Trouble Ahead For Small Family Farms

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In the early 1980s the economics of agriculture were driving small family farms out of business.

American agriculture is in a state of crisis, and the
future of small family farms–an institution often
considered to be a cornerstone of our society–looks

The signs of trouble are everywhere: in the protest
parades of tractors, in the strange combination of high
food prices and low farm income, and in the declining
number of working agricultural operations. As a matter of
fact, while there were 6.8 million U.S. farms in 1935, the
total had dropped to 2.3 million by 1974, and
that figure is expected to decline to 1.5 million
by the end ofthis year!

Of course, the powers that be in American agriculture have
ways of explaining away even such shocking evidence. It is
often claimed, for instance, that the statistics just
reflect the weeding out of small, inefficient enterprises. And we’re constantly told that our farms are producing
morethan ever before.

Aren’t we, then, just seeing the “economics of size” at
work in rural America? Well, maybe. The number of small
“noncommercial” farms–defined by the USDA as those
with sales of less than $2,500 a year–declined from
2,388,000 in 1949 to just 771,000 in 1974. During the same
period, the quantity of small “commercial”
farms–operations with sales of between $2,500 and
$40,000–shrank too, from 2,893,000 to
1,218,000. Only the large commercial
farms–those with sales of over
$40,000–increased from 104,000 in 1949 to 477,000
i n 1974.

Among the big farms, the very largest –with
sales of over $200,000–multiplied most rapidly,
from 16,000 to 63,000! And the large agricultural concerns
didn’t grow just in number, they increased in
size, too: The average U.S. farm in 1940 covered 197 acres,
but by 1974 the average had grown to 440 acres.

All in all, it appears that the American farmer has been
following the “get big or get out” advice of former
Secretary of Agriculture Earl Butz. And economies of scale
do seem–at least on the face of the matter–to
make good sense. However, the USDA has discovered that the
“bigger is more efficient” argument isn’t all it’s cracked
up to be. In fact, Department of Agriculture economist
Thomas Miller has reported that medium-sized farms (with
gross sales from $20,000 to $100,000) are most efficient!
Above the $20,000 threshold, says Miller, there are no
important reductions in the unit cost of production. So
farms grow beyond medium size not because it’s less
expensive to produce each bushel of wheat when you’re one
of the “big boys,”  but simply because the overgrown
acreages can produce–and sell–more bushels of

Now a grower’s desire to raise more wheat–or corn, or
oats, or soybeans–is understandable, but the course
of action that must be taken to do so does have several
hidden consequences. For one thing, large-scale
farmers–with good access to credit–often
bid up the price of available land … and the
result is that small growers cannot afford to buy or lease
additional acreage.

Worse yet, as the sales value of the land in an area rises,
taxes follow suit … again putting economic stress on
the family farmer. Furthermore, the problems are aggravated
because–according to a recent USDA
study–federal and state tax laws give special tax
benefits to high-income farmland buyers … and
such laws have created incentives for farmers to shift
their attention from efficiency and productivity to farm
expansion, and to the appreciation of land values
as anend in itself.

Even the federal commodity programs–supposedly
designed to help growers when crop prices are depressed
–accelerate the trend toward fewer, but
larger, farms. A USDA report indicates that most
price supports don’t differentiate between family
farms–the natural target of such aid–and
corporate farms … and thus the programs provide the
largest amount of assistance to the giant enterprises that
produce the most.

And–in a self-perpetuating cycle–the corporate
farmers often apply that “bonus” money to underwrite even
further expansion! What’s more, income support, disaster
payment and commodity programs tend to
encourage the large-scale, single-purpose farms … often
operations that are bankrolled by non-farm investors, who
use highly leveraged debt financing.

As you can imagine, such economic factors often force
smaller-scale farmers either to expand, abandon production,
or become part-time growers … and the last two
choices–given the limited capital of most family
operations–are the ones frequently taken. Well, you
might ask, why not? Why shouldn’t the most
efficient and best-capitalized farmers drive the
inefficient little guys out of business?

Aside from the ethics of the situation, the best answer to
such questions is simply that our present system isn’t
working. The fact is that much of America’s fabled
agricultural productivity is based on large chemical- and
energy-intensive monoculture (single-crop) operations.
And–as we approach the end of the century–it’s going
to become more and more difficult, and expensive,
to maintain the kinds of farms that we’ve come to depend

In the USDA’s, “Report and Recommendations on Organic
Farming,” deep concern is expressed
about the probable future repercussions of such practices
as intensive and continuous production of cash grains, and
extensive and often excessive use of chemicals.
The report team cites especially the danger of sharply
increasing costs (and uncertain availability) of energy and
of chemical fertilizers, the steady decline in soil
productivity and tilth resulting from excessive erosion and
loss of soil organic matter, and the problems
resulting from the pollution of natural waters by
agricultural chemicals.

Unfortunately, the cost of agricultural land is often so
high that many farmers feel compelled to extract
every last bushel from their acreage, and that fact
encourages practices that destroy the land. As author Mark
Kramer points out, “When short-term demand makes the
squandering of resources profitable, resources are
squandered. Farmers farm as their situations dictate.” [EDITOR’S NOTE: Kramer’s book Three Farms: Making Milk, Meat
and Money from the American Soil (Little, Brown, 1980,) takes a thoughtful look at our agricultural

The problem, in short, is that we’re putting all
of our agricultural eggs in one large money-, chemical-,
and energy-intensive basket , and in the process we’re
allowing our backup systems–the family farms–to
be swallowed up or abandoned.

When the last drop of oil is extracted from the ground, we
may welt not be able (even if there were a rational reason
for doing so) to ship a carrot 2,500 miles from producer to
consumer. We’ve encouraged big agriculture (both farmers
and marketers) in the name of a search for
inexpensive food … but food is no longer inexpensive.
And the average family farm has not seen its income grow despite the higher cost to consumers of its goods.

That’s why there have been tractor parades at the
Capitol, and that’s why we need to be concerned
about the future of the family farm.

EDITOR’S NOTE: There is some occasion for
optimism, in spite of our current agricultural dilemma.
Notably, the Family Farm Development Act of 1980, as
proposed by Representatives Richard Nolan of Minnesota and
George Brown of California, could aid the small-scale
encouraging sign is the positive attention that
the USDA has been paying to organic agriculture. And
perhaps most important of all is the fact that private
parties are beginning to address the problems facing the
family farm.

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