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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.

After years of growth, U.S. farm real estate values have stalled since 2014

Friday, June 30, 2017

In recent years, farm real estate (including farmland and buildings) has accounted for about 80 percent of the value of U.S. farm assets—amounting to about $2.4 trillion in 2015. Strong farm earnings and historically low interest rates have supported the increase in farmland values since 2009. Since 2014, farm real estate values in many regions have leveled off; and, in 2016, the national average per-acre value declined slightly. This is partly a response to the recent declines in farm income, which may temper expectations of future farm earning potential. In addition, the 2016 USDA 10-year commodity outlooks suggest that the prices of major commodities will all stabilize at, or grow modestly from, their current price levels—which are significantly lower than those in 2011. Expectations of interest rate increases, which have been noted in some U.S. farm regions, also put downward pressure on land values. Given that farm real estate makes up such a significant portion of the balance sheet of U.S. farms, changes in its value can affect the financial well-being of individual farms and the farm sector. Over 60 percent of U.S. farmland was owner-operated in 2014; for these owners, increases in real estate values make it easier to obtain credit and service debt. For the farmers who rent the remaining 39 percent of farmland, higher real estate values can lead to higher rent expenses. This chart appears in the ERS topic page for Farmland Value, updated April 2017.

Managed honeybee colony numbers increased since 2006 even as colony mortality remained high

Friday, June 23, 2017

About one-third of the world’s food crops depend on pollinators, such as managed honeybees and more than 3,500 species of native bees. These pollinators face a variety of stressors that can impact their health, such as insect pests, pesticide exposure, and habitat changes. Honeybee mortality, as measured by the loss of a honeybee colony, has remained high over the last decade. In 2006-07, approximately 30 percent of honeybee colonies were lost during the over-winter period (October 1 through April 1). The over-winter loss rate has since diminished (22 percent in 2014-15), but over-summer losses have grown. The net result is that about 44 percent of colonies perished in 2015-16, compared with 36 percent in 2010-11. While recent public attention has focused largely on colony mortality trends, overall colony numbers have increased since 2006. This was accomplished with intensified beekeeper management, including splitting colonies, adding new queens, and offering supplemental feeding. This chart is based on the ERS report Land Use, Land Cover, and Pollinator Health: A Review and Trend Analysis, released June 2017.

Beef cattle operations received more than half of all Microloans between 2013 and 2015

Thursday, June 15, 2017

In January 2013, USDA’s Farm Service Agency (FSA) launched the Direct Farm Operating Microloan program to better serve the credit needs of small farms, beginning farmers, farmers from socially disadvantaged groups (women and minorities), and veterans. FSA issued over 13,800 Microloans as of mid-November 2015, which varied by the type of operation. The number of Microloans received by crop farmers remained fairly stable, while those received by livestock farmers increased each year—from about 2,300 in 2013 to nearly 4,000 in 2015. Crops include grain and oilseeds, vegetables, and fruits; livestock include beef cattle, dairy, and poultry. Beef cattle operations alone received more than half of all Microloans. Grain and oilseed farms, the next largest category, received about 15 percent. Beef cattle operations accounted for about a third of all operations in 2014, a much larger share than any other production category. They also tend to be relatively small, so small loans like Microloans (up to $50,000 each) might fulfill the financing needs of more beef cattle operations relative to other commodity specializations. This chart appears in the ERS report USDA Microloans for Farmers: Participation Patterns and Effects of Outreach, released December 2016.

