ERS Charts of Note
Monday, April 6, 2020
Over the past three decades, the midpoint acreage—where half of the acres of a specific crop are on farms that harvest more than the midpoint, and half are on farms that harvest less—has shifted to larger farms for almost all crops. In 1987, for example, the midpoint acreage for corn was 200 acres; it increased to 685 acres by 2017. Four other major field crops (cotton, rice, soybeans, and wheat) showed a very similar pattern: the midpoint for harvested acreage increased between 1987 and 2017 by amounts ranging from 166 to 243 percent. The midpoints also increased persistently in each census year, with the single exception of a decline in cotton from 2007 to 2012. Economic Research Service researchers extended the analysis to 10 more field crops and to 40 fruit, tree nut, berry, vegetable, and melon crops. Consolidation was nearly ubiquitous, as the 2017 midpoint acreage exceeded its 1987 level for 53 of 55 crops (the exceptions were lemons and plums/prunes). Consolidation was also substantial—the average 1987-2017 midpoint increase across the 55 crops was 148 percent, and 44 of 55 crops showed at least a 100-percent increase. Finally, consolidation was persistent over time, with continued midpoint increases for 42 crops between 2012 and 2017. This chart appears in the February 2020 Amber Waves feature, “Consolidation in U.S. Agriculture Continues.”
Monday, February 10, 2020
Contracts are widely used in the production and sale of U.S agricultural commodities. Under marketing contracts, ownership of the commodity remains with the farmer during production, with little involvement from the contractor. By comparison, under a production contract, the contractor usually owns the commodity (e.g., the chicks for poultry operations) during production and often provides specific inputs and services, production guidelines, and technical advice to the grower—who receives a contract fee for raising the commodity. Across all commodities, the value of contract production was nearly evenly split between marketing and production contracts in 2018. However, the use of contract types varies sharply across commodities. Most contract crop production (except for seeds and some processing vegetables) used marketing contracts, as did all contract dairy production. In contrast, production contracts were used extensively for the production of hogs and poultry. Some hogs may be raised under a production contract between a grower and an integrator (an intermediary that coordinates production), and then sold by the integrator under a marketing contract with a processor, who slaughters and processes the animal for sale. This chart updates data found in the July 2019 Amber Waves article, “Marketing and Production Contracts Are Widely Used in U.S. Agriculture.”
Monday, October 28, 2019
Contracts are widely used in the production and sale of U.S agricultural commodities. Farmers use contracts to obtain compensation for higher product quality, specify outlets for products, and provide assurance of sales to manage income risk or finance debt. Processors use contracts to gain timely flows of products and greater control over the characteristics and consistency of the products they acquire. Contracts cover relatively small shares of corn, soybean, and wheat production—and those shares have changed little in 20 years. In contrast, most poultry is produced under contract, and what is not produced under contracts between processors and growers is raised in facilities operated directly by processors. These differences between commodities reflect differences in markets and product characteristics. Because corn, wheat, and soybean producers have many potential buyers and can store their crops for long periods, cash markets work well for them. On the other hand, poultry producers make a substantial investment to produce birds that lose value quickly after reaching maturity, and there are usually just one or two local buyers for the product. Facing a risk that, without a contract in place, buyers would be able to force the price down, poultry producers are reluctant to invest in their business without the assurance of a contract. This chart appears in the December 2018 report, America’s Diverse Family Farms: 2018 Edition. It was also highlighted in the ERS’s Amber Waves Data Feature, “Marketing and Production Contracts Are Widely Used in U.S. Agriculture” in July.
Friday, October 11, 2019
Recent ERS research examined productivity trends in the Heartland region, which includes all of Iowa, Illinois, and Indiana, and parts of Minnesota, South Dakota, Nebraska, Missouri, Kentucky, and Ohio. Findings show that the smallest crop farms (less than 100 acres) fell further behind larger farms in terms of productivity between 1982 and 2012. Total factor productivity (TFP)—a measure of the quantity of output produced relative to the quantity of inputs used—grew at similar rates across farm-size classes except for the smallest, which had slower growth rates. (However, data for 2012 reflects a severe drought in the Heartland region that year and so does not follow historical trend lines.) While the TFP for farms in the four largest size categories increased by 47 to 59 percent between 1982 and 2012, TFP for the smallest farms increased by only 17 percent. Some technological advances in recent decades, such as very large combine harvesters and precision agriculture technologies, were not as advantageous for the smallest farms to adopt due to cost. This may help explain why the farm productivity growth of the smallest farms has lagged behind that of larger operations. This trend has resulted in a deterioration of the competitive position of farms in the smallest size category, and has likely contributed to a decline in their share of total output. This chart appears in the December 2018 Amber Waves feature “Productivity Increases With Farm Size in the Heartland Region.”
