ERS Charts of Note
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.
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.
Friday, December 1, 2017
USDA’s commodity, Federal crop insurance, and conservation programs provided about $16.9 billion in financial assistance to farm producers and landowners in 2015. Over time, as agricultural production shifted to larger farms, these programs’ payments shifted to higher-income households—which often operate larger farms. In 1991, half of commodity program payments went to farms operated by households with incomes over $60,717 (adjusted for inflation). By 2015, this midpoint value, at which half of payments went to households with higher incomes, was $146,126. Similar trends hold for other programs, though with variability across programs and over time. For example, the midpoint income level for crop insurance indemnity payments increased from 2010 to 2013, but by 2015 had dropped below the 2008 level, to $143,806. For context, the median U.S. household income shows little change over the period and in 2015 was $56,516. Payments from commodity programs reduce financial risks to specific commodity producers, while payments from federally subsidized crop insurance mitigate yield and revenue risks. Payments from conservation programs aim to conserve natural resources and reduce environmental impacts from farming. This chart appears in the ERS report The Evolving Distribution of Payments from Commodity, Conservation, and Federal Crop Insurance Programs, released November 2017.
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.
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.
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.
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.
Thursday, January 26, 2017
Commercial-sized farms often require more management and labor than an individual can provide. Additional operators can offer these and other resources, such as capital or farmland. Having a secondary operator may also provide a successor when an older principal operator phases out of farming. In 2015, 39 percent of all U.S. farms (811,000 farms) had secondary operators. Because nearly all farms are family-owned, family members often serve as secondary operators; nearly two-thirds of all secondary operators were spouses of principal operators. Multiple-operator farms are most prevalent among nonfamily farms, accounting for 85 percent of that group. Some multiple-operator farms are also run by multiple generations. About 6 percent of all farms (and 16 percent of all multiple-operator farms) were multiple-generation farms, with at least 20 years’ difference between the ages of the oldest and youngest operators. Very large family farms had the highest share of operators from multiple generations: about 28 percent of these farms. This chart appears in the topic page for Farm Structure and Organization, updated December 2016.
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.
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.
Tuesday, November 1, 2016
Midsize farms, those with gross cash farm income (GCFI) between $350,000 and $1 million, represent an important link in the chain of family farms. Many U.S. midsize farms start out as successful small commercial farms, and as many as 15 percent of today’s midsize farms will become tomorrow’s large farms. In 2012, the U.S. had 125,441 midsize farms—the majority of which (over 70,000 farms) specialized in cash grains and oilseed crops. Another 15,000 midsize farms specialized in beef cattle. Midsize farms were found in greater proportions and numbers in the northern Great Plains (North Dakota, South Dakota, and Nebraska) and the Heartland (Iowa, Illinois, and Indiana) because these regions are best suited to growing cash grains and oilseed crops. In 2014, midsize farms in these two regions contributed nearly half of the total value of production on midsize farms. That same year, midsize farms accounted for about 6 percent of U.S. farms and 21 percent of the total value of production. This chart appears in the ERS report The Changing Organization and Well-Being of Midsize U.S. Farms, 1992-2014, released October 31, 2016.
Tuesday, October 4, 2016
Beginning farmers, those who have managed a farm or ranch for 10 years or less, generally have lower rates of business survival than more established farm operators. According to Census of Agriculture data, only 48.1 percent of beginning farmers with positive sales in 2007 also reported positive sales in 2012—compared with 55.7 percent of all farms. Running a larger operation and selling directly to consumers (at roadside stands, farmers’ markets, and so on) may help beginning farmers remain in business. As a whole, beginning farms with direct-to-consumer (DTC) sales had a 54.3 percent survival rate, while 47.4 percent of those without DTC sales survived. This pattern holds across operations of different sizes, as defined by annual sales. The difference in survival rates was substantial—ranging from 9 percentage points for the smallest farms to about 4 percentage points for the largest. Farmers with DTC sales can usually get a higher product price and reach a certain level of sales with less machinery and land. In turn, these farmers may have a more stable income and need to borrow less—further increasing chances of survival. This chart appeared in the September 2016 Amber Waves finding, “For Beginning Farmers, Business Survival Rates Increase With Scale and With Direct Sales to Consumers."
