This paper examines the production and productivity growth of Macedonian agriculture. Furthermore, having in mind the distinctive dual structure of Macedonian agriculture, this study investigates the differences in productivity surplus between family farms and agricultural companies. In the period from 1998 to 2008, the sector experienced an increase in terms of volume with an average annual rate of 0.8%, and a productivity or growth rate of 0.7% per annum. The partial productivity of the production factors generally increased throughout the whole period. The productivity growth mainly originated from the increase in agricultural output prices and was distributed to the input suppliers. Additionally, an important benefit was received by family labour with 1.5% of the surplus. Family farms proved to be more consistent in production and productivity growth, despite their small and heterogenic features. In contrast, the production and productivity levels at agricultural companies seem to follow a decreasing trend. The decision makers should consider the source and allocation of productivity gains when formulating the agricultural and rural development policy. This approach also provides ground for monitoring and assessment of the policy, through measurement of the distribution of the increasing governmental support and the EU pre-accession funds.