Productivity Growth in Agriculture in Latin America and the Caribbean Presented by Carlos Ludena

Productivity Growth in Productivity Growth in Agriculture in Latin Agriculture in Latin America and the America and the CaribbeanCaribbean

Presented by Presented by

Carlos LudenaCarlos Ludena

OutlineOutline

I.I. Importance of Agricultural ProductivityImportance of Agricultural ProductivityII.II. Methods to Measure Total factor Methods to Measure Total factor

ProductivityProductivityIII.III. Productivity in Agriculture - ResultsProductivity in Agriculture - ResultsIV.IV. Agricultural Productivity in Latin AmericaAgricultural Productivity in Latin AmericaV.V. Impacts of External Shocks and Impacts of External Shocks and

Economic ReformsEconomic ReformsVI.VI. Going forward – future analysisGoing forward – future analysis

I. Agricultural I. Agricultural ProductivityProductivity

- Importance to the wider - Importance to the wider economyeconomy

Productivity in Productivity in AgricultureAgriculture Agricultural productivity is an key factor for Agricultural productivity is an key factor for

agricultural development. agricultural development. Agricultural development is an important Agricultural development is an important

precondition towards industrializationprecondition towards industrialization Preceded and promoted industrialization in now Preceded and promoted industrialization in now

developed economies. developed economies. Agricultural productivity growth is higher Agricultural productivity growth is higher

relative to manufacturing (Martin and Mitra, relative to manufacturing (Martin and Mitra, 1999)1999) 0.5 - 1.5 percent per year higher0.5 - 1.5 percent per year higher

Agricultural Productivity Agricultural Productivity and economic growthand economic growth Agricultural productivity improves broader economic Agricultural productivity improves broader economic

growth by: growth by: Generation of additional demand for goods and Generation of additional demand for goods and

services produced outside agriculture as income from services produced outside agriculture as income from agriculture increases. agriculture increases.

Savings through increased farm incomes which can Savings through increased farm incomes which can then be invested both in agriculture and other sectors. then be invested both in agriculture and other sectors.

Release of labor to the industrial sector.Release of labor to the industrial sector. Provision of cheap food for urban areas, enabling Provision of cheap food for urban areas, enabling

them to maintain wage rates at competitive levels them to maintain wage rates at competitive levels Provision of raw material to support manufacturing. Provision of raw material to support manufacturing.

II. Approaches to II. Approaches to Measure TFPMeasure TFP

- Distance functions and - Distance functions and the Malmquist Indexthe Malmquist Index

Total Factor Productivity Total Factor Productivity (TFP)(TFP) Can take into account all relevant factors Can take into account all relevant factors

and offer a more detailed view relative to and offer a more detailed view relative to partial factor productivity (PFP)partial factor productivity (PFP)

Used in the analysis of agricultural Used in the analysis of agricultural productivityproductivity

TFP Measurement TFP Measurement ApproachesApproaches Frontier or Non-FrontierFrontier or Non-Frontier Frontier approaches explicitly incorporate Frontier approaches explicitly incorporate

inefficiencyinefficiency and account for and account for changeschanges in in efficiency over time.efficiency over time.

Non-frontier approaches generally assume Non-frontier approaches generally assume that observed output is frontier outputthat observed output is frontier output Competitive optimizers behavior. Firms are Competitive optimizers behavior. Firms are

technically efficienttechnically efficient TFP is changes in production technology onlyTFP is changes in production technology only

TFP Measurement TFP Measurement ApproachesApproaches EconometricEconometric Estimation of cost and production functions Estimation of cost and production functions

(non-frontier)(non-frontier) Estimation of production frontierEstimation of production frontier

DeterministicDeterministic Index Numbers (Laspayres, Paasche, Index Numbers (Laspayres, Paasche,

TTöörnqvist)rnqvist) Mathematical Programing (Malmquist Index)Mathematical Programing (Malmquist Index)

TFP Measurement TFP Measurement ApproachesApproaches

Non FrontierNon Frontier FrontierFrontier

EconometricEconometric Econometric estimation Econometric estimation of production (and of production (and cost) functionscost) functions

Econometric Econometric estimation of estimation of production frontiersproduction frontiers

DeterministicDeterministic Function-based index Function-based index number formulae number formulae (Diewert)(Diewert)PaaschePaascheLaspeyersLaspeyersTTöörnqvistrnqvistFischerFischer

Mathematical Mathematical Programming ModelsProgramming ModelsData Envelopment Data Envelopment AnalysisAnalysisMalmquist IndexMalmquist Index

Deterministic MethodsDeterministic Methods

Do not involve explicit specification of a Do not involve explicit specification of a production function (no estimation of production function (no estimation of parameters)parameters)

A A deterministicdeterministic or exact relationship or exact relationship between inputs and outputs.between inputs and outputs.

