Canada’s agricultural productivity growth has slowed since 2011, which is consistent with overall productivity trends around the globe. This slowdown has occurred when food security concerns are heightened and climate change disrupts food production. Innovation and technology can rekindle productivity growth going forward. Assuming the Canadian agriculture industry returns productivity growth to the plateau we recorded two decades ago, this would add as much as $30 billion in net cash income over ten years. Efforts and resources to spark innovation can boost agriculture productivity growth and enhance food security and sustainability.
A simple definition of productivity
Agricultural productivity measures the quantity of goods and services produced with a given quantity of inputs. It evaluates how inputs such as labour, capital, land, and material (fertilizer, feed, etc.) are transformed into outputs such as crops, livestock, and aquaculture products. Total factor productivity (TFP) measures the combined effects of new technologies, efficiency improvements and economies of scale.
TFP growth is achieved when producers increase their output using the same or smaller quantities of inputs. In other words, TFP growth rises when producers implement new technology or find efficiencies in how they mix and utilize fewer farm inputs to increase output. Accelerated growth in TFP growth can lead to an expansion of the food supply and boost the ratio of farm product prices to farm input prices paid by farm operators.
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