Overview
Farm structure underlies the efficiency and competitiveness
of the farm sector, the well-being of farm households,
the design of public policies, and the nature of rural
areas. Farm structure
covers a variety of topics, including the number and size
of farms, concentration of production, tenure, farm organization,
business arrangements (including contractual agreements),
and the characteristics of farmers and their households.
Farm structure both affects and is affected by public
policy and the economy at all levels. The ERS research
program in this area seeks to identify and analyze the
key factors affecting farm structure. It includes a descriptive
component focused on the development of appropriate information
to define the elements of structure, to measure those
elements, and to summarize changes in structure through
time. More overview...
Features
 Understanding
U.S. Farm Exits—The rate at which U.S. farms go out of business,
or exit farming, is about 9 or 10 percent per year, comparable to exit
rates for nonfarm small businesses in the United States. The probability
of exit is higher for recent entrants than for older, more established
farms. Farms operated by Blacks are more likely to exit than those operated
by Whites, but the gap between Black and White exit probabilities has
declined substantially since the 1980s. Exit probabilities differ by
specialization, with beef farms less likely to exit than cash grain
or hog farms.
 Structure
and Finances of U.S. Farms: Family Farm Report, 2007 Edition.
This report presents comprehensive information on family
and nonfamily farms and important trends in farming,
operator household income, farm performance, and contracting.
Most farms are family farms, and small family farms
account for most farms but produce a modest share of
farm output. A companion
brochure summarizes the report's findings. See also the related
Amber Waves feature on The Importance of Farm Program Payments to Farm Households
Growing Farm Size and the
Distribution of Farm Payments—Changes in U.S.
farm structure may have wide-ranging effects on the
distribution of benefits from farm programs. We examine
one specific development: shifts of production to larger
farms have driven important changes in the distribution
of government commodity payments, shifting them to
much higher-income households. Since the change in
farm structure appears to be ongoing, commodity payments
will likely, under current policies, continue to shift
to higher income households.
Agricultural
Contracting: Trading Autonomy for Risk Reduction—While
the share of farms that contract has remained steady since
at least 1991, the share of production under contract
has grown from 11 percent in 1969 to 39 percent in 2003.
For farm operators, contracts provide benefits from reduced
risks, but also result in loss of managerial control and
reduced autonomy.
Agricultural
Contracting Update—Marketing and production
contracts cover an increasing share of the value of U.S.
agricultural production, up to 39 percent in 2003. Large
farms are far more likely to contract than small farms,
over half of the value of production from farms with at
least $1 million in sales under contract.
Production
Shifting to Very Large Family Farms—U.S. farm
production is shifting to larger operations at the same
time that people are continuing to be involved with part-time,
small-scale farming operations. Small family farms still
account for most of the Nation's farms, but their
share of the value of U.S. agricultural production fell
by nearly a third between 1993 and 2003. The number of
very large family farms rose by nearly half over the period,
while their share of production grew from 33 to 44 percent.
How
Do U.S. Farmers Plan for Retirement?—Retirement
and succession planning are of considerable importance
to farm households and there are good reasons to believe
that they are affected by savings and retirement policies
in ways that are different from the rest of the Nation's
households. For example, compared with the U.S. labor
force, farm operators are considerably older. In addition
to working longer past traditional retirement age, farm
operator households tend to have several income sources
and different forms of wealth, as compared with the general
population. While fewer farm operators are covered by
employer-sponsored pensions than are nonfarmers, a majority
of farm operators save from current income on a regular
basis and have accumulated diversified financial portfolios,
including individual retirement savings.
Small
Farms Can Grow Into Large Enterprises—Today's
farmers are responding to challenges-competition with
global markets, facing the need for new alternative markets
where traditional markets have declined, and consumer
demands for fresher and safer products. Smaller farms,
in particular, may have more difficulty in adapting to
the changing marketplace because of, among other things,
lack of capital and other resources. Yet, as a recent
ERS analysis shows, some smaller farms manage to grow
into large commercial operations.
Growing
Farm Size and the Distribution of Commodity Program Payments—Structural
changes within the farm sector can alter how benefits
from government commodity programs are distributed, even
without changes in government policy. For instance, agricultural
production is shifting toward larger farms. Hence, given
that commodity program payments are proportional to production
of certain commodities, these program payments are shifting
to the largest farms.
