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Farm Structure: Issues and Trends
Contracts and Other Marketing and
Production Arrangements
Farm Operator Households: Income,
Wellbeing, and Off-Farm Work
Limited Resource and Minority-Operated
Farms
Farm Structure: Issues and Trends
The 20th Century Transformation
of U.S. Agriculture and Farm Policy—The structure
of farms, farm households, and rural communities has evolved
markedly over the last century. The report analyzes a
wide range of historical data related to farm structure
and provides perspective on the long-term forces that
have helped shape agricultural and rural life. A review
of some key policy developments also considers the extent
to which farm policy design has or has not kept pace with
the continuing transformation of American agriculture.
See also Milestones
in U.S. Farming and Farm Policy, an Amber Waves data
feature based on this report.
A Consideration of the
Devolution of Federal Agricultural Policy—Diverse
needs and preferences across the United States provide
justification for the devolution, or decentralization,
of many Federal Government programs to the State or local
level. The move toward devolution, however, has not been
evidenced in U.S. agricultural policy, despite significant
differences across States in such areas as commodity production,
production costs, income distribution, and opportunities
for off-farm work. This report considers the implications
of devolving $22 billion in USDA 2003 budget outlays,
mostly for domestic commodity and natural resource programs
and rural development and housing programs. Amber
Waves summary article
American
Farms—The number of farms has fallen dramatically
since its peak in 1935. In the meantime, the number of
large farms has grown, which means that large farms now
form a larger share of the total U.S. farms. Nevertheless,
most of the remaining farms are family run businesses
with sales less than $250,000. The diversity of today's
farms has some implications in farm policy discussions.
Agriculture Fact Book 2001-2002 (2/03).
Economic and Structural
Relationships in U.S. Hog Production—Rapid change
in the size and ownership structure of U.S. hog production
has created new and varied challenges for the industry.
This report describes an industry becoming increasingly
concentrated among fewer and larger farms, and becoming
more economically efficient. These changes have not come
without problems. The increasing market control and power
concentrated among packers and large hog operations, and
the manure management problem posed by an increasing concentration
of hog manure on fewer operations, are paramount concerns.
Addressing these concerns through regulations would likely
impose economic costs that could be passed on to consumers.
In addition, the relative mobility of the hog industry
means that regulations could result in significant changes
in the location of hog production facilities, with ripple
effects in local economies. Balancing environmental and
economic interests will challenge policymakers dealing
with the implications of structural change in U.S. hog
production. (2/03)
Farm
Numbers: Largest Growing Fastest—Acreage-class
and sales-class data show a trend toward bigger farms-operating
at least 500 acres of land or selling at least $250,000
in farm products. Compared with acreage-class data, the
sales-class data capture less of an increase in smaller
farms. The 1992-97 increase in farms with sales less than
$10,000 largely resulted from expanding the farm count
to include operations with all their cropland in the Conservation
Reserve or Wetlands Reserve Programs (CRP or WRP). Changes
in the distribution of sales by size of farm, however,
were actually more dramatic than changes in the distribution
of farm numbers. Agricultural Outlook (10/02)
Land
Ownership and Farm Structure—Although the Federal
Government once held most U.S. land, 60 percent (1.4 billion
acres) is now privately owned. Virtually all farmland
is privately owned. Leased land has become an increasing
share of farm operations as farm numbers decline and average
farm size increases. Farms today vary widely in size and
other characteristics. Most farms are family farms; the
share of sales accounted for by nonfamily corporations
has been consistently small over time. Small family farms
(sales less than $250,000) account for 92 percent of all
farms, but only 32 percent of production. Nevertheless,
small family farms account for 61 percent of the land
operated, which is important to the Nation's conservation
and environmental efforts. Farmers' tenure also affects
their use of conservation measures. Agricultural Resources
and Environmental Indicators (7/02).
Structural
Change in an Era of Increased Openness: A Background Paper
on the Structure of U.S. Agriculture—This paper
examines the structure of U.S. agriculture and highlights
six of the primary forces that are driving structural
change in the sector: trade liberalization, domestic agricultural
policy, domestic economic policy, the adoption of new
technologies, new commercial relationships, and the relative
strength of the non-agricultural economy. The structure
of U.S. agriculture is described in detail using the farm
typology, a unique conceptual framework developed by the
U.S. Department of Agriculture's Economic Research Service
(ERS). The ERS Farm Typology divides farms into eight
distinct, relatively homogeneous groups. This framework
allows for a more in-depth understanding of U.S. agriculture.