Dairy farming offers profits, but also financial risks

Thursday, May 25, 2017

On average, larger dairy farms earn higher profits than smaller farms, spurring a steady shift of cows and production to larger operations. Between 2011 and 2015, farms with at least 1,000 milk cows earned the highest average rates of return on equity (ROE), a measure of profitability that captures the return to the capital that farmers have invested in the business. According to the 2012 Census of Agriculture (the latest data), these farms accounted for nearly half of all cows. By comparison, farms with less than 100 cows generally had negative average ROE between 2011 and 2015, but accounted for only 17 percent of all cows in 2012. Average ROE data can mask variation at the farm level: some farms are profitable and others are not. Low and negative ROE indicate that dairy farmers could earn more by investing their money elsewhere. Dairy farming carries financial risks for farms in all herd size classes. For example, ROE rose in 2014 as the prices that farmers receive for their milk rose to well over $20 per hundredweight of milk, but then fell sharply the following year as monthly milk prices declined by about 30 percent. This chart updates data from the ERS report Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry, released March 2016.

Gains in productivity have fueled the growth in U.S. agricultural output

Thursday, May 11, 2017

From 1948 to 2013, U.S. farm sector output grew by 170 percent with about the same level of farm input use over the period. This output growth resulted mainly from gains in productivity, as measured by total factor productivity (TFP)—the difference between the growth of aggregate output and growth of aggregate inputs (such as land and labor). Between 1948 and 2013, total output grew at an average annual rate of 1.52 percent, agricultural TFP at 1.47 percent, and input use at only 0.05 percent. Long-term agricultural productivity is fueled by innovations in animal/crop genetics, chemicals, equipment, and farm organization that result from public and private research and development. This chart appears in the ERS publication Selected charts from Ag and Food Statistics: Charting the Essentials, 2017, released April 28, 2017.

Larger family farms show stronger financial performance than smaller farms

Tuesday, May 9, 2017

Ongoing innovations in agriculture have enabled a single farmer, or farm family, to manage more acres or more animals. Farmers who take advantage of these innovations to expand their operations can reduce costs and raise profits because they can spread their investments over more acres. In 2015, larger family farms displayed stronger financial performance, on average, than smaller farms. For example, 74 percent of very large family farms—those with gross farm cash income (GCFI) of $5 million or more—had estimated operating profit margins (OPM) of at least 10 percent. This represents the safer yellow and green zones, with lower financial risk. By comparison, 54 percent of midsize family farms (GCFI of $350,000 to $999,999) also had an OPM of at least 10 percent. Most small farms (GCFI under $350,000) in the red zone (OPM under 10 percent), had a negative OPM, the result of losses from farming. Small farms account for 90 percent of U.S. farms, but only contribute about a quarter of the value of production. The majority of their operator households’ income comes from off-farm sources. This chart appears in the March 2017 Amber Waves data feature, "Large Family Farms Continue To Dominate U.S. Agricultural Production."

Nearly 14,000 USDA Microloans issued between 2013 and 2015

Wednesday, May 3, 2017

In January 2013, USDA’s Farm Service Agency (FSA) launched the Direct Farm Operating Microloan program to better serve the credit needs of small farms, beginning farmers, farmers from socially disadvantaged groups (women and minorities), and veterans. These loans (up to $50,000) are designed to be more convenient and accessible to groups not traditionally served through FSA’s credit programs. Relative to FSA’s traditional Direct Operating Loans, for example, the Microloan program has a shorter application and more relaxed requirements for farm management experience, production history, and collateral. FSA has issued over 13,800 Microloans as of mid-November 2015. The number of loans increased 13 percent from 2013 to 2014 and 31 percent from 2014 to 2015. Farmers belonging to one or more of the program’s targeted groups—beginning farmers, SDA borrowers, and veterans—received nearly 90 percent of Microloans issued. Overall, beginning farmers received the most Microloans (81 percent) out of any group. This chart appears in the March 2016 Amber Waves finding, "Nearly 14,000 USDA Microloans Issued Between 2013 and 2015."