Farm
Income Less Important to Most Corn Farm Households—The
relative importance of the different components of farm
household income (farm, off-farm, government payments)
varies by farm type, but off-farm income is most important
for a majority of farm households. This implies that the
well-being of most farm households depends on economic
conditions and opportunities off-farm much more than on
factors affecting the return to farming.
One
Farm, One Operator? Not on the Largest Farms—Today's
commercial farms often require more management and labor
than an individual can provide. Some farms have more than
one operator, defined as anyone who makes day-to-day-decisions
about the farm business. Understanding multiple-operator
farms is important, because they produce a large share
of agricultural output. Of the nearly 700,000 multiple
operator farms, only 12 percent are multiple-generation
operations. Nevertheless, secondary operators on multiple-generation
farms could at least provide "replacement operators&"
for the larger commercial-sized farms producing the bulk
of farm products.
Contracts, Markets,
and Prices: Organizing the Production and Use of Agricultural
Commodities—Production and marketing contracts
govern 36 percent of the value of U.S. agricultural
production, up from 12 percent in 1969. Contracts
are now the primary method of handling sales of many
livestock commodities and of major crops. Use of
contracts is closely related to farm size. For producers,
contracting can reduce income risks of price and
production variability, ensure market access, and
provide higher returns for providing differentiated
farm products. For processors and other buyers, vertical
coordination through contracting is a way to ensure
the flow of products and to obtain differentiated
products, ensure traceability for health concerns,
and guarantee certain methods of production.
Recommended Readings
Structure and Finances
of U.S. Farms: 2005 Family Farm Report—This
report presents comprehensive information on family
and nonfamily farms and important trends in farming,
operator household income, farm performance, and contracting.
Most farms are family farms, and small family farms
account for most farms but produce a modest share of
farm output. Farm households receive most of their
income from off-farm sources. A companion
brochure summarizes the report's findings.
Characteristics and Production
Costs—This series of reports examines how
production costs vary among producers of different
commodities, including production practices, input
use levels (i.e., the technology set), and farm operator/structural
characteristics. The reports also illustrate the
degree to which costs vary for producers of different
commodities and indicate possible reasons for the
variation. Characteristics and production costs are
examined for low- and high-cost producers of each
commodity, and producers of varying size, region,
and typology classification:
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. From the Agriculture Fact
Book 2001-2002.
See all recommended readings...
Questions and Answers
Commonly asked questions
about farm structure,
farm characteristics
(including off-farm income, small and minority farmers),
agricultural contracting,
and corporate farming.
Recommended Data Products
 Farm
Business and Household Survey Data: Customized Data
Summaries from ARMS—Use this new dynamic
web-based data delivery tool to learn about agriculture
online: farming practices, commodity production costs
and returns, the economics of the farm business, the
structure of American farming, and the characteristics
of the American farm household. Get tailored reporting
on agricultural production technology, farm business
viability, and the structure of U.S. agriculture from
the very latest information gleaned from ARMS-including,
for the first time, data for 15 selected States as
well as the nation as a whole. Access all ARMS
data, including that previously provided in the Farm
Financial Management and the Crop Production Practices
data products.
Deriving Operator
Household Income, recent years—This spreadsheet
provides the data used to derive recent as well as forecasted
U.S. average income to farm operator households.
Historic
Data on Farm Operator Household Income—Operator
household income data prior to 1996, including a time
series back to 1960.
Related Briefing Rooms
Related Links
Trends
in U.S. Agriculture—Charts and supporting data
highlighting trends in farm numbers, and values, commodity
production from the early 1900s.
History
of American Agriculture—A poster highlighting
U.S. agricultural history back to colonial times.
National Agricultural
Statistics Service—A wide range of survey-based
information about U.S. agriculture.
Census of Agriculture—Detailed
data on farm operations in the United States, conducted
every 5 years, including commodity production, inventory,
land operated, income, expenses, farm assets, and operator
and operation characteristics. Data are available electronically
at the U.S., State, and county levels.
See all related links...
Glossary
Check the glossary for explanations
of the economic terms and concepts used throughout the
briefing room.
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