Thursday, September 12, 2019
Farms of different sizes rely on different mixes of labor. During the 5 years encompassing 2013–2017, the principal operator and the operator’s spouse provided most of the labor hours (75 percent) used on small farms—those with annual gross cash farm income (GCFI) under $350,000. That share fell to 44 percent on midsize farms (GCFI between $350,000 and $999,999), 19 percent on large farms (GCFI between $1 million and $4,999,999), and 2 percent on very large farms (GCFI of $5 million or more). Large and very large farms relied most on hired labor, which provided 64 and 69 percent of the labor hours on those farms, respectively. By comparison, hired labor provided about 12 percent of labor hours on small farms and 39 percent on midsize farms. Small and midsized farms are more numerous, but account for less production overall. Overall, principal operators and their spouses provided 47 percent of the labor hours used on U.S. farms in 2013–17, while hired labor provided 35 percent, and other operators and other unpaid family labor provided another 9 percent of total hours, the same share as contract labor (workers employed by firms hired by the farm). Contract laborers were particularly important on very large farms, contributing over 27 percent of labor hours. This chart updates data found in the March 2018 ERS report, Three Decades of Consolidation in U.S. Agriculture. This Chart of Note was originally published April 15, 2019.
Friday, July 12, 2019
Contracts are widely used in the production and sale of U.S agricultural commodities. Contracts provide farmers with a tool for managing income risks. Farmers also use contracts to obtain compensation for higher product quality, specify outlets for products, and provide assurance of sales for debt financing. Processors use contracts to ensure timely flows of inputs and greater control over the characteristics and consistency of the products they acquire. In 2017, 49 percent of livestock were raised under contract agreements—usually between farmers and processors—while contracts governed 21 percent of crop production. The share of crops produced under contract has declined in recent years as farmers turned to other methods for managing risks, such as diversification, hedging through futures markets, and investing in storage. This chart appears in the December 2018 report America’s Diverse Family Farms: 2018 Edition and the July Data Feature of the ERS Amber Waves magazine, “Marketing and Production Contracts Are Widely Used in U.S. Agriculture.”
Monday, April 15, 2019
Farms of different sizes rely on different mixes of labor. During the 5 years encompassing 2013–2017, the principal operator and the operator’s spouse provided most of the labor hours (75 percent) used on small farms—those with annual gross cash farm income (GCFI) under $350,000. That share fell to 44 percent on midsize farms (GCFI between $350,000 and $999,999), 19 percent on large farms (GCFI between $1 million and $4,999,999), and 2 percent on very large farms (GCFI of $5 million or more). Large and very large farms relied most on hired labor, which provided 64 and 69 percent of the labor hours on those farms, respectively. By comparison, hired labor provided about 12 percent of labor hours on small farms and 39 percent on midsize farms. Small and midsized farms are more numerous, but account for less production overall. Overall, principal operators and their spouses provided 47 percent of the labor hours used on U.S. farms in 2013–17, while hired labor provided 35 percent, and other operators and other unpaid family labor provided another 9 percent of total hours, the same share as contract labor (workers employed by firms hired by the farm). Contract laborers were particularly important on very large farms, contributing over 27 percent of labor hours. This chart updates data found in the March 2018 ERS report, Three Decades of Consolidation in U.S. Agriculture.
