Abstract

The gross-output multifactor productivity index for U.S. food manufacturing grew 0.19

percent per year between 1975 and 1997. This productivity growth is low when compared

with an estimate of 1.25 percent per year for the whole manufacturing sector. Low investment in research and development (R&D) could be one reason. Although productivity has

been relatively low, food manufacturing output has grown significantly at 1.88 percent

over the last two decades. Indeed, the expansion of combined factor inputs provided significant impetus to food manufacturing output. Food manufacturing is materials-intensive,

and declining real producer prices of crude food and feedstuffs fueled the expansion of

input utilization and drove down prices of processed foods paid by consumers. 

Keywords: Food manufacturing, multifactor productivity, labor productivity.

Acknowledgments

The author thanks Mark Denbaly, Nicole Ballenger, David Davis, Paul Heisey, and 

Mike Ollinger of the Economic Research Service, Bob Chambers of the University of

Maryland, and Tom Lutton of the Office of Federal Housing Enterprise Oversight for

helpful review of the earlier drafts of this report; John Connor of Purdue University and

Gerry Schluter of the Economic Research Service for their suggestions in compiling the

Census of Manufacturing data; Lou King for editorial advice and Wynnice PointerNapper for the final document layout and charts. 

United States

Department

of Agriculture

www.ers.usda.gov

Electronic Report from the Economic Research Service

October 2003

Technical

Bulletin

Number 1905 Food Manufacturing Productivity

and Its Economic Implications

Kuo S. Huang
Contents

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Production and Factor Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Gross and Net Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Labor Input . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Capital Input . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Material and Energy Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Methodology of Measuring Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Derivation of Productivity Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

The Törnqvist Index Approximation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Empirical Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Empirical Productivity Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Gross-Output Productivity Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Net-Output Productivity Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Appendix A: Data Compilations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Appendix B: Estimated Capital Depreciation Equations . . . . . . . . . . . . . . . . .31

Appendix C: Yearly Productivity Measures . . . . . . . . . . . . . . . . . . . . . . . . . . .32

ii ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA
Summary

This study measures the productivity of U.S. food manufacturing to explore its

input-output relationships during 1975-97. The gross output (the value of shipments net of changes in inventories) of the food manufacturing sector grew 1.88

percent yearly, reaching an annual average of $353 billion in 1995-97. The net

output (gross output minus the cost of material inputs and purchased services),

which shows the industry’s contribution to the Nation’s gross domestic product

(GDP), increased 3.58 percent yearly. In 1995-97, the annual average net output

was $135 billion (about 38 percent of the gross output), with the 62-percent difference accounted for by expenditures on material inputs. 

Annual employment growth in the food manufacturing sector averaged just 0.12

percent between 1975 and 1997. However, new capital expenditures, measured at

1982 prices, show a yearly increase from $6.3 billion in 1975-79 to $8.8 billion in

1995-97, a growth rate of 2.39 percent. Similarly, capital services costs increased

1.41 percent annually from $9 billion in 1975-79 to $11.2 billion in 1995-97. Slow

growth in employment, coupled with the increase of capital expenditures, is

evidence that capital is substituting for labor by providing each employee with

more and better capital to work with. 

To measure the productivity of the U.S. food manufacturing sector, this study

calculates multifactor and labor productivity indexes. The multifactor productivity

index measures the rate of output growth in excess of growth due simply to

increases in combined factor inputs. The labor productivity index measures the rate

of growth in output per labor-hour devoted to the production of that output.

Two approaches are applied to measure the multifactor and labor productivity

indexes of U.S. food manufacturing. The gross-output approach specifies gross

output as a function of capital, labor, energy, and all intermediate material inputs.

Alternatively, the net-output approach specifies net output as a function of labor

and capital inputs only. The two approaches produce substantially different

productivity measurements, mainly because material costs constitute more than 60

percent of the food manufacturing sector’s gross output. The ratios for some food

manufacturing industries, like meat products and fats and oils, reached 74 and 79

percent, respectively, in 1995-97. Consequently, including or excluding material

inputs as a component in a production function will substantially affect the results

of measured productivity indexes. 

For interpreting food manufacturing productivity, the gross-output productivity

indexes should be used to assess technology changes over time because this model

includes as many factor inputs as available data sources allow, and the potential

change effects from unmeasured inputs can be avoided. The gross-output multifactor productivity index for food manufacturing grew 0.19 percent per year

between 1975 and 1997. This slow growth rate is consistent with the Bureau of

Labor Statistics (BLS) estimate of 0.45 percent using different data. Both estimates

of productivity indexes are low when compared with the BLS estimate of 1.25

percent per year for the whole manufacturing sector over the same period of time.

The reason for the lower productivity growth in food manufacturing is not fully

understood, but low investment in research and development (R&D) could be one

reason. The economic implications of slow growth in food manufacturing productivity are threefold.

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ iii
First, instead of productivity growth, the expansion of combined factor inputs

provided significant impetus to food manufacturing output. U.S. food manufacturing gross output grew 1.88 percent yearly during 1975-97. During this period,

the combined capital, labor, energy, and material inputs grew at an average rate of

1.69 percent yearly, with material inputs growing fastest at 2.25 percent. Food

manufacturing is materials-intensive, and a 3.6-percent decline in real producer

prices of crude food and feedstuffs fueled the expansion of input utilization. 

Second, the productivity growth of food manufacturing contributed little to price

declines in recent years. The real producer price of processed foods declined an

average 2.13 percent per year over the period 1975-97. Researchers have hypothesized that advances in food manufacturing productivity would explain the decline

in real prices of processed foods. According to this study, however, it was a

decrease in the prices of crude food and feedstuffs that drove down the prices of

processed foods paid by consumers. 

Third, heightened merger and acquisition activity in recent years has had little

effect on changes in food manufacturing productivity. According to Mergerstat

Review, which tracked purchases valued at $1 million or higher and transfers of

ownership involving at least 10 percent of a company’s equity, the pace of merger

and acquisition activity in food processing increased steadily from 60 transactions

in 1991 to 157 in 1998. On the basis of slow growth in the multifactor productivity

index, it appears that recent heightened merger and acquisition activity has had

little effect on food manufacturing productivity. 

In evaluating the contribution of food manufacturing to the growth of the Nation’s

GDP, productivity indexes from the net-output approach should be used, because

net output is defined the same as gross-product-originating (value-added) GDP.

Both the net output and labor productivity indexes exhibit a steady increase,

implying that the contribution of food manufacturing to the Nation’s GDP has

increased over time. This study also evaluates the effects of a 10-percent increase

in both capital and labor inputs and finds that food manufacturing’s net output

would increase by $4.3 billion. In addition, a 10-percent increase in capital input

alone would increase the sector’s capital intensity, and consequently its labor

productivity, by $1.43 per worker-hour. A 10-percent increase in labor input alone

would reduce the sector’s capital intensity and reduce its labor productivity by

$1.58 per worker-hour.

iv ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA
Introduction

Advances in industrial productivity—measured as the

rate of output growth in excess of growth due to

increases in factor inputs—are a significant source of

increase in national income and improvements in the

standard of living and global competitiveness. Most

agricultural productivity studies in the United States

have focused on productivity changes and the relationship between inputs and outputs at the farm level.

Considerably less attention has been devoted to

research on productivity beyond the farmgate, such as

food manufacturing. Only a few studies (e.g., Ball and

Chambers; Heien; MacDonald and Ollinger) addressed

the productivity of U.S. food manufacturing industries.

This study contributes to the gap in food manufacturing research with a focus on measuring the productivity of U.S. food manufacturing. 

U.S. food manufacturing plays an important role in the

U.S. food system, stretching from farms and ranches to

retail food markets, and has contributed significantly to

the Nation’s economic growth. According to the

Annual Survey of Manufactures, the U.S. food manufacturing sector accounted for 10.3 percent of the value

of shipments and 9 percent of employment from all

U.S. manufacturing sectors in 2000. This study measures the productivity growth of the food manufacturing

sector and provides information pertaining to the following questions: What are the productivity trends of

food manufacturing? What are the sources of growth in

food manufacturing outputs? Does productivity explain

a decline in real prices of processed foods in recent

years? How does food manufacturing contribute to the

Nation’s gross domestic product (GDP)? 

In addition, the food manufacturing industries have

undergone substantial structural changes in recent

years because of mergers and acquisitions and a trend

toward substituting computers and automated

machines for human operations. To better understand

the effects of this evolution on the performance of

food manufacturing industries, this study analyzes

industry production structure and answers the following questions: What are the input-output relationships

of food manufacturing? Is there any evidence showing

that capital is substituting for labor? Have the recent

mergers and acquisitions affected food manufacturing

productivity? 

Although Bureau of Labor Statistics (BLS) productivity indicators are available for all U.S. manufacturing

sectors, this study uses different data and focuses on

measuring productivity changes in food manufacturing

specifically for the following reasons. First, this study

provides net-output (value-added) productivity measures as a linkage to the gross-product-originating GDP

to meet the gap caused by the elimination of productivity indexes from BLS news releases of productivity

trends for all manufacturing sectors since 1994.

Second, the food manufacturing industries are fundamentally different from other manufacturing industries

in the sense that food processing is quite materialsintensive. Instead of using the BLS productivity index

alone, it is necessary to explore the detailed inputoutput relationships of food manufacturing. Third, it is

useful for this study to compile data and establish a

data bank for food manufacturing suitable for online

analysis, estimation of productivity changes, and some

other productivity-related issues. 

This study begins by focusing on the input-output relationships of U.S. food manufacturing with respect to

the growth of production and the utilization of labor,

capital, and material inputs. Particular attention is

given to identify some data sources for factor inputs

and outputs that can be used for measuring productivity. The second part of this study discusses the methodology for measuring productivity and its application to

U.S. food manufacturing. Since productivity growth is

most closely identified with technological gains, the

goal of the methodology is to measure these gains as

the rate of output growth in excess of growth due simply to increases in combined factor inputs. 

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 1

Food Manufacturing Productivity

and Its Economic Implications

Kuo S. Huang
Before measuring productivity, it is necessary to

understand the input-output relationships of U.S. food

manufacturing with respect to the growth of production and the utilization of labor, capital, and material

inputs. For easy presentation of a sample period covering 1975-97, each table throughout this study summarizes economic information by dividing the whole

sample period into five subperiods with a 5-year interval for most periods and showing the average of annual data in each period. All values are measured at 1982

constant prices.

The data used in this study were compiled mainly

from the Bureau of the Census in its Census of

Manufactures and the Annual Survey of Manufactures

(ASM), and from the Bureau of Labor Statistics for

various producer price indexes including the price of

processed foods and feeds. The data refer to an aggregate food manufacturing sector by the Standard

Industrial Classification (SIC) System code 20 (Food

and Kindred Products) and its nine three-digit coded

industries for 1975-97. Those food industries are (201)

meat products, (202) dairy products, (203) preserved

fruits and vegetables, (204) grain mill products, (205)

bakery products, (206) sugar and confectionery products, (207) fats and oils, (208) beverages, and (209)

miscellaneous food and kindred products.

The data in the 1997 Census of Manufactures were

published for the first time on the basis of the North

American Industry Classification System (NAICS).

This system is different from the SIC classification

system used in previous censuses. To construct consistent time-series data dating back to 1975, this study

compiles the 1997 data into a framework along with

the SIC classification system. A comparability of product codes and the compiling procedure used for converting NAICS data into SIC data are listed in

Appendix A. 

Gross and Net Outputs

According to the Census of Manufactures, two commonly used output indicators are the value of shipments and the value added. The value of shipments

covers the received or receivable net selling values of

all products shipped at the plants excluding freight and

taxes. The value added is derived by subtracting the

cost of materials, supplies, containers, fuel, and electricity from the value of shipments, but it still contains

the cost of purchased services. Thus, the cost of purchased services must be subtracted from the value

added to obtain a consistent measurement of the grossproduct-originating (value-added) GDP without 

double-counting the value of sales. 

For productivity analysis, gross output is calculated as

the adjusted value of shipments by the net change of

inventories and then deflated by the producer price

index of processed foods and feeds. Similarly, net output is calculated as the “net value added” by subtracting the cost of purchased services from the value

added and then deflated by the producer price index of

processed foods and feeds. Both gross output and net

output are used as output indicators for measuring productivity. In particular, net output may be used as an

indicator to show the contribution of an industry to the

Nation’s GDP. 

The costs of purchased services for each food manufacturing industry are available only in the 1992 and

1997 Censuses but not in the ASM. To determine the

cost of purchased services for other years, this study

first calculates the average ratios of the cost of purchased services to the value of shipments for each

food industry in the two Censuses. Then, these ratios

are used to determine the approximate cost of purchased services in each industry for the missing years.

The ratios in terms of percentage are food sector (1.35

percent), meats (1.3), dairy (1.17), preserved fruits and

vegetables (1.5), grain mill products (1.4), bakery

products (1.65), sugar and confections (1.62), fats and

oils (1.08), beverages (1.3), and miscellaneous foods

(1.3). These ratios are less than 2 percent of the value

of shipments across food industries, and the errors of

approximation for measuring the net value added

should be small. 

In table 1, the yearly value of U.S. food manufacturing

gross output measured at 1982 prices increased from

$258 billion in 1975-79 to $353 billion in 1995-97, an

average annual growth rate of 1.9 percent. Most food

industries tended to grow at 2-3 percent except for fats

and oils, which showed virtually no growth. In 1995-

97, the meat product industry was dominant in gross

output valued at $79.8 billion, followed by beverages

at $51.5 billion. For net output, food manufacturing as

a whole increased from a yearly average of $72 billion

2 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Production and Factor Inputs
in 1975-79 to $135 billion in 1995-97, with an average

annual growth rate of 3.7 percent. For most individual

industries, average yearly growth rates ranged from

about 3-4 percent. The beverages industry was dominant at $25.4 billion in 1995-97, followed by the meat

products industry at $19 billion. 

Table 1 shows that the ratio of net output to gross output increased from 27.7 percent in 1975-79 to 38.3

percent in 1995-97 for the food sector as a whole. This

increase reflects a decrease in the share of material

costs relative to the value of output over time. For

individual industries, the meat industry significantly

increased this ratio from 14.6 percent in 1975-79 to

23.9 percent in 1995-97, probably because of cheaper

meat materials available for processing, especially for

sausage and poultry meat products. On the other hand,

highly processed, differentiated, and convenient consumer goods are high value-added products. Thus, the

ratio increased from 55 percent in 1975-79 to 61.6 percent in 1995-97 for the bakery products industry. 

Figure 1 shows the different ratios of net output to

gross output across the food manufacturing industries

and the whole food sector in 1995-97. In general, the

food manufacturing sector is materials-intensive with a

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 3

Table 1—Outputs of food manufacturing, 1975-1997

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

Gross output (million $ at 1982 prices) Percent

Food sector 258,325 278,389 302,510 330,374 352,926 1.88

Meat products 65,326 66,045 69,177 76,712 79,799 1.45

Dairy products 34,126 37,919 40,780 42,650 43,904 1.52

Preserved fruits & vegetables 26,703 29,824 34,246 38,495 39,402 2.31

Grain mill products 29,389 31,876 34,718 40,662 44,927 2.13

Bakery products 16,510 17,532 21,021 23,175 25,241 2.11

Sugar and confections 14,688 16,358 17,110 18,409 19,847 1.23

Fats and oils 19,061 17,849 16,356 15,910 17,992 0.49

Beverages 31,185 37,724 43,139 46,242 51,500 2.77

Miscellaneous foods 21,317 23,263 25,962 28,119 30,313 2.77

Net output (million $ at 1982 prices)

Food sector 71,653 83,420 105,245 122,668 135,166 3.58

Meat products 9,553 9,891 12,243 14,995 19,045 3.86

Dairy products 7,043 7,973 10,098 11,634 11,838 2.99

Preserved fruits & vegetables 9,817 11,611 15,316 17,979 18,503 3.88

Grain mill products 8,264 10,012 13,502 16,865 17,473 3.78

Bakery products 9,090 10,111 12,878 14,094 15,556 2.98

Sugar and confections 5,056 6,122 7,321 8,327 9,174 3.41

Fats and oils 2,635 2,698 2,860 3,155 3,267 1.90

Beverages 12,621 15,729 19,617 22,463 25,432 3.83

Miscellaneous foods 7,574 9,273 11,411 13,154 14,878 3.98

Ratio of net output to gross output (percent)

Food sector 27.74 29.97 34.79 37.13 38.30

Meat products 14.62 14.98 17.70 19.55 23.87

Dairy products 20.64 21.03 24.76 27.28 26.96

Preserved fruits & vegetables 36.76 38.93 44.72 46.70 46.96

Grain mill products 28.12 31.41 38.89 41.48 38.89

Bakery products 55.06 57.67 61.26 60.82 61.63

Sugar and confections 34.42 37.42 42.79 45.24 46.22

Fats and oils 13.83 15.12 17.48 19.83 18.16

Beverages 40.47 41.70 45.47 48.58 49.38

Miscellaneous foods 35.53 39.86 43.95 46.78 49.08

Note: All values are deflated by the producer price index of processed foods and feeds.

Source: USDA/Economic Research Service.
ratio of 38.3 percent, meaning a cost of about $62 on

materials consumed for producing $100 of gross output. The ratio for fats and oils was relatively small,

only 18 percent. Other low-ratio industries are meats

(23.9 percent) and dairy products (27 percent). This is

because farm commodities as food materials for processing constitute a major share of processing costs for

these products. On the other hand, bakery products are

relatively value-intensive products with a ratio of 61.6

percent, because the bakery industry has high labor

costs for processing and direct store delivery.

Beverages are also value-intensive, with a ratio of 49.4

percent due to low material costs, high advertising

expenditures, and the value added to shipments by

high-profit soft-drink syrup makers. 

Labor Input 

The employment data in the census consist of two categories of workers: production and nonproduction.

Production workers, including those engaged in fabricating, processing, assembling, packing, and other

services, are closely associated with the production

operations at food manufacturing plants. All other

employees, such as those engaged in factory supervision above the working foreman level and those in

sales, credit, and clerical positions at manufacturing

plants, are classified as nonproduction workers.

The U.S. food manufacturing sector employed a yearly

average of 1.5 million employees in 1975-79, gradually

decreasing to 1.4 million in 1985-89, and then increasing back to 1.5 million employees in 1995-97 (table 2).

