Farm Structure: Questions and Answers

A. In farm structure discussions, concentration of production is now a bigger issue than the declining number of farms. Census of agriculture data show that farm production has become more concentrated over time. For example, 17 percent of U.S. farms produced 50 percent of farm sales in 1900, compared with only 2 percent of farms in 1997. On the other hand, the 17-percent figure for 1900 also indicates that some concentration already existed a century ago. Production was not evenly distributed across all farms in 1900.

Examining concentration in other industries provides perspective on concentration in farm production. Farming remains much less concentrated than other industries. The 2 percent of U.S. farms accounting for half of agricultural sales in 1997 actually includes 46,100 farm operations, far too many for any individual farmer to hold much market power. In most industries, concentration is not considered a policy issue until a small number of firms—such as two to four—comes to dominate the industry.

Reference

Stanton, B.F. "Changes in Farm Size and Structure in American Agriculture in the Twentieth Century," Size, Structure, and the Changing Face of American Agriculture. Arne Hallam (ed.), Boulder, CO: Westview Press, 1993.