Measuring Productivity Growth in Australian Broadacre Agriculture

Abstract

An important source of growth for Australian broadacre agriculture has been technical progress. We compare alternative measures of productivity growth including the traditional Tornqvist-Thiel total factor productivity index; variants of this approach that allow decreasing returns to scale; the Fisher ideal index; other nonparametric measures that do not impose particular functional forms and an econometric estimate from a translog industry cost function. The annual growth in productivity in broadacre agriculture over the period from 1953 to 1994 was in the range of 2.4 to 2.6 per cent and hence was quite robust to measurement technique.

Nonparametric measures of the impact of public research expenditures on Australian broadacre agriculture

“…In constructing indices a standard approach of deriving quantity data from value and price series was used to ensure the price times quantity gave value. The data procedures and de¢nitions we use are discussed more fully in Mullen and Cox (1996). 7 Note, this e¡ectively normalises expenditures using the base period prices as the numeraire.…”

“…In order to visually assess their`reasonableness', ¢gure 6 compares thè smoothed' geometric mean TFPs from S5 and S1 with more conventional TFP measures obtained by Mullen and Cox (1996) using these same data. The Fisher Ideal (Diewert 1992) and CCD No Scale Adjustment (Caves, Christensen and Diewert 1982) TFP measures are both superlative indexes which assume constant returns to scale.…”

“…The Fisher Ideal (Diewert 1992) and CCD No Scale Adjustment (Caves, Christensen and Diewert 1982) TFP measures are both superlative indexes which assume constant returns to scale. 10 The CCD Scale Adjusted (Caves, Christensen and Diewert 1982) and Translog Cost (Mullen and Cox 1996) TFP measures allow for non-constant (decreasing) returns to scale. As noted in Mullen and Cox (1996), the estimated translog cost function was not particularly`well behaved' in terms of consistency with theoretical priors.…”

“…They employed a two-stage estimation procedure in which a measure of productivity was derived in the ¢rst stage, then regressed against explanatory variables (including research expenditures) in the second stage. The productivity measures they used are described in Mullen and Cox (1996). Data limitations and the econometric techniques used were insu¤cient to resolve some important issues such as the length and shape of the research lag pro¢le and the separate contributions of research and extension to productivity growth.…”

Agricultural research: Implications for productivity in New Zealand and Australia

“…This series has been constructed by splicing a series of MFP estimates (ABARE 2006) for the period 1988 -2004 to the series used by Mullen and Cox (1996) based on ABARE survey data for the period 1953 -1994. The growth in MFP over the whole period was 2.5%.…”