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Half of U.S. cropland now on farms with 1,200 acres or more

Tuesday, February 17, 2015

The average (mean) number of acres on crop farms has changed little over 3 decades, with a slight increase from 241 acres in 2007 to 251 in 2012. However, the mean misses an important element of changing farm structure; it has remained stable because while the number of mid-size crop farms has declined over several decades, farm numbers at the extremes (large and small) have grown. With only modest changes in total cropland and the total number of crop farms, the size of the average (mean) farm has changed little. However, commercial crop farms, which account for most U.S. cropland, have gotten larger, aided by technologies that allow a single farmer or farm family to farm more acres. The 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) effectively tracks cropland consolidation over time. The midpoint acreage of total and harvested cropland has increased over the last three decades, from roughly 500-600 acres in 1982 to about 1,200 acres in the most recent census of agriculture data (2012). This chart is extended through 2012 from one found in the ERS report, Farm Size and the Organization of U.S. Crop Farming, ERR-152, August 2013.

Simulating the interactions between climate adaptation and conservation program design

Monday, May 20, 2013

Farmers can adapt to their local climate in many ways, including through participation in USDA programs. In regions of the country that face higher levels of drought risk, farmers are more likely to offer eligible land for enrollment in the Conservation Reserve Program (CRP). As a consequence, CRP is both more competitive in these regions and drought-prone counties are more likely to face a binding CRP acreage enrollment cap. When counties are near their enrollment cap, farms are less likely to offer eligible land for CRP because those offers are less likely to be accepted for enrollment. In simulations of offer rates based on observed historical data, a national increase in the county CRP acreage enrollment cap to 35 percent of cropland in each county (from the current level of 25 percent), results in more offers from eligible farmers in drought prone regions of the Great Plains and the Intermountain West. This map is found in the ERS report, The Role of Conservation Programs in Drought Risk Adaptation, ERR-148, April 2013.

U.S. trade-distorting agricultural support declines with higher world commodity prices

Monday, May 13, 2013

The current Agreement on Agriculture of the World Trade Organization (WTO) limits how much members can spend on trade-distorting support. Members notify this spending as the aggregate measurement of support (AMS), commonly called the “amber box.” The U.S. limit, or ceiling, is currently $19.1 billion, reduced from a starting point of $23 billion in 1995. For developed countries, the AMS includes support for specific commodities (product-specific support) that totals more than 5 percent of the value of production of that commodity, and support generally available to producers (non-product specific support) that totals more than 5 percent of the country’s total value of agricultural production. For the United States, only a small number of commodities have been supported above the 5-percent minimum (or de minimis) level, and general support has never risen above that level. Even so, during several years of low commodity prices, U.S. program support led to AMS totals close to the WTO ceiling. In recent years, however, high commodity prices have reduced program spending, and an AMS has been notified to the WTO for only a few commodities. This chart is based on data found on the U.S. WTO Domestic Support Reduction Commitments and Notifications topic page on the ERS website.

Relatively few farms receive both conservation and commodity payments

Monday, April 22, 2013

Existing conservation and farm commodity programs serve multiple purposes. Commodity-based income programs are intended to support farm families historically involved in the production of targeted “program” crops. Conservation payments, on the other hand, are designed to promote environmentally beneficial changes in farmland use or production practices. Conservation payments are available to a much wider range of producers, with nearly all crop and livestock producers eligible for at least one conservation program. In 2011, roughly 31 percent of all U.S. farms received commodity payments, conservation payments, or both. Only 6 percent of farms, however, received both commodity and conservation payments. Fifty-five percent of conservation payments went to farms that did not receive commodity payments, while 63 percent of commodity payments went to farms that did not receive conservation payments. Since 2004, the proportion of farms receiving both conservation and commodity payments has remained fairly constant. This chart updates one found in the March 2012 Amber Waves finding, Green Payments: Can Conservation and Commodity Programs Be Combined?

Agricultural productivity improving in Sub-Saharan Africa, but very slowly

Monday, February 25, 2013

Agricultural productivity growth is a critical factor in controlling the economic and environmental costs of feeding the world’s growing population. New ERS research finds that agricultural productivity in Sub-Saharan Africa has been growing by about one percent per year since the 1980s. A major driver has been adoption of new agricultural technologies developed through agricultural research. Investment by the CGAIR Consortium of international agricultural research centers has been particularly important, providing about $6 in productivity impacts for every $1 spent by these centers on research. However, rates of new technology adoption and agricultural productivity in Sub-Saharan Africa are still low relative to other developing countries. Resource degradation, policies that reduce economic incentives to farmers, the spread of HIV/AIDS, armed conflicts, and low national research and extension capacity have hindered agricultural productivity improvement in the region. This chart is based on the ERS report, Resources, Policies and Agricultural Productivity in Sub-Saharan Africa, ERR-145, released February 2013.

