Agricultural Production, Productivity, and Research Investment in North Dakota

This report examines long-term trends in farm income, agricultural production, productivity, and research and development (R&D) investment in North Dakota. Although nominal farm receipts have increased substantially, growth in real net receipts has been more modest because rising production costs have absorbed a substantial share of revenue gains, particularly in livestock production. North Dakota also achieved strong long-run total factor productivity (TFP) growth after 1960, consistent with the delayed effects of earlier public agricultural R&D growth. However, productivity growth has slowed in recent decades, and aggregate TFP has stagnated after 2000, likely reflecting slower R&D growth in earlier decades, especially during the 1990s. Despite this slowdown, estimated returns to North Dakota agricultural R&D remain positive and economically meaningful. The preferred specification produces an internal rate of return (IRR) of 28.42 percent and a modified internal rate of return (MIRR) of 10.37 percent. Counterfactual simulations suggest that if real R&D investment had continued to grow at the 2000–2015 rate during 2015–2025, additional agricultural production through 2075 would have been worth $7.47 billion in 2015 dollars. These findings suggest that sustained public agricultural R&D investment can support North Dakota’s long-run productivity growth and production capacity.