Smaller Farms Falling Behind in Total Factor Productivity

WASHINGTON, DC – Smaller farms are falling further behind larger ones in terms of productivity, according to recent research from the Economic Research Service (ERS). Total factor productivity grew at similar rates across farm-size classes except for the smallest, which had slower growth rates. While productivity for farms in the four largest size categories increased by 47 to 59 percent over the past 40 years, productivity for the smallest farms increased by only 17 percent. Some technological advances in recent decades, such as large combines and precision agriculture technologies, were not as advantageous for the smallest farms to adoption costs. Researchers say this helps explain why the productivity growth of the smallest farms has lagged behind that of larger operations. This trend has also resulted in a deterioration of the competitive position of farms in the smallest size category, likely contributing to a decline in their share of total output.