Proceedings of the Seventh Agricultural and Food Policy
Systems Information Workshop (2/02).
Food
and Agricultural Policy: Taking Stock for the New Century—This
report is designed to take a longer term view of our Nation's
agriculture and food system and to offer constructive
ideas to help guide future farm policy. It examines the
enormous changes faced by today's food and farm system,
as well as the lessons learned from more than seven decades
of food and farm policies. The report offers a set of
principles to guide policy development for the future-addressing
issues such as trade, a farm safety net, system infrastructure,
conservation and environment, rural communities, nutrition
and food assistance, and program delivery systems. (9/01).
Structural and Financial
Characteristics of U.S. Farms: 2001 Family Farm Report—Family
farms range from very small retirement and residential
farms to establishments with sales in the millions of
dollars. The farm typology developed by ERS categorizes
farms into groups based primarily on occupation of the
operator and sales class of the farm. The groups differ
in their importance to the farm sector, product specialization,
program participation, dependence on farm income, and
other characteristics. AIB-768 (5/01)
Development
at the Urban Fringe and Beyond: Impacts on Agriculture
and Rural Land—
Land development in the United States is following two
routes: expansion of urban areas and large-lot development
(greater than 1 acre per house) in rural areas. Urban
expansion claimed more than 1 million acres per year between
1960 and 1990, yet is not seen as a threat to most farming,
although it may reduce production of some high-value or
specialty crops. The consequences of continued large-lot
development may be less sanguine, since it consumes much
more land per unit of housing than the typical suburb.
AER-803 (7/01)
U.S. Organic
Farming Emerges in the 1990s: Adoption of Certified Systems—During
the 1990's, certified organic cropland more than doubled,
and two organic livestock sectors-eggs and dairy-grew
even faster. This report updates USDA estimates of land
farmed with certified organic practices during 1992-94
with 1997 estimates, including new State-and crop-level
detail, and provides a brief discussion of current economic
issues in organic farming. AIB-770 (6/01)
America's Diverse Family
Farms: Assorted Sizes, Types, and Situations—Most
farms are small and most farmland is on small farms, but
small farms account for less than a third of the value
of agricultural production. The variety of family farm
types--what they produce and their differences in characteristics,
economic situations, and household and business arrangements--make
any one policy instrument appropriate for only a portion
of family farms. AIB-769 (5/01)
What
Does Farm Structure Imply for Future Farm Policy?—The
evolution of the U.S. agricultural sector has created
a structure significantly different than existed in the
1930's, when much farm commodity policy was founded. Recent
work on the definition of a farm safety net uses the ERS
farm typology to take explicit account of the marked differences
in aspirations and circumstances across farm households
when examining how income goals might be met. Agricultural
Outlook Forum (2/01).
A New Typology For a Diverse Ag Sector—This article
appeared in the "Graphically Speaking" section
of Choices, in the 1st Quarter, 2001 issue. The article
describes U.S. farm structure using the ERS farm typology.
Sales class alone is inadequate to classify farms.
Environmental
Regulation and Location of Hog Production—Environmental
regulation, and the added costs generally associated with
compliance, are considerations often factored into the
choice of a business location. It has been hypothesized
that geographic variation in environmental regulations
and enforcement can induce a migration of industries across
state or country boundaries to "pollution havens"
where compliance costs associated with environmental regulations
are lower. ERS analyzes the impacts of environmental regulation
on the location of animal production using information
from studies presented at an ERS-Farm Foundation workshop
on industry location analysis, as well as extensive review
of recently published analyses. Agricultural Outlook (9/00
)
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Structure, Management,
and Performance Characteristics of Specialized Dairy Farm
Businesses in the United States—The U.S. dairy
industry faces a changing government policy environment
in the year 2000. Milk producers are struggling, and will
continue to struggle, to adjust to markets that are more
dependent on the forces of supply and demand. Data from
the 1993-95 Farm Costs and Returns Surveys and the 1996
Agricultural Resource Management Study show that dairy
farm businesses in general did a fairly good job of meeting
short-term debt, generating returns, and meeting long-term
debt from 1993 to 1996. The analysis indicates that farm
management strategies will play an important role in determining
the overall profitability of a dairy farm business as
Government supports decline. However, the 1996 data suggest
that changes in management techniques are adopted slowly.
