Decomposition of Total Factor Productivity Change in the U.S. Hog Industry

The U.S. hog industry has experienced dramatic structural changes and rapid increases in farm productivity. A stochastic frontier analysis is used to measure hog enterprise total factor productivity (TFP) growth between 1992 and 2004 and to decompose this growth into technical change and changes in technical efficiency, scale efficiency, and allocative efficiency. Productivity gains over the 12-year period are found to be explained almost entirely by technical progress and by improvements in scale efficiency. Differences in TFP growth rates in the Southeast and Heartland regions were found to be explained primarily by differences in farm size growth rates.