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Cropland has shifted to larger farms over the last three decades

Thursday, March 15, 2018

Agricultural production has shifted to much larger farming operations over the last three decades. In 1987, more than half (57 percent) of all U.S. cropland was operated by midsize farms that had between 100 and 999 acres of cropland. The largest farms with at least 2,000 acres operated only 15 percent of U.S. cropland that year. By 2012, midsize farms held 36 percent of cropland, the same share as that held by the largest farms. That shift occurred persistently over time, as the share held by the largest farms increased in each Census of Agriculture after 1987—in 1992, 1997, 2002, 2007, and 2012—while the share held by midsize farms fell in each census. By comparison, the share of cropland held by the smallest farms with less than 100 acres changed little over time, remaining at about 8 percent. Consolidation can occur through shifts in ownership, as operators of larger farms purchase land from retiring operators of midsize farms. However, most cropland is rented, and farms frequently expand by renting more cropland, often from retired farmers and their relatives. This chart appears in the ERS report, Three Decades of Consolidation in U.S. Agriculture, released March 2018.

Energy consumption in agriculture increased in 2016, driven mainly by diesel and fertilizer use

Tuesday, March 13, 2018

In 2016, the agricultural sector consumed 1,872 trillion Btu of energy, accounting for about 1.9 percent of total U.S. primary energy consumption. Farms consume energy in many forms, mainly diesel (44 percent of direct energy consumption), electricity (24 percent), natural gas (13 percent), gasoline (11 percent), and liquefied petroleum gas (7 percent). Diesel and, to a lesser extent, gasoline are used to power farm machinery. Electricity is used mainly for irrigation, cooling, and lighting. Natural gas and LP gas are used in heating and grain drying. Large amounts of natural gas are required in the manufacturing of fertilizer and pesticide, so these amounts are categorized as indirect energy consumption on farms. Overall, about three-fifths of energy in 2016 used in the agricultural sector was consumed directly on-farm, while two-fifths were consumed indirectly in the form of fertilizer and pesticides. Recent increases in diesel and fertilizer consumption come in response to declining oil and natural gas prices. From 2012 to 2015, agriculture became more energy intensive, as energy consumption grew over 10 percent compared with about 6 percent growth in agricultural output. This chart updates data found in the ERS report, Trends in U.S. Agriculture's Consumption and Production of Energy: Renewable Power, Shale Energy, and Cellulosic Biomass, released August 2016.

U.S. agricultural productivity continued to grow over time, while the real price of agricultural outputs tended to decline

Tuesday, March 6, 2018

Productivity growth in the U.S. farm sector has implications for both U.S. and global food markets. The United States is one of the largest consumers and producers in world agricultural commodity markets. Slowing productivity growth that fails to keep pace with increasing food demand may lead to rising food prices. It may also put pressure on low-income households, as these households spend a greater share of their income on food. Transitory events—such as energy shocks or supply shortages due to bad weather—may cause agricultural commodity prices to rise, the long-term growth trend in U.S. agricultural productivity has enhanced food security and benefited consumers by reducing the real (inflation-adjusted) price of agricultural outputs over time. Between 1948 and 2015, total factor productivity increased by 152 percent, while real agricultural output price declined by nearly 65 percent. This chart appears in the March 2018 Amber Waves data feature, "Agricultural Productivity Growth in the United States: 1948-2015."

U.S. farm real estate appreciation has slowed following a decline in U.S. net cash farm income

Friday, February 23, 2018

Farm real estate (including land and the structures on the land) accounts for over 80 percent of farm sector assets and represents a significant investment for many farms. U.S. farm real estate values have been rising since the farm crisis of the 1980s, reaching record high values in 2015. Beginning in the mid-2000s, higher farm incomes and lower interest rates contributed to rapid appreciation. Nationally, average per-acre farm real estate values more than doubled when adjusted for inflation, from $1,483 in 2000 to $3,060 in 2015. Cropland appreciated faster than pastureland (reflecting the relatively steep rise in grain and oilseed commodity prices), while farmland in the Midwest appreciated faster than other areas of the country. However, farmland appreciation slowed considerably from 2015 to 2016, with some regions experiencing small declines caused by falling commodity prices and net cash farm income. This chart appears in the February 2018 ERS report Farmland Values, Land Ownership, and Returns to Farmland, 2000-2016.

