U.S. Farms: Numbers, Size, and Ownership
U.S. Farms: Numbers, Size, and Ownership
U.S. Farms: Numbers, Size, and Ownership
a discussion of shifts in the distribution of farms and agricultural sales by farm size over time, see Hoppe and Korb (2005).
5For
6 Structure and Finances of U.S. Farms: 2005 Family Farm Report / EIB-12
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Figure 3
91.2
59.1
Farms
Value of production
Source: USDA, Economic Research Service, 2003 Agricultural Resource Management Survey, Phase III.
cattle. At the other extreme, small farms account for only 8 percent of the value of production for hogs and 4 percent for poultry. Most small-farm production is concentrated among farming-occupation farms, which account for 19 percent of total U.S. production. The share of assets and land held by small farms is substantially more than indicated by their 27-percent share of production. Small farms hold about 71 percent of all farm assets, including 70 percent of the land owned by farms (fig. 4). Because of their large land holdingsin aggregatesmall farms are important in conservation efforts. Small farms account for 82 percent of the land enrolled in the Conservation Reserve Program (CRP) and Wetlands Reserve Program (WRP).
Shifting Shares
The 2003 ARMS data in figure 3 provide a current picture of distribution of farms and production among various types of farms. The 2003 distribution is different from the distribution in the recent past. Although we cannot extend the current ERS farm classification back before 2003,6 a condensed classification consistent with the current one can be extended to earlier years, as shown in table 2. Large, very large, and nonfamily farms are defined the same as in the 2003 version of the classification. Small family farms are classified into two subtypes, those with sales less than $10,000 and those with sales between $10,000 and $249,999. Note that farm types for all years in table 2 are defined in 2003 dollars. Sales in 1989 and 1995 were adjusted using the Producer Price Index for farm products.7 Farm numbers and production. Two major changes occurred between 1989 and 2003. First, farm size shifted toward the smallest and the largest sales classes. Specifically, small farms with annual sales of less than $10,000, very large farms, and nonfamily farms increased in number. At the
6Beginning in 2003, limitedresource farmers are defined as having low household income during the current year (2003) and during the previous year (2002). Earlier versions of the ARMS and FCRS did not collect household income for the previous year. 7The year 1989 was selected for analysis because it was the earliest year with data consistent with the current ARMS. The year 1995 was selected because it is midway between 1989 and 2003.
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Table 2
Farms, value of production, operator age, and profit margin, by condensed farm type, 1989, 1995, and 2003
Item 1989 1995 2003
Number
Number of farms Small family farms Less than $10,000 in sales $10,000-$249,999 in sales Large-scale family farms Large family farms Very large family farms Nonfamily farms 2,148,740 1,996,845 1,063,672 933,173 127,083 87,369 39,714 24,812 2,068,000 1,915,246 1,000,825 914,422 121,563 75,153 46,410 31,190 2,121,107 1,935,109 1,213,378 721,731 150,950 84,294 66,656 35,048
Percent
Distribution of farms: Small family farms Less than $10,000 in sales $10,000-$249,999 in sales Large-scale family farms Large family farms Very large family farms Nonfamily farms Distribution of value of production: Small family farms Less than $10,000 in sales $10,000-$249,999 in sales Large-scale family farms Large family farms Very large family farms Nonfamily farms Operator 65 years old or more Small family farms Less than $10,000 in sales $10,000-$249,999 in sales Large-scale family farms Large family farms Very large family farms Nonfamily farms Operating profit margin1 Small family farms Less than $10,000 in sales $10,000-$249,999 in sales Large-scale family farms Large family farms Very large family farms Nonfamily farms 92.9 49.5 43.4 5.9 4.1 1.8 1.2 92.6 48.4 44.2 5.9 3.6 2.2 1.5 91.2 57.2 34.0 7.1 4.0 3.1 1.7
42.3 2.1 40.2 51.5 19.9 31.6 6.2 24.4 25.5 28.8 21.6 10.6 9.5 12.8 *8.8 5.3 -5.8 -57.3 d 18.0 14.6 20.3 **12.8
37.6 2.0 35.6 48.0 14.9 33.1 14.5 25.1 26.3 28.5 23.8 9.8 8.3 12.3 d d -18.1 -68.7 -10.4 15.1 11.5 16.9 *9.5
27.1 1.6 25.5 59.1 14.4 44.7 13.7 26.7 27.8 28.0 27.4 13.5 14.0 12.8 *22.9 d -28.5 -98.0 -13.3 14.7 10.6 16.4 15.3
Note: The 1989 and 1995 farm types are defined in 2003 constant dollars. Sales were adjusted using the Producer Price Index (PPI) for farm products. d = Data suppressed due to insufficient observations or because the standard error was greater than 75 percent of the estimate. * = Standard error is between 25 percent and 50 percent of the estimate. ** = Standard error is between 51 percent and 75 percent of the estimate. 1Operating profit margin = 100 percent X (net farm income + interest -charge for unpaid operators labor and management)/gross farm income. Source: USDA, Economic Research Service, 1989 and 1995 Farm Costs and Returns Survey and 2003 Agricultural Resource Management Survey, Phase III.
