Q. Who are small farmers and what do they
contribute?
A. To some extent, the cutoff between
small and large farms is arbitrary. In the past,
ERS frequently used $50,000 in agricultural sales as the
delineation between large and small, “commercial” and “noncommercial”
farms.
Cutoffs other than $50,000 are also used, however. The
National Commission on Small Farms, established in 1997 by the
Secretary of Agriculture, used $250,000 in gross sales as its cutoff,
high enough to include more farm families of modest income who may
need or want to improve their net farm income. As a result,
the Commission's cutoff includes 9 out of 10 U.S. farms.
In response to the Commission, ERS developed a farm typology to
divide small farms—as defined by the Commission—into smaller,
more homogeneous, mutually exclusive groups based on farm and operator
characteristics. Examining the farm typology gives a detailed
picture of small farmers today.
The Typology
The farm typology focuses
on "family farms," farms organized as proprietorships, partnerships,
and family corporations. Family farms exclude farms organized
as nonfamily corporations or cooperatives, as well as farms with hired
managers. Family farms are closely held (legally controlled) by their
operator and the operator's household (alternative definitions of family farms).
The first group identified by the typology is limited-resource
farms, or family farms with gross sales less than $100,000,
farm assets less than $150,000, and household income less than $20,000.
Identifying this group is critical because USDA may need to develop
special efforts to serve limited-resource farmers. Unlike farmers
in the other groups of small farms, limited-resource farmers are
not restricted to one major occupation. They may report farming,
a nonfarm occupation, or retirement as their major occupation.
The remaining small family farms are classified into one of three
additional groups based on the major occupation of the operators—the
occupation at which they spend more than 50 percent of their work
time.
- Retirement farms—Small farms whose operators report
they are retired. The operators may have had either a farm
or a nonfarm major occupation before retirement. However,
they are still engaged enough in farming to produce at least $1,000
of farm products, the minimum for an establishment to be classified
as a farm. For many of these farmers, the status of retirement
programs and the return on savings and investments are more important
than the state of the agricultural economy.
- Residential/lifestyle farms—Small farms whose operators
report they have a major occupation other than farming.
For these operators, the health of the off-farm economy is critical.
Some operators in this group may view their farms strictly as
a hobby that provides a farm lifestyle. For others,
the farm provides a residence and may supplement their off-farm
income. Some may hope to eventually farm full-time.
- Farming-occupation farms—Small farms whose operators
report farming as their major occupation. Although the operator
spends most of his or her time farming, the household may receive
substantial income from off-farm work by other household members
and part-time off-farm work by the operator. Thus, both
the farm and nonfarm economy may be important to these operators.
Larger and smaller farms in this group differ in their characteristics,
so the group is further divided into two additional subgroups
based on gross sales:
- Low-sales farms. Farming occupation farms with
sales less than $100,000.
- High-sales farms. Farming occupation farms with
sales between $100,000 and $249,999.
Three additional groups of farms were added to the typology to
ensure that it covers all farms. Large family farms
have sales between $250,000 and $499,999, and very large family
farms have sales of $500,000 or more. Finally, the nonfamily
farms group includes farms organized as nonfamily corporations
or cooperatives and farms with hired managers.
Households operating high-sales small farms, large family farms,
and very large family farms all received substantial income, on
average, from farming activities (household
income by typology groups). In contrast, households operating
limited-resource farms, retirement, residential/lifestyle, and low-sales
small farms received practically all their income from off-farm
sources, on average.
Output, Assets, and Land
Although most U.S. farms are classified as small family farms, agricultural
production is highly concentrated among large family farms, very
large family farms, and nonfamily farms. These three groups
together made up 8 percent of all farms in 1999, but accounted for
68 percent of U.S. production of agricultural products (share
of farms and production). Some small farms also made a
substantial contribution to production. Small farms with high
sales were responsible for 16 percent of the value of production,
more than the 14-percent share contributed by large farms.
Small farms with low sales accounted for another 8 percent of production.
At the other extreme, 62 percent of all U.S. farms were in the
limited-resource, retirement, and residential/lifestyle categories,
but these farms produced only 8 percent of farm output in 1999.
Most farm businesses are very small, because only $1,000 of farm
sales is necessary to be classified as a farm according to the official
U.S. farm definition.
Although the five small farm groups accounted for only 32 percent
of total agricultural production, they collectively held 72 percent
of farm assets, including 74 percent of the land (measured in acres)
owned by farms (share of
assets). As custodians and managers of a large share of farmland,
small farms play a major role in natural resource and environmental
policy. For example, small farms accounted for 87 percent of the
land in the Conservation Reserve Program or Wetlands Reserve Programs
(CRP and WRP).
For further details, see America's
Diverse Family Farms: Assorted Sizes, Types, and Situations.
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