By DOUG SCHMITZ
Iowa Correspondent DES MOINES, Iowa – Contrary to the dismal economic forecasts pronounced on them in the 1980s, family farms are now more diverse and account for 98 percent of all farms in the United States, with large-scale operations making up 10 percent and contributing to 75 percent of production, according to the USDA’s 2007 Family Farm Report.
“The (report) shows that the number of larger farms is growing, but there has not been any significant growth in the percentage of farms that are corporate,” said Iowa Agriculture Secretary Bill Northey, a Spirit Lake, Iowa corn and soybean farmer who’s serving his first term in the Iowa Department of Agriculture and Land Stewardship (IDALS)’s top post.
Conversely, the 2007 report, which was released on June 8, said small family farms in the U.S. comprised 90 percent of farms and own 61 percent of farmland, which, Northey added, provides incentives to younger farmers entering agriculture.
“What I think these numbers show is that we need to continue to make sure that smaller producers and young farmers still have the opportunity to get into farming,” he said. “The cost of land and equipment are both going up, so we have to make sure young people have a chance to get their foot in the door.”
The report is based on data from the 2004 Agricultural Resource Management Survey (ARMS), conducted annually by the USDA’s Economic Research Service (ERS) and the National Agricultural Statistics Service (NASS), which includes various censuses of agriculture, ERS estimates of farm productivity, NASS estimates of the number of farms, and labor force data from the Bureau of Labor Statistics, using long-term trends.
The report, started in February 2006 by the USDA’s ERS, used the farm classification system developed by ERS to examine American farm structure based on farm sales, organization and the farm operator’s primary occupation. Family farms excluded farms organized as non-family corporations or cooperatives, or farms with hired managers.
The report said total average income (as reported in 2004) for large-scale farms (sales of $250,000 or more) hit $125,120, while small farm income (sales less than $250,000) averaged $63,043 for low-sales and $70,365 for medium sales for operators reporting losses in 2004.
The report said the total average income for all U.S. family farms reached $81,596, with off-farm work providing the primary source of income for most farm households.
In addition, the report said sales of farm products shifted dramatically to farms with sales of $1 million or more between the 1982 and 2002 Censuses of Agriculture, with most being organized as family farms.
According to the report, most million-dollar farms (88 percent) were family operations, but only less than 1 percent of million-dollar farms were operated by large, publicly-held corporations, with the most common specialization coming from specialty crops (27 percent of the group), poultry (19 percent), dairy (14 percent) and hogs (10 percent).
The report said million-dollar farms, which were less than 2 percent of all farms – accounted for 48 percent of the sales of farm products in 2002, up from 23 percent in 1982, with the share of sales by farms with less than $250,000 fell from 53 percent to 24 percent.
Neil Harl, an Iowa State University (ISU) emeritus professor of economics and the Charles F. Curtiss Distinguished Professor in Agriculture, said the shift toward larger operating units has been going on for several decades and could be attributed to the ability of larger operations to spread machine costs and labor costs over more acres.
“As tractors became larger and more efficient, and combines became larger and more efficient, the pressure was on to become large enough to spread those costs over as many acres as possible,” he said. “One cannot justify a $300,000 combine on a section of land.”
The report also said small family farms produced a modest share of farm output, and receive substantial off-farm income; however, 61 percent of farms did not receive farm program payments.
But Harl, who served on the U.S. Commission on Payment Limitations in Agriculture in 2003, said government money should not be used to grow large operations.
“Some had been arguing, including some agricultural economists, that to curb the growth of the largest operations would cause inefficiencies in the farming sector,” he said. “I disagreed with that position and still do.
“The price of farm commodities is not set by the most efficient; the price is set by what it takes to attract the least efficient into production. That’s the major reason why Congress should enact strict payment limitations,” he said.
The major change in today’s family farms is the level of optimism surrounding farming, Northey said, which is higher now than in the 1980s – especially concerning generational farming.
As a result, Northey said more young people are interested in farming, with more parents interested in bringing their children back to the farm. “I think the most significant trend of the last 20 years has been the pace of change within farming,” he said. “When I got started farming in 1981, I expected to be growing corn and soybeans for the next 40 years.
“Now, someone getting into farming has a lot more options and opportunities to grow a specialty crop, participate in some direct marketing production, or some other activity that can add value to their production,” he said.
By contrast, in the 2001 Farm and Rural Life Poll, 76 percent of Iowa farmers surveyed said they thought the future of rural Iowa was severely threatened due to the loss of family farms.
But Northey said he doesn’t see that happening to U.S. family farms as indicated in the report – especially in Iowa, where the state is gaining ground as a leader in many areas of production agriculture.
To view the full report, visit www.ers.usda.gov/Publications/EIB26 This farm news was published in the June 27, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee. |