These total employment numbers are important indicators commonly used to observe whether there is a

recession in general economic activities. Meat products

and miscellaneous foods were the only industries that

increased employment over the sample period, with

average yearly growth rates of 1.9 and 1.4 percent,

respectively. The number of employees in other industries showed yearly decreases, especially in fats and

oils (-1.8 percent) and beverages (-1.4 percent). Figure

2 shows the distribution of employees across different

food manufacturing industries using the 1995-97 average. Significant shares are found in the meat products

(29 percent), bakery products (14 percent), and preserved fruits and vegetables (13 percent) industries. 

For measuring productivity, production worker-hours

(hours worked or paid for at the plant, including actual

overtime hours) are used as an indicator of labor input

4 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Figure 1

Ratio of net output to gross output, 1995-97 average

Percent

Food sector Meat

products

Dairy

products

Preserved

fruits &

vegetables

Grain mill

products

Bakery

products

Sugar

and

confections

Fats and

oils

Beverages Miscellaneous

foods

0

10

20

30

40

50

60

70

Source: USDA/Economic Research Service.

Figure 2

Composition of employment, 

1995-97 average

Meat products

29%

Dairy products

9%

Preserved fruits & 

vegetables--13%

Grain mill products--7%

Bakery products--14%

Sugar and 

confections--6%

Fats and oils--2%

Beverages--9%

Miscellaneous 

foods--11%

Source: USDA/Economic Research Service.
for production workers. As shown in table 2, the meat

products industry increased production worker-hours

substantially from 506 million hours in 1975-79 to 774

million hours in 1995-97, an average yearly growth rate

of 2.3 percent. Similarly, there is a significant increase

of worker-hours in the miscellaneous foods industry

from 198 million hours to 248 million hours over the

sample period with a yearly growth rate of 1.9 percent.

The fats and oils and beverages industries decreased by

2 and 1 percent, respectively. All other food industries

showed no significant change in worker-hours.

The number of nonproduction employees, constituting

about one-third of total employees, is used to represent

the labor input for nonproduction workers. Similar to

production workers, the number of nonproduction

employees for most industries decreased, especially

for the dairy industry, with a 2-percent average annual

rate of decrease over the sample period. In 1995-97,

the bakery products and beverage industries employed

the most nonproduction workers, 85,000 and 70,000

persons, respectively. 

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 5

Table 2—Labor inputs of food manufacturing, 1975-1997

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

All employees number (1,000) Percent

Food sector 1,536 1,484 1,441 1,496 1,533 0.12

Meat products 312 314 336 401 441 1.89

Dairy products 159 143 140 136 132 -1.10

Preserved fruits & vegetables 233 223 214 215 207 -0.34

Grain mill products 114 108 101 105 103 -0.43

Bakery products 232 217 212 214 222 -0.15

Sugar and confections 103 96 90 91 89 -0.56

Fats and oils 42 39 31 28 26 -1.83

Beverages 201 193 165 144 145 -1.37

Miscellaneous foods 141 151 152 162 168 1.36

Number of nonproduction employees (1,000)

Food sector 458 438 419 404 405 -0.59

Meat products 56 52 54 58 64 0.92

Dairy products 72 60 54 51 48 -2.23

Preserved fruits & vegetables 35 37 37 36 35 0.46

Grain mill products 34 33 32 33 31 -0.45

Bakery products 94 90 89 83 85 -0.18

Sugar and confections 21 19 18 19 20 -0.15

Fats and oils 12 11 10 9 8 -1.16

Beverages 99 98 85 71 70 -1.59

Miscellaneous foods 35 38 40 44 43 0.60

Production worker-hours (million)

Food sector 2,125 2,054 2,007 2,223 2,317 0.57

Meat products 506 515 564 708 774 2.28

Dairy products 180 170 174 179 179 -0.06

Preserved fruits & vegetables 374 354 334 351 347 -0.29

Grain mill products 169 155 145 157 159 -0.37

Bakery products 269 251 241 262 272 -0.05

Sugar and confections 160 151 141 145 145 -0.25

Fats and oils 65 58 43 41 40 -2.02

Beverages 203 190 160 148 152 -0.96

Miscellaneous foods 198 210 206 232 248 1.86

Source: USDA/Economic Research Service.
Capital Input

In measuring the gross book value of depreciable

assets, the assets at the beginning of the year, plus new

capital expenditures, less capital retirements, equals

assets at the end of the year. Therefore, annual new

capital expenditures are a major component in the

accumulation of assets over time. In table 3, the new

capital expenditures in the food manufacturing sector

measured at 1982 prices show an average annual

growth rate of 2.4 percent from $6.3 billion in 1975-79

to $8.8 billion in 1995-97. For individual industries,

new capital expenditures also increased over the sample period. The growth rates are high for dairy products, bakery products, and miscellaneous foods, each

between 3.7-4 percent. Meat products, preserved fruits

and vegetables, and grain mill products are next, each

about 3 percent. The meat products, preserved fruits

and vegetables, grain mill products, and beverages

industries had annual capital expenditures of more

than $1 billion in 1995-97. 

The flow of capital services derived from the stock of

capital assets for equipment and structures in an industry is commonly considered as capital input in measuring productivity. In this study, considering the limitation of data, the annual cost of capital services is

approximated as the sum of depreciation charges for

fixed assets and interest costs on the average value of

fixed assets at the beginning and ending of that year.

The cost of capital services is then deflated by the producer price index of capital equipment for use as capital input in measuring productivity. 

To measure depreciation charges, data are available

and reported only for 1977-85. Depreciation charges

for the remaining period are projected on the basis of a

log-linear regression by fitting the depreciation

charges (D) as a function of beginning-of-year structure and equipment assets (K) for 1977-85. A complete

listing of fitted depreciation equations for all individual food manufacturing industries is listed in Appendix

B. For example, the following is a fitted depreciation

equation for the food manufacturing sector:

ln D = -3.3203 + 1.0630 ln K R2 = 0.99

(0.0292)

The figure in parenthesis is the standard error. The

estimated coefficient is statistically significant with a

1-percent increase in fixed assets causing a 1.06-percent increase in the depreciation charge.

The cost of interest on fixed assets is calculated by

multiplying the average yearly value of fixed assets by

the interest rates. These interest rates are obtained

from the Survey of Current Business (SCB) with the

Moody’s Corporate Industrial Bond Rate from SCB

prior to 1994. Yields on new high-grade corporate

bonds are used for 1994 and thereafter, because

Moody’s rates are not available in the latter period. 

In table 3, the charges of capital services in the food

manufacturing sector increased by 1.41 percent annually from $9 billion in 1975-79 to $11.2 billion in

1995-97. In contrast with a declining employment

trend, the increase of capital services is evidence that

capital is substituting for labor by providing each

employee with more and better capital to work with.

The charges of capital services varied across the food

manufacturing industries depending on their capital

intensity in the production process. Taking 1995-97 as

an example, the cost of capital services is highest for

the beverage industry, at $2.1 billion, followed by

grain mill products at $1.7 billion, and preserved fruits

and vegetables at $1.6 billion. In terms of annual

growth rate, the grain mill products industry was

ranked highest at 2.7 percent, followed by miscellaneous foods at 2.1 percent. 

Finally, the ratio of the new capital expenditures to the

gross output of an industry can be viewed as an indicator to reflect the rate of investment of the industry.

This average annual rate of investment for the food

manufacturing sector was 2.6 percent in 1995-97. For

individual industries, figure 3 shows that the annual

rates of investment in 1995-97 were high (at 3 percent

or more) for the sugar and confections, bakery products, grain mill products, preserved fruits and vegetables, and beverages industries. The high investment

rate is probably related to new product introduction

and rapid technological changes in these industries

that require new equipment.

Material and Energy Inputs 

In addition to payments for labor input and capital

services, the cost of production in food manufacturing

includes materials and purchased fuel and electricity.

In this study, materials (including raw materials, semifinished goods, and containers) and fuel and electricity

are considered as separate inputs in measuring productivity. The quantity of material inputs is determined as

the cost of materials adjusted by a net change in inventories and then deflated by the producer price index of

6 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA
crude foodstuffs and feeds. The energy input is measured as the cost of purchased fuels and electricity

deflated by the producer price index of intermediate

energy goods.

In table 4, the cost of materials for the food manufacturing sector measured at 1982 prices grew steadily at

2.3 percent yearly from $167 billion to $243 billion

over the sample period. The growth rates of most individual industries were 2-3 percent yearly. For example,

the meat products industry spent the most on materials—about $69 billion in 1995-97—more than double

that of most other food industries. The cost of purchased fuel and electricity is also shown in table 4. For

the food manufacturing sector, the cost of energy utilization measured at 1982 prices was lowest at $5 billion in 1980-84. This is consistent with petroleumbased fuels prices which reached their peak in that

period. The ratio of energy costs to gross output (not

shown in the table) is 1.3 percent for the general food

sector, and the ratios are under 2 percent for the vast

majority of the food manufacturing industries. 

The ratios of material costs to gross output for the

sample period are presented in the lower part of table

4 and in figure 4 for 1995-97. In general, food manuEconomic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 7

Table 3—Capital inputs of food manufacturing, 1975-1997

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

New capital expenditures (million $ at 1982 prices) Percent

Food sector 6,320 6,298 6,583 7,388 8,837 2.39

Meat products 740 674 799 984 1,240 3.01

Dairy products 561 604 671 726 897 4.00

Preserved fruits & vegetables 774 816 953 1,150 1,157 3.29

Grain mill products 836 828 1,036 1,109 1,365 3.22

Bakery products 526 457 591 704 790 3.72

Sugar and confections 461 456 494 589 626 2.68

Fats and oils 356 329 257 268 335 1.85

Beverages 1,553 1,591 1,185 1,132 1,585 2.63

Miscellaneous foods 513 542 597 726 841 3.67

Charges of capital services (million $ at 1982 prices)

Food sector 9,013 11,967 11,354 10,716 11,209 1.41

Meat products 1,075 1,335 1,228 1,260 1,381 1.60

Dairy products 907 1,096 1,061 1,032 1,114 1.18

Preserved fruits & vegetables 1,150 1,547 1,519 1,538 1,550 1.40

Grain mill products 1,121 1,535 1,536 1,545 1,702 2.67

Bakery products 793 962 954 945 1,010 1.26

Sugar and confections 760 945 857 816 846 0.64

Fats and oils 506 686 580 485 467 0.27

Beverages 1,966 2,871 2,659 2,164 2,113 1.04

Miscellaneous foods 735 990 960 931 1,027 2.12

Ratio of new capital expenditures to gross output (percent)

Food sector 2.12 2.20 2.24 2.34 2.63

Meat products 0.99 0.99 1.19 1.34 1.63

Dairy products 1.43 1.55 1.69 1.78 2.14

Preserved fruits & vegetables 2.54 2.68 2.86 3.14 3.08

Grain mill products 2.47 2.52 3.07 2.86 3.19

Bakery products 2.77 2.53 2.89 3.19 3.28

Sugar and confections 2.71 2.72 2.99 3.35 3.31

Fats and oils 1.62 1.79 1.61 1.76 1.94

Beverages 4.31 4.11 2.83 2.56 3.24

Miscellaneous foods 2.12 2.26 2.37 2.71 2.92

Note: All values are deflated by the producer price index of capital equipment.

Source: USDA/Economic Research Service.
facturing is materials-intensive, with material costs

constituting about 60 percent or more of the value of

gross output in the food manufacturing sector. The

ratios of material costs to gross output vary widely

among the food manufacturing industries. Taking

1995-97, for example, the ratio is highest for the fats

and oils industry, at 79 percent, reflecting the industry’s heavy dependence on materials like soybeans for

crushing or semi-refined soybean oil for refining. Also,

the ratio is high for the meat and dairy industries—

slightly more than 70 percent—because these industries have little value added using relatively expensive

meats and milk as raw materials for processing highly

standardized products. On the other hand, the ratio for

the bakery industry is the lowest (35.4 percent)

because the industry uses more production workers

and adds more value to flour and other ingredients

from other processors. 

8 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Figure 3

Ratio of new capital expenditures to gross output, 1995-97 average

Percent

Food sector Meat

products

Dairy

products

Preserved

fruits &

vegetables

Grain mill

products

Bakery

products

Sugar

and

confections

Fats and

oils

Beverages Miscellaneous

foods

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Source: USDA/Economic Research Service.

Figure 4

Ratio of material cost to gross output, 1995-97 average

Percent

Food sector Meat

products

Dairy

products

Preserved

fruits &

vegetables

Grain mill

products

Bakery

products

Sugar

and

confections

Fats and

oils

Beverages Miscellaneous

foods

0

20

40

60

80

100

Source: USDA/Economic Research Service.
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 9

Table 4—Material and energy inputs of food manufacturing, 1975-97

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

Cost of materials (million $ at 1982 prices) Percent

Food sector 167,032 182,239 206,508 228,299 243,087 2.25

Meat products 50,415 53,307 60,576 68,764 68,841 2.06

Dairy products 24,407 28,299 32,515 34,366 36,114 2.29

Preserved fruits & vegetables 14,976 16,762 19,522 22,170 22,927 2.53

Grain mill products 18,848 20,219 21,815 25,847 30,247 2.57

Bakery products 6,433 6,692 8,208 9,625 10,406 2.22

Sugar and confections 8,355 9,373 10,075 10,916 11,692 1.54

Fats and oils 14,783 13,991 14,037 14,110 16,572 1.55

Beverages 16,570 20,521 24,545 26,147 29,043 3.23

Miscellaneous foods 12,377 13,075 15,216 16,354 17,245 3.52

Cost of fuels and electricity energy (million $ at 1982 prices)

Food sector 5,297 5,015 6,372 6,237 6,649 0.20

Meat products 674 688 944 937 1,015 0.41

Dairy products 614 573 762 704 709 0.10

Preserved fruits & vegetables 740 715 879 894 929 0.24

Grain mill products 779 732 1,082 1,116 1,291 0.45

Bakery products 343 319 467 470 495 0.37

Sugar and confections 583 466 478 466 479 -0.12

Fats and oils 572 538 563 482 516 0.14

Beverages 618 598 717 638 684 0.23

Miscellaneous foods 375 386 482 529 533 0.44

Ratio of material cost to gross output (percent)

Food sector 70.0 67.2 62.5 60.5 59.2

Meat products 83.5 82.8 80.1 78.4 74.1

Dairy products 77.3 76.5 73.0 70.5 70.7

Preserved fruits & vegetables 60.7 57.7 52.2 50.4 50.0

Grain mill products 69.4 65.1 57.6 55.6 57.9

Bakery products 42.1 39.2 35.8 36.3 35.4

Sugar and confections 61.4 58.9 53.9 51.9 50.6

Fats and oils 84.0 80.5 78.6 77.6 79.1

Beverages 57.5 55.8 52.0 49.5 48.4

Miscellaneous foods 62.6 57.7 53.6 50.9 48.8

Note: The value of materials is deflated by the producer price index of crude foodstuffs and feedstuffs.

The value of fuels and electricity is deflated by the producer price index of intermediate energy goods.

Source: USDA/Economic Research Service.
In productivity studies, the rates of technological

change, which reflect changes in an industrial output

for a given input bundle, may be measured by using a

production function similar to that developed by

Solow. Alternatively, rates of technological change

which reflect changes in the cost of obtaining a given

output may be measured by using a cost function such

as that used in Ball and Chambers. This study applies

a production function approach because it provides

useful information for a direct explanation about the

source of output growth. 

The data used in this study are mainly compiled from

the Bureau of the Census’s Annual Survey of

Manufactures and Census of Manufacturing. Two

common production indicators, the value of shipments

and the value added, are available in the data sources.

This study uses both indicators as the output of a production function for measuring productivity indexes.

The potential difference in productivity measurements

from these production indicators is an issue addressed

in this study. Following is a brief explanation of the

methodology used to measure the multifactor and

labor productivity indexes, and a method to modify the

model for application to U.S. food manufacturing. 

Derivation of Productivity Measures

In productivity studies, multifactor productivity is

derived by taking account of various inputs into the

productivity measurement. To measure the multifactor

productivity index, the underlying production function

is assumed to be Hicks’ neutral technical change. The

general form of the production function with n-factor

inputs at time t can be written as:

Qt = At f(X1t, X2t, . . , Xnt), (1)

where variables are Qt (real output), Xit (input of the

ith factor, i = 1, 2,..,n), and At (index of Hicks’ neutral

technical change or multifactor productivity).

Although the assumption of neutral technical change

may be rigid, this production function provides a

framework for easy interpretation of the causes of productivity changes. 

Differentiating equation (1) with respect to time t, the

derived output growth equation becomes 

(dQt

/dt) / Qt = (dAt/dt) / At + 

Σi (∂Qt

/∂Xit) (Xit /Qt) (dXit/dt) / Xit (2)

Equation (2) shows the rate of change in output as the

sum of the rate of change in multifactor productivity,

(dAt

/dt) / At , and a weighted average of the rates of

change in various inputs (dXit/dt) / Xit. The weight is

expressed by (∂Qt

/∂Xit) (Xit /Qt), which is the elasticity of output with respect to the ith input, showing the

percentage change in output per 1-percent change in

the ith input. 

In addition, under the assumption that a competitive

economy is operating at longrun equilibrium, the marginal products of all inputs are equal to their respective

real market prices as ∂Qt / ∂Xit = Wit / Pt

, with new

variables Wit (price of the ith input) and Pt (price of

output). Substituting this expression for the elasticity

of output in equation (2), and then using Sit (cost share

of the ith input) to represent Wit Xit / Pt Qt

, the multifactor productivity index can be shown as:

(dAt

/dt ) / At = (dQt/dt) / Qt - 

Σi [Sit (dXit /dt) / Xit ] (3)

The competition in output markets indicates that the

capital price reflects a competitive rate of return ensuring that all revenues are spent on inputs. In other

words, the summation of all input cost shares equals 1

(Σi Sit = 1). Thus, the multifactor productivity index,

showing the ability to produce more output from the

same input, is calculated by subtracting an index series

for the combined changes of various inputs from the

index series for output changes. Different inputs are

aggregated into one input measure by weighting (multiplying) the index series of each input by its share in

the total cost of output. 

