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Briefing Rooms

Farm Structure: Questions and Answers

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 percent.

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's share of production in major commodity groups, 2001

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.


For more information, contact: Robert Hoppe

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Updated date: July 9, 2002