AHB 720 (9/00)
Small
and Large Farms Both Growing in Number—Census
of Agriculture data from 1997 seem to indicate that farm
numbers stabilized in the 1990's. A closer look shows
that the number of full-time farms continued declining,
while part-time farms surged. Many counties continued
to lose farms at a steady pace, while others gained farms.
Rural Conditions and Trends (7/00)
Nonfarm Growth
and Structural Change Alter Farming's Role in the Rural
Economy—The rural economy continued to grow during
the late 1990's, despite low commodity prices that caused
economic problems in the farm sector. The resiliency of
the rural economy is a reminder that agriculture is not
the primary source of economic growth in rural America.
Growth in other rural industries and structural changes
in the farm sector have reduced farming's importance and
altered traditional perceptions of farms. This issue of
Rural Conditions and Trends examines the changing role
and character of farming and other agriculturally related
industries in the United States. Rural Conditions and
Trends (7/00)
Structural and Financial
Characteristics of U.S. Farms, 1995: 20th Annual Family
Farm Report to the Congress—Farming in the United
States is both diverse and complex, and national averages
often mask the variation and interactions that are key
to understanding the major participants in agricultural
production (farm businesses, farm operators, and farm
operator households). Farm businesses vary with respect
to such characteristics as size, product mix, legal organization,
land tenure, and financial performance. Farm operators
show diversity in demographic characteristics, in the
hours they spend working on and off the farm, and in their
managerial practices. AIB-746 (12/98)
ERS Farm Typology for
a Diverse Agricultural Sector—Categorizes farms
beyond sales volume alone and into groups that differ
in their importance to the farm sector, product specialization,
program participation, and dependence on farm income.
AIB-759 (7/98)
Changes in the Farm Sector—The structure and organization
of the farm sector are steadily evolving, driven by changes
in production technology, off-farm opportunities, and
the organization of markets. Farming will continue to
evolve toward a more dualistic structure, with larger
farms accounting for the bulk of production, but small
farms dominating the number of farms. Recent changes in
the structure and institutional setting of the agricultural
sector-particularly the sources of farm household income-may
influence the financing of agriculture over the next generation.
By David H. Harrington, Robert A. Hoppe, R. Neal Peterson,
David Banker, and H. Frederick Gale, Jr., in Financing
Agriculture into the Twenty-first Century, Marvin Duncan
and Jerome Stam (eds.). Boulder, CO: Westview Press, 1998.
Change in U.S. Livestock
Production, 1969-92—This report examines geographic
change in U.S. livestock production during 1969-92 from
the standpoint of industry concentration and structure.
Fed cattle and broiler production were the most highly
concentrated livestock sectors throughout the study period,
but the location of these industries remained relatively
stable. In contrast, regional shifts in hog and milk production
were substantial as hog production expanded in the Southeast
and milk production extended West. AER-754 (7/97)
Technology
Adoption Decisions in Dairy Production and the Role of
Herd Expansion—The notion that technological
change is a major determinant of structural change is
perhaps most relevant to farms that specialize in dairy
production. Fewer but larger farms now characterize the
structure of U.S. milk production. Because of the structural
implication of technological adoption, the analysis examines
the determinants of adopting capital- and management-intense
technologies, with special emphasis given to the role
of herd expansion. Agricultural and Resource Economics
Review (4/99)
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The Changing
Structure of Dairy Markets: Past, Present, Future—The
markets for fluid milk and manufactured dairy products
have changed dramatically since the 1970's. Companies
selling most or all types of dairy products have given
way to companies or subsidiaries selling one or two. Large
proprietary and cooperative firms, both U.S. and foreign-owned,
are major participants in U.S. dairy markets. This report
discusses how dairy markets reached their current state
and implications for the future. AER-757 (9/97)
U.S.
Dairy Product Markets Restructuring—Technological
advances and automation in the U.S. dairy industry have
increased productivity and improved product quality and
consistency, leading to fewer and larger farms and processing
plants. Reduced transportation costs have led to integration
of local markets into regional or even national markets,
and rapid capital flows and ownership changes have altered
the objectives of marketing and distribution firms. Dairy
cooperatives could change significantly as Federal programs
are reduced or eliminated. Members may expect cooperatives
to expand marketing activities and to more aggresively
pursue different ways of managing supplies and inventories.
