Why is lagging total factor productivity growth such a concern?
Reduced total factor productivity growth reduces competitiveness in global agricultural markets, adversely affecting trade balances and economic stability. It also deters investment in the agricultural sector, further stifling innovation and growth. Socially, the slowdown exacerbates inequalities, particularly impacting smallholder farmers and rural communities, and widens the gap between urban and rural prosperity.
Reduced productivity growth also hampers the agricultural sector’s ability to adapt to climate change, compromising global food supply stability. A failure to reverse the declining total factor productivity growth trend also may lead to rising food prices, disproportionately affecting low-income households and exacerbating poverty and hunger. Environmentally, to compensate for lower productivity growth, countries may overuse inputs or natural resources, causing environmental degradation and long-term ecological damage.
“Tackling agricultural productivity growth will require cooperation across political and philosophical lines throughout the food system,” said Agnew, associate director of CALS Global. “Using our resources wisely and most efficiently is applicable to every farmer, in every farming system, at every scale of production.”
South Asia’s total factor productivity surge
The 2024 GAP Report finds that South Asia has emerged as a global leader in average annual total factor productivity growth during 2013-22 through significant public and private investment in research and development, mechanization adoption, and information, communication, and technology innovations. The region experienced 1.4 percent annual growth, outpacing other regions, including North America.
During 2013-22, the United States experienced negative total factor productivity growth, averaging -0.21 percent annually. This downturn can be attributed, in part, to a reduction in public funding for agricultural research and development.
As the home of the Green Revolution, South Asia is using evolving approaches to pursuing sustainable productivity growth, offering actionable policy and investment insights to other world regions that are struggling with lagging total factor productivity growth. However, the report makes it clear that public and private research and development alone will not suffice to achieve the target annual total factor productivity (TFP) growth rate. Bridging the “valley of death” must be a top priority in the coming decade.
“South Asia’s TFP growth highlights the critical role of innovation and investment,” Nakelse said. “Achieving sustainable productivity growth requires bridging the gap between research and widespread adoption. This lesson is vital for all regions seeking to overcome challenges and boost agricultural efficiency.”
GAP Report launch event
The launch event at the National Press Club brought together policymakers, farmers, and private sector leaders from around the world to discuss the report’s findings and explore innovative solutions to accelerate agricultural productivity growth.
The event featured two panel discussions: a multisectoral panel on successful bundling approaches and an all-farmer panel providing firsthand insights from the field.
Notable experts contributing to the launch event included Basil Gooden, under secretary for rural development in the U.S. Department of Agriculture; Robert Bertram, chief scientist in the U.S. Agency for International Development’s Bureau of Resilience and Food Security; and Alejandra Castro, global head of partnerships-international organizations for Bayer.
Beyond the GAP Initiative, Virginia Tech was represented in a panel discussion by Mario Ortez Amador, collegiate assistant professor of agribusiness and entrepreneurship in the Department of Agricultural and Applied Economics, and in closing remarks by Mario Ferruzzi, the recently appointed dean of the College of Agriculture and Life Sciences.
Recommended priorities
The 2024 GAP Report outlines several policy and investment priorities to drive agricultural productivity growth:
- Invest in agricultural innovation systems: Agriculture innovation systems create dissemination and adoption pathways for existing and new knowledge, technologies, and practices. This includes the infrastructure, human capital and skills development, financial systems, partnerships, socio-cultural considerations, and environmental conditions required for producers at all scales of production, but especially smallholder producers, to access and sustainably adopt productivity-enhancing tools.
- Expand robust and resilient market access: Producers at all scales of production must be able to access competitive input and output markets. Price discovery, minimized search costs, and information transparency help producers to make informed decisions on the inputs required to optimize productivity and profitability.
- Strengthen regional and global trade: Regional and global trade have demonstrated positive impacts on agricultural productivity growth by opening up larger markets, creating opportunities for specialization, and encouraging adoption of productivity-enhancing tools.
- Improve quality and reduce loss of outputs: Reducing food loss and waste and improving output quality contribute to agricultural productivity growth by increasing both the value and quantity of usable output from the same or fewer inputs. As pressures from changing climate, pests, disease, and limited access to resources such as affordable financing continue to intensify, it is essential to tailor food loss and waste reduction policies and technologies to specific commodities and local contexts.
- Cultivate partnerships and cooperation: Partnerships activate strong agricultural innovation systems and accelerate the development and dissemination of technologies, practices, and knowledge by tailoring productivity-enhancing tools for different contexts.
By strategically bundling production tools with socio-economic, policy, and distribution mechanisms, we can power productivity growth and create bridges across the “valley of death” tailored to local contexts and cultures, according to the report.
