Total Factor Productivity (TFP) measures the change in the ability of the farming sector to produce more with the use of fewer inputs, a comprehensive performance indicator of the efficient use of resources and the competitiveness of the sector. Productivity has become the main driver of global agricultural growth since the 1990s, an opportunity to increase production without using additional inputs, some of which are harmful for the environment.
Since the 1980s, the European Union has had respectable TFP performance, with growth rates ranging between 0.73% and 1.42% per year. The period between 2011 and 2019 saw a worldwide slowdown in productivity growth compared to the previous decade. Even though this reduction was less pronounced in the European Union, TFP was below the world average of 1.3% per year, but close to the OECD average of 0.9%. Some OECD countries achieved large improvements in TFP growth (1.5% in Japan and 2.5% in Canada) while others stagnated, in particular the United Kingdom, the United States and Australia.
Innovation is a key driver of productivity growth and, with the right policy environment, an opportunity to reconcile multiple food systems goals in the European Union, such as food security, environmental sustainability and livelihoods.