Friday, April 5, 2019
The distribution of U.S. farm production varies by commodity and farm size. In 2017, small family farms—those with annual gross cash farm income (GCFI) under $350,000—produced most of the hay (76 percent) and poultry (60 percent). As a group, small family farms accounted for about 89 percent of all U.S. farms and 26 percent of U.S. agricultural production. By comparison, large-scale family farms—those with GCFI of at least $1 million—produced most of the dairy (68 percent), high-value crops like fruits and vegetables (56 percent), and cotton (55 percent). Large-scale family farms accounted for about 3 percent of all farms and 39 percent of total production. Midsize family farms—those with GCFI between $350,000 and $1 million—contributed large shares of cash grains and soybeans (36 percent), cotton (30 percent), and poultry (29 percent). These midsize farms together accounted for about 6 percent of all farms and 23 percent of total production. Nonfamily farms account for the remaining farms and production. This chart appears in the ERS topic page for Farm Structure and Organization, updated December 2018.
Tuesday, March 19, 2019
Past ERS research on consolidation in the U.S. farm sector has documented a widespread shift in agricultural production to large-scale operations. This structural change has likely been partly driven by productivity advantages enjoyed by larger operations. Recent ERS research examined consolidation trends in the Heartland region—which includes all of Iowa, Illinois, and Indiana, and parts of Minnesota, South Dakota, Nebraska, Missouri, Kentucky, and Ohio. Between 1982 and 2012, the Heartland’s largest crop farms (more than 1,000 acres) increased their share of total production in the region from 17 percent in 1982 to 59 percent in 2012. In contrast, over the same period, the share of total production declined for the four smaller farm size categories. Midsized farms (250–500 acres) experienced the largest decline in market share, falling from about 30 percent in 1982 to 10 percent in 2012. In aggregate, the productivity of crop farms in the Heartland region increased by 64 percent, or 1.5 percent per year, between 1982 and 2012. ERS researchers estimate that about one-sixth of this productivity growth was attributable to the shift in production to larger farms. This chart appears in the December 2018 Amber Waves feature “Productivity Increases With Farm Size in the Heartland Region.”
Monday, December 17, 2018
Farmers use contracts to manage price and production risks and ensure a market for their products. Processors, integrators, and buyers use contracts to procure farm products with specific qualities and reduce supply uncertainty. The share of value of production that was under contract across all commodities in 2017 was 34 percent, close to the share in 1996/1997 (32 percent). More than 50 percent of U.S. peanuts, tobacco, sugar beets, hogs, and poultry/eggs in 2017 were produced under contract. In contrast, less than 20 percent of wheat, soybeans, and corn were grown under contract. The share of tobacco production under contract jumped from less than 1 percent in 1996/1997 to 90 percent in 2017, as cigarette manufacturers switched from cash auctions to contracts to ensure a sufficient supply of specific types of tobacco. The share of hogs produced under contract nearly doubled, from 34 percent in 1996/97 to 63 percent in 2017. Hog processors can use contracts to better control the characteristics of the hogs they acquire, helping them offer more consistent quality of meat to consumers. The decline in dairy reported under contract may reflect changing perceptions of farmers about their transactions with dairy cooperatives; more research is required to clarify that dynamic. This chart appears in the ERS report America’s Diverse Family Farms: 2018 Edition, released December 2018.
Monday, October 29, 2018
Unlike cropland, which has shifted toward larger farms since the 1980s, the other major component of U.S. farmland—permanent pasture and rangeland—has shifted to smaller farms. In 1987, farms and ranches with at least 10,000 acres of pasture and rangeland operated more than half (51 percent) of all pasture and rangeland, while those with less than 1,000 acres held 15 percent. By 2012, the share operated by the largest acreage class had gradually fallen to 44 percent, while the share of farms and ranches with less than 1,000 acres of pasture and rangeland had risen to 22 percent. Consolidation in cropland is driven by technologies—such as bigger, faster, and smarter pieces of equipment—that allow a single farmer or farm family to manage more cropland. Improvements in those technologies have not led to consolidation in pasture and rangeland, however, because planting, spraying, and harvesting machinery are rarely used on pasture and range. Pasture and rangeland are primarily used for grazing beef cows and their calves, although other livestock such as sheep, horses, and bison are also grazed. In 2012, 45 percent (over 400 million acres) of all U.S. farmland was devoted to pasture and grazing land. This chart appears in the March 2018 ERS report, Three Decades of Consolidation in U.S. Agriculture.
