Crops and Livestock Productivity Growth in the Prairies: The Impacts of Technical Change and Scale

This study undertakes a comprehensive analysis of productivity growth in Canadian Prairie primary agriculture from 1940 to 2004. Total factor productivity (TFP) is measured using Tornqvist-Theil indexing procedures for the Prairie provinces (Alberta, Manitoba, and Saskatchewan). During the 1940-2004 period, productivity growth in Prairie agriculture grew at a rate of 1.56% a year. This aggregate measure does not indicate the substantial variations in productivity growth that have occurred between crops and livestock, between the provinces, and over time: productivity growth in crops is considerably higher than productivity growth in livestock; Manitoba and Saskatchewan display consistently higher productivity growth than Alberta; and from 1980 to 2004 livestock productivity growth increased considerably in Manitoba and Saskatchewan. The productivity growth estimates are decomposed econometrically using a translog cost function to indicate the relative roles of technical change and scale effects. Productivity growth in crops has largely been the result of technical change while economies of scale have played a critical role in generating productivity growth in the livestock sector.