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Family Farms Overview

The vast majority of farms and ranches in the United States are family owned and operated. USDA classifies family farms as “any farm organized as a sole proprietorship, partnership, or family corporation. Family farms exclude farms organized as nonfamily corporations or cooperatives, as well as farms with hired managers” (USDA, Economic Research Service 2007 Family Farm Report). Under this definition, the National Agricultural Statistics Service’s 2007 Census of Agriculture reported that family farms account for almost 96 percent of the 2,204,792 farms in the United States.

The census makes the following useful distinctions among these family farms, based initially on their gross annual sales:

  • Very large family farms (101,265) gross over $500,000
  • Large family farms (86,551) gross between $250,000 and $500,000
  • Small family farms (1,925,799) gross under $250,000

 

Many people are surprised that farms are classified as small, large, and very large based on their annual sales rather than on their physical size. While a size-based measure seems intuitive, farm acreage can mean very different things in different places. An acre of non-irrigated land in a low rainfall area, such as southern Utah, is hard to compare to an acre of very fertile, high rainfall land in the Pelouse region of eastern Washington.

No classification is ideal, particularly when social factors are involved, but the above typology allows for interesting comparisons across the United States with a focus on the diverse goals and needs of farm families.  Using another approach, a recent analysis of U.S. farms, based on household economic theory rather than gross sales, identifies six mutually exclusive farm types by including non-farm income and decisionmaking at the household rather than the farm level (“A New U.S. Farm Household Typology: Implications for Agricultural Policy.” B. C. Briggeman, Gray, A.W., Morehart, M. J., Baker, T.G., and Wilson, C.A. Review of Agricultural Economics, vol. 29, #4).

Most of the U.S. domestic production of food and fiber comes from relatively few large operations. The 2007 Ag Census showed that large and very large family farms produced over 63 percent of the value of all products sold (though they accounted for less than 9 percent of all family farms,) while non-family farms produced approximately 21 percent, and the nearly 2 million small farms and ranches (sales under $250,000) produced approximately 15 percent.

Operations with over $1 million in annual sales are particularly productive. A recent report from the Economic Research Service (ERS) (Million-Dollar Farms in the New Century) notes that farms with annual sales over $1 million were responsible 59 percent of agricultural production in 2007, and that 84 percent of these operations are family farms. The ERS report also notes that concentration of agricultural production into fewer and larger operations has occurred over several decades and is likely to continue, with a focus on high value crops, milk, hogs, poultry, and beef.

These numbers, however, do not give the full picture of the current and future value of smaller operations. Many small farms and ranches produce significant amounts of produce and the number of smaller operations, particularly those in peri-urban areas that take advantage of local marketing opportunities (ref. Update), has risen remarkably in the past few years. Also, small farms and ranches are responsible for the vast majority of the approximately 52 percent of total U.S. land that is used for agricultural purposes and, therefore, can play a major role in conservation and natural resource protection.

Several, inter-related issues must be considered when discussing the long-term viability of the nation’s family farms. The good news is that after decades of decline the number of family farms has grown by about 4 percent. But how sustainable are these new operations?

Most of the increase is in small operations with annual sales less than $1,000 and where no one enterprise makes up 50 percent of the farm. These new farms tend to be smaller (annual sales less than $1,000), with younger operators, and greater reliance on off-farm income than more established operations.  The Ag Census also shows a small increase in the number of large and very large family and non-family farms, and a slight decrease in other classes, leading to a concern about the loss of mid-level farms, noted by Agriculture Secretary Tom Vilsack.

A related issue is the ageing of America’s farmers. An estimated 70 percent of U.S. farmland will change hands in the next 20 years, but many family operations do not have a next generation skilled in or willing to continue farming. If a farm or ranch family has not adequately planned for succession, it is likely to go out of business, be absorbed into ever-larger farming neighbors, or be converted to non-farm uses.

On the positive side, the increasing popularity of local produce and direct or regional marketing is often seen as an important new opportunity for small and beginning farmers and ranchers to become financially secure.

 

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