U.S. cash receipts for livestock products forecast up in 2012

Thursday, January 17, 2013

Gains are predicted in all livestock categories except hogs and dairy. Receipts for cattle and calves are predicted to increase in 2012 reflecting large anticipated price increases for cattle and veal in 2012. The slight decline predicted in hog receipts reflects a forecast decline in the hog annual price. Cash receipts for dairy are expected to decline despite USDA expectations of more milk cows producing more milk per cow in 2012. The average annual price of milk, despite recent gains, is expected to remain lower than in 2011. Increased broiler cash receipts reflect USDA expectations of price increases. Turkey receipts are also expected to benefit from higher prices in 2012. Chicken egg receipts are forecast to increase reflecting more eggs sold at a higher annual average price. This chart appeared in the Farm Sector Income & Finances topic page on the ERS website, updated November 2012.

Farm household income is diverse in sources and levels

Friday, December 28, 2012

Because of the USDA’s broad definition of a farm, the population of farm households is economically diverse. In 2011, households of the principal operators of commercial farms—farms with annual gross sales of $250,000 or more—had a median total income of $127,009 and a median income from farming activities of $84,649. In contrast, households associated with intermediate farms—those with less than $250,000 in sales whose principal operators considered farming their primary occupation—typically have a loss from farming. The same is true for households of rural residence farms, defined as having less than $250,000 in sales but whose principal operator’s primary occupation is not farming. The typical intermediate and rural residence farm household experienced similar losses from farming, but rural residence farm households had higher median total income ($61,260 compared with $45,889) because of greater off-farm income. Of the three types of farm households, only intermediate farm households had a lower median total income than U.S. households overall ($45,889 compared with $50,054). This chart is based on data found in the Farm Household Well-being topic page on the ERS website, updated November 2012.

Change in net cash income for farm businesses forecast to vary by commodity specialization

Tuesday, December 11, 2012

Although 2012 average net cash income (NCI) for all farm businesses is expected to stay near its 2011 level, many farm businesses are expected to experience large changes. Farm businesses that specialize in mixed grains; wheat; and soybeans and peanuts are expected to experience a 24- to 28-percent increase in average NCI due to strong grain prices and insurance indemnities. Beef cattle farm businesses are forecast to experience a 12-percent increase in average NCI, while declining hog and milk prices and increasing feed expenses are contributing to an expected 16-percent decline in average NCI for hog farm businesses and an almost 51-percent decline for dairy farm businesses. Farm businesses are defined as operations with sales of over $250,000 or smaller operations where farming is reported as the operator's primary occupation; collectively, they represent 42 percent of all U.S. farm operations. This chart is based on data found in the November 27, 2012 update of the Farm Sector Income & Finances topic page on the ERS website.

Farm sector solvency ratios forecast to improve in 2012

Friday, December 7, 2012

The debt-to-equity ratio and the debt-to-asset ratio are major indicators of the financial well-being of the farm sector. The debt-to-equity ratio measures the relative proportion of funds invested by creditors (debt) and owners (equity). The debt-to-asset ratio measures the proportion of farm-business assets that are financed through debt. Lower ratios signify that farmers are relying less on borrowed funds to finance their asset holdings. The farm sector’s debt-to-asset ratio is expected to decline from 10.7 percent in 2011 to 10.5 percent in 2012. The debt-to-equity ratio is also forecast to decline, from 11.9 percent in 2011 to 11.7 percent in 2012. The steady decline in both ratios since the mid-1980s is due to relatively large growth in the value of farm assets (driven principally by increases in farm real estate values), while farm-debt levels increased at a much slower pace. This chart is from the Farm Sector Income & Finances topic page on the ERS website, updated November 27, 2012.

Base acreage and direct payment rates vary by commodity

Monday, November 26, 2012

Direct payments are farm program payments that are based on historical cropping patterns of major commodities, or "base acres," with per-acre rates fixed in legislation and not linked to current production or market prices. Direct payments per acre vary significantly by commodity. In 2008, rice and peanuts received the largest direct payments per acre ($96.25 and $45.85, respectively). Rice base acres were predominant in a few counties along the Gulf Coast and in the Pacific region, while peanut base acres were concentrated in the Southeast. Corn, wheat, and soybeans accounted for more than 80 percent of total base acres in 2008, but received lower direct payments per acre ($24.39 per acre, $15.21 per acre, and $11.54 per acre, respectively). Corn base acres dominated in the Corn Belt, Lake States, the Northeast and Appalachia while wheat base acres were prevalent in the Northern and Southern Plains as well as parts of the Mountain region. This chart is found in the ERS report, Potential Farm-Level Effects of Eliminating Direct Payments, EIB-103, November 2012.

