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.