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How does labor efficiency correlate to a farm’s productivity?

A Purdue University ag economist says farmers should analyze their labor efficiency to maximize productivity in 2025.

Michael Langemeier says if a farm has higher labor costs, it could struggle to support its workforce.

“If your labor costs are above 11%, you need to think about why,” he says. “Do I have low machinery costs, or do I need to expand? You need to start asking questions about why your labor efficiency might be a little bit higher than the benchmark.”

He tells Brownfield, “The labor productivity or the gross revenue per acre prior to COVID, that benchmark used to be $500,000 gross revenue per worker. That’s changed to $750,000 per worker. If your gross revenue per worker is lower than that, do we need to do differently to improve that labor efficiency.”

Langemeier says regular labor benchmarking allows farmers to identify areas of improvement to make informed management decisions.

AUDIO: Michael Langemeier, Purdue University