Sensitive to measurement errorsSensitive to measurement errors

Output Possibility Set Output Possibility Set and Distance Functions and Distance Functions

B

g

A

O O2

C

P(x)

y1

y2

P(x) = {y R+M | (y, x) S}

D0 (x, y) = (sup{θ: (x, θy) S})-1

D0 (x, y) = OC/OA

1, :C 0 ttt yxD

1, :A 0 ttt yxD

θ = Efficiency coefficient

Distance Functions and Distance Functions and Productivity IndicesProductivity Indices

g

Bt

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At

St

y1

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t

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Malmquist IndexMalmquist Index

Malmquist Index (Caves et al., 1982)Malmquist Index (Caves et al., 1982)

ttt

tttt

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yxDM

,

,

0

110

Maximal proportional change in output to make (xt,yt) feasible in relation to technology at t+1.

Technology in period t is reference technology.

ttt

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0

11101

Technology in period t+1 is reference technology.

TFP, Malmquist Index and TFP, Malmquist Index and Distance FunctionsDistance Functions Fare et al. (1994, Fare et al. (1994, AERAER): Geometric mean ): Geometric mean

of two Malmquist Indexes (t and t+1) of two Malmquist Indexes (t and t+1) Shepard’s Distance Function: Shepard’s Distance Function: Maximum proportional change in outputs Maximum proportional change in outputs

required to make the set of input and outputs required to make the set of input and outputs feasible in relation to the technology at time feasible in relation to the technology at time tt

Computed as the solution to a linear Computed as the solution to a linear programming problem, with the model programming problem, with the model exhibiting constant returns to scale:exhibiting constant returns to scale:

*

,

1**0 max,

*

k

z

kk

kkD

yx

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k

kkj

kj

k yyz1

** Jj ,,1

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k

kh

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k xxz1

*Hh ,,1

0kz Nk ,,1

Where:k is the set of countries (k* is a particular country whose efficiency is being measured)j is the set of outputs, h is the set of inputs, zk is the weight of the kth country data; and is the efficiency index.

Subject to


Output-based Malmquist productivity Output-based Malmquist productivity change indexchange index

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growthty Productivi 1)(0 M

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Allows for inefficient performanceAllows for inefficient performance Does not assume an underlying form for Does not assume an underlying form for

technologytechnology Constructs a “world” frontier and compares Constructs a “world” frontier and compares

each country to this frontier.each country to this frontier. Two components: Efficiency change and Two components: Efficiency change and

technical changetechnical change The product of these two components yields a The product of these two components yields a

frontier version of productivity change frontier version of productivity change

Technical Change and Technical Change and Efficiency ChangeEfficiency Change

g

O

At

St

y1

y2

St+1

At+1

Technical Change

“Innovation”

Efficiency Change

“Catching-up”

Bt

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Efficiency and Technical Efficiency and Technical ChangeChange

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Distance Functions with Distance Functions with multiple outputsmultiple outputs

Directional Distance Directional Distance FunctionFunction Nin et al. (2003): Input allocationNin et al. (2003): Input allocation

Specific input constraints for allocated inputsSpecific input constraints for allocated inputs Modified the directional distance function measure Modified the directional distance function measure

(Chung et al., 1997)(Chung et al., 1997) Defined as the contraction of inputs and the Defined as the contraction of inputs and the

expansion of outputs (expansion of outputs (--ggxxggyy)) One output: One output: gg = ( = (yyii, , 00)) The distance function The distance function DD((xx, , yy; ; gg = ( = (yyii, , 00)))) is the is the

optimal objective value for the following optimal objective value for the following problem:problem:

is the level of the allocatable input h used to produce output j of firm k,

*

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*

ki

zi

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A is the set of allocatable inputs,

index the other outputs (for which efficiency is not being measured).

