Woods, W. Fred

English

Research Papers in Economics

POLICIES FOR NONCOMMERCIAL  FARMS
W Fred Woods
Extension Service, USDA
We  are told there are  some 2.2 million farms in the United States
and  that various  types  of federal  farm  programs  are  essential  for
their continued survival.  Actually we have been told the latter since
the  early  1930s  when  there  were  some  6.5  million  farms  in the
United States.
Most of us do not question the relationship  between total numbers
of farms and farm policy although we are fully aware that, of total
farms, somewhat  more than 600,000  are  commercial  and about  1.6
million are noncommercial.
Of course  the commercial  farms, those  with  annual agricultural
product sales of $40,000 and more, produce about 90 percent of U.S.
agricultural  products,  receive  about the  same proportion  of federal
farm program payments and earn all of the net farm income. On the
other hand, the noncommercial  farms, those with annual farm sales
under  $40,000,  produce about  10  percent  of farm products,  receive
less than 10  percent  of farm  program payments  and,  from a farm
accounting standpoint,  operate their farms at a net loss.
I hope this highlights the first point I want to make: when we talk
about farm policy  we generally  mean a commercial farm policy,  im-
plemented  through farm programs that are typically production  ad-
justment or commodity  programs with benefits tied to bushels and
bales  and hundred-weights  of production.  Obviously  the majority  of
benefits  go to those who produce the most.  That is the way the pro-
gram is designed. Noncommercial farmers will never benefit, at least
directly, from a policy that is aimed at commercial farms. That leads
to  several  questions.  Should  there  be  a policy  for  noncommercial
farmers?  What  form  should  it take?  Should  noncommercial  farms
even be classified as "farms"?  Is it fair to hold 1.6 million farms, for
lack of a better term, "hostage" in agriculture to justify welfare pay-
ments to a portion of our 600,000 commercial farms?
Is U.S.  agriculture products  or people? When Abraham Lincoln es-
tablished the U.S. Department of Agriculture  (USDA) 125 years ago
he called it "the people's department." I am sure it is not that today.
171All the blame should not be placed on USDA, however. The Congress,
the land grant community and others must share the responsibility.
I have urged for several years some effort to gather more detailed
information  about  the  noncommercial  farm  population  and  have
been repeatedly told that, though we really should know more about
this group, such an undertaking would be too expensive.  So what we
have had instead is a succession of studies of segments of "small" or
noncommercial farms. Frequently each study, like the blind men who
were  taken  to  "see"  the  elephant,  infers  its findings  to the  whole
population.
Many  of us, and  not only the politicians,  find  it more convenient
not to know very much about this major segment of our rural popula-
tion. For then we can, and currently  do, use it to support almost any
argument  we care to make.
We  can  blindly  assume that all  "places"  with  $1,000  or more  in
farm sales are farming businesses and argue that farm programs are
essential for the survival of 2.2 million U.S. farms.
Even when we talk about "noncommercial"  farms we tend to treat
them as an amorphous  group to make whatever  point captures  our
fancy at the moment. Want to create sympathy?  Then we address the
portion that are  "low-income,  limited resource,"  however  we are  de-
fining that at the  moment.  On the  other hand,  if we  are forced  to
admit that this group  does not benefit from current farm programs,
we say that they are "hobby farmers" who don't deserve government
assistance.  After  all, on the  average,  they  receive  about $18,000  a
year in nonfarm  income.
We say that they are high-cost, inefficient producers but the USDA
Cost and Returns Survey covers only a small fraction of these units of
production.  So we really don't know much about their costs or even if
the usual cost of production calculations are relevant.
Averaging this disparate group of 1.6 million units conceals a lot of
diversity.
It is not my purpose to proscribe  a definite  policy or set of policies
for noncommercial  agriculture.  What I want to do is to point out, on
the one hand, the dishonesty  inherent  in the insinuation that cur-
rent farm policies address the needs of both commercial and noncom-
mercial farms and farmers, and,  on the other, to indicate  something
about the widely disparate population to be addressed  if a policy  for
noncommercial agriculture  should emerge.
Noncommercial farms are a part of the pluralism of rural America.
Some farmers  are poor, some well-off; some  depend on farming for a
living,  most probably  don't;  some are  too old  to  do  anything else,
some don't want to do anything else. How  many are in each group?
We don't know very much about that.
172Probably  about 15  to 20 percent  are the traditional  "low-income,
limited-resource"  farms. About 25 percent of the operators are more
than 65 years old.
What about off-farm income that currently is high enough  for the
average  noncommercial  farmer  to  support  the  argument  that this
group doesn't  need  help?  Matthew  Smith,  Economic Research  Ser-
vice,  USDA,  using  1979  data,  found  this  income  distributed  more
unevenly  than  incomes  of all  rural  families  generally.  Looking at
