By the Numbers: A Look at Consolidation in U.S. Agriculture

James M. MacDonald and Robert A. Hoppe

(Editor’s note: An analy­sis of farm-lev­el records from the USDA’s Cen­sus of Agri­cul­ture and its Agri­cul­tur­al Resource Man­age­ment Sur­vey con­firms that, since 1987, almost all crop­land has shift­ed to larg­er farms. Mean­while, con­sol­i­da­tion in many live­stock sec­tors — due in part to the con­tin­ued devel­op­ment of con­fine­ment feed­ing prac­tices” — has result­ed in oper­a­tions that use less pas­ture and range­land than they did in the past. The study also finds that fam­i­ly farms” — offi­cial­ly defined as a farm in which the per­son pri­mar­i­ly respon­si­ble for day-to-day oper­at­ing deci­sions also owns the major­i­ty of the farm busi­ness” — still dom­i­nate the indus­try. The fol­low­ing sum­ma­ry is drawn from a larg­er USDA report, avail­able at the bot­tom of this post.)

In 1987, more than half (57 per­cent) of all U.S. crop­land was oper­at­ed by mid­size farms that had between 100 and 999 acres of crop­land, while 15 per­cent was oper­at­ed by large farms with at least 2,000 acres. Over the next 25 years, crop­land shift­ed away from mid­size and toward larg­er oper­a­tions. By 2012, farms with 100 – 999 acres held 36 per­cent of crop­land, the same share as that held by large farms.

That shift occurred per­sis­tent­ly over time, as the share held by large farms increased in each Cen­sus of Agri­cul­ture after 1987 — in 1992, 1997, 2002, 2007, and 2012 — while the share held by farms with 100 – 999 acres fell in each cen­sus. Note that the share of crop­land held by the small­est farms (with less than 100 acres) changed lit­tle over time, at about 8 per­cent of all cropland.

Con­sol­i­da­tion can occur through shifts in own­er­ship, as oper­a­tors of large farms pur­chase land from retir­ing oper­a­tors of mid­size farms. How­ev­er, most crop­land is rent­ed, and farms fre­quent­ly expand by rent­ing more crop­land, often from retired farm­ers and their rel­a­tives, but some­times from absen­tee investors in farmland

Shifts of crop acreage to larg­er farms occurred in almost all crops. To track con­sol­i­da­tion in spe­cif­ic crops, we mea­sured the mid­point acreage for select­ed crops in each cen­sus year. At the mid­point, half of all har­vest­ed acres of the crop are on larg­er oper­a­tions and half are on small­er. In 1987, for exam­ple, the mid­point for corn was 200 acres — half of all har­vest­ed corn acres was on farms that har­vest­ed at least 200 acres of corn, and half was on farms that har­vest­ed no more than 200 acres. The corn mid­point increased in every cen­sus after 1987. By 2012, it stood at 600 acres. Four oth­er major field crops (cot­ton, rice, soy­beans, and wheat) showed a very sim­i­lar pat­tern: the mid­point for har­vest­ed acreage more than dou­bled for each crop between 1987 and 2012, and the mid­points increased per­sis­tent­ly in each cen­sus year (with the sin­gle excep­tion of a decline in cot­ton in 2007-12).

Note: Half of all har­vest­ed acres are on farms that har­vest more than the mid­point, and half are on farms that har­vest less. (Source: USDA, Eco­nom­ic Research Ser­vice using data com­piled by USDA, Cen­sus of Agri­cul­ture)

We repeat­ed the analy­sis for 10 more field crops and for 40 fruit, mel­on, tree nut, and veg­etable crops — a total of 55 crops in all. Con­sol­i­da­tion was near­ly ubiq­ui­tous, as the mid­point increased in 53 of the 55 crops between 1987 and 2012. Con­sol­i­da­tion was also sub­stan­tial, as most of these mid­point increas­es were well over 100 per­cent, and it was per­sis­tent, as most mid­points increased in most cen­sus years.

Pas­ture and range­land shifts to small­er operations

Crop­land account­ed for 43 per­cent of all U.S. farm­land in 2012, while pas­ture and range­land account­ed for anoth­er 45 per­cent. While crop­land con­sol­i­dat­ed into larg­er farms between 1987 and 2012, pas­ture and range­land did not, but instead shift­ed away from the largest farms and ranch­es and toward small­er operations.