Introduction of direct payments for oilseeds did not impact production decisions

Thursday, November 8, 2012

Direct payments are based on historic acreage and yields of program crops like corn and wheat and are often considered "decoupled" because they do not depend on a farmer's current production decisions. Nonetheless, because direct payments are linked to past production of program crops and because productive areas tend to remain productive over time, areas that currently have higher average yields and more acreage of program crops tend to receive more payments than areas with lower yields and fewer acres. This positive association between direct payments and production of program crops raises doubts about whether direct payments really are decoupled from current production decisions. The 2002 Farm Act authorized direct payments for the first time for oilseed crops, such as soybeans, triggering a sudden shift in direct payments toward areas with higher average production of oilseeds. By studying oilseed producers' response to the shift in payments between 2002 and 2007, ERS researchers found that direct payments had little effect on production decisions This chart appears in "Expansion in Direct Payments Did Not Lead to More Crop Production" in the September 2012 issue of ERS's Amber Waves magazine.

Government payments forecast at $11.1 billion in 2012

Monday, October 15, 2012

Government payments paid directly to producers are expected to total $11.1 billion in 2012, a 6.3-percent increase over the 2011 program payments. Direct payments under the Direct and Countercyclical Program (DCP) and the Average Crop Revenue Election Program (ACRE) are forecast at $4.96 billion for 2012. This 5.4-percent increase in direct payments in 2012 over 2011 is largely due to the fact that the percentage of base acres on which direct payments are made increased from 83.3 percent for the 2011 crop year to 85.0 percent for the 2012 crop year. This chart is from the Farm Sector Income & Finances topic page on the ERS website.

Farm program changes could affect environmental compliance incentives

Monday, July 16, 2012

Federal farm program payments help encourage good stewardship of natural resources through environmental compliance requirements. To maintain eligibility for most farm programs, farmers must follow an approved soil conservation plan on all highly erodible land used for crop production. Farmers who do not comply with these requirements, even on a small number of acres, risk losing some or all of their Federal farm commodity, conservation, and disaster payments, as well as access to Federal farm loan and loan guarantee programs. Since 2003, annual farm program payments subject to environmental compliance have fluctuated between $11 billion and $20 billion. Most of the variation can be attributed to countercyclical payments (CCP) and marketing loan benefits (MLB), which are triggered by low crop prices. Since 2007, high prices for most program crops have sharply reduced CCP and MLB payments from their 2005-06 levels. Direct payments have accounted for roughly half of the compliance incentive since 2008. If they are eliminated in the 2012 farm bill, farmers who do not receive conservation or disaster payments (the other major payments subject to environmental compliance) may have less incentive to continue meeting compliance requirements unless these payments are replaced by another type of commodity or insurance program subject to compliance. This chart appeared in the June 2012 issue of Amber Waves magazine.

Exploring farmers' ACRE enrollment decisions

Tuesday, April 24, 2012

Under the Average Crop Revenue Election (ACRE) program, farmers receive revenue-based payments if yields and/or prices fall below ACRE triggers but give up 20 percent of direct payments, receive no countercyclical payments, and face reduced marketing assistance loan rates. The 2009 Agricultural Resource Management Survey (ARMS) queried farmers as to their reasons for choosing to enroll or not in the ACRE program. About 10 percent of almost 500,000 farmers who gave explicit reasons for their enrollment decision did enroll in ACRE. The reason most frequently cited for enrolling in ACRE was the expectation that no CCPs would be received, followed by anticipation of high guaranteed prices and concerns about farm income variability. Of the 442,000 farmers who chose not to enroll in the ACRE program, an equal percentage cited the complexity of the ACRE program and anticipated foregoing CCPs as their reason. Another 20 percent of those not enrolling said they were waiting for neighboring farmers to join. This chart is found in Agricultural Income and Finance Outlook, AIS-91, December 2011.

The size of government payments to farmers varies spatially

Monday, May 9, 2011

While the Direct and Counter-cyclical Program and Federal crop insurance are both part of the farm safety net, they do not necessarily serve the same farmers. Looking at counties that received at least $20 in direct payments per cropland acre in 2008, or $20 in crop insurance indemnity payments averaged over 2007 to 2009, clear geographic patterns emerge. Direct payments tend to be higher in the Corn Belt (corn and soybeans), Mississippi Delta (cotton and rice), and the Texas-Louisiana Gulf Coast (cotton and rice). They are also high in Arizona (cotton), California (cotton and rice), and parts of the Southern Atlantic Seaboard. Crop insurance indemnity payments tend to be higher in the wheat-growing regions in the Northern Plains and parts of the Southern Plains, as well as North and South Carolina. Both programs are high in the Texas Panhandle (cotton and wheat) and across Alabama and Georgia (cotton and peanuts). This chart appeared in the December 2010 release of the Agricultural Income and Finance Outlook, AIS-90.

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