Subject to:

i is the particular output for which efficiency is being measured for firm k*, and

Directional Malmquist Directional Malmquist IndexIndex Directional Malmquist Index for a specific Directional Malmquist Index for a specific

Product/Sector (Nin-Pratt et al., 2003)Product/Sector (Nin-Pratt et al., 2003)

5.0

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Directional Malmquist Directional Malmquist IndexIndex Efficiency and Technological Change Efficiency and Technological Change

Components:Components:

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LimitationsLimitations

Malmquist index may not be well definedMalmquist index may not be well defined Reallocation factor bias in the measureReallocation factor bias in the measure

Movement of unallocated inputs from one activity to Movement of unallocated inputs from one activity to the other rather than technical growth. the other rather than technical growth.

Data Data Which factors are relevantWhich factors are relevant Which peers (countries) to includeWhich peers (countries) to include Zero output in some cases (i.e. pork production)Zero output in some cases (i.e. pork production)

Other problems (not exclusive of Malmquist Other problems (not exclusive of Malmquist Index)Index) Which measures/indicators are appropriate?Which measures/indicators are appropriate?

III. Productivity III. Productivity in Agriculturein Agriculture

- Worldwide results and - Worldwide results and focus on Latin Americafocus on Latin America

Ludena et al., 2007. Productivity growth and convergence in crop, ruminant, and non ruminant production: measurement and forecasts. Agricultural Economics 37 (1): 1–17

Empirical Application for Empirical Application for Latin AmericaLatin America FAOSTAT: 116 countries, 1961-2001FAOSTAT: 116 countries, 1961-2001 Outputs – Crops, Ruminants and Non Outputs – Crops, Ruminants and Non

RuminantsRuminants InputsInputs

Land (Pastures, Arable and Permanent Crops) Land (Pastures, Arable and Permanent Crops) Machinery (tractors, milking machines)Machinery (tractors, milking machines) Animal StockAnimal Stock Animal FeedAnimal Feed FertilizersFertilizers Labor (in agriculture)Labor (in agriculture)

Input-Output AllocationInput-Output AllocationInputInput OutputOutput

Arable land and permanent cropsArable land and permanent crops CropsCrops

Land in pastureLand in pasture RuminantsRuminants

Tractors and harvestersTractors and harvesters CropsCrops

Milking MachinesMilking Machines RuminantsRuminants

Ruminant StockRuminant Stock RuminantsRuminants

Non-Ruminant StockNon-Ruminant Stock Non-ruminantsNon-ruminants

FeedFeed LivestockLivestock

Fertilizer Fertilizer CropsCrops

LaborLabor AllAll

TFP in Agriculture (1961-TFP in Agriculture (1961-2001)2001)

RegionAgriculture Crops Ruminants

Non-Ruminants

World 0.94 0.72 0.62 2.10

Latin America & Carib. 0.77 0.76 0.08 2.01

Industrialized Countries 1.19 1.47 0.71 1.23

Economies in Transition 0.89 1.13 0.28 1.20

China 1.67 0.74 2.82 3.33

East and South East Asia 0.18 0.02 -0.22 1.25

South Asia 0.27 0.17 0.35 1.89

N. Africa and Middle East 0.03 -0.03 -0.02 0.64

Sub-Saharan Africa 0.21 0.15 0.36 0.50

Annual Productivity Growth (%) in Agriculture and Subsectors

0.94

0.77

1.19

0.89

1.67

0.18

0.27

0.03

0.21

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8

World

Latin America & Carib.

Industrialized Countries

Economies in Transition

China

East and South East Asia

South Asia

N. Africa and Middle East

Sub-Saharan Africa

Agriculture

-0.5 0 0.5 1 1.5 2 2.5 3 3.5 4

World




China


South Asia


Sub-Saharan Africa

CropsRuminantsNon-Ruminants

0.72

0.76

1.47

1.13

0.74

0.02

0.17

-0.03

0.15

-0.2 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6

World




China


South Asia


Sub-Saharan Africa

Crops

-0.5 0 0.5 1 1.5 2 2.5 3 3.5 4

World




China


South Asia


Sub-Saharan Africa

Ruminants

Non-Ruminants

IV. Productivity IV. Productivity Growth in Latin Growth in Latin AmericaAmerica

TFP in Agriculture in Latin TFP in Agriculture in Latin America and the CaribbeanAmerica and the Caribbean

