Most people are aware of the concept of productivity, although there are so many measures that more definition is needed.
Probably the most common productivity measure is issued daily by the Bureau of Labor Statistics: the labor productivity index. In short, it is GDP units of output divided by hours worked. It is closely monitored because it is a predictor of inflation, growth or recession. Hourly labor rates increase over time, and if productivity of labor does not increase at the same rate or more, inflation may result.
The BLS recently reported that the labor productivity index increased in the second quarter of 2012 by 2.2 percent. Because labor costs per hour increased 3.7 percent over the same period, there was some labor inflation.
Not included in the BLS calculations are farm wages and hours, essentially because much farm labor is unpaid, being performed by the farmer himself. So agriculture productivity is measured in output per acre, per cow, per acre foot of water, etc.
Farming has been very productive over the past 25 years, with milk per cow increasing by 57 percent, corn and soybeans per acre more than 30 percent, and poultry and meat almost 50 percent. As a result, Americans spend only 6.4 percent of their income on food at home, the lowest percentage in history and the lowest of any tracked country. By contrast, France, a highly developed country, spends 13.2 percent of its national income on food at home.
One might ask, How can we see such productivity increases, because soil is soil and water is water?
One difference is that today we have better chemical amendments, or if farming organically, we have better natural products to offset negative inputs.
Our equipment is far superior today, with tractors having GPS monitors that can track soil types and fertility and then apply soil amendments to suit the type.
We have genetically modified organisms that can withstand drought, bugs or weeds, and despite concerns about GMO foods, more and more of what we eat must be genetically modified or we will not have enough.
The result of surging productivity in agriculture has been that the U.S., with 20 percent of the worlds arable land, has become a massive exporter of food. In 2011, food exports totaled $137 billion, a $43 billion surplus over imports, and the best contributor to improvement in our balance of trade. Furthermore, we have been able to do that with less than 1 acre of farmland per person today, compared with 2.8 acres per person 50 years ago. We are delivering much more output with much less input of land.
As farmers, we might pat ourselves on the back for these productivity increases. But when we look at the growing supply of mouths to feed and the shrinking supply of land and water, we realize that we must double our rate of increase.
In fact, if projections of 9.3 billion people on the face of the Earth within 50 years prove true, we must achieve an output increase of 3.4 percent per year. The actual increase over the past 40 years was 1.8 percent.
But rates of increase are slowing. Acres of land going out of production are increasing. Water is becoming critical around the world. Ocean sterility is growing.
We have a daunting task ahead.
Farming and ranching are not simply important endeavors. They are critical to the survival of mankind.
CHAS BONNER: Vice president of business development, Scythe & Spade Co., Eagle. email@example.com