UNIT 1
THE CHANGING COMPLEXION OF FARMING
CHAPTER 2
Physical Structure
Pre-WW II
Post-WW II
Present
Specialization, Diversification,
SMALL FARMS
ONE COMMODITY
LARGE FARMS
THREE OR MORE COMMODITIES
Organization, & Contracting
CORPORATE FARMS
FARM & OFF FARM WORK
PRODUCTIVITY
TOTAL OUTPUT
Productivity
LIVESTOCK PRODUCTS
CROPS
Financial Structure Farm Profitability
Cash Receipts from Farm Marketings
GOVT PAYMENTS
GROSS FARM INCOME
REAL NET FARM INCOME
Financial Structure Farm Profitability
Value of Real Estate Assets
NON-REAL ESTATE ASSETS
EQUITY OR NET WORTH
LIABILITIES OR DEBTS
Pre-WWII Farms
The number of farms declined from 6.8 million in 1935 to about 2.1 million today.
Pre-WWII farms relied on manual labor and family members, had lower levels of mechanization and electrification than today, and struggled with low prices and the Great Depression. Many of these farms were family-owned, averaging 200 acres.
Post-WWII Farms
The average farm size post-WWII doubled from about 200 acres to 400 acres.
Farm size has remained consistent between 1990 to 2015, ranging from 418 to 464 acres. About 60% of U.S. farms had sales of less than $10,000, and these farms accounted for only 3% of the value of agricultural production.
Present Day Corporate Farms
Today million-dollar farms make up less than 2% of all U.S. farms, but they account for a sizeable share of the value of production.
It is noteworthy that the share of total farm receipts earned by the 50,000 largest farms (2% of the total number of U.S. farms) has been increasing during the last
35 years. Large-scale farms currently account for 10% of U.S. farms, but they are
responsible for 75% of the value of production. Arguably, concentration of production may be more of a critical issue in the discussion of farm structure than the decline
in the number of farms.
Large Farms
Share of the 50,000 largest farms (2% of all U.S. farms) account for roughly 50% of total sales.
Large farms with sales of around half a million dollars produce more than three commodities. It is important to note that family-owned farms are NOT losing their share of U.S. agriculture to non-farm corporations.
Small Farms
Most of the operators of farms with sales less than $50,000 also work off the
farm or are retired. Retired operators and operators reporting a major occupation
other than farming made up roughly 60% of all farms. Yet, these farms accounted
for only 13% of the value of production.
Farm & Off-Farm
Like their nonfarm counterparts, many of
today’s farm households are dual-career households. For those operators who
report a nonfarm major occupation or work off-farm, the health of the local economy, nonfarm job growth, and the level of nonfarm wages may be as important as
farm programs.
Corporate Farms
Concern has been expressed over a perceived increase in the number of corporate farms and a corresponding decline in family farms. Data from the Census of
Agriculture show that family-owned farms are not losing their share of U.S. agriculture to nonfarm corporations. At present, most U.S. farms are family farms. U.S.
farms are mostly organized as individual operations, but farms organized as partnerships and corporations accounted for nearly 40% of the value of production in the
agricultural sector
Productivity on the Rise
Productivity is defined as output per unit of input and has increased dramatically since WWII. Output has been on the rise due primarily to the development and use of technology and biotechnology.
Livestock Products
Growth rates in livestock and crop output have been about the same; the average growth rate is 2% per year.
Crop Products
Output has been on the rise primarily due to advances in technology and biotechnology. U.S. farmers have widely adopted GMOs since their introduction in 1996. For example, soybeans and cotton have been genetically engineered with herbicide-tolerant traits. Cotton and corn have been modified with insect resistance traits.
Total Output
Increased productivity is the main contributor to growth in U.S. agriculture. Productivity, or the level of output per unit of input, in the farm sector has increased
rather dramatically during the post–World War II period. Crop production per acre
in the 1990s doubled since the 1950s. Total U.S. agricultural output increased at an average
annual rate of 4.2% over the period 1948 to 2013. Growth rates in crop and livestock
output averaged 4.3% and 3.4%, respectively
Cash receipts from the farm sector have grown from
almost $34 billion in 1960 to $377 billion in 2015. Government payments have
ranged from $0.5 billion (in 1974) to nearly $24.4 billion (in 2005) over the period
1960 to 2015. Cash receipts and government payments averaged $165.3 billion and
$8.3 billion over the period 1960 to 2015.
Equity associated with the
farm sector has been on the
rise over the past decade.
The debt-to-asset ratio and
the debt-to-equity ratio
associated with the farm
sector have been relatively
stable over the past 10 years
Farm assets have grown steadily since
1986, totaling nearly $2.9 trillion in 2015. Farm sector liabilities grew from
$22.4 billion in 1960 to $188.8 billion in 1984. From 1985 to 1992, farm sector
liabilities actually declined. Over the period 1993 to 2015, farm liabilities rose from
$134.3 billion to $364.2 billion. In a nutshell, farm assets greatly exceeded farm
liabilities over the period 1960 to 2015. As a result, equity in the farm sector has been on the rise since 1986, reaching $2.5 trillion in
2015.
We see that the change in the value of farm
real estate represents the major component of the change in the total value of all
farm assets. Since 1986, real estate assets associated with the farm sector have grown rather steadily.
Gross farm income has
increased, albeit somewhat
erratically, and production
expenses have behaved in a similar fashion. Inflation-adjusted or real net farm
income has grown modestly
over the past 30 years.
Inflation-adjusted or real net farm
income has grown modestly
over the past 30 years