Economic Research Report No. (ERR-21) 42 pp

June 2006

Understanding U.S. Farm Exits

The rate at which U.S. farms go out of business, or exit farming, is about 9 or 10 percent per year, comparable to exit rates for nonfarm small businesses in the United States. U.S. farms have not disappeared because the rate of entry into farming is nearly as high as the exit rate. The relatively stable farm count since the 1970s reflects exits and entries essentially in balance. The probability of exit is higher for recent entrants than for older, more established farms. Farms operated by Blacks are more likely to exit than those operated by Whites, but the gap between Black and White exit probabilities has declined substantially since the 1980s. Exit probabilities differ by specialization, with beef farms less likely to exit than cash grain or hog farms.

Keywords: 1997 Census of Agriculture Longitudinal File, farm exit, farm exit probability, farm entry, farm structure, farm operator characteristics, farm operator life cycle

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