Responding to the triple challenge of food systems requires innovative and complete government policy packages, and increasing investments for R&D and innovation. Policy approaches that prioritise and facilitate innovation are better placed than other forms of support to deliver higher productivity and new opportunities to reconcile productivity and sustainability goals.
Sustainable productivity growth in agriculture
Productivity growth makes it possible to produce more with less. This happens when innovations lead to a more efficient use of land, fertilisers and other inputs, opening an opportunity to increase incomes and reduce the pressure on natural resources, such as water and soils. Sustainable productivity growth seeks to ensure that this is done sustainably thereby contributing to food production and to viable livelihoods, with limited negative impacts on the environment.
Key messages
Total Factor Productivity (TFP) measures the ratio between production and inputs in agriculture. Its growth represents the contribution of innovation and technology to production. By making it possible to produce more with less, TFP growth is critical to producing enough food, while limiting the use of natural resources.
As a result of productivity growth, the environmental impact per unit of food produced has fallen over time, as reflected in, for example, an annual reduction of 0.6% in the GHG emissions intensity of OECD countries from 2011 to 2020. However, total emissions from agriculture have grown at an annual rate of 0.8% and other environmental pressures, such as on water, remain in many countries.
The Declaration on Transformative Solutions for Sustainable Agriculture and Food Systems, adopted on 4 November 2022 at the Ministerial meeting of the OECD Committee for Agriculture, called on the OECD to facilitate robust and comparable measurements of sustainable agricultural productivity growth. The OECD uses the International Agricultural Productivity database from ERS and combines it with the OECD Agri-environmental Indicators database to improve the measurement of sustainable productivity. The OECD Network of Total Factor Productivity and the Environment is the international reference for these co-ordinated efforts.
Context
Following thirty years of high productivity growth, several countries now face a slowdown
Greater agricultural production can come from using more land or other inputs, or by improving the technology or the efficiency in the use of inputs. The latter is known as Total Factor Productivity (TFP) growth. Productivity has become the main driver of global agricultural growth since the 1990s, an opportunity to increase production without using additional inputs, some of which are harmful for the environment. However, after decades of increasing productivity growth, a slowdown is underway in several major countries, reducing the ability to adapt to climate change and other shocks. Lower productivity growth also puts pressure on resources, including land, with potential negative implications for global biodiversity and deforestation. Governments need a renewed commitment to sustainable productivity growth.
Comparing the agricultural productivity, sustainability, and resilience of countries
Since the 1980s, the European Union has had a respectable TFP performance, with growth rates ranging between 0.73% and 1.42% per year. The period between 2011 and 2019 saw a worldwide slowdown in productivity growth compared to the previous decade. Even though this reduction was less pronounced in the European Union, TFP was below the world average of 1.3% per year, but close to the OECD average of 0.9%. Some OECD countries achieved large improvements in TFP growth (1.5% in Japan and 2.5% in Canada), while others stagnated, in particular the United Kingdom, the United States, and Australia. The OECD Productivity-Sustainability-Resilience (PSR) Policy Framework compares the performance of different countries.
Innovation is a key driver of productivity growth and, with the right policy environment, an opportunity to reconcile multiple food systems goals in the European Union, such as food security, environmental sustainability, and livelihoods.