Off-farm income contributes significantly to households operating farms of all sizes

Friday, January 26, 2018

Most farm households rely on off-farm income, such as wages from a job outside the farm. Typically, only commercial farm households receive a substantial share of their income from the farm. For example, in 2016, the median farm income was negative $2,008 for households operating residence farms (where the operator primarily works off-farm or is retired from farming), while median off-farm income was $83,400. Households operating intermediate farms (smaller farms where the operator’s occupation is farming) also earn the bulk of their income from off-farm sources. In contrast, households operating commercial farms—where gross cash income is $350,000 or more—derive most of their income from the farm (nearly $144,000 in 2016). Changes to their total household income follow profits from farming. Most agricultural production takes place on commercial farms. In 2016, residential and intermediate farms together accounted for over 90 percent of U.S. family farms and one-quarter of the value of production. By comparison, commercial farms accounted for 9 percent of family farms and three-quarters of production. This chart is based on data from the ERS data product Farm Household Income and Characteristics, updated November 2017.

The share of indemnities from Federal crop insurance for each farm type roughly mirrors its share of harvested cropland

Wednesday, January 24, 2018

In recent Farm Acts, emphasis has shifted to a greater reliance on risk management through insurance and less reliance on income support through Government payments from commodity programs. Indemnities—payments from Federal crop insurance to compensate for losses—are roughly proportional to acres of harvested cropland. In 2016, midsize family farms and large family farms together accounted for 66 percent of indemnities and 61 percent of harvested cropland. These farms’ high share of indemnities reflects their high participation in Federal crop insurance. About two-thirds of midsize farms and three-fourths of large farms participated in Federal crop insurance, compared with only one-sixth of all U.S. farms. Grain farms—the most common specialization among midsize and large family farms—accounted for 67 percent of all participants in Federal crop insurance and 64 percent of harvested cropland in 2016. This chart appears in the ERS report America’s Diverse Family Farms, 2017 Edition, released December 2017.

Intellectual property rights for new plant varieties have expanded

Monday, January 8, 2018

Intellectual property rights are intended to offer incentives for innovation by protecting new inventions from imitation and competition. When the modern U.S. Patent and Trademark Office was established in 1836, new plant varieties were considered products of nature and, therefore, not eligible for protection under any form of intellectual property. In 1930, asexually reproducing plants were the first to receive protection through plant patents, which have been issued primarily for fruits, tree nuts, and horticultural species. The remainder of the plant kingdom, including a broad range of commercial crops, became eligible for protection in 1970 with the introduction of plant variety protection certificates (PVPCs). However, PVPCs had exemptions for farmers to save seeds and for research uses. Full patent protection (without these exemptions) arrived in 1980 with the U.S. Supreme Court decision Diamond v. Chakrabarty. This ruling extended utility patent protection—the type of protection provided to most inventions in other areas—to plants. Despite being available for the least amount of time, annual utility patent grants for plant cultivars and lines have rapidly overtaken PVPCs and reached similar levels as plant patents. The rapid rise of utility patents mirrored the rapid rise in private research and development in the seed and agricultural biotech sector over a similar period. This chart updates data found in the ERS report Agricultural Resources and Environmental Indicators, 2006 Edition.

Share of production by type of farm varies across commodities, 2016

Monday, December 18, 2017

Farm production has been shifting to larger farms for many years, but this trend varies by commodity. In 2016, over 45 percent of U.S. farm production occurred on the 3 percent of U.S. farms classified as large-scale family farms—with at least $1 million in annual gross cash farm income before expenses (GCFI). These farms accounted for half of hog production and two-thirds of the production of both dairy and high-value crops like fruits and vegetables. Large-scale farms also contributed 60 percent of cotton’s value of production. By comparison, small family farms—with less than $350,000 GCFI—accounted for 90 percent of U.S. farms, but contributed less than 23 percent to U.S. farm production. These small farms, however, contributed larger shares of production for poultry (59 percent) and hay (50 percent). Nonfamily farms, which accounted for 1 percent of U.S. farms, contributed about 10 percent of U.S. farm production. This chart appears in the ERS report America’s Diverse Family Farms, 2017 Edition, released December 2017.

