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100 years. By multifjictor productivity I mean the aggregate average product 

 of all Inputs under the control of fanners. As is suggested by my statement, 

 public and private R&D, which are not under the direct control of farmers, 

 have been one Important source of U.S. multif actor agricultural productivity 

 increases. Let me hasten to add that the uses of new technologies may have 

 effects on the environment that are negative and that could be viewed as 

 partially offsetting some of the productivity gains. Also, although additional 

 farm output is generally evaluated at market prices, market prices may 

 overvalue the marginal social benefit of farm output when government surplus 

 stocks of commodities exist. Research is underway to fine-tune productivity 

 estimates for some of these effects. 



What do multifactor productivity gains mean? When multifactor 

 productivity is faster in the farm than in the nonfarm sector and a large 

 share of consumer expenditures are for domestically produced products, the 

 consequence is that the real price of farm output decreases . In other words , 

 agricultural products become relatively inexpensive. For example, Jorgenson 

 and Gollop (1992) present empirical evidence for 1948-89 showing that 

 multifactor productivity growth has been on average U times faster in the 

 U.S. farm sector than in the nonfarm sector. This is an outstanding 

 achievement for the farm sector that has enhanced its relative comparative 

 advantage in international trade. Furthermore, with a large amount of 

 competition in the U.S. economy, these differences in productivity rates have 

 shown up in different trends in U.S. prices. The price of farm output has 

 fallen by 2.5 percent per year relative to all goods and services purchased 

 by U.S. consumers . 



One way economists summarize the benefits of agricultural research is 

 the internal rate of return on the investment. This is a cost versus benefit 