Annual Productivity Growth (%) in Agriculture and Subsectors (1961-2001)

AgricultureAgriculture CropsCrops RuminantsRuminantsNon Non

RuminantsRuminants

1961-001961-00 0.80.8 0.80.8 0.10.1 2.02.0

1961-701961-70 0.10.1 0.40.4 -0.9-0.9 0.30.3

1971-801971-80 0.70.7 0.50.5 0.00.0 2.72.7

1981-901981-90 0.70.7 0.50.5 0.50.5 1.61.6

1991-001991-00 1.71.7 1.61.6 0.70.7 3.53.5

0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

AgricultureCropsLivestock

Cumulative Productivity Index for Latin Cumulative Productivity Index for Latin America and the Caribbean (1961 = 100)America and the Caribbean (1961 = 100)

Source: Ludena et al. 2007.

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

3

3.5

TFP EFF TCH TFP EFF TCH TFP EFF TCH TFP EFF TCH

Agriculture Crops Ruminants Non Ruminants

TFP in Agriculture in Latin America TFP in Agriculture in Latin America and the Caribbean (1961-2000)and the Caribbean (1961-2000)

Annual TFP Growth (1961-200)Annual TFP Growth (1961-200)Countries with Land Abundance (Ha./PEA > Countries with Land Abundance (Ha./PEA > 12) 12)

0 0.5 1 1.5 2 2.5 3 3.5 4

Argentina

Bolivia

Brazil

Chile

Colombia

Mexico

Nicaragua

Paraguay

Uruguay

Venezuela

Annual TFP Growth (1961-200) Annual TFP Growth (1961-200) Countries with Land Constraint (Ha./PEA < Countries with Land Constraint (Ha./PEA < 12) 12)

-1.5 -1 -0.5 0 0.5 1 1.5 2 2.5 3

Costa Rica

Cuba

Ecuador

El Salvador

Guatemala

Haiti

Honduras

Jamaica

Panama

Peru

Rep. Dom.

AVERAGE GROWTH (%)1961-0061-70 71-80 81-90 91-00

Argentina 3.40 4.63 3.72 1.78 3.47Belize 3.00 0.59 3.35 1.14 7.03Bolivia 0.37 -2.15 0.16 1.08 2.44Brazil 0.68 -1.73 -1.38 2.34 3.60Chile 1.99 2.07 0.31 2.55 3.06Colombia 1.22 -0.47 2.64 1.57 1.16Costarica 2.64 3.95 0.03 3.61 2.99Cuba 0.99 2.48 2.13 -0.89 0.29Dominican 0.64 2.05 0.37 -0.49 0.62Ecuador 0.23 0.58 -1.07 0.52 0.90Elsalvador -0.14 1.32 0.10 -1.13 -0.85Guatemala 1.24 1.43 1.63 0.69 1.24Haiti 0.60 2.45 3.00 -0.24 -2.70Honduras -1.20 -2.76 -0.14 -0.81 -1.08Jamaica 0.59 1.40 -0.34 -0.84 2.16Mexico 1.55 0.36 2.73 1.02 2.12Nicaragua 0.96 3.72 -0.22 -2.58 3.03Panama -1.22 -1.76 -1.57 -0.36 -1.19Paraguay 1.54 0.03 3.37 1.54 1.24Peru 1.46 1.10 -0.46 1.86 3.37PuertoRico 5.19 4.80 6.06 5.77 4.15Suriname -0.07 -1.52 4.51 1.95 -4.96Uruguay 1.63 1.74 2.64 0.89 1.26Venezuela 2.08 2.79 2.35 1.04 2.16

0.8

1.3

1.8

2.3

2.8

3.3

3.8

4.3

1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000


USA

Cumulative Productivity Index for USA Cumulative Productivity Index for USA (1961 = 100)(1961 = 100)

Cumulative Index Relative to the Cumulative Index Relative to the USUS

0

0.2

0.4

0.6

0.8

1

1.2

1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

Argentina Bolivia Brazil Chile Colombia

Costarica Cuba Ecuador Elsalvador Guatemala

Haiti Honduras Jamaica Mexico Nicaragua

Panama Paraguay Peru Uruguay Venezuela

V. External Shocks V. External Shocks and Economic and Economic ReformsReforms: Impacts : Impacts on Agricultural on Agricultural ProductivityProductivity

- The cases of Brazil and Cuba- The cases of Brazil and Cuba

Brazil and its agricultural Brazil and its agricultural policy – 1943-1980spolicy – 1943-1980s The corner stone of Brazil’s agricultural policy since The corner stone of Brazil’s agricultural policy since

1943 until the mid 1980s was the Minimum Price 1943 until the mid 1980s was the Minimum Price Program (PPM).Program (PPM).