Furthermore, the productivity index of the jth input

can be shown as:

(dQt

/dt) / Qt - (dXjt/dt) / Xjt = (dAt/dt) / At + 

Σi

, i≠j Sit [(dXit/dt) / Xit - (dXjt/dt) / Xjt ] (4)

In particular, if the jth input is regarded as labor, then

this equation represents labor productivity.

Accordingly, labor productivity, showing the rate of

change in output per worker on the left-hand side of

equation, is determined by two components: techno10 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Methodology of Measuring Productivity
logical progress and the quantities of capital goods and

other inputs available to each worker. 

The Törnqvist Index Approximation

The rates of change in equations (3) and (4) are

expressed in the Divisia index such as (dQt

/dt) / Qt for

the change of output and require using continuous data

for the presentation. For empirical application, however, the Törnqvist index is commonly used as a discrete

approximation of the Divisia index. More specifically,

for example, the rate of change of output (dQt

/dt) / Qt

= (dlnQt/dt) can be approximated by ln(Qt/Qt-1).

Similarly, the rate of change of the ith input (dXit/dt) /

Xit = (dlnXit/dt) can be approximated by ln(Xit/Xit-1).

In addition, since the variables are expressed in consecutive change of observed data, an ideal weight Sit

in the brackets of equations (3) and (4) should be the

average shares of Sit and Sit-1; that is, 1/2(Sit + Sit-1). 

Therefore, by applying the Törnqvist index as a discrete approximation of the Divisia index, the multifactor productivity in equation (3) can be expressed as:

ln(At

/At-1) = ln(Qt/Qt-1) - 

Σi [1/2(Sit + Sit-1) ln(Xit/Xit-1)] (5)

This expression shows that the rate of change of multifactor productivity ln(At

/At-1) is the difference

between the rate of change in output ln(Qt

/Qt-1) and a

weighted average of the rates of change of all factor

inputs in the bracket. This methodology was used by

the Bureau of Labor Statistics, and a discussion of the

model for two factors (labor and capital) in a production function was documented in Mark and Waldorf. 

Similarly, the Törnqvist index approximation of the

productivity index of the jth input in equation (4)

becomes:

ln(Qt

/Qt-1) - ln(Xjt/Xjt-1) =

ln(At

/At-1) + Σi, i≠j 1/2(Sit + Sit-1) 

[ln(Xit/Xit-1) - ln(Xjt/Xjt-1)] (6)

Again, if the jth input is regarded as labor, then this

equation represents labor productivity. The above

expression in natural logarithmic form shows that the

rate of change of labor productivity is equal to the sum

of the rate of change of multifactor productivity and

the contribution of the changes in all other inputs per

unit of labor to output. 

While the above procedures for measuring productivity can be easily implemented, one might question that

the underlying assumption of perfect competition may

not be appropriate to the food manufacturing sector,

which may be characterized by oligopoly. Ideally, we

need to perform some tests on the potential oligopoly

structure of the food manufacturing sector, but these

tests are beyond the scope of this study. A noted paper

by Azzam et al. incorporated information about

markups, demand, and cost parameters into the measurement of productivity. This set of extraneous information, however, is obtained from different sources,

and may introduce errors in the productivity measurement because the extraneous information is not

obtained within the same framework as the measurement of productivity changes. 

Empirical Modeling

In applying the methodology of measuring productivity for the U.S. food manufacturing industries, two

commonly used output indicators (the value of shipments and the value added) are available in the Census

of Manufactures and Annual Survey of Manufactures.

By using these output indicators, this study applies

two approaches to specify a production function for

measuring the multifactor and labor productivity

indexes. 

One is the gross-output approach, such that the adjusted value of shipments is a function of capital, labor,

energy, and material inputs as follows:

Qt = At f(Kt

, Lat, Lbt, Et, Mt), (7)

where Qt is the gross output defined as the value of

shipments adjusted by the net change in inventories

measured at 1982 prices, with the producer price index

of processed foods and feeds as a deflator. Kt represents capital services charges measured at 1982 prices,

with the producer price index of capital equipment as a

deflator. Capital services charges are approximated as

the sum of depreciation charges for fixed assets and

interest costs on the average value of fixed assets at

the beginning and ending of that year. The labor inputs

are divided into two components: production and nonproduction workers. Lat represents production workerhours, and Lbt is the number of nonproduction

employees. Et represents purchased fuels and electricity at 1982 prices, with the producer price index for

intermediate energy goods as a deflator. Mt is the cost

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 11
of materials at 1982 prices, with the producer price

index of crude foodstuffs and feedstuffs as a deflator.

At is the index of multifactor productivity for the value

of shipments. This gross-output production function

represents a production structure that includes the contribution of all factor inputs that are available in the

data sources. 

The net-output approach uses net output or the net

value added as an output in a production function. Net

output is calculated by subtracting the cost of materials, supplies, containers, fuel, electricity, and purchased services from the value of shipments and then

deflating by the producer price index of processed

foods and feeds. The net output represents the value

that is added, by the application of capital and labor, to

intermediate inputs in converting those inputs to finished products. Therefore, capital and labor are the relevant inputs in generating the net output of an industry, and a production function for the net output is

specified as follows:

Qt

* = At* f(Kt, Lat, Lbt ), (8)

where Qt

* is the quantity of net output or net value

added, and Kt

, Lat, and Lbt are defined the same as in

equation 7. At

* is the index of multifactor productivity

for the net value added. 

The existence of this net-output production function, as

discussed in Gullickson, requires that the production of

gross output (as shown in equation 7) be characterized

by value-added separability, in which intermediate

inputs cannot be the source of productivity growth. In

other words, intermediate inputs are excluded from consideration in the net-output model on the assumption

that they are insignificant to the analysis of productivity

growth. With this restrictive assumption, the purpose of

measuring net-output productivity from equation 8 is to

calculate an industry’s contribution to the Nation’s GDP

in a simple and straightforward way. For interpreting

industry productivity, however, the gross-output model

specification is generally preferred. 

12 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA
Both the gross-output and net-output approaches are

applied to measure the multifactor and labor productivity indexes of the food manufacturing sector and its

associated nine industries. The gross-output approach

relates the adjusted value of shipments as a function of

capital, labor, energy, and all intermediate materials as

shown in equation 7, while the net-output approach

relates the net value added as a function of labor and

capital as shown in equation 8. The detailed empirical

results of yearly productivity indexes and related

measures obtained from both approaches are reported

in Appendix C. This section focuses mainly on the

productivity results compiled in tables 5-10, in which

average figures for each of 5 subperiods (four 5-year

periods and one final 3-year period) are presented.

Gross-Output Productivity Measures 

Table 5 presents the gross-output productivity results

of the food manufacturing sector. As indicated in the

table, the annual rate of change in multifactor productivity (4) is obtained by subtracting the combined

inputs (2) from the gross output (1). The annual rate of

change in labor productivity (5) is a summation of the

capital and other input intensity per unit of labor (3)

and multifactor productivity (4). 

In table 5, the gross-output multifactor productivity

index for food manufacturing grew 0.19 percent a year

between 1975 and 1997. The productivity growth of

food manufacturing shows a gain of 1.7 percent in

1975-79, then a loss of 1.38 percent in 1980-84,

rebounding to 1.08 percent in 1985-89, before decreasing to a negative rate of -0.63 percent in 1995-97. The

slow growth rate found in this study is consistent with

the Bureau of Labor Statistics (BLS) estimate of 0.45

percent using different data. As shown in figure 5a,

both the study’s and BLS’ productivity indexes show a

trend of slow growth, moving up and down within 10

percent along a level slightly above the base year 1975.

Both the study’s and BLS’ estimates of productivity

indexes are low when compared with the BLS estimate

of 1.25 percent a year for the whole manufacturing

sector over the same period of time. The reason for the

lower productivity growth in food manufacturing is not

fully understood, but low investment in research and

development (R&D) could be one reason. This study

found that real private sector R&D expenditures for

food manufacturing in the period 1975-97 grew 2.22

percent a year on average (table 6). These R&D

expenditures represent only 0.23 percent of sales. Over

the same period, the R&D expenditures for food manufacturing even grew slower than similar expenditures

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 13

Empirical Productivity Measures

Table 5—Gross-output productivity and price of the food manufacturing sector, 1975-97

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

Calculated annual change rate (percent)

Gross output (1) 2.96 1.27 1.68 2.04 1.51 1.88

Inputs:

Combined inputs (2) 1.26 2.65 0.60 1.88 2.14 1.69

Nonlabor/labor intensity (3) 0.00 4.58 -0.41 -0.13 1.62 1.14

Productivity:

Multifactor productivity (4)=(1)-(2) 1.70 -1.38 1.08 0.16 -0.63 0.19

Labor productivity (5)=(3)+(4) 1.70 3.21 0.67 0.03 0.99 1.33

BLS multifactor productivity:

Food and kindred products 1.12 1.43 -0.18 -0.35 0.29 0.45

Whole manufacturing 1.20 1.22 1.26 0.87 1.98 1.25

Real processed food price -2.45 -3.58 -1.28 -2.27 -0.46 -2.13

Notes: Gross output = real adjusted value of shipments; Combined inputs = weighted average of all inputs;

Nonlabor/labor input = nonlabor intensity or combined nonlabor inputs per worker-hour;

Real processed food price is deflated by the consumer price index.

BLS Multifactor productivity is compiled from the BLS website (http://stats.bls.gov/mfp/mprdload.html).

Source: USDA/Economic Research Service.
for agricultural input industries such as agricultural

chemicals and plant breeding. Also, the National

Science Foundation estimated that the real private

R&D expenditures of all industries grew at much

faster rates of 5.78 percent yearly in the same period. 

Although productivity has been relatively low, food

manufacturing output has grown significantly over the

last two decades. According to this study, it was the

expansion of combined factor inputs that provided the

major impetus to the sector’s output. Gross output

measured at 1982 prices grew 1.88 percent a year during 1975-97. During this period the combined capital,

labor, energy, and material inputs grew at an average

annual rate of 1.69 percent. Material inputs grew the

fastest at 2.25 percent a year. Food manufacturing is

materials-intensive with material costs constituting

about 60 percent or more of the value of gross output.

A 3.06-percent annual decline in real producer prices

of crude food and feedstuffs in the period 1975-97

fueled the expansion of input utilization. 

This expansion of food manufacturing output benefited

U.S. and global consumers. The real producer price of

processed foods declined on average 2.13 percent a

year between 1975 and 1997 (table 5 and fig. 5a).

Researchers have hypothesized that advances in food

manufacturing productivity would explain the decline

in real prices of processed foods. To explain the cause

of decline, this study estimates a log-linear regression

by expressing the real producer price of processed

foods (Pt

) at time t as a function of the multifactor productivity index (At

) and the real price index of crude

food and feedstuffs (Ft

) represented for material cost.

The empirical results of the fitted price equation covering 1975-97 for the food manufacturing sector are

shown below:

ln Pt = 2.5593 – 0.1381 ln At + 0.5854 ln Ft R2 = 0.99

(0.1280) (0.0173) (9)

The figures in parentheses are the standard errors. The

estimated coefficient implies that a 1-percent decrease

in the price index of crude food and feedstuffs (Ft

)

would reduce the real price of processed foods by 0.59

percent, and is statistically significant. The effect of a

1-percent increase in multifactor productivity (At

),

however, would reduce the real price of processed

food by only 0.14 percent, but would not be statistically significant. The results found in this study indicate

that a decrease in the prices of crude food and feed14 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Figure 5a

The food sector: Gross-output multifactor 

productivity and real output price

75 77 79 81 83 85 87 89 91 93 95 97

60

80

100

120

140

160

Index (1975=100)

Multifactor productivity-BLS

Real output price

Combined input

Gross output

Multifactor productivity

Source: USDA/Economic Research Service.

Table 6—Private research and development (R&D) expenditures, 1975-97

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

Million $ at 1982 prices

Total agricultural inputs 865 1,091 1,163 1,396 1,548 4.04

Plant breeding 89 123 173 237 288 6.31

Agricultural chemicals 346 522 606 754 804 5.60

Farm machinery 304 312 234 231 271 1.95

Veterinary pharmaceuticals 125 134 151 174 185 2.56

Food manufacturing products 497 604 687 609 644 2.22

Total agricultural R&D 1,362 1,695 1,850 2,005 2,192 3.34

All U.S. industries 28,721 40,692 54,000 66,419 80,499 5.78

Source: USDA/Economic Research Service; Data for all U.S.industries are compiled from National Science Foundation.
stuffs drove down the prices of processed foods paid

by consumers. Productivity growth apparently contributed little to the price decline. 

Another issue of much public interest has been the

effect of many mergers and acquisitions in recent

years on food manufacturing productivity. According

to Mergerstat Review, which tracked purchases valued

at $1 million or higher and transfers of ownership

involving at least 10 percent of a company’s equity,

the pace of merger and acquisition activity in food

processing increased steadily from 60 transactions in

1991 to 157 in 1998 (table 7). Annually, there was an

average of 97 transactions involving 12 foreign buyers

and 24 foreign sellers. Meanwhile, the number of

transactions valued at $100 million or more increased

from 10 in 1991 to 23 in 1998, with an annual average

of 17. On the basis of the measured multifactor productivity index, it appears that heightened merger and

acquisition activity had little effect on productivity.

Some argued that R&D labs were consolidated and

total resources reduced in association with a high

number of mergers and acquisitions (Connor and

Schiek, p. 385).

In measuring labor productivity, the major focus was

on the productivity of production workers, who constitute more than 70 percent of the total labor force. As

shown in table 5, the average annual rate of change in

labor productivity was 1.33 percent. Labor productivity increased over all subperiods, with a peak at 3.21

percent in 1980-84, mainly because of the high growth

of nonlabor input intensity, at an annual rate of 4.58

percent. Multifactor productivity, however, showed a

negative growth rate of -1.38 percent in 1980-84. The

labor productivity index (fig. 5b) moved steadily

upward until leveling off somewhat after 1985, while

the nonlabor intensity index closely mirrored this

movement. Evidently, a yearly 1.33-percent growth in

labor productivity was closely related to improvements

in nonlabor intensity per production worker, especially

with workers having more and better machinery.

Table 8 presents the gross-output productivity results

of each food manufacturing industry. In the table, the

average rates of change in multifactor productivity

range from -0.42 for meat products to 1.12 percent for

beverages. Many food industries stay roughly even

with the level in the base year 1975 with small gains

and losses over the subperiods. In 1980-84, the multifactor productivity index sharply decreased for most

food industries. For example, multifactor productivity

of the dairy industry was estimated at -1.92 percent,

because the growth rate of output was only 2.25 perEconomic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 15

Figure 5b

The food sector: Gross-output labor 

productivity

Index (1975=100)

Nonlabor intensity

Labor productivity

Multifactor productivity

75 77 79 81 83 85 87 89 91 93 95 97

90

100

110

120

130

140

Source: USDA/Economic Research Service.

Table 7—U.S. food processing merger and acquisition activity, 1990-1998

1991 1992 1993 1994 1995 1996 1997 1998 Annual

average

Number of transactions1 60 75 74 84 86 111 130 157 97

Number transactions of 

$100 million more 10 8 11 17 20 19 26 23 17

Foreign buyers 8 8 6 13 13 12 15 23 12

Foreign sellers 14 26 30 20 17 24 32 31 24

Value offered, million $ 3,101 4,328 3,525 11,061 10,833 8,287 10,856 11,450 7,930

Foreign buyers value, million $ 543 446 930 4,248 6,187 425 3,041 1,382 2,150

Foreign sellers value, million $ 721 2,976 1,705 381 1,844 2,812 3,435 6,170 2,505

1 Mergers are included only if the purchase price was at least $1 million and transfers of ownership involved at least 

10 percent of a company's equity.

Source: Mergerstat Review. Selected issues.
16 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Table 8—Gross-output productivity of the food manufacturing industries, 1975-97

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

Calculated annual change rate (percent)

Meat products

Gross output (1) 3.56 -1.37 1.93 1.74 2.03 1.45

Inputs:

Combined inputs (2) 2.11 0.75 2.17 2.80 1.38 1.87

Nonlabor/labor intensity (3) 0.89 1.55 -2.29 -1.35 -0.24 -0.34

Productivity:

Multifactor productivity (4)=(1)-(2) 1.46 -2.12 -0.24 -1.06 0.65 -0.42

Labor productivity (5)=(3)+(4) 2.35 -0.57 -2.53 -2.41 0.41 -0.77

Dairy products

Gross output (1) 2.18 2.25 1.29 0.95 0.76 1.52

Inputs:

Combined inputs (2) -0.20 4.17 1.11 1.60 1.41 1.72

Nonlabor/labor intensity (3) 0.20 5.64 0.05 1.69 0.74 1.82

Productivity:

Multifactor productivity (4)=(1)-(2) 2.38 -1.92 0.18 -0.65 -0.65 -0.20

Labor productivity (5)=(3)+(4) 2.58 3.72 0.23 1.04 0.09 1.62

Preserved fruits and vegetables

Gross output (1) 4.68 2.87 1.89 2.24 -0.95 2.31

Inputs:

Combined inputs (2) 2.61 3.27 0.38 2.16 -1.11 1.64

Nonlabor/labor intensity (3) 0.72 5.67 0.87 1.51 0.10 1.97

Productivity:

Multifactor productivity (4)=(1)-(2) 2.08 -0.40 1.51 0.08 0.16 0.67

Labor productivity (5)=(3)+(4) 2.79 5.27 2.38 1.59 0.26 2.64

Grain mill products

Gross output (1) 0.69 2.18 3.11 2.51 1.70 2.13

Inputs:

Combined inputs (2) -0.51 3.49 1.29 1.98 4.90 2.11

Nonlabor/labor intensity (3) -0.25 6.92 0.19 0.97 5.45 2.53

Productivity:

Multifactor productivity (4)=(1)-(2) 1.21 -1.31 1.82 0.53 -3.20 0.02

Labor productivity (5)=(3)+(4) 0.96 5.61 2.01 1.50 2.25 2.55

Bakery products

Gross output (1) 0.29 2.38 2.88 3.35 0.79 2.11

Inputs:

Combined inputs (2) -1.80 2.50 1.14 1.90 1.46 1.13

Nonlabor/labor intensity (3) -1.84 5.34 0.25 -0.43 3.13 1.27

Productivity:

Multifactor productivity (4)=(1)-(2) 2.09 -0.12 1.74 1.45 -0.67 0.99

Labor productivity (5)=(3)+(4) 0.25 5.22 1.99 1.03 2.46 2.25

Continued--
cent, far less than the 4.17-percent growth of the combined inputs. Some significant decreases in multifactor

productivity in 1980-84 occurred in fats and oils (-2.34

percent) and meats (-2.12 percent). In 1995-97, the

multifactor productivity indexes of most food industries showed little change or were negative for industries like grain mill products (-3.2 percent) and miscellaneous foods (-2.33 percent). 

