Noel A.D. Thompson, John Dunkelberger, Lavaughn Johnson, and Glenn Howze

What will 21st Century farms be like in Alabama and how will this affect the face of Alabama agriculture and the state's economy? That question was addressed by an AAES study of current farming trends and projections of the future face of agriculture. Results suggest that farms will be bigger, but Alabama will not lose its family farming tradition.

Although fewer than 38,000 farms remain at present in Alabama, agriculture continues to make a significant contribution to the state’s economy. Today, less than 2% of Alabamians are engaged in farming, while agriculture contributes in excess of $4 billion directly to Gross State Product (GSP) annually through the sale of farm and forestry products. Producers of food and fiber also contribute significantly to the state’s economy by purchasing inputs needed in crop and livestock production.

Several changes in Alabama agriculture during the years 1974 to 1992 are expected to continue through the year 2002 and beyond. Key indicators include changes in the number of farms, farm size, value of farm sales, and types of farm business organization.

The definition of a farm used by the U.S. Census of Agriculture is any place from which $1,000 or more of agricultural products are produced and sold, or normally would have been sold during the census year. Using even such a minimal requirement for being classified a “farm,” Alabama has witnessed a dramatic decrease in the number of farms during the past 60 years. From a high point of 273,455 farms in 1935, the number declined to 115,788 farms by 1959 to only 56,678 by 1974.

Figure 1. Number of Alabama farms, 1974-2002.

During the period 1974 through 1992, five agricultural censuses were conducted. Each census revealed a substantial loss of farm units. In three of the four census periods, Alabama lost more than 5,000 farms (Figure 1). The census period showing the greatest loss was 1974 through 1978, when almost 5,900 farms were lost. Another 5,400 farms were lost between 1987 and 1992, reducing the number of Alabama farms over 18 years to fewer than 38,000.

Using the 60-year trend as a basis for projecting current farm numbers, it is predicted that the number of Alabama farms in 1997 has declined to somewhere in the range of 34,000 and will decrease to as few as 31,000 by 2002. As the baseline number of farms decreases with each census, smaller declines in the number of farms can be anticipated. The projected number of farms lost since 1992 is about 4,000 by 1997 and 3,000 more by 2002.

To get a clear picture of what the loss of farms has meant to the structure of production agriculture in this state, researchers examined the size of farms being lost and the redistribution of the remaining farms by size categories. There was a decrease in the number of farms for all farm sizes between 1974 and 1992. Four broad size categories (10-49 acres = small, 50-179 acres = small-medium, 180-999 acres = medium, and 1,000 or more acres = large) were used for this analysis. Most farms in Alabama are small or small to medium sized (between 10 to 179 acres). Only a few are classified as large farms (1,000 acres or more).

Figure 2. Alabama farm size by category, 1974-2002.

As the number of Alabama farms declined, there was little change in the relative proportion of farms in the different size categories (Figure 2). Between 1974 and 1992, there was only a slight increase (less than 1%) in the proportion of all farms of 1,000 acres or more. So, although the number of small and small to medium sized farms of fewer than 180 acres had declined by 14,848 farms, the number of large farms also decreased by 435 farms.

There was no major shift during this period toward large farms. Based on projections of only about 31,000 Alabama farms in the year 2002, the predicted loss of farms will continue to be spread across all farm sizes barring some drastic change in world demand for food or in U.S. agricultural policy. The majority of farms (70%) will be less than 180 acres and 30% will be less than 50 acres. Large farms also will be fewer, but will continue to represent a slightly larger proportion of the remaining 31,000 projected farms. Only 4.2% of all farms are anticipated to be large.

Figure 3. Average size of Alabama farms, 1974-2002.

In 1974, average farm size was 209 acres for almost 57,000 farms (Figure 3). By 1992, the average size had increased by 14 acres to 223 acres for the fewer than 40,000 farms remaining. Projections for 1997 and 2002 are for modest increases in the average size of farms to 227 and 230 acres, respectively.

Also in 1974, the majority (41,262) of Alabama farms reported annual sales of farm products of less than $10,000 and half (28,339 farms) had sales less than $2,500. These numbers for the 1992 census year were 24,108 farms with sales below $10,000 and 11,675 farms with less than $2,500 in sales. Looking specifically at farms with high incomes reveals a contrasting increase in farms with incomes of $100,000 and above. The number of these farms almost doubled from 2,494 in 1974 to 4,890 in 1992.

Figure 4. Alabama farms by value of sales, 1974-2002.

Figure 4 shows the percentage distribution in farm sales adjusted for the declining number of farms. High farm sales income units increased by almost 9%, going from 4.4% of farms to 13% between 1974 and 1992. Most of this increase can be attributed to continued growth in the poultry industry and the obvious fact that larger farms produce more commodities for the market.

Estimating future trends is always hazardous because of the volatility of markets for agricultural commodities. Nevertheless, the nature of change relative to current and future farm sales for surviving Alabama farms is clear. Since 1982, when almost 40% of farms had incomes of less than $2,500 annually from farm sales, there has been a steady decrease of about 4% per five-year period. Based on general stability in current political and economic conditions worldwide, a continued decrease in the 3% range by 1997 and another 3% by 2002 is projected, leaving only about one-fourth of Alabama farms earning less than $2,500 annually. At the same time, modest increases in the proportion of farms in each of the other three sales categories are projected, with 15% of farms having gross farm sales of $100,000 or higher by 2002.

Alabama farms are predominantly “individual or family farm” business organizations. Of the three organizational types identified by the Census of Agriculture—individual or family farms, partnership farms, and corporation farms—34,257 were individual or family farms in 1992. This number has decreased as the total number of farms has decreased, but the 90% proportion has remained virtually constant across recent census periods when almost 20,000 farms went out of business. Moreover, the gradual increase in the proportion of larger farms has not resulted in a trend toward more corporate ownership arrangements. Fewer than 2% of Alabama farms are organized as corporations and only 7% to 8% involve partnerships.

Modest growth in the number and proportion of incorporated Alabama farms can be expected through 2002. Given financial incentives and changing production strategies, corporate farms should continue to increase slightly. Projections based on these results suggest that 2.2% of Alabama farms will be of the corporate type by 2002, with most of these farms merely extensions of family ownership to the corporate model.