AER-757 (2/98)
Agriculture and New
Agricultural Policy in the Great Plains—The Great
Plains will be affected by the 1996 farm legislation in
important ways. The transition to the new law could increase
demands for farm inputs and services in the Great Plains
by $1.2-$1.4 billion per year (3.8 to 4.6 percent)--enough
to make the difference between decline and growth for
many farm-related sectors. The residual returns to the
farm sector may decline under the 1996 law if demands
for agricultural products continue to grow at their historical
rates. But residual returns to the sector could increase
if demands grow at slightly more than their historical
rates, as is likely with the progressive implementation
of the North American Free Trade Agreement and World Trade
Organization pacts liberalizing trade in agricultural
products. Increasing the rate of growth of farm product
demands by an average of 1.4 percent per year over less
than 4 years would restore longrun net returns to the
favorable levels of the 1995 base year. Rural Development
Perspectives (6/98)
Why
U.S. Agriculture and Rural Areas have a Stake in Small
Farms—Despite a two-thirds decline in the number
of farms since 1945, small farms remain important contributors
to rural communities and U.S. agriculture. They constitute
60 percent of all farms, own 29 percent of farmland held
by farmers, and hold 39 percent of the farm sector's net
worth. Small farmers often concentrate on alternative
crops and niche markets, pioneering new areas for U.S.
agriculture. They also contribute significantly to the
rural economy as purchasers of inputs and supplies, preservers
of the rural landscape, and sources of off-farm workers
in local economies. Rural Development Perspectives (2/97)
Who Are
Retired Farm Operators?—Thanks to a change in
the nation's most comprehensive farm survey, a new report
from USDA's Economic Research Service provides the first
in-depth look at a significant segment of the U.S. farm
community—retired farm operators. AER-730 (5/96)
Retired
Farm Operators: Who Are They?—Approximately 17
percent of all farm operators considered themselves retired
in 1993. Although the farms of retired operators generate
little cash income, they are a major asset for the operators
and their households. Renting out acreage and enrolling
acreage in the Conservation Reserve Program are widely
used by retired farmers to receive income without working
their land. Rural Development Perspectives (2/96)
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Contracts and Other Marketing
and Production Arrangements
Key, Nigel and William McBride "Production Contracts
and Productivity in the U.S. Hog Sector." American
Journal of Agricultural Economics. February 2003, vol.
85, no. 1, pp. 121-133. This paper measures the impact
of contracting on partial and total factor productivity
and the production technology of U.S. hog operations.
A sample selection model accounts for the fact that unobservable
variables may be correlated with both the operators' decision
to contract and farm productivity. Results indicate that
the use of production contracts is associated with a substantial
increase in factor productivity, and represents a technological
improvement over independent production. Results also
identify determinants of farmers' decisions to contract
and other factors influencing farm productivity. (2/03)
Corn,
Soybeans, and Wheat Sold Through Marketing Contracts,
2001 Summary—According to information, from the
Agricultural Resource Management Survey, conducted by
USDA's National Agricultural Statistics Service (NASS)
in 2002, 62,300 U.S. farms utilized more than 82,100 corn,
soybean or wheat marketing contracts during 2001. The
number of marketing contracts by crop shows over 44,700
farms with corn contracts, almost 27,700 farms with soybean
contracts, and almost 9,700 farms with wheat contracts.
This report summarizes information collected about these
contracts including contract quantity, value, price received,
and terms and conditions. The report provides information
by region, farm size and farm business organization (2/03).
Agriculture
and the Rural Economy: Contracting Changes How Farms Do
Business—Increased contracting with agribusiness
has changed the way farms do business. Contracting can
potentially increase efficiency in the food system and
provide a means of quickly transmitting consumer preferences
to farms. However, farmers lose some managerial independence.
Farms of all sizes have contracts, but contracting is
more prevalent on larger farms. In some sectors, contracting
seems to have encouraged geographic shifts in production.