Farmland ownership concentrated among older operators and landlords, and male operators

Friday, April 28, 2017

The Tenure, Ownership, and Transition of Agricultural Land (TOTAL) survey provides demographic information that can reveal trends about who owns and rents U.S. farmland. In 2014, for example, 61 percent of U.S. farmland was owned by the farm operator (or owner-operated); those aged 55 and older accounted for nearly 80 percent of that land. By comparison, out of the 39 percent of farmland that was rented out, 80 percent was owned by non-operator landlords; nearly 70 percent of that land was owned by someone aged 65 or older. Building up the financial capacity to purchase farmland takes time, which contributes to the relatively advanced age of landowners. Farmland ownership also varies by gender, with male principal operators accounting for the majority of land (90 percent) owned by both owner-operators and operator landlords. However, land owned by non-operator landlords was more equally divided by gender, with women owning 46 percent of that land. This chart appears in the ERS data visualization 2014 Tenure, Ownership, and Transition of Agricultural Land (TOTAL) survey, released March 2017.

Decline in farm share of U.S. food dollar mirrors drop in farm commodity prices

Tuesday, March 21, 2017

On average, U.S. farmers received 15.6 cents for farm commodity sales from each dollar spent on domestically-produced food in 2015, down from 17.2 cents in 2014. Known as the farm share, this amount is at its lowest level since 2006, and coincides with a steep drop in 2015 average prices received by U.S. farmers, as measured by the Producer Price Index for farm products. ERS uses input-output analysis to calculate the farm and marketing shares from a typical food dollar, including food purchased at grocery stores and at restaurants, coffee shops, and other eating out places. 2015 was the fourth consecutive year that the farm share has declined, but the 2015 decline was substantially more than in the three previous years. The drop in farm share also coincides with four consecutive years of increases in the share of food dollars paying for services provided by the foodservice industry. Since farmers receive a smaller share from eating out dollars, due to the added costs for preparing and serving meals, more food-away-from-home spending will also drive down the farm share. The data for this chart can be found in ERS’s Food Dollar Series data product, updated on March 16, 2017.

Public and private sectors specialize in different areas of agricultural research

Monday, March 13, 2017

Both the public and private sectors fund agricultural research and development (R&D), but focus on different areas. The private sector specializes in areas where R&D results in improved commercial products and services, particularly food and feed manufacturing as well as farm machinery and engineering. The public sector, in contrast, conducts most of the R&D on areas that have social value, but do not result in easily sold products. These areas include environment and natural resources and human nutrition and food safety. The public and private sectors conduct significant research on plant systems and crop protection as well as on animal systems and animal health. However, a closer inspection reveals that each sector invests in these areas differently. Much of the private R&D on plant and animal systems aims at new commercial products like agricultural pesticides and veterinary pharmaceuticals. In contrast, public R&D focuses on topics like improving field practices and studying pest populations, animal pathogens, and soil attributes. This chart appears in the November 2016 Amber Waves feature, "U.S. Agricultural R&D in an Era of Falling Public Funding."

Million-dollar farms accounted for over half of production in 2015

Tuesday, March 7, 2017

Agricultural production has been shifting to larger farms for many years. Farms with over $1 million in gross cash farm income (GCFI) accounted for half of the value of U.S. farm production in 2015, up from about a third in 1991. Most million-dollar farms (90 percent) are family farms; only 10 percent are nonfamily farms. Larger million-dollar farms (over $5 million in GCFI) nearly doubled their share of production between 1991 and 2015. Smaller million-dollar farms (GCFI between $1 million and $4,999,999) increased their share from 19 percent to 29 percent. This marks a shift in the share of production from small farms (GCFI under $350,000). Small farms accounted for 46 percent of production in 1991; by 2015, they accounted for less than 25 percent. Farmers who take advantage of ongoing innovations to expand their operations can reduce costs and raise profits because they can spread their investments over more acres. This chart appears in the ERS report America's Diverse Family Farms, 2016 Edition, released December 2016.