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Figure 4
Share of farm business assets, acres owned, and acres enrolled in the Conservation Reserve and Wetlands Reserve Programs (CRP & WRP), 2003 Small farms account for most farm assets (including land)
Percent of U.S. farm assets, acres owned, or program acres
Small family farms Large-scale family farms Nonfamily farms
5.1
6.5
23.5
23.8 69.7
71.4
Assets
4.0 13.9
82.1
same time, the number of small farms with annual sales between $10,000 and $249,999 declined. Second, production shifted sharply to very large family farms and nonfamily farms. These types accounted for 58 percent of the value of production in 2003, compared with 38 percent in 1989, shifting mainly from farms with annual sales between $10,000 and $249,999 andto a lesser extentlarge family farms. Most of the shift in production to nonfamily farms occurred between 1989 and 1995, while the shift to large family farms occurred later, between 1995 and 2003. Shifts in production away from farms in the $10,000 to $249,999 sales class are likely to continue, given their negative operating profit marginon averageand the large (and growing) share of their operators who are at least 65 years old.8 Concentration. Production shifts to very large farms are consistent with trends in concentration presented in figure 5. Concentration is measured here by the smallest percent of farms (starting with the largest farms and working down) needed to account for half of agricultural sales. During the 1987 to 2002 period in figure 5roughly equivalent to the 1989 to 2003 period in table 2the share of farms accounting for half of sales declined
in the distribution of farm assets followed a pattern similar to shifts in production. The share of assets held by very large farms increased from 9 percent in 1989 to 14 percent in 2003. At the same time, the share of assets held by farms with sales between $10,000 and $249,999 declined from 48 percent to 41 percent.
8Changes
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by more than half, from the largest 3.6 percent of farms to the largest 1.6 percent. Most of the longrun increase in concentration, however, occurred between 1900 and 1987.
Percentage of U.S. farms accounting for half of U.S. farm product sales, selected census years from 1900 to 2002
Concentration has increased during the past century Percent of U.S. farms 25 20 15 10 5 0 1900 40 69 87 92 97 2002
Note: This figure shows the percent of farms (starting with the largest and working down) accounting for 50% of farm product sales in a given census year. For example, the largest 2 percent of farms accounted for 50% of sales in 2002. In contrast, one needed to count down to the largest 17 percent of farms to get to 50% of sales in 1900. Source: USDA, Economic Research Service, compiled from Census of Agriculture data and Peterson and Brooks (1993, p. 5).
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Table 3
Item
Limitedresource
Large
Number
Total farms 235,030 308,832 892,602 363,812 134,833 84,294 66,656 35,048 2,121,107
11.1 1.4
14.6 1.5
42.1 5.2
17.2 6.6
6.4 12.3
4.0 14.4
3.1 44.7
1.7 13.7
100.0 100.0
Percent of group
Sales class: Less than $10,000 $10,000 to $49,999 $50,000 to $99,999 $100,000 to $174,999 $175,000 to $249,999 $250,000 to $499,999 $500,000 to $999,999 $1,000,000 or more
na na na 61.2 38.8 na na na
na na na na na 100.0 na na
na na na na na na 62.8 37.2
Percent of group
Tenure: Full owner Part owner Tenant1
d = Data suppressed due to insufficient observations or because the standard error was greater than 75 percent of the estimate. na = Not applicable. * = Standard error is between 25 percent and 50 percent of the estimate. 1Farms that rent all the land they operate. Also includes farms owning less than 1 percent of the land they operate. Source: USDA, Economic Research Service, 2003 Agricultural Resource Management Survey, Phase III.
