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Trends in agricultural productivity in the EU (and a comparison with the USA) Presentation on the workshop The outlook for EU agriculture: Causes, constraints and challenges for productivity”, organized by ECPA, FERTILIZERS EUROPE and COPA-COGEGA, Brussels, June 29, 2011 Dieter Kirschke Humboldt University of Berlin

Dieter Kirschke

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Page 1: Dieter Kirschke

Trends in agricultural productivity in the EU

(and a comparison with the USA)

Presentation on the workshop

“The outlook for EU agriculture: Causes, constraints and challenges for productivity”,

organized by ECPA, FERTILIZERS EUROPE and COPA-COGEGA,

Brussels, June 29, 2011

Dieter Kirschke

Humboldt University of Berlin

Page 2: Dieter Kirschke

2/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Problem setting

Definitions and theoretical background

Productivity trends in EU agriculture

Productivity and the world food equation

Rediscovering productivity in EU agricultural policy?

Contents

Page 3: Dieter Kirschke

3/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Problem setting

Productivity in “traditional” agricultural policy-making

Productivity under the “treadmill”:

Changing policy objectives and priorities

Productivity under the new “price boom”

Is it time to rediscover productivity

as a key driver of agriculture

and important policy objective?

Page 4: Dieter Kirschke

4/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Definitions and theoretical background

Productivity

Land productivity

Labor productivity

Total factor productivity

Output y d dy dx

Input x y x

d dy dLAND

y LAND

d dy dLABOR

y LABOR

ni

i

i 1 i

d dy dINPUT

y INPUT

– production elasticity / cost share

Page 5: Dieter Kirschke

5/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Land productivity development in wheat production

in selected EU member states, 1961-2009, in t/ha

Source: Own figure based on FAO (2011C).

y = 3,1289e0,0227x

0

3

6

9

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

Germany

y = 2,0696e0,0119x

0

3

6

9

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

Italy

y = 2,8445e0,0259x

0

3

6

9

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

France

y = 1,0572e0,023x

0

3

6

9

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

Spain

Page 6: Dieter Kirschke

6/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Land productivity development in wheat production

in selected regions of the world, 1961-2009, in t/ha

Source: Own figure based on FAO (2011C).

y = 2,0406e0,0268x

0

1

2

3

4

5

6

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

European Union

y = 1,6464e0,0114x

0

1

2

3

4

5

6

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

Northern America

y = 1,095e0,0172x

0

1

2

3

4

5

6

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

South America

y = 0,9056e0,0273x

0

1

2

3

4

5

6

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Asia

Page 7: Dieter Kirschke

7/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Value added in agriculture per worker in selected

EU member states, 1980-2009, in real 2000 USD

Source: Own figure based on WORLD BANK (2011).

y = 7326,4e0,0493x

0

10 000

20 000

30 000

40 000

50 000

60 000

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Germany

y = 6183,7e0,0557x

0

10 000

20 000

30 000

40 000

50 000

60 000

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Italy

y = 10718e0,0574x

0

10 000

20 000

30 000

40 000

50 000

60 000

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

France

y = 4718e0,0549x

0

10 000

20 000

30 000

40 000

50 000

60 000

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Spain

Page 8: Dieter Kirschke

8/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Value added in agriculture per worker in selected

world regions, 1980-2009, in real 2000 USD

Source: Own figure based on WORLD BANK (2011).

y = 6159,9e0,0325x

0

10 000

20 000

30 000

40 000

50 000

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

European Union

y = 236,17e0,0273x

0

1 000

2 000

3 000

4 000

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

East Asia & Pacific

y = 12212e0,0461x

0

10 000

20 000

30 000

40 000

50 000

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Northern America

y = 1718,7e0,022x

0

1 000

2 000

3 000

4 000

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Latin America & Caribbean

Page 9: Dieter Kirschke

9/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Total factor productivity growth by region,

average annual growth rate, in percent

Source: FUGLIE (2008).

Average annual growth rate (%)

by period

TFP index

1970-1979 1980-1989 1990-1999 2000-2006

World 0.60 0.94 1.60 1.55

Developed countries 1.62 1.48 2.25 1.76

Developing countries 0.55 1.67 2.31 2.08

USSR & Eastern Europe –0.46 0.27 1.59 2.10

Western Europe 1.46 1.65 1.97 1.39

North America 1.46 1.36 2.13 1.75

Latin America & Carribean 0.61 1.30 2.38 2.48

Brazil –0.54 3.13 3.00 3.66

Northeast Asia, developing 0.51 2.57 4.00 3.42

China –0.19 2.47 3.78 3.22

South Asia 0.66 2.02 1.71 1.36

India 0.80 2.10 1.74 1.43

Page 10: Dieter Kirschke

10/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Total Factor Productivity accounts for a rising share

of agricultural growth over time

Source: FUGLIE (2010A).

Average annual output growth rate (percent)

Page 11: Dieter Kirschke

11/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Is there a slowing down of productivity growth?

The World Bank (WDR 2008) has initiated the debate.

Some arguments:

Public R&D funding:

– Slowing down

– Priority change

EU policy and regulatory framework:

– Extensification

– GMO policy

Global aspects

– Land availability

– Use of marginal land

– Resource degradation / soil erosion

Page 12: Dieter Kirschke

12/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Energy

price

QS

= QD

Food + QD

Feed + QD

Fiber + QD

Fuel

Productivity

growth

Demand in

emerging markets

1

3

Productivity and the world food equation (I)

2

s d

dp 1 dT dPOP dY

p T POP Y

with p – price, – supply elasticity, – demand elasticity, – income elasticity

T – technology factor, POP – population factor, Y – income

s d

Page 13: Dieter Kirschke

13/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Emissions of CO2-eqivalents in EU agriculture

Source: LESSCHEN ET AL. (2011).

Page 14: Dieter Kirschke

14/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Climate

change

Bioenergy

policy

Env./climate

protection

5

Productivity and the world food equation (II)

Energy

price

QS

= QD

Food + QD

Feed + QD

Fiber + QD

Fuel

Productivity

growth

Demand in

emerging markets

1

3

2

s d

dp 1 dT dPOP dY dCC dECP dBE

p T POP Y CC ECP BE

with CC – climate change (production) effect, ECP – environmental and climate protection

(production) effect, BE – bioenergy policy (production) effect

64

Page 15: Dieter Kirschke

15/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx

Rediscovering productivity in EU agricultural policy?

It is time to rediscover productivity!

Re-evaluation of policies reducing supply and enhancing demand

(Environmental policies, feed and animal production,

future mitigation and current bioenergy policies)

Perspective: Intelligent and sustainable intensification and

productivity increase

R&D policy: volume and focus

reliable and supportive framework

Global implications and EU responsibility

Reshaping the CAP and the 2nd pillar?

Page 16: Dieter Kirschke

16/16

Humboldt University of Berlin, Chair for Agricultural Policy

Prof. Dr. Dr. h.c. Dieter Kirschke Trends-2011.pptx