Total Factor Productivity (TFP) of the UK agricultural industry is estimated to have increased by 3.4% between 2021 and 2022. TFP measures how well inputs are converted into outputs and thus gives an indication of the efficiency and competitiveness of the farming industry. It is one of the measures that Defra looks at closely, as it tries to improve the performance of UK agriculture.
Rather than an improvement in the level of output, the main driver for the increase in TFP was a decrease in the volume of inputs. This offset a very slight decrease in the volume of all outputs; less than 0.1%. The volume of all inputs decreased by -3.3%; this is as a result of a decline across all input items in the accounts except for veterinary expenses and labour which saw small increases. The inputs which saw the largest percentage decreases were fertilisers (-12.8%), seeds (-12.0%) and animal feed (-6.7%).
Looking in a little more detail at output, total crop output increased by 1.7%, whilst total livestock output decreased by the same amount. The notable changes in crop output were an increase in OSR (38.8%) and barley (11.5%). In contrast, there were decreases in sugar beet (-18.3%) and vegetables and horticultural products (-4.9%). Total output of livestock from meat was down by -0.8%; this was mainly due to a decline in output from pigs (-3.1%) and poultry (-3.3%) with both cattle and sheep output increasing on the year by 0.7% and 3.1% respectively. Output from other livestock products was -3.2%, with milk output lower by -0.8% but the main driver was eggs, down by -21.4% on the year.
Getting TFP, and other productivity measures, improving is one of the key policy goals of Government over the next few years. Despite annual variability, the long-term trend is still one of slow but overall improvement in TFP. Since the time series began in 1973, TFP has increased by 67.3% driven by an increase in volume of all outputs by 37.9% and a decrease in the volume of all inputs by 17.6%.