Share of land used for agricultural purposes has decreased 11 percentage points since 1949

Friday, December 8, 2017

The U.S. land area totals just under 2.3 billion acres. Land used in agriculture has become less common over time, declining from 63 percent in 1949 to 52 percent in 2012 (the latest data available). Gradual declines have occurred in cropland, while grazed forestland has decreased more rapidly. In 2012, 392 million acres of agricultural land were in cropland (18 percent less than in 1949), 655 million acres were in pasture and range (4 percent more), 130 million acres were in grazed forestland (59 percent less), and 8 million acres were in farmsteads and farm roads (45 percent less). In contrast, land used for rural parks and wilderness (included in nonagricultural special uses) has increased by 226 million acres since 1949, contributing to the relative growth in nonagricultural land use over time. Urban land, which represents a relatively small share of the U.S. land base, has nearly tripled in area since 1949 to accommodate economic and population growth. This chart appears in the December 2017 Amber Waves data feature, "A Primer on Land Use in the United States."

Farm sector profits forecast to stabilize in 2017

Wednesday, November 29, 2017

After several years of decline, net farm income in 2017 for the U.S. farm sector as a whole is forecast to be relatively unchanged at $63.2 billion in inflation-adjusted terms (up about $0.5 billion, or 0.8 percent), while inflation-adjusted U.S. net cash farm income is forecast to rise almost $2.0 billion (2.1 percent) to $96.9 billion. Both profitability measures remain below their 2000-16 averages, which included substantial increases in crop and animal/animal product cash receipts from 2010 to 2013. Net cash farm income and net farm income are two conventional measures of farm sector profitability. Net cash farm income measures cash receipts from farming as well as cash farm-related income, including government payments, minus cash expenses. Net farm income is a more comprehensive measure that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income. Find additional information and analysis on ERS’s Farm Sector Income and Finances topic page, released November 29, 2017.

Cropland is shifting to larger farms, even as average size changes little

Friday, November 24, 2017

Errata: On November 24, 2017, the Chart of Note article “Cropland is shifting to larger farms, even as average size changes little” was reposted to correct a mislabeling in the chart’s legend.

U.S. cropland has shifted to larger farms over time. However, between 1982 and 2012, the average (or mean) acres of cropland and harvested cropland changed little. Acreage averages have been stable because the largest and smallest crop farms grew in number, while farms in the middle declined. With only small changes in total cropland and total crop farms, average acreages changed minimally. The trend in midpoint acreage—at which half of all cropland acres are on farms with more cropland than the midpoint and half are on farms with less—captures the consolidation of cropland better than average acreage. As cropland shifts to larger farms, the midpoint increases. Between 1982 and 2012, the midpoint acreage for both cropland and harvested cropland roughly doubled to about 1,200 acres each. This shift was aided by technologies that allowed a single farmer or farm household to farm more acres. This chart appears in the ERS report America's Diverse Family Farms, 2016 Edition, released December 2016.

Productivity has driven the growth in U.S. agricultural output

Tuesday, November 14, 2017

Technological developments in agriculture have been influential in driving changes in the farm sector. Innovations in animal and crop genetics, chemicals, equipment, and farm organization have enabled continuing output growth while using less inputs. As a result, even as the amount of land and labor used in farming declined, total agricultural output more than doubled between 1948 and 2015. During this period, agricultural output grew at an average annual rate of 1.48 percent, compared to 0.1 percent for total farm inputs (including land, labor, machinery, and intermediate goods). The major source of output growth is the increase in agricultural productivity, as measured by total factor productivity (TFP)—the difference between the growth of aggregate output and growth of aggregate inputs. Between 1948 and 2015, TFP grew at an average annual rate of 1.38 percent, accounting for more than 90 percent of output growth over that period. This chart appears in the ERS data product Agricultural Productivity in the U.S., updated October 2017.

