Solution to land tenure system in agriculture

 

Solution to land tenure system in agriculture

A New Angle For Investing In Climate Resilience: Land Use 


Mercy Corps Ventures, the venture capital arm of Mercy Corps, invests in startups building climate resilience and financial resilience for communities across the world. We’ve supported 30+ ventures to scale and raise over $100 million in follow-on capital. Read on to learn about the role our ventures play in building a world where everyone can prosper. Whether overtly flagged or not, land use is at the heart of nearly all discussions on climate change and adaptation. Extractive economic systems, market failures and mismanagement of our collective commons have driven us to intensify pressure on degraded land, incentivize harmful agricultural practices and ultimately, expand the destruction of our biodiversity. In building out our Climate Resilience thesis at Mercy Corps Ventures (MCV), we have long recognized that there is the confluence of powerful commercial and impact opportunities within the land use space — from incentivizing smallholders to adopt sustainable practices and improving supply chain resilience, to the creation of new risk transfer and financial products centered around non-extractive land use models. To catalyze a shift in land use that meaningfully moves the bar, we are exploring the following areas… Land tenure The scale of land insecurity is daunting; approximately 72% of the world’s population—more than 4 billion people—live on physical property for which they do not hold formal rights or documentation. In many countries, people have little, if any, protection for their land, and are vulnerable to the risk of land disputes, fraud, and evictions. In fact, in many countries, landlessness is used as the core predictor of poverty. So property rights represent the key institutional asset on which people often build their livelihoods. The World Bank considers “secure land tenure… central to the fight against climate change.” From an adaptation perspective, a growing body of research is concluding that land tenure is critical for the individual and collective adoption of any adaptation practices, assets, or strategies. A recent study from Benin concluded: "…land ownership has a positive effect on the decision to adopt any adaptation strategy. Subsequently, securing farmers’ property rights would help to enhance their capacity to adapt to climate change." As we approach grand challenges in food security and rural livelihoods linked to climate change, secure land tenure is a foundational step toward sustainable and equitable land use. Models and technologies that are able to attribute land use history (as a form of digital ID) and/or secure land tenure for individuals and communities present a massive opportunity. In urban areas, secure land tenure unlocks wealth (perhaps upwards of $10 trillion), commerce, and infrastructure; in rural areas, it is the basis for more resilient supply chains that corporations, regulators, and consumers are looking to build. In agriculture specifically, farmers have little incentive or ability to take on the massive financial risk and disruption to engage in yield enhancing replanting programs and activities. But, with formal land titles, smallholders have security and ownership, allowing them to unlock access to the tools they need to improve their livelihoods, and are more likely to invest in productivity and expand production. Exciting solutions are emerging in this space. Meridia allows its agribusiness customers, like the Hershey Company and Unilever, to use the underlying surveying data to extend customary and formal titles to smallholders in their value chain. And Suyo has been recognized as a leader in Colombia for facilitating thousands of formal hard titles to households living in post-conflict zones and urban settlements. Geospatial data collection and analytics This encapsulates data layers from the first mile (such as who occupies or farms a plot of land, the age/type/quality of crops or soil, etc.) to the community level (infrastructure, hydrology maps, commercial hubs) to the national or regional level (terrain, political boundaries, ports). Advances in remote sensing over the past 40 years have unlocked amazing capabilities (like measuring carbon sequestration in soil, powering precision agricultural advice and autonomous farming or predicting floods) that could dramatically alter the land use behavior and incentives of individuals, communities, and governments. The first mile data layer remains elusive and expensive in emerging markets; it is also critical to the design, validation, and distribution of nearly all products and services (from ground truthing a parametric insurance product to optimizing a precision agriculture algorithm to the issuance of carbon credits). Within this sub-theme, startups are building, consolidating and/or validating critical data layers and generating novel analytics on top of these. Cloud to Street leverages a range of satellites and its proprietary algorithms to continuously monitor over 122 million people globally for flood risk in real-time. Not only does this support improved planning and disaster response, but is serving as the foundation for the creation of an entirely new suite of flood insurance products. Alongside land tenure, Meridia is a world leader in first-mile surveying and data collection, with the proven ability to generate hyper-detailed farm data on over 2,000 smallholder parcels a week for the supply chains of some of the world’s biggest agribusinesses (i.E. Unilever, Mondelez). Finance / Web3 This