Agricultural productivity and innovation

Innovation in agriculture takes many forms. ‘Process innovations’ improve how food is produced on farms, while ‘product innovations’ help develop healthier, value-added foods in downstream industries. ‘Marketing and organisational innovations’ enhance performance at all stages, and innovation can also emerge through new institutions and smarter policy design.

Each type of innovation presents a powerful opportunity for win-win solutions, delivering healthy, safe, and nutritious food for all, while promoting sustainable resource use, climate adaptation, and resilient livelihoods. Achieving gains in sustainable productivity is essential to ensure long-term viability and reduce the environmental footprint of agriculture, including pollutants, emissions, and waste.

Over the past two decades, most growth in agricultural production has come from improvements in Total Factor Productivity (TFP), which measures the efficiency of inputs in producing outputs. However, these gains have not been uniform. Significant productivity gaps persist across farms, and closing them remains a major challenge, even in high-performing countries.

While productivity growth has helped limit farmland expansion, overall environmental performance of agriculture has been uneven across countries. To address these issues, the OECD has developed tools to assess agricultural performance in terms of productivity, sustainability, and resilience. To deepen understanding of the links between these areas, to deliver sustainable productivity growth, the OECD also convenes two expert networks: the Farm-Level Analysis Network and the Network on Agricultural TFP and the Environment.

Innovation in agriculture is not isolated, it’s a dynamic, interactive process involving farmers, researchers, industry, and policymakers. It is a key driver of sector performance, alongside structural transformation and natural resource constraints. Yet, only an estimated 3% of current support to the agricultural sector is directed toward Agricultural Knowledge and Innovation Systems (AKIS), which are essential to fostering innovation.

Beyond direct funding, a broader set of policies and regulations shape innovation by creating incentives. These include environmental and natural resource policies, education and skills development, taxation, research, and the wider economic framework. The OECD Productivity, Sustainability and Resilience (PSR) framework offers a unique, evidence-based tool to support cross-government action. It helps deliver coherent, forward-looking policies that support innovation and strengthen the future of farming and food systems.