Wednesday, September 21, 2016
A notable characteristic of principal farm operators—the person most responsible for running the farm—is their relatively advanced age. In 2014, 33 percent of principal farm operators were at least 65 years old. This is nearly three times the U.S. average (12 percent) for older self-employed workers in nonagricultural businesses, according to the U.S. Bureau of Labor Statistics. Most older principal farm operators run small family farms. Retirement farms had the highest percentage of older operators (67 percent), followed by low-sales farms (41 percent) and moderate sales farms (28 percent). Older operators made up about one-fifth of each of the remaining groups. The advanced age of farm operators is understandable. The farm is also home for most farmers and they can gradually phase out of farming. Improved health and advances in farm equipment also allow operators to farm later in life than in past generations. This chart appears in the 2015 ERS report America’s Diverse Family Farms.
Tuesday, July 12, 2016
Farmers can receive government farm program payments from three broad categories of agricultural programs: commodity-related programs, working-land conservation programs, and land-retirement conservation programs. The distribution of payments in each category varies by farm type. In 2014, nearly 70 percent of commodity-related program payments went to moderate-sales, midsize, and large family farms, roughly proportional to their 80-percent share of acres in program-eligible crops. Midsize and large family farms together received about 60 percent of working-land payments that help farmers adopt conservation practices on agricultural land in production. Land-retirement programs pay farmers to remove environmentally sensitive land from production. Retirement, off-farm occupation, and low-sales farms received about three-fourths of these payments. Retired farmers and older farmers on low-sales farms may be more likely to take land out of production as they scale back their operations. Although government farm program payments can be important to the farms receiving them, 75 percent of farms in 2014 received no government payments. (These data summarize payments made in 2014. The Farm Act that was passed in 2014 introduced changes to commodity programs as part of a shift to greater reliance on crop insurance; most of those changes will be reflected in the source data beginning in 2015. Nevertheless, who receives particular government payments will continue to reflect farm and operator characteristics.) This chart is found in the ERS report America’s Diverse Family Farms: 2015 Edition.
Friday, June 10, 2016
Most labor on small U.S. dairy farms is provided by the operator and the operator’s family, whereas large dairy farms, while usually still family-owned and operated, rely extensively on hired labor. Labor productivity—output of milk per hour of labor—is much higher on larger dairy farms, with the largest (farms with milking herds of at least 2,000 cows) realizing 10 hundredweight (cwt) per hour of labor, compared to 2-4 cwt per hour on farms with herds of 50-500 head. Large farms operate differently than small dairy farms, as their size allows them to apply practices and technologies that result in higher milk yields and labor productivity. For example, farms with at least 500 cows are much more likely to milk three times a day, while smaller farms typically milk twice a day. Thrice-daily milking raises per-cow milk yields, allows farms to offer more work and higher pay to their hired labor, and creates more intensive use of milking equipment. Greater labor productivity is one source of the cost advantages accruing to larger dairy operations. This chart is based on data found in the ERS report, Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry, March 2016.