The labor productivity index increased steadily for

most food industries and was closely related to

increased use of inputs other than labor. Table 8 shows

that the average annual rates of change in labor productivity range from -0.77 for meat products to 3.8

percent for beverages. In contrast to low multifactor

productivity in 1980-84, the annual rate of change in

labor productivity of the dairy industry was 3.72 percent because of a high growth rate (5.64 percent) of

nonlabor intensity. In 1980-84, the labor productivity

indexes showed significant increases in preserved

fruits and vegetables (5.27 percent), grain mill products (5.61 percent), bakery products (5.22 percent),

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 17

Table 8—Gross-output productivity of the food manufacturing industries, 1975-97--Continued

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

Calculated annual change rate (percent)

Sugar and confections

Gross output (1) -2.46 3.19 0.66 1.98 2.61 1.23

Inputs:

Combined inputs (2) -3.26 3.49 -0.79 2.04 1.70 0.72

Nonlabor/labor intensity (3) -3.87 4.51 0.30 1.25 2.36 1.00

Productivity:

Multifactor productivity (4)=(1)-(2) 0.80 -0.30 1.44 -0.06 0.92 0.51

Labor productivity (5)=(3)+(4) -3.08 4.21 1.75 1.18 3.27 1.51

Fats and oils

Gross output (1) 3.55 -1.82 -1.55 -0.54 5.35 0.49

Inputs:

Combined inputs (2) 1.69 0.53 -2.46 1.06 5.62 0.87

Nonlabor/labor intensity (3) -0.59 6.06 1.06 2.11 7.42 3.00

Productivity:

Multifactor productivity (4)=(1)-(2) 1.86 -2.34 0.91 -1.59 -0.27 -0.38

Labor productivity (5)=(3)+(4) 1.28 3.72 1.98 0.51 7.15 2.62

Beverages

Gross output (1) 3.96 3.32 1.72 2.70 2.15 2.77

Inputs:

Combined inputs (2) 2.31 4.41 -1.14 0.56 2.69 1.65

Nonlabor/labor intensity (3) 1.82 7.35 2.74 0.49 -0.39 2.68

Productivity:

Multifactor productivity (4)=(1)-(2) 1.65 -1.09 2.87 2.15 -0.54 1.12

Labor productivity (5)=(3)+(4) 3.48 6.26 5.61 2.64 -0.92 3.80

Miscellaneous foods

Gross output (1) 7.61 1.40 1.32 3.01 0.63 2.77

Inputs:

Combined inputs (2) 5.35 2.29 0.75 1.93 2.95 2.50

Nonlabor/labor intensity (3) -0.39 3.09 0.11 -0.22 1.09 0.75

Productivity:

Multifactor productivity (4)=(1)-(2) 2.27 -0.89 0.56 1.08 -2.33 0.27

Labor productivity (5)=(3)+(4) 1.87 2.20 0.68 0.86 -1.24 1.02

Notes: Gross output = real adjusted value of shipments; Combined inputs = weighted average of all inputs;

Nonlabor/labor input = nonlabor intensity or combined nonlabor inputs per worker-hour.

Source: USDA/Economic Research Service.
sugar and confections (4.21 percent), fats and oils

(3.72 percent), and beverages (6.26 percent). 

In 1995-97, fats and oils as a capital-intensive industry

registered remarkably high labor productivity with an

annual rate of 7.15 percent, which was related to the

7.42-percent increase in nonlabor intensity. For other

industries, some high labor productivity growth rates

were found in sugar and confections (3.27 percent),

grain mill products (2.25 percent), and bakery products

(2.46 percent), but others showed only a small increase.

Figures 6a to 6i show the movements of gross output,

multifactor productivity, and labor productivity for

nine food industries in 1975-97. The general pattern of

variations for most industries was similar to variations

in the overall food manufacturing sector, characterized

by a steady upward movement of the gross output and

labor productivity. On the other hand, the multifactor

productivity indexes moved downward or were slightly

above the base year level. 

Net-Output Productivity Measures 

The main purpose of measuring net-output productivity

is to show the industry’s contribution to the Nation’s

gross domestic product (GDP). Given the measured

input-output relationships, a change in the quantity of

inputs will affect the amount of combined inputs and

capital intensity per production worker so that the quantity of net value added and labor productivity will be

affected simultaneously. Therefore, net-output productivity results are useful indicators for showing the contribution of food manufacturing to the Nation’s GDP. 

Table 9 presents the net-output productivity results of

the food manufacturing sector. The results are obtained

from a production function in which the net output

(real net value added) is a function of capital and

labor. The information is arranged similar to that in

table 5 by dividing the whole sample period into five

subperiods. As indicated in the table, the annual rate of

change in the multifactor productivity (4) is obtained

by subtracting the combined inputs of capital and

labor (2) from the net output (1). The annual rate of

change in labor productivity (5) is a summation of

capital intensity per worker-hour (3) and multifactor

productivity (4). 

In table 9, multifactor productivity of the net value

added was characterized by a yearly 2.73-percent

growth. The annual rate of change was 3.1 percent in

1975-79, increasing to a peak of 5.41 percent in 1985-

89 before slowing to 4.21 percent in 1990-94 and 

-0.91 percent in 1995-97. The gains in the multifactor

productivity index constituted the major force of

growth in the net value added, which grew at an annual rate of 3.58 percent. The contribution of combined

labor and capital inputs to the growth of the net value

added, however, was not certain; there were significant

contributions of 3.05 percent in 1980-84 and 2.58 percent in 1995-97, but not in other subperiods. 

Table 9 also shows that the average annual rate of

change in labor productivity was 3.03 percent. The

productivity index showed a gain of 2.99 percent in

1975-79, reaching a peak of 5.43 percent in 1980-84

before slowing to 2.71 percent in 1985-89 and 1.14

percent in 1995-97. The rates of change in technological progress and capital intensity per production worker determine the rates of change in labor productivity.

For example, the average annual rate of change in

labor productivity peaked at 5.43 percent in 1980-84,

mainly because of the high annual rates of growth in 

18 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Table 9—Net-output productivity of the food manufacturing sector, 1975-97

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

Calculated annual change rate (percent)

Net output (1) 4.24 3.50 3.73 4.13 1.66 3.58

Inputs:

Combined inputs (2) 1.15 3.05 -1.68 -0.08 2.58 0.85

Capital/labor intensity (3) -0.11 4.99 -2.69 -2.09 2.06 0.31

Productivity:

Multifactor productivity (4)=(1)-(2) 3.10 0.45 5.41 4.21 -0.91 2.73

Labor productivity (5)=(3)+(4) 2.99 5.43 2.71 2.12 1.14 3.03

Notes: Net output = real net value added; Combined inputs = weighted average of all inputs;

Capital/labor input = capital intensity or capital services per worker-hour.

Source: USDA/Economic Research Service.
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 19

Figure 6a

Gross-output productivity: 

Meat products

75 77 79 81 83 85 87 89 91 93 95 97

80

90

100

110

120

130

140

Index (1975=100)

Gross output

Multifactor productivity 

Labor productivity

Figure 6c

Gross-output productivity: 

Preserved fruits and vegetables

Index (1975=100)

Gross output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

90

100

110

120

130

140

150

160

170

180

Figure 6e

Gross-output productivity: 

Bakery products

Index (1975=100)

Gross output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

90

100

110

120

130

140

150

160

170

Figure 6b

Gross-output productivity: 

Dairy products

Index (1975=100)

Gross output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

90

100

110

120

130

140

150

Figure 6d

Gross-output productivity: 

Grain mill products

Index (1975=100)

Gross output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

90

100

110

120

130

140

150

160

170

180

Figure 6f

Gross-output productivity: 

Sugar and confections

Index (1975=100)

Gross output

Multifactor 

productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

80

90

100

110

120

130

140

Source: USDA/Economic Research Service.
capital intensity of 4.99 percent. In 1975-79, however,

labor productivity was 2.99 percent, mainly because of

a significant increase in multifactor productivity of 3.1

percent. In general, it is difficult to ascertain the contribution of multifactor productivity or capital intensity

to the growth of net-output labor productivity in the

food manufacturing sector. 

Figure 7a shows that the multifactor productivity index

was in general moving upward continuously along

with the net-output index during 1975-97, while the

combined capital and labor inputs index showed little

change. Figure 7b shows that the labor productivity

20 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Figure 6g

Gross-output productivity: 

Fats and oils

Index (1975=100)

Gross output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

80

100

120

140

160

180

Figure 6h

Gross-output productivity: 

Beverages

Index (1975=100)

Gross output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

70

90

110

130

150

170

190

210

230

250

270

Figure 6i

Gross-output productivity: 

Miscellaneous foods

Index (1975=100)

Gross output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

90

110

130

150

170

190

Figure 7a

The food sector: Net-output multifactor 

productivity

Index (1975=100)

Combined inputs

Multifactor 

productivity

Net output

75 77 79 81 83 85 87 89 91 93 95 97

80

100

120

140

160

180

200

220

Source: USDA/Economic Research Service.

Figure 7b

The food sector: Net-output labor

productivity

Index (1975=100)

Nonlabor intensity

Multifactor 

productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

80

100

120

140

160

180

200

Source: USDA/Economic Research Service. Source: USDA/Economic Research Service.
index is moving upward continuously along with the

net-output index during 1975-97, while the multifactor

productivity index decreases slightly before 1981 and

then increases steadily over most years. The combined

capital and nonproduction worker intensity index

trended upward before 1985 and declined thereafter. 

Table 10 presents the net-output productivity results of

each food manufacturing industry. The average growth

rates of the multifactor productivity indexes vary widely across industries ranging from grain mill products

(1.99 percent) to beverages (3.66 percent). Multifactor

productivity accounted for the major growth of net

value added in some subperiods, but in other subperiods the combined labor and capital inputs contributed

significantly to changes in net value added. In the meat

industry, for example, the average growth rate of net

value added in 1995-97 was 7.92 percent because of a

4.16-percent increase in multifactor productivity and a

3.76-percent increase in combined inputs. In 1980-84,

the annual increase of net value added was 1.18 percent, mainly spurred by a 1.3-percent increase in combined inputs. In 1985-89, however, the annual increase

of net value added was 4.4 percent, mainly due to a

3.7-percent increase in multifactor productivity.

Regarding net-output labor productivity, table 10 shows

that most of the average annual changes in labor productivity are positive ranging from meat products (1.64

percent) to beverages (4.85 percent), implying that the

productivity index increased over time. In 1980-84, the

increase of capital intensity was vital to the growth of

labor productivity for most industries. For example, in

the grain mill products, a 7.89-percent increase in capital intensity during that period caused a 7.59-percent

increase in labor productivity. On the other hand, the

average annual rates of change in capital intensity for

most food industries was negative in 1985-89 and

1990-94, which affected labor productivity during

those subperiods. For example, the average growth rate

of capital intensity for meat products was -3.76 percent

in 1985-89, causing labor productivity to drop by 0.06

percent, substantially lower than the 3.7-percent

increase in multifactor productivity.

Figures 8a to 8i show the movements of net output,

multifactor productivity, and labor productivity for the

nine food industries in 1975-97. These indexes moved

upward continuously over time, but their growth rates

varied among industries. For dairy products, bakery

products, and sugar and confections, all three indexes

were closely correlated. For grain mill products and

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 21

Figure 8a

Net-output productivity: 

Meat products

Index (1975=100)

Net output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

80

100

120

140

160

180

200

220

240

Figure 8b

Net-output productivity: 

Dairy products

Index (1975=100)

Net output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

80

100

120

140

160

180

200

Figure 8c

Net-output productivity: 

Preserved fruits and vegetables

Index (1975=100)

Net output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

80

100

120

140

160

180

200

220

240

260

Source: USDA/Economic Research Service.
22 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Figure 8d

Net-output productivity: 

Grain mill products

Index (1975=100)

Net output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

80

130

180

230

280

330

Figure 8f

Net-output productivity: 

Sugar and confections

Index (1975=100)

Net output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

80

100

120

140

160

180

200

220

Figure 8h

Net-output productivity: 

Beverages

Index (1975=100)

Net output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

70

120

170

220

270

320

Figure 8e

Net-output productivity: 

Bakery products

Index (1975=100)

Net output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

70

90

110

130

150

170

190

210

Figure 8g

Net-output productivity: 

Fats and oils

Index (1975=100)

Net output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

50

70

90

110

130

150

170

190

210

Figure 8i

Net-output productivity: 

Miscellaneous foods

Index (1975=100)

Net output

Multifactor productivity

Labor productivity

75 77 79 81 83 85 87 89 91 93 95 97

70

90

110

130

150

170

190

210

230

250

Source: USDA/Economic Research Service.
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 23

Table 10—Net-output productivity of the food manufacturing industries, 1975-97

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

Calculated annual change rate (percent)

Meat products

Net output (1) 1.62 1.18 4.40 5.34 7.92 3.86

Inputs:

Combined inputs (2) 0.30 1.30 0.70 2.07 3.76 1.49

Capital/labor intensity (3) -0.91 2.10 -3.76 -2.08 2.14 -0.72

Productivity:

Multifactor productivity (4)=(1)-(2) 1.32 -0.11 3.70 3.27 4.16 2.37

Labor productivity (5)=(3)+(4) 0.41 1.99 -0.06 1.19 6.30 1.64

Dairy products

Net output (1) 3.54 2.65 3.73 2.93 1.71 2.99

Inputs:

Combined inputs (2) -2.52 2.74 -1.07 -0.30 3.80 0.37

Capital/labor intensity (3) -2.12 4.21 -2.13 -0.21 3.12 0.47

Productivity:

Multifactor productivity (4)=(1)-(2) 6.06 -0.10 4.80 3.23 -2.09 2.62

Labor productivity (5)=(3)+(4) 3.94 4.12 2.68 3.02 1.03 3.09

Preserved fruits and vegetables

Net output (1) 6.03 5.04 4.28 2.94 -0.04 3.88

Inputs:

Combined inputs (2) 1.96 2.93 -1.06 0.72 -0.98 0.81

Capital/labor intensity (3) 0.07 5.33 -0.57 0.07 0.23 1.14

Productivity:

Multifactor productivity (4)=(1)-(2) 4.07 2.11 5.33 2.22 0.95 3.06

Labor productivity (5)=(3)+(4) 4.14 7.44 4.77 2.29 1.17 4.21

Grain mill products

Net output (1) 4.28 4.16 6.05 4.64 -2.74 3.78

Inputs:

Combined inputs (2) 1.71 4.46 -0.85 0.42 4.14 1.79

Capital/labor intensity (3) 1.98 7.89 -1.95 -0.59 4.68 2.21

Productivity:

Multifactor productivity (4)=(1)-(2) 2.57 -0.30 6.91 4.22 -6.87 1.99

Labor productivity (5)=(3)+(4) 4.54 7.59 4.96 3.64 -2.19 4.20

Bakery products

Net output (1) 2.44 3.39 2.91 4.15 1.21 2.98

Inputs:

Combined inputs (2) -0.74 2.03 -0.69 0.51 2.15 0.58

Capital/labor intensity (3) -0.77 4.87 -1.58 -1.82 3.83 0.72

Productivity:

Multifactor productivity (4)=(1)-(2) 3.17 1.37 3.60 3.65 -0.95 2.40

Labor productivity (5)=(3)+(4) 2.40 6.24 2.02 1.83 2.88 3.12

Continued--
preserved fruits and vegetables, there was a close correlation between the output and labor productivity

indexes. For beverages and fats and oils, there was a

close correlation between the output and multifactor

productivity indexes. 

The net-output productivity results are useful indicators for showing the contribution of food manufacturing to the Nation’s GDP. This report concludes by

assessing the effects of an increase in capital, labor

(including production and nonproduction workers), or

both by 10 percent on the rates of change in net value

added and labor productivity. The upper part of table

11 presents the simulated results, showing the increases in net value added compared with the yearly average for 1995-97. These base values, for example, are

$135 billion for the food sector and $19 billion for

meat products. The simulated results indicate that an

increase in capital input by 10 percent would increase

the net value added of the food sector by $3.3 billion,

24 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Table 10—Net-output productivity of the food manufacturing industries, 1975-97--Continued

1975-79 1980-84 1985-89 1990-94 1995-97 Average

annual growth

Calculated annual change rate (percent)

Sugar and confections

Net output (1) 2.60 4.89 2.85 3.05 3.58 3.41

Inputs:

Combined inputs (2) 0.44 2.59 -2.62 0.51 0.69 0.28

Capital/labor intensity (3) -0.17 3.61 -1.54 -0.28 1.35 0.56

Productivity:

Multifactor productivity (4)=(1)-(2) 2.16 2.29 5.48 2.54 2.88 3.13

Labor productivity (5)=(3)+(4) 1.99 5.91 3.94 2.26 4.24 3.69

Fats and oils

Net output (1) 9.77 -6.14 3.00 2.93 1.25 1.90

Inputs:

Combined inputs (2) 2.57 2.59 -4.99 -2.69 1.56 -0.47

Capital/labor intensity (3) 0.29 8.13 -1.46 -1.64 3.36 1.65

Productivity:

Multifactor productivity (4)=(1)-(2) 7.20 -8.74 7.99 5.62 -0.31 2.37

Labor productivity (5)=(3)+(4) 7.50 -0.60 6.52 3.98 3.05 4.03

Beverages

Net output (1) 4.84 4.54 3.47 4.01 1.55 3.83

Inputs:

Combined inputs (2) 2.89 4.10 -4.17 -3.05 2.57 0.17

Capital/labor intensity (3) 2.40 7.04 -0.28 -3.11 -0.50 1.19

Productivity:

Multifactor productivity (4)=(1)-(2) 1.95 0.45 7.64 7.06 -1.02 3.66

Labor productivity (5)=(3)+(4) 4.36 7.48 7.36 3.95 -1.52 4.85

Miscellaneous foods

Net output (1) 6.34 4.66 1.50 5.93 0.55 3.98

Inputs:

Combined inputs (2) 2.51 3.29 -1.22 0.88 4.30 1.71

Capital/labor intensity (3) -3.23 4.09 -1.86 -1.27 2.44 -0.04

Productivity:

Multifactor productivity (4)=(1)-(2) 3.83 1.37 2.72 5.05 -3.75 2.26

Labor productivity (5)=(3)+(4) 0.60 5.46 0.86 3.78 -1.32 2.23

Notes: Net output = real net value added; Combined inputs = weighted average of all inputs;

Capital/labor input = capital intensity or capital services per worker-hours.

