Australia's grains industry: factors influencing productivity growth

Abstract

Growth in total factor productivity is continuing to ease in Australia's grains industry. Moisture availability is the main driver of productivity on farms. Land use intensity is another major influence, with its impact dependent largely on natural soil fertility and management practices. Other factors that have a significant impact on farm productivity in some or all regions include access to finance, land area, education of farmers, crop specialisation, investment income and corporate ownership. As moisture availability is largely beyond the control of farmers, its impact has been netted out of the analysis presented here. With the effect of moisture availability removed, the Australian grains industry is estimated to have realised an underlying productivity improvement of around 2.6 per cent a year on average over the sixteen years from 1988-89 to 2003-04 - considerably less than the rate of 3.8 per cent over the seventeen years to 1993-94 estimated in a previous ABARE study.