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manages several such farms at the same time. Because these farms have a hired manager, they are classified as nonfamily farms. The relatively high average acreage for nonfamily farms reflects a small share of farms in the group with a large acreage. Tenure. Renting land is no longer considered primarily a method for entry into farming. It has become a way to expand by controlling additional land without the debt and commitment of capital associated with ownership (Reimund and Gale, 1992, pp. 7-8). About two-thirds of the medium-sales farms and large-scale farms are part-owners, meaning that they own part of the land they operate and rent the rest. In addition, about 17 percent of very large family farms are tenants that own none of the land they farm. This is a larger tenancy percentage than is true for any other type of farm.
Specialization
Specialization varies by farm size. Small farms tend to specialize in raising beef cattle, other grazing livestock, and various crops (table 4). Poultry, hogs and high-value crops tend to be produced on larger farms. Medium-sales small farms and large family farms are most likely to specialize in grain. Beef cattle. Beef cattle are by far the most common specialization among small farms, accounting for 35 percent to 41 percent of limited-resource, retirement, residential/lifestyle, and low-sales farms (table 4). Beef cattle commonly cow-calf enterprises in the case of small farmsoffer three advantages to operators of small-farms: (1) Cattle are less labor-intensive than many other enterprises, which may be attractive to an operator who is retired or holds a full-time job off the farm. (2) Cattle enterprises tend to be low-cost, which limits cash requirements. (3) Producing calves has the potential to produce losses that can be written off against off-farm income. (For more details, see box Why Beef Cattle?) Other Specializations. Other small-farm specializations vary by type of farm. One-fourth of limited-resource and residential/lifestyle farms specialize in other livestock, including horses, sheep, and goats. Other field crops is a common specialization for limited-resource, retirement, residential/lifestyle farms, and low-sales farms. This category also includes farms with all their crop acres in the CRP and WRP. Some specializations are more common among farms with sales greater than $100,000 (medium-sales and the two types of large-scale farms). Farms specializing in cash grains and soybeans account for more than 40 percent of medium-sales farms and large family farms. In addition, 20 percent of medium-sales farms specialize in dairy, approximately double the percentage for any other type. Very large family farms are at least twice as likely as any other type to specialize in poultry or hogs, accounting for 75 percent of poultry production and 61 percent of hog production.
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Table 4
Item
Limitedresource
Large
Number
Total farms 235,030 308,832 892,602 363,812 134,833 84,294 66,656 35,048 2,121,107
Percent
Commodity specialization:1 Cash grain2 Other field crops3 High-value crops4 Beef Hogs Dairy Poultry Other livestock5
Number
Average number of commodities6 1.8 1.3 1.4 2.2 3.6 3.4 3.3 1.5 1.9
Percent
Number of commodities:6 No commodities7 One commodity Two commodities Three commodities Four or more commodities 11.8 39.1 29.0 10.9 9.2 22.6 38.4 28.2 7.5 3.3 17.1 42.1 29.2 7.6 4.0 6.3 29.8 37.5 10.6 15.8 d 12.1 23.6 16.7 47.5 d 14.1 23.4 21.0 41.5 d 19.7 19.4 22.9 37.8 23.5 40.4 19.1 7.7 9.3 13.3 35.4 29.4 10.1 11.9
d = Data suppressed due to insufficient observations. * = Standard error is between 25 percent and 50 percent of the estimate. 1Commodity that accounts for at least half of the farm's value of production. 2Includes wheat, corn, soybeans, grain sorghum, rice, and general cash grains, where no single cash grain accounts for the majority of production. 3Tobacco, peanuts, cotton, sugar beets, sugar cane, corn for silage, sorghum for silage, hay, canola, and general crops, where no single crop accounts for the majority of production. Also includes farms with all cropland in the Conservation Reserve or Wetlands Reserve Programs (CRP & WRP). 4Vegetables, fruits and tree nuts, and nursery and greenhouse. 5Includes sheep, goats, horses, mules, ponies, fur-bearing animals, bees, fish, and any other livestock. Also includes farms where no single livestock species accounts for the majority of production. 6Based on 26 commodities or commodity groups: barley, oats, wheat, corn for grain, corn silage, soybeans, sorghum for grain, sorghum silage, canola, fruit, vegetables, nursery products, peanuts, sugar cane, sugar beets, rice, potatoes, cotton, tobacco, hay, other crops, cattle, hogs, dairy, poultry, and other livestock. 7Includes farms with no production due to drought, other adverse weather, crop and livestock disease, etc. Also includes farms with all cropland in CRP & WRP. Source: USDA, Economic Research Service, 2003 Agricultural Resource Management Survey, Phase III.
