Sunday, June 22, 2014

The 2 Percent: America's Million Dollar Farms

One of my summer projects is an update of my book, Food, Farming & Sustainability: Readings in Agricultural Law.  Here is an excerpt that I am working on that ties together some interesting resources that I have been meaning to blog about.

Million-Dollar Farms:  The “2-4 Percent” of Agriculture

Everyone has heard of the economic category of the “1 percent” of Americans – the political rallying point against excessive income disparity in the United States that was most visibly emphasized by Occupy Wall Street and its followers.  A less well known category is the small percentage of U.S. agriculture that owns increasing amounts of land, exercises significant market power, and is responsible for producing the majority of our commercial food stocks.  While some might not like it, we are far more dependent on these mega-farms that most people realize.

USDA data from 2007 indicates that 37 percent of very large family farms and 13 percent of non-family farms have annual sales of $1 million or more. These farms are referred to as the “Million-Dollar farms.”  They made up only 2 percent of all U.S. farms — there were 47,600 million-dollar farms in 2007 —but the USDA reports that they accounted for 53 percent of production. These farms dominated in producing certain high value crops such as vegetables, fruits and tree nuts, nursery and greenhouse products.  They produced approximately 60 to 70 percent of hogs, dairy, poultry, and beef.  Eighty-six percent of these million dollar farms were categorized by USDA as family farms.  See, Robert A. Hoppe & David Banker, Structure and Finances of Family Farms — Family Farm Report 2010 Edition 2, USDA, ERS, Bull. No. 66 (July 2010).

Note that the USDA defines "family farms" without limit to size, value, or business entity, focusing solely on ownership.
[A family farm is] any farm where the majority of the business is owned by the operator and individuals related to the operator by blood or marriage, including relatives who do not reside in the operator’s household. Nonfamily farms include any farm where the operator and relatives do not own a majority of the business. For example, nonfamily farms include farms operated by publicly held corporations, but also farms equally owned by three unrelated business partners, as well as farms operated by a hired manager for a family of absentee owners.
Analysis of the data from the 2012 Census of Agriculture is just coming out from the USDA.  It reflects an increase in the percentage of Million-Dollar Farms and an increase in their production.  Farms with sales of $1 million or more now constitute 4 percent of all farms, and in 2012, they produced 66 percent of the total value of U.S. production.

Most Million-Dollar farms produce between $1 million and $4,999,999 in annual sales, but 2007 data indicates that 5,200 farms —11 percent of the million dollar farms—have sales of  at least $5 million. These farms produce 35 to 45 percent of beef (largely in feedlots), milk, and high-value crops. Sixty-four percent of these mega-million dollar farms are categorized as family farms.  Id.

See also, Robert Hoppe, Penni Korb, and David E. Banker, Million-Dollar Farms in the New Century, USDA ERS, Bull. No. 42 (Dec. 2008).

Really large scale farming has been in the news of late, providing a face of sorts to these mega-farms. Last April, the New York Times did a feature story on a highly computerized large dairy farm that incorporates robotics, With Farm Robotics, the Cows Decide When It’s Milking Time by Jesse McKinley (Apr, 22, 2014). The upbeat article focused on the technology and how its use provided advantages for both the farmer and his or her cows.  It's an interesting story showcased with this video.




The New York Times article did not explore the costs of the new technology, the size of operation needed to justify the capital expenditures, implications associated with this size of dairy, an increasing need to get cows to produce more milk (to pay for the technology), or the impact on either the dairy industry in general or the rural communities where they are located.

One of these consequences was touched on in a very recent story on National Public Radio, All Things Considered, The Making of Megafarms: A Mixture of Pride and Pain (June 16, 2014). This broadcast told a poignant story about large-scale Midwestern agriculture, farm consolidation, and the impact on rural communities. The story focused on a family farm in Kansas made up of 16,000 acres of land, spread throughout 3 areas in Kansas, hundreds of miles apart. The farmer-owners actually live in the suburbs of Manhattan, Kansas, with management conducted largely by computer.  Where once the land was owned and operated by dozens of smaller family farms who supported the local economy, the entire high-tech operation now is run by the farmer, his father-in-law, and seven employees.

So many issues to discuss and debate.

For those hoping to use the book edits for Fall teaching, we will make arrangements for you to have the materials as a supplement to the book.  Please email me directly for more information, I will keep you updated when the edits are complete,  Susan Schneider.

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