
• A new European Innovation Partnership instrument for agricultural productivity and sustainability (EIP-A) also in the Rural Development Pillar.
• Increased funding amounting to €4.5 billion for agricultural and food research under the Commission’s Horizon 2020 research programme for research and innovation on food security, the bio-economy, and sustainable agriculture.… Read the rest