In 1987, farms and ranch­es with at least 10,000 acres of pas­ture and range­land oper­at­ed more than half (51 per­cent) of all pas­ture and range­land, while those with less than 1,000 acres held 15 per­cent. By 2012, the share oper­at­ed by the largest acreage class had fall­en to 44 per­cent, while farms and ranch­es with less than 1,000 acres of pas­ture and range­land oper­at­ed 22 percent.

U.S. farm­land shows very lit­tle con­sol­i­da­tion since the 1980s. How­ev­er, that seem­ing sta­bil­i­ty reflects two diverg­ing under­ly­ing trends: con­sid­er­able con­sol­i­da­tion in crop­land and in crop and live­stock pro­duc­tion, set against shifts of pas­ture and range­land toward small­er operations.

Con­sol­i­da­tion in live­stock varies

Con­sol­i­da­tion in live­stock pro­duc­tion fol­lows a dif­fer­ent pat­tern than that in crops. When it has occurred, it has not unfold­ed at a steady and per­sis­tent rate over time. Instead, live­stock con­sol­i­da­tion pro­ceed­ed episod­i­cal­ly, with peri­ods of sharp change in the size of oper­a­tions, fol­lowed by stability.

As in our analy­sis of spe­cif­ic crops, we tracked mid­points for each live­stock com­mod­i­ty across cen­sus years. We used a sales mid­point — based on the num­ber of ani­mals sold or removed dur­ing a year — for live­stock feed­ing indus­tries like broil­ers, turkeys, and fed cat­tle. We used mid­point herd or flock inven­to­ry val­ues for egg lay­ers and cows.

(Source: USDA, Eco­nom­ic Research Ser­vice using data com­piled by USDA, Cen­sus of Agriculture)

Some shifts have been dra­mat­ic. For exam­ple, the mid­point milk cow herd in 1987 was at 80 cows — half of U.S. milk cows were in herds of at least 80 cows, and half were in herds with no more than 80. By 2012, the mid­point had increased more than ten­fold, to 900 cows. Sim­i­lar dra­mat­ic increas­es occurred in egg lay­ers and in hogs and pigs, as each indus­try under­went strik­ing changes in orga­ni­za­tion and farm size.

In oth­er sec­tors (like broil­ers, turkeys, and fed cat­tle), pro­duc­tion shift­ed to larg­er oper­a­tions by 2012, but the shifts were not per­sis­tent, and there is lit­tle evi­dence of con­tin­u­ing con­sol­i­da­tion in 2007-12. Major reor­ga­ni­za­tions of those indus­tries occurred ear­li­er, in the 1960s and 1970s, and the lat­er shifts reflect­ed fur­ther adjustments.

One impor­tant sec­tor shows lit­tle con­sol­i­da­tion. The mid­point beef cow herd was at 89 cows in 1987, a bit larg­er than the mid­point milk cow herd. By 2012, the mid­point beef herd had increased, but only mod­est­ly, to 110 cows. Beef cow herds, and the calves that they birth, typ­i­cal­ly graze on pas­ture and range­land, which showed no con­sol­i­da­tion in the peri­od. Oth­er live­stock, such as sheep, goats, and hors­es, may also graze on pas­ture and range — but cat­tle are the major users of what amounts to near­ly half of all U.S. farm­land. Hence, cat­tle graz­ing, and the pas­ture and range that they graze on, are an impor­tant excep­tion to the strong trend toward con­sol­i­da­tion in agriculture.

Farm sales have also shift­ed to larg­er farms

So far, we have focused on spe­cif­ic live­stock and com­modi­ties, and showed that acreage and pro­duc­tion in most have con­sol­i­dat­ed into larg­er enter­pris­es. How­ev­er, most farms are diver­si­fied: those with crops almost always pro­duce more than one, and while some live­stock pro­duc­ers are spe­cial­ized, most also grow some crops. Hence, a com­plete pic­ture of farm con­sol­i­da­tion requires that we look at all prod­ucts on a farm, which we do by track­ing con­sol­i­da­tion in farm sales.

