Big, Small or Bust: The Hollowing Out of Mid-Sized U.S. Farms

(Bloomberg) -- The number of U.S. farms that are either very big or pretty small grew during a period when agriculture incomes fell 22 percent, pressuring mid-sized growers whose debt skyrocketed.

The first new U.S. agricultural census since 2012, released Thursday, offers a peek at America’s farming community in the five years ending in 2017, confirming that a decade-long trend of consolidation isn’t abating.

Key Highlights:

  • There are 2.04 million farms and ranches, down 3.2 percent from 2012
  • The smallest (1-9 acres) farms make up 0.1 percent of all farmland, while the largest (2,000 or more acres) make up 58 percent
  • Just 105,453 farms produced 75 percent of all sales in 2017, down from 119,908 in 2012
  • Of the 2.04 million farms and ranches, the 76,865 making $1 million or more in 2017 represent just over two-thirds of the $389 billion in total value of production, while the 1.56 million operations making under $50,000 represent just 2.9 percent

USDA 2017 Agricultural Census Farm Economics Summary (Table)

The new report only captures part of a downturn that’s persisted into 2019, fueled by a trade war with China that’s limited buyers in a year with bumper crops. That’s boosted grower debt to a record $427 billion, spurring a continuing death watch on the mid-sized farm. The industry’s debt-to-income ratio is now the highest since the mid-1980s.

“We’ve had sort of a hallowing out of the middle,” said Todd Kuethe, an agricultural economist at the University of Illinois Urbana-Champaign, in a telephone interview. “Either you’re one of these large farms or you’re one of these rural, residential farms.”

The number of farms that have 2,000 acres (809 hectares) of land or more increased by 27 percent in 2012 from 1982 levels, the last census showed. Conversely, operations with between 500 and 999 acres dropped by about 30 percent. Meanwhile, the number of little guys -- largely part-time growers, or those farming for leisure or fun -- rose as well. Farms between 10 and 49 acres climbed 31 percent.

Big, Small or Bust: The Hollowing Out of Mid-Sized U.S. Farms

Jim MacDonald, an economist at the U.S. Department of Agriculture, attributes the increase in smaller farms mostly to better data collection by the government and also to people that may have, for example, retired to a rural area, purchased farm land and some cattle or crops.

As for the larger farms, that growth is all about costs, MacDonald said. Farmers have sought to increase scale to better spread their fixed costs and increase their purchasing power with seed and fertilizer companies. At the same time, a proliferation of new technology, including bigger and faster tractors, allow farmers to till ground more quickly and efficiently.

The 2017 census data being released by the USDA provides a deep dive into grower demographics, from the sizes of farms by acreage and income, to the race and gender of those working in the fields. The last census, released in 2012, came just before net farm income peaked at a record $123 billion.

Also see: Corn’s demise poised to deepen as U.S. farmers boost acres

Dan Sumner, an agricultural professor at the University of California in Davis, says that consumers have benefited from farm consolidation with low prices for food and options like being able to choose between organic and non-organic, for example. Most farms, even as they’ve grown, are still family-owned, he said.

More evidence of consolidation is "not bad news,” Sumner said. “I always like to say the smarter brother stays on the farm. For the most part we have really talented people in farming.”

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