Objective of the PPM: Reduce price risks and Objective of the PPM: Reduce price risks and variability, hence promote more investment and variability, hence promote more investment and agricultural production.agricultural production.

However, the PPM changed into a consumer subsidy However, the PPM changed into a consumer subsidy program – “cheap food policy”.program – “cheap food policy”.

Price control on more than 40 agricultural products, by Price control on more than 40 agricultural products, by fixing prices, controlling marketing margins and fixing prices, controlling marketing margins and allowing subsidized imports to compete with domestic allowing subsidized imports to compete with domestic production.production.

Brazil: Annual Productivity Brazil: Annual Productivity Growth in Agriculture (%)Growth in Agriculture (%)

PeriodPeriod AgricultureAgriculture CropsCrops RuminantsRuminantsNon Non

RuminantsRuminants

1961-851961-85 -0.63-0.63 -0.88-0.88 -1.03-1.03 1.011.01

1986-001986-00 3.263.26 3.633.63 5.025.02 10.1010.10

0

1

2

3

4

5

6

1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

TFP Agriculture

TFP Crops

TFP Ruminants

TFP Non-Ruminants

REFORMS

Brazil and the effect of Brazil and the effect of economic reformseconomic reforms

Brazil and its agricultural Brazil and its agricultural policy – 1985-2000policy – 1985-2000 In 1985 agricultural policies changed.In 1985 agricultural policies changed. Trade liberalization and reduction of Trade liberalization and reduction of

government intervention.government intervention. Deregulation and elimination of direct Deregulation and elimination of direct

price controls in agricultural products.price controls in agricultural products. This changes reduced costs and This changes reduced costs and

increased agricultural productivity.increased agricultural productivity.

Brazil and its agricultural Brazil and its agricultural policy – 1985-2000policy – 1985-2000 Agricultural productivity grew at an Agricultural productivity grew at an

annual rate of 3.26%.annual rate of 3.26%. Livestock sector grew the most:Livestock sector grew the most: Productivity growth in pigs and poultry grew Productivity growth in pigs and poultry grew

at 10% per year.at 10% per year. Productivity in bovine meat and milk Productivity in bovine meat and milk

production grew at 5% per year.production grew at 5% per year.

Brazil and its agricultural Brazil and its agricultural policy – 1985-2000policy – 1985-2000 More productivity in pigs and poultry due More productivity in pigs and poultry due

to reduced costs.to reduced costs. Incentives to move to corn and soybean Incentives to move to corn and soybean

production areas.production areas. This has reduced feed costs, which are This has reduced feed costs, which are

>50% of all costs in pigs and poultry >50% of all costs in pigs and poultry production.production.

Cuba and the effect of Cuba and the effect of external shocks – 1960-1988external shocks – 1960-1988 Cuba since the 1960s followed the Soviet Cuba since the 1960s followed the Soviet

model of monoculture, with high mechanization model of monoculture, with high mechanization and use of fertilizers.and use of fertilizers.

Government managed farms comprised 70% of Government managed farms comprised 70% of all agricultural land.all agricultural land.

Use of tractors and fertilizers at rates similar to Use of tractors and fertilizers at rates similar to the United States.the United States.

Trade of sugar with the Soviet Union at Trade of sugar with the Soviet Union at preferential terms in exchange for oil, preferential terms in exchange for oil, chemicals and machinery. chemicals and machinery.

Cuba Cuba and the effect of and the effect of external shocks – 1960-1988external shocks – 1960-1988

During the period it grew at 0.6% per During the period it grew at 0.6% per year.year.

Excess use of capital intensive inputs Excess use of capital intensive inputs (fertilizers and tractor) per unit of output.(fertilizers and tractor) per unit of output.