We mea­sure sales with gross cash farm income (GCFI), which rep­re­sents all rev­enues flow­ing to a farm busi­ness from com­mod­i­ty sales, con­tract fees real­ized by rais­ing crops or live­stock for some­one else, gov­ern­ment pay­ments, and farm-relat­ed” income (such as land rentals, cus­tom ser­vices pro­vid­ed to oth­ers, or insur­ance indem­ni­ties). Because GCFI can be affect­ed by infla­tion in prices irre­spec­tive of any change in pro­duc­tion, we adjust for infla­tion and report GCFI in 2015 dol­lars. We use USDA’s annu­al Agri­cul­tur­al Resource Man­age­ment Sur­vey (ARMS) for sales data, and can there­fore extend the analy­sis through 2015.

There is sub­stan­tial con­sol­i­da­tion in farm sales.

In 2015, small farms with less than $350,000 in GCFI account­ed for about 25 per­cent of the val­ue of agri­cul­tur­al pro­duc­tion, down from 46 per­cent in 1991. In con­trast, farms with at least $1 mil­lion in GCFI account­ed for 51 per­cent of all pro­duc­tion in 2015, com­pared to 31 per­cent in 1991. The broad trend sup­ports the evi­dence from the crop and live­stock mea­sures of a sub­stan­tial shift of pro­duc­tion to larg­er farms.

How­ev­er, note that much of the con­sol­i­da­tion in sales occurred between 1991 and 2007, and it appears to have slowed con­sid­er­ably after­wards. This find­ing is con­sis­tent with the slow­ing of con­sol­i­da­tion shown in most live­stock sec­tors, and also with slow­ing con­sol­i­da­tion in some crops. How­ev­er, esti­mates of farm prof­its derived from ARMS indi­cate that larg­er farms con­tin­ue to real­ize bet­ter finan­cial returns than small­er oper­a­tions, so we can­not yet con­clude that the appar­ent slow­ing is more than a pause.

What the pat­terns tell us about the dri­vers of consolidation

Con­sol­i­da­tion shows dis­tinct pat­terns. It occurred in most crop and live­stock sec­tors, but not in graz­ing and pas­ture­land and not in the beef cow-calf sec­tor. Con­sol­i­da­tion pro­ceed­ed steadi­ly in crops, and more episod­i­cal­ly in live­stock, but was not con­cen­trat­ed in any sin­gle period.

Tech­no­log­i­cal devel­op­ments in agri­cul­ture allow a sin­gle farmer or farm fam­i­ly to man­age more acres or more ani­mals than they could in the 1970s and 1980s, and these devel­op­ments like­ly play an impor­tant role in con­sol­i­da­tion. Specif­i­cal­ly, larg­er, faster, and more pre­cise trac­tors, planters, sprayers, and har­vest­ing equip­ment reduce the time a farmer must devote to field tasks on a giv­en acreage, free­ing a farmer to man­age more acres. Pest man­age­ment inno­va­tions of the last sev­er­al decades — such as chem­i­cal her­bi­cides, genet­i­cal­ly engi­neered her­bi­cide-tol­er­ant seeds, and seed treat­ments — also reduce labor com­mit­ments for field tasks.

In live­stock, the con­tin­ued devel­op­ment of con­fine­ment feed­ing prac­tices has been an impor­tant dri­ver of con­sol­i­da­tion. Pro­duc­ers moved poul­try and hog pro­duc­tion into cli­mate-con­trolled hous­ing, while dairy pro­duc­tion and cat­tle feed­ing placed most ani­mals in open barns and pens. Those shifts, com­bined with steady improve­ments in dis­ease con­trol, repro­duc­tion, and nutrition/​feeding prac­tices, allow pro­duc­ers to man­age more ani­mals while also real­iz­ing sub­stan­tial improve­ments in productivity.

