A family farm is officially defined by the 1998 Agricultural Resource Management Study as any farm organized as a sole proprietorship, partnership, or family corporation. Family farms exclude those organized as nonfamily corporations or cooperatives or firms with a hired manager. Family farms are those legally controlled by one operator, or the person who makes daily decisions, and are run by their family or household. The U.S. Department of Agriculture (USDA) defines small family farms as those with sales of less than $250,000, large family farms as those with sales of $250,000–$499,999, and very large family farms as those with sales of $500,000 or more. Farms were first defined for census purposes in 1850, and their definition has changed nine times. The current definition of a farm is any place from which $1,000 or more of agricultural products are sold or would normally have been sold in a given year.
The 2001 Family Farm Report by Economic Research Services of the USDA illustrates that there is a wide variety of small family farms. These include are limited-resource farms with sales less than $100,000 and an operator household of less than $20,000; retirement farms, whose owners are retired; and residential/ lifestyle farms, which are small farms where the majority of household income comes from an occupation other than farming.
Family farms declined dramatically in number during the 20th century. The census of agriculture has shown that the number of farms decreased by two-thirds between 1935 and 1974, from 6.8 million to 2.3 million. The average farm was 155 acres in 1934; it was 487 acres in 1998. Agricultural production is heavily concentrated on large and very large family farms. While these two groups accounted for only 8 percent of all farms in 1998, they made up 53 percent of the total production of agricultural products. Although the limited-resource, retirement, and residential/lifestyle types make up 62 percent of farms in the United States, they produce only 9 percent of farm output. Family farms in the United States also tend to specialize in production, and half of all farms produce just one commodity.
In addition, family farmers are an aging and mostly rural population. The average age of a family farmer is typically around 50 years old. Many younger people have moved off family farms as more nonfarm employment became available. Almost two-thirds of U.S. farms are in nonmetropolitan counties. One of the biggest problems that these farms face is a heavy debt burden. A USDA-recommend strategy for these farmers by the USDA is to lease land and farm equipment rather than purchase it in order to eliminate the need for capital financing. A large number of family farms are simply too small for their owners to do anything other than supplement other types of employment.
Farm policy has always been a difficult issue for the United States, especially in the 19th century when the populist movement was a major force in U.S. politics. This movement lasted until the early 20th century and was widely supported by farmers who hoped to have some control over crop prices and determining credit policies toward farmers. During the New Deal of the 1930s, legislation was passed that was designed to protect farmers from wide price changes during the Great Depression, and a farm policy called the Parity Program was developed. This resulted in the Commodity Credit Corporation (CCC), which made loans to farmers whenever prices fell below the cost of production. Farmers could consequently hold crops back from the market to force prices back up and repay their loans with interest. This program also regulated farm production in order to balance crop supply with demand and created a national grain reserve.
Controversial legislation passed in 1996 sought to alleviate the problems of family farmers. The Federal Agriculture Improvement and Reform Act (FAIR), also known as the Freedom to Farm Act, is a seven-year farm program that put an end to New Deal production controls and eliminated federal price supports. FAIR gave farmers a guarantee of fixed but declining payments that were to end in 2002 as well as the flexibility to plant whatever crops they want. By eliminating price floors and production controls, FAIR was supposed to give farmers some control over the price of their crops so that they could increase exporting by offering more competitive prices on the world market. Critics of this legislation have argued that in the last four years, exports of key crops such as corn, wheat, and soybeans have dropped 10 percent. They also suggest that this law has not allowed farmers a means of controlling the supply of crops on the market, even if there is already a surplus that has greatly depressed prices. Finally, critics argue that legislators have failed to consider the reality of increased production by other exporting countries, and that lower commodity prices do not increase overall demand.
The decline in the profitability and number of family farms has also led to great debate over their future role in the American economy. Some economists have argued that in a global economy, small family farms have simply become too inefficient and that those who support them cling to a romantic notion rather than economic reality. In the last 20 years the agriculture industry has seen a great deal of concentration. In 2000 the top packing companies in the beef business accounted for 81 percent of cattle slaughtering, up from 30 percent in 1980. In hog processing, four farms control 56 percent of the market. Several recent mergers have also created huge new conglomerates, often referred to as agribusiness companies. In 1999 Cargill Inc., the country’s largest grain processor, acquired Continental Grain Company, the third largest. In order to prevent this new conglomerate from becoming a complete monopoly, the Justice Department required that they make some significant corporate divestitures of assets.
As corporate farms have become steadily larger, some critics have warned about potential environmental and health dangers associated with them. Factory farms such as hog farms often create pools of waste that can leak into ground water and rivers. While agribusiness companies insist that that mergers will lead to a growing efficiency in production and lower consumer prices, many small farmers argue that such mergers are driving them out of business.
Supporters of agribusiness suggest that family farms are simply unproductive and outdated in face of the largescale efficiency offered by large corporations. They suggest that family-farm supporters exaggerate the environmental threat, that America is no longer a rural culture, and that agriculture policies should be developed to favor international trade, rather than small rural farmers. FAIR was passed in great measure to support the U.S. commitment to the World Trade Organization and the General Agreement on Tariffs and Trade (GATT). Nonetheless, some staunch family-farm supporters, such as Senator Bryan Dorgan of North Dakota, argue that family farms do not struggle because they are inefficient but because of inappropriate federal legislation and trade agreements that favor agribusiness. He suggests that the most important element family farms provide to the country is a sense of community and family values. The place of family farms in American life was important throughout the 18th and 19th century, but their decline in the 20th century has been significant, and their future economic viability remains in question.
Further reading
Dorgan, Byron. “Don’t Be Down on the Farm.” The Washington Monthly, January/February 2000; Ghent, Bill. “Agriculture: Mergers Squeeze Family Farms,” National Journal (15 July 2000): 32; “Structural and Financial Characteristics of U.S. Farms: 2001 Family Farm Report,” U.S. Department of Agriculture Economic Research Service. Available on-line. URL: http://www.ers.usda.gov/publications/aib768/. Downloaded on May 31, 2001.