bucket builds upon the first two — and is where things get exciting. As an example, a major inhibitor to farmers to adopt regenerative agricultural practices is a lack of right-fit, long-term financing. This might require letting land lay fallow, leaving farmers without an income stream for a few years and then requiring a large investment in an entirely new planting scheme. Risk transfer products, like agricultural microinsurance (see leaders like Gramcover, Pula, and WRMS), are perhaps the first wave of financial products and most directly linked to adaptation. By providing downside protection against catastrophic events, these insurance products ensure farmers don’t get caught in a poverty trap and are in a position to build a long-term business. Powered in part by remote sensing, their proprietary models, datasets, and trust is also unlocking additional value for farmers: We have also been heartened by two new developments: the buoying of the carbon markets and the emergence of decentralized finance (DeFi) and Web3. While the carbon markets are volatile, they inherently represent a new structure for economically rewarding non-extractive and sustainable land use. While early, we are seeing projects and startups leveraging the unique advantages of Web3 (transparency, new economic incentive models, ability to quickly mobilize a global community) to reimagine how carbon markets can drive an entirely new paradigm of land use. If you need to coordinate billions and trillions of economic activity, crypto and Web3 is potentially the bottom-up architecture and approach to make it happen. Protocols themselves are reorienting themselves toward this end and making bold moves to ground their reserves in real world sustainable assets. Celo’s Climate Collective is a prime example of this (and one which we are particularly excited about given that Celo is optimally built for use in emerging markets). This space is new, but burgeoning — Loam, Moss.Earth, Nori, and Klima DAO are a few we have been tracking closely the past year. Terra0 is perhaps one of the more intriguing projects. Built on the Ethereum network, this decentralized self-owned cybernetic forest aims to create a new economic model for resilient ecosystems. While the scale of collective action needed to confront climate change is daunting, the increasing confluence of the three areas above means the flywheel is starting to spin. For Web3 to deliver on its true promise (e.G. To reach those most marginalized, at-risk and excluded from current systems), it will have to build upon the data, analytics, contracts (explicit or customary) and other innovations unlocked via recent advances in geospatial tech and land tenure. Over the next two to three years, we believe there will be a healthy constellation of investment opportunities that meet the moment we are in.



Food Security, Agriculture, And Livelihoods 


Hunger is not inevitable. It is a question of justice. The world produces more food than at any time in history. Yet one in eight people go to bed hungry every night. In developing countries, the hungry are often farmers. Small-scale farmers often lack basic necessities, such as access to fertile land, water, credit, knowledge, and extension services. Women, who grow much of the world’s food, face some of the biggest hurdles of all. Malnutrition, disease, chronic rural poverty, and stunted economic development result when small farmers cannot earn decent livelihoods. Climate change and increasingly erratic weather patterns are compounding these problems, disrupting agriculture and food supplies, and making small-scale farming in many regions harder and more precarious. Oxfam works with partners to tackle the injustice of food insecurity and hunger by unlocking the potential of small-scale farmers—particularly women. Helping small-scale farmers to be more productive can lift their families out of poverty and end the cycle of food insecurity that threatens communities and whole nations. It can generate income that families can invest in their children, and it can sow the seeds of economic development. Secure land tenure, appropriate technology, strong and democratic institutions, and policies that are fair to smallholders can make all the difference. We believe that governments need to: Invest in research and development, basic infrastructure, and extension services tailored for the climate, soil, geography, markets, and challenges small-scale producers in their countries face. Create and strengthen institutions and regulations that enable small-scale farmers to claim their rights and protect their resources, including access to land and water. Eliminate gender discrimination to ensure that women farmers have the same opportunities as their male counterparts. Assist small-scale farmers so that they can adopt sustainable practices and adapt to climate change. Activities Our agriculture and food security programs and advocacy promote locally sustainable solutions that meet the needs of small-scale producers, particularly women. Through focused and targeted advocacy, we also tackle the underlying policies and power imbalances that keep people in poverty. Policy, advocacy, and campaigning Oxfam America works with civil society organizations (CSOs) and communities to empower small-scale producers. We encourage governments and companies to enact policies and make investments that benefit smallholders, especially women food producers. We analyze decisions and investments that affect the livelihoods of small-scale producers and help hold governments, international institutions, and companies accountable. We believe that