Monday, August 13, 2018
Commodity mixes differ by farm size. For example, hogs and poultry accounted for 29 percent of the production of small farms in 2016, a much greater share than in other size classes. Small farms typically raise the animals for processors under contracts, which reduces price risks and allows them access to bank financing. Dairy production and fruit, vegetable, and nursery crops—where economies of scale give an advantage to larger farms—accounted for 59 percent of the output of very large farms, compared to 12 percent of the output of small farms. Midsize farms emphasize corn and soybean production, as well as other field crops. This chart updates data found in the March 2018 ERS report, Three Decades of Consolidation in U.S. Agriculture.
Friday, July 6, 2018
Livestock production has become increasingly specialized, relying less on homegrown and more on purchased feed. Since fully specialized farms have no cropland to absorb manure as fertilizer, they must move their manure off the farm. In 2015, 37 percent of all livestock were produced on farms that had no crop production, up from 22 percent in 1996. Specialization grew in each major livestock commodity during this period. In 2015, nearly 53 of all poultry production occurred on farms that raised no crops, up from 44 percent in 1996. Poultry manure is lighter than other manure and easier to transport, making it cheaper for a contract poultry operation to dispose of all its manure off the farm and reducing the incentive to grow crops on farm. Specialization increased substantially in hog production, where 31 percent of production occurred on farms with no crops in 2015, up from 14 percent in 1996. This chart appears in the March 2018 ERS report, Three Decades of Consolidation in U.S. Agriculture.
Friday, May 25, 2018
A notable characteristic of principal farm operators (those most responsible for running the farm) is their relatively advanced age. In 2016, 36 percent of principal farm operators were at least 65 years old, compared with only 14 percent of self-employed workers in nonagricultural businesses. Older operators ran 37 percent of all small family farms—those with annual gross cash farm income (GCFI) before expenses under $350,000—including 68 percent of retirement farms and 38 percent of low-sales farms. By comparison, older operators ran 21 percent of large family farms (GCFI of $1 million to $4,999,999) and 23 percent of very large family farms (GCFI of $5 million or more). Improved health and advances in farm equipment enable operators to farm later in life than in past generations. The farm is also home for most farmers, and they can gradually phase out of farming by renting out or selling parcels of their land. Some larger, more commercially oriented farms run by older farmers may have a younger, secondary operator who might eventually replace the principal operator. This chart appears in the ERS report America's Diverse Family Farms: 2017 Edition, released December 2017.
Thursday, May 10, 2018
Over the last three decades, the midpoint acreage—where half of acres are on farms that harvest more than the midpoint, and half are on farms that harvest less—has shifted to larger farms for almost all crops. In 1987, for example, the midpoint for corn was 200 acres, which increased to 600 acres by 2012. Four other major field crops (cotton, rice, soybeans, and wheat) showed a very similar pattern: the midpoint for harvested acreage more than doubled for each crop between 1987 and 2012. The midpoints also increased persistently in each census year, with the single exception of a decline in cotton in 2012. ERS researchers repeated the analysis for a total of 55 crops in all. Consolidation was nearly ubiquitous, as the midpoint increased in 53 of 55 major field and specialty crops between 1987 and 2012. Consolidation was also substantial, as most of these midpoint increases were well over 100 percent—and it was persistent, as most midpoints increased in most census years. This chart appears in the ERS report Three Decades of Consolidation in U.S. Agriculture, released March 2018.
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.
Thursday, March 1, 2018
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 2016, nearly 40 percent of all U.S. farms had a multiple operators. Because nearly all farms are family owned, family members often serve as secondary operators. For example, 64 percent of secondary operators were spouses of principal operators. Some multiple-operator farms were also run by multiple generations, with a difference of at least 20 years between the ages of the youngest and oldest operators. These multiple-generation farms accounted for about 7 percent of all U.S. farms. Large-scale family farms and nonfamily farms were more likely to be operated by multiple generations, at about 20-25 percent of those farms. However, the operators in nonfamily multiple-generation farms were likely unrelated managers from different generations. This chart appears in the December 2017 ERS report, America’s Diverse Family Farms, 2017 Edition.
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.