House of Paine

household farms redux

   2 million farm households 
        must be wrong....




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"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."