U.S. farm sector’s net farm income forecast to continue to decline in 2017

Tuesday, February 7, 2017

Net farm income is a conventional measure of farm sector profitability that is used as part of the U.S. Gross Domestic Product calculation. Following several years of record highs, net farm income trended downward from 2013 to 2016. For 2017, ERS forecasts net farm income will fall to $62.3 billion ($54.8 billion in inflation-adjusted terms). If realized, this would be an 8.7 percent decline from the prior year and a decline of 49.6 percent from the record high in 2013. The expected decline in 2017 net farm income is driven by a forecast reduction in the value of production. Crop value of production is forecast down $9.2 billion (4.9 percent), while the value of production of animal/animal products is forecast to decline by less than $1 billion (0.5 percent). Find additional information and analysis in ERS’ Farm Sector Income and Finances topic page, released February 7, 2017.

Developing countries, such as China and Brazil, lead global productivity growth

Thursday, February 2, 2017

Raising productivity, rather than expanding resources, has become the major source of growth in global agriculture. Higher productivity has helped make food cheaper and more abundant, and saved resources such as forests from being converted to cropland. However, large differences remain in productivity performance between countries. For example, between 1971 and 2013, U.S. agricultural productivity growth averaged about 1.5 percent a year. Over the past few decades, China and Brazil have emerged among the world leaders in agricultural productivity growth. In Sub-Saharan Africa, on the other hand, agricultural productivity has been relatively stagnant. According to ERS research, strengthening the capacity of national agricultural research and extension systems has been a key factor in improving productivity growth. Long-term investments in agricultural research were especially important to sustaining higher growth rates in large, rapidly developing countries like Brazil and India. Under-investment in agricultural research remains an important barrier to stimulating productivity. The broader environment—such as institutions, infrastructure, and economic and trade policies—has also played an important role in raising agricultural productivity in many parts of the world. This chart appears in the topic page for International Agricultural Productivity, updated January 2017.

Non-operators were more likely than operators to inherit farmland

Wednesday, January 11, 2017

Land may be acquired in a number of ways, including sales, gifts, and inheritances. Arms-length purchases from nonrelatives are a traditional method for acquiring land, particularly for those without family or personal connections to agricultural landowners. In 2014, operating landowners—those who own farmland and operate some or all of it—purchased half of their land from nonrelatives. This group acquired another 27 percent of land through inheritances or gifts. In contrast, non-operator landlords—those who own and rent farmland but are not actively involved in its operation—acquired 30 percent of their land in purchases from nonrelatives. The majority of non-operator land (54 percent) was inherited or received as a gift. Since most farming operations are family farms, it is not surprising that a larger share of operator landowners’ land (18 percent) was purchased from a relative compared to non-operators (11 percent), as this suggests that land is being sold from one family generation to the next. This chart appears in the August 2016 Amber Waves feature, “Land Acquisition and Transfer in U.S. Agriculture.”

More Microloans issued in areas with more beginning and socially disadvantaged farmers

Tuesday, January 3, 2017

In January 2013, USDA’s Farm Service Agency (FSA) launched the Direct Farm Operating Microloan program to better serve the credit needs of small farms, beginning farmers, farmers from socially disadvantaged groups (women and minorities), and veterans. These loans (up to $50,000) are designed to be more convenient and accessible to groups not traditionally served through FSA’s credit programs. Although any farmer can apply for a Microloan, FSA reserves 70 percent of its funds for beginning farmers, women, and minorities. Correspondingly, FSA distributed more Microloans in regions with larger shares of farmers belonging to these groups, and in regions with smaller average farm size. Between 2013 and 2015, the number of Microloans increased each year in every region except for the Pacific, where the number of loans first dipped then rebounded above its 2013 level. ERS analysis found that the number of Microloans received by borrowers who were new to FSA direct loans substantially surpassed the number of new borrowers who received Microloan-sized traditional Direct Operating Loans (DOLs) in 2010-12, the three years preceding the introduction of the Microloans program. This difference suggests that the Microloan program likely attracted new borrowers who would not have received traditional DOLs if Microloans hadn’t existed. This chart appears in the ERS report USDA Microloans for Farmers: Participation Patterns and Effects of Outreach, published December 2016.