Source: USDA/Economic Research Service.
mainly from capital-intensive industries: beverages

($681 million), grain mill products ($476 million), and

preserved fruits and vegetables ($463 million). A 10-

percent increase in labor would increase the net value

added of the food sector by $995 million, with the

meat industry contributing the most among industries

($227 million) because of its labor-intensive meatpacking operations. The increase of both capital and

labor would increase the value added of the food sector by $4.3 billion, with beverages contributing the

most among all industries ($808 million). 

The lower part of table 11 presents the simulated

results, showing the increases in labor productivity

compared with the yearly average in 1995-97. The

base value of the food sector was $58.34 for the net

value added per production worker-hour. Beverages

and grain mill products, heavily capital-intensive

industries, ranked high in labor productivity ($167.1

and $109.73 per worker-hour, respectively). On the

other hand, labor productivity of the labor-intensive

meat products industry ranked the lowest among the

food industries—only $24.61 per worker-hour. A 10-

percent increase in capital input alone would increase

the food manufacturing sector’s capital intensity, and

consequently its labor productivity, by $1.43 per worker-hour. Most of the increases in labor productivity

were realized by capital-intensive industries: $4.47 per

worker-hour for beverages and $2.99 per worker-hour

for grain mill products. A 10-percent increase in labor

input alone would reduce the entire food manufacturing sector’s capital intensity and cause a decrease in

labor productivity of $1.58 per worker-hour. Finally,

an increase of both capital and employees would yield

a small increase in labor productivity of the food sector (15 cents per worker-hour), because of the countereffects of changes between capital and labor. 

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 25

Table 11—Effects of increases in inputs on net value added and labor productivity

Base Changes in value added as a 10-percent increase of:

value Capital Labor Both capital and labor

Million $ at 1982 prices

Food sector 135,166 3,299 995 4,294

Meat products 19,045 378 227 605

Dairy products 11,838 278 98 376

Preserved fruits & vegetables 18,503 463 125 588

Grain mill products 17,473 476 79 555

Bakery products 15,556 342 152 494

Sugar and confections 9,174 224 67 291

Fats and oils 3,267 84 20 104

Beverages 25,432 681 127 808

Miscellaneous foods 14,878 372 100 473

Changes in net value added per 

worker-hour (dollars)

Food sector 58.34 1.43 -1.58 0.15

Meat products 24.61 0.49 -0.55 0.07

Dairy products 65.99 1.55 -1.79 0.24

Preserved fruits & vegetables 53.29 1.33 -1.43 0.10

Grain mill products 109.73 2.99 -3.17 0.18

Bakery products 57.30 1.26 -1.51 0.25

Sugar and confections 63.22 1.55 -1.69 0.15

Fats and oils 82.19 2.12 -2.31 0.19

Beverages 167.14 4.47 -4.90 0.42

Miscellaneous foods 59.93 1.50 -1.66 0.16

Note: All values are measured at 1982 prices deflated by producer price of processed foods and feeds.

Base value = yearly ave rage value in 1995-97. Labor = production and nonproduction workers.

Source: USDA/Economic Research Service.
This report uses gross-output and net-output approaches to measure multifactor and labor productivity indexes of the U.S. food manufacturing sector. The grossoutput approach relates the adjusted value of shipments as a function of capital, labor, energy, and all

intermediate materials, while the net-output approach

relates the net value added as a function of labor and

capital. This study finds a striking difference in the

multifactor productivity indexes obtained through different approaches. The gross-output approach yields

no significant changes in multifactor productivity over

the sample period, while the net-output approach indicates a steady increase in the productivity index. 

The cause for different multifactor productivity results

may be explained below. The productivity index is calculated by subtracting the rates of change in the combined input index from the output index. In the grossoutput model, materials are considered both as input

and output of a production function. If the cost of

materials constitutes a large portion of the value of

shipments, the rate of change in the output index

would be close to the combined input index, causing

the measured multifactor productivity index to be

small. In the net-output model, materials are not

included in output or considered as input in a production function. The difference in the rates of change

between the net value added and the combined capital

and labor inputs—that is, the net-output multifactor

productivity index—shows more degrees of freedom to

vary than under the gross-output model. 

In fact, the food manufacturing sector is materialsintensive, with material costs constituting about 60

percent or more of the value of gross output. The

ratios for some food manufacturing industries, such as

meat products and fats and oils, even reach 75 percent

or higher. These two industries depend on either relatively expensive meats as raw materials for processing

or heavy use of soybeans for crushing or semi-refined

soybean oil for refining. Consequently, including or

excluding materials as a component in a production

function will substantially affect the results of measured productivity indexes. Basically, the economic

meaning of the productivity measurements from the

two approaches is different, and they represent different applications. There are certain advantages for

applying either the gross-output or net-output

approach to measure the productivity indexes of the

U.S. food manufacturing sector. 

Results obtained from the gross-output approach

should be used for interpreting food manufacturing

productivity trends. The gross-output approach measures the ability to produce higher gross output from

the same level of all inputs because of technological

change. Under this approach, the production function

is a comprehensive representation of a production

structure that includes the contribution of all factor

inputs available from the data sources. Therefore, the

measured gross-output productivity index may closely

represent technology changes over time, while the

potential change effects from unmeasured inputs can

be avoided. On the other hand, a distinct drawback of

applying the net-output approach is the assumption

that materials inputs are separable from other inputs

and cannot be the source of productivity growth. The

Bureau of Labor Statistics (BLS) apparently supports

using the gross-output results to explain productivity

trends. Gullickson indicated that the BLS has not

included net-output productivity indexes in its news

release of productivity trends for all manufacturing

industries since 1994. 

Productivity indexes obtained from the net-output

approach should be used for evaluating the contribution of food manufacturing to the growth of the

Nation’s GDP, mainly because the definition of net

output is the same as for gross-product-originating

(value-added) GDP. As a common practice to evaluate

the Nation’s GDP in any year, the level of GDP is frequently regarded as dependent on the input of labor

measured in worker-hours multiplied by the labor productivity measure as real value added per worker-hour.

Therefore, the net-output labor productivity index

using the net value added as output in a production

function may directly show the contribution of the

food manufacturing industries to the Nation’s GDP. In

addition, net-output labor productivity, which depends

solely on capital and labor inputs, can be easily interpreted as dependent on technological progress and the

quantity of capital goods available to workers. This

provides a framework for easy interpretation of the

substitution relationships between capital and labor

inputs. These advantages in application, however, are

not available in the gross-output labor productivity

measure. 

26 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Concluding Remarks
Applied Financial Information LP. Mergerstat Review.

Various issues. 

Azzam, A.M., E. Lopez, and R. Lopez (2001).

“Imperfect Competition and Total Factor

Productivity Growth,” University of Connecticut,

Storrs Agr. Exper. Station: Scientific Contribution

No. 2041. 

Ball, V.E. and R.G. Chambers (1982). “An Economic

Analysis of Technology in the Meat Products

Industry,” American Journal of Agricultural

Economics 64:699-709.

Connor, J.M. and W.A. Schiek (1997). Food

Processing: An Industrial Powerhouse in Transition,

2nd edition, New York: John Wiley & Sons.

Gullickson, W. (1995). “Measurement of Productivity

Growth in U.S. Manufacturing,” Monthly Labor

Review: 13-35.

Heien, D.M. (1983). “Productivity in U.S. Food

Processing and Distribution,” American Journal of

Agricultural Economics 65: 297-302.

MacDonald, J.M. and M.E. Ollinger (2000). “Scale

Economies and Consolidation in Hog Slaughter,”

American Journal of Agricultural Economics 82:

334-346.

Mark, J.A.and W.H. Waldorf (1983). “Multifactor

Productivity: A New BLS Measure,” Monthly Labor

Review: 3-15

Solow, R.M. (1957). “Technical Change and the

Aggregate Production Function,” Review of

Economics and Statistics 39: 312-320.

U.S. Department of Commerce. Survey of Current

Business. Various issues.

U.S. Department of Commerce, the Bureau of the

Census. Census of Manufactures. Various issues. 

U.S. Department of Commerce, the Bureau of the

Census. Annual Survey of Manufactures. Various

issues. 

U.S. Department of Commerce, the Bureau of the

Census. 1997 Economic Census: Bridge between

SIC and NAICS: Food and Kindred products.

Website (http://www.census.gov/epcd/

ec97brdg/e97b2_20.htm)

U.S. Department of Labor, the Bureau of Labor

Statistics (BLS). Producer Price Indexes. Website

(http://stats.bls.gov/blshome.html.) 

U.S. Department of Labor, the Bureau of Labor

Statistics (BLS). Multifactor Productivity. Website

(http://stats.bls.gov/mfp/mprdload.html.) 

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 27

References
The data used in this study were compiled mainly

from the Census of Manufactures and the Annual

Survey of Manufactures SIC code 20 (Food and

Kindred Products) and its nine three-digit industries

for 1975-97 published by the Census Bureau of the

U.S. Department of Commerce. The Census Bureau

conducts the economic census (including food manufacturing) every 5 years, covering years ending in 2

and 7, (e.g., 1992 and 1997). In addition, the Census

Bureau conducts the Annual Survey of Manufactures

(ASM) in each of the 4 years between the economic

censuses. The ASM is a probability-based sample of

approximately 58,000 establishments and collects

many of the same industry statistics as the economic

census including employment, payroll, value of shipments, etc. However, there are some selected statistics

not included in the ASM. Among these are the number

of companies and establishments, detailed product and

materials data, and sub-State geographic data.

The data in the 1997 Census of Manufactures were

published for the first time on the basis of the North

American Industry Classification System (NAICS),

which is different from the Standard Industrial

Classification System (SIC) used in previous censuses.

For food manufacturing industries, there is substantial

difference in product classification between the

NAICS and the SIC systems. For example, dog and cat

food and other animal foods are included in animal

food (code 3111) in the NAICS, but they are included

in grain mill products (code 204) in the SIC. In the

NAICS, seafood product preparation and packaging

(code 3117) is added as a product category, but is

included in miscellaneous food (code 209) under the

SIC system. 

To construct consistent time-series data dating back to

1975, this study converts the 1997 data under the

NAICS classification system into a framework along

with the SIC classification system. The converting procedure follows the Census Bureau’s classification codes

published on the web site “1997 Economic Census:

Bridge Between SIC and NAICS.” A list of the comparability of product codes used for converting the NAICS

data into SIC data is presented in Appendix table A. For

example, in the meat products, SIC code 2011 (meatpacking plants) is nearly equivalent to NAICS code

311611 (animal, except poultry, slaughtering). 

28 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix A: Data Compilations
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 29

Appendix table A—Comparability of product codes between SIC and NAICS for food and kindred products

SIC code NAICS code *

Meat products 201

Fresh frozen meat 2011 Meatpacking plants 311611 Animal (except poultry) slaughtering (99.9%)

Sausage 2013 Sausages and other prepared meats 311612 Meat processed from carcasses (93%)

Poultry 2015 Poultry slaughtering and processing 311615 Poultry processing

311999 All other miscellaneous food (21%)

Dairy products 202

Creamery butter 2021 Creamery butter 311512 Creamery butter

Cheese 2022 Cheese, natural and processed 311513 Cheese

Dry condensed milk 2023 Dry, condensed and evaporated dairy products 311514 Dry, condensed and evaporated dairy products

Ice cream 2024 Ice cream and frozen desserts 311520 Ice cream and frozen dessert

Fluid milk 2026 Fluid milk 311511 Fluid milk

Preserved fruits 

and vegetables 203

Canned specialty 2032 Canned specialties 311422 Speciality canning

311999 All other miscellaneous food (2%) 

Canned fruits and vegetables 2033 Canned fruits and vegetables 311421 Fruit and vegetable canning (91%)

Dried fruits and vegetables 2034 Dehydrated fruits, vegetables, and soups 311423 Dried and dehydrated food (94%)

Pickles 2035 Pickles, sauces, and salad dressings 311941 Pickles, sauces, and salad dressings (96%)

311421 Fruit and vegetable canning (9%)

Frozen fruits and vegetables 2037 Frozen fruits and vegetables 311411 Frozen fruit, juice, and vegetable

Frozen specialties 2038 Frozen specialties 311412 Frozen specialty food

Grain mill products 204

Flour and gain mill products 2041 Flour and other grain mill products 311211 Flour milling

Breakfast cereals 2043 Cereal breakfast foods 311230 Breakfast cereal

Rice 2044 Rice milling 311212 Rice milling

Prepared flour mixes 2045 Prepared flour mixes and doughs 311822 Flour mixes and dough from flour

Wet corn 2046 Wet corn milling 311221 Wet corn milling

Dog and cat food 2047 Dog and cat food 311111 Dog and cat food

Prepared feeds 2048 Prepared feeds 311119 Other animal food

311611 Animal (except poultry) slaughtering (0.1%)

Bakery products 205

Cookies and crackers 2052 Cookies and crackers 311821 Cookies and crackers

311919 Potato chips and other snack food (6%)

311812 Commercial bakeries (0.2%)

Frozen bakery 2053 Frozen bakery products, except bread 311813 Frozen cake, pie, and other pastry

Sugar and confections 206

Raw cane sugar 2061 Raw cane sugar 311311 Sugarcane mills

Cane sugar 2062 Cane sugar refining 311312 Cane sugar refining

Beet sugar 2063 Beet sugar 311313 Beet sugar

Candy 2064 Candy and other confectionery 3113302 Confectionery products from chocolate

products and chewing gum (commercial)

Nonchocolate confectionery manufacturing 3113402 Nonchocolate confectionery (commercial)

Chocolate 2066 Chocolate and cocoa products 311320 Chocolate and confectionery from

cacao beans 

Nuts and peanuts 2068 Salted and roasted nuts and seeds 311911 Roasted nuts and peanut butter (80%)

Continued--
30 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table A—Comparability of product codes between SIC and NAICS for food and kindred products--Continued

Fats and oils 207

Soybean oil 2075 Soybean oil mills 311222 Soybean processing

311225 Fats and oils refining and blending (12%)

Other oilseed 2076 Vegetable and cotton oil mills 311223 Other oilseed processing

311225 Fats and oils refining and blending (2%)

Animal fats and oils 2077 Animal and marine fats and oils 311613 Rendering and meat byproduct processing

311711 Seafood canning (1%) 

Edible fats and oils 2079 Edible fats and oils 311225 Fats and oils refining and blending (86%)

Beverages 208

Malt beverages 2082 Malt beverages 312120 Breweries

Malt 2083 Malt 311213 Malt

Wines 2084 Wines, brandy, and brandy spirits 312130 Wineries 

Distillery 2085 Distilled and blended liquors 312140 Distilleries

Soft drink 2086 Soft drink 312111 Soft drink 

2086 Bottled water 312112 Bottled water

Flavoring syrups 2087 Flavoring syrup and concentrate 311930 Flavoring syrup and concentrate

311942 Spice and extract (20%)

311999 All other miscellaneous food (8%) 

Miscellaneous foods 209

Seafood canned 2091 Canned and cured fish and seafoods 311711 Seafood canning (99%)

Seafood fresh 2092 Fresh or frozen prepared fish 311712 Fresh and frozen seafood processing

Roasted coffee 2095 Roasted coffee 311920 Coffee and tea (90%)

Potato chips 2096 Potato chips and similar snacks 311919 Potato chips and other snack food (94%)

Manufactured ice 2097 Manufactured ice 312113 Manufactured ice

Macaroni and spaghetti 2098 Macaroni and spaghetti 311823 Dry pasta

Food preparation 2099 Food preparations 311830 Tortilla

311942 Spice and extract (80%)

311991 Perishable prepared food

311999 All other miscellaneous food (69%) 

311423 Dried and dehydrated food (6%)

311911 Roasted nuts and peanut butter (20%)

311920 Coffee and tea (10%)

311941 Mayonnaise, dressing & sauce (4%)

* The percent in parentheses indicates that the percentage of a NAICS code is allocated to a corresponding SIC code.

Source: U.S. Census Bureau. 1997 Economic Census: Bridge Between SIC and NAICS: Food and kindred products. (http://www.Census.gov/epcd/ec97brdg)
To measure depreciation charges for capital, data are

available and reported only for 1977-85. Depreciation

charges for the remaining period 1986-97 are projected

on the basis of a log-linear regression by fitting the

depreciation charges (Dt

) at time t as a function of

beginning-of-year structure and equipment assets (Kt

)

for 1977-85. That is,

ln Dt = α + β ln Kt

. 

A complete listing of fitted depreciation equations for

the food manufacturing sector and all individual food

manufacturing industries is listed in the following table:

Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 31

Appendix B: Estimated Capital Depreciation Equations

Appendix table B—Estimation results of capital depreciation equations

Estimated constant Estimated slope R-square D.W.

Food sector -3.3203 1.0630 0.99 2.60

(0.3156) (0.0292)

Meat products -2.5058 1.0028 0.87 2.61

(1.2503) (0.1460)

Dairy products -2.9143 1.0412 2.61 1.68

(0.7790) (0.0927)

Preserved fruits and vegetables -3.2090 1.0591 0.98 1.86

(0.4354) (0.0497)

Grain mill products -3.8491 1.1222 0.94 1.70

(0.9448) (0.1076)

Bakery products -3.4243 1.1039 0.96 2.18

(0.7369) (0.0891)

Sugar and confections -2.8632 1.0051 0.96 1.92

(0.6141) (0.0737)

Fats and oils -4.0580 1.1716 0.99 3.16

(0.3755) (0.0473)

Beverages -3.7038 1.1149 0.99 1.84

(0.4264) (0.0457)

Miscellaneous foods -1.1906 0.8327 0.89 1.34

(0.9152) (0.1108)

Notes: The depreciation equation is a log-linear form by fitting the depreciation charges as a function of the assets at the beginning-of-year.

