USDA Releases Important Report on Farm Size

USDA’s Economic Research Service released a report, Farm Size and the Organization of US Cropping, examining the scale of farms that now dominate crop production. The report concludes there is a continual shift to larger farms. The shift is more prevalent in the Northern Great Plains and Midwest.

The study argues the midpoint acreage for 2011 (half the farms are larger and half are smaller) to be 1,100 acres. Farms this size, and many more farms that are 5 and 10 times larger, dominate crop production today. This is nearly doubled from the midpoint acreage of 589 acres in 1982.

They identified three driving factors of consolidation – technology, changes in farm organization (farms specializing in fewer commodities and fewer raising both crops and livestock), and government policy.

Technology has clearly facilitated growth in farm size. From innovations in seed production, to the increased size and capacity of farm equipment, technology has shaved the amount of labor needed and enabled farms to get larger.

We agree specialization has played a role in the growth of farm size. However, we would argue federal policy has had a hand in driving specialization of crops and away from livestock by failing to address livestock market concentration.

The Center has long argued federal farm programs play a role in consolidation of agriculture. While the study looked at a host of federal policy issues, and agrees it plays a role in driving up farm size, it misses the mark in regards to farm program payments. 

Quoting from the report, they argue:

Despite receiving higher overall payments, larger farms do not receive systematically higher payments on a per-acre or per-bushel basis than small farms receive, nor do commodity payments represent a higher share of their gross income. Moreover, payments tend to be capitalized into land values, and to raise cropland rents, thus benefiting landlords and raising renters’ costs. They do not provide an obvious direct impetus to increase farm size.

We, of course, disagree. The Center believes that very formula has facilitated the growth in farm size.

The loopholes in farm program payments enabled well-capitalized mega-farms to receive a subsidy on every acre they added to their operation. This provided them a competitive advantage over small and mid-sized, less capitalized farms.

While we may disagree with the above assessment, the report tackles an important and complex issue. You'll find it here.