Only non ruminant production (pigs and Only non ruminant production (pigs and poultry) grew close to 2% per year.poultry) grew close to 2% per year.

In 1989, the Soviet Union dissolved and In 1989, the Soviet Union dissolved and at the same time, 6 billion dollars in at the same time, 6 billion dollars in subsidies for Cuba.subsidies for Cuba.

GDP decreased by 25% between 1989 GDP decreased by 25% between 1989 and 1991and 1991

Oil imports fell by 50%, availability of Oil imports fell by 50%, availability of fertilizers and pesticides decreased by fertilizers and pesticides decreased by 70%, and other imports fell by 30%. 70%, and other imports fell by 30%.

Cuba and the collapse of Cuba and the collapse of the Soviet Unionthe Soviet Union

Cuba: Annual Productivity Cuba: Annual Productivity Growth in Agriculture (%)Growth in Agriculture (%)

PeriodPeriod AgricultureAgriculture CropsCrops RuminantsRuminantsNonNon

RuminantsRuminants

1961-19881961-1988 0.380.38 -4.87-4.87 -0.98-0.98 1.921.92

1989-19921989-1992 -20.85-20.85 -16.87-16.87 -22.41-22.41 -23.26-23.26

1993-20001993-2000 6.856.85 2.902.90 5.325.32 9.769.76

0

0.5

1

1.5

2

2.5

3

1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

TFP Agriculture

TFP Crops

TFP Ruminants

TFP Non-Ruminants

REFORMS

SOVIET UNION COLLAPSE

Cuba and the collapse of Cuba and the collapse of the Soviet Unionthe Soviet Union

Cuba and the “Special Cuba and the “Special Period”Period” Agricultural Productivity decreases by Agricultural Productivity decreases by

52% between 1989 and 1992.52% between 1989 and 1992. Bovine cattle production is the most Bovine cattle production is the most

affected, decreasing 70%.affected, decreasing 70%. Crops and non-ruminant productivity Crops and non-ruminant productivity

declines by 28% and 22%, respectively.declines by 28% and 22%, respectively.

Cuba and agricultural Cuba and agricultural reforms – 1993-2000reforms – 1993-2000 The government gives land to farmers and The government gives land to farmers and

cooperatives and creates the cooperatives and creates the Unidad Básica de Unidad Básica de Producción CooperativaProducción Cooperativa (UBPC) as the (UBPC) as the fundamental production unit.fundamental production unit.

The government allows excess production to be The government allows excess production to be sold.sold.

By the year 2000, the UBPC encompass 42% of By the year 2000, the UBPC encompass 42% of land.land.

Government participation of land holdings Government participation of land holdings decreased from 75% to 33%.decreased from 75% to 33%.

0

0.5

1

1.5

2

2.5

3

1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

TFP Agriculture

TFP Crops

TFP Ruminants

TFP Non-Ruminants

REFORMS

SOVIET UNION COLLAPSE

Cuba and agricultural Cuba and agricultural reformsreforms

Cuba and agricultural Cuba and agricultural reforms – 1993-2000reforms – 1993-2000 After the reforms, agricultural productivity grew at After the reforms, agricultural productivity grew at

annual rate of 7%.annual rate of 7%. Most of the growth in livestock sector, 10% in pigs and Most of the growth in livestock sector, 10% in pigs and

poultry and 5% in ruminants.poultry and 5% in ruminants. Non-ruminant production reached pre-1988 levels, Non-ruminant production reached pre-1988 levels,

mostly due to pig production.mostly due to pig production. Alternative feed sources, increased feed efficiency, urban Alternative feed sources, increased feed efficiency, urban

agriculture.agriculture. Government’s contract system for farmers, feed assigned Government’s contract system for farmers, feed assigned

based on total meat production.based on total meat production.

Limited poultry production due to feed import Limited poultry production due to feed import limitations.limitations.

Cuba and agricultural Cuba and agricultural reforms – 1993-2000reforms – 1993-2000 Meat production did not recovered completely.Meat production did not recovered completely. Meat sales was prohibited, with penalties of up Meat sales was prohibited, with penalties of up

to 20 years in prison for illegal animal to 20 years in prison for illegal animal slaughter.slaughter.