helping farmers voice their concerns and participate in agriculture decision-making can play a vital role in boosting production and creating a world free from hunger. In recent years, volatile food prices and the specter of food insecurity has heightened global awareness of the importance of smallholder agriculture. Oxfam America has seized this opportunity to press for US government assistance to be more responsive and targeted to small-scale food producers. Through in-country research and advocacy, Oxfam America is deepening its understanding of what is working and what can be improved in US bilateral food security programs. This evidence is helping to build a compelling case for why Congress should continue funding agricultural development programs. Our findings are also influencing how the US government implements these programs around the world. In addition, our research enables us to advocate for broader changes needed in agriculture, trade, and energy policies that affect global food security. Oxfam America recognizes that the private sector and new public-private partnerships can have a major impact on prospects for development and poverty reduction. So we work at the intersection of public policy and private sector investment to keep the rights and interests of small-scale producers at the center of development dialogue. We promote strong standards to focus companies’ attention on social and environmental impacts, and we hold companies accountable. And we analyze national policies to understand whether they will tip the balance of benefits toward companies at the expense of small-scale producers. In an increasingly multipolar world, multilateral forums such as the Committee on World Food Security and the G8 and G20 help shape the agricultural development agenda. Oxfam America works with allies and partners to influence the US government as it participates in these spaces and to demand global solutions to hunger that recognize and prioritize small producers. Programs Oxfam America designs its own programs in developing countries to address the root causes of food insecurity, including low agricultural productivity, marginalization of women smallholder farmers, and unequal access to natural resources and financial services. We support women in coming together to build savings, we strengthen farmer associations and cooperatives, and we train farmers in improved and appropriate agricultural techniques. Our programs systematically analyze gender dynamics within the household to ensure the interventions promote gender equality at all levels. An in-depth understanding of local conditions along with a range of participatory tools informs our program design. Our agriculture programs are designed taking into account farmers’ assets and endowments. We focus on sustainable agricultural practices to overcome environmental, climate, and technical hurdles while increasing outputs. For example, in Haiti, Vietnam, and Cambodia, Oxfam America supports the System of Rice Intensification (SRI)—a low external input system that can save farmers seed, reduce water use, and lower greenhouse gas emissions while improving yields. In Ethiopia, Oxfam America works with the government and other partners to improve agriculture extension services so that these services can better respond to the needs of farmers—particularly women and youth—in different regions using improved agronomical practices. In Cambodia, Mali, Senegal, El Salvador, and Guatemala, the Saving for Change program encourages groups of rural women to save regularly, borrow from their group’s fund, and repay loans from the group with interest. These women use the money to build small businesses or homes and to buy food, educational materials, or medicine. Read more about Saving for Change. Goals & priorities Influencing the US Feed the Future Initiative Through the Feed the Future (FTF) initiative, the US has committed to helping developing countries improve food security. In selected countries, FTF supports inclusive agriculture sector growth, prioritizes women food producers, builds resilience to climate change, improves maternal and child nutrition, and delivers assistance based on principles that make aid more effective. Oxfam America’s research in several countries has taken an in-depth look at FTF-funded programs, examining their strategies for reaching and empowering small-scale producers, promoting sustainable farming practices and adaptation to climate change, and strengthening the capacity of local institutions. Our research has identified opportunities to improve this initiative and is enabling us to continue building the case that FTF can deliver results and deserves Congressional support. Reforming US food aid programs The US offers substantial food aid in response to both natural disasters and those caused by human intervention. But the US government’s approach to providing this humanitarian assistance in crisis situations is badly broken. Buying and shipping food from the US to destinations around the world is often not the most efficient or effective means of getting aid to those in need. Based on our experience working in emergency settings around the world, Oxfam America is pushing for a more flexible US food aid system. We will continue to advocate for innovative approaches like local and regional procurement, which can more promptly meet urgent needs while supporting agricultural development that will eliminate the need for aid in the future. Challenging public-private partnerships to deliver improved food security At the 2012 G8 summit, countries launched a New Alliance for Food Security and Nutrition, a