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.1997 Census of Agriculture Longitudinal File, farm exit, farm entry, farm structure, farm operator characteristics, farm operator life cycle, Agricultural Finance,

Agricultural Contracting Update: Contracts in 2003

Marketing and production contracts covered 39 percent of the value of U.S. agricultural production in 2003, up from 36 percent in 2001 and a substantial increase over estimated values of 28 percent for 1991 and 11 percent in 1969. Large farms are far more likely to contract than small farms; in fact, contracts cover over half of the value of production from farms with at least $1 million in sales. Although use of both production and marketing contracts has grown over time, growth is more rapid for production contracts, which are largely used for livestock.contracts, contracting, marketing contracts, production contracts, vertical integration, vertical coordination, market structure, risk analysis, price signals, Industrial Organization, Marketing,

Agricultural Contracting Update: Contracts in 2008

Marketing and production contracts covered 39 percent of the value of U.S. agricultural production in 2008, up from 36 percent in 2001, and a substantial increase over 28 percent in 1991 and 11 percent in 1969. However, aggregate contract use has stabilized in recent years and no longer suggests a strong trend. Contracts between farmers and their buyers are reached prior to harvest (or before the completion stage for livestock)and govern the terms under which products are transferred from the farm. Contracts are far more likely to be used on large farms than on small farms, and they form one element in a package of risk management tools available to farmers. Production contracts are used widely in livestock production, while marketing contracts are important to the production of many crops.Production contracts, marketing contracts, farm structure, farm size, farm income, contracting, Agricultural Resource Management Survey, ARMS, risk analysis, Agribusiness, Farm Management, Livestock Production/Industries, Risk and Uncertainty,

FARM OPERATIONS FACING DEVELOPMENT: RESULTS FROM THE CENSUS LONGITUDINAL FILE

This paper examines farms in areas undergoing development, using a longitudinal file constructed by linking several agricultural censuses. Individual farms are followed over the 1982-97 period. Survival, exit, and entrance rates are presented for three types of farms: recreational, adaptive, and traditional. The three types of farms are located where one would expect. Traditional farms are concentrated in nonmetropolitan (nonmetro) counties, while adaptive farms are concentrated in metro core counties. Recreational farms are least common in nonmetro nonadjacent areas, where off-farm opportunities are fewest. The concentration of adaptive farms in metro core counties does not appear to be the result of these farms simply surviving an urban environment better than traditional and recreational farms. In fact, adaptive farms have lower survival rates than traditional farms. Adaptive farms instead had a relatively high entrance rate.urban development, urbanization, specialty agriculture, high-value agriculture, farming, farm structure, Farm Management,

AGRICULTURAL STRUCTURAL ADJUSTMENT TO GOVERNMENT POLICIES: EMPIRICAL EVIDENCE

Economic theory alone cannot predict the impacts of government payments on farm structure. We estimate a 5-equation model for the 1978-96 period to measure the impacts using state micro and macro data sets. We found that government payments were positively associated with farm size and farm exits, but negatively associated with the extent of consolidation in farm production and the off-farm work of operators.government payments, productivity, farm size, farm exits, off-farm work, consolidation, Agricultural and Food Policy,

Small Farms in the United States: Persistence Under Pressure

Ninety-one percent of U.S. farms are classified as small—gross cash farm income (GCFI) of less than $250,000. About 60 percent of these small farms are very small, generating GCFI of less than$10,000. These very small noncommercial farms, in some respects, exist independently of the farm economy because their operators rely heavily on off-farm income. The remaining small farms—small commercial farms—account for most small-farm production. Overall farm production, however, continues to shift to larger operations, while the number of small commercial farms and their share of sales maintain a long-term decline. The shift to larger farms will continue to be gradual, because some small commercial farms are profitable and others are willing to accept losses.Family farms, farm businesses, farm financial performance, farm-operator household income, farm operators, farm structure, noncommercial farms, small farms, small commercial farms, Agricultural and Food Policy, Farm Management,

PROFIT PATTERNS IN THE U.S. AND THE WEST, 1992 AND 1997: WHAT COUNTY-LEVEL DATA REVEAL

We examine whether there are spatial relationships in U.S. production agriculture's profitability across regions and over time. We test the traditional view that factor markets (approximately) adjust to equalize agriculture's net returns over space and time using county-level data from the UDSA's Census of Agriculture, 1992 and 1997. We estimate Gini coefficients and calculate the Theil Entropy Measure (TMI) to examine changes in the concentration of returns over space and time, and to decompose the variation in inequality in returns due to between-region variation in returns. Although factor markets (approximately) adjust to equalize net returns over space and time, there is still considerable variability in returns within regions and within states. Use of county-level (Census of Agriculture) and farm-level data (ARMS Survey) to help highlight these differences. In general, farm-level Gini coefficients have remained fairly constant but show a mild increase in concentration since the 1996 FAIR Act. The TMI analysis reveals that in 1997 about 54 percent of the variation in total returns (net cash returns) was due to within-region variation, and about 46 percent was due to (average) between-region variation (compared to 53 and 47 percent in 1992). Total U.S. inequity of net cash returns increased from 0.14 in 1992 to 0.21 in 1997.Gini coefficient, Theil Entropy Measure, net cash returns, net cash and net farm income, farm structure, Agricultural Finance, Community/Rural/Urban Development, Q, Q140,

Million-Dollar Farms in the New Century

Million-dollar farms—those with annual sales of at least $1 million—accounted for about half of U.S. farm sales in 2002, up from a fourth in 1982 (with sales measured in constant 2002 dollars). By 2006, million-dollar farms, accounting for 2 percent of all U.S. farms, dominated U.S. production of high-value crops, milk, hogs, poultry, and beef. The shift to million-dollar farms is likely to continue because they tend to be more profitable than smaller farms, giving them a competitive advantage. Most million-dollar farms (84 percent) are family farms, that is, the farm operator and relatives of the operator own the business. The million-dollar farms organized as nonfamily corporations tend to have no more than 10 stockholders.Contracting, family farms, farm businesses, farm financial performance, farm-operator household income, farm operators, farm structure, farm type, million-dollar farms, Farm Management,

U.S. Small Farms: Decline and Persistence?

We use two comprehensive and representative USDA databases to assess the performance of small farms in the U.S. Farm production is shifting to much larger farms, and the number of small commercial farms is declining. Most large U.S. farms remain family-owned and operated enterprises, and most remain small businesses by U.S. standards. Small commercial farms tend to focus on three commodities: beef cattle, grains and oilseeds, and poultry. On average, large farm financial returns substantially exceed those on small farms, but the range of performance among small farms is quite wide. About one quarter of the nearly 800,000 small commercial farms show very good financial returns.small farms, structural change, farm income, Agricultural and Food Policy, Q12,

Recent Changes in Farm Structure: A Canada-U.S. Comparison

Following a series of bilateral and multilateral agreements, the past two decades have seen increased trade and investment liberalization between Canada and the United States in the agri-food sector. Changes in trade policy are one of several paths by which farm structure can change. This increased liberalization, together with the largest drop in Canadian farm numbers recorded by the Census of Agriculture in thirty years, has provided the impetus to review some aspects of farm structure. In particular, this article presents the latest Canadian and U.S. data on the number of farms by sales class, the concentration of sales and other production-related variables, and the distribution of income and receipts. We explore whether significant changes in the latter two elements of farm structure have occurred during this period of trade and investment liberalization.Crop Production/Industries, Farm Management, International Relations/Trade,