Agricultural productivity slows as rising input costs pressure farmers

Global agricultural productivity growth is slowing, reaching its lowest annual rate in 50 years at 0.63 percent between 2015 and 2024, according to the 2026 Global Agricultural Productivity (GAP) Report from Virginia Tech. This slowdown suggests that meeting projected 2050 food demand may require a substantial increase in land, water, and resource use.

In Australia, farmers are facing significant financial pressure due to surging costs for fuel and fertilizer. Jason Mellings, president of VFF Grains, noted that while a bumper harvest is expected, high input costs are squeezing profit margins. He highlighted that much of the increased expenditure on these essential resources flows to overseas companies, reducing the capital available for local investments like new machinery.

The combination of slowing productivity and rising resource requirements poses risks to both farmers and consumers. For producers, increased reliance on expensive inputs raises financial risk profiles. For consumers, these rising production costs can lead to higher prices for food and raw materials used in industries such as clothing and pharmaceuticals.