VIEWPOINT

Farm-size demographics highlight the changing face of today's agriculture.
By Don Copenhaver

When you get the opportunity, go to the Web site of USDA’s Economic Research Service and read a new report called America’s Diverse Family Farms—Structure and Finances. The ERS analyzes statistics on U.S. agriculture. Specifically, the report classifies U.S. farms based on data from the 2003 Agricultural Resource Management Survey.

To organize the data, the researchers rethought traditional groupings. Small family farms are grouped under sales of less than $250,000; large family farms are those with sales of $250,000 to $499,999; very large family farms present sales of $500,000 or more; and non-family farms are organized as non-family corporations or cooperatives as well as farms operated by hired managers.

As all of us involved in agriculture know, farm numbers and operators have declined. That decline slowed in the 1980s and almost stopped in the 1990s. By 2002, said the authors, about 2.1 million farms remained. Since the amount of farmland decreased at a far slower pace than number of farms, it stood to reason that the remaining farms were larger. On those 2.1 million U.S. farms, traditional data showed 2.1 million operators. 

In a new twist, the one-farm, one-operator rule was rethought. Traditionally, an operator had been defined as anyone who made day-to-day decisions about the farm business. By analyzing the data in a new way, the researchers uncovered a new statistic. According to the report, the actual number of operators is considerably higher than the census estimate.

As the new analysis pointed out, the traditional view of “one-farm, one-operator” understated the actual count of farm operators by 1.1 million. Furthermore, the study’s authors report two-thirds of the additional operators—750,000 out of 1.1 million—are spouses. The number of operators per farm increases with size, averaging 1.9 for very large family farms.  That means a more realistic total of 3.2 million actual operators.

These statistics also bring up another new category: farms run by several people, almost always related by birth or marriage. Multiple-operator farms, according to the survey, produce almost 64 percent of the total value of production. Researchers put the number of multiple-generation farms at 167,600.

In addition, the 2002 analysis also estimates that the 34,100 largest farms account for 75 percent of sales.

The authors list four major findings:
1. Large family farms, very large family farms and
non-family farms account for most production. Shifts in production away from small farms are likely to continue.

Large-scale family farms and non-family farms accounted for only 9 percent of farms in 2003. But this category accounted for 73 percent of production. Profitability concerns limit the number of farmers willing to replace operators of small farms with sales under $250,000.

But larger farms which are expected to increase production are family operations. Family operations account for 88 percent of the 28,300 farms with sales of $1 million. Million-dollar non-family farms owned by large, publicly held corporations are a negligible segment and likely to remain so.

2. Small farms may exist for reasons other than generating a profit. But, within each farm type, some have an operating profit margin of at least 10 percent.

I find that astounding. Maybe in hindsight, I shouldn’t. But according to the researchers, many small farms are not operated for profit—maybe intentionally. Losses are offset by tax shelters, capital gains, rural lifestyles and inheritance.

3. Three-fifths of U.S. farms do not receive government payments. For these farms, changes in taxes and the non-farm economy are probably more important than government payments.

Consider that 61 percent of farms in 2003 did not participate in farm programs. That explains why many policymakers continue to contend that tax policy supersedes farm policy. 

4. Primary operators of farms are older than other self-employed persons. Secondary operators on multiple-generation farms may replace them.

Many of the older farmers still operating consider themselves retired. Many young farmers are now functioning on the farm as secondary operators, and older farmers are being replaced by fewer young farmers who operate larger farms.

What conclusions can be drawn from these statistics? As Mark Twain famously pointed out, there are lies, damn lies and statistics. So per usual, many people will draw many conclusions, some of them contradictory. From my perspective, these show challenging demographics ahead for ag retailers and the farm sector.

MFA is a cooperative. We rise and fall with the economic plight of our member/owners. There is a bright future in agriculture. It is reasonable to conclude that the number of multi-generational farms is roughly the same as the number of farms that account for a huge percentage of sales. Young people are waiting in the wings, and there’s still room enough for them to grow without decreasing production. MFA can and will help.