framework for public-private partnerships created to deliver improved food security now in 10 African countries. Since the inception of the alliance, Oxfam America has been a strong critic of the framework, demanding greater transparency and more open participation—in particular by those most affected by hunger and poverty. We are challenging the policy reforms and investment activities included in the initiative, at both the country and global levels, calling on governments and companies to make public-private partnerships work for small-scale food producers. Advocating better global food security governance The Committee on World Food Security (CFS) has taken center stage as an inclusive space for the development of policies and principles to guide national, regional, and global action to tackle hunger. Oxfam America is working to influence the US role in the CFS and US engagement in the process of developing responsible agricultural investment (RAI) principles. We are calling for a strong set of principles to guide both public and private investments so they help ensure everyone has enough to eat always, thereby realizing the right to food. Ending competition between food and fuel In recent years, as much as 40 percent of the US corn crop has been used to create ethanol, a result of the mandates included in the Renewable Fuel Standard. Working with allies that range from anti-hunger organizations to fiscally conservative groups to food industry advocates, Oxfam is championing an end to energy policies that contribute to high and volatile food prices and make it more difficult for people living in poverty to buy the food they need to survive. Strengthening land rights to address constraints faced by small-scale farmers Land is a fundamental asset for agricultural production. Often, women face severe cultural and legal barriers in accessing it. The accelerated scale and pace of large-scale land acquisitions in recent years has all too often led to forced evictions or otherwise undermined the rights of small-scale farmers to access and control land. Oxfam America engages in research on large-scale land investments and their effects on small-scale farmers in developing countries, and we advocate at the global and national levels to protect smallholder rights by exposing land grabbing and undue concentration of land ownership. Our advocacy has also supported the global adoption and national-level implementation of the new UN standard on how land is governed known as the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security. Its aim is to ensure that the right frameworks are in place at the national level to protect and promote secure tenure rights and equitable access to land. Influencing public policymakers in developing countries to uphold the rights of small-scale food producers Oxfam America works with civil society partners to influence local governments and policymakers to protect the rights of small-scale producers, especially women, and to put in place policies and programs to meet their needs. In El Salvador, for example, Oxfam is working with an alliance of rural women that includes six national organizations representing 8,000 women across the country, as well as a coalition of more than 200 groups of farmers, cooperatives, environmentalists, and others organizing to achieve the right to food. On World Food Day in 2013, more than 7,000 civil society activists gathered in front of the Legislative Assembly to present their own draft of a new food security law that is now under debate. Oxfam continues to support their efforts to get the legislature to pass a strong food security bill and to ratify a constitutional amendment for the right to food. Pioneering innovative strategies to provide small-scale farmers, pastoralists, and fisherfolk with access to water, land, financial and extension services, and markets to increase their productivity and incomes In Ethiopia, for example, Oxfam America works to improve smallholders’ access to water. Our program is strengthening water users associations, making them more democratic and representative. The goal is to ensure that water is allocated fairly and equitably and that government policy supports small-scale irrigation. We are also working to improve the Ethiopian government’s agricultural extension program. We train agricultural extension workers to be more responsive to farmers. And we have designed a new monitoring system that allows the government to see how well its extension system is working. This Performance Management System provides effective monitoring and evaluation mechanisms and feedback tools for farmers and frontline extension workers so that the system is based on farmers’ needs. As a result of our efforts, the government is able to help farmers in regions that were not being reached or receiving adequate services before. Achievements so far As part of the Farm Bill reauthorization, members of Congress took an important step to reform US food aid programs to make them more flexible, efficient, and effective. Oxfam America and its grassroots supporters mobilized in support of these changes, holding more than 200 meetings with members of Congress, and generating more than 13,000 letters calling for reform. When the House of Representatives began debating the legislation, two members of Congress offered a bipartisan amendment on the House floor that would have enacted a sweeping overhaul of food aid programs. It failed by just nine votes. While there is room for improvement, the Farm Bill sends an important signal that food aid programs can be made more efficient and effective. Toward