For each pair of estimates, the upper part is the estimated coefficient, and the lower part in parentheses is the standard error. D.W. = DurbinWatson statistic.

Source: USDA/Economic Research Service.
For applying the methodology of measuring productivity to U.S. food manufacturing, two commonly used

output indicators, the value of shipments and value

added, are available in the Census of Manufactures

and the Annual Survey of Manufactures. Therefore,

two alternative approaches in specifying a production

function for measuring multifactor and labor productivity indexes are applied in this study. One approach

is specifying the “gross” output or real adjusted value

of shipments as a function of capital, labor, and intermediate materials inputs. The results from the grossoutput approach are presented in appendix tables C1 to

C10. Another approach is specifying the “net” output

or real net value-added as a function of capital and

labor inputs. The results from the net-output approach

are presented in appendix tables C11 to C20. 

Each table contains the detailed results of yearly productivity indexes and related measures. The upper part

of each table shows the calculated annual rates of

changes in output, inputs, and multifactor and labor

productivity indexes. The lower part of each table

shows and the generated index values using 1975 as

the base year. These index series showing the movements of the generated index numbers for output, multifactor, and labor productivity are the input information for use in the figures appearing in the text. 

32 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix C: Yearly Productivity Measures
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 33

Appendix table C-1—Gross-output productivity of the food manufacturing sector

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 7.49 3.30 1.78 4.19 5.97

1977 2.01 2.85 2.41 -0.83 1.58

1978 3.02 0.96 -1.17 2.06 0.89

1979 -0.70 -2.08 -3.01 1.39 -1.62

1980 0.24 4.40 5.48 -4.16 1.32

1981 2.74 5.17 7.03 -2.43 4.60

1982 2.06 4.01 7.94 -1.94 6.00

1983 0.31 -2.44 -0.31 2.75 2.44

1984 0.99 2.09 2.79 -1.10 1.68

1985 2.21 4.39 6.21 -2.18 4.03

1986 0.44 -1.60 -1.14 2.04 0.90

1987 4.45 2.94 -1.47 1.51 0.04

1988 2.21 -0.96 -3.06 3.18 0.12

1989 -0.89 -1.75 -2.60 0.86 -1.73

1990 1.83 2.38 -0.46 -0.54 -1.00

1991 0.73 3.36 2.62 -2.63 -0.02

1992 4.92 2.07 -2.02 2.85 0.83

1993 1.95 -2.04 -3.43 3.99 0.56

1994 0.78 3.62 2.64 -2.85 -0.21

1995 2.75 2.31 1.67 0.44 2.11

1996 -1.78 -4.08 -3.51 2.29 -1.21

1997 3.56 8.18 6.70 -4.63 2.07

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 107.5 103.3 101.8 104.2 106.0

1977 109.7 106.2 104.2 103.3 107.6

1978 113.0 107.3 103.0 105.5 108.6

1979 112.2 105.0 99.9 106.9 106.8

1980 112.5 109.7 105.4 102.5 108.2

1981 115.5 115.3 112.8 100.0 113.2

1982 117.9 119.9 121.8 98.0 120.0

1983 118.3 117.0 121.4 100.7 122.9

1984 119.5 119.5 124.8 99.6 125.0

1985 122.1 124.7 132.5 97.4 130.0

1986 122.6 122.7 131.0 99.4 131.2

1987 128.1 126.3 129.1 100.9 131.3

1988 130.9 125.1 125.1 104.1 131.4

1989 129.8 122.9 121.9 105.0 129.2

1990 132.1 125.8 121.3 104.5 127.9

1991 133.1 130.1 124.5 101.7 127.8

1992 139.7 132.8 122.0 104.6 128.9

1993 142.4 130.1 117.8 108.8 129.6

1994 143.5 134.8 120.9 105.7 129.4

1995 147.4 137.9 122.9 106.2 132.1

1996 144.8 132.2 118.6 108.6 130.5

1997 150.0 143.1 126.5 103.6 133.2
34 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-2—Gross-output productivity of the meat products industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 6.75 4.10 2.17 2.65 4.82

1977 -3.17 0.22 0.86 -3.39 -2.53

1978 10.00 7.38 4.56 2.62 7.18

1979 0.68 -3.26 -4.00 3.95 -0.05

1980 -5.89 -1.58 -3.93 -4.30 -8.23

1981 1.35 4.67 6.88 -3.32 3.56

1982 1.45 5.42 5.53 -3.96 1.57

1983 -3.48 -4.41 -3.17 0.94 -2.23

1984 -0.31 -0.36 2.46 0.04 2.50

1985 -0.31 4.21 3.83 -4.52 -0.69

1986 1.32 3.04 -1.27 -1.72 -2.99

1987 8.37 8.87 -0.34 -0.50 -0.84

1988 1.02 -3.60 -9.08 4.62 -4.46

1989 -0.75 -1.68 -4.60 0.93 -3.67

1990 3.94 4.39 -0.72 -0.45 -1.17

1991 -1.67 5.08 2.67 -6.75 -4.09

1992 5.21 4.27 -1.47 0.94 -0.53

1993 3.97 1.00 -2.96 2.96 0.00

1994 -2.75 -0.76 -4.26 -2.00 -6.25

1995 1.84 0.64 1.78 1.20 2.98

1996 -3.72 -6.65 -7.51 2.93 -4.58

1997 7.99 10.16 5.01 -2.18 2.83

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 106.7 104.1 102.2 102.7 104.8

1977 103.4 104.3 103.0 99.2 102.2

1978 113.7 112.0 107.7 101.8 109.5

1979 114.5 108.4 103.4 105.8 109.4

1980 107.7 106.6 99.4 101.2 100.4

1981 109.2 111.6 106.2 97.9 104.0

1982 110.8 117.7 112.1 94.0 105.6

1983 106.9 112.5 108.5 94.9 103.3

1984 106.6 112.1 111.2 94.9 105.9

1985 106.3 116.8 115.4 90.6 105.1

1986 107.7 120.3 114.0 89.1 102.0

1987 116.7 131.0 113.6 88.6 101.1

1988 117.9 126.3 103.3 92.7 96.6

1989 117.0 124.2 98.5 93.6 93.1

1990 121.6 129.6 97.8 93.2 92.0

1991 119.6 136.2 100.4 86.9 88.2

1992 125.8 142.0 98.9 87.7 87.8

1993 130.8 143.5 96.0 90.3 87.8

1994 127.2 142.4 91.9 88.5 82.3

1995 129.5 143.3 93.6 89.5 84.7

1996 124.7 133.7 86.5 92.2 80.8

1997 134.7 147.3 90.9 90.2 83.1
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 35

Appendix table C-3—Gross-output productivity of the dairy products industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 11.45 7.44 7.87 4.02 11.89

1977 -0.03 1.47 5.49 -1.50 3.99

1978 -1.42 -3.93 -4.50 2.51 -1.99

1979 -1.27 -5.78 -8.07 4.51 -3.56

1980 3.49 7.61 10.70 -4.12 6.58

1981 5.58 8.75 9.09 -3.16 5.93

1982 3.47 6.65 11.16 -3.18 7.98

1983 1.85 0.12 1.94 1.73 3.67

1984 -3.15 -2.26 -4.68 -0.89 -5.56

1985 3.71 8.47 9.07 -4.76 4.31

1986 0.58 -0.64 -1.00 1.22 0.22

1987 4.02 2.51 -1.58 1.51 -0.07

1988 0.09 -3.48 -8.24 3.57 -4.67

1989 -1.97 -1.33 2.01 -0.65 1.36

1990 2.62 3.62 3.73 -1.00 2.73

1991 -2.64 0.58 1.03 -3.21 -2.18

1992 8.40 4.39 -0.54 4.01 3.46

1993 -2.81 -4.73 -3.92 1.92 -2.00

1994 -0.80 4.15 8.16 -4.95 3.21

1995 2.63 4.30 2.16 -1.67 0.50

1996 -0.25 -5.32 -4.42 5.07 0.64

1997 -0.10 5.25 4.47 -5.35 -0.88

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 111.5 107.4 107.9 104.0 111.9

1977 111.4 109.0 113.8 102.5 116.4

1978 109.8 104.7 108.7 105.0 114.0

1979 108.4 98.7 99.9 109.8 110.0

1980 112.2 106.2 110.6 105.2 117.2

1981 118.5 115.5 120.6 101.9 124.2

1982 122.6 123.2 134.1 98.7 134.1

1983 124.9 123.3 136.7 100.4 139.0

1984 120.9 120.5 130.3 99.5 131.2

1985 125.4 130.7 142.1 94.8 136.9

1986 126.2 129.9 140.7 95.9 137.2

1987 131.2 133.1 138.5 97.4 137.1

1988 131.3 128.5 127.1 100.8 130.7

1989 128.8 126.8 129.6 100.2 132.5

1990 132.1 131.4 134.5 99.2 136.1

1991 128.6 132.2 135.8 96.0 133.1

1992 139.4 138.0 135.1 99.8 137.7

1993 135.5 131.4 129.8 101.8 135.0

1994 134.4 136.9 140.4 96.7 139.3

1995 138.0 142.8 143.4 95.1 140.0

1996 137.6 135.2 137.1 99.9 140.9

1997 137.5 142.3 143.2 94.6 139.7
36 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-4—Gross-output productivity of the preserved fruits and vegetables industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 7.26 0.37 2.97 6.89 9.86

1977 10.16 9.39 2.85 0.77 3.61

1978 2.49 1.07 -1.80 1.42 -0.39

1979 -1.18 -0.41 -1.15 -0.77 -1.92

1980 -2.53 3.22 6.81 -5.74 1.06

1981 1.75 3.96 6.64 -2.21 4.43

1982 6.89 4.62 11.40 2.28 13.68

1983 2.20 -1.46 0.39 3.67 4.06

1984 6.03 6.02 3.09 0.01 3.10

1985 3.67 5.63 7.58 -1.96 5.62

1986 -0.18 -5.02 -3.24 4.85 1.60

1987 -0.85 -0.88 1.20 0.04 1.24

1988 1.80 0.16 -0.36 1.64 1.28

1989 5.01 2.05 -0.80 2.96 2.16

1990 2.81 4.22 1.11 -1.41 -0.30

1991 4.25 5.21 3.59 -0.96 2.63

1992 -1.42 -3.16 -2.26 1.74 -0.52

1993 2.53 -1.36 -0.44 3.88 3.44

1994 3.01 5.88 5.57 -2.87 2.70

1995 0.33 1.55 -0.35 -1.22 -1.57

1996 -3.37 -5.41 -3.14 2.05 -1.10

1997 0.19 0.54 3.80 -0.35 3.45

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 106.7 104.1 102.2 102.7 104.8

1977 103.4 104.3 103.0 99.2 102.2

1978 113.7 112.0 107.7 101.8 109.5

1979 114.5 108.4 103.4 105.8 109.4

1980 107.7 106.6 99.4 101.2 100.4

1981 109.2 111.6 106.2 97.9 104.0

1982 110.8 117.7 112.1 94.0 105.6

1983 106.9 112.5 108.5 94.9 103.3

1984 106.6 112.1 111.2 94.9 105.9

1985 106.3 116.8 115.4 90.6 105.1

1986 107.7 120.3 114.0 89.1 102.0

1987 116.7 131.0 113.6 88.6 101.1

1988 117.9 126.3 103.3 92.7 96.6

1989 117.0 124.2 98.5 93.6 93.1

1990 121.6 129.6 97.8 93.2 92.0

1991 119.6 136.2 100.4 86.9 88.2

1992 125.8 142.0 98.9 87.7 87.8

1993 130.8 143.5 96.0 90.3 87.8

1994 127.2 142.4 91.9 88.5 82.3

1995 129.5 143.3 93.6 89.5 84.7

1996 124.7 133.7 86.5 92.2 80.8

1997 134.7 147.3 90.9 90.2 83.1
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 37

Appendix table C-5—Gross-output productivity of the grain mill products industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 5.14 1.46 2.45 3.68 6.13

1977 0.86 2.09 4.95 -1.24 3.72

1978 -4.16 -4.18 -6.10 0.02 -6.07

1979 0.93 -1.43 -2.31 2.36 0.05

1980 3.96 6.71 8.55 -2.74 5.80

1981 5.70 8.60 11.33 -2.90 8.43

1982 -2.64 -0.20 6.14 -2.43 3.71

1983 3.87 -0.56 0.49 4.43 4.93

1984 0.00 2.93 8.10 -2.93 5.16

1985 0.75 1.14 5.05 -0.38 4.66

1986 -2.68 -5.74 -5.16 3.06 -2.10

1987 6.29 4.55 -2.96 1.74 -1.22

1988 6.69 3.82 1.55 2.87 4.42

1989 4.49 2.67 2.48 1.82 4.29

1990 0.18 0.39 0.06 -0.22 -0.15

1991 1.09 3.30 3.50 -2.21 1.29

1992 6.01 4.05 -1.84 1.96 0.13

1993 2.99 -2.78 -3.21 5.77 2.56

1994 2.26 4.91 6.35 -2.66 3.69

1995 4.75 3.21 0.97 1.54 2.51

1996 -3.02 2.47 5.46 -5.49 -0.03

1997 3.37 9.03 9.91 -5.65 4.26

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 105.1 101.5 102.5 103.7 106.1

1977 106.0 103.6 107.5 102.4 110.1

1978 101.6 99.3 101.0 102.4 103.4

1979 102.6 97.8 98.6 104.8 103.4

1980 106.6 104.4 107.1 102.0 109.4

1981 112.7 113.4 119.2 99.0 118.7

1982 109.7 113.1 126.5 96.6 123.1

1983 114.0 112.5 127.1 100.9 129.1

1984 114.0 115.8 137.4 97.9 135.8

1985 114.9 117.1 144.4 97.5 142.1

1986 111.8 110.4 136.9 100.5 139.1

1987 118.8 115.4 132.9 102.3 137.4

1988 126.8 119.8 134.9 105.2 143.5

1989 132.5 123.0 138.3 107.1 149.7

1990 132.7 123.5 138.3 106.9 149.4

1991 134.1 127.6 143.2 104.5 151.4

1992 142.2 132.8 140.6 106.6 151.6

1993 146.5 129.1 136.0 112.7 155.4

1994 149.8 135.4 144.7 109.7 161.2

1995 156.9 139.8 146.1 111.4 165.2

1996 152.1 143.2 154.1 105.3 165.2

1997 157.3 156.2 169.3 99.4 172.2
38 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-6—Gross-output productivity of the bakery products industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 6.74 -0.59 -4.45 7.33 2.88

1977 -4.41 -6.12 2.71 1.71 4.42

1978 -1.85 -0.01 -0.36 -1.83 -2.19

1979 0.67 -0.49 -5.26 1.16 -4.11

1980 0.53 5.93 5.08 -5.39 -0.31

1981 4.05 4.25 6.79 -0.20 6.60

1982 4.14 1.90 12.28 2.24 14.52

1983 0.31 -5.10 -1.60 5.40 3.81

1984 2.84 5.51 4.15 -2.67 1.48

1985 9.02 3.98 5.99 5.04 11.03

1986 0.49 -3.75 -1.56 4.24 2.68

1987 8.44 5.50 -3.93 2.94 -0.99

1988 -2.60 0.13 -0.63 -2.73 -3.36

1989 -0.98 -0.17 1.40 -0.81 0.59

1990 1.08 0.71 0.27 0.36 0.63

1991 1.37 2.19 0.63 -0.82 -0.19

1992 7.05 2.16 -2.69 4.89 2.21

1993 3.24 -1.13 -2.63 4.37 1.74

1994 4.01 5.56 2.29 -1.55 0.75

1995 1.24 2.25 1.28 -1.01 0.27

1996 -3.49 -4.60 -1.26 1.11 -0.15

1997 4.62 6.72 9.37 -2.10 7.27

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 106.7 99.4 95.6 107.3 102.9

1977 102.0 93.3 98.1 109.2 107.4

1978 100.1 93.3 97.8 107.2 105.1

1979 100.8 92.9 92.6 108.4 100.8

1980 101.3 98.4 97.4 102.6 100.4

1981 105.5 102.5 104.0 102.4 107.1

1982 109.8 104.5 116.7 104.6 122.6

1983 110.2 99.2 114.9 110.3 127.3

1984 113.3 104.6 119.6 107.4 129.2

1985 123.5 108.8 126.8 112.8 143.4

1986 124.1 104.7 124.8 117.5 147.3

1987 134.6 110.5 119.9 121.0 145.8

1988 131.1 110.6 119.2 117.7 140.9

1989 129.8 110.4 120.8 116.7 141.7

1990 131.2 111.2 121.2 117.2 142.6

1991 133.0 113.7 121.9 116.2 142.4

1992 142.4 116.1 118.6 121.9 145.5

1993 147.0 114.8 115.5 127.2 148.0

1994 152.9 121.2 118.2 125.3 149.1

1995 154.8 123.9 119.7 124.0 149.5

1996 149.4 118.2 118.2 125.4 149.3

1997 156.3 126.1 129.2 122.7 160.2
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 39

Appendix table C-7—Gross-output productivity of the sugar and confections industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 -6.18 -5.97 -13.40 -0.20 -13.60

