What will the future bring? The USDA economists say while farmland has been declining, there is a limit on how much land is productive as cropland, and the supply of land is fixed. The number of farms had declined for many decades, but has stabilized, and agricultural production has continued to grow due to greater productivity. They believe that increased commodity prices from global demand will shift more land into crop production and entice people into agriculture. But they admit, “Nevertheless, future growth in farm production is likely to arise from continued productivity growth if historical trends continue.”
Among other changes in the structure of agriculture, the USDA economists said farmers would rely more on contract arrangements, linking them with vendors on one side and with buyers on the other, which help to spread out risk. Risk is also being managed more frequently by Federal Crop insurance, which saw covered acreage double to 200 million from 1989 to 2007.
Another trend is the continuing shift to larger farms which can adopt new technology more easily, and are favored by those food processors that use marketing contracts. Farming is still expected to remain a family enterprise on 98% of farms.
And a final trend is the growth in productivity, which increased 45% between 1982 and 2007, yet with little change in input use. Such productivity has kept food prices stable during that period of time.
Agriculture is continually changing, but the change has to keep up with global food needs. In the past 30 years less U.S. labor and land have been used for food production, but productivity has increased 45% with no change in inputs.
Source: FarmGate blog