|What’s a Farm in 2010?
We recently received the above titled report from the Daily Yonder. The Daily Yonder is “Your daily multi-media source of news, commentary, research, and features”, and “bring(s) you overviews of the big issues now facing small communities — health, employment, broadband access, education, and economic development. We’re tracking how national policies are reaching (or ignoring) rural communities.”
The Daily Yonder highlighted the results of a newly released report by the USDA’s Economic Research Service. That report, Structure and Finances of U.S. Farms: Family Farm Report, 2010 Edition, compiles information about the size and finances of the country’s farms. For the full report, visit here.
First, a couple of definitions. A “farm” here is defined as “any place from which $1,000 or more of agricultural products (crops and livestock) were sold or normally would have been sold” in a year.
A “family farm” is “any farm where the majority of the business is owned by the operator and individuals related to the operator…including relatives who do not reside in the operator’s household.”
The keys points of the report that we want to share with our Agurban readers are:
- Number and Size of Farms – After peaking at 6.8 million farms in 1935, the number of U.S. farms fell sharply until the early 1970s. The decline in farm numbers slowed in the 1980s and essentially stopped in the 1990s. From 1978 to 2007, the number of farms operating fewer than 70 acres increased 12 percentage points, the number of “thousand-acre farms” increased 1 percentage point, and the number of farms in all acreage classes in between decreased. Note that farms do not necessarily own all the land they operate; they can also rent land. For example, a farm operating 1,000 acres could own 500 acres and rent 500 acres, or even own no land at all and rent 1,000 acres.
- Metropolitan Farming – Farming is popularly viewed as taking place in rural areas. Nevertheless, 39 percent of U.S. farms are located in metropolitan (metro) areas, defined as a county or group of counties with an urban population concentration of at least 50,000 people.Metro areas provide both opportunities and problems for farms. For example, farmers may have opportunities to produce and sell high-value crops through farmers’ markets. Proximity to employment in the metropolitan core might provide members of farm families with opportunities to work off-farm. On the other hand, markets for traditional field crops could be reduced as more land is developed. Grain elevators, for example, might go out of business. Real estate taxes may increase as land prices rise to reflect the value of the land in nonfarm uses.
- Aging Operators – About 28 percent of farm operators are at least 65 years old. In contrast, only 8 percent of self-employed workers in nonagricultural industries are that old. Retired operators are the oldest group-as one might expect-with an average age of 70 years, followed by low-sales operators, with an average age of 59 years.The nation’s 28-percent share of operators at least 65 years old-called “older farmers” -has raised concerns about a mass exit of farmers from agriculture in the near future and the likelihood of finding younger farmers to replace them and absorb their assets, including land.
- Farm Income – Not surprising, the average rates of return on assets and equity and the average operating profit margin are negative for retirement, residential/lifestyle, and low-sales small farms. These measures turn positive for medium-sales small farms, and increase further for large-scale and nonfamily farms.The ratios are higher for very large farms than for large farms, reflecting very large farms’ higher level of sales. Larger farms often can use their resources more productively than smaller farms, generating more dollars of sales per unit of labor and capital.
Small farms appear more profitable if net farm income is examined rather than operating profit margins. Although most small farms had a negative operating profit margin, a majority of each small-farm type generated positive net farm income. The different results are attributed mostly to differences in the way the two measures treat unpaid labor by the operator.
The agricultural industry has been a mainstay in the American economy since our country’s founding, and we believe it will remain so for generations to come. We will continue to watch these key factors.