Friday, May 6, 2016
Data on direct-to-consumer (DTC) food sales were first collected in the 1978 Census of Agriculture, and DTC sales data have been collected in every agricultural census thereafter (except in 1987). In 1992, the number of DTC farms fell to the lowest level since information collection on DTC farms began; since that time, the number has slowly and steadily increased, peaking in 2012. The constant-dollar value of DTC sales increased as well, before declining slightly in 2012. Two factors may have contributed to the lack of growth in DTC sales over 2007-12. First, consumer demand for local food purchased through DTC outlets may have plateaued. Second, where local food systems have been thriving, farmers may have been able to direct more of their sales to “intermediated” outlets, such as local restaurants and retailers, institutions, and local aggregators. ERS research finds that the number of farms marketing through intermediated channels increased by 34 percent from 36,000 in 2008 to 48,300 in 2012 (not shown in graph). This chart updates one found in the ERS report, Direct and Intermediated Marketing of Local Foods in the United States, November 2011, and draws on information from Trends in U.S. Local and Regional Food Systems: A Report to Congress, January 2015.
Tuesday, April 19, 2016
While some small U.S. dairy farms earn profits and some large farms incur losses, financial performance in the dairy sector, on average, is linked to herd size. Data from 2010 (the latest available for dairy farms by herd size) show that a majority of dairy farms with milking herds of at least 1,000 cows generate gross returns that exceed total costs, while most small and mid-size dairy farms do not earn enough to cover total costs. Total costs include annualized capital recovery as well as the cost of unpaid family labor (measured as what the farm family could earn off the farm), in addition to cash operating expenses. Many more small and mid-sized farms are able to cover total costs, except for costs associated with capital recovery. Farms can operate in this way for years, covering operating expenses and providing a reasonable income for a farm family, until the expense of maintaining aging equipment and structures begins to erode the incomes that a family can earn from the farm. At that point, many families may decide to close the farm. Some—particularly those where a younger generation intends to continue the business—may seek financing to expand the dairy herd and realize lower costs through scale economies. This chart is found in the ERS report,
Thursday, April 7, 2016
Between 2007 and 2012, farms using direct-to-consumer (DTC) marketing had smaller growth in nominal gross sales (13.5 percent), on average, than farms using traditional marketing channels (19.3 percent). In addition, gross sales on farms using DTC marketing grew more slowly in each size class (as measured by 2007 sales). The slower growth for farms with DTC sales may stem from several factors. The 2012 Census of Agriculture shows farms using DTC marketing employ substantially more labor across all sales categories than farms without direct sales. Therefore, farms with DTC sales may need to hire additional workers at a lower scale of production, and the associated transaction costs may provide an obstacle to growth. Off-farm income opportunity may also play a role, as farms with DTC sales are more likely to have total household incomes both less than $50,000, and less than $20,000. The lower total household income for farms with DTC sales may reflect fewer off-farm income opportunities, leading these farms to continue farming even if they have less ability to expand production. This chart is found in the March 2016 Amber Waves feature, “Local Foods and Farm Business Survival and Growth.”
Thursday, March 24, 2016
Concentration levels in many U.S. agricultural markets have risen in recent decades, resulting in fewer buyers accounting for a growing share of purchases of agricultural commodities. This is particularly true for livestock markets. The four largest packers now account for nearly 70 percent of the value of all livestock purchased for slaughter, compared to 26 percent in 1980. For fed cattle, the concentration level is even higher, as the share of the top four firms increased from 36 percent to 85 percent between 1980 and 2012. This chart is from the ERS report, Thinning Markets in U.S. Agriculture: What are the Implications for Producers and Processors?
Friday, March 11, 2016
Two decades ago, most milk came from farms with fewer than 150 cows, on which a farm family handled milking, herd management, and crop production for feed. Today, while the United States still has many herds of 50 to 100 cows, most cows and milk production have moved to much larger farms, which are usually still owned and operated by families, but rely on hired labor for most farm tasks. Farms with milking herds of at least 1,000 cows accounted for nearly half of all cows in 2012, up from 10 percent of all cows in 1992. Producers continued to increase herd size in that period; there were 17 farms with herds of 4,000 or more cows in 1992, compared to 95 farms in 2002 and 234 in 2012. Costs are an important reason behind the shift, as production costs appear to be substantially lower, on average, on larger farms. The data underlying this chart are available in the ERS report, Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry, March 2016.