Editor's note: This item appeared in the Dec. 30 edition of Dairy Exec newsletter, published by Dairy Herd Management.
While you may inherently know that you’re producing more with less these days, a new study jointly published by the USDA’s National Agricultural Statistics Service and the Economic Research Service backs that gut feeling up with statistics. The study also shows a shift in how producers manage risk, among other findings.
Authors analyzed data from multiple sources and found:
- Use of two major inputs, land and labor, has decreased over time. From 1982 to 2007, land used in agriculture dropped from 54 to 51 percent of total U.S. land area, while farming used 30 percent less hired labor and 40 percent less operator labor. Meanwhile, new technologies (such as precision agriculture) — often requiring new or advanced management techniques — have been increasingly adopted by farmers.
- Farmers have altered how they manage their risk, including a heavier reliance on contracting (the value of production under contract increased roughly 10 percentage points between 1991 and 2007) and a shift of production to farms organized as partnerships and corporations (from 34 percent of all farm product sales in 1982 to 43 percent by 2007), allowing risks to be spread over a wider set of stakeholders. Federal crop insurance has also become a major risk management tool (farmers insured 100 million acres in 1989; by 2007, more than 270 million acres were insured).
- Larger farms receive the bulk of commodity payments while most conservation payments accrue to smaller farms. Overall, payments are smaller yet make up a larger share of gross cash farm income for smaller farms, which often rely heavily on off-farm income, while larger farms receive larger payments that make up a much smaller share of their gross cash farm income. Over the past three decades, government policies have shifted from a concentration on supply management to focus on income support, with a growing emphasis on environmental concerns — most recently via working-land programs.
- Despite declines in the use of land and labor, agricultural productivity has maintained a linear growth pattern. Driven by the increased use of technology, production practices have changed. For example, the use of no-till increased from 5 percent of all planted acres in 1989 to 23 percent by 2004, and pesticide use has declined on many crops. Many of these changes have also lowered labor requirements, which have allowed some farms to increase the size of their operations. Although production has shifted dramatically to larger farms over the past 25 years, 97 percent of all farms remain family farms, generating more than 85 percent of the total value of U.S. agricultural production.