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[Gene GeRue <genegerue AT ruralize.com>]

. . . but largely because one or more family members is earning an income 
off the farm.

The Little Guys Are O.K.

By BRUCE GARDNER

Published: March 7, 2005

College Park, Md. — THE increasing size and industrialization of American 
farms have been decried as responsible for depopulating the countryside and 
causing economic and social ills. President Bush's proposed budget has 
encouraged the belief that help is on the way, in the form of more 
stringent limits on farm program payments. The plan, under which payments 
to some producers would drop by 5 percent and the current $360,000 annual 
ceiling on payments would drop to $250,000, has earned praise from rural 
populists, who see it as a step to reduce the subsidization of large as 
compared to small farms.

However, two questions must be raised: Will the limits on payments really 
help small farms? And, more fundamentally, is it a good idea to subsidize 
large farms less than small ones?

To answer these questions fairly, one must consider some surprising news: 
small farms are actually surviving and even flourishing to an extent no one 
guessed 20 or 30 years ago.

The United States had 6 million farms in 1944, and by 1970 that number had 
declined to 3 million, a rate of loss of almost 3 percent each year. If the 
pattern had held, we would have just over a million farms today. Instead we 
have 2.1 million, and the rate of decline has slowed to a trickle, with 
today's total essentially the same as that of 1990.

What made this moderation of the trend possible? In large part, the 
integration of the farm and nonfarm labor markets. Yes, all the 
improvements over the last 75 years in rural transportation, communications 
and education first led to an accelerated movement of people from farm to 
city. But a more recent trend has seen many people commuting to nonfarm 
jobs while they remain living on the farm. According to the Agriculture 
Department, nonfarm jobs now account for more than 90 percent of farm 
households' incomes.

In many cases, one family member focuses on the farming enterprise while 
others - spouses, siblings, grown children - work off the farm. In other 
situations, no one works full-time at farming - the operation is a side job 
for the entire family, in some cases a refuge from urban stresses. While 
complete statistics are hard to come by, the data indicate that these 
arrangements are proving viable to an extent far greater than was thought 
possible 30 years ago.

Government statistics show that the rise of these nontraditional farms has 
been accompanied by a marked improvement in the economic condition of the 
agricultural population. Until the 1960's, farm household incomes remained 
stubbornly below those of nonfarm households, averaging about 60 percent of 
the nonfarm average. But, beginning in the 1960's, relative farm incomes 
began to rise - and by 1990 they had achieved income parity with the rest 
of Americans. The Agriculture Department's latest estimate, for 2003, is 
that farm households had average incomes 15 percent higher than average 
nonfarm levels.

Federal figures show that both large farms and small ones are increasing as 
a fraction of all farms, with the proportion of mid-size farms decreasing. 
This would lead one to expect a rise in income inequality among farm 
households, with the middle-sized farmers falling behind. So perhaps the 
biggest surprise is that incomes are actually becoming more equal.

Consider the relative net income of farmers classified by the Agriculture 
Department as at the bottom fifth in terms of gross sales and government 
subsidies. In 1950 they made about a third less than did the average farm 
household. But by the mid-1990's, those farmers in the bottom fifth were 
within 10 percent of the national average. Similarly, in 1950 the top 5 
percent of farmers had two and a half times the average farm household's 
income; this figure was reduced to one and a third times as much by the 
mid-1990's.

So how should this good news change our thinking about the proposed changes 
in federal payments? First, the new limits are unlikely to give any 
significant boost to small farms. Large farms will likely go on producing 
just as much as they are producing now, because these payments are almost 
entirely fixed per farm, and do not vary with the amount the farm produces. 
So the market conditions facing small farms will not improve. On the other 
hand, if large farms produce less of the bulk program crops that are 
subject to the limits (cotton and rice are the main ones affected), they 
will produce something else on their land, and that something else may well 
be the high-value crops that are more prevalent on today's small farms than 
on large ones.

As to the question of whether it is good policy to promote small farms, the 
main reasons advocates give are that small farming makes rural areas more 
vital by resulting in more people per square mile, and that small farms are 
closer to the bucolic ideal so many of us grew up with. While that 
traditional farming image has as much appeal in agriculture as in many 
other endeavors, and while I share the sentiment, I have to side with those 
who question the wisdom of using taxpayer dollars to subsidize it. Large 
farms simply produce commodities at lower cost, and shouldn't be thought 
the worse for it. After all, special subsidies for smaller stores in 
country towns would help them compete with Wal-Mart, too, but even the 
chain's greatest enemies haven't suggested such a policy.

The promising trends in terms of farm numbers, increasing incomes and 
decreasing inequality don't mean there are no economic problems in American 
agriculture. But they do mean that the industrialization of agriculture has 
not crowded out small, specialized farm operations. Even in the age of 
Monsanto and Cargill, there is still a role for Mom and Pop.

Bruce Gardner, dean of the College of Agriculture and Natural Resources at 
the University of Maryland, is the author of "American Agriculture in the 
20th Century: How It Flourished and What It Cost."

http://www.nytimes.com/2005/03/07/opinion/07gardner.html