Q. Are family farms disappearing?
A. The news media frequently express concern over
a perceived increase in the number of corporate farms and
a corresponding decline in family farms. But data from the
census of agriculture show that family farms are holding
their own in terms of both share of farm numbers and share
of farm product sales. Census data also indicate that most
nonfamily-held farm corporations are still small, with 10
or fewer stockholders.
The census of agriculture, conducted every 5 years, classifies
farms into four main categories according to their business organization:
individual or family (sole proprietorship); partnership; corporation
(family-held and nonfamily-held); and "other" (cooperative, estate
or trust, and institutional). The first category is somewhat misleading,
since family farms need not be organized exclusively as proprietorships;
partnerships and corporations can also be closely held by families.
For example, two brothers or a father and a son may form a partnership.
A family corporation may be formed with siblings as stockholders,
allowing some siblings to farm while more distant siblings retain
an interest in the farm.
Production by family farms, moreover, has been shifting from proprietorships
to partnerships and family corporations. Commercial farms today
may require more management, labor, and assets than can be provided
by a single family, and partnerships and corporations allow farm
families to pool resources. Nevertheless, as of 1997, sole proprietorships
remained the dominant form of farm ownership (86 percent of all
farms) and the largest generator of sales (53 percent of total farm
product sales) (farm organization,
1978-97).
Family farms are broadly defined here to include partnerships and
family-held corporations, as well as sole proprietorships. Census
of agriculture data confirm that family-owned farms are not losing
their share of U.S. farm product sales in relation to nonfamily
corporations. Nonfamily corporations comprised a relatively stable
and minor share (0.3 to 0.4 percent) of total U.S. farm numbers
between 1978 and 1997, while their share of total farm product sales
actually fell, from 6.5 percent in 1978 and 1982 to 5.6 percent
in 1997 (farm organization,
1978-97).
Family corporations, in contrast, increased their share of farm
numbers (from 2 to 4 percent) and product sales (from 15 to 23 percent)
during 1978-97. Partnerships' share of farm numbers fell, but their
share of sales grew. Only the sole proprietorship category registered
a decrease in the share of both farm numbers and product sales (farm
organization, 1978-97).
Despite limited changes in organization, changes have occurred in
the way farm production and marketing is conducted, with increasing
use of contracting and vertical integration in recent years. This
shift is often referred to as the industrialization
of agriculture.
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