Rural Conditions and Trends (2/00)
Vertical Coordination
in the Pork and Poultry Industry—This report
compares current changes in vertical coordination in the
U.S. pork industry with past changes in the U.S. broiler
industry. Recent changes in the structure of the U.S.
pork industry reflect, in many ways, past changes in the
broiler industry. Production contracts and vertical integration
in the broiler industry facilitated rapid adoption of
new technology, improved quality control, assured market
outlets for broilers, and provided a steady flow of broilers
for processing. Affordable, high-quality chicken products
have contributed to continual increases in U.S. chicken
consumption, which has surpassed pork and beef on a per
capita basis. Incentives for contracting and vertical
integration in the pork industry may yield comparable
results. AER-777 (4/99)
Broiler Farms' Organization,
Management, and Performance—This study provides
a comprehensive view of the organization, management,
and financial performance of U.S. broiler farms. Using
data from USDA's Agricultural Resource Management Study
(ARMS, formerly known as the Farm Costs and Returns Survey),
we examine farm size, financial structure, household income,
management practices, and spousal participation in decision-making.
We compare broiler operations with other farming enterprises
and their earnings with that of the average U.S. household.
Because most of the 7 billion broilers produced in the
United States in 1995 were raised under contract, we also
explore the use of contracts and the effects of contracting
on the broiler sector. AIB-748 (3/99)
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Farmer's Use of Marketing
and Production Contracts—Contracts are an
integral part of the production and marketing of selected
livestock commodities, such as broilers, turkeys, eggs,
and milk. Such crops as fruit, vegetables, and sugar beets
and cane are mostly produced under contracts. In the past,
farm receipts were assumed to be distributed across all
farm families in proportion to their production. Today,
contractors receive a large share of farm receipts, formerly
assumed to go to the operator's family. Contractors typically
bear a large share of production and price risk, and earn
the majority of net income from the commodity's production.
Farmers may benefit by being able to expand their operations
more rapidly than otherwise possible--perhaps with less
debt and fewer financial risks. AER-747 (12/96)
Forward
Contracting of Inputs: A Farm-Level Analysis—Forward
contracting of factors of production is a growing activity
between the suppliers of inputs and the farmers
who use them. Forward contracting of inputs also guarantees
farmers an assured supply of inputs at a specified price.
Journal of Agribusiness (11/99)
Contracting:
More Farmers Managing to Cut Risk—Nearly $60
billion of U.S. crops and livestock--about one-third--was
grown or sold under contract in 1997, according to USDA's
Agricultural Resource Management Study, and more than
1 in 10 farm operators reported income from contractual
arrangements. Two-thirds of farms with contracts in 1997
were small family farms, but larger family farms and nonfamily
farms accounted for more than three-fourths of the value
of products grown and sold under contract. Agricultural
Outlook (2/99)
Contracting--A
Business Option for Many Farmers—Contracting
has become a common business practice on all sizes of
farms in all areas of the country. In 1993, contractual
arrangements accounted for $47 billion--almost one-third
of the U.S. farm value of production. For farmers, contracts
increase income stability and, depending on the arrangement,
permit concentration of management efforts on a particular
part of the production process. For processors, contracts
enhance uniformity of products to suit consumers, which
also lowers costs of processing, packing, and grading.
Agricultural Outlook (2/99)
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Farm Operator Households:
Income, Wellbeing, and Off-Farm Work
Income, Wealth and the
Economic Well-Being of Farm Households—This report
examines factors that affect the economic well-being of
farm operator households based on USDA's ARMS survey data.
Agricultural
Income and Finance Situation and Outlook Report—Agriculture's
contribution to the national economy in 2002 (net value
added) is currently forecast at $82.4 billion, down 9.3
percent from 2001. A wide array of stakeholders including
farm operator households, landlords, lenders and contractors
provide inputs and services and earn a share of agriculture's
output. This report also presents information on farm
income and wealth including farm operator household income
by the ERS farm typology and makes the case that farm
household well-being depends on both on-farm and off-farm
activities. AIS-79 (9/02)
A
Temporal Comparison of Sources of Variability in Farm
Household Income—This study, based on data from
1995 and 1999, examines how much of the variability in
total farm household income can be attributed to variability
in net farm incomeand variability in off-farm income sources
(such as income from off-farm business, wages and salaries,
interest and dividends, and other off-farm income). Comparisons
are also made between participants and non-participants
in Federal commodity programs. Agricultural Finance Review
(3/02)
Farm
Household Income and Wealth: Farm Households Are Often
Dual-Career—As with nonfarm households, many
farm households pursue more than one career. Decisions
about how to allocate labor, management skills, and other
resources between farm and nonfarm employment affect the
level and sources of income for farm households. Even
households with very large farms are often dual-career.