Agri­cul­tur­al pol­i­cy, in the form of USDA com­mod­i­ty pro­grams, is direct­ed pri­mar­i­ly at field crops. If com­mod­i­ty pol­i­cy was a dom­i­nant fac­tor in con­sol­i­da­tion, we should there­fore expect con­sol­i­da­tion to be con­cen­trat­ed in field crops. How­ev­er, the pat­terns described above show that con­sol­i­da­tion has occurred across a wide range of field and spe­cial­ty crops, as well as live­stock sec­tors. Anoth­er impor­tant USDA pro­gram, Fed­er­al crop insur­ance, has been expand­ed sharply since the mid-1990s; while there are poli­cies aimed at spe­cial­ty crops and some live­stock sec­tors, the pri­ma­ry focus has been on field crops. How­ev­er, since con­sol­i­da­tion pro­ceed­ed rapid­ly in many crop and live­stock com­modi­ties, and before the mid-1990s, it seems unlike­ly that crop insur­ance could have played a dom­i­nant role.

Fam­i­ly farms still dom­i­nate agriculture

A fam­i­ly farm com­bines own­er­ship and deci­sion mak­ing in a sin­gle fam­i­ly. Specif­i­cal­ly, a fam­i­ly farm is defined as one in which the per­son pri­mar­i­ly respon­si­ble for day-to-day oper­at­ing deci­sions — called the prin­ci­pal oper­a­tor — also owns the major­i­ty of the farm busi­ness, either indi­vid­u­al­ly or in com­bi­na­tion with rel­a­tives. Fam­i­ly farms account for 99 per­cent of all U.S. farms and 89 per­cent of agri­cul­tur­al pro­duc­tion, and we see no reduc­tion in those shares over time. Even among the largest farms, those with at least $5 mil­lion in sales, fam­i­ly oper­a­tions account­ed for 78 per­cent of farms and 73 per­cent of production.

Non­fam­i­ly farms include many types of orga­ni­za­tions. Many large non­fam­i­ly farms are part­ner­ships among a small num­ber of unre­lat­ed peo­ple, while oth­ers are oper­at­ed by a hired man­ag­er on behalf of a fam­i­ly that owns the farm or a larg­er mul­ti­farm busi­ness. Large cor­po­ra­tions do oper­ate farms, par­tic­u­lar­ly in poul­try and hog pro­duc­tion, but their pri­ma­ry role in agri­cul­ture is to coor­di­nate sup­ply chains through the pro­vi­sion of inputs to fam­i­ly farms, and by con­tract­ing with fam­i­ly farms to raise commodities.

The dom­i­nance of fam­i­ly busi­ness­es is a dis­tinc­tive attribute of U.S. agri­cul­ture and derives from sev­er­al fea­tures of agri­cul­ture. While there are some scale economies in agri­cul­ture, most can be ful­ly real­ized by fam­i­ly farms that remain fair­ly small busi­ness­es — enor­mous size is not nec­es­sary to effec­tive­ly imple­ment agri­cul­tur­al tech­nolo­gies. Agri­cul­ture often does require detailed local­ized knowl­edge (of soils, pests, and micro­cli­mates), and farm­ers must often act quick­ly and flex­i­bly to weath­er con­di­tions. Fam­i­ly busi­ness are well suit­ed to devel­op local­ized knowl­edge and to adapt quick­ly and flexibly.

(Exam­in­ing Con­sol­i­da­tion in U.S. Agri­cul­ture” was pub­lished on Amber Waves, the U.S. Depart­ment of Agri­cul­ture Eco­nom­ic Research Service’s dig­i­tal mag­a­zine. It’s drawn from a larg­er report — Three Decades of Con­sol­i­da­tion in U.S. Agri­cul­ture” — avail­able here. Author dis­clo­sure: James M. Mac­Don­ald is a mem­ber of the Amer­i­can Eco­nom­ic Asso­ci­a­tion and the Indus­tri­al Orga­ni­za­tion Soci­ety. He is also a mem­ber and Fel­low of the Agri­cul­tur­al and Applied Eco­nom­ics Asso­ci­a­tion.)

James M. Mac­Don­ald is a branch chief at the U.S. Depart­ment of Agri­cul­ture’s Eco­nom­ic Research Ser­vice (ERS).Robert A. Hoppe is an Agri­cul­tur­al Econ­o­mist who start­ed work­ing at ERS in 1978. For the past 20 years, he’s con­duct­ed research on farm structure.
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