Has Growth in Productivity in Australian Broadacre Agriculture Slowed? A Historical View

Review Article

Ann Agric Crop Sci. 2016; 1(3): 1011.

Has Growth in Productivity in Australian Broadacre Agriculture Slowed? A Historical View

Yu Sheng¹*, John Denis Mullen² and Shiji Zhao¹

¹Department of Agriculture and Water Resource, Australian Bureau of Agricultural and Resource Economics

²Institute for Land, Water and Society, Charles Sturt University, Australia

*Corresponding author: Yu Sheng, Department of Agriculture and Water Resource, Australian Bureau of Agricultural and Resource Economics and Sciences, Australia

Received: August 24, 2016; Accepted: November 15, 2016; Published: November 29, 2016

Abstract

This paper uses the adjusted Cumulative Sum Square (CUSQ) index to examine the stability of historical productivity trend in Australian broad acre agriculture over the period of 1953 to 2007. The results show that a significant structural break in agricultural productivity occurred around the mid 1990s, and these results are robust across different industries and states. Further analysis of relative impacts of climate variability and investment in real agriculture Research and Development (R&D) shows that the slowdown in productivity growth is more likely to be driven by a long-term decline in public R&D investment than climate variability.

Keywords: Total Factor Productivity; Structural Change Analysis; CUSUM Index

Introduction

Productivity growth in Australian agriculture has long been regarded as an important source of wealth in Australia. The real value of agricultural production in Australia has been over $40b (2008$A’s) per annum since the late 90s (Figure 1). As productivity has grown at the rate of 2 per cent per annum, about two thirds of the value of production in recent years can be attributed to productivity growth since 1952-53. Agricultural productivity growth has been strong relative to other sectors of the Australian economy and relative to the agricultural sectors of other rich countries [1].