About two-fifths of households operating very large farms
are dual-career with a spouse working off the farm and
an operator farming, largely without off-farm work. Rural
America, (7/01)
Financial
Well-Being of Small Farm Households Depends on the Health
of Rural Economies—
The number of farms has decreased since the 1930s, and
average size, measured in acres, has increased. Most farms
are small, and more than half have sales less than $10,000.
As a result, households operating small farms rely heavily
on off-farm income from the local economy. At the other
extreme, some farms have sales in the millions. These
and other differences present challenges when analyzing
the economic structure of agriculture and developing farm
policy recommendations. Rural America (5/01)
Choosing
to Work Off Farm—For most farm families, off-farm
employment is an important source of additional income,
and can also be used to mitigate the risks associated
with farming activities. Total household income tends
to be higher when off-farm wages can be counted on, most
notably on farms with sales less than $250,000. Age and
the educational level of farm operators are factors that
can affect the decision and ability to work off farm.
Rural Development Perspectives (5/99)
Sources
and Levels of Farm Household Income Vary by Type of Farm—Average
farm operator household income was about equal to that
of all U.S. households in 1996. Only 16 percent of farm
households' income came from farming. But, the sources
and level of farm household income varied considerably,
depending on the type of farm operated. The wealth of
farm households, however, consisted largely of their farms,
regardless of the type of farm they operated. Rural Conditions
and Trends (2/99)
Farm
Operator Household Income and Wealth Compare Favorably
With All U.S. Households—On average, farm operator
household income was about the same as the average for
all U.S. households in 1995. The average farm operator
household received its income from various sources, and
only 11 percent was from the farm. Households with commercial
farms, however, received about half of their income from
farming. On average, the net worth of farm operator households
fell between those of all U.S. households and the households
of the selfemployed. Wealth of farm households consisted
mostly of their farms, regardless of the size of the farm
they operated. Rural Conditions and Trends (10/97)
Farm
Operator Household Income Compares Favorably With All
U.S. Households, But Varies by Geography and Size of Farm—On
average, farm operator household income was about the
same as the average for all U.S. households in 1994. The
average farm operator household received its income from
various sources, but only 10 percent was from the farm.
Commercial farm households, however, received half of
their income from farming. Sources of income also varied
geographically, reflecting differences in the concentration
of commercial farms. Rural Conditions and Trends (2/97)
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Limited Resource and Minority-Operated
Farms
Minority
& Women Farmers in the U.S.—Report
describes the characteristics of minority and women farms
in terms of farm size, sales, specialization, operator
age, tenure, and regional concentration. Examines how
the share of minority owned farms has changed over time.
Discusses the Civil Rights Action Team's report on how
the USDA can address the needs of minority and women farmers.
Agricultural Outlook (5/98)
Characteristics and
Risk Management Needs of Limited-Resource and Socially
Disadvantaged Farmers—Small U.S. farms and
those run by socially disadvantaged minority operators
tend not to purchase insurance or to participate in insurance-type
programs operated by USDA. This report traces the lack
of use of such risk management measures to several characteristics
of such farmers, who include females, blacks, American
Indians, Asian/Pacific Islanders, and operators of Spanish
origin. These farmers tend, more than the typical U.S.
farm, to raise livestock rather than crops, and there
are no government-sponsored insurance-type programs for
livestock. AIB-733 (4/97)
Limited-Resource
Farmers: Their Risk Management Needs—ERS research
on the risk management needs of farmers with limited-resources
indicates that these farmers tend not to purchase crop
insurance nor to participate in current insurance-type
programs operated by USDA. Program changes and additions
currently under study, especially coverage of additional
crops and expanded outreach and educational efforts by
USDA's Risk Management Agency, may prompt limited-resource
farmers to make greater use of crop insurance and other
risk management strategies. Agricultural Outlook (5/97)
Factors
Affecting the Profitability of Limited-Resource and Other
Small Farms—Small farms as defined by the National
Commission on Small Farms constitute 90 percent of U.S.
farms, contain 67 percent of farm land, and hold 77 percent
of farm sector net worth. They also contribute significantly
to rural economies as purchasers of inputs and supplies
and as preservers of the rural landscape. Under the 1996
Federal Agriculture Improvement and Reform Act (FAIR,
1996) farmers face greater risk of income volatility because
of the likelihood of increased volatility in the prices
they receive. An understanding of which farm and operator
characteristics influence profitability would be useful
to operators of limited-resource farms and other small
farms who wish to make changes in their operations in
order to increase profit. Agricultural Finance Review
(1/99)
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