1977 0.04 -2.46 -2.40 2.50 0.10

1978 -2.37 -4.79 -1.78 2.43 0.65

1979 -1.35 0.19 2.09 -1.54 0.54

1980 17.16 16.74 18.80 0.42 19.22

1981 -1.43 3.59 2.30 -5.02 -2.72

1982 -5.19 -4.99 -1.39 -0.20 -1.59

1983 2.66 -2.43 -1.42 5.09 3.66

1984 2.77 4.56 4.30 -1.79 2.50

1985 -0.48 0.26 5.07 -0.74 4.33

1986 1.28 -0.35 1.50 1.63 3.13

1987 5.59 1.05 0.41 4.54 4.95

1988 -1.22 -2.21 -1.92 0.98 -0.94

1989 -1.89 -2.68 -3.54 0.79 -2.75

1990 0.83 2.94 0.01 -2.11 -2.10

1991 4.14 3.49 5.09 0.64 5.73

1992 4.01 0.32 0.04 3.69 3.73

1993 1.55 -1.90 -3.83 3.45 -0.38

1994 -0.66 5.35 4.94 -6.00 -1.07

1995 2.36 0.77 0.84 1.58 2.42

1996 1.63 -3.38 -1.81 5.01 3.21

1997 3.85 7.70 8.03 -3.84 4.19

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 93.8 94.0 86.6 99.8 86.4

1977 93.9 91.7 84.5 102.3 86.5

1978 91.6 87.3 83.0 104.8 87.1

1979 90.4 87.5 84.8 103.2 87.5

1980 105.9 102.1 100.7 103.6 104.3

1981 104.4 105.8 103.0 98.4 101.5

1982 99.0 100.5 101.6 98.2 99.9

1983 101.6 98.1 100.1 103.2 103.5

1984 104.4 102.6 104.4 101.3 106.1

1985 103.9 102.8 109.7 100.6 110.7

1986 105.3 102.5 111.4 102.2 114.2

1987 111.2 103.5 111.8 106.9 119.9

1988 109.8 101.3 109.7 107.9 118.7

1989 107.7 98.5 105.8 108.8 115.5

1990 108.6 101.4 105.8 106.5 113.0

1991 113.1 105.0 111.2 107.2 119.5

1992 117.6 105.3 111.2 111.1 124.0

1993 119.5 103.3 107.0 115.0 123.5

1994 118.7 108.8 112.2 108.1 122.2

1995 121.5 109.7 113.2 109.8 125.2

1996 123.5 106.0 111.1 115.3 129.2

1997 128.2 114.1 120.1 110.8 134.6
40 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-8—Gross-output productivity of the fats and oils industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 5.05 2.99 1.55 2.06 3.60

1977 5.15 4.78 2.42 0.37 2.79

1978 3.97 2.87 -3.17 1.10 -2.07

1979 0.05 -3.88 -3.14 3.92 0.78

1980 -5.65 -1.34 3.34 -4.31 -0.97

1981 -4.70 -3.58 1.49 -1.11 0.38

1982 -7.82 -0.51 5.35 -7.32 -1.96

1983 1.34 0.28 8.92 1.05 9.98

1984 7.74 7.77 11.22 -0.03 11.18

1985 -8.57 -2.24 6.92 -6.32 0.60

1986 -13.12 -11.86 -3.18 -1.26 -4.44

1987 -0.31 0.42 4.45 -0.73 3.72

1988 22.35 14.55 10.29 7.79 18.08

1989 -8.08 -13.18 -13.18 5.10 -8.08

1990 -5.73 -1.58 3.42 -4.15 -0.73

1991 -4.21 1.31 4.53 -5.52 -0.99

1992 -0.06 -0.08 -5.95 0.03 -5.93

1993 5.22 1.96 3.88 3.26 7.14

1994 2.10 3.68 4.65 -1.58 3.07

1995 2.79 4.14 5.37 -1.35 4.02

1996 3.07 -2.62 -1.88 5.69 3.81

1997 10.19 15.34 18.76 -5.15 13.61

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 105.0 103.0 101.5 102.1 103.6

1977 110.5 107.9 104.0 102.4 106.5

1978 114.8 111.0 100.7 103.6 104.3

1979 114.9 106.7 97.5 107.6 105.1

1980 108.4 105.3 100.8 103.0 104.1

1981 103.3 101.5 102.3 101.8 104.5

1982 95.2 101.0 107.8 94.4 102.4

1983 96.5 101.3 117.4 95.4 112.6

1984 104.0 109.1 130.6 95.4 125.2

1985 95.1 106.7 139.6 89.3 126.0

1986 82.6 94.0 135.1 88.2 120.4

1987 82.3 94.4 141.2 87.6 124.9

1988 100.7 108.2 155.7 94.4 147.5

1989 92.6 93.9 135.2 99.2 135.5

1990 87.3 92.4 139.8 95.1 134.5

1991 83.6 93.7 146.1 89.8 133.2

1992 83.6 93.6 137.4 89.8 125.3

1993 87.9 95.4 142.8 92.8 134.3

1994 89.8 98.9 149.4 91.3 138.4

1995 92.3 103.0 157.4 90.1 144.0

1996 95.1 100.3 154.5 95.2 149.4

1997 104.8 115.7 183.5 90.3 169.8
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 41

Appendix table C-9—Gross-output productivity of the beverages industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 4.96 -0.07 1.56 5.04 6.60

1977 5.93 4.61 4.51 1.32 5.83

1978 5.80 4.34 1.72 1.47 3.19

1979 -0.84 0.36 -0.51 -1.20 -1.71

1980 3.97 8.74 11.43 -4.77 6.66

1981 5.98 7.84 11.32 -1.86 9.46

1982 6.49 6.92 9.68 -0.43 9.24

1983 1.26 -3.32 -1.13 4.58 3.45

1984 -1.09 1.88 5.45 -2.97 2.48

1985 7.11 7.14 8.20 -0.03 8.18

1986 3.09 -1.48 3.74 4.57 8.31

1987 0.75 -2.55 5.96 3.30 9.26

1988 1.47 -3.03 -1.13 4.50 3.36

1989 -3.81 -5.80 -3.06 2.00 -1.06

1990 0.44 0.55 1.50 -0.11 1.40

1991 4.69 2.46 3.01 2.23 5.24

1992 5.99 0.55 -1.43 5.44 4.02

1993 -0.87 -5.39 -8.84 4.53 -4.32

1994 3.26 4.60 8.19 -1.35 6.85

1995 4.81 2.89 2.35 1.92 4.27

1996 0.30 -3.85 -1.95 4.15 2.20

1997 1.35 9.02 -1.56 -7.67 -9.23

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 105.0 99.9 101.6 105.0 106.6

1977 111.2 104.5 106.1 106.4 112.8

1978 117.6 109.1 108.0 108.0 116.4

1979 116.7 109.5 107.4 106.7 114.4

1980 121.3 119.0 119.7 101.6 122.0

1981 128.5 128.4 133.2 99.7 133.6

1982 136.9 137.2 146.1 99.3 145.9

1983 138.6 132.7 144.5 103.8 151.0

1984 137.1 135.2 152.4 100.7 154.7

1985 146.8 144.8 164.9 100.7 167.4

1986 151.4 142.7 171.0 105.3 181.3

1987 152.5 139.0 181.2 108.8 198.0

1988 154.7 134.8 179.2 113.7 204.7

1989 148.9 127.0 173.7 116.0 202.5

1990 149.5 127.7 176.3 115.8 205.4

1991 156.5 130.9 181.6 118.4 216.1

1992 165.9 131.6 179.0 124.8 224.8

1993 164.5 124.5 163.2 130.5 215.1

1994 169.8 130.2 176.6 128.7 229.8

1995 178.0 134.0 180.7 131.2 239.6

1996 178.5 128.8 177.2 136.7 244.9

1997 180.9 140.4 174.4 126.2 222.3
42 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-10—Gross-output productivity of the miscellaneous foods industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 25.00 16.14 8.44 8.86 17.30

1977 10.08 10.62 -1.03 -0.54 -1.57

1978 1.45 -2.95 -8.05 4.41 -3.65

1979 -6.07 -2.41 -0.93 -3.66 -4.59

1980 -0.14 4.33 6.17 -4.47 1.70

1981 2.51 2.41 1.42 0.10 1.52

1982 5.60 5.85 5.10 -0.25 4.85

1983 -2.75 -3.06 0.27 0.31 0.58

1984 1.80 1.92 2.50 -0.12 2.38

1985 2.59 4.88 7.89 -2.28 5.61

1986 6.14 2.10 4.28 4.04 8.32

1987 4.18 1.00 -7.73 3.18 -4.55

1988 -1.64 -3.93 -2.32 2.30 -0.03

1989 -4.69 -0.27 -1.55 -4.41 -5.97

1990 4.12 1.77 -4.75 2.35 -2.40

1991 0.72 4.17 5.95 -3.44 2.50

1992 5.85 1.96 -5.49 3.89 -1.60

1993 3.48 -3.52 -1.71 7.00 5.29

1994 0.88 5.27 4.89 -4.39 0.50

1995 3.65 2.74 0.07 0.91 0.98

1996 -2.19 -5.03 -8.74 2.84 -5.91

1997 0.42 11.15 11.94 -10.72 1.21

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 125.0 116.1 108.4 108.9 117.3

1977 137.6 128.5 107.3 108.3 115.5

1978 139.6 124.7 98.7 113.0 111.2

1979 131.1 121.7 97.8 108.9 106.1

1980 130.9 126.9 103.8 104.0 107.9

1981 134.2 130.0 105.3 104.1 109.6

1982 141.7 137.6 110.6 103.9 114.9

1983 137.8 133.4 110.9 104.2 115.6

1984 140.3 135.9 113.7 104.1 118.3

1985 144.0 142.6 122.7 101.7 124.9

1986 152.8 145.6 127.9 105.8 135.3

1987 159.2 147.0 118.0 109.2 129.2

1988 156.6 141.2 115.3 111.7 129.2

1989 149.2 140.9 113.5 106.8 121.4

1990 155.4 143.3 108.1 109.3 118.5

1991 156.5 149.3 114.5 105.5 121.5

1992 165.7 152.2 108.3 109.6 119.6

1993 171.4 146.9 106.4 117.3 125.9

1994 172.9 154.6 111.6 112.1 126.5

1995 179.3 158.9 111.7 113.2 127.8

1996 175.3 150.9 101.9 116.4 120.2

1997 176.1 167.7 114.1 103.9 121.7
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 43

Appendix table C-11—Net-output productivity of the food manufacturing sector

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 12.82 -1.39 -2.92 14.21 11.30

1977 1.40 -2.10 -2.54 3.50 0.96

1978 2.83 4.28 2.15 -1.45 0.70

1979 -0.08 3.80 2.87 -3.87 -1.00

1980 1.67 8.94 10.02 -7.27 2.75

1981 1.56 5.77 7.63 -4.21 3.42

1982 10.08 2.60 6.53 7.48 14.01

1983 3.09 -6.18 -4.05 9.27 5.22

1984 1.08 4.12 4.82 -3.05 1.77

1985 8.03 -1.78 0.04 9.82 9.85

1986 5.43 -8.09 -7.62 13.52 5.89

1987 6.32 2.29 -2.12 4.03 1.92

1988 1.72 1.91 -0.19 -0.19 -0.37

1989 -2.88 -2.73 -3.58 -0.14 -3.72

1990 3.93 1.28 -1.56 2.65 1.10

1991 2.71 -1.69 -2.43 4.40 1.96

1992 8.61 -0.85 -4.94 9.46 4.52

1993 2.69 -4.46 -5.86 7.16 1.30

1994 2.70 5.31 4.32 -2.61 1.71

1995 3.73 -0.16 -0.79 3.89 3.10

1996 -6.16 2.25 2.82 -8.41 -5.59

1997 7.41 5.64 4.15 1.77 5.92

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 112.8 98.6 97.1 114.2 111.3

1977 114.4 96.5 94.6 118.2 112.4

1978 117.6 100.7 96.6 116.5 113.1

1979 117.5 104.5 99.4 112.0 112.0

1980 119.5 113.8 109.4 103.8 115.1

1981 121.4 120.4 117.7 99.5 119.0

1982 133.6 123.5 125.4 106.9 135.7

1983 137.7 115.9 120.3 116.8 142.8

1984 139.2 120.7 126.1 113.3 145.3

1985 150.4 118.5 126.2 124.4 159.6

1986 158.6 108.9 116.6 141.2 169.0

1987 168.6 111.4 114.1 146.9 172.3

1988 171.5 113.5 113.9 146.6 171.6

1989 166.6 110.4 109.8 146.4 165.3

1990 173.1 111.9 108.1 150.3 167.1

1991 177.8 110.0 105.5 156.9 170.3

1992 193.1 109.0 100.3 171.7 178.0

1993 198.3 104.2 94.4 184.0 180.4

1994 203.7 109.7 98.5 179.2 183.5

1995 211.3 109.5 97.7 186.2 189.1

1996 198.3 112.0 100.4 170.6 178.6

1997 212.9 118.3 104.6 173.6 189.1
44 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-12—Net-output productivity of the meat products industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 6.65 -0.86 -2.79 7.51 4.73

1977 -4.93 -2.24 -1.60 -2.69 -4.29

1978 3.52 4.58 1.76 -1.06 0.70

1979 1.23 -0.27 -1.01 1.51 0.50

1980 -2.17 7.84 5.49 -10.01 -4.52

1981 -2.34 1.10 3.31 -3.44 -0.13

1982 8.24 5.26 5.37 2.99 8.36

1983 -1.75 -6.90 -5.66 5.15 -0.50

1984 3.93 -0.82 2.00 4.75 6.74

1985 12.20 -0.74 -1.12 12.93 11.82

1986 1.54 -4.22 -8.53 5.76 -2.77

1987 0.93 5.15 -4.06 -4.22 -8.28

1988 4.83 3.50 -1.98 1.33 -0.66

1989 2.50 -0.20 -3.12 2.70 -0.42

1990 8.90 4.23 -0.88 4.66 3.78

1991 -5.16 1.23 -1.19 -6.39 -7.58

1992 9.64 1.14 -4.60 8.50 3.90

1993 6.14 -1.89 -5.85 8.02 2.17

1994 7.18 5.62 2.12 1.56 3.68

1995 11.86 0.23 1.37 11.63 13.00

1996 -13.10 3.95 3.09 -17.04 -13.95

1997 25.00 7.10 1.95 17.89 19.84

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 106.7 99.1 97.2 107.5 104.7

1977 101.4 96.9 95.7 104.6 100.2

1978 105.0 101.4 97.3 103.5 100.9

1979 106.3 101.1 96.4 105.1 101.4

1980 104.0 109.0 101.6 94.6 96.9

1981 101.5 110.2 105.0 91.3 96.7

1982 109.9 116.0 110.7 94.0 104.8

1983 108.0 108.0 104.4 98.9 104.3

1984 112.2 107.1 106.5 103.6 111.3

1985 125.9 106.3 105.3 117.0 124.5

1986 127.8 101.8 96.3 123.7 121.0

1987 129.0 107.1 92.4 118.5 111.0

1988 135.2 110.8 90.6 120.0 110.3

1989 138.6 110.6 87.7 123.3 109.8

1990 151.0 115.3 87.0 129.0 114.0

1991 143.2 116.7 85.9 120.8 105.3

1992 157.0 118.0 82.0 131.1 109.4

1993 166.6 115.8 77.2 141.6 111.8

1994 178.6 122.3 78.8 143.8 115.9

1995 199.7 122.6 79.9 160.5 131.0

1996 173.6 127.4 82.4 133.2 112.7

1997 217.0 136.5 84.0 157.0 135.1
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 45

Appendix table C-13—Net-output productivity of the dairy products industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 9.17 -4.94 -4.50 14.10 9.60

1977 2.61 -3.39 0.63 6.01 6.63

1978 -3.26 -1.93 -2.50 -1.33 -3.83

1979 5.65 0.20 -2.09 5.45 3.35

1980 1.02 6.93 10.02 -5.91 4.11

1981 0.78 7.21 7.55 -6.43 1.12

1982 3.56 0.36 4.87 3.20 8.08

1983 7.88 -2.72 -0.91 10.60 9.70

1984 -0.01 1.93 -0.49 -1.93 -2.42

1985 4.31 -1.32 -0.73 5.64 4.91

1986 11.55 -7.17 -7.53 18.72 11.19

1987 7.39 2.65 -1.44 4.74 3.30

1988 0.74 2.65 -2.11 -1.91 -4.02

1989 -5.34 -2.16 1.17 -3.18 -2.00

1990 1.77 1.71 1.82 0.06 1.88

1991 4.25 -2.19 -1.74 6.44 4.70

1992 16.10 -0.97 -5.90 17.07 11.16

1993 -3.23 -4.62 -3.81 1.39 -2.41

1994 -4.25 4.58 8.59 -8.83 -0.24

1995 -0.38 0.72 -1.41 -1.10 -2.52

1996 -4.39 1.94 2.84 -6.33 -3.50

1997 9.89 8.72 7.95 1.17 9.12

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 109.2 95.1 95.5 114.1 109.6

1977 112.0 91.8 96.1 121.0 116.9

1978 108.4 90.1 93.7 119.4 112.4

1979 114.5 90.2 91.7 125.9 116.2

1980 115.7 96.5 100.9 118.4 120.9

1981 116.5 103.4 108.5 110.8 122.3

1982 120.7 103.8 113.8 114.3 132.2

1983 130.2 101.0 112.8 126.5 145.0

1984 130.2 102.9 112.3 124.0 141.5

1985 135.8 101.6 111.4 131.0 148.4

1986 151.5 94.3 103.0 155.5 165.0

1987 162.7 96.8 101.6 162.9 170.5

1988 163.9 99.4 99.4 159.8 163.6

1989 155.2 97.2 100.6 154.7 160.3

1990 157.9 98.9 102.4 154.8 163.4

1991 164.6 96.7 100.6 164.8 171.0

1992 191.1 95.8 94.7 192.9 190.1

1993 184.9 91.3 91.1 195.6 185.5

1994 177.1 95.5 98.9 178.3 185.1

1995 176.4 96.2 97.5 176.4 180.4

1996 168.7 98.1 100.3 165.2 174.1

1997 185.4 106.6 108.3 167.1 190.0
46 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-14—Net-output productivity of the preserved fruits and vegetables industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 15.86 -3.52 -0.92 19.38 18.45

