Big, Small or Bust: The Hollowing Out of Mid-Sized U.S. Farms

April 10, 2019 06:00 PM
 
he number of U.S. farms that are either very big or pretty small probably grew during a period when agriculture incomes fell 22 percent, pressuring mid-sized growers whose debt skyrocketed.

(Bloomberg) -- The number of U.S. farms that are either very big or pretty small probably grew during a period when agriculture incomes fell 22 percent, pressuring mid-sized growers whose debt skyrocketed.

The first new U.S. agricultural census since 2012, set to be released Thursday, could offer a sobering peek at America’s farming community in the five years ending in 2017, as well as suggesting where it’s headed. The best bet: A decade-long trend of consolidation isn’t likely to abate.

The new report will only capture part of a downturn that’s persisted into 2019, fueled by a trade war with China that’s limited buyers in a year with bumper crops. That’s boosted grower debt to a record $427 billion, spurring a continuing death watch on the mid-sized farm. The industry’s debt-to-income ratio is now the highest since the mid-1980s.

“We’ve had sort of a hallowing out of the middle,” said Todd Kuethe, an agricultural economist at the University of Illinois Urbana-Champaign, in a telephone interview. “Either you’re one of these large farms or you’re one of these rural, residential farms.”

The number of farms that have 2,000 acres (809 hectares) of land or more increased by 27 percent in 2012 from 1982 levels, the last census showed. Conversely, operations with between 500 and 999 acres dropped by about 30 percent. Meanwhile, the number of little guys -- largely part-time growers, or those farming for leisure or fun -- rose as well. Farms between 10 and 49 acres climbed 31 percent.

Jim MacDonald, an economist at the U.S. Department of Agriculture, attributes the increase in smaller farms mostly to better data collection by the government and also to people that may have, for example, retired to a rural area, purchased farm land and some cattle or crops.

As for the larger farms, that growth is all about costs, MacDonald said. Farmers have sought to increase scale to better spread their fixed costs and increase their purchasing power with seed and fertilizer companies. At the same time, a proliferation of new technology, including bigger and faster tractors, allow farmers to till ground more quickly and efficiently.

The 2017 census data being released by the USDA will provide a deep dive into grower demographics, from the sizes of farms by acreage and income, to the race and gender of those working in the fields. The last census, released in 2012, came just before net farm income peaked at a record $123 billion.

Dan Sumner, an agricultural professor at the University of California in Davis, says that consumers have benefited from farm consolidation with low prices for food and options like being able to choose between organic and non-organic, for example. Most farms, even as they’ve grown, are still family-owned, he said.

More evidence of consolidation is "not bad news,” Sumner said. “I always like to say the smarter brother stays on the farm. For the most part we have really talented people in farming.”

 

©2019 Bloomberg L.P.

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Comments

 
Spell Check

Somewhere in SD
Somerwhere in SD, SD
4/11/2019 10:10 AM
 

  All of this talk of over production is overrated! It truly is about being competitive in the world market, if we do not produce it here it will be produced in other countries. With the world population base where it is at today, it does not take many problems and stocks will become tight because of high world demand. We are not in the 80's when there was many years of production waiting in the bins, the supply out there today will not feed the world for a few years. That is a big difference. You certainly could see the grains rally this year with the weather troubles building, to get big soy yields beans needed to be planted early and corn is similar, this is not going to happen. if we promote socialist supply measures those acres will simply shift to a foreign country, that is what promoted vast expansion in South America in the past. That's reality.

 
 
kat
Central, IL
4/13/2019 01:12 PM
 

  Consolidation is not "good news" nor is it a "benefit to consumers." It is not a sign that the "smarter brother stays on the farm," as Dan Sumner (UC Davis) states, since it is often the "smarter brother" (or sister, in some cases) who, despite their experience and knowledge, lose the farm due to forces beyond their control. Consolidation is, however, an indication that large corporations have driven market prices so low, largely to increase their own corporate profits, that many farmers struggle to break even and are, as a result, forced to sell their beloved farm. Their struggles are not because they are bad farmers. They are a direct result of a system that rewards corporate greed and that benefits those with the deepest pockets, often far removed from the local community from which they plunder. Apologists like Mr. Sumner only perpetuate their myth, which is shameful and demeaning to many hard-working farmers, as well as deceitful and factually erroneous.

 
 
Tim M
Zumbrota, MN
4/14/2019 01:27 PM
 

  I question the sustainability of large consolidated farms. Many of which by their own admission can not survive without a supply of cheap labor. As American farmers convert from owner operators to owner managers, we are recreating the system former generations of my family left Europe to escape. Many of todays farms are unable or unwilling to pay wages that compete with other industries with similar skill sets. In my life I have milked cows , picked pumpkins and squash by the acre. I would not do that work today for what many farms pay. hence their need for low cost and often undocumented labor. If the US can't produce food and pay the people doing the work a good livable wage, then it's time for a serious discussion on how our food is produced.

 
 

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