FPJ1801 - Zhao, S et al. (2021), Productivity as a measure of performance: ABARES perspective

FPJ1801 - Zhao, S et al. (2021), Productivity as a measure of performance: ABARES perspective

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Productivity is an important measure of Australian agricultural performance. It shows how efficiently farm inputs are used to produce outputs. At face value, productivity is a simple measure, however it has some important conceptual and technical complexities that need to be understood to make best use of it, and it is by no means a complete measure of industry performance when used in isolation. This article explains how ABARES’ productivity estimates (known as total factor productivity or TFP) should be interpreted and what trends in productivity over time do and don’t tell us about Australian agriculture. An appendix describes issues in the interpretation of productivity estimates in more detail and discusses the relationships between scientific and technological breakthroughs, farm business innovation and productivity growth.

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Published 13 Apr 2021

Industry performance measures are vital indicators for understanding return on industry investment, judging appropriate levels of government and other public support and how industries contribute to economic health and wellbeing. Total Factor Productivity (TFP) is a standard measure of industry performance which describes a ratio of all outputs relevant to…
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