Q. What are emergent adaptive small farms?
A. There is tremendous turnover among
very small farms. Many operators view farming as an avocation—they
have no intention of trying to develop a business. Between
7 and 8 percent leave farming each year, to be replaced
by new entrants. As a result, while we observe about 1
million very small farms in any given agricultural census,
very few of those operators are attempting to build a
business, and even fewer are attempting to build a business
in high-value crops. Identifying those farms therefore
takes some initial data search efforts.
We begin with the Census of Agriculture Longitudinal file. The USDA’s
National Agricultural Statistics Service (NASS) constructed the
longitudinal data file by linking unique farm records across five
agricultural censuses over the 20-year period, 1978-97. The file
contains 4.5 million observations, and covers any farm in business
during the period.
We wanted to investigate growth patterns among farms that started
very small, but that grew into significant businesses, and that
did so in high-value crops. To do that, we identified all farms
in the sample that had sales of less than $10,000 in 1982, but that
were still in business, with sales of more than $10,000, in 1997
and that focused on high-value crops (sales more than $500 an acre).
Why start in 1982 instead of 1978? Some farms with very low sales
may be experiencing unusual circumstances, such as an unusual production
year or a disaster. We wanted to ensure that we had identified farms
that were truly starting small, so we compared 1978 and 1982 records.
We dropped those farms with 1978 sales above $10,000, and hence
focused on very small 1982 farms that were also very small, or that
did not exist, in 1978. There were 5,431 such farms in the longitudinal
file, and table 1 describes
their growth patterns over time.
Most of those farms remained fairly small—4,787 (88 percent)
had 1997 sales below $100,000, with most of them near $10,000. But
we were able to identify 644 farms with high-value crop sales in
excess of $100,000 in 1997, though they had started very small in
1978-82. We call these operations emergent adaptive farms. Some
of these farms grew to be quite significant businesses—97
had sales of at least $500,000, and 34 of those had sales of at
least $1 million, in 1997. Most took some time to grow. While 11
exploded from 1982 sales less than $10,000 to more than $500,000
in 1987 (suggesting major initial financial investment), that was
very unusual. Most farms that grew to be very large by 1997 grew
gradually, through a series of smaller investments and expansions.
What Do Emergent Adaptive Farms Produce and How Do They
Grow?
These farms pursued a wide variety of operations (table
2). Five different sectors—grape vineyards, nursery and
tree products, floriculture, tree nuts, and other noncitrus fruit
(e.g., apricots, dates, peaches, prunes)—attracted 357 of
the farms, but the remaining 45 percent were spread across a wide
variety of sectors. Similarly, the five most important sectors for
sales accounted for 57 percent of emergent farms’ sales, with
the rest spread over many sectors.
These farms all started very small, generating little net income
for their operators, who hence often depended on off-farm jobs for
incomes while growing the farm business.
Figure 1 details changes in off-farm work among operators. In 1987,
nearly two-fifths of operators reported that they did no off-farm
work while a similar proportion reported working at least 200 days
of off-farm work—essentially, a full-time off-farm job. As
the farm grew, more operators shifted to a full-time farm commitment;
by 1997, 60 percent of operators reported that they performed no
off-farm work, while just 16 percent continued to work at least
200 days a year off the farm.
Another indicator of how emergent farm operations adjust their work
focus over time is the response to a census question on principle
occupation. In 1982, 46 percent of operators chose “farming/ranching”
as their principle occupation, broadly consistent with their response
to the off-farm work question the same year, but still a strikingly
high response in view of the limited incomes that respondents were
drawing from farming in 1982 (recall that all of them had sales
of less than $10,000). Over time, the fraction that chose “farming/ranching”
rose sharply, to 76 percent by 1997.
As their business became larger and more complex, emergent farm
operators began to change the farm’s legal organization. By
1997, about one in seven (14 percent) were organized as corporations,
up from 6 percent in 1982.
Where Do Emergent Adaptive Farms Operate?
About a third of these farms operate in California, and they account
for just over a third (35 percent) of sales. The next three most
important States (Florida, Washington, and Oregon) are home to about
20 percent of the farms, as well as 20 percent of total sales. That
these four States comprise the primary locations is not surprising,
given the nature of the farms’ businesses. But the remaining
farms are spread widely across the country (table
3). Some operations benefit from proximity to buyers (with higher
concentrations in metro areas); others are best suited to specific
climactic conditions, while other products may be more dependent
on entrepreneurship than specific locational factors for success.
A few operators took up farming as second careers after retirement—in
fact 30 operators were 65 or older in 1982, at the beginning of
the businesses’ growth, and several of them expanded their
farms into substantial businesses, with sales of over a million
dollars by 1997. But most were relatively young; almost a third
were less than 35 years old in 1982, and 61 percent were under 45
(the mean age of all farm operators in 1982 was 50).
Implications
Agricultural production is increasingly shifting to large farms,
and that shift is occurring in almost all commodity categories.
Yet, that does not imply that entry into farming now requires large
initial investments and a large beginning size. Picking a single
year, and focusing on one large segment of farming, we identified
a number of farms that started as very small enterprises and grew
into significant commercial entities. The farms produced a wide
variety of specific products and were spread over many locations,
although for this segment (high-value crops), market access and
climactic needs were important. Growth usually occurred gradually,
and only rarely did such farms make a single large jump in size.
Off-farm work provided an important source of support for many operators
while they expanded their businesses.
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