Q. What role do small farms play in U.S. agriculture?
A. There are more than 1 million very
small farms, with annual sales of less than $10,000, in
the United States, and their numbers have grown in recent
years. However, when we consider slightly larger (and
more commercial) small farms, their numbers and share
of farm production have been declining sharply. In table
1, we show recent changes in farm numbers and in the
share of farm production for farms of different sizes,
using sales as a measure of size (all sales figures are
adjusted for inflation, and expressed in 2002 dollars).
The ERS farm typology
defines small family farms as those with sales below $250,000,
and we further sort small farms into three sales classes:
less than $10,000, $10,000 to $100,000, $100,000 to $250,000.
Large farms are sorted into two sales classes, and we
placed all nonfamily farms into a separate class.
While the total number of U.S. farms changed little between 1989
and 2002, the distribution of farm sizes widened—there were
more very small farms and very large farms at the end of the period.
But farm numbers in the middle ($10,000 to $250,000) fell sharply,
from 918,000 farms in 1989 to 775,000 in 2002.
The locus of production also shifted sharply. The largest family
farms, with at least $500,000 in annual sales, accounted for 44
percent of the value of production in 2002, compared to 29 percent
just 13 years earlier. That shift was precisely mirrored by the
declining share of production from small family farms, 45.9 to 30.7
Small farms hold large output shares in just a few commodity groups.
While small farms account for nearly half of cash grain (including,
corn, wheat, soybeans, grain sorghum, and rice) and oilseed production,
large operations handle almost all production in the industrialized
hog and poultry sectors.
Small farms account for less than 15 percent of high-value crop
production (fruits, vegetables, melons, tree nuts, greenhouse and
nursery crops, and horticultural specialties).
Even though large farms dominate high-value production, such crops
are important for many small farms. Table
2 reports the five most important commodities (ordered by value
of production) for size class, together with the commodity’s
share of total production in that class. For very small family farms
(less than $10,000 in sales), two commodities—cattle and hay—account
for two-thirds of sales. Mid-sized family farms tend to be much
more diversified than very large or very small farms. Cash grains
and soybeans are important revenue sources, and have grown steadily
more important over time, as livestock production (particularly
dairy, poultry, and hogs) migrates to the largest farms. Non-family
farms are highly specialized, with cattle (feedlots) and high-value
crops accounting for 70 percent of their production. Also, the largest
family farms tend to specialize in high-value crops and livestock
production (cattle feedlots, large dairy operations, and confined
poultry and hog feeding enterprises).
Only two commodities are among the top five commodities for every
size of farm—cattle and high-value crops. But small farms
operate cow-calf and backgrounding operations, often with less than
50 cattle and often based on grazing. As they mature, those cattle
move to feedlots on the largest farms, which feed rations of purchased
feed to very large numbers of cattle (up to 100,000) in pens. In
short, small cattle operations are unlikely to grow into large cattle
operations, since they perform much different functions.
In contrast, small farms produce a wide variety of different high-value
crops, just as large farms do. Moreover, initial investments in
high-value production can be quite modest. Little land is needed,
and operators may not need a great deal of physical capital. The
question on emergent adaptive farms
looks more closely at high-value crops, and at small farms that
have grown into commercial high-value enterprises.