USDA latest compilation of the size, ownership and productivity of U.S. agricultural operations offers some cautionary data on where the nation’s food productivity is headed in the future.
The latest report on the agricultural economy is both enlightening and sobering.
Enlightening because the data dispel one of the most prevalent myths surrounding the nation’s farms and farming community. Sobering because the financial status of way too many farms in this country is precarious, which doesn’t bode well for the future of domestic food production.
Before diving into the data, let’s specify that if sustainability is an issue, if reducing the impact of energy consumption matters long-term, heck, if national security is a priority, then food self-sufficiency is critical.
Right now, the prospects of ensuring all that are not good.
The study in question is a new report recently released by USDA’s Economic Research Service that documents the role of family farms in U.S. agricultural production, including financial performance, sources of farm household income and extent of off-farm work. Equally important, the 2014 Edition of The Family Farm Report provides detailed information on the structure of U.S. farms, including the relationship of farm size and type to agricultural production, data which shatter the myth too many people believe that most farming in America is done by giant corporate entities in bed with Monsanto and entrenched with Big Ag commodity brokers, processors and food marketers.
According to the report, family farms accounted for 97 percent of U.S. farms in terms of numbers (2011 data). That bears repeating: Only 3 percent of all U.S. farms are actually corporate-owned and operated. Talk to a couple dozen people on the street about that statistic, and you’d probably elicit guesstimates that reversed those numbers.
Even more compelling: Small family farms— ones that report annual gross farm income of less than $350,000 a year — comprise 90 percent of all farms, according to USDA, and account for 52 percent of the nation’s farmland. Again, I can guarantee that you’d have to search to find a typical urban resident who would answer with those numbers if asked about the relative prevalence of small farmers.
Of course, small farms account for a smaller share of production, about 26 percent, according to the report. Other than broilers, 56 percent of which are grown by small farmers — or maybe they should be more accurately labeled as contractors — small farms produce only about one-quarter of total domestic agricultural production.
Midsize and large-scale family farms combined are responsible for some 60 percent of U.S. agricultural output. In terms of numbers, larger family farms make up only about 8 percent of all U.S. farms, but they account for nearly two-thirds of the value of U.S. agriculture.
Of the corporate-owned agricultural operations, “non-family farms” in USDA parlance, 85 percent of their output was from farms with gross farm income of $1.0 million or more.
Financial straits ahead
Now for the sobering part of the report.
According to USDA data, about three-fourths of U.S. farms are in “the critical zone” for rate of return on assets (a value less than 1 percent), and two-thirds are in the critical zone for operating profit margin (a value less than 10 percent). The smaller the farm operation in terms of revenue, the worse the financial situation. In fact, as anyone connected with agriculture knows all too well, the majority of small-farm households rely on off-farm income to stay afloat.
The USDA report asked the pertinent question: “Given small farms’ poor financial performance, why do so many continue to exist?”
The answer is clear: “Small-farm households typically receive substantial off-farm income and do not rely primarily on their farms for their livelihood [and] they often invest in their farm operations with off-farm income.”
That’s what is concerning. It’s well-known that the median age of farmers in some key producing regions, such as the Midwest, is in the mid-50s. That means in the next decade there will be a changing of the guard — hopefully. But if family members decide not to continue in agriculture, many of those smaller farms are going to be sold, subdivided and retired from production permanently.
The loss of farmland is almost as damaging as the exodus of farmers.
The Family Farm Report demonstrates that we need large-scale, highly productive farms if the nation is to maintain its agricultural productivity. The data don’t lie: The majority of our food and fiber comes from big, well-capitalized farms with an efficiency of scale that is essential to the availability and affordability of the food supply.
But we also need the millions of small farmers and ranchers just as much. Even though their total output is far less than that of bigger operations, in terms of numbers and acreage they’re critical to the long-term future of U.S. farm productivity.
We lose small farmers, and we lose the farmland in which they formerly operated.
We lose that farmland, and we’re never getting it back.
That’s why I buy as much food locally as possible, why I patronize farmer’s markets and the local co-op that carries seasonal produce grown in the Northwest. Our family buys into a Community Supported Agriculture project, we buy shares of beef from a local farmer and in summertime, we try to hit several U-Pick farms in the area to stock up on fruits and vegetables.
I believe all that is one way to help small farmers — who have to become specialty growers these days — to stay in business. When they prosper, all of farming benefits.
And when the collective farm community benefits, it’s good for the 98% of us who don’t till the soil, raise livestock or tend to orchards and vineyards.
As the USDA report so clearly shows, we need both big and not-so-big farms. For now, and for the future.
The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.