Midsize farm production has shifted towards cash grains and oilseeds, hogs, and poultry

Thursday, December 22, 2016

Midsize farms, those with gross cash farm income between $350,000 and $1 million, concentrate their production on grains and oilseeds. In 2014, over 40 percent of midsize farm production occurred on farms that specialized in these crops—8 percentage points higher than in 1992. Midsize farms that specialized in hogs and poultry also accounted for a higher share of production in 2014 than in 1992. However, midsize farms specializing in dairy, high-value crops, and other crops (such as tobacco and peanuts) represented a smaller share in 2014. Midsize dairy farms, for example, declined in number over this period—and total dairy production became more concentrated on large farms. Midsize farm contribution to total U.S. production has also declined from 26.7 percent to 20.9 percent during this period. This chart appears in the ERS report The Changing Organization and Well-Being of Midsize U.S. Farms, 1992-2014, released October 31, 2016.

Small family farms account for the majority of U.S. farms and half the farmland

Wednesday, December 7, 2016

In 2015, 99 percent of U.S. farms were family farms, where the principal operator and his or her relatives owned the majority of the business. Small family farms—those with less than $350,000 in annual gross cash farm income (GCFI)—accounted for about 90 percent of U.S. farms, half of all farmland, and a quarter of the value of production. Midsize and large-scale family farms, which have at least $350,000 in GCFI, made up only 9 percent of U.S. farms—but contributed most of the value of production (65 percent). Over the past 25 years, production has shifted to midsize and large-scale farms. Nevertheless, small family farms did produce a relatively large share of two commodities in 2015: poultry and eggs (57 percent) and hay (52 percent). This chart appears in the ERS report America’s Diverse Family Farms: 2016 Edition , released December 6, 2016.

U.S. farm sector income forecasts down for 2016, led by lower animal/animal products receipts

Wednesday, November 30, 2016

Net cash farm income and net farm income are two conventionally used and related measures of farm sector profitability. The first measure includes cash receipts, government payments, and other farm-related cash income net of cash expenses, while the second is more comprehensive and incorporates noncash transactions such as implicit rents, changes in inventories, and economic depreciation. Following several years of high income, both measures have trended downward since 2013. ERS forecasts that net cash farm and net farm income for 2016 will be $90.1 billion and $66.9 billion, respectively, or $80.9 billion and $60.1 billion, respectively, when adjusted for inflation (in 2009 dollars). Cash receipts declined across a broad set of agricultural commodities in 2015, and are expected to fall further in 2016—primarily for animal/animal products. Production expenses are forecast to contract in 2016, but not enough to offset the commodity price declines. Net cash farm and net farm income are below their 10-year averages, which include surging crop and animal/animal product cash receipts from 2010 to 2013. Find additional information and analysis in ERS’ Farm Sector Income and Finances topic page, updated November 30, 2016.

Private sector R&D in food and agriculture rose sharply as public sector funding declined

Monday, November 14, 2016

U.S. private sector spending on food and agricultural research and development (R&D) has risen rapidly over 2003-2013, surpassing public sector funding. This is a relatively new phenomenon; historically, the public sector has led funding. From 1971 to the early 2000s, total public and total private R&D on food and agriculture followed each other closely. Throughout, the private sector funded R&D for agricultural inputs (such as tractors and pesticides) and food manufacturing in roughly equal measure, while the public sector focused primarily on agricultural inputs. In 2003, however, the two series began to diverge. Total private R&D—in both the food and agricultural input sectors—increased from a total of $6.0 billion (adjusted for inflation) in 2003 to $11.8 billion in 2013. Meanwhile, total public R&D fell from $6.0 billion to around $4.5 billion. By 2010, private agricultural input R&D alone had surpassed total public R&D. Multiple factors have contributed to this change, including the extension of intellectual property rights to different crop varieties, greater potential profits from new scientific opportunities, and increased demand for new agricultural products in developing markets. This chart appears in the November 2016 Amber Waves feature, “U.S. Agricultural R&D in an Era of Falling Public Funding.”

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