small farms with annual  sales less than $20,000, he found that 50
percent of them earned less than 20 percent of the group's total in-
come with the remaining half earning more than 80 percent.
This latter half is responsible for the view, so often extended to the
whole group, that "farming"  activities for the noncommercial  group
range between  hobby  and tax shelter  and consequently are not de-
serving of public policy concern.  "Hobby,"  "residential," "weekend,"
"sundown"  and  "reaction"  are  terms  frequently  used  to  describe
them.
Cochrane,  in his recent  Choices article  (yes, the one  in which he
says extension  is old and tired and reluctant to take on new  policy
directions),  asserted  that  noncommercial  producers  of  traditional
crops were typically laggard with respect to adoption of new and im-
proved technologies  appropriate  for their size  of operation  and geo-
graphic  area  (Cochrane).  Admittedly  he  defined  his  target  group
somewhat differently than I do.
He is probably right about some of this group. But I would venture
the opinion that new and improved technologies  appropriate for their
size and area simply don't exist. Neither public nor private research-
ers, for the  most part, have  any interest in developing technologies
that  are  best  suited  for  small-and  moderate-sized  and  part-time
farms.
The  pious  please  of publicly  supported  research  administrators
that the vast majority  of agricultural research is size-neutral  simply
is unacceptable in the face  of structural change in U.S. agriculture.
I agree with Cochrane's contention that noncommercial farms have
received  short  shrift  from  government  agricultural  policy-
commodity  programs,  research  programs  and service  programs,  in-
cluding extension. It does indeed sometimes appear that farm policy
guidance  comes  from Matthew  13:12:  "For whosoever  hath,  to him
shall  be  given,  and he  shall  have  more  abundance:  but whosoever
hath not, from him shall be taken away even that he hath."
While at least half of the noncommercial farm group suffers serious
income  problems, commodity  programs won't  help them. Their  vol-
ume of production is just too  low.
Continuing  to  include  the  noncommercial  farm  group  with  com-
mercial farms is not only dishonest but will continue to obscure our
173ability  to address  the real problems  of this group.  Problems  facing
older  noncommercial  farmers  living on  social  security  are  like  the
problems facing all the elderly, farmers or not. Younger noncommer-
cial farmers, working full-time off the farm or not, should be viewed
in the context  of the overall labor  market with its problems  of dis-
placement.  Most of the fraction of noncommercial  farmers  who cur-
rently have  significant  nonfarm  income  have  solved,  in one  way or
the other, the labor adjustment  problem.  Others, though,  need help
in financing basic education,  vocational  training and retraining, job
research and the production of employment  opportunities.
These  needs and other broader, basic needs of whole rural commu-
nities  could  and should  be  addressed  in  a  comprehensive  national
rural development policy.  The kindest thing one could say about cur-
rent rural development policies and programs is that they are highly
fragmented.
The farm concerns of noncommercial  farmers should not be ignored
because farm income is an important part of overall income and well-
being of many of this group. Most proposals to help on the farm side
are aimed at making commercial farmers out of noncommercial  ones.
The  activities  coming out of these  proposals  can,  and have,  helped
some farmers.  Many,  however,  are  long on technical  production  ad-
vice,  but  short  on  the  economic  knowledge  and  entrepreneurship
needed to  find and supply  market  niches and to manage  intensive
and  exotic  enterprises.  These  programs  need  to  be  continued  and
strengthened  but need to recognize  that all noncommercial  farmers
don't want to be  commercial  farmers,  even if they have  the ability
and resources to be. There is also considerable room for innovation in
educational methodologies  needed to reach noncommercial  farmers.
Noncommercial  farms, whatever  we  call them, will,  like the poor,
be with us always. And well they should. In addition to contributing
to the quality of rural life, with all those values that most of us still
treasure, they fill a real economic need by filling local market niches
and providing, to some extent, a competitive yardstick against which
prices and quality  of the products of the commercial  farm segment
can be judged.
But equity and the need for  sound public policies  require that we
change  the  way  we  view  noncommercial  farms.  They  cannot  be
helped  by  traditional  commercial  agricultural  policies;  admitting
this may contribute to more sensible, and less costly, farm programs.
It may  also permit us to move ahead in developing  a sensible  rural
development  policy  that  really  would  benefit  all  2.2  million  U.S.
farms, rural areas and the rest of the economy  as well.
REFERENCES
Cochrane, Thad. "Agricultural  Policy: Stay  the Course." Choices, third quarter 1987,  p. 4
Smith, Matthew.  "Can Farm Policy  Help Small Farmers." Rural Development Perspectives, p. 12. Washington  DC:
ERS, USDA, Oct. 1986.
174

POLICIES FOR NONCOMMERCIAL FARMS

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