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Percent of farms specializing in beef 36.8 46.5 31.5 17.6 15.1 13.2 8.5 10.8 34.7
Why do so many small farms, particularly those with sales less than $100,000, specialize in beef cattle? Beef cattle have three main advantages for small farms: Cattle operations are less labor-intensive than many other enterprises, making it easier to combine them with off-farm employment (Cash, 2002, p. 21). In contrast to hogs and chickens, cattle roam freely with little need for direct supervision, except when calving. Cattle are fairly self-sufficient, except in winter when forage is not available. Cattle operations tend to be low-cost, which limits cash requirements (Cash, 2002, p. 21). Variable costs generally are lower than those for field crop enterprises. Cattle eat grass and require little additional feed, except during the winter. Fixed costs for land, water access, and fencing make up a large share of the expenses for cow-calf enterprises. These costs, however, represent long-lived assets that only require repair. Under the existing tax code, losses from farming can be written off against income from other sources. The writeoff is unlimited, if the farm has the potential to be profitable and the filer is materially involved in operating the farm (Freshwater and Reimer, 1995, p. 220). Some farmers may take advantage of the writeoff by producing a commoditysuch as calvesthat allows them to group their expense and sales in different years to generate small profits in some years and large losses in others.
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High-value crops. Production of high-value crops is heavily concentrated among very large family farms and nonfamily farms, which together account for 76 percent of the total. Although high-value crop enterprises are sometimes suggested as ways to boost the earnings of small farmers, no more than 9 percent of any small-farm type specializes in these crops. Highvalue crops can generate large sales per acre, but they require substantially more labor than cattle and they may require more effort to market.
Diversification
Farms today tend to be specialized, with individual farms typically producing very few commodities. Only 22 percent of U.S. farms produced more than two commodities in 2003. Sixty-five percent of U.S. farms produced only one or two commodities in 2003, and 13 percent had no production at all. Farms with no production include those with all their cropland in the CRP or WRP, as well as farms experiencing crop failure or loss of livestock from disease or other causes. Farms become more diversified as size increases. Many small farms specialize in a single commodity or produce nothing at all. Mediumsales farms and large-scale farms are more likely to produce multiple commodities: three-fifths of farms in these groups produce three or more commodities.
9Nineteen percent of operators have retirement farms, but are still counted as farmers because they have sales of at least $1,000. BLS excludes these operators from their estimates, because they are nottechnically speakingin the labor force. Excluding these operators from the ARMS estimate to be consistent with BLS methodology lowers the portion of operators at least 65 years of age to 14 percent. This is still double the 7-percent BLS estimate.
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Table 5
Item
Limitedresource
Large
Number
Total principal operators 235,030 308,832 892,602 363,812 134,833 84,294 66,656 35,048 2,121,107
Years
Average age 62 69 50 57 52 51 51 55 56
Percent
Age: Younger than 35 years 35 to 44 years 45 to 54 years 55 to 64 years 65 years or older Education: Some high school or less Completed high school Some college Completed college
d = Data suppressed due to insufficient observations. * = Standard error is between 25 percent and 50 percent of the estimate. ** = Standard error is between 51 percent and 75 percent of the estimate. Source: USDA, Economic Research Service, 2003 Agricultural Resource Management Survey, Phase III.
The advanced age of farmers raises concerns about the exit of large numbers of farmers from agriculture in the near future and finding younger farmers to replace them (Gale, 2002, p. 30). Finding replacement operators, however, may not be as hard as it seems. Older farmers can be replaced with younger farmers who will produce more on larger farms, and some replacement farmers already work as secondary operators on multiple-generation farms (Hoppe et al., 1996, p. 45; Gale, 1994, pp. 5, 34-35; Gale, RDP). Educational attainment varies sharply by type of farm. Very few operators of limited-resource farms attended or completed college, compared with over half of residential/lifestyle farms. Educational attainment also increases with farm size. About 44 percent of medium-sales operators attended or completed college, a number that jumps to nearly 60 percent for operators of very large farms.
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