Availability of bovine cattle meat was limited.Availability of bovine cattle meat was limited. Use of animal traction to substitute tractor use. Use of animal traction to substitute tractor use. By 2000, there were 400,000 traction animals, By 2000, there were 400,000 traction animals,

more than double the levels in 1990.more than double the levels in 1990. Number of tractors decreased by 40% between Number of tractors decreased by 40% between

1990 and 2000.1990 and 2000.

ConclusionsConclusions

Agricultural productivity in Latin America Agricultural productivity in Latin America has grown, specially in the 1990s.has grown, specially in the 1990s.

The most dynamic sector is livestock, The most dynamic sector is livestock, where non ruminants (pigs and poultry) is where non ruminants (pigs and poultry) is the subsector with the largest growth.the subsector with the largest growth.

Production systems and technology for Production systems and technology for pigs and poultry are more transferable pigs and poultry are more transferable from developed countries.from developed countries.

Efficiency gains in feed explain a large Efficiency gains in feed explain a large share of productivity growth in this sector.share of productivity growth in this sector.

Plan aheadPlan ahead

Econometric analysis of causes of productivity Econometric analysis of causes of productivity growthgrowth

Data sources and variables:Data sources and variables: Agricultural Science and Technology Indicators Agricultural Science and Technology Indicators

(IFPRI) (IFPRI) www.asti.cgiar.orgwww.asti.cgiar.org Price policy towards agriculture (The World Bank) Price policy towards agriculture (The World Bank)

www.worldbank.org/agdistortionswww.worldbank.org/agdistortions Trade opennessTrade openness Development of financial marketsDevelopment of financial markets Other variables used in development economics Other variables used in development economics

literatureliterature

ReferencesReferences

Färe et al., 1994. Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries. The American Economic Review, 84 (1): 66-83.

Nin et al., 2003. Bridging the Gap between Partial and Total Factor Productivity Measures using Directional Distance Functions. American Journal of Agricultural Economics 85: 928-942.

Ludena et al., 2007. Productivity Growth and Convergence in Crop, Ruminant and Non-Ruminant Production: Measurement and Forecasts, Agricultural Economics, 37(1): 1-17.

Total Factor Productivity Total Factor Productivity Growth in Latin America Growth in Latin America and the Caribbeanand the Caribbean

Presented by Presented by

Carlos LudenaCarlos Ludena

max,

,;,kz

yxD ggyx

N

kyj

kj

kj

k gyyz1

* Jj ,,1

N

kxh

kh

kh

k gxxz1

* Hh ,,1

0kz Nk ,,1•k is the set of countries (k* is a particular country)•j is the set of outputs and h is the set of inputs, •zk is the weight of the kth country data, •gy and gx determine the direction in which D is defined, gyj and

gxh denote the jth and hth components of gy and gx,

respectively, and•β is a scalar.

Subject to:

At At+1

O

Pt Pt+1

y1

y2

Efficiency in Efficiency in yy1’s Direction of a 1’s Direction of a Production Point in Production Point in tt + 1 with + 1 with Technology in Technology in tt as reference as reference

0

0.5

1

1.5

2

2.5

3

3.5

4

1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

Argentina Bolivia

Brazil Chile

Colombia Ecuador

Mexico Paraguay

Peru Uruguay

Venezuela

0

0.5

1

1.5

2

2.5

3

3.5

4

1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

Argentina Costarica

Cuba Dominican

Elsalvador Guatemala

Haiti Honduras

Jamaica Mexico

Nicaragua Panama

Suriname

Brazil and its agricultural Brazil and its agricultural policy – 1943-1980spolicy – 1943-1980s Agricultural productivity declined for crops and Agricultural productivity declined for crops and

livestock.livestock. Between 1961 and 1985, productivity declined Between 1961 and 1985, productivity declined

on average by 0.63% per annum.on average by 0.63% per annum. Crops productivity decreased by 0.88% per Crops productivity decreased by 0.88% per

year, while ruminant production (bovine meat year, while ruminant production (bovine meat and milk production) declined 1.03% per year.and milk production) declined 1.03% per year.

Exception were pigs and poultry, which Exception were pigs and poultry, which increased productivity by 1% per year.increased productivity by 1% per year.

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Productivity Growth in Agriculture in Latin America and the Caribbean Presented by Carlos Ludena