this goal, it authorizes up to $80 million to buy food locally and in the region where it is needed, an important and much-needed flexibility. Oxfam is conducting case study research on the implementation of Feed the Future programs in Senegal, Tanzania, Haiti, and Ethiopia. We have learned from field experiences, have analyzed best practices, and have identified areas for improvement; now we are sharing research findings with the US Agency for International Development (USAID), local communities, and nongovernmental organizations (NGOs) in those countries. Oxfam America’s research has enhanced the credibility for our advocacy in Congress, helping to bolster support for this critical program. As part of our Effective Aid campaign, Oxfam America placed paid ads seen by more than five million people and hosted farmers and other “local aid” heroes to make the case that US foreign aid is working. Our advocacy helped keep funding for Feed the Future steady at a time when some in Congress were trying to drastically cut government spending. Oxfam America has pressed the US government to end rules and subsidies that drive up food prices by diverting food crops into fuel. Oxfam worked with partners to persuade lawmakers to end the largest corn ethanol subsidy—the Volumetric Ethanol Excise Tax Credit, or VEETC—by letting it expire at the end of 2011. In 2012, two states—Arkansas and North Carolina—requested a waiver from the Renewable Fuel Standard (RFS) based on the economic impact the RFS mandates had on agriculture and food industries in those states. Oxfam America mobilized its constituents in support of this waiver request, generating more than 21,000 comments to the Environmental Protection Agency (EPA) and the Obama administration calling for approval of the waiver. Although the EPA denied the states’ requests, the strong demonstration of support for this request has provided impetus for more fundamental reform of the RFS. Members of both the House and Senate have introduced legislation toward the goal of eliminating the corn ethanol mandate. The EPA recently proposed lowering volume mandates for the 2014 RFS nationwide. Under this proposal, the target for the volume of biofuels in the fuel supply would drop by three billion gallons, and the corn ethanol target would be trimmed by just under one billion. Oxfam is supporting the EPA proposal as a first step, while working with Congress toward the goal of eliminating the corn ethanol mandate. Oxfam America released a report in September 2013 about irregular land acquisitions fueling further concentration of land ownership in Colombia’s Altillanura region. This report—Divide and Purchase: How Land Ownership Is Being Concentrated in Colombia—revealed how Cargill acquired land intended for small farmers with limited resources, violating at least the spirit of Colombian law. The publicity the report received helped to create space for public debate in Colombia on the issue of undue concentration of land ownership. As a result, civil society advocacy in Colombia helped to stop the government from moving forward with legislative reforms that would have legalized and promoted further concentration of land ownership through acquisitions similar to Cargill’s. Oxfam has also made progress in focusing the World Bank’s attention on the need to protect the land rights of poor and vulnerable people. In 2013 the International Bank for Reconstruction and Development (World Bank) issued a statement cautioning that “speculators and unscrupulous investors” too often exploit “smallholder farmers, herders, and others who lack the power to stand up for their rights.” Bank President Jim Yong Kim is calling for “modern, efficient, and transparent policies on land rights.” The bank has committed itself to a new UN standard on how land is governed and has agreed to make land rights a key focus in the review under way of the rules governing the bank’s activities. A three-year study exploring the impacts of savings groups in 500 rural villages in Mali shows that households in villages with savings groups saved 31 percent more on average and experienced an 8 percent increase in food security. Oxfam’s Saving for Change program has helped women create 7,019 savings groups in 2,625 villages in Mali. There are now 250,000 people involved in Saving for Change groups in 6,000 villages in Mali, Senegal, Burkina Faso, El Salvador, and Cambodia. Collectively, these groups have saved more than $4 million, and the average participant earns 20 percent annually on their deposits. One reason why Saving for Change is taking off so quickly is because women can form groups with fellow villagers in which they save and invest their own money. The groups need not have any relationship with a microfinance institution like a bank. This factor helps the program reach the poorest women who would not otherwise be able to borrow money because most banks consider them to be too big a risk. The GROW campaign, Oxfam supporters and allies have made significant progress in reforming a broken food system through a variety of actions and campaigning tactics, including evidence-based reports, direct lobbying of governments, mobilizing for marches, sponsoring petitions, using social media, and building coalitions. We’ve achieved commitments on agriculture-related policies from governments, corporations, and global institutions, and we’ve increased the participation of rural women in policy processes. Most recently, GROW has secured commitments by the biggest food companies in the world—NestlĂ©, Coca-Cola, and others—to change their policies affecting their supply chain operations.



