Analysis of Factor Productivity in Iranian Agricultural Sector in an Input – Output Framework

Abstract Due to the scarcity of production factors, it is essential to enhance productivity as the best way of achieving agricultural sector's growth. In order to attain a proper level of productivity growth in economic sectors, it is required to have a clear image of the total factor productivity (TFP) growth and the productivity of every production resource in such sectors. So, the main purpose of the present study is to analyze total factor productivity in the Iranian agricultural sector and its four subsectors (crops and horticulture, livestock and poultry, fishery, and forestry) over the period 1986-2001. To this end, the partial and the total factor productivity were calculated by Tornqvist- Theil index based on input-output tables. In addition, the total factor productivity was decomposed into the productivity of four inputs, namely labor, capital, land, and intermediate factors. For this purpose, the input-output tables of the years 1986, 1991, and 2001 that have been published by the Statistical Center of Iran and deflated to constant price, were employed. Results generally showed that, although productivity of some inputs has increased during the study period, however, total factor productivity has declined in all agricultural sub-sectors, except in the livestock and poultry sub-sector. The highest and lowest annual growth of productivity has been 1.47 and -1.68 percent in livestock and poultry sub-sector and forestry sub-sector, respectively. Given that increase in productivity is essential for any growth in output and to offset any increase in product prices, a focus on the increase in productivity of low productivity inputs through the development of a comprehensive and long-term plan by the sector planners is recommended.