ERS Charts of Note
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.
Thursday, September 1, 2016
Ninety-seven percent of U.S. farms are family farms where the majority of the business is owned by the operator and individuals related to the operator. The remaining 3 percent are nonfamily farms, which produced 15 percent of the value of agricultural output in 2011. Two features of family farms stand out. First, there are many small family farms (having less than $250,000 in annual sales); together, they account for 87 percent of all U.S. farms. Second, large-scale family farms account for most of the Nation?s agricultural production?70 percent in 2011, as measured by value of output. The share of farm assets held by small farms is substantially higher than their 15-percent share of production. Small-scale family farms hold about 56 percent of all farm assets. The disproportionate asset holdings of smaller farms reflects their overinvestment, particularly in land and dwellings, for purposes other than production, and economies of size enjoyed by larger farms that allow them to produce more with the resources they control. This chart updates one found in the 2010 Edition of the ERS report, America?s Diverse Family Farms, with 2011 Agricultural Resource Management Survey data recently added to the ERS Web tool.
Thursday, September 1, 2016
While the average leverage of farm businesses?as measured by debt-to-asset (D/A) ratios?has decreased over time, some farms remain highly leveraged. The D/A ratio that implies financial vulnerability varies with individual farm business characteristics, but a commonly used threshold to indicate high leverage is a D/A ratio greater than 0.4. Using this definition, highly-leveraged farms consistently accounted for a disproportionate but declining share of the total value of production by all farm businesses between 1992 and 2011. In 2011, 5.3 percent of farm businesses were highly leveraged and contributed 13.4 percent of farm businesses? total value of production; by comparison, in 1992, 9.5 percent of farm businesses, responsible for 19.6 percent of production, were highly leveraged. The declining role of highly-leveraged farms suggests the sector?s financial resiliency has increased over time because financial shocks?such as an unexpected drop in income or a sudden jump in interest rates?would likely affect fewer farm businesses, producing a smaller share of the value of production. This chart appears ?Farm Businesses Well-Positioned Financially, Despite Rising Debt? in the April 2014 Amber Waves online magazine.
Thursday, September 1, 2016
In the early 1960s, over 80 percent of broiler production was marketed as whole birds, and only 2 percent as further processed products. By 2011, only 12 percent of production was marketed as whole birds, as production shifted to cut-up parts (42 percent of production) and to further processed products such as boneless chicken, breaded nuggets and tenders, and chicken sausages (46 percent of production). The shift to cut-up and processed products spurred growth in demand for chicken, which in turn elicited production increases. Different products come from birds of different sizes, and changes in demand composition have shifted production toward larger birds for processed products. Smaller broilers are usually marketed bone-in (whole or cut into parts) to the fast-food and foodservice sectors, while intermediate sizes are normally marketed to retail groceries in tray-pack or bagged forms. The largest birds can be sold whole as roasters but are also marketed deboned and processed into parts and value-added products. Growing and processing birds of such widely varying sizes requires tight coordination between the hatchery, grow-out, slaughter, and processing stages. This chart is found in the ERS report, Technology, Organization, and Financial Performance in U.S. Broiler Production, EIB-126, June 2014.
Thursday, September 1, 2016
Between 1960 and 1995, annual broiler slaughter in the United States grew from 1.5 to 7.4 billion birds?4.6 percent per year, on average. With birds also getting larger?from an average of 3.35 pounds to 4.66?total live-weight production grew at an average rate of 5.6 percent per year. While average weights continued to grow steadily after 1995, growth in annual slaughter slowed sharply and then fell in 2009 and again in 2012. Total live-weight production reached 49.8 billion pounds in 2008, but did not exceed that figure until 2013. In all, live-weight production grew by just 1.3 percent per year between 2003 and 2013, one-fourth of the 1960-1995 growth rate. High produc?tion growth in earlier decades?and slowing growth later?reflected movements in demand for chicken meat. The cessation of broiler industry growth, due to slowing growth in population, per capita consumption of chicken, and exports, places new financial pressures on broiler producers and new stresses on industry organization. This chart is found in Technology, Organization, and Financial Performance in U.S. Broiler Production, EIB-126, June 2014.
Thursday, September 1, 2016
The United Nations has designated 2014 as the ?International Year of Family Farming? to highlight the potential family farmers have to help feed the world. But what is a family farm? USDA?s Economic Research Service (ERS) defines family farms as those whose principal operator, and people related to the principal operator by blood or marriage, own most of the farm business. Under the ERS definition, family farms represent 97.6 percent of all U.S. farms and are responsible for 85 percent of U.S. farm production. Other definitions rely on who supplies the labor. Large farms often rely heavily on hired labor, but farm families who own the farm and provide most of the farm?s labor still account for 87.1 percent of U.S. farms, with 57.6 percent of farm production. Some farms also hire firms to perform some farm tasks. If we account for the labor provided by those firms, family farms that provide most of the labor used on the farm still account for 86.1 percent of farms and nearly half of production. This chart can be found in ?Family Farming in the United States? in the March 2014 Amber Waves.
Thursday, September 1, 2016
Most labor on small U.S. dairy farms is provided by the operator and the opera?tor?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.
Thursday, September 1, 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, September 1, 2016
Median total household income among all farm households ($57,050) exceeded the median for all U.S. households ($50,054) in 2011. More than half of U.S. farms are very small, with annual sales under $10,000; the households operating these farms typically draw all of their income from off-farm sources. Median household income and income from farming increase with farm size, as defined by sales. The typical household operating the largest commercial farms earned about $380,000 in 2011, and most of that came from farming. This chart is found in the chart collection, Ag and Food Statistics: Charting the Essentials, on the ERS website, updated September 2013.