Slowing Productivity Reduces Growth In Global Agricultural Output 


Feature: Farm Economy December 28, 2021 Highlights: Data collected and analyzed for 2011–19 by USDA’s Economic Research Service revealed that reduction in the growth of global agricultural output is strongly linked with a recent slowdown in agricultural productivity. Total factor productivity, which measures the overall efficiency with which inputs are combined to produce output, grew at a global annual rate of 1.31 percent in the 2010s, down from 1.96 percent per year in the 2000s. The slowdown in agricultural output growth is observed primarily in developing countries, with Asian countries leading the slowdown in output growth. Declining productivity growth could result in consequences such as higher food prices and increased greenhouse gas emissions from agriculture. Increasing agricultural productivity is key to ensuring an abundant and affordable food supply for a growing global population while still conserving limited environmental resources such as land. A main driver of productivity growth is the development, adoption, and diffusion of new agricultural technologies and management practices. With technological progress and innovation, not only have agricultural yields increased, but opportunities to better manage the land, labor, and capital (inputs) needed for production and reduce the environmental impact of production also have emerged. The benefits of new agricultural technologies, practices, and knowledge have been widespread across farms of different sizes, income levels, and agro-ecological environments. In recent years, however, growth in agricultural productivity has slowed, meaning the relative rate of output to input growth has narrowed. An update to the USDA, Economic Research Service (ERS) International Agricultural Productivity data product links deceleration in the growth of agricultural output with a recent slowdown in agricultural productivity. From 2011–19, the volume of world agricultural output was 6 percent below what it would have been if the growth rate of the previous decade had been maintained and compounded over time. Slowing Growth in Agricultural Total Factor Productivity Total factor productivity (TFP) is a broad measure of agricultural productivity that compares total output of crop and animal commodities to the total set of land, labor, capital, and material inputs used in farm production (see blue box below). TFP measures the overall efficiency with which inputs are combined to produce output. When total output is increasing faster than total inputs, TFP is said to be growing. After the “Green Revolution” of the 1960s and 1970s increased crop yields, growth rates in agricultural output peaked and then started declining until the 1990s. In the 1990s and 2000s, growth rates in global agricultural output began trending upward again. Driven by more rapid TFP growth, world agricultural output increased fast enough to meet food demand from growing global populations and incomes, and reduced the need to use more land, labor, and other resources. However, ERS data indicate that global agricultural productivity growth slowed in the 2010s. Output grew at an average annual rate of 2.08 percent during 2011–19 compared with 2.68 percent during 2001–10 (see chart below). Average TFP growth during these decades fell from 1.96 percent annually to 1.31 percent annually. While growth in output from an increased use of labor, capital, and material inputs per acre as well as irrigation also declined, these changes were small compared with the slowing of TFP growth. At the same time, the rate at which agricultural land was expanding increased. Where Has Agricultural Productivity Been Slowing? The slowdown in agricultural output growth over the past decade occurred primarily in developing countries (see right side of chart below). The growth rate in agricultural production in developing countries declined from an average of 3.56 percent in the 2000s to 2.37 percent in the 2010s. A decrease in the rate of TFP growth was responsible for most of this decline. Developed countries (left side of chart below) experienced stable or increasing average output growth. Here, productivity growth remained strong in the 2010s while the level of inputs used in the agricultural sector stabilized. In the 1990s and 2000s, agricultural inputs (especially labor and land) in developed countries were being redirected to other sectors such as manufacturing and services. For developing countries, the productivity slowdown was widespread across most regions. Comparing average growth rates in the 2010s with the previous decade reveals Asia experienced the largest slowdown in output growth, followed by the Central and West Asia-North Africa region. In terms of productivity growth, Latin America and the Caribbean experienced the largest slowdown, followed by Asia. In Sub-Saharan Africa, agricultural productivity growth was already low in the 2000s and turned slightly negative in the 2010s. These patterns extend to major agricultural producers and exporters. Brazil, China, and India all experienced slowing output and productivity growth. The largest declines were experienced by Brazil, where average annual output growth in 2011–19 fell by 2.1 percentage points compared with the previous decade. What Are Some Implications of Slowing Agricultural Productivity Growth? Higher productivity allows farmers to produce commodities with fewer resources, which can lower unit costs and reduce agricultural prices. Past performance suggests slowing growth in agricultural productivity may lead to higher prices in global commodity markets. Higher food prices are especially costly to low-income households, who already spend a large share of their income on food. Historical improvement in agricultural productivity led to declines in inflation-adjusted commodity prices of an average of 1 percent a year from 1900 through 2000 even as world population tripled (see chart below). Since the turn of the millennium, however, agricultural prices have trended higher, driven by multiple forces including increased food and biofuel demand, rising input prices (such as for fertilizer) and slowing productivity. When productivity growth declines, agricultural producers will need more inputs and environmental resources that could have been used in other sectors or for other purposes to ensure growth in output. Such a