To: "homestead AT lists.ibiblio.org" <homestead AT lists.ibiblio.org>
Subject: [Homestead] Small farmers are doing okay . . .
Date: Mon, 07 Mar 2005 05:35:34 -0700
. . . 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."