#181. Productivity and Agricultural YieldsPosted on
One of the long-term drivers of commodity prices is productivity gains driven by technological progress. From the late 1700’s until 1950, land use devoted to agriculture increased fivefold, in line with increases in population. But, since 1950, the percentage of the world’s land area used for farming has increased modestly, while the world’s population has more than doubled, from 2.5 billion to 6.6 billion. Today’s agriculture technology means one person is fed by 2,000 square meters (1/2 acre) of farmland annually, whereas in the 1700-1800’s, it took 20,000 square meters (5 acres).
The most important transformation on the path to development was the tractor. The US used about 269 tractors per 100 hectares of farmland, while China uses just 96. This is changing, however, as China continues its process of industrialization and further narrows the gap. In 1961, China had only 5 tractors per 100 hectares.
Agricultural technology is not just about machines. The newest innovation is genetically modified organisms (GMOs). While controversial top some, the process allows scientists to manipulate the genetic structure of plant organisms, which boosts yield and helps reduce the use of pesticides. Just like with the revolution that transformed the personal computer from a room-sized monstrosity into a ubiquitous household technology, agricultural product innovations are poised to take off.