BUTLER/CUNNINGHAM

This page introduces some basic facts about agriculture in the United States. Neither it, nor related pages, are comprehensive descriptions such as you might find in a textbook on agriculture. We intend only to provide such facts as might be useful in discussion, and for the series of conferences.

This site will change from time to time. Basic organization will remain constant.

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polioej@acesag.auburn.edu

Level 2

AG FACTS US:

INTRODUCTION

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GENERAL AGRICULTURE IN THE UNITED STATES

Some of the major trends in agriculture in the United States, since about 1900, can be summarized as below.

-Population has moved from rural to urban. Urban and suburban population now very greatly dominates total population. Rural population is only a few percent of total population.

- Agriculture has shown a marked increase in the productivity per unit of land.

-The increase in productivity is due to increased mechanization, increased use of chemicals, more productive strains of plants and animals, and other advances in the efficiency of techniques.

-The size of the (near) contiguous land needed to run a successful farm has continually increased. The size of the family farm has grown ever larger. Many acres of land have gone over to corporations. Many family farms have disappeared.

-To some extent, productivity increased with increasing farm size, but farms can be so big as to become less efficient. Many factors working together determine the most productive farm size, and the size of farms most likely to remain in farming.

-The total amount of land devoted to agriculture in the US increased slowly up until about 1950, and then has decreased slightly. Even so, the total agricultural product has increased a great deal because of increases in productivity. Domestic US markets have not been able to absorb all the productivity, so that it has not been necessary to maintain all the farms and farmland even with the increase in the general population.

-Individual farms, and whole regions, began to specialize, particularly after 1950. By 2000, regional specialization in grains, dairy, meat production, truck farming, fruit, nuts, wine, floriculture, etc. were well established.

-Farming declined most sharply in areas that were less suited for modern farming (less competitive with other regions) such as the Southeast. These regions are less suitable because of poor soils, climate stress and susceptibility to financial stress (see below).

-Some crops, such as soybeans, increased in the amount of acreage from 1960 to 1980, with the expansion of international markets and with shifts in domestic markets; but that expansion eventually settled into balance with other traditional crops. Such "alternative" crops as soybeans sometimes expanded quickly in areas where traditional crops had most declined, such as the Southeast; but then often declined there just as quickly due to the general problems with agriculture in those regions.

-Meat consumption, and production, declined after about 1975, primarily due to increased grain prices, changes in ideas about health and to changes in consumer tastes. Consumption and production seems to have remained steadier after 1990.

-Some truly new alternatives, such as aquaculture, have grown since about 1980, especially in regions where traditional agriculture diminished the most and local climate was suitable, such as the Southeast, the Northwest and the Northeast.

-The amount of capital needed to run a successful farm has steadily increased.

-Federal, state, and local research and extension considerably helped increase farm productivity, at least until the 1980s. Research and extension probably continue to play a major role in places where soil, weather, product choice, and social institutions allow them to have an impact.

-Agriculture has always suffered from:

(a) Unpredictability of crop performance (yield and quality). One major reason is unpredictability of weather.

(b) Variability in crop price, and therefore profitability, regardless of yield. Crop price is strongly sensitive to small changes in supply around the market equilibrium point or around market "saturation" (due to inelastic demand for agricultural products, to "inferior" goods effects, and sometimes to the "kinked demand curve" effect). In particular, success in a crop one season can lead to large crop volume in subsequent seasons and to a rapid significant reduction in potential profit for that crop despite high yields. Because of the sustained increases in productivity in American agriculture, many agricultural markets are often near "saturation" and thus often susceptible to small changes in supply.

-Greater access to all national domestic markets (due to improved storage and transportation), expansion of world markets (both of buyers and producers), greater access to world markets, and expansion of goverment payment programs, all have partly buffered agricultural fluctuations, but have not made flucutations minor.

-Government payments have played an increasing role in stabilizing markets and in determining how farms are successfully run.

-Land prices have increased generally for several decades for both agricultural land and other land. The increase in the price of land generally is due to increase in the total population and to increase in suburbanization. The increase in the price of agricultural land to some extent followed the increase in agricultural productivity, but the increase has probably been influenced also by changes in the general price of land.

-Therefore, the ability to borrow on agricultural land values may not arise entirely from the value of farms as agricultural entrerprises but may also reflect the value of land for speculation. This pattern of borrowing has sometimes caused problems, especially when market forces (often non-agricultural market forces) have rapidly changed land prices.

-In farming, the rate of return on assets (or on invested capital), that is profits, has never been very high in comparison to other economic alternatives. Farmers suffer a continual opportunity cost. Many people choose to remain on the farm anyway. Now, nearly all non-corporate farmers need some supplemental non-farm income. Low profit rates and dependence on non-farm income makes borrowing by farmers more necessary, and therefore makes farmers more vulnerable to any discrepancy between the value of land for farming and land prices.

-Agriculture in the Southeast seems even more affected than the average by general decline and by specific crop shifts, market shifts, changes in the value of land, and the availability of capital.