The Next Farm Productivity Gain May Come From Better Data
TL;DR: U.S. agriculture has become dramatically more productive over time, but that growth has not moved at the same pace every decade. USDA data show that total factor productivity growth slowed for long stretches after 2000 before rebounding in recent years. For farmers, the next efficiency gain can come from better information: knowing costs sooner, seeing cash flow clearly, and using farm financial data to make decisions faster.
For a long time, the formula for getting more efficient on the farm was pretty straightforward: bigger equipment, better seed, more fertilizer, better crop protection, and more acres handled with less labor.
Those things still matter. But there is a limit to how much bigger the combine can get, how much more fertilizer you can put down, or how much another piece of equipment can improve the operation. That is where data starts to matter more.
What Does It Mean When We Say Farm Productivity Growth Has Slowed?
USDA’s Economic Research Service measures agricultural productivity using total factor productivity (TFP). It looks at how much output agriculture produces compared with the land, labor, capital, and other inputs used to produce it.
The long-term story is impressive. USDA reports that U.S. farm output was nearly three times its 1948 level by 2023, while total input use changed only modestly. Most of that long-term growth came from farmers becoming more productive with the resources they already had… But the pace has not been steady.
USDA’s latest productivity data show average annual TFP growth of 1.47% from 1990-2000. That dropped to 0.34% from 2000-2007 and 0.51% from 2007-2019. Productivity growth rebounded strongly from 2019-2023, averaging 3.19% per year.
So this is not a story that American agriculture suddenly stopped getting better. It is a reminder that the easy gains cannot be taken for granted.
The Next Efficiency Gain May Be in the Numbers
A farmer cannot control weather, commodity prices, interest rates, or input costs. But you can control how quickly you understand what those things are doing to your operation. That is the part we think matters more.
Better farm data can help answer questions like:
- Which enterprise is actually making money?
- Are input costs rising faster than revenue?
- Which fields are the most profitable?
- How much cash will be available before the next major expense?
- Is a new piece of equipment helping the operation enough to justify the cost?
- Is there room to take on another loan, employee, or enterprise?
- What needs attention now instead of six months from now?
That is not about turning every farmer into an accountant. It is about getting the information out of the shoebox, spreadsheet, bank statement, or accounting software and putting it somewhere useful.
Good Books Are a Farm Productivity Tool
Bookkeeping can sound like something you do just for tax time. It is more useful than that.
When your books are current, you can see what is happening while there is still time to make a decision. You can compare revenue and expenses, track cash flow, look at costs by enterprise, and understand where the farm stands before the next season starts. That is the bigger efficiency conversation: the next gain may not come from simply doing more. It may come from seeing the operation more clearly and making a better decision sooner.
That is where we fit in. We organize the financial side of the farm so the farmer has cleaner, faster information to work with.
You run the farm. We help make sure the numbers can keep up.
Want to see the data behind this? Check out USDA’s Agricultural Productivity in the United States data and recent findings.
If you want a clearer picture of your own farm, learn more about our farm bookkeeping and financial management services or text “FARM” to 470-318-3097 to see how we can help your farm.
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