Rented U.S. farmland was concentrated in the Corn Belt, Northern Plains, and Delta States

Tuesday, October 31, 2017

Of the 914 million acres of land in U.S. farms in 2012 (the latest data), 61 percent were owner-operated. The remaining land was rented, either from another farm operator or from a non-operator (an owner not actively engaged in farming). Farmland tenure arrangements vary across the country, with higher shares of renting and non-operator ownership in the Midwest and Plains regions. This geographic pattern is due to commodity specialization: the majority of land used to grow cotton and cash grains (such as rice, corn, soybeans, and wheat) is rented. According to data from the 2014 TOTAL Survey, cropland (54 percent) is more likely to be rented than pastureland (28 percent). This pattern is attributable to several factors, including the relatively low cost of purchasing pastureland compared to cropland. This chart appears in the August 2017 ERS report Major Uses of Land in the United States, 2012.

Low-income countries had the highest rate of agricultural growth, but middle-income countries had the highest rate of productivity growth

Monday, October 16, 2017

During 2001-14, low-income countries accounted for only 5 percent of global agricultural production. But these countries achieved a higher rate of agricultural output growth than middle- or high-income countries, at nearly 4 percent per year during that period. Most of that development came from increasing the use of land and other inputs, rather than from raising the total productivity of those inputs. Middle-income countries, on the other hand, accounted for 40 percent of global agricultural production and achieved growth that was nearly as high (more than 3.5 percent per year), largely because of improving productivity. For high-income countries, which accounted for 25 percent of global production, agricultural growth averaged under 2 percent per year, even as land and other inputs employed in the sector fell. Improvements in productivity account for all the output growth in high-income countries. Overall, most gains in global agricultural productivity have come from middle-income countries. Strengthening the capacity of national agricultural research and extension systems in large middle-income countries (such as Brazil and India) has been a key determinant of their agricultural productivity performance. This chart appears in the ERS topic page for International Agricultural Productivity, updated October 2017.

Texas accounted for 6 percent ($21 billion) of U.S. farm sector cash receipts in 2016

Wednesday, October 11, 2017

Each August, as part of the its Farm Income data product, ERS produces estimates of the prior year’s cash receipts—the cash income the farm sector receives from agricultural commodity sales. This data product includes State-level estimates, which can help offer background information about States subject to unexpected changes that affect the agricultural sector, such as the recent hurricane that struck Texas. In 2016, U.S. cash receipts for all commodities totaled $352 billion. Texas contributed about 6 percent ($21 billion) of that total, behind only California and Iowa. Cattle and calves accounted for 40 percent ($8 billion) of cash receipts in Texas, compared to 13 percent nationwide. Only Nebraska had higher cash receipts for cattle and calves in 2016. Texas led the country in cash receipts from cotton at almost $3 billion (13 percent of the State’s receipts), accounting for 46 percent of the U.S. total for cotton. Milk and broilers each accounted for 9 percent of cash receipts in Texas. The State ranked sixth in both milk and broiler cash receipts nationwide. This chart uses data from the ERS U.S. and State-Level Farm Income and Wealth Statistics data product, updated August 2017.

Public sector spending on agricultural research declining in the United States and Western Europe, but rising in China, India, and Brazil

Wednesday, September 13, 2017

U.S. public sector funding for agricultural R&D is falling, both in absolute terms and relative to major countries and regions. Between 1990 and 2013, the U.S. share of spending among nations with major public agricultural R&D investments fell from about 23 to 13 percent. This decline was driven by a combination of falling U.S. spending (lately mirrored in Western Europe) and rapidly rising spending in developing countries such as India and, especially, China. Chinese government spending on agricultural R&D rose nearly eightfold in real (inflation-adjusted) terms between 1990 and 2013, surpassing U.S. spending in 2008 and more than doubling it in 2013. In simple dollar terms, the decline in U.S. public sector funding has been more than offset by a rise in U.S. private research spending, but the two are not substitutes, as each tends to specialize in different kinds of R&D. This chart appears in the November 2016 Amber Waves feature, "U.S. Agricultural R&D in an Era of Falling Public Funding."