1977 11.11 1.44 -5.11 9.67 4.57

1978 0.67 3.30 0.43 -2.63 -2.21

1979 -3.51 6.61 5.87 -10.13 -4.26

1980 -3.12 8.65 12.24 -11.77 0.48

1981 2.28 5.14 7.83 -2.86 4.97

1982 17.00 1.89 8.68 15.11 23.79

1983 3.68 -5.42 -3.57 9.10 5.53

1984 5.35 4.41 1.48 0.94 2.42

1985 6.47 -0.41 1.54 6.87 8.42

1986 7.33 -7.50 -5.72 14.83 9.11

1987 0.07 1.58 3.66 -1.51 2.15

1988 2.97 2.44 1.92 0.53 2.45

1989 4.56 -1.39 -4.24 5.95 1.71

1990 0.49 3.12 0.01 -2.63 -2.62

1991 6.82 0.20 -1.42 6.62 5.21

1992 2.98 -0.42 0.49 3.40 3.88

1993 2.48 -4.53 -3.62 7.01 3.39

1994 1.91 5.23 4.91 -3.31 1.60

1995 -2.15 -0.66 -2.56 -1.49 -4.04

1996 -3.40 0.90 3.17 -4.30 -1.13

1997 5.44 -3.19 0.07 8.63 8.70

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 115.9 96.5 99.1 119.4 118.5

1977 128.7 97.9 94.0 130.9 123.9

1978 129.6 101.1 94.4 127.5 121.1

1979 125.0 107.8 100.0 114.6 116.0

1980 121.1 117.1 112.2 101.1 116.5

1981 123.9 123.1 121.0 98.2 122.3

1982 145.0 125.5 131.5 113.0 151.4

1983 150.3 118.7 126.8 123.3 159.8

1984 158.3 123.9 128.7 124.5 163.7

1985 168.6 123.4 130.7 133.0 177.4

1986 180.9 114.1 123.2 152.8 193.6

1987 181.1 115.9 127.7 150.5 197.8

1988 186.4 118.8 130.1 151.3 202.6

1989 194.9 117.1 124.6 160.3 206.1

1990 195.9 120.8 124.6 156.0 200.7

1991 209.3 121.0 122.9 166.4 211.1

1992 215.5 120.5 123.5 172.0 219.3

1993 220.8 115.0 119.0 184.1 226.8

1994 225.1 121.0 124.8 178.0 230.4

1995 220.2 120.3 121.7 175.3 221.1

1996 212.7 121.3 125.5 167.8 218.6

1997 224.3 117.5 125.6 182.3 237.6
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 47

Appendix table C-15—Net-output productivity of the grain mill products industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 11.74 -1.33 -0.33 13.07 12.73

1977 3.69 0.63 3.49 3.06 6.55

1978 -2.92 6.19 4.27 -9.11 -4.84

1979 4.60 1.35 0.47 3.25 3.72

1980 5.06 11.20 13.04 -6.14 6.90

1981 2.82 8.99 11.72 -6.17 5.55

1982 4.94 1.79 8.13 3.15 11.29

1983 7.62 -9.16 -8.11 16.78 8.67

1984 0.36 9.49 14.66 -9.14 5.52

1985 10.91 -1.42 2.49 12.33 14.83

1986 4.34 -10.56 -9.97 14.90 4.92

1987 10.98 4.33 -3.19 6.65 3.46

1988 3.13 4.02 1.74 -0.88 0.86

1989 0.91 -0.64 -0.83 1.55 0.71

1990 4.79 2.10 1.77 2.69 4.46

1991 3.06 -1.86 -1.66 4.92 3.26

1992 7.58 -0.07 -5.96 7.65 1.69

1993 5.41 -4.55 -4.98 9.96 4.98

1994 2.37 6.48 7.91 -4.11 3.80

1995 8.59 0.90 -1.33 7.69 6.36

1996 -25.64 3.22 6.21 -28.87 -22.65

1997 8.83 8.28 9.16 0.55 9.72

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 111.7 98.7 99.7 113.1 112.7

1977 115.9 99.3 103.1 116.5 120.1

1978 112.5 105.4 107.6 105.9 114.3

1979 117.7 106.9 108.1 109.3 118.6

1980 123.6 118.8 122.2 102.6 126.7

1981 127.1 129.5 136.5 96.3 133.8

1982 133.4 131.8 147.6 99.3 148.9

1983 143.5 119.8 135.6 116.0 161.8

1984 144.1 131.1 155.5 105.4 170.7

1985 159.8 129.3 159.4 118.4 196.0

1986 166.7 115.6 143.5 136.1 205.7

1987 185.0 120.6 138.9 145.1 212.8

1988 190.8 125.5 141.3 143.8 214.6

1989 192.5 124.7 140.1 146.0 216.2

1990 201.8 127.3 142.6 150.0 225.8

1991 207.9 124.9 140.2 157.3 233.1

1992 223.7 124.8 131.9 169.4 237.1

1993 235.8 119.2 125.3 186.3 248.9

1994 241.4 126.9 135.2 178.6 258.4

1995 262.1 128.0 133.4 192.3 274.8

1996 194.9 132.1 141.7 136.8 212.5

1997 212.1 143.1 154.7 137.6 233.2
48 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-16—Net-output productivity of the bakery products industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 13.17 -0.89 -4.75 14.06 9.31

1977 -2.30 -7.30 1.54 4.99 6.53

1978 -1.64 3.45 3.10 -5.10 -1.99

1979 0.52 1.79 -2.98 -1.27 -4.25

1980 -0.18 7.43 6.59 -7.61 -1.02

1981 4.59 3.13 5.67 1.46 7.13

1982 7.68 0.74 11.12 6.95 18.07

1983 1.67 -8.26 -4.76 9.93 5.17

1984 3.20 7.11 5.74 -3.91 1.84

1985 11.49 -1.34 0.67 12.83 13.50

1986 2.55 -6.81 -4.63 9.36 4.73

1987 10.06 4.70 -4.73 5.36 0.63

1988 -4.59 2.84 2.08 -7.43 -5.35

1989 -4.96 -2.85 -1.29 -2.11 -3.40

1990 1.55 0.13 -0.31 1.42 1.10

1991 2.64 -0.20 -1.76 2.84 1.07

1992 8.82 0.10 -4.74 8.72 3.98

1993 2.78 -3.41 -4.91 6.19 1.28

1994 4.98 5.92 2.66 -0.94 1.72

1995 0.08 0.51 -0.46 -0.42 -0.89

1996 -2.63 1.63 4.98 -4.26 0.71

1997 6.17 4.32 6.97 1.85 8.82

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 113.2 99.1 95.2 114.1 109.3

1977 110.6 91.9 96.7 119.8 116.4

1978 108.7 95.0 99.7 113.7 114.1

1979 109.3 96.8 96.7 112.2 109.3

1980 109.1 103.9 103.1 103.7 108.2

1981 114.1 107.2 109.0 105.2 115.9

1982 122.9 108.0 121.1 112.5 136.8

1983 124.9 99.1 115.3 123.7 143.9

1984 128.9 106.1 121.9 118.8 146.5

1985 143.8 104.7 122.8 134.1 166.3

1986 147.4 97.5 117.1 146.6 174.2

1987 162.2 102.1 111.5 154.5 175.3

1988 154.8 105.0 113.9 143.0 165.9

1989 147.1 102.0 112.4 140.0 160.3

1990 149.4 102.2 112.0 142.0 162.0

1991 153.3 102.0 110.1 146.0 163.8

1992 166.9 102.1 104.8 158.7 170.3

1993 171.5 98.6 99.7 168.6 172.5

1994 180.0 104.4 102.3 167.0 175.4

1995 180.2 104.9 101.9 166.3 173.9

1996 175.4 106.7 106.9 159.2 175.1

1997 186.3 111.3 114.4 162.1 190.5
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 49

Appendix table C-17—Net-output productivity of the sugar and confections industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 10.76 0.42 -7.01 10.34 3.34

1977 5.78 -2.09 -2.02 7.86 5.84

1978 -1.54 -0.84 2.17 -0.69 1.48

1979 -4.58 4.28 6.17 -8.86 -2.69

1980 19.86 8.74 10.80 11.12 21.92

1981 -12.22 5.80 4.51 -18.02 -13.51

1982 13.24 -0.54 3.06 13.78 16.84

1983 2.44 -5.10 -4.09 7.54 3.44

1984 1.11 4.06 3.79 -2.95 0.84

1985 7.21 -4.14 0.67 11.35 12.02

1986 3.71 -8.69 -6.84 12.40 5.56

1987 4.48 1.52 0.87 2.96 3.84

1988 0.83 1.01 1.30 -0.18 1.12

1989 -1.97 -2.82 -3.67 0.85 -2.82

1990 1.66 2.43 -0.50 -0.77 -1.27

1991 6.03 -2.29 -0.69 8.32 7.63

1992 8.22 -0.42 -0.70 8.64 7.94

1993 0.12 -3.45 -5.38 3.57 -1.81

1994 -0.77 6.26 5.85 -7.04 -1.18

1995 1.89 -0.55 -0.48 2.44 1.96

1996 2.99 1.37 2.95 1.62 4.57

1997 5.85 1.27 1.60 4.59 6.19

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 110.8 100.4 93.0 110.3 103.3

1977 117.2 98.3 91.1 119.0 109.4

1978 115.4 97.5 93.1 118.2 111.0

1979 110.1 101.7 98.8 107.7 108.0

1980 131.9 110.5 109.5 119.7 131.7

1981 115.8 117.0 114.4 98.1 113.9

1982 131.2 116.3 117.9 111.7 133.1

1983 134.4 110.4 113.1 120.1 137.7

1984 135.8 114.9 117.4 116.5 138.8

1985 145.6 110.1 118.2 129.8 155.5

1986 151.1 100.6 110.1 145.9 164.1

1987 157.8 102.1 111.1 150.2 170.4

1988 159.1 103.1 112.5 149.9 172.4

1989 156.0 100.2 108.4 151.2 167.5

1990 158.6 102.7 107.8 150.0 165.4

1991 168.2 100.3 107.1 162.5 178.0

1992 182.0 99.9 106.3 176.5 192.1

1993 182.2 96.4 100.6 182.8 188.6

1994 180.8 102.5 106.5 170.0 186.4

1995 184.2 101.9 106.0 174.1 190.0

1996 189.7 103.3 109.1 176.9 198.7

1997 200.8 104.6 110.9 185.1 211.0
50 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-18—Net-output productivity of the fats and oils industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 24.39 -0.38 -1.82 24.77 22.94

1977 -33.32 -1.52 -3.88 -31.79 -35.68

1978 33.69 8.67 2.64 25.02 27.66

1979 14.32 3.51 4.24 10.82 15.06

1980 -11.19 8.20 12.88 -19.40 -6.51

1981 -18.90 7.87 12.95 -26.77 -13.83

1982 11.18 1.30 7.15 9.88 17.04

1983 10.98 -9.47 -0.83 20.45 19.62

1984 -22.78 5.06 8.50 -27.83 -19.34

1985 -0.30 -7.07 2.09 6.76 8.86

1986 4.12 -10.85 -2.17 14.97 12.81

1987 20.34 -3.17 0.86 23.50 24.37

1988 14.15 0.90 -3.36 13.24 9.88

1989 -23.30 -4.75 -4.75 -18.55 -23.30

1990 17.56 -1.93 3.06 19.50 22.56

1991 -10.54 -4.08 -0.85 -6.47 -7.32

1992 -0.74 -3.44 -9.31 2.70 -6.61

1993 7.71 -7.20 -5.28 14.91 9.63

1994 0.67 3.21 4.19 -2.54 1.64

1995 5.01 -2.43 -1.20 7.43 6.24

1996 -11.61 0.78 1.52 -12.39 -10.86

1997 10.34 6.33 9.75 4.01 13.76

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 124.4 99.6 98.2 124.8 122.9

1977 82.9 98.1 94.4 85.1 79.1

1978 110.9 106.6 96.9 106.4 101.0

1979 126.8 110.4 101.0 117.9 116.2

1980 112.6 119.4 114.0 95.0 108.6

1981 91.3 128.8 128.7 69.6 93.6

1982 101.5 130.5 137.9 76.5 109.5

1983 112.7 118.1 136.8 92.1 131.0

1984 87.0 124.1 148.4 66.5 105.7

1985 86.7 115.3 151.5 71.0 115.0

1986 90.3 102.8 148.3 81.6 129.8

1987 108.7 99.6 149.5 100.8 161.4

1988 124.1 100.5 144.5 114.1 177.3

1989 95.2 95.7 137.6 92.9 136.0

1990 111.9 93.8 141.9 111.1 166.7

1991 100.1 90.0 140.6 103.9 154.5

1992 99.3 86.9 127.6 106.7 144.3

1993 107.0 80.7 120.8 122.6 158.2

1994 107.7 83.3 125.9 119.5 160.8

1995 113.1 81.2 124.4 128.3 170.8

1996 100.0 81.9 126.3 112.4 152.3

1997 110.3 87.0 138.6 116.9 173.2
Economic Research Service/USDA Food Manufacturing Productivity and Its Economic Implications / TB-1905 ✺ 51

Appendix table C-19—Net-output productivity of the beverages industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 8.92 -0.01 1.62 8.94 10.56

1977 7.08 -1.65 -1.75 8.74 6.98

1978 6.75 6.93 4.31 -0.18 4.13

1979 -3.38 6.30 5.42 -9.67 -4.25

1980 2.77 10.78 13.47 -8.01 5.46

1981 5.68 6.70 10.19 -1.03 9.16

1982 12.62 4.82 7.58 7.80 15.38

1983 3.90 -5.42 -3.23 9.32 6.09

1984 -2.26 3.60 7.17 -5.86 1.31

1985 8.53 -1.98 -0.91 10.51 9.60

1986 5.72 -9.82 -4.60 15.54 10.94

1987 3.22 -2.09 6.42 5.31 11.73

1988 3.21 -0.76 1.13 3.97 5.11

1989 -3.34 -6.20 -3.45 2.86 -0.60

1990 0.16 -2.74 -1.79 2.90 1.11

1991 6.74 -4.96 -4.41 11.70 7.29

1992 9.71 -3.96 -5.94 13.67 7.73

1993 -1.87 -6.74 -10.20 4.87 -5.33

1994 5.33 3.18 6.77 2.15 8.92

1995 3.64 -1.09 -1.63 4.73 3.10

1996 0.93 1.64 3.54 -0.71 2.83

1997 0.08 7.16 -3.42 -7.07 -10.50

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 108.9 100.0 101.6 108.9 110.6

1977 116.6 98.3 99.8 118.5 118.3

1978 124.5 105.1 104.1 118.2 123.2

1979 120.3 111.8 109.8 106.8 117.9

1980 123.6 123.8 124.6 98.2 124.4

1981 130.7 132.1 137.3 97.2 135.8

1982 147.2 138.5 147.7 104.8 156.7

1983 152.9 131.0 142.9 114.6 166.2

1984 149.4 135.7 153.2 107.9 168.4

1985 162.2 133.0 151.8 119.2 184.5

1986 171.5 120.0 144.8 137.8 204.7

1987 177.0 117.4 154.1 145.1 228.7

1988 182.7 116.5 155.8 150.8 240.4

1989 176.6 109.3 150.4 155.1 239.0

1990 176.8 106.3 147.7 159.6 241.6

1991 188.8 101.0 141.2 178.3 259.2

1992 207.1 97.0 132.8 202.7 279.3

1993 203.2 90.5 119.3 212.6 264.4

1994 214.1 93.4 127.4 217.2 288.0

1995 221.9 92.4 125.3 227.4 297.0

1996 223.9 93.9 129.7 225.8 305.4

1997 224.1 100.6 125.3 209.8 273.3
52 ✺ Food Manufacturing Productivity and Its Economic Implications / TB-1905 Economic Research Service/USDA

Appendix table C-20—Net-output productivity of the miscellaneous foods industry

Year Output Inputs Productivity

Combined Nonlabor/labor Multifactor Labor

(1) (2) (3) (4)=(1)-(2) (5)=(3)+(4)

Calculated annual change rate (percent) 

1976 25.42 -1.24 -8.93 26.66 17.72

1977 -3.81 -6.43 -18.08 2.62 -15.46

1978 8.70 5.73 0.63 2.97 3.60

1979 -4.95 11.97 13.45 -16.92 -3.47

1980 1.78 8.03 9.87 -6.25 3.62

1981 10.01 7.69 6.69 2.32 9.01

1982 10.51 1.19 0.44 9.32 9.76

1983 -3.22 -3.96 -0.63 0.74 0.11

1984 4.24 3.50 4.08 0.75 4.83

1985 3.29 -1.33 1.68 4.62 6.30

1986 7.25 -7.60 -5.42 14.85 9.43

1987 12.53 4.80 -3.93 7.73 3.81

1988 -2.00 1.50 3.11 -3.49 -0.39

1989 -13.57 -3.48 -4.76 -10.09 -14.85

1990 10.95 2.58 -3.93 8.37 4.44

1991 -1.45 -1.56 0.22 0.11 0.33

1992 10.16 0.76 -6.68 9.40 2.72

1993 9.26 -4.12 -2.31 13.38 11.07

1994 0.74 6.75 6.37 -6.01 0.36

1995 3.12 0.04 -2.63 3.08 0.45

1996 0.37 2.91 -0.81 -2.54 -3.35

1997 -1.84 9.96 10.75 -11.79 -1.05

Generated index number (1975=100)

1975 100.0 100.0 100.0 100.0 100.0

1976 125.4 98.8 91.1 126.7 117.7

1977 120.6 92.4 74.6 130.0 99.5

1978 131.1 97.7 75.1 133.8 103.1

1979 124.6 109.4 85.2 111.2 99.5

1980 126.9 118.2 93.6 104.2 103.1

1981 139.6 127.3 99.8 106.7 112.4

1982 154.2 128.8 100.3 116.6 123.4

1983 149.3 123.7 99.6 117.5 123.5

1984 155.6 128.0 103.7 118.3 129.5

1985 160.7 126.3 105.5 123.8 137.7

1986 172.4 116.7 99.7 142.2 150.6

1987 194.0 122.3 95.8 153.2 156.4

1988 190.1 124.1 98.8 147.8 155.8

1989 164.3 119.8 94.1 132.9 132.6

1990 182.3 122.9 90.4 144.0 138.5

1991 179.6 121.0 90.6 144.2 139.0

1992 197.9 121.9 84.5 157.7 142.7

1993 216.2 116.9 82.6 178.9 158.5

1994 217.8 124.8 87.8 168.1 159.1

1995 224.6 124.8 85.5 173.3 159.8

1996 225.4 128.5 84.8 168.9 154.5

1997 221.3 141.3 94.0 149.0 152.9