Total factor productivity of Australian vegetable farms

ABARES Working Paper

Published: 30 April 2024

Authors: Haydn Valle, Shiji Zhao, Louise Capel and Will Chancellor

Summary

Vegetable productivity growth is inherently difficult to measure, due to the heterogeneity of outputs and subsequent challenges in aggregating price data. Standard approaches also fail to account for improvements in quality, we therefore develop a quality adjusted measure of vegetable total factor productivity (TFP).

The vegetable productivity average annual growth rate from 2007-08 to 2015-16 was negative 1.08%. These productivity estimates are likely to be understated due to uncaptured improvements in output mix and quality, as well as challenges in aggregating and weighting many diverse outputs.

Vegetable productivity growth experienced low volatility compared to broadacre productivity growth, reflecting less sensitivity to weather variability. While measurement issues remain, this working paper provides a firm starting point for future estimation attempts, should new data become available.