2017 net farm income and net cash farm income forecast up over 2016

Wednesday, August 30, 2017

After several years of declines, inflation-adjusted U.S. net farm income is forecast to increase about $0.9 billion (1.5 percent) to $63.4 billion in 2017, while inflation-adjusted U.S. net cash farm income is forecast to rise almost $9.8 billion (10.8 percent) to $100.4 billion. The expected increases are led by rising production and prices in the animal and animal product sector compared to 2016, while crops are expected to be flat. The stronger forecast growth in net cash farm income, relative to net farm income, is largely due to an additional $9.7 billion in cash receipts from the sale of crop inventories. The net cash farm income measure counts those sales as part of current-year income, while the net farm income measure counts the value of those inventories as part of prior-year income (when the crops were produced). Despite the forecast increases over 2016 levels, both profitability measures remain below their 2000-16 averages, which included surging crop and animal/animal product cash receipts from 2010 to 2013. Net cash farm income and net farm income are two conventional measures of farm sector profitability. Net cash farm income measures cash receipts from farming as well as farm-related income including government payments, minus cash expenses. Net farm income is a more comprehensive measure that incorporates non-cash items, including changes in inventories, economic depreciation, and gross imputed rental income. Find additional information and analysis on ERS’s Farm Sector Income and Finances topic page, released August 30, 2017.

Different forms of outreach can increase farmer participation in County Committee elections

Friday, August 18, 2017

County Committees (COC) are critical to the delivery of farm support programs and make numerous program decisions, such as whether or not a producer is in compliance with the program’s eligibility requirements. However, participation in COC elections have declined over time. An ERS experiment tested the impact of using different forms of outreach on voter participation during the 2015 COC elections. Some voters received ballots with information about candidates printed on the outside. Other voters received postcards with deadlines and candidate information. A third group of voters received both, and a baseline group received neither. Compared to the baseline, the experiment found that printing candidate information on the outside of the ballot plus sending postcards increased voter participation by nearly 3 percent. This information may offer a relatively low-cost outreach strategy to encourage participation in future elections. This chart appears in the ERS report Economic Experiments for Policy Analysis and Program Design: A Guide for Agricultural Decisionmakers, released August 2017.

The share of beginning midsize farms held steady from 2005 to 2014

Tuesday, August 15, 2017

The aging of the overall farm population raises questions about whether there are enough beginning farms to replace those that exit farming. Between 2005 and 2014, the share of beginning farms generally declined across all farm sizes, though overall farm numbers were relatively steady during this period. A beginning farm is one where all operators have 10 years or less farming experience. Very-low sales farms—those with annual gross cash farm income (GCFI) under $10,000—had the most beginning farms across these years, but also saw the greatest decline: from 27 percent in 2005 to 24 percent in 2014. By comparison, the share of beginning midsize farms—those with GCFI between $350,000 and $999,999—hovered around 9 percent during this period. In 2014, that represented about 12,000 midsize farms. This chart and the factors affecting these results appear in the ERS report The Changing Organization and Well-Being of Midsize U.S. Farms, 1992-2014, released October 2016.

USDA provides operating loans to farmers through different programs

Thursday, August 3, 2017

The USDA Farm Service Agency (FSA) provides loans to farmers through a number of programs. Direct Operating Microloans are designed to be more convenient and accessible than FSA’s traditional Direct Operating Loans (DOLs) for groups such as beginning farmers, women, and veterans. The number of new FSA direct loan borrowers—those who had not previously received an FSA direct loan, such as a traditional DOL or Microloan—increased substantially in 2009. During that time more farmers turned to FSA, as commercial sources of credit tightened during the Great Recession. Since then, the number of new FSA direct loan borrowers increased overall, though the number receiving traditional DOLs fell in 2013, when the Microloan program began. This suggests that the Microloan program may have attracted new borrowers that otherwise might have applied for traditional DOLs. At the time of receiving their first Microloan, 8,182 borrowers (71 percent) were new to FSA direct loans. Microloans are much smaller than traditional DOLs, with a maximum loan limit of $50,000 compared to $300,000. A version of this chart appears in the ERS report USDA Microloans for Farmers: Participation Patterns and Effects of Outreach, released December 2016.

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