reallocation of resources often has consequences. First, shifting more land, labor, and capital to the farm sector from other economic uses could slow growth in other sectors, including manufacturing and services, that are important to both rural and broader national economies. Second, increasing agricultural land use and input intensification means a larger environmental footprint of agriculture, including higher greenhouse gas emissions from agriculture. As illustrated in the chart below, greenhouse gas emissions from agriculture closely track aggregate input use. Countries where TFP improvement has enabled fewer inputs to be used in farm production have been able to curb the growth of, or even reduce, greenhouse gas emissions from agriculture. Countries where input use is still rising are seeing rapid growth in emissions. Causes and Consequences Several factors may be affecting the global slowdown in agricultural productivity growth. Weather shocks associated with a changing climate (such as drought, heat, or flooding) can decrease yields. These effects would be cumulative as further increases in temperature or adverse weather shocks result in larger and more frequent reductions in productivity over time. In addition to lowering overall productivity, climate change may shift global production patterns. In other words, crops that used to be grown productively in one region may no longer be suitable to new agro-ecological conditions, such as changes in seasonality, temperature, and precipitation, and might be more suited to other regions. The emergence of new or resistant forms of crop diseases and pests—such as citrus greening, fall armyworm, and herbicide-resistant “super” weeds— also are worth watching as productivity gains slow. These new threats to yields may require the use of additional inputs such as labor and chemicals to control their spread. Long-term solutions may involve new research and development to provide technology-based solutions that are adaptable to specific production environments. Slow diffusion of improved agricultural technologies among producers remains a central issue in determining TFP growth. This is a challenge among producers in developing countries, where underdeveloped agricultural extension systems, limited access to financial and insurance services, and insecurity of land tenure may contribute to weak incentives for producers to invest in new technologies. Among developed countries, agricultural policies and public attitudes toward new technologies such as genetically modified crops may slow the adoption of productivity-enhancing innovations. At present, raising genetically modified crops in the European Union is rarely permitted, for example. Additionally, many new precision agriculture technologies require reliable satellite, cellular, and internet infrastructure that is not available in many rural areas around the world. Another possible reason for the slowing rate of TFP growth is fewer new technological breakthroughs emerging for agriculture. This could result from insufficient investment in agricultural research and development (R&D). For example, previous ERS research highlighted a decrease in public agricultural R&D expenditures among high-income countries, which may be associated with long-term declines in TFP growth. Additionally, limited capacity of national agricultural R&D systems in developing countries may constrain the development of new technologies suitable for local farming systems. Market access barriers in international trade also could hinder productivity growth. Poor infrastructure, high market transaction costs, inconsistent regulatory frameworks and tariffs often make it more expensive to acquire productivity-enhancing technologies and inputs and limit opportunities for the transfer of technology. Tariff and non-tariff barriers to international trade reduce opportunities for producers to achieve efficiency gains by specializing in commodities in which they have a competitive advantage. One factor that is probably not a significant barrier to productivity growth in agriculture is farm structure. Small and medium-sized family farms continue to dominate worldwide agriculture and often co-exist with large farms and corporate operations. Although in some instances, such as confined livestock production, large farms sometimes produce commodities at lower unit cost because of economies of scale, ERS researchers have found that productivity growth can also be rapid on small farms. However, small producers may face challenges in accessing markets and services that could enhance their productivity and enable them to participate more fully in global agricultural value chains. What Role Does Total Factor Productivity (TFP) Play in Agricultural Output Growth? Total factor productivity (TFP) measures the overall efficiency with which farmers transform agricultural market inputs (land, labor, capital, and material inputs such as fertilizer and feed) into crop and animal commodities. Other commonly used measures of productivity include crop yield and the value added per worker, but they focus more narrowly on just one input used in production. Farmers can increase output by expanding their agricultural acreage or by increasing yield per acre. They can increase yields by adding irrigation or through more intensive use of agricultural inputs (such as by using more labor, capital, or fertilizer per acre). They can also achieve higher yields by applying technological improvements to existing inputs—in other words, by increasing TFP. The figure below illustrates the role TFP plays in agricultural output growth. With growth in TFP, fewer inputs are required for each unit of output, so unit production costs fall. Growth in TFP is driven by the adoption of improved technologies and is influenced by policies that encourage innovation and technology adoption, such as investments in agricultural research and extension. This article is drawn from... International Agricultural Productivity, by Keith Fuglie, Jeremy Jelliffe, and Stephen Morgan, USDA, Economic Research Service, October 2021 Agricultural Research Investment and Policy Reform in High-Income Countries, by Paul Heisey and Keith Fuglie, ERS, May 2018 "Harvesting Prosperity: Technology and Productivity Growth in Agriculture", World Bank, 2019 "New Perspectives on Farm Size and Productivity", Food Policy, 2019


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