Productivity growth in Australian Broadacre and Dairy industries Peter Gooday Branch Manager Productivity, water and fisheries ABARE

Overview… Trends in broadacre and dairy productivity growth When did productivity growth begin to slow? Where has productivity growth slowed? Why did productivity slow down? What is next?

Broadacre productivity growth 1.4%

Productivity growth has offset declining terms of trade in Australian agriculture… 1.4% Long term growth rate Broadacre productivity and terms of trade indices -1.6%

Broadacre productivity growth has enabled more output to be produced using fewer inputs… 1.4% 0.8% - 0.6% Long term growth rate Broadacre input, output and productivity indices

Broadacre productivity growth was stronger during the 1980s and 1990s… 1.4% 0.8% - 0.6% Long term growth rate Broadacre input, output and productivity indices 1.8%-1.3%

Broadacre input use intensity Long term growth rate 0.9% -0.7% -1.1% -1.7%

Increased dairy production has been driven by growth in inputs rather than productivity… 0.8% 3.9% 4.7% Long term growth rate Dairy input, output and productivity indices

Dairy productivity growth has slowed compared to earlier periods… 0.8% 3.9% 4.7% Long term growth rate Dairy input, output and productivity indices %-1.6%

Change in broadacre productivity, by state

The slowdown has been mostly restricted to cropping and dairy farms… Long term trends in TFP growth Note: Dairy trends begin from onwards

Do we need to worry? – Broadacre productivity index – 5 year moving average

Why might productivity growth be slowing? Slashed output Drought? R&D investment? Higher use of purchased inputs Reduced confidence Slowing growth in public R&D expenditure DRIVERS

Growth in public agricultural R&D expenditure has slowed…. Source: Mullen (2009)

Why might productivity growth be slowing? Drought? R&D investment? DRIVERS Other factors? Fewer ‘big gain’ technologies Ageing farm population Fewer expansion opportunities Changing research priorities Knowledge constraints

Challenges for productivity growth in Australian agriculture… How much R&D should be public/private funded? Where should public R&D be allocated? How much basic/applied research? How do we better communicate research to users? What policies are impeding structural adjustment? How could these policies be improved?

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