Three years after the collapse of commodity prices, there are only slightly fewer farms in the United States than when the seven-year boom peaked and farm income was record high, according to USDA data. The government estimated there were 2.06 million farms in 2016, down 2 percent from 2013, the same period in which net farm income, a gauge of solvency, plummeted 46 percent.
With little sign of a significant improvement in commodity prices or farm income in the near term, farm-state lawmakers worry that hard times are ahead, with some operators possibly being forced out of business. “A good farm bill,” says House Agriculture chairman Michael Conaway, “will require resources,” meaning money to offset low commodity prices and unfair farm subsidies overseas.
So far, indicators of financial stress, such as the debt-to-asset ratio, are at benign levels, but farm debt is forecast to reach $395 billion this year, up 25 percent since 2013. Over the next several years, net farm income, which includes the value of crops held in storage, is expected to run at levels similar to 2005-09, in the early days of the agricultural boom, according to Pat Westhoff, head of a University of Missouri think tank.
Upturns or declines in farm numbers are parsed for signs of the health of the sector, although the connection may be strained; productivity has increased so farm output, and income, can rise at the same time that numbers are falling, as they did during the latest boom.
In an annual report, the USDA said the number of farms dropped 8,000 since 2015. The only segment to show an uptick was medium-size farms with sales of $250,000-$500,000 a year, which were up 500 farms. The roughly 98,000 farms in the category, with an average size of 1,296 acres, operate 14 percent of U.S. farmland, a bit more than two square miles of land.
In 2013, when farm income crested, there were 2.102 million farms nationwide. The figure declined by 42,000 farms in the following three years. But the decline in farm numbers began decades ago. Indeed, the number of U.S. farms declined by 47,000 during the three booming years leading to 2013.
From 1910-40, the government routinely counted more than 6 million farms — approaching 7 million during the worst of the Great Depression — before mechanization, hybrid seeds and synthetic fertilizers and pesticides contributed to a transformation of U.S. agriculture. The number of farms dropped like a ski slope from the late 1940s through the mid 1970s, when the census leveled off at around 2.8 million farms, half of the total at the end of World War II.
The figure has drifted slowly lower in recent decades. The farm total was 2.48 million in 1982, 2.22 million in 1997 and 2.11 million in 2012, according to USDA’s Census of Agriculture.
The largest 400,000-600,000 farms, with sales over $100,000 a year, supply the lion’s share of food and fiber. They are 20 percent of farms but run nearly 70 percent of the land. Some 911 million acres of land is in farms, down by 1 million acres from 2015.
Half of U.S. farms, some 1.03 million, produce less than $10,000 a year in agricultural sales. In fact, nearly 429,000 operations were listed as farms because they met the definition — producing